CR 22-075 Rule Text

ORDER OF THE OFFICE OF THE COMMISSIONER OF INSURANCE AMENDING, CREATING AND REPEALING A RULE

Office of the Commissioner of Insurance

Rule No. Agency 145 – S. Ins 50.01 and 50.155

The Commissioner of Insurance proposes an order to amend Ins 50.01 (9) and Ins 50.155 (1), relating to the office’s access to CPA financial compilations and to the exemption from internal audit function requirements.

 

The statement of scope for this rule SS: 157-20 was approved by the Governor on December 11, 2020, published in Register No.780A3 on December 21, 2020, and approved by the Commissioner on January 13, 2021. The proposed rule was approved by the Governor on January 12, 2023, to submit to the Legislature, and submitted to the Legislature on January 18, 2023. The rule passed through Senate and Assembly committees and the Joint Committee for Review of Administrative Rules on April 6, 2023 (Senate) and April 12, 2023 (Assembly) with no action taken.

 

ANALYSIS PREPARED BY THE OFFICE OF THE COMMISSIONER OF INSURANCE (OCI)

  1.   Statutes interpreted:

Wisconsin Statutes ss. 601.42, 601.43, 623.02.

  2.   Statutory authority:

Wisconsin Statutes ss. 601.42 (1g) (a), 601.43 (1) (a), 623.03 and 623.04.

  3.   Explanation of OCI’s authority to promulgate the proposed rule under these statutes:

Section 601.42 (1g), Stats., authorizes the commissioner to request statements, reports, and other information from regulated persons. Section 601.42 (2), Stats., authorizes the commissioner to prescribe forms for these reports. Section 601.43, Stats., authorizes the commissioner to examine regulated persons. Sections 623.03 and 623.04, Stats., authorize the commissioner to promulgate rules regarding the valuation of assets and liabilities, respectively. Section 623.02, Stats., recognizes the commissioner’s authority to promulgate standards for accounting rules.

  4.   Related statutes or rules:

Wis. Admin. Code ch. INS 50 Subchapter I

  5.   The plain language analysis and summary of the proposed rule:

The definition of work papers in Wis. Admin. Code § INS 50.01 (9) will be amended to clarify that work papers includes financial compilations. Additionally, the proposed rule will allow smaller insurers that are not part of a group to be eligible for the small-size exemption from the internal audit function requirements of Wis. Admin. Code § INS 50.155.

  6.   Summary of, and preliminary comparison with, any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule:

    N/A

  7.   Summary of comments received during preliminary comment period:

    N/A

  8.   Comparison of similar rules in adjacent states as found by OCI:

Illinois:   Ill. Admin. Code tit. 50, § 925.130 (CPA work papers)

Ill. Admin. Code tit. 50, § 925.141 (Internal audit function requirements)

Iowa:     Iowa Admin Code r. 191-98.12 (CPA work papers)

Iowa Admin Code rr. 191-98.2(1), 191.98.16 (Internal audit function requirements)

Michigan:   Mich. Comp. Laws § 500.1021 (CPA work papers)

Mich. Comp. Laws § 500.1028 (Internal audit function requirements)

Minnesota:   Minn. Stat. § 60a.1291, subd. 14. (CPA work papers)

Minn. Stat. § 60a.1291, subd. 15a.. (Internal audit function requirements)

  9.   A summary of the factual data and analytical methodologies that OCI used in support of the proposed rule and how any related findings support the regulatory approach chosen for the proposed rule:

Access to CPA work papers reduces the amount of information that OCI is required to obtain from insurers and aids in the efficient oversight of insurers. This small clarification to the definition of work papers will further aid OCI in efficiently regulating insurers. The small change to the internal audit function requirements will make clear that small insurers that are not part of group of insurers are eligible for an exemption from those requirements, which OCI believes is appropriate for smaller insurers.

  10.   Any analysis and supporting documentation that OCI used in support of OCI’s determination of the rule’s effect on small businesses under s. 227.114:

This rule will have little or no effect on small businesses. Insurers will not be affected by the clarification of what constitutes CPA work papers. It will also be clearer that small insurers that are not part of a group of insurers are exempt from the internal audit function requirements and those associated costs.

  11.   A description of the Effect on Small Business:

This rule will have little or no effect on small businesses.

  12.   Agency contact person:

A copy of the full text of the proposed rule changes, analysis, and fiscal estimate may be obtained from the web site at https://oci.wi.gov/Pages/Regulation/RulesCurrentlyPending.aspx or by contacting Karyn Culver at:

Phone:   [phone]

Email:   [e-mail]

Address:   125 South Webster St – 2nd Floor, Madison WI 53703-3474

Mail:   PO Box 7873, Madison, WI 53707-7873

  13.   Place where comments are to be submitted and deadline for submission:

Persons wishing to testify or provide oral or written comments regarding the proposed administrative rule may appear during the hearing. Additionally, the rule may be reviewed and comments made at https://docs.legis.wisconsin.gov/code or sent to the following:

The deadline for submitting comments is 4:00 p.m. on Friday, December 9, 2022.

Written comments can be mailed or hand-delivered to:

Legal Unit - OCI Rule Comment for Rule Ins 50.01 and 50.155

Office of the Commissioner of Insurance

125 South Webster St – 2nd Floor

Madison WI 53703-3474

Email address: [e-mail]

For additional information please contact: [e-mail].