Filings Made Easy for Life, Health and Licensing

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(No Transcript)
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Filings Made Easy for Life, Health and Licensing
Financial Examinations IT Examinations and
Examination Reports
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Presenters

• Tony Trevino, CFE
• Chief Examiner
• Examinations
• Tony.Trevino_at_tdi.state.tx.us
• Linda Hytry, CFE
• Assistant Chief Examiner AES
• Linda.Hytry_at_tdi.state.tx.us
• Jamie Walker, CFE
• Assistant Chief Examiner
• Jamie.Walker_at_tdi.state.tx.us

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Discussion topics

• Overview of Financial Program
• Overview of Examinations
• IT Examinations and Examination Tools
• Examination Reports
• Questions

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Overview of Financial Program
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Overview of Financial Program, continued

• Cradle to Grave Approach
• Company Licensing and Registration
• Actuarial
• Financial Analysis
• Financial Examinations
• Rehabilitation and Liquidation Oversight

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Overview of Financial Program, continued

• Serves as the primary solvency guardian for
  policyholders
• Seeks to detect financial concerns early and take
  prompt action by applying available statutes,
  rules and procedures to prevent insolvency and
  consumer problems
• Priorities focus on firm, fair, effective, and
  efficient regulation for all insurance entities,
  while reducing impediments to competition

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Overview of Examinations
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Examinations Key Processes

• On-site examinations of the books, records, and
  operations of insurance companies and other
  entities
• Financial examinations
• Market conduct examinations
• Analysis of annual operations reports filed by
  premium finance companies

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Examinations Key Processes continued

• Target examinations as needed in response to
  potential regulatory concerns
• Other entities subject to examination include
• Guaranty Fund Associations
• Premium Finance Companies
• Reinsurance Intermediaries
• Managing General Agents

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Examinations Coordination with Other States

• Lead State
• Allocation of work-load
• Clear understanding regarding each states role
  and needs
• Sharing of work papers and findings

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Examinations Coordination with Other States
continued

• Characteristics of Lead States
• State with the largest number of domestic
  insurance companies in the group
• State with large or largest premium volume or
  exposure
• Domiciliary state of top-tiered insurance company

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Risk Focused Examinations

• Provides clearer methodology for assessing
  residual risk
• Allows the assessment of risk management
  processes other than those that result in
  financial statement line item verifications

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Texas Policy and Procedures Manual

• Procedures and regulations unique to Texas
• Texas statutes and rules take precedence

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• IT EXAMINATIONS

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IT Examinations
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IS Examiner/System Analyst/Examination Coordinator

• Staff
• Examinations Coordinator
• IS Examiners (6)
• System Analysts (2)
• Examination Coordinator
• Initial request for information
• part of the pre-planning for an examination
• slightly different for large/small companies for
  information requested

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IS Examiner/System Analyst/Examination
Coordinator continued

• IS Examiner
• Support for Financial Examiner
• IS Control Review
• ISQ Desk Review
• System Analyst
• Reconciliation of databases (premiums, losses)
• Sample section utilizing Audit Command Language
  (ACL)

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Examination Tools

• ACL
• Software
• Premium/Loss database requests
• Independent testing and sample selection
• TeamMate
• Electronic work papers
• Enhance regulatory insurance examinations
• Central repository for standard examination
  procedures
• Work papers can be shared/assessed
• NAIC Citrix Server for Lead State Examinations

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• REPORT PROCESSING

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Report Contents

• Comprised of
• Description of company operations
• Financial statements
• Significant Deficiencies
• Disclosed in the body of the report
• Uncorrected deficiencies are accumulated in the
  Summary of Significant Findings

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Report Contents continued

• Examination Report Comments
• Report activities that are contrary to the
  Insurance Code, Administrative Code, or SSAP
  guidance.
• Management Letter Comments
• Disclose items that are not substantive,
  material, or of major regulatory concern.

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Report Processing

• Workpapers transmitted to Austin
• One additional review of the report
• Signed by the Examiner-in-Charge
• Final Report transmitted to the Insurance Company

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Company Receives Report

• Initiating the Appeal Process
• Governed by 28 TAC 7.83
• Adoption of the Report
• 15 days after report is received, if not appealed
• Response to Report Deficiencies

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QUESTIONS?