§ 27-72-7. Examination.
(a) The commissioner may, when the commissioner deems it reasonably necessary to protect
the interests of the public, examine the business and affairs of any licensee or applicant
for a license. The commissioner may order any licensee or applicant to produce any
records, books, files, or other information reasonably necessary to ascertain whether
such licensee or applicant is acting or has acted in violation of the law or otherwise
contrary to the interests of the public. The expenses incurred in conducting any examination
shall be paid by the licensee or applicant.
(b) In lieu of an examination under this chapter of any foreign or alien licensee licensed
in this state, the commissioner may, at the commissioner's discretion, accept an examination
report on the licensee as prepared by the commissioner for the licensee's state of
domicile or port-of-entry state.
(c) Names of and individual identification data, or for all owners and insureds shall
be considered private and confidential information and shall not be disclosed by the
commissioner unless required by law.
(d) Records of all consummated transactions and life settlement contracts shall be maintained
by the provider for three (3) years after the death of the insured and shall be available
to the commissioner for inspection during reasonable business hours.
(e) Conduct of examinations.
(1) Upon determining that an examination should be conducted, the commissioner shall issue
an examination warrant appointing one or more examiners to perform the examination
and instructing them as to the scope of the examination. In conducting the examination,
the examiner shall use methods common to the examination of any life settlement licensee
and should use those guidelines and procedures set forth in an examiners' handbook
adopted by a national organization.
(2) Every licensee or person from whom information is sought, its officers, directors,
and agents shall provide to the examiners timely, convenient, and free access at all
reasonable hours at its offices to all books, records, accounts, papers, documents,
assets, and computer or other recordings relating to the property, assets, business,
and affairs of the licensee being examined. The officers, directors, employees, and
agents of the licensee or person shall facilitate the examination and aid in the examination
so far as it is in their power to do so. The refusal of a licensee, by its officers,
directors, employees, or agents, to submit to examination or to comply with any reasonable
written request of the commissioner shall be grounds for suspension or refusal of,
or nonrenewal of any license or authority held by the licensee to engage in the life
settlement business or other business subject to the commissioner's jurisdiction.
Any proceedings for suspension, revocation, or refusal of any license or authority
shall be conducted pursuant to § 42-35-1 et seq.
(3) The commissioner shall have the power to issue subpoenas, to administer oaths and
to examine under oath any person as to any matter pertinent to the examination. Upon
the failure or refusal of a person to obey a subpoena, the commissioner may petition
a court of competent jurisdiction, and upon proper showing, the court may enter an
order compelling the witness to appear and testify or produce documentary evidence.
(4) When making an examination under this chapter, the commissioner may retain attorneys,
appraisers, independent actuaries, independent certified public accountants or other
professionals and specialists as examiners, the reasonable cost of which shall be
borne by the licensee that is the subject of the examination.
(5) Nothing contained in this chapter shall be construed to limit the commissioner's authority
to terminate or suspend an examination in order to pursue other legal or regulatory
action pursuant to the insurance laws of this state. Findings of fact and conclusions
made pursuant to any examination shall be prima facie evidence in any legal or regulatory
action.
(6) Nothing contained in this chapter shall be construed to limit the commissioner's authority
to use and, if appropriate, to make public any final or preliminary examination report,
any examiner or licensee work papers or other documents, or any other information
discovered or developed during the course of any examination in the furtherance of
any legal or regulatory action which the commissioner may, in his or her sole discretion,
deem appropriate.
(f) Examination reports.
(1) Examination reports shall be comprised of only facts appearing upon the books, from
the testimony of its officers or agents or other persons examined concerning its affairs,
and such conclusions and recommendations as the examiners find reasonably warranted
from the facts.
(2) No later than sixty (60) days following completion of the examination, the examiner
in charge shall file with the commissioner a verified written report of examination
under oath. Upon receipt of the verified report, the commissioner shall transmit the
report to the licensee examined, together with a notice that shall afford the licensee
examined a reasonable opportunity of not more than thirty (30) days to make a written
submission or rebuttal with respect to any matters contained in the examination report
and which shall become part of the report or to request a hearing on any matter in
dispute.
(3) In the event the commissioner determines that regulatory action is appropriate as
a result of an examination, the commissioner may initiate any proceedings or actions
provided by law.
(g) Confidentiality of examination information.
(1) Names and individual identification data for all owners, purchasers, and insureds
shall be considered private and confidential information and shall not be disclosed
by the commissioner, unless the disclosure is to another regulator or is required
by law.
(2) Except as otherwise provided in this chapter, all examination reports, working papers,
recorded information, documents and copies thereof produced by, obtained by, or disclosed
to the commissioner or any other person in the course of an examination made under
this chapter, or in the course of analysis or investigation by the commissioner of
the financial condition or market conduct of a licensee shall be confidential by law
and privileged, shall not be subject to open records, shall not be subject to subpoena,
and shall not be subject to discovery or admissible in evidence in any private civil
action. The commissioner is authorized to use the documents, materials, or other information
in the furtherance of any regulatory or legal action brought as part of the commissioner's
official duties. The licensee being examined may have access to all documents used
to make the report.
(h) Conflict of interest.
(1) An examiner may not be appointed by the commissioner if the examiner, either directly
or indirectly, has a conflict of interest or is affiliated with the management of
or owns a pecuniary interest in any person subject to examination under this chapter.
This section shall not be construed to automatically preclude an examiner from being:
(i) An owner;
(ii) An insured in a life settlement contract or insurance policy; or
(iii) A beneficiary in an insurance policy that is proposed for a life settlement contract.
(2) Notwithstanding the requirements of this clause, the commissioner may retain from
time to time, on an individual basis, qualified actuaries, certified public accountants,
or other similar individuals who are independently practicing their professions, even
though these persons may from time to time be similarly employed or retained by persons
subject to examination under this chapter.
(i) Immunity from liability.
(1) No cause of action shall arise nor shall any liability be imposed against the commissioner,
the commissioner's authorized representatives, or any examiner appointed by the commissioner
for any statements made or conduct performed in good faith while carrying out the
provisions of this chapter.
(2) No cause of action shall arise, nor shall any liability be imposed against any person
for the act of communicating or delivering information or data to the commissioner
or the commissioner's authorized representative or examiner pursuant to an examination
made under this chapter, if the act of communication or delivery was performed in
good faith and without fraudulent intent or the intent to deceive. This subsection
(i)(2) does not abrogate or modify in any way any common law or statutory privilege
or immunity heretofore enjoyed by any person identified in subsection (i)(1).
(3) A person identified in subsection (i)(1) or (i)(2) of this section shall be entitled
to an award of attorney's fees and costs if he or she is the prevailing party in a
civil cause of action for libel, slander, or any other relevant tort arising out of
activities in carrying out the provisions of this chapter and the party bringing the
action was not substantially justified in doing so. For purposes of this section,
a proceeding is "substantially justified� if it had a reasonable basis in law or fact
at the time that it was initiated.
(j) Investigative authority of the commissioner. The commissioner may investigate suspected fraudulent life settlement acts and persons
engaged in the business of life settlements.
(k) Cost of examinations. The total cost of examinations performed pursuant to this chapter shall be borne by
the provider(s) or broker(s) examined companies in accordance with the provision of
§ 27-13.1-7. The commissioner is authorized to retain contract examiners and consultants to perform
the examinations. The commissioner shall review and affirmatively endorse detailed
billings from the qualified contract examiner before summary billings are sent to
the insurer.