Ins 50.14
Ins 50.14
Availability and maintenance of CPA work papers. Ins 50.14(1)(1)
An insurer shall require the accountant or accounting firm which conducts an audit or other procedure under this subchapter to make available for review all work papers and any communications related to the audit or procedure between the insurer and the accountant or accounting firm at the offices of the insurer or at a reasonable place designated by the commissioner. The insurer shall require that the accountant retain the audit work papers and communications until the commissioner has filed a report on examination covering the period of the audit but no longer than 7 years from the date of the audit report.
Ins 50.14(2)
(2) The commissioner may obtain copies of work papers and retain the copies. If copies of work papers are requested in electronic format, the electronic copies must be as fully functional as the original documents. Password protection of the storage medium used to transmit electronic work papers is acceptable in order to securely transfer electronic work papers to the commissioner. Passwords on individual electronic work papers, or passwords that disable features of individual electronic work papers, are not permitted. All working papers and communications obtained by the commissioner under this section are confidential under s.
601.465, Stats.
Ins 50.14 History
History: Cr.
Register, July, 1993, No. 451, eff. 8-1-93;
CR 08-053: renum. from Ins 50.15
Register December 2008 No. 636, eff. 1-1-09;
CR 17-015: am. (2)
Register December 2017 No. 744, eff. 1-1-18.
Ins 50.15
Ins 50.15
Requirements for audit committees. Ins 50.15(1)(1)
This section does not apply to foreign or alien insurers licensed in this state or an insurer that is a SOX Compliant Entity or a direct or indirect wholly-owned subsidiary of a SOX Compliant Entity.
Ins 50.15(2)
(2) The audit committee shall be directly responsible for the appointment, compensation and oversight of the work of any accountant, including resolution of disagreements between management and the accountant regarding financial reporting, for the purpose of preparing or issuing the audited financial report or related work pursuant to this chapter. Each accountant shall report directly to the audit committee.
Ins 50.15(2m)
(2m) The audit committee shall be responsible for overseeing the insurer's internal audit function and granting the person or persons performing the function suitable authority and resources to fulfill their responsibilities if required by s.
Ins 50.155.
Ins 50.15(3)
(3) Each member of the audit committee shall be a member of the board of directors of the insurer or a member of the board of directors of an entity elected pursuant to sub.
(6) and s.
Ins 50.01 (1r).
Ins 50.15(4)
(4) In order to be considered independent for purposes of this section, a member of the audit committee may not, other than in the capacity as a member of the audit committee, the board of directors, or any other board committee, accept any consulting, advisory or other compensatory fee from the entity or be an affiliated person of the entity or any subsidiary thereof. However, if a law requires board participation by otherwise non-independent members, the law shall prevail and the members may participate in the audit committee and be designated as independent for audit committee purposes, unless the members are an officer or employee of the insurer or one of its affiliates.
Ins 50.15(5)
(5) If a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, the member, with notice by the insurer to the commissioner, may remain an audit committee member of the insurer until the earlier of the next annual meeting of the insurer or one year from the occurrence of the event that caused the member to be no longer independent.
Ins 50.15(6)
(6) To exercise the election of the controlling person to designate the audit committee for purposes of this chapter, the ultimate controlling person shall provide written notice to the commissioner of the affected insurers. Notification shall be made timely prior to the issuance of the audited financial report and include a description of the basis for the election. The election can be changed through notice to the commissioner by the insurer, which shall include a description of the basis for the change. The election shall remain in effect for perpetuity, until rescinded.
Ins 50.15(7)(a)(a) The audit committee shall require the independent certified public accountant that performs for an insurer any audit required by this chapter to timely report to the audit committee in accordance with the requirements of SAS 61, Communication with Audit Committees, or its replacement, including:
Ins 50.15(7)(a)1.
1. All significant accounting policies and material permitted practices.
Ins 50.15(7)(a)2.
2. All material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the insurer, ramification of the use of the alternative disclosures and treatments, and the treatment preferred by the independent certified public accountant.
Ins 50.15(7)(a)3.
3. Other material written communications between the independent certified public accountant and the management of the insurer, such as any management letter or schedule of unadjusted differences.
Ins 50.15(7)(b)
(b) If an insurer is a member of an insurance holding company system, the reports required by sub.
(7) (a) may be provided to the audit committee on an aggregate basis for insurers in the holding company system, provided that any substantial differences among insurers in the system are identified to the audit committee.
Ins 50.15(8)
(8) The proportion of independent audit committee members shall meet or exceed the criteria contained in the following table unless the commissioner orders a greater proportion of independent audit committee members:
-
See PDF for table 
Ins 50.15(9)
(9) An insurer with direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $ 500,000,000 may make application to the commissioner for a waiver from this section based upon hardship. The insurer shall file with its annual statement filing the approval for relief from the requirements of this section with the states that it is licensed in or doing business in and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.
Ins 50.155
Ins 50.155 Internal audit function requirements. Ins 50.155(1)(1)
An insurer is exempt from the requirements of this section if:
Ins 50.155(1)(a)
(a) The insurer has total annual direct written and unaffiliated assumed premiums, including international direct and assumed premiums but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000; and
Ins 50.155(1)(b)
(b) If the insurer is a member of a group of insurers, the group has total annual direct written and unaffiliated assumed premiums, including international direct and assumed premiums but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $1,000,000,000.
Ins 50.155(2)
(2) An insurer or group of insurers shall establish an internal audit function providing independent, objective, and reasonable assurance to the audit committee and insurer management regarding the insurer's governance, risk management, and internal controls. This assurance shall be provided by performing general and specific audits, reviews, and tests and by employing other techniques deemed necessary to protect assets, evaluate control effectiveness and efficiency, and evaluate compliance with policies and regulations.
Ins 50.155(3)
(3) In order to ensure that internal auditors remain objective, the internal audit function must be organizationally independent. Specifically, the internal audit function will not defer ultimate judgment on audit matters to others, and the insurer or group of insurers shall appoint an individual to head the internal audit function who will have direct and unrestricted access to the board of directors. Organizational independence does not preclude dual-reporting relationships.
Ins 50.155(4)
(4) The head of the internal audit function shall report to the audit committee regularly, but no less than annually, on the periodic audit plan, factors that may adversely impact the internal audit function's independence or effectiveness, material findings from completed audits, and the appropriateness of corrective actions implemented by management as a result of audit findings.
Ins 50.155(5)
(5) If an insurer is a member of an insurance holding company system, as defined in s.
Ins 40.01 (6), or included in a group of insurers, the insurer may satisfy the internal audit function requirements set forth in this section at the ultimate controlling parent level, an intermediate holding company level, or the individual legal entity level.
Ins 50.16
Ins 50.16
Conduct of insurer in connection with the preparation of required reports and documents. Ins 50.16(1)(1)
No director or officer of an insurer shall, directly or indirectly:
Ins 50.16(1)(a)
(a) Make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review or communication required under this chapter.
Ins 50.16(1)(b)
(b) Omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in light of the circumstances under which the statements were made, not misleading to an accountant in connection with any audit, review or communication required under this chapter.
Ins 50.16(2)
(2) No officer or director of an insurer, or any other person acting under the direction thereof, shall directly or indirectly take any action to coerce, manipulate, mislead or fraudulently influence any independent certified public accountant engaged in the performance of an audit pursuant to this chapter if that person knew or should have known that the action, if successful, could result in rendering the insurer's financial statements materially misleading. In this subsection, actions that “if successful, could result in rendering the insurer's financial statements materially misleading" include actions taken at any time with respect to the professional engagement period to coerce, manipulate, mislead or fraudulently influence an independent certified public accountant:
Ins 50.16(2)(a)
(a) To issue or reissue a report on an insurer's financial statements that is not warranted in the circumstances, due to material violations of statutory accounting principles prescribed by the commissioner, generally accepted auditing standards, or other professional or regulatory standards.
Ins 50.16(2)(b)
(b) Not to perform audit, review or other procedures required by generally accepted auditing standards or other professional standards.
Ins 50.16(2)(d)
(d) Not to communicate matters to an insurer's audit committee.
Ins 50.16 History
History: CR 08-053: cr.
Register December 2008 No. 636, eff. 1-1-09.
Ins 50.17
Ins 50.17
Management's report of internal control over financial reporting. Ins 50.17(1)(1)
Every insurer required to file an audited financial report pursuant to this subchapter that has annual direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of $ 500,000,000 or more shall prepare a report of the insurer's or group of insurers' internal control over financial reporting as the terms are defined in s.
Ins 50.01. The report shall be filed with the commissioner along with the Communication of Internal Control Related Matters Noted in an Audit described in s.
Ins 50.12. Management's report of internal control over financial reporting shall be as of December 31 immediately preceding.
Ins 50.17(2)
(2) Notwithstanding the premium threshold in sub.
(1), the commissioner may require an insurer to file management's report of internal control over financial reporting if the insurer is in any risk based capital event as described in s.
Ins 51.01, or the insurer is in financially hazardous condition.
Ins 50.17(3)
(3) In lieu of the management's report of internal control over financial reporting, an insurer or a group of insurers may file a report described in sub.
(4) if any of the following criteria are applicable:
Ins 50.17(3)(b)
(b) The insurer is part of a holding company system whose parent is directly subject to Section 404.
Ins 50.17(3)(c)
(c) The insurer is not directly subject to Section 404 but is a SOX Compliant Entity.
Ins 50.17(3)(d)
(d) The insurer is a member of a holding company system whose parent is not directly subject to Section 404 but is a SOX Compliant Entity.
Ins 50.17(4)
(4) An insurer qualifying under sub.
(3) may file its or its parent's Section 404 report and an addendum in satisfaction of the requirements under sub.
(1) or
(2), provided that the internal controls of the insurer or group of insurers having a material impact on the preparation of the insurer's or group of insurer's audited statutory financial statements, those items included in s.
Ins 50.06 (2) (b) to
(3), were included in the scope of the Section 404 report. The addendum shall be a positive statement by management that there are no material processes with respect to the preparation of the insurer's or group of insurers' audited statutory financial statements, those items included in s.
Ins 50.06 (2) (b) to
(3), excluded from the Section 404 report. If there are internal controls of the insurer or group of insurers that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements and those internal controls were not included in the scope of the Section 404 report, the insurer or group of insurers may either file:
Ins 50.17(4)(a)
(a) A management's report of internal control over financial reporting pursuant to sub.
(1) or
(2); or
Ins 50.17(4)(b)
(b) The Section 404 report and a management's report of internal control over financial reporting for those internal controls that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements not covered by the Section 404 report.
Ins 50.17(5)
(5) Management's report of internal control over financial reporting shall include:
Ins 50.17(5)(a)
(a) A statement that management is responsible for establishing and maintaining adequate internal control over financial reporting.
Ins 50.17(5)(b)
(b) A statement that management has established internal control over financial reporting and an assertion to the best of management's knowledge and belief, after diligent inquiry, as to whether its internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles.
Ins 50.17(5)(c)
(c) A statement that briefly describes the approach or processes by which management evaluated the effectiveness of its internal control over financial reporting.
Ins 50.17(5)(d)
(d) A statement that briefly describes the scope of work that is included and whether any internal controls were excluded.
Ins 50.17(5)(e)
(e) Disclosure of any unremediated material weaknesses in the internal control over financial reporting identified by management as of December 31 immediately preceding. Management may not conclude that the internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles if there is one or more unremediated material weaknesses in its internal control over financial reporting.
Ins 50.17(5)(f)
(f) A statement regarding the inherent limitations of internal control systems.
Ins 50.17(5)(g)
(g) Signatures of the chief executive officer and the chief financial officer, or equivalent position or title.
Ins 50.17(6)
(6) Management shall document and make available upon financial condition examination the basis upon which its assertions required in this section are made. Management may base its assertions, in part, upon its review, monitoring and testing of internal controls undertaken in the normal course of its activities.
Ins 50.17(6)(a)
(a) Management shall have discretion as to the nature of the internal control framework used, and the nature and extent of documentation, in order to make its assertion in a cost effective manner and, as such, may include assembly of or reference to existing documentation.
Ins 50.17(6)(b)
(b) Management's report on internal control over financial reporting, required by this section, and any documentation provided in support thereof during the course of a financial condition examination, shall be kept confidential.
Ins 50.17 History
History: CR 08-053: cr.
Register December 2008 No. 636, eff. 1-1-09.
Ins 50.18
Ins 50.18
Exemptions and effective dates. Ins 50.18(1)(1)
The commissioner may grant an exemption from compliance with this subchapter if the commissioner finds that compliance would constitute a financial or organizational hardship upon the insurer, except as provided in ss.
Ins 50.08 (2),
(9) (a) and
50.15 (9).
Ins 50.18(2)
(2) An exemption may be granted at any time and from time to time for a specified period.
Ins 50.18(3)
(3) Subject to subs.
(6) and
(7), this subchapter shall apply to domestic insurers retaining a certified public accountant on the effective date of this subsection who qualifies as independent, for the year ending December 31, 2008, and each year thereafter.
Ins 50.18(4)
(4) Section
Ins 50.08 (3) to
(9) shall apply to domestic insurers not retaining a certified public accountant on the effective date of this subsection who qualifies as independent, for the year ending December 31, 2009, and each year thereafter.
Ins 50.18(6)
(6) The requirements of s.
Ins 50.15 are effective January 1, 2010. An insurer or group of insurers that is not required to have independent audit committee members or only a majority of independent audit committee members, as opposed to a supermajority, because the total written and assumed premium is below the threshold, and subsequently becomes subject to one of the independence requirements due to changes in premium shall have one year following the year the threshold is exceeded, but not earlier than January 1, 2010, to comply with the independence requirements. An insurer that becomes subject to one of the independence requirements as a result of a business combination shall have one calendar year following the date of acquisition or combination to comply with the independence requirements.
Ins 50.18(7)
(7) The requirements of s.
Ins 50.17 are effective beginning with the reporting period ending December 31, 2010, and each year thereafter. An insurer or group of insurers that is not required to file a report because the total written and assumed premium is below the threshold and subsequently becomes subject to the reporting requirements shall have 2 years following the year the threshold is exceeded, but not earlier than December 31, 2010, to file a report. An insurer acquired in a business combination shall have 2 calendar years following the date of acquisition or combination to comply with the reporting requirements.
Ins 50.18(8)
(8) The requirements of s.
Ins 50.155 first apply on January 1, 2018. If an insurer or group of insurers that was exempt under s.
Ins 50.155 (1) no longer qualifies for such exemption, it shall have one year following the year the threshold is exceeded to comply with the internal audit requirements.
Ins 50.18 History
History: Cr.
Register, July, 1993, No. 451, eff. 8-1-93;
CR 08-053: renum. from Ins 50.16, am. (title) and (1), cr. (3) to (7)
Register December 2008 No. 636, eff. 1-1-09;
CR 17-015: cr. (8)
Register December 2017 No. 744, eff. 1-1-18.
Ins 50.19
Ins 50.19
Canadian and British companies. Ins 50.19(1)(1)
In the case of Canadian and British insurers, for the purpose of this subchapter the annual audited financial report shall be defined as the annual statement of total business on the form filed by the insurers with their domiciliary supervisory authority duly audited by an independent chartered accountant.
Ins 50.19(2)
(2) For Canadian and British insurers, the letter required in s.
Ins 50.07 shall state that the accountant is aware of the requirements relating to the annual audited statement filed with the commissioner under s.
Ins 50.05 and shall affirm that the opinion expressed is in conformity with those requirements.
Ins 50.19 History
History: Cr.
Register, July, 1993, No. 451, eff. 8-1-93;
CR 08-053: renum. from Ins 50.17
Register December 2008 No. 636, eff. 1-1-09.
Ins 50.20
Ins 50.20
Insurers to file annual financial statements. Ins 50.20(1)(1)
An insurer shall file an annual financial statement with the commissioner. Except as otherwise required by law, rule, order or instruction of the commissioner, an insurer shall file the annual financial statement:
Ins 50.20(1)(a)
(a) On the national association of insurance commissioners annual statement blank appropriate for the lines of business the insurer is authorized to write, except an insurer licensed under ch.
612, Stats., may file on the town mutual annual statement blank prescribed by the commissioner; and
Ins 50.20(1)(b)
(b) Prepared in accordance with the national association of insurance commissioners annual statement instructions and the accounting practices or procedures prescribed or permitted by the applicable national association of insurance commissioners accounting practices and procedures manual except an insurer licensed under ch.
612, Stats., shall prepare the statement as prescribed by the commissioner.
Ins 50.20(2)
(2) Insurers shall file the annual statement required under sub.
(1) by March 1, except insurers organized under ch.
612, Stats., shall file by February 15 and the commissioner may prescribe a different date for individual insurers.
Ins 50.20 History
History: Cr.
Register, July, 1993, No. 451, eff. 8-1-93.
Ins 50.25
Ins 50.25
Insurers to file with the national association of insurance commissioners. Ins 50.25(1)(1)
This section applies to all licensed insurers, except:
Ins 50.25(1)(a)
(a) Those categories of insurers whose annual or quarterly statements the national association of insurance commissioners does not collect on the date filing is required, unless otherwise required by the commissioner;
Ins 50.25(1)(b)
(b) An insurer organized under ch.
612, Stats., unless otherwise ordered by the commissioner; and
Ins 50.25(1)(c)
(c) Insurers the commissioner exempts after finding an exemption is in the public interest.
