18 Del. Admin. Code § 301-15.0

Current through Register Vol. 28, No. 5, November 1, 2024

Section 301-15.0 - Internal Audit Function Requirements

15.1 Exemption - An insurer is exempt from the requirements of this section if the insurer:

15.1.1 Has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, in an amount that is less than $500,000,000; and

15.1.2 Is a member of a group of insurers, the group has annual direct written and unaffiliated assumed premium including international direct an assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $1,000,000,000.

15.2 Function - The 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.

15.3 Independence - In order to ensure that internal auditors remain objective, an insurer's internal audit function must be organizationally independent. Specifically, the internal audit function shall not defer ultimate judgment on audit matters to others, and shall appoint an individual to head the internal audit function who shall have direct and unrestricted access to the board of directors. Organizational independence does not preclude dual-reporting relationships.

15.4 Reporting - 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 finding from completed audits and the appropriateness of corrective actions implemented by management as a result of audit findings.

15.5 Additional Requirements - If an insurer is a member of an insurance holding company system 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.

18 Del. Admin. Code § 301-15.0

21 DE Reg. 441 (11/1/2017) (Final)