Filings Made Easy for Life, Health and Licensing

2. Filings Made Easy for Life, Health and Licensing

3. Presenters Tony Trevino, CFE Chief Examiner Examinations Tony.Trevino@tdi.state.tx.us Linda Hytry, CFE Assistant Chief Examiner � AES Linda.Hytry@tdi.state.tx.us Jamie Walker, CFE Assistant Chief Examiner Jamie.Walker@tdi.state.tx.us

4. Discussion topics Overview of Financial Program Overview of Examinations IT Examinations and Examination Tools Examination Reports Questions

5. Overview of Financial Program

6. Overview of Financial Program, continued Cradle to Grave Approach Company Licensing and Registration Actuarial Financial Analysis Financial Examinations Rehabilitation and Liquidation Oversight

7. 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

8. Overview of Examinations

9. 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

10. 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

11. Examinations Coordination with Other States Lead State Allocation of work-load Clear understanding regarding each state�s role and needs Sharing of work papers and findings

12. 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 Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure

13. 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 Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure

14. Texas Policy and Procedures Manual Procedures and regulations unique to Texas Texas statutes and rules take precedence Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure

15. IT EXAMINATIONS Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure

16. IT Examinations Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure

17. 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 Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure

18. 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) Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure

19. 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 Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure

20. REPORT PROCESSING Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure Additional characteristics of Lead-States: Physical location of the main corporate offices or largest operational offices of the group Expertise in the area of concern and experience of staff in like situations State whose regulatory requirements have driven the design of the organization�s infrastructure

21. 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�

22. 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.

23. 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

24. 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

25. QUESTIONS?