§ 27-1-3.5-12.5 — Management's report of internal control over financial reporting

Indiana § 27-1-3.5-12.5

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 1: DEPARTMENT OF INSURANCE
• Ch. 3.5: Annual Audited Financial Reports

Text

5. (a) A domestic insurer that is required
to file an annual audited financial report under this chapter that has
annual direct written and assumed premiums (excluding premiums
reinsured with the Federal Crop Insurance Corporation and Federal
Flood Program) of at least five hundred million dollars ($500,000,000)
shall prepare a report of the domestic insurer's or group of insurers'
management's internal control over financial reporting as of the
immediately preceding December 31. The report shall be filed with the
commissioner along with the communication of internal control related
matters noted in an audit.
(b) The commissioner may require a domestic insurer that is:
(1) not described in subsection (a); and
(2) in a RBC level event described in IC 27-1-36 or considered by
the commissioner to be in hazardous financial condition (as
defined in rules adopted under IC 27-1-3-7);
to file a report of management's internal control over financial
reporting.
(c) If:
(1) a domestic insurer or group of insurers is:
(A) directly subject to Section 404;
(B) part of an insurance holding company system whose parent
is directly subject to Section 404;
(C) not directly subject to Section 404, but is a SOX compliant
entity; or
(D) part of an insurance holding company system whose parent
is not directly subject to Section 404, but is a SOX compliant
entity; and
(2) the domestic insurer's or group of insurers' internal controls
over financial reporting that have a material impact on the
preparation of the domestic insurer's or group of insurers' annual
audited financial statements are included in the Section 404
report;
the domestic insurer or group of insurers may satisfy the requirement
of this section to file a report of management's internal control over
financial reporting by including with the domestic insurer's or group of
insurers' Section 404 report an addendum described in subsection (d).
(d) An addendum described in subsection (c) must be a positive
statement by the domestic insurer's or group of insurers' management
that no internal controls over financial reporting that have a material
impact on the preparation of the domestic insurer's or group of insurers'
annual audited financial statements exist, other than the internal
controls that are included in the Section 404 report.
(e) If:
(1) a domestic insurer or group of insurers is described in
subsection (c)(1); and
(2) the domestic insurer's or group of insurers' internal controls
over financial reporting that have a material impact on the
preparation of the domestic insurer's or group of insurers' annual
audited financial statements are not all included in the Section
404 report;
the domestic insurer or group of insurers shall file a report of
management's internal control over financial reporting as required by
this section for the internal controls that have a material impact and are
not included in the Section 404 report.
(f) A domestic insurer's or group of insurers' report of management's
internal control over financial reporting required by this section must
include the following:
(1) A statement that management is responsible for establishment
and maintenance of adequate internal control over financial
reporting.
(2) A statement that management has established internal control
over financial reporting and an assertion of whether, to the best of
management's knowledge and belief after diligent inquiry,
management's internal control over financial reporting is effective
to provide reasonable assurance regarding the reliability of
financial statements in accordance with statutory accounting
principles.
(3) A statement that briefly describes the approach or processes
by which management evaluated the effectiveness of
management's internal control over financial reporting.
(4) A statement that briefly describes the scope of work that is
included in the report and whether any of management's internal
controls over financial reporting were excluded.
(5) Disclosure of any unremediated material weaknesses in the
management's internal control over financial reporting identified
by management as of the immediately preceding December 31.
The management may not conclude that the internal control over
financial reporting is effective to provide reasonable assurance
regarding the reliability of annual audited financial statements in
accordance with statutory accounting principles if one (1) or more
unremediated material weaknesses exist in the management's
internal control over financial reporting.
(6) A statement regarding the inherent limitations of the
management's internal control over financial reporting.
(7) Signatures of the chief executive officer and the chief
financial officer, or equivalent position, of the domestic insurer or
group of insurers.
(g) A domestic insurer's or group of insurers' management shall
document and make available upon financial condition examination the
basis on which the management's assertions described in subsection (f)
are made. The management's assertions may be based, in part, upon the
management's review, monitoring, and testing of internal controls over
financial reporting that are undertaken in the normal course of the
management's activities. The management may determine the nature of
the internal control framework used and the nature and extent of
documentation to make the management's assertion in a cost effective
manner, including assembly of or reference to existing documentation.
(h) A report of management's internal control over financial
reporting required by this section, and any supporting documentation
provided during the course of a financial condition examination, is
confidential.

Legislative History

As added by P.L.251-1995, SEC.12. Amended by P.L.146-2015, SEC.18.