§ 27-71-7. Protocols for targeted market conduct examinations.
(a) When the commissioner identifies through market analysis a pattern of conduct or practice
by an insurer which requires further investigation, and less intrusive market conduct
actions identified in § 27-71-5(b) are not appropriate, the commissioner has the discretion to conduct targeted, market
conduct examinations in accordance with the NAIC Market Conduct Uniform Examination
Procedures and the Market Regulation Handbook (or procedures, adopted by regulation,
that are substantially similar to the foregoing NAIC products).
(b) If the insurer to be examined is not a domestic insurer, the commissioner may communicate
with and may coordinate the examination with the insurance commissioner of the state
in which the insurer is organized.
(c) Concomitant with the notification requirements established in subsection (e) of this
section, the commissioner shall post notification on the NAIC Examination Tracking
System, or comparable NAIC product as determined by the commissioner, that a market
conduct examination has been scheduled.
(d) The commissioner may not conduct a comprehensive market conduct examination more frequently
than once every three (3) years. The commissioner may decide not to conduct a comprehensive
market conduct examination based on market analysis.
(e)(1) Prior to commencement of a targeted on-site market conduct examination, market conduct
surveillance personnel shall prepare a work plan and proposed budget. Such proposed
budget, which shall be reasonable for the scope of the examination, and work plan
shall be provided to the company under examination.
(2) Market conduct examinations shall, to the extent feasible, utilize desk examinations
and data requests prior to a targeted on-site examination.
(3) Market conduct examinations shall be conducted in accordance with the provisions set
forth in the NAIC Market Regulation Handbook and the NAIC Market Conduct Uniform Examinations
Procedures (or procedures, adopted by regulation, that are substantially similar to
the foregoing NAIC products).
(4) Prior to the conclusion of a market conduct examination, the individual among the
market conduct surveillance personnel who is designated as the examiner-in-charge
shall schedule an exit conference with the insurer.
(f) Announcement of the examination shall be sent to the insurer and posted on the NAIC's
Examination Tracking System (or comparable NAIC product, as determined by the commissioner)
as soon as possible but in no case later than sixty (60) days before the estimated
commencement of the examination, unless extraordinary circumstances indicating a risk
to consumers require immediate action. Such announcement to the insurer shall contain:
(1) The name and address of the insurer(s) being examined;
(2) The name and contact information of the examiner-in-charge;
(3) The reason(s) for and the scope of the targeted examination;
(4) The date the examination is scheduled to begin;
(5) Identification of any non-insurance department personnel who will assist in the examination,
if known at the time the notice is prepared;
(6) A time estimate for the examination;
(7) A budget and work plan for the examination and identification of reasonable and necessary
costs and fees that will be included in the bill, if the cost of the examination is
billed to the company; and
(8) A request for the insurer to name its examination coordinator.
(g) If a targeted examination is expanded beyond the reasons provided to the insurer in
the notice of the examination required under this section, the commissioner shall
provide written notice to the insurer, explaining the extent of the expansion and
the reasons for the expansion. The department shall provide a revised work plan to
the insurer before the beginning of any significantly expanded examination, unless
extraordinary circumstances indicating a risk to consumers require immediate action.
(h) The commissioner shall conduct a pre-examination conference with the insurer examination
coordinator and key personnel to clarify expectations thirty (30) days prior to commencement
of the examination.
(i) The department shall use the NAIC Standard Data Request (or comparable product, adopted
by regulation, that is substantially similar to the foregoing NAIC product).
(1) A company responding to a commissioner's request to produce information shall produce
it as it is kept in the usual course of business or shall organize and label it to
correspond with the categories in the demand.
(2) If a commissioner's request does not specify the form or forms for producing electronically
stored information, a company responding to the request must produce the information
in a form or forms in which the company ordinarily maintains it or in a form or forms
that are reasonably usable.
(3) A company responding to an information request need not produce the same electronically
stored information in more than one form.
(j)(1) The commissioner shall adhere to the following timeline, unless a mutual agreement
is reached with the insurer to modify the timeline:
(i) The commissioner shall deliver the draft report to the insurer within sixty (60) days
of the completion of the examination. Completion of the examination shall be defined
as the date the commissioner confirms in writing that the examination is completed.
(ii) The insurer must respond with written comments within thirty (30) days of receipt
of the draft report.
(iii) The department shall make a good faith effort to resolve issues and prepare a final
report within thirty (30) days of receipt of the insurer's written comments, unless
a mutual agreement is reached to extend the deadline. The commissioner may make corrections
and other changes, as appropriate.
(iv) The insurer shall, within thirty (30) days, of receipt of the final report, file a
written response to all comments and recommendations contained in the report. The
response shall include a written plan of how and when the comments and recommendations
contained in the examination report will be corrected and/or implemented. For each
comment and recommendation, the response must include an implementation date and a
completion date for each corrective action. In lieu of these requirements, the company
may submit a rebuttal to any comment or recommendation contained in the examination
report. An additional thirty (30) days shall be allowed if agreed to by the commissioner
and the insurer.
(2) The final written and electronic publicly available market conduct report shall include
the insurer's written response and any agreed-to corrections or changes. The response
may be included either as an appendix or in the text of the examination reports. References
to specific individuals by name shall be limited to an acknowledgement of their involvement
in the conduct of the examination.
(k)(1) Upon adoption of the examination report pursuant to § 27-13.1-5(c) — (f), the commissioner shall continue to hold the content of the examination report
as private and confidential for a period of thirty (30) days, except to the extent
provided in subsection (k)(2) of this section. During this time, the report shall
not be subject to subpoena and shall not be subject to discovery or admissible in
evidence in any private action. Thereafter, the commissioner shall open the report
for public inspection, provided no court of competent jurisdiction has stayed its
publication. This section may not be construed to limit the commissioner's authority
to use any final or preliminary market conduct examination report, and examiner or
company work papers or other documents, or any other information discovered or developed
during the course of an examination in the furtherance of any legal or regulatory
action that the commissioner, in the commissioner's sole discretion may deem appropriate.
(2) Nothing contained in this chapter shall prevent or be construed as preventing the
commissioner from disclosing the content of an examination report, preliminary examination
report or results, or any matter relating thereto, to the insurance department of
this or any other state or agency of the federal government at any time, provided
the agency or office receiving the report or matters relating thereto agrees to hold
it confidential and in a manner consistent with this chapter.
(l) The insurer may appeal the order adopting the examination report in accordance with
the procedures set forth in § 27-13.1-5(d) and the administrative procedures act, chapter 35 of title 42.