Indiana § 27-1-3-36 - Partnerships and joint ventures; prior authorization

Full text of Indiana Indiana Code § 27-1-3-36 — Partnerships and joint ventures; prior authorization, with citation guidance and answers to common questions.

§ 27-1-3-36. Partnerships and joint ventures; prior authorization

Sec. 36. (a) As used in this section, "prior authorization" means a practice implemented by a health plan through which coverage of a health care service is dependent on the covered individual or health care provider obtaining approval from the health plan before the health care service is rendered. The term includes prospective or utilization review procedures conducted before a health care service is rendered.

(b) The department may enter into partnerships and joint ventures to encourage best practices in the appropriate and effective use of prior authorization in health care.

As added by P.L.215-2025, SEC.46.

IC 27-1-3.1Chapter 3.1. Examinations

27-1-3.1-1Commissioner 27-1-3.1-2Company 27-1-3.1-3Department 27-1-3.1-4Examiner 27-1-3.1-5Insurer 27-1-3.1-6Repealed 27-1-3.1-7Person 27-1-3.1-8Procedure 27-1-3.1-9Warrant; access to information; refusal; penalties; subpoenas; oaths; order to appear; evidence 27-1-3.1-10Reports 27-1-3.1-11Review of report; order 27-1-3.1-12Orders; findings and conclusions; appeal; hearing 27-1-3.1-13Hearing 27-1-3.1-14Confidentiality of report; public inspection; disclosures 27-1-3.1-15Confidential information; use in court proceedings 27-1-3.1-16Appointment of examiner; conflict of interest; support staff 27-1-3.1-17Liability of commissioner, authorized representative, or examiner; attorney's fees 27-1-3.1-18Financial analysis ratios; written requests; examination synopses; confidentiality

IC 27-1-3.1-1Commissioner Sec. 1. As used in this chapter, "commissioner" refers to the insurance commissioner appointed under IC 27-1-1-2.

As added by P.L.26-1991, SEC.5.

IC 27-1-3.1-2Company Sec. 2. As used in this chapter, "company" means any person engaging in or proposing or attempting to engage in any transaction or kind of insurance or surety business and any person or group of persons who may otherwise be subject to the administrative, regulatory, or taxing authority of the commissioner.

As added by P.L.26-1991, SEC.5.

IC 27-1-3.1-3Department Sec. 3. As used in this chapter, "department" refers to the department of insurance of Indiana.

As added by P.L.26-1991, SEC.5.

IC 27-1-3.1-4Examiner Sec. 4. As used in this chapter, "examiner" means any individual or firm authorized by the commissioner to conduct an examination under this chapter.

As added by P.L.26-1991, SEC.5.

IC 27-1-3.1-5Insurer Sec. 5. As used in this chapter, "insurer" has the meaning set forth in IC 27-1-2-3.

As added by P.L.26-1991, SEC.5.

IC 27-1-3.1-6RepealedAs added by P.L.26-1991, SEC.5. Repealed by P.L.124-2018, SEC.3.

IC 27-1-3.1-7Person Sec. 7. As used in this chapter, "person" means any individual, aggregation of individuals, trust, association, partnership, limited liability company, or corporation, or any affiliate of these entities.

As added by P.L.26-1991, SEC.5. Amended by P.L.8-1993, SEC.410.

IC 27-1-3.1-8Procedure Sec. 8. (a) The commissioner or any of the commissioner's examiners:

(1) may conduct an examination under this chapter of any company as often as the commissioner, in the commissioner's sole discretion, considers appropriate; and

(2) shall, at a minimum, conduct an examination of every insurer licensed in Indiana at least once every five (5) years.

(b) In scheduling and determining the nature, scope, and frequency of the examinations, the commissioner shall consider such matters as the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified public accountants, and other criteria as set forth in the Financial Condition Examiner's Handbook and the Market Regulation Handbook, whichever is applicable.

(c) For purposes of completing an examination of any company under this chapter, the commissioner may examine or investigate any person, or the business of any person, in so far as such examination or investigation is, in the sole discretion of the commissioner, necessary or material to the examination of the company.

(d) In lieu of an examination under this chapter of any foreign or alien insurer licensed in Indiana, the commissioner may accept an examination report on such company as prepared by the insurance department of the company's state of domicile or port-of-entry state until January 1, 1994. After January 1, 1994, those reports may only be accepted if:

(1) the insurance department that prepared the report was at the time of the examination accredited under the Financial Regulation Standards and Accreditation Program; or

(2) the examination is performed with the participation of one (1) or more examiners who are employed by an accredited State Insurance Department and who after a review of the examination work papers and report state under oath that the examination was performed in a manner consistent with the standards and procedures required by their insurance department.

As added by P.L.26-1991, SEC.5. Amended by P.L.1-1992, SEC.144; P.L.124-2018, SEC.4.

IC 27-1-3.1-9Warrant; access to information; refusal; penalties; subpoenas; oaths; order to appear; evidence Sec. 9. (a) Upon determining that an examination should be conducted, the commissioner or the commissioner's designee shall issue an examination warrant appointing one (1) or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall observe those guidelines and procedures set forth in the Financial Condition Examiner's Handbook and the Market Regulation Handbook. The commissioner may also employ such other guidelines or procedures as the commissioner considers appropriate. The commissioner is not required to issue an examination warrant for a data call.

(b) Every company or person from whom information is sought, and the officers, directors, and agents of the company or person, must provide to the examiners appointed under subsection (a) timely, convenient, and free access at all reasonable hours at its offices to all books, records, accounts, papers, documents, and any or all computer or other recordings relating to the property, assets, business, and affairs of the company being examined. The officers, directors, employees, and agents of the company or person must facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of any company, by its officers, directors, employees, or agents within the company's control, to submit to examination or to comply with any reasonable written request of the examiners, or the failure of any company to make a good faith effort to require compliance with such a request, is grounds for:

(1) suspension;

(2) refusal; or

(3) nonrenewal;

of any license or authority held by the company to engage in an insurance or other business subject to the commissioner's jurisdiction. The commissioner may proceed to suspend or revoke a license or authority upon the grounds set forth in this subsection under IC 27-1-3-10 or IC 27-1-3-19.

(c) The commissioner and the commissioner's examiners may issue subpoenas, administer oaths, and examine under oath any person as to any matter pertinent to an examination conducted under this chapter. Upon the failure or refusal of any person to obey a subpoena, the commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter any order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order is punishable as contempt of court.

(d) 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 cost of retaining these examiners shall be borne by the company that is the subject of the examination.

(e) This chapter does not limit the commissioner's authority to terminate or suspend any examination in order to pursue other legal or regulatory action pursuant to this title. Findings of fact and conclusions made pursuant to any examination shall be prima facie evidence in any legal or regulatory action.

As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.8; P.L.116-1994, SEC.12; P.L.111-2008, SEC.1; P.L.124-2018, SEC.5.

IC 27-1-3.1-10Reports Sec. 10. (a) All examination reports shall be comprised of only:

(1) facts:

(A) appearing upon the books, records, or other documents of the company; and

(B) ascertained from the agents or other persons examined, or as ascertained from the testimony of its officers or agents or other persons examined concerning the affairs of the company; and

(2) conclusions and recommendations that the examiners find reasonably warranted from those facts.

(b) No more than sixty (60) days after the completion of the examination, the examiner in charge shall file with the department a verified written report of examination under oath. Upon receipt of the verified report, the department shall transmit the report to the company examined, together with a notice that affords such company 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. The thirty (30) day period may be extended if the commissioner, in the commissioner's sole discretion, determines that an extension is appropriate or necessary.

As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.9; P.L.116-1994, SEC.13.

IC 27-1-3.1-11Review of report; order Sec. 11. (a) Within thirty (30) days after the end of the period allowed for the receipt of written submissions or rebuttals, the commissioner shall fully consider and review the report, together with any written submissions or rebuttals and any relevant portions of the examiner's workpapers, and enter an order:

(1) adopting the examination report as filed or with modification or corrections;

(2) rejecting the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation or information, and refiling the report under this chapter; or

(3) calling for an investigatory hearing with no less than twenty (20) days notice to the company for purposes of obtaining additional documentation, data, information and testimony.

(b) If the examination report reveals that the company is operating in violation of any law, regulation, or prior order of the commissioner, the commissioner may order the company to take any action the commissioner considers necessary and appropriate to cure that violation.

As added by P.L.26-1991, SEC.5.

IC 27-1-3.1-12Orders; findings and conclusions; appeal; hearing Sec. 12. (a) All orders entered under section 11(a) of this chapter shall be accompanied by findings and conclusions resulting from the commissioner's consideration and review of the examination report, relevant examiner workpapers, and any written submissions or rebuttals.

(b) Any order entered under section 11(a) of this chapter shall be considered a final administrative decision that may be appealed under IC 4-21.5-5, and shall be served upon the company by certified mail, together with a copy of the adopted examination report. Within thirty (30) days of the issuance of the adopted report, the company shall file an affidavit stating that each director has received a copy of the adopted report and related orders.

(c) Any hearing conducted under section 11(a)(3) of this chapter by the commissioner or an authorized representative shall be conducted as a nonadversarial confidential investigatory proceeding as necessary for the resolution of any inconsistencies, discrepancies, or disputed issues apparent upon the face of the filed examination report or raised by or as a result of the commissioner's review of relevant workpapers or by the written submission or rebuttal of the company. Within twenty (20) days of the conclusion of the hearing, the commissioner shall enter an order under section 11 of this chapter.

As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.10; P.L.116-1994, SEC.14.

IC 27-1-3.1-13Hearing Sec. 13. (a) The commissioner may not appoint an examiner as authorized representative to conduct a hearing. The hearing shall proceed expeditiously with discovery by the company limited to the examiner's workpapers which tend to substantiate any assertions set forth in any written submission or rebuttal. The commissioner or the commissioner's representative may issue subpoenas for the attendance of any witnesses or the production of any documents deemed relevant to the investigation whether under the control of the department, the company, or other persons. The documents produced shall be included in the record and testimony taken by the commissioner or the commissioner's representative shall be under oath and preserved for the record.

(b) This section does not require the department to disclose any information or records which would indicate or show the existence or content of any investigation or activity of a criminal justice agency.

(c) The hearing shall proceed with the commissioner or the commissioner's representative posing questions to the persons subpoenaed. Thereafter, the company and the department may present testimony relevant to the investigation. The commissioner, the department, and the company may cross-examine witnesses. The company and the department shall be permitted to make closing statements and may be represented by counsel of their choice.

As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.11; P.L.116-1994, SEC.15.

IC 27-1-3.1-14Confidentiality of report; public inspection; disclosures Sec. 14. (a) Upon the adoption of an examination report under section 11(a)(1) of this chapter, the commissioner shall continue to hold the content of the examination report as confidential information for a period of thirty (30) days except to the extent provided in section 10(b) of this chapter. Thereafter, the report shall be open for public inspection.

(b) This chapter does not prevent or prohibit the commissioner from disclosing the content of an examination report, preliminary examination report, or results, or any matter relating thereto, to the National Association of Insurance Commissioners, the insurance department of any other state or country, or to law enforcement officials of Indiana or any other state or agency of the federal government at any time, if the agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this chapter.

(c) If the commissioner determines that regulatory action is appropriate as a result of any examination, the commissioner may initiate any proceedings or actions authorized by law.

(d) This chapter does not limit the commissioner's authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or company 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 that the commissioner may, in the commissioner's sole discretion, consider appropriate.

As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.12; P.L.116-1994, SEC.16; P.L.11-2011, SEC.4.

IC 27-1-3.1-15Confidential information; use in court proceedings Sec. 15. (a) All 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 under this chapter (including trade secrets and information obtained from a federal agency, a foreign country, or the National Association of Insurance Commissioners, or under another state law):

(1) are confidential and privileged;

(2) are not subject to public inspection or copying under IC 5-14-3-3;

(3) are not subject to subpoena;

(4) are not subject to discovery or admissible in evidence in a private civil action; and

(5) may not be made public by the commissioner or any other person, except to the extent provided in section 14 of this chapter.

(b) The commissioner may use the materials and information described in subsection (a) in relation to a regulatory or legal action brought as part of the commissioner's duties. Access to the materials and information described in subsection (a) may also be granted to the National Association of Insurance Commissioners. A party receiving materials or information under this subsection must agree in writing prior to receiving the materials or information to provide to it the same confidential treatment as required by this section, unless the prior written consent of the company to which it pertains has been obtained.

(c) A court order requiring a release or production of materials or information described in subsection (a) that is not authorized under this section is null and void unless the commissioner has been served, in accordance with the Indiana Rules of Trial Procedure, with a pleading or motion requesting the court to order release or production of the materials or information.

As added by P.L.26-1991, SEC.5. Amended by P.L.11-2011, SEC.5; P.L.276-2013, SEC.1.

IC 27-1-3.1-16Appointment of examiner; conflict of interest; support staff Sec. 16. (a) No examiner may be appointed by the commissioner if that 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. However, this section does not automatically preclude an examiner from being:

(1) a policyholder or claimant under an insurance policy;

(2) a grantor of a mortgage or similar instrument on the examiner's residence to a regulated entity if done under customary terms and in the ordinary course of business;

(3) an investment owner in shares of regulated diversified investment companies; or

(4) a settlor or beneficiary of a "blind trust" into which any otherwise impermissible holdings have been placed.

(b) Notwithstanding the requirements of this section, the commissioner may periodically retain on an individual basis qualified actuaries, certified public accountants, and other similar individuals who are independently practicing their professions, even though those persons may from time to time be similarly employed or retained by persons subject to examination under this chapter.

As added by P.L.26-1991, SEC.5.

IC 27-1-3.1-17Liability of commissioner, authorized representative, or examiner; attorney's fees Sec. 17. (a) 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.

(b) No cause of action may arise, and no 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 that act of communication or delivery is performed in good faith and without fraudulent intent or the intent to deceive.

(c) This section does not abrogate or modify in any way any common law or statutory privilege or immunity enjoyed by any person identified in subsection (a).

(d) A person identified in subsection (a) is entitled to an award of attorney's fees and costs if that person is the prevailing party in a civil cause of action for libel, slander or any other relevant tort arising out of that person's activities in carrying out the provisions of this chapter and if the court finds the action was frivolous, unreasonable, groundless, or litigated in bad faith.

As added by P.L.26-1991, SEC.5.

IC 27-1-3.1-18Financial analysis ratios; written requests; examination synopses; confidentiality Sec. 18. (a) The commissioner shall provide any financial analysis ratios computed by the Insurance Regulatory Information System within five (5) business days after receiving a written request for those ratios.

(b) All examination synopses concerning insurance companies that are submitted to the department by the Insurance Regulatory Information System are confidential and may not be disclosed by the department.

As added by P.L.26-1991, SEC.5. Amended by P.L.124-2018, SEC.6.

IC 27-1-3.5Chapter 3.5. Annual Audited Financial Reports

27-1-3.5-0.5"Audit committee" 27-1-3.5-1"Commissioner" 27-1-3.5-2"Domestic insurer" 27-1-3.5-2.6"Group of insurers" 27-1-3.5-3"Independent auditor" 27-1-3.5-3.1"Insurance holding company system" 27-1-3.5-3.2"Internal audit function" 27-1-3.5-3.3"Internal control over financial reporting" 27-1-3.5-3.4"Section 404" 27-1-3.5-3.5Repealed 27-1-3.5-3.6"Section 404 report" 27-1-3.5-3.7"SOX compliant entity" 27-1-3.5-4"Work papers" 27-1-3.5-5Application of chapter; exemptions 27-1-3.5-6Annual audit; filing; time; extension 27-1-3.5-6.2Filing of financial statements by domestic stock insurer 27-1-3.5-6.5Filing annual audited financial reports by domestic insurer 27-1-3.5-7Contents of report 27-1-3.5-8Independent auditor 27-1-3.5-9Qualifications of independent auditor 27-1-3.5-10Consolidated returns 27-1-3.5-11Report from independent auditor of financial condition irregularities; subsequent facts 27-1-3.5-12Report of unremediated material weaknesses in internal control over financial reporting 27-1-3.5-12.1Audit committee; members; duties; waiver 27-1-3.5-12.3Internal audit function 27-1-3.5-12.5Management's report of internal control over financial reporting 27-1-3.5-13Independent audit work papers and communications; review by department examiners 27-1-3.5-14Exemption application; hearing 27-1-3.5-15Repealed 27-1-3.5-16Penalty for noncompliance 27-1-3.5-17Effect of chapter on examinations under IC 27-1-3.1 27-1-3.5-18British or Canadian insurers

IC 27-1-3.5-0.5"Audit committee" Sec. 0.5. (a) As used in this chapter, "audit committee" means a body established by the board of directors of a domestic insurer or group of insurers for the purpose of overseeing:

(1) the accounting and financial reporting processes;

(2) external audits of financial statements; and

(3) the internal audit function;

of a domestic insurer or group of insurers.

(b) For purposes of this chapter, the audit committee of an insurance holding company system is considered to be the audit committee of a group of insurers that are members of the insurance holding company system, at the election of the insurance holding company system.

(c) For purposes of this chapter, if a board of directors does not establish an audit committee, the entire board of directors constitutes the audit committee.

As added by P.L.146-2015, SEC.3.

IC 27-1-3.5-1"Commissioner" Sec. 1. As used in this chapter, "commissioner" refers to the insurance commissioner appointed under IC 27-1-1-2.

As added by P.L.244-1989, SEC.2.

IC 27-1-3.5-2"Domestic insurer" Sec. 2. (a) As used in this chapter, "domestic insurer" means an insurer organized under the laws of Indiana.

(b) If a domestic insurer is a member of an "insurance holding company system" (as defined in IC 27-1-23-1), the term "domestic insurer" also includes:

(1) any person in immediate control of the domestic insurer; and

(2) any affiliate:

(A) in which the domestic insurer has invested; or

(B) that is indebted to the domestic insurer.

As added by P.L.244-1989, SEC.2.

IC 27-1-3.5-2.6"Group of insurers" Sec. 2.6. As used in this chapter, "group of insurers" means two (2) or more insurers that are part of an insurance holding company system.

As added by P.L.146-2015, SEC.4.

IC 27-1-3.5-3"Independent auditor" Sec. 3. As used in this chapter, "independent auditor" means a certified public accountant or a certified public accounting firm that conducts an annual audit of a domestic insurer as required by this chapter.

As added by P.L.244-1989, SEC.2.

IC 27-1-3.5-3.1"Insurance holding company system" Sec. 3.1. As used in this chapter, "insurance holding company system" has the meaning set forth in IC 27-1-23-1.

As added by P.L.146-2015, SEC.5.

IC 27-1-3.5-3.2"Internal audit function" Sec. 3.2. As used in this chapter, "internal audit function" means a process that provides independent, objective, and reasonable assurance that is designed to:

(1) add value to and improve a domestic insurer's or group of insurers' operations; and

(2) accomplish the domestic insurer's or group of insurers' objectives;

through introduction of a systematic, disciplined approach to the evaluation and improvement of the effectiveness of risk management, control, and governance processes.

As added by P.L.146-2015, SEC.6.

IC 27-1-3.5-3.3"Internal control over financial reporting" Sec. 3.3. As used in this chapter, "internal control over financial reporting" means a process effected by a domestic insurer's board of directors, management, or other personnel that is designed to provide reasonable assurance regarding the reliability of financial statements of the domestic insurer, including the following:

(1) The items specified in section 7(c)(2) through section 7(c)(6) and section 7(d) of this chapter.

(2) Policies and procedures that do the following:

(A) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and deposit of assets.

(B) Provide reasonable assurance that:

(i) transactions are recorded as necessary to permit preparation of the financial statements; and

(ii) receipts and expenditures are made only in accordance with the authorization of management and the board of directors.

(C) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that may have a material effect on the financial statements.

As added by P.L.146-2015, SEC.7.

IC 27-1-3.5-3.4"Section 404" Sec. 3.4. As used in this chapter, "Section 404" refers to Section 404 of the federal Sarbanes-Oxley Act of 2002 (Public Law 107-204).

As added by P.L.146-2015, SEC.8.

IC 27-1-3.5-3.5RepealedAs added by P.L.251-1995, SEC.3. Repealed by P.L.146-2015, SEC.9.

IC 27-1-3.5-3.6"Section 404 report" Sec. 3.6. As used in this chapter, "Section 404 report" means a domestic insurer's or group of insurers' management's report on internal control over financial reporting (as defined by the federal Securities and Exchange Commission) and the related attestation report of an independent auditor.

As added by P.L.146-2015, SEC.10.

IC 27-1-3.5-3.7"SOX compliant entity" Sec. 3.7. As used in this chapter, "SOX compliant entity" means an entity that is required to be compliant, or is voluntarily compliant, with all of the following provisions of the federal Sarbanes-Oxley Act of 2002 (Public Law 107-204):

(1) The preapproval requirements of Section 201.

(2) The audit committee independence requirements of Section 301.

(3) The internal control over financial reporting requirements of Section 404.

As added by P.L.146-2015, SEC.11.

IC 27-1-3.5-4"Work papers" Sec. 4. (a) As used in this chapter, "work papers" means the records kept by the independent auditor of the procedures followed, the tests performed, the information obtained, and the conclusions reached by the independent auditor's audit of the financial statements of a domestic insurer.

(b) The term includes any audit planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents, and schedules or commentaries that:

(1) are prepared or obtained by the independent auditor in the course of any audit of the financial statements of a domestic insurer; and

(2) support the independent auditor's opinion on the domestic insurer's financial statements.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.4.

IC 27-1-3.5-5Application of chapter; exemptions Sec. 5. (a) Except as provided in subsections (b) and (c), this chapter applies to all domestic insurers.

(b) A domestic insurer that has:

(1) direct written premiums of less than one million dollars ($1,000,000) in any calendar year;

(2) less than one thousand (1,000) policyholders or certificate holders of directly written policies nationwide at the end of a calendar year; and

(3) assumed premiums under contracts or treaties of reinsurance of less than one million dollars ($1,000,000);

is exempt from this chapter with respect to that year. However, the commissioner may require compliance with this chapter upon a finding that compliance with this chapter is necessary for the commissioner to carry out a statutory responsibility.

(c) A foreign or an alien insurer that files an audited financial report in another state or country pursuant to that state's or country's requirement for audited financial reports is exempt, with respect to the year of that audited financial report, from the requirement to file an audited financial report with the commissioner under this chapter, if:

(1) the commissioner has found the other state's or country's requirement for audited financial reports to be substantially similar to the requirements of this chapter;

(2) copies of the audited financial report, a communication of internal control related matters noted in an audit, and the accountant's letter of qualifications filed with the other state or country are filed with the commissioner in accordance with the filing requirements set forth in sections 6, 8, and 12 of this chapter; and

(3) a copy of a notification of an adverse financial condition report that is filed with the other state is filed with the commissioner within the time specified in section 11 of this chapter.

This subsection does not prevent the commissioner from ordering, conducting, or performing examinations of foreign or alien insurers under the rules, regulations, and practices of the department.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.5; P.L.146-2015, SEC.12.

IC 27-1-3.5-6Annual audit; filing; time; extension Sec. 6. (a) A domestic insurer shall have an audit by an independent auditor every year and shall file an audited financial report with the commissioner every year before June 1 immediately following the December 31 that ends the year reported on in the financial report. The commissioner may require a domestic insurer to file an audited financial report earlier than June 1 if the commissioner gives the domestic insurer ninety (90) days advance notice of the earlier filing date.

(b) An extension of the June 1 filing date may be granted by the commissioner for thirty (30) days upon a showing by the insurer and its independent auditor of the reasons for requesting the extension and a determination by the commissioner that there is good cause for an extension. The request for an extension must be submitted in writing at least ten (10) days before the due date, and must include sufficient detail to permit the commissioner to make an informed decision with respect to the requested extension.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.6.

IC 27-1-3.5-6.2Filing of financial statements by domestic stock insurer Sec. 6.2. (a) As used in this section, "domestic stock insurer" means a person that:

(1) provides coverage under a health plan (as defined in IC 27-1-48-4);

(2) is organized under the insurance laws of this state; and

(3) is a publicly traded stock corporation.

(b) A domestic stock insurer shall file the following with the department:

(1) Not later than March 1 of each calendar year, the domestic stock insurer's annual financial statement from the previous calendar year.

(2) Not later than May 15 of each calendar year, the domestic stock insurer's first quarter financial statement from the current calendar year.

(3) Not later than August 15 of each calendar year, the domestic stock insurer's second quarter financial statement from the current calendar year.

(4) Not later than November 15 of each calendar year, the domestic stock insurer's third quarter financial statement from the current calendar year.

(c) The department must post the information filed under subsection (b) on the department's website on a single and easily accessible web page not later than ten (10) business days after receiving the information.

As added by P.L.190-2023, SEC.12.

IC 27-1-3.5-6.5Filing annual audited financial reports by domestic insurer Sec. 6.5. Except as provided in this chapter, a domestic insurer shall file the annual audited financial reports required under this chapter for the calendar year ending December 31, 1989, and for every calendar year after 1989.

As added by P.L.220-2011, SEC.420.

IC 27-1-3.5-7Contents of report Sec. 7. (a) The annual audited financial report filed by a domestic insurer under this chapter shall report:

(1) the financial position of the domestic insurer as of the end of the most recently ended calendar year; and

(2) the results of the domestic insurer's operations, cash flow, and changes in capital and surplus for that year;

in conformity with statutory accounting practices prescribed, or otherwise permitted, by the department of insurance.

(b) The financial statements included in the annual audited financial report filed by a domestic insurer under this chapter shall be examined by an independent auditor. The independent auditor shall conduct its examination of the domestic insurer's financial statements in accordance with generally accepted auditing standards, and shall consider such other procedures illustrated in the Financial Condition Examiner's Handbook as the independent auditor considers necessary.

(1) The report of the insurer's independent auditor.

(2) A balance sheet reporting admitted assets, liabilities, capital, and surplus.

(3) A statement of operations.

(4) A statement of cash flow.

(5) A statement of changes in capital and surplus.

(6) Notes to financial statements. The notes must be those required by the applicable Annual Statement Instructions and any other notes required by statutory accounting practices, which must include a reconciliation of differences, if any, between the financial statements included in the audited financial report and the annual statement filed by the insurer under IC 27-1-20-21, including a written description of the nature of these differences.

(d) The financial statements included in a domestic insurer's audited financial report shall be prepared in the same form, and using language and groupings substantially the same, as the relevant sections of the annual statement of the insurer filed with the commissioner under IC 27-1-20-21.

(e) The financial statements included in a domestic insurer's audited financial report must be comparative, presenting the amounts as of December 31 of the year of the report and comparative amounts as of the immediately preceding December 31. However, in the first year in which an insurer is required to file an audited financial report under this chapter, the comparative data may be omitted.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.7; P.L.146-2015, SEC.13; P.L.124-2018, SEC.7.

IC 27-1-3.5-8Independent auditor Sec. 8. (a) A domestic insurer that is required by this chapter to file annual audited financial reports shall, not more than sixty (60) days after becoming subject to the requirement, register in writing with the commissioner the name and address of the independent auditor retained by the insurer to conduct the annual audits required by this chapter. The domestic insurer shall continuously ensure that the information provided to the commissioner under this section is accurate, and shall inform the commissioner in writing of any change in the identity or address of its independent auditor.

(b) A domestic insurer shall obtain a letter from its independent auditor that:

(1) states that the independent auditor is aware of the provisions of IC 27 and the administrative rules of the department of insurance that relate to auditing, accounting, and financial matters; and

(2) affirms that the independent auditor will express its opinion on the financial statements of the domestic insurer in the terms of their conformity to the statutory accounting practices prescribed or otherwise permitted by the department, specifying such exceptions as the independent auditor may believe appropriate.

The domestic insurer shall file a copy of this letter with the commissioner.

(c) If an independent auditor that audited the most recent financial report filed by the insurer with the commissioner under this chapter subsequently ceases to be the independent auditor for the insurer, the insurer shall:

(1) not more than five (5) business days after the cessation of the independent auditor's services, notify the commissioner in writing of the identity and address of the new independent auditor;

(2) not more than ten (10) business days after the notification given in subdivision (1), furnish the commissioner with a separate letter that states whether in the twenty-four (24) months preceding the engagement of the new independent auditor there were any disagreements between the insurer and its former independent auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of the former independent auditor, would have caused the former independent auditor to make reference to the subject matter of the disagreement in the former independent auditor's statement of its opinion on the insurer's financial report, and, if there was such a disagreement, provides a description of the disagreement. Disagreements required to be reported under this subdivision include those at the decision making level that were resolved:

(A) to the former accountant's satisfaction; and

(B) not to the former accountant's satisfaction; and

(3) comply with subsection (d).

For the purposes of this subsection, "decision making level" refers to the personnel of the insurer who are responsible for the presentation of the insurer's financial statements and the personnel of the independent auditor who are responsible for rendering the opinion of the auditor on the insurer's financial report.

(d) A domestic insurer subject to the provisions of subsection (c) shall:

(1) provide its former independent auditor with a copy of the letter furnished to the commissioner under subsection (c)(2); and

(2) request in writing its former independent auditor to furnish a letter addressed to the insurer stating whether the former independent auditor agrees with the statements contained in the letter furnished to the commissioner under subsection (c)(2) and, if not, stating the reasons for the former independent auditor's disagreement.

The domestic insurer shall furnish the commissioner with a copy of any responsive letter it receives from its former independent auditor within five (5) business days after the insurer receives the letter.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.8.

IC 27-1-3.5-9Qualifications of independent auditor Sec. 9. (a) For the purposes of this chapter, the commissioner may not recognize as an independent auditor any individual or firm that is not:

(1) a certified public accountant (if an individual) or made up of certified public accountants (if a firm); or

(2) in good standing with:

(A) the American Institute of Certified Public Accountants; and

(B) all of the authorities that license certified public accountants and certified public accounting firms in the states in which the individual or firm is licensed to practice.

(b) A partner or other individual responsible for rendering a report may not act in that capacity for more than five (5) consecutive years. An individual who has been responsible for rendering a report for five (5) years is disqualified from acting in that or a similar capacity for the same company or its insurance subsidiaries or affiliates for five (5) years. A domestic insurer may apply to the commissioner and request to be exempted from the five (5) year rotation requirement on the basis of unusual circumstances. The commissioner may consider the following factors in determining if relief should be granted:

(1) The number of partners, expertise of the partners, or number of insurance clients in the currently registered firm.

(2) The premium volume of the domestic insurer.

(3) The number of jurisdictions in which the domestic insurer transacts business.

(c) The commissioner may not recognize as an independent auditor or accept an annual audited financial report prepared in whole or part by a person who:

(1) has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act under federal law (18 U.S.C. 1961 through 1968) or state law (IC 35-45-6) or any dishonest conduct or practices under federal or state law;

(2) has been found to have violated the insurance law of this state with respect to any previous reports submitted under this chapter; or

(3) has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under this chapter.

(d) The commissioner shall not recognize as a qualified independent certified public accountant, or accept an annual audited financial report prepared in whole or in part by an accountant that provides to a domestic insurer, contemporaneously with the audit, any of the following nonaudit services:

(1) Bookkeeping or other services related to the accounting records or financial statements of the domestic insurer.

(2) Financial information systems design or implementation.

(3) Appraisal or valuation services, fairness opinions, or contribution-in-kind reports.

(4) Actuarially oriented advisory services involving the determination of amounts recorded in the financial statements. This does not include the following:

(A) The accountant assisting the domestic insurer to understand the methods, assumptions, and inputs used in the determination of amounts recorded in the financial statement if it is reasonable to conclude that the assistance provided is not subject to audit procedures during an audit of the domestic insurer's financial statements.

(B) An accountant's actuary issuing an actuarial opinion or certification concerning the domestic insurer's reserves if the following apply:

(i) The accountant and the accountant's actuary have not performed any management functions or made any management decisions.

(ii) The domestic insurer has competent personnel, or engages a third party actuary, to estimate the reserves for which management takes responsibility.

(iii) The accountant's actuary tests the reasonableness of the reserves after the domestic insurer's management has determined the amount of the reserves.

(5) Internal audit outsourcing services.

(6) Management or human resources functions.

(7) Broker, dealer, investment adviser, or investment banking services.

(8) Legal services or expert services unrelated to the audit.

(9) Any other services that the commissioner determines to be impermissible in rules adopted under IC 4-22-2.

(e) In making a determination under subsection (d), the commissioner shall generally consider whether the accountant's independence has been impaired by any of the following, in which case the commissioner shall not recognize the accountant or accept the annual audited financial report from the accountant:

(1) Functioning in the role of management for the domestic insurer.

(2) Auditing the accountant's own work.

(3) Serving as an advocate for the domestic insurer.

(f) The commissioner may conduct a hearing under IC 4-21.5 to determine whether an independent auditor engaged by a domestic insurer is sufficiently independent of that domestic insurer to be capable of exercising independent judgment and expressing an objective opinion on the financial statements in the annual financial report filed by the insurer under this chapter. If the commissioner determines that the auditor is not sufficiently independent of the insurer, the commissioner shall require the insurer to replace the auditor with another that is sufficiently independent of the insurer.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.9; P.L.11-2011, SEC.6; P.L.146-2015, SEC.14.

IC 27-1-3.5-10Consolidated returns Sec. 10. A domestic insurer may apply in writing to the commissioner for approval to satisfy the requirements of this chapter by filing audited consolidated or combined financial statements instead of separate annual audited financial statements if the insurer is part of a group of insurance companies that utilizes a pooling or one hundred percent (100%) reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer cedes all of the insurer's direct and assumed business to the pool. If a domestic insurer whose application is approved elects to file a consolidated return, the insurer shall file, with its financial statements, a columnar consolidating or combining schedule, which must meet the following requirements:

(1) Amounts shown on the consolidated or combined audited financial report shall be shown on the schedule.

(2) Amounts for each insurer subject to this section shall be stated separately.

(3) Noninsurance operations shall be shown on the schedule on an individual basis.

(4) Explanations of consolidating and eliminating entries shall be included.

(5) A reconciliation shall be included of any differences between the amounts shown in the individual insurer columns of the schedule and comparable amounts shown on the annual statements of the insurers.

As added by P.L.244-1989, SEC.2. Amended by P.L.130-1994, SEC.13; P.L.116-1994, SEC.17.

IC 27-1-3.5-11Report from independent auditor of financial condition irregularities; subsequent facts Sec. 11. (a) A domestic insurer required to file annual audited financial reports under this chapter shall require its independent auditor to report in writing to the board of directors or the board of director's audit committee, not more than five (5) business days after making a determination, the independent auditor's determination that:

(1) the domestic insurer has materially misstated to the commissioner the financial condition of the insurer as of the date of the balance sheet being examined by the independent auditor; or

(2) the domestic insurer does not meet the minimum capital and surplus requirements of Indiana as of the date of the balance sheet being examined by the independent auditor.

The domestic insurer who has received a report under this section shall forward a copy of the report to the commissioner within five (5) business days after receipt of the report and shall provide the independent accountant making the report with evidence of the report being furnished to the commissioner. An independent auditor who does not receive the evidence that the report was filed with the commissioner within the required five (5) business days shall furnish the commissioner a copy of the report within the next five (5) business days. An independent auditor may not be liable to any person for a statement made in connection with this subsection, if the statement is made in good faith compliance with this subsection.

(b) If the independent auditor of a domestic insurer, after the filing of the insurer's audited financial report under this chapter, becomes aware of facts that, if the independent auditor had been aware of the facts when writing its report, might have affected the independent auditor's report that was included in the insurer's audited financial report, the independent auditor shall take such action as is prescribed in the Professional Standards of the American Institute of Certified Public Accountants.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.10.

IC 27-1-3.5-12Report of unremediated material weaknesses in internal control over financial reporting Sec. 12. (a) A domestic insurer required by this chapter to file an annual audited financial report with the commissioner shall also furnish the commissioner with a written communication describing any unremediated material weaknesses (as defined in the Accounting Practices and Procedures Manual) in the domestic insurer's internal control over financial reporting as of the December 31 immediately preceding the audit (coinciding with the domestic insurer's annual audited financial report), noted during the audit. If no unremediated material weaknesses are noted during the audit, the communication must reflect that fact.

(b) The written communication required under subsection (a) must be prepared not later than sixty (60) days after the filing of the annual audited financial report.

(c) If a description of remedial actions taken or proposed to correct unremediated material weaknesses described under subsection (a) is not provided by the independent auditor, the domestic insurer shall provide a description of the remedial actions.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.11; P.L.146-2015, SEC.15; P.L.124-2018, SEC.8.

IC 27-1-3.5-12.1Audit committee; members; duties; waiver Sec. 12.1. (a) As used in this section, "independent", with respect to a member of an audit committee, means that the member, other than in the member's capacity as a member of the audit committee, the board of directors, or another board committee:

(1) does not accept a consulting fee, an advisory fee, or another compensatory fee from the domestic insurer or group of insurers; and

(2) is not an affiliate of the domestic insurer or group of insurers.

(b) This section does not apply to any of the following:

(1) A foreign insurer or an alien insurer that possesses a certificate of authority.

(2) A domestic insurer that is a SOX compliant entity.

(3) A wholly-owned subsidiary of a SOX compliant entity.

(1) appointment;

(2) compensation; and

(3) oversight of the work;

of the domestic insurer's or group of insurers' accountant, including resolution of disagreements between management and the accountant concerning financial reporting, for the purpose of preparing or issuing an annual audited financial report or related work under this chapter. Each accountant reports directly to the audit committee.

(d) The audit committee of a domestic insurer or group of insurers is responsible for:

(1) oversight of the domestic insurer's or group of insurers' internal audit function; and

(2) granting the person that performs the internal audit function suitable authority and resources to fulfill the person's responsibilities if required by section 12.3 of this chapter.

(e) The following apply to the membership of an audit committee:

(1) Each member shall be:

(A) a member of the board of directors of the domestic insurer; or

(B) if the audit committee of the entity that controls a group of insurers serves as the audit committee of the domestic insurer or group of insurers, a member of the audit committee of the entity that controls the group of insurers.

(2) The percentage of independent members must meet the following minimum requirements:

(A) If the domestic insurer had direct written and assumed premiums during the immediately preceding calendar year of less than three hundred million dollars ($300,000,000), no minimum requirement applies.

(B) If the domestic insurer had direct written and assumed premiums during the immediately preceding calendar year of at least three hundred million dollars ($300,000,000) and less than five hundred million dollars ($500,000,000), at least fifty percent (50%) of the members must be independent members.

(C) If the domestic insurer had direct written and assumed premiums during the immediately preceding calendar year of at least five hundred million dollars ($500,000,000), at least seventy-five percent (75%) of the members must be independent members.

(f) If:

(1) state or federal law requires that a board of directors of a domestic insurer or group of insurers include otherwise nonindependent members; and

(2) an otherwise nonindependent member is not an officer or employee of the domestic insurer, group of insurers, or an affiliate of the domestic insurer or group of insurers;

the nonindependent member may serve as a member of an audit committee and be considered to be independent for audit committee purposes.

(g) If:

(1) a member of an audit committee of a domestic insurer ceases to be independent for reasons beyond the member's reasonable control; and

(2) the domestic insurer notifies the department of the cessation of independence;

the member may continue to serve as an audit committee member until the next annual meeting of the domestic insurer or one (1) year after the date on which the member's independence ceased, whichever occurs first.

(h) The ultimate controlling person of a domestic insurer may designate the audit committee of the domestic insurer by providing written notice to each commissioner responsible for regulation of each affected insurer. The written notice must:

(1) be timely provided before the issuance of the annual audited financial report; and

(2) include a description of the basis for the designation.

(i) A designation:

(1) under subsection (h) may be changed with written notice from the domestic insurer to the commissioner, including a description of the basis for the designation; and

(2) under subsection (h) or this subsection remains in effect unless rescinded or changed.

(j) A domestic insurer's audit committee shall require the accountant that performs an audit required by this chapter to report to the audit committee in accordance with the requirements of AICPA Statements on Auditing Standards (SAS) 61, Communication with Audit Committees, including the following:

(1) All significant accounting policies and material permitted practices.

(2) All:

(A) material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the domestic insurer; and

(B) ramifications of the use of the alternative disclosures and treatments.

(3) The treatment described in subdivision (2) that is preferred by the accountant.

(4) Any other material written communication between the accountant and the management of the domestic insurer, including any management letter or schedule of unadjusted differences.

(k) If:

(1) a domestic insurer is a member of an insurance holding company system; and

(2) any substantial differences among insurers in the insurance holding company system are identified to the audit committee;

the reports required by subsection (j) may be provided to the audit committee on an aggregate basis for insurers in the holding company system.

(l) If a domestic insurer has direct written and assumed premiums (excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than five hundred million dollars ($500,000,000), the domestic insurer may apply to the commissioner for a waiver from the audit committee requirements of this section based on hardship.

(m) A domestic insurer that receives a waiver under subsection (l) shall file the waiver, with the domestic insurer's annual statement filing, with the:

(1) commissioners of insurance in the states in which the domestic insurer is licensed or doing insurance business; and

(2) NAIC.

If another state has access to electronic filing with the NAIC, the domestic insurer shall file the waiver with the other state electronically in accordance with NAIC electronic filing specifications.

As added by P.L.146-2015, SEC.16. Amended by P.L.124-2018, SEC.9.

IC 27-1-3.5-12.3Internal audit function Sec. 12.3. (a) This section does not apply to a domestic insurer that meets the following requirements:

(1) The domestic insurer has annual direct written and unaffiliated assumed premiums (including international direct and assumed premiums and excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than five hundred million dollars ($500,000,000).

(2) If the domestic insurer is a member of a group of insurers, the group has annual direct written and unaffiliated assumed premiums (including international direct and assumed premiums and excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than one billion dollars ($1,000,000,000).

A domestic insurer or group of insurers described in this subsection shall comply with the requirements of this section not later than one (1) year after the year in which the domestic insurer's or group's annual direct written and unaffiliated assumed premiums described in subdivisions (1) and (2) exceed the applicable maximum amount specified in subdivision (1) or (2).

(b) A domestic insurer shall establish an internal audit function to:

(1) provide independent, objective, and reasonable assurance to the domestic insurer's audit committee and management concerning the domestic insurer's governance, risk management, and internal controls;

(2) perform general and specific audits, reviews, and tests; and

(3) use other techniques considered necessary to protect assets, evaluate control effectiveness and efficiency, and evaluate compliance with policies and regulations.

(1) Ultimate judgment concerning audit matters must be made by the department responsible for the internal audit function.

(2) The department responsible for the internal audit function shall appoint an individual:

(A) to be responsible for the internal audit function; and

(B) to have direct and unrestricted access to the board of directors of the domestic insurer.

The internal audit function's organizational independence does not preclude dual reporting relationships.

(d) The director of the internal audit function shall report to the audit committee of a domestic insurer on a regular basis, at least annually, concerning the following:

(1) The internal audit function's periodic audit plan.

(2) Factors that may adversely affect the internal audit function's independence or effectiveness.

(3) Material findings from completed audits.

(4) The appropriateness of corrective actions implemented by management as a result of audit findings.

(e) If a domestic insurer is a member of an insurance holding company system or a member of a group of insurers, the domestic insurer may satisfy the internal audit function requirements of this section at the ultimate controlling person level, an intermediate holding company level, or an individual legal entity level.

As added by P.L.146-2015, SEC.17. Amended by P.L.72-2016, SEC.7.

IC 27-1-3.5-12.5Management's report of internal control over financial reporting Sec. 12.5. (a) A domestic insurer that is required to file an annual audited financial report under this chapter that has annual direct written and assumed premiums (excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of at least five hundred million dollars ($500,000,000) shall prepare a report of the domestic insurer's or group of insurers' management's internal control over financial reporting as of the immediately preceding December 31. The report shall be filed with the commissioner along with the communication of internal control related matters noted in an audit.

(b) The commissioner may require a domestic insurer that is:

(1) not described in subsection (a); and

(2) in a RBC level event described in IC 27-1-36 or considered by the commissioner to be in hazardous financial condition (as defined in rules adopted under IC 27-1-3-7);

to file a report of management's internal control over financial reporting.

(1) a domestic insurer or group of insurers is:

(A) directly subject to Section 404;

(B) part of an insurance holding company system whose parent is directly subject to Section 404;

(D) part of an insurance holding company system whose parent is not directly subject to Section 404, but is a SOX compliant entity; and

(2) the domestic insurer's or group of insurers' internal controls over financial reporting that have a material impact on the preparation of the domestic insurer's or group of insurers' annual audited financial statements are included in the Section 404 report;

the domestic insurer or group of insurers may satisfy the requirement of this section to file a report of management's internal control over financial reporting by including with the domestic insurer's or group of insurers' Section 404 report an addendum described in subsection (d).

(d) An addendum described in subsection (c) must be a positive statement by the domestic insurer's or group of insurers' management that no internal controls over financial reporting that have a material impact on the preparation of the domestic insurer's or group of insurers' annual audited financial statements exist, other than the internal controls that are included in the Section 404 report.

(e) If:

(1) a domestic insurer or group of insurers is described in subsection (c)(1); and

the domestic insurer or group of insurers shall file a report of management's internal control over financial reporting as required by this section for the internal controls that have a material impact and are not included in the Section 404 report.

(f) A domestic insurer's or group of insurers' report of management's internal control over financial reporting required by this section must include the following:

(1) A statement that management is responsible for establishment and maintenance of adequate internal control over financial reporting.

(2) A statement that management has established internal control over financial reporting and an assertion of whether, to the best of management's knowledge and belief after diligent inquiry, management's internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles.

(3) A statement that briefly describes the approach or processes by which management evaluated the effectiveness of management's internal control over financial reporting.

(4) A statement that briefly describes the scope of work that is included in the report and whether any of management's internal controls over financial reporting were excluded.

(5) Disclosure of any unremediated material weaknesses in the management's internal control over financial reporting identified by management as of the immediately preceding December 31. The management may not conclude that the internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of annual audited financial statements in accordance with statutory accounting principles if one (1) or more unremediated material weaknesses exist in the management's internal control over financial reporting.

(6) A statement regarding the inherent limitations of the management's internal control over financial reporting.

(7) Signatures of the chief executive officer and the chief financial officer, or equivalent position, of the domestic insurer or group of insurers.

(g) A domestic insurer's or group of insurers' management shall document and make available upon financial condition examination the basis on which the management's assertions described in subsection (f) are made. The management's assertions may be based, in part, upon the management's review, monitoring, and testing of internal controls over financial reporting that are undertaken in the normal course of the management's activities. The management may determine the nature of the internal control framework used and the nature and extent of documentation to make the management's assertion in a cost effective manner, including assembly of or reference to existing documentation.

(h) A report of management's internal control over financial reporting required by this section, and any supporting documentation provided during the course of a financial condition examination, is confidential.

As added by P.L.251-1995, SEC.12. Amended by P.L.146-2015, SEC.18.

IC 27-1-3.5-13Independent audit work papers and communications; review by department examiners Sec. 13. (a) A domestic insurer required to file an audited financial report under this chapter shall require its independent auditor to make available for review by department examiners:

(1) all work papers prepared in the conduct of the independent auditor's examination; and

(2) any record of significant communications related to the audit between the independent auditor and the insurer that took place at:

(A) the offices of the insurer;

(B) the department;

(D) any other reasonable place designated by the commissioner.

The insurer shall require the independent auditor to retain the audit work papers and communications until the department has filed a report on the examination covering the period of the audit but not later than seven (7) years after the date of the audit report.

(b) Department examiners, in conducting a review of an independent auditor's work papers, may make and retain copies of the work papers and communications. A review of an independent auditor's work papers and communications shall be considered an investigation and all work papers and communications obtained or copied during the course of that investigation are confidential under IC 27-1-3.1-15.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.13.

IC 27-1-3.5-14Exemption application; hearing Sec. 14. (a) In response to a written application from a domestic insurer, the commissioner may grant an exemption from compliance with this chapter if the commissioner finds, upon review of the application, that compliance with this chapter would constitute a financial or an organizational hardship upon the domestic insurer. An exemption may be granted at any time for a specified period.

(b) Within ten (10) days after the denial of a domestic insurer's written request for an exemption from this chapter, the insurer may, in writing, request a hearing on its application for an exemption. The hearing shall be held under IC 4-21.5.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.14.

IC 27-1-3.5-15RepealedAs added by P.L.244-1989, SEC.2. Repealed by P.L.251-1995, SEC.22.

IC 27-1-3.5-16Penalty for noncompliance Sec. 16. A domestic insurer that fails to file an audited annual financial report before July 1 or any other deadline established by the commissioner for the insurer under this chapter without having obtained an extension is subject to a civil penalty of fifty dollars ($50) per day until the report is received by the commissioner.

As added by P.L.244-1989, SEC.2.

IC 27-1-3.5-17Effect of chapter on examinations under IC 27-1-3.1 Sec. 17. This chapter does not prohibit or in any way restrict the commissioner from ordering, conducting, or performing examinations of insurers under IC 27-1-3.1.

As added by P.L.244-1989, SEC.2. Amended by P.L.26-1991, SEC.6.

IC 27-1-3.5-18British or Canadian insurers Sec. 18. (a) In the case of a British or Canadian insurer, the annual audited financial report refers to the annual statement of total business on the form filed by the company with its domiciliary supervision authority audited by an independent auditor.

(b) For a British or Canadian insurer, the letter required under section 8 of this chapter shall state that the accountant is aware of the requirement relating to the annual audited statement filed with the commissioner under section 6 of this chapter and shall affirm that the opinion expressed is in conformity with those requirements.

As added by P.L.251-1995, SEC.15.

IC 27-1-3.7Chapter 3.7. ExpiredAs added by P.L.233-2023, SEC.6. Expired 12-31-2025 by P.L.233-2023, SEC.6.

IC 27-1-4Chapter 4. RepealedRepealed by Acts 1979, P.L.255, SEC.3.

IC 27-1-4.1Chapter 4.1. Corporate Governance Annual Disclosure

27-1-4.1-1Application and scope of chapter 27-1-4.1-2"Corporate governance annual disclosure"; "CGAD" 27-1-4.1-3"Insurance group" 27-1-4.1-4"Insurer" 27-1-4.1-5"NAIC" 27-1-4.1-6Annual submission of CGAD 27-1-4.1-7Level of disclosure 27-1-4.1-8CGAD submitted by insurance group member 27-1-4.1-9Nonduplication of other filings 27-1-4.1-10Additional information; CGAD preparation requirements 27-1-4.1-11Confidentiality; privilege; use of information; sharing and disclosure 27-1-4.1-12Third party consultants; confidentiality; sharing of information 27-1-4.1-13Failure to timely file; penalty; reduction 27-1-4.1-14Nonseverability 27-1-4.1-15Rulemaking

IC 27-1-4.1-1Application and scope of chapter Sec. 1. (a) This chapter applies beginning January 1, 2016.

(b) This chapter does not do the following:

(1) Impose corporate governance standards or internal procedures that are not otherwise required under IC 27.

(2) Limit the commissioner's authority, or the rights and obligations of third parties, under IC 27-1-3.1.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-2"Corporate governance annual disclosure"; "CGAD" Sec. 2. As used in this chapter, "corporate governance annual disclosure" or "CGAD" means a confidential report filed by an insurer or insurance group under this chapter.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-3"Insurance group" Sec. 3. As used in this chapter, "insurance group" means insurers and affiliates of an insurance holding company system (as defined in IC 27-1-23-1).

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-4"Insurer" Sec. 4. As used in this chapter, "insurer" has the same meaning as set forth in IC 27-1-2-3, except that the term:

(1) refers only to domestic insurers (as defined in IC 27-1-36-8); and

(2) does not include agencies, authorities, or instrumentalities of the United States, possessions and territories of the United States, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-5"NAIC" Sec. 5. As used in this chapter, "NAIC" refers to the National Association of Insurance Commissioners.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-6Annual submission of CGAD Sec. 6. (a) An insurer or insurance group of which the insurer is a member shall, not later than June 1 of each calendar year, submit:

(1) to the commissioner; or

(2) if the insurer is a member of an insurance group, to the lead state commissioner of the insurance group (as determined by the procedures in the Financial Analysis Handbook) according to the law of the lead state;

a CGAD.

(b) An insurer that is a member of an insurance group and not required to submit a CGAD to the commissioner under subsection (a) shall submit a CGAD to the commissioner upon the commissioner's request.

(c) A CGAD submitted under this section must include the signature of the insurer's or insurance group's chief executive officer or corporate secretary attesting that to the best of the chief executive officer's or corporate secretary's knowledge the insurer has:

(1) implemented corporate governance procedures; and

(2) provided a copy of the CGAD to the insurer's board of directors or the appropriate committee of the board of directors.

As added by P.L.146-2015, SEC.19. Amended by P.L.124-2018, SEC.10.

IC 27-1-4.1-7Level of disclosure Sec. 7. (a) Subject to subsection (b), an insurer or insurance group may complete a CGAD using corporate governance information at the level of disclosure at which the insurer's or insurance group's system of corporate governance is structured, as follows:

(1) The ultimate controlling parent level.

(2) An intermediate holding company level.

(3) The individual legal entity level.

(b) An insurer or insurance group may, but is not required to, choose the level of disclosure at which to complete a CGAD under subsection (a) according to one (1) of the following criteria:

(1) The level at which the insurer's or insurance group's risk tolerance is determined.

(2) The level at which the insurer's or insurance group's earnings, capital, liquidity, operations, and reputation are:

(A) collectively overseen; and

(B) supervised.

(3) The level at which legal liability for failure of general corporate governance would be placed.

(c) If the insurer or insurance group chooses the level of disclosure at which to complete a CGAD under subsection (a) according to a criterion described in subsection (b), the insurer or insurance group shall:

(1) indicate which of the three (3) criteria was used to determine the level of disclosure; and

(2) explain any change in the level of disclosure that is subsequently used.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-8CGAD submitted by insurance group member Sec. 8. If a CGAD is submitted by an insurer as a member of an insurance group, the lead state commissioner of the insurance group (as determined by the procedures in the Financial Analysis Handbook) shall:

(1) review a CGAD submitted under section 6 of this chapter; and

(2) make any requests for additional information.

As added by P.L.146-2015, SEC.19. Amended by P.L.124-2018, SEC.11.

IC 27-1-4.1-9Nonduplication of other filings Sec. 9. If an insurer or insurance group:

(1) submits, in other:

(A) documents submitted to the commissioner, including proxy statements filed with registration statements required by IC 27-1-23-3; or

(B) state or federal filings provided to the department;

information that is substantially similar to the information required by this chapter; and

(2) cross references in the CGAD the document or filing that contains the substantially similar information;

the insurer or insurance group is not required to duplicate the information in the CGAD.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-10Additional information; CGAD preparation requirements Sec. 10. (a) If a CGAD contains the material information necessary to allow the reviewing commissioner to understand the insurer's or insurance group's corporate governance structure, policies, and procedures, the insurer or insurance group may determine whether to respond to a request from the reviewing commissioner for additional information.

(b) If the reviewing commissioner considers additional information to be material and necessary to provide a clear understanding of an insurer's or insurance group's:

(1) corporate governance structure, policies, and procedures;

(2) reporting or information system; or

(3) controls implementing subdivisions (1) and (2);

the commissioner may request the additional information.

(1) prepared in a manner consistent with the NAIC's Corporate Governance Annual Disclosure Model Regulation; and

(2) made available to the commissioner upon:

(A) examination under IC 27-1-3.1; or

(B) request of the commissioner.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-11Confidentiality; privilege; use of information; sharing and disclosure Sec. 11. (a) Documents, materials, and other information related to a CGAD, including the CGAD, that are in the possession or control of the department and obtained by, created by, or disclosed to the commissioner or another person under this chapter, are:

(1) considered to be proprietary and contain trade secrets;

(2) confidential and privileged;

(3) not subject to subpoena; and

(4) not subject to discovery or admissible in evidence in a private civil action.

(b) The commissioner may:

(1) use the documents, materials, and other information described in subsection (a) in relation to a regulatory or legal action brought as part of the commissioner's duties; and

(2) otherwise make the documents, materials, and other information public only with the prior written consent of the insurer.

(1) who receives documents, materials, or other information related to a CGAD while acting under the authority of the commissioner; or

(2) with whom the documents, materials, or other information are shared;

under this chapter is not permitted or required to testify in a private civil action concerning any documents, materials, or other information described in subsection (a).

(d) The commissioner may, in the performance of the commissioner's duties, do the following:

(1) Upon request, share all documents, materials, and other information described in subsection (a) with the following if the recipient agrees in writing, and provides written verification that the recipient has the legal authority, to maintain the confidential and privileged status of the documents, materials, and other information:

(A) Other state, federal, and international financial regulatory agencies.

(B) The NAIC.

(D) A third party consultant under section 12 of this chapter.

(2) Receive all documents, materials, and other information described in subsection (a) from:

(A) other state, federal, and international financial regulatory agencies;

(B) members of a supervisory college (as defined in IC 27-1-23-1); and

if the commissioner maintains the confidential or privileged status of the documents, materials, and other information that are received with notice or the understanding that the documents, materials, and other information are confidential or privileged under the laws of the jurisdiction that is the source of the documents, materials, and other information.

(e) The sharing of information by the commissioner under this chapter is not a delegation of regulatory authority. The commissioner is solely responsible for the administration, implementation, and enforcement of this chapter.

(f) Disclosure to or sharing by the commissioner of documents, materials, or other information under this chapter is not a waiver of any applicable privilege or claim of confidentiality in the documents, materials, or other information.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-12Third party consultants; confidentiality; sharing of information Sec. 12. (a) The commissioner may, at the insurer's expense, retain third party consultants, including attorneys, actuaries, accountants, and others who are not part of the commissioner's staff, that:

(1) the commissioner considers necessary to review a CGAD, related information, or the insurer's or insurance group's compliance with this chapter; and

(2) have verified, with notice to the insurer, that the third party consultant:

(A) has no conflict of interest affecting the commissioner's retention of the third party consultant; and

(B) has internal procedures to:

(i) monitor whether a conflict of interest arises after the third party consultant has been retained; and

(ii) comply with the confidentiality requirements of this chapter.

(b) A third party consultant who is retained under subsection (a) is under the direction and control of the commissioner and acts only in an advisory capacity.

(c) The NAIC and a third party consultant who is retained under subsection (a) are subject to the same confidentiality requirements as the confidentiality requirements that apply to the commissioner under this chapter. The NAIC may share information received under this chapter only with state regulators from states in which insurers that are members of an insurance group are domiciled.

(d) The commissioner shall enter into a written agreement with the NAIC or a third party consultant governing sharing and use of information provided under this chapter, including the following:

(1) Procedures and protocols concerning the confidentiality and security of information shared:

(A) with the NAIC or third party consultant under this chapter; and

(B) by the NAIC with regulators of other states in which insurers that are members of an insurance group are domiciled.

(2) A statement that the recipient:

(A) agrees in writing; and

(B) provides written verification that the recipient has the legal authority;

to maintain the confidential and privileged status of the documents, materials, and other information.

(3) A statement that, with respect to information shared with the NAIC or third party consultant under this chapter:

(A) the commissioner maintains ownership of the information; and

(B) the use of the information is subject to the direction of the commissioner.

(4) A statement that the NAIC or third party consultant may not store information shared under this chapter in a permanent data base after the underlying analysis is completed.

(5) A requirement that, if CGAD related information of an insurer that is in the possession of the NAIC or third party consultant under this chapter is subject to a request or subpoena to the NAIC or third party consultant for production or disclosure, the NAIC or third party consultant will provide prompt notice to the commissioner and to the insurer or insurance group.

(6) A requirement that the NAIC or third party consultant will allow intervention by an insurer in a judicial or administrative action under which the NAIC or third party consultant may be required to disclose confidential information concerning the insurer that has been shared with the NAIC or third party consultant under this chapter.

(7) An express requirement that the written consent of the insurer or insurance group is required before the NAIC or third party consultant makes public any information shared under this chapter.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-13Failure to timely file; penalty; reduction Sec. 13. (a) An insurer that fails, without just cause (as determined by the commissioner), to timely file a CGAD as required by this chapter shall, after notice and hearing under IC 4-21.5, pay a civil penalty of one hundred dollars ($100) for each day of noncompliance, not to exceed ten thousand dollars ($10,000).

(b) The commissioner may reduce a penalty imposed under subsection (a) if the insurer demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer.

(c) A civil penalty collected under this section shall be deposited in the department of insurance fund established by IC 27-1-3-28.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-14Nonseverability Sec. 14. Notwithstanding IC 1-1-1-8, section 11 of this chapter is not severable.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.1-15Rulemaking Sec. 15. The commissioner may adopt rules under IC 4-22-2 to implement this chapter.

As added by P.L.146-2015, SEC.19.

IC 27-1-4.5Chapter 4.5. Disclosure of Ownership Information

27-1-4.5-1"Controlling" 27-1-4.5-2"Insurer" 27-1-4.5-2"Insurer" 27-1-4.5-3"Pharmacy benefit manager" 27-1-4.5-4"Third party administrator" 27-1-4.5-5Required reporting of ownership information by an insurer, a third party administrator, and a pharmacy benefit manager 27-1-4.5-6Implementation of a plan to collect the ownership information 27-1-4.5-7Fine for noncompliance; disciplinary action for repeated noncompliance 27-1-4.5-8Annual report of the violations assessed and fines waived 27-1-4.5-9Notice or bulletin of the reporting requirements 27-1-4.5-10Requirement to operate within existing appropriations

IC 27-1-4.5-1"Controlling" Sec. 1. As used in this chapter, "controlling" has the meaning set forth in IC 23-1-43-8.

As added by P.L.239-2025, SEC.11.

IC 27-1-4.5-2"Insurer" Note: This version of section effective until 7-1-2027. See also following version of this section, effective 7-1-2027.

Sec. 2. As used in this chapter, "insurer" includes the following:

(1) An insurer (as defined in IC 27-1-2-3(x)) that issues a policy of accident and sickness insurance (as defined in IC 27-8-5-1(a)). However, the term does not include the coverages described in IC 27-8-5-2.5(a).

(2) A health maintenance organization (as defined in IC 27-13-1-19) that provides coverage for basic health care services (as defined in IC 27-13-1-4).

(3) A managed care organization (as defined in IC 12-7-2-126.9) that provides services to a Medicaid recipient.

(4) A prepaid health care delivery plan under IC 5-10-8-7(c) that provides group health coverage for state employees.

As added by P.L.239-2025, SEC.11.

IC 27-1-4.5-2"Insurer" Note: This version of section effective 7-1-2027. See also preceding version of this section, effective until 7-1-2027.

Sec. 2. As used in this chapter, "insurer" includes the following:

(2) A health maintenance organization (as defined in IC 27-13-1-19) that provides coverage for basic health care services (as defined in IC 27-13-1-4).

(3) A managed care organization (as defined in IC 12-7-2.1-218) that provides services to a Medicaid recipient.

(4) A prepaid health care delivery plan under IC 5-10-8-7(c) that provides group health coverage for state employees.

As added by P.L.239-2025, SEC.11. Amended by P.L.145-2026, SEC.138.

IC 27-1-4.5-3"Pharmacy benefit manager" Sec. 3. As used in this chapter, "pharmacy benefit manager" has the meaning set forth in IC 27-1-24.5-12.

As added by P.L.239-2025, SEC.11.

IC 27-1-4.5-4"Third party administrator" Sec. 4. As used in this chapter, "third party administrator" means an individual or entity that performs administrative services for an insurer or a self-funded health benefit plan, including:

(1) a self-funded health benefit plan that complies with the federal Employee Retirement Income Security Act (ERISA) of 1974 (29 U.S.C. 1001 et seq.); and

(2) a self-insurance program established under IC 5-10-8-7(b).

As added by P.L.239-2025, SEC.11.

IC 27-1-4.5-5Required reporting of ownership information by an insurer, a third party administrator, and a pharmacy benefit manager Sec. 5. (a) Beginning July 1, 2025, and each July 1 thereafter, each insurer, third party administrator, and pharmacy benefit manager that does business in Indiana shall file with the department a report that includes the following information:

(1) The name of each person or entity that has:

(A) an ownership interest of at least five percent (5%);

(B) a controlling interest; or

in the insurer, third party administrator, or pharmacy benefit manager.

(2) The business address of each person or entity identified under subdivision (1). The business address must include a:

(A) building number;

(B) street name;

(D) ZIP code; and

(E) country name.

The business address may not include a post office box number.

(3) The business website, if applicable, of each person or entity identified under subdivision (1).

(4) Any of the following identification numbers, if applicable, for a person or entity identified under subdivision (1):

(A) National provider identifier (NPI).

(B) Taxpayer identification number (TIN).

(D) CMS certification number (CCN).

(E) National Association of Insurance Commissioners (NAIC) identification number.

(F) A personal identification number associated with a license issued by the department of insurance.

(5) The ownership stake of each person or entity identified under subdivision (1).

A report provided under this section may not include the Social Security number of any individual.

(b) The department may not charge a fee for a report submitted under this section.

As added by P.L.239-2025, SEC.11.

IC 27-1-4.5-6Implementation of a plan to collect the ownership information Sec. 6. (a) The department shall cooperate with the Indiana department of health and the secretary of state to develop and implement a plan to collect the information described in section 5 of this chapter, IC 16-21-6-3(a)(14) through IC 16-21-6-3(a)(18), and IC 23-0.5-2-13(a)(6).

(b) Before September 1 of each year, the department shall provide the information collected under section 5 of this chapter to the Indiana department of health.

As added by P.L.239-2025, SEC.11.

IC 27-1-4.5-7Fine for noncompliance; disciplinary action for repeated noncompliance Sec. 7. (a) The department may assess:

(1) an insurer;

(2) a third party administrator; or

(3) a pharmacy benefit manager;

that violates section 5 of this chapter a fine of one thousand dollars ($1,000) per day for which the report is past due.

(b) A fine under this section shall be deposited into the payer affordability penalty fund established by IC 12-15-1-18.5.

(d) The department may take disciplinary action against:

(1) an insurer;

(2) a third party administrator; or

(3) a pharmacy benefit manager;

that is licensed under this title for repeated violations of section 5 of this chapter.

As added by P.L.239-2025, SEC.11.

IC 27-1-4.5-8Annual report of the violations assessed and fines waived Sec. 8. (a) Before December 1 of each year, the department shall submit to the legislative council an annual report of the:

(1) violations assessed; and

(2) fines waived;

under section 7 of this chapter in the previous calendar year.

(b) A report described in this section must be submitted in an electronic format under IC 5-14-6.

As added by P.L.239-2025, SEC.11.

IC 27-1-4.5-9Notice or bulletin of the reporting requirements Sec. 9. (a) The department shall issue a notice or bulletin on at least two (2) occasions to notify insurers, third party administrators, and pharmacy benefit managers of the reporting requirements set forth in this chapter.

(b) A notice or bulletin issued under this section must be posted on the department's website in a manner that is easily accessible to insurers, third party administrators, and pharmacy benefit managers.

As added by P.L.239-2025, SEC.11.

IC 27-1-4.5-10Requirement to operate within existing appropriations Sec. 10. In carrying out the department's duties under this chapter, the department shall operate within existing appropriations for the department.

As added by P.L.239-2025, SEC.11.

IC 27-1-5Chapter 5. Classification of Insurance

27-1-5-1Authority to write one or more kinds of insurance; restrictions on assessment plan companies; classes of insurance 27-1-5-2Management of segregated investment account 27-1-5-3"Property" and "property interests" defined 27-1-5-4Repealed

Source: official Indiana text · Last verified 2026-08-27

Frequently Asked Questions About Indiana § 27-1-3-36

What does Indiana Code § 27-1-3-36 cover?

Section 27-1-3-36 ("Partnerships and joint ventures; prior authorization") is part of the Indiana Code, the codified statutory law of Indiana. It sets out the legal rule or procedure described in the text above. Statutes are amended regularly, so always verify against the official source.

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Official text of § 27-1-3-36 at the Indiana source

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Indiana § 27-1-3-36 - Partnerships and joint ventures; prior authorization

§ 27-1-3-36. Partnerships and joint ventures; prior authorization

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Frequently Asked Questions About Indiana § 27-1-3-36

What does Indiana Code § 27-1-3-36 cover?

How do I cite Indiana § 27-1-3-36?

Is this the official text of Indiana law?

How does Indiana § 27-1-3-36 apply to my situation?

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