443.

Annual and other reports; penalties (a)(1) Every stock and mutual insurance company, association, and exchange, doing business in this Commonwealth, shall annually, on or before the first day of March, file in the office of the Insurance Commissioner and with the National Association of Insurance Commissioners a statement which shall exhibit its financial condition on the thirty-first day of December of the previous year, and its business of that year and shall, within thirty days after requested by the Insurance Commissioner, file with the Insurance Commissioner and with the National Association of Insurance Commissioners such additional statement or statements concerning its affairs and financial condition as the Insurance Commissioner may, in his discretion, require. The Insurance Commissioner shall require each insurance company association and exchange to report its financial condition on the statement convention blanks, in such form as adopted by the National Association of Insurance Commissioners and shall, upon written request, furnish such blanks for their convenience; and may make such changes, from time to time, in the form of the same as shall seem best adapted to elicit from them a true exhibit of their financial condition. (2) Unless otherwise provided by law, regulation or order of the Insurance Commissioner, each insurance company, association and exchange shall adhere to the annual or quarterly statement instructions and the accounting practices and procedures manuals prescribed by the National Association of Insurance Commissioners. The Insurance Commissioner may require each insurance company, association and exchange to file in the office of the Insurance Commissioner and with the National Association of Insurance Commissioners financial statements on diskettes or other electronic information storage devices acceptable to the Insurance Commissioner. (b) Insurance companies of foreign governments, doing business in this Commonwealth, shall be required to return only the business done in the United States, and the assets held by and for them within the United States for the protection of policyholders therein. (c) In the absence of actual malice, members of the National Association of Insurance Commissioners, their duly authorized committees, subcommittees and task forces, their delegates and employes and all others charged with the responsibility of collecting, reviewing, analyzing and disseminating the information developed from the filing of the annual statement convention blanks shall be acting as agents of the Insurance Commissioner under the authority of this act and shall not be subject to civil liability for libel, slander or any other cause of action by virtue of their collection, review and analysis or dissemination of the data and information collected from the filings required hereunder. (d)(1) The following documents, materials or information shall be confidential by

law and privileged and shall not be subject to subpoena, discovery, the act of February 14, 2008 (P.L. 6, No. 3), known as the "Right-to-Know Law," or admissible in evidence in any private civil action: (i) All documents, materials or other information prepared or provided by an insurance company, association or exchange solely in support of the statement of actuarial opinion filed under this section, including actuarial reports, work papers or actuarial opinion summaries and any other material solely prepared by the insurance company, association or exchange for the purpose of providing it to the Insurance Department in connection with actuarial reports, work papers or actuarial opinion summaries. (ii) All financial analysis ratios, analyst team reports and other financial analytical results concerning insurance companies, associations and exchanges that are provided to the Insurance Department by the National Association of Insurance Commissioners. (iii) All additional work products, documents, materials or information produced by, obtained by or provided to the Insurance Department in the course of conducting financial analyses of financial statements filed under this section. (2) The protections established under paragraph (1)(i) and (iii) shall also apply to the materials, drafts or copies thereof when in possession of the insurance company, association or exchange if the materials or drafts were prepared solely for the purpose of submitting the materials to the Insurance Department. Any documents, materials or information that are provided to the Insurance Department under paragraph (1)(i) or (iii) and that would otherwise be available from original sources shall not be construed as immune from discovery from the original source and use in any private civil action merely because they were provided to the Insurance Department. (3) Neither the Insurance Commissioner nor any individual or person who receives documents, materials or information while acting under the authority of the Insurance Commissioner shall be permitted or required to testify in any private civil action concerning any confidential documents, materials or information covered under this section. (4) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the Insurance Commissioner or as a result of the Insurance Commissioner sharing information in conformance with sections 201-A and 202-A of the act of May 17, 1921 (P.L. 789, No. 285), known as "The Insurance Department Act of 1921." (5) The Insurance Commissioner may use the documents, materials or other information obtained or created under this section in furtherance of any regulatory or legal action brought as part of the Insurance Commissioner' s official duties.

Ch. 147

INSURERS FINANCIAL REPORT CHAPTER 147. ANNUAL FINANCIAL REPORTING REQUIREMENTS

31 147.1

Sec.

147.1. 147.2. 147.3. 147.3a. 147.4. 147.5. 147.6. 147.6a. 147.6b. 147.7. 147.8. 147.9. 147.9a. 147.9b. 147.10. 147.11. 147.12. 147.13. 147.14. 147.15.

Purpose. Definitions. Filing and extensions for filing required reports and communications. Requirement for audit committees. Contents of annual audited financial report. Designation of independent certified public accountant. Recognition, qualification and responsibilities of an independent certified public accountant. Letter of qualifications of independent certified public accountant. Conduct of insurer relating to audits. Consolidated or combined audits. Scope of audit and report of independent certified public accountant. Notification of adverse financial condition. Establishment and communication of internal control over financial reporting. Managements report of internal control over financial reporting. [Reserved]. Definitions, availability and maintenance of independent certified public accountant workpapers. [Reserved]. Effective date and exemption. Penalties. [Reserved].
Authority

The provisions of this Chapter 147 issued and amended under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. 66, 186, 411 and 412); sections 320 and 321 of The Insurance Company Law of 1921 (40 P. S. 443 and 444); section 1605(a)(3)(ii) of The Insurance Company Law of 1921 (40 P. S. 991.1605(a)(3)(ii)); sections 205 and 206 of The Pennsylvania Fair Plan Act (40 P. S. 1600.205 and 1600.206); section 731 of the Medical Care Availability and Reduction of Error (MCARE) Act (40 P. S. 1303.731); 40 Pa.C.S. 6125, 6331 and 6701; sections 11 and 14 of the Health Maintenance Organization Act (40 P. S. 1561 and 1564); sections 7 and 25 of the Continuing-Care Provider Registration and Disclosure Act (40 P. S. 3207 and 3225); (40 P. S. 443, 764a, 967, 991.2452); and section 602 of the Fraternal Benefit Societies Code (40 P. S. 1142-602) (Repealed), unless otherwise noted. Source The provisions of this Chapter 147 adopted December 21, 1979, effective December 22, 1979, 9 Pa.B. 4164, unless otherwise noted. Cross References This chapter cited in 31 Pa. Code 151.7 (relating to disclosure statements); and 31 Pa. Code 160.3 (relating to standards).

147.1. Purpose.
The purpose of this chapter is to improve the Departments surveillance of the financial condition of insurers by requiring an annual audit by independent certi-

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31 147.2

MISCELLANEOUS PROVISIONS

Pt. VIII

fied public accountants of the financial statements reporting the financial condition and the results of operations of insurers, a written communication detailing internal control related matters noted in the audit, and a written report by management of internal control over financial reporting.
Authority The provisions of this 147.1 amended under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. 66, 186, 411 and 412); sections 320, 630, 1007 and 2452 of The Insurance Company Law of 1921 (40 P. S. 443, 764a, 967 and 991.2452); sections 205 and 206 of The Pennsylvania Fair Plan Act (40 P. S. 1600.2051600.206); section 731 of the Medical Care Availability and Reduction of Error Act (40 P. S. 1303.731); 40 Pa.C.S. 6125, 6331 and 6701; sections 11 and 14 of the Health Maintenance Organization Act (40 P. S. 1561 and 1564); and sections 7 and 25 of the Continuing Care Provider Registration and Disclosure Act (40 P. S. 3207 and 3225.) Source The provisions of this 147.1 adopted December 21, 1979, effective December 22, 1979, 9 Pa.B. 4164; corrected January 11, 1980, effective December 22, 1979, 10 Pa.B. 129; amended November 10, 1995, effective November 11, 1995, 25 Pa.B. 4785; amended October 2, 2009, effective October 3, 2009, 39 Pa.B. 5730. Immediately preceding text appears at serial pages (305319) to (305320). Notes of Decisions Applicability Section 809 of The Insurance Company Law of 1921 (40 P. S. 919), giving the Department authority over loan agreements, does not apply to loans to professional health service corporation and is limited to surveillance of the financial condition of the insurers as set forth in this section. Pennsylvania Dental Association v. Insurance Department, 560 A.2d 870 (Pa. Cmwlth. 1989).

147.2. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise: AffiliateAs defined in section 1401 of The Insurance Company Law of 1921 (40 P. S. 991.1401). Assumed premiumsTotal premiums assumed by an insurer from nonaffiliated insurers. Audit committee (i) A committee or equivalent body established by the board of directors or equivalent body of an insurer for the purpose of overseeing the accounting and financial reporting processes, audits of financial statements, and internal control structure of the insurer or insurer group. (ii) The term includes a committee established under section 1405(c)(4) or (5) of The Insurance Company Law of 1921 (40 P. S. 991.1405(c)(4) and (5)). Audited financial reportThe term includes those items specified in 147.4 (relating to contents of annual audited financial report).

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