Section 2303.16 - Examination of Reinsurance Intermediaries(a) The Commissioner may examine the business and affairs of a reinsurance intermediary whenever the Commissioner deems necessary, or upon application as provided in this article. The examination shall include a determination of the intermediary's compliance with applicable provisions of the California Insurance Code and its ability to fulfill its obligations.(b) An application for an examination by the Commissioner of a licensed reinsurance intermediary may be made by a licensed insurer on behalf of the intermediary, or by the intermediary. The application shall include: 1. A copy of each financial statement provided by the intermediary to its client insurers within the three years prior to the filing of the application;2. A copy of each audit report with an "as of" date within the three years prior to the filing of the application, along with responses to the report findings, if any;3. If the intermediary is not independently audited, an un-audited balance sheet, income statement, and statement of cash flow, each with an "as of" date of not more than 120 days;4. A statement of funds held in fiduciary accounts;5. A description of any professional liability or fidelity insurance policies or bonds naming the intermediary as an insured or principal;6. If the application is requested by an insurer on behalf of an intermediary, a written consent by the intermediary to the examination; and7. Additional documents and records as may be requested by the Commissioner.(c) Each financial statement submitted to the Department by or on behalf of an intermediary shall be certified by an officer of the intermediary as being a true copy of the original, and shall contain a statement signed by the intermediary's chief financial officer under penalty of perjury attesting to the veracity of the financial statement.(d) Following completion of an examination, the Department shall provide the intermediary with a copy of the examination report, together with a notice that the intermediary has 15 days to make a written submission or rebuttal with respect to any matters contained within the examination report. Within 15 days after expiration of the time to respond, the Commissioner shall fully consider the examination report and any responsive submissions by the intermediary and either adopt the examination report as prepared by the examiner or with modifications or corrections, or reject the examination report and require re-opening of the examination for purposes of obtaining additional information.(e) In conducting the examination, the Commissioner shall observe those guidelines and procedures set forth in the Examiner's Handbook adopted by the NAIC as may be relevant to the examination of an intermediary, and may employ other guidelines or procedures which the Commissioner deems appropriate. All documents disclosed in connection with the examination may be used by the Commissioner and shall be given confidential treatment by the Commissioner to the same extent as provided in Code Section 735.5 for documents disclosed in connection with the examination of insurers.(f) An examination of an intermediary shall be at the expense of the intermediary, unless the examination is undertaken at the request of an insurer. The Commissioner shall not commence an examination requested by an insurer until receipt of a written commitment from the insurer, satisfactory to the Commissioner, that the insurer shall promptly pay all costs of the examination.(g) Requests for an examination of a reinsurance intermediary shall be made following the procedures set forth in Section 2303.21(j) of this article.(h) A licensed intermediary shall annually file with the Department a copy of the financial statement required by Code Sections 1781.6(c) or 1781.9(b), authenticated as required by subdivision (c) of this section.Cal. Code Regs. Tit. 10, § 2303.16
1. New section filed 10-24-2006; operative 11-23-2006 (Register 2006, No. 43).
2. Change without regulatory effect repealing former section 2303.16 and renumbering former section 2303.17 to new section 2303.16, including amendment of subsection (g) and NOTE, filed 3-25-2015 pursuant to section 100, title 1, California Code of Regulations (Register 2015, No. 13).
3. Change without regulatory effect amending subsections (a) and (e) filed 7-14-2021 pursuant to section 100, title 1, California Code of Regulations (Register 2021, No. 29). Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20. Note: Authority cited: Section 1781.12, Insurance Code. Reference: Section 1781.10, Insurance Code.
1. New section filed 10-24-2006; operative 11-23-2006 (Register 2006, No. 43).
2. Change without regulatory effect repealing former section 2303.16 and renumbering former section 2303.17 to new section 2303.16, including amendment of subsection (g) and Note, filed 3-25-2015 pursuant to section 100, title 1, California Code of Regulations (Register 2015, No. 13).
3. Change without regulatory effect amending subsections (a) and (e) filed 7-14-2021 pursuant to section 100, title 1, California Code of Regulations (Register 2021, No. 29). Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20.