1998 Minnesota Statutes

     60A.129 Loss reserve certification and annual audit. 

    Subdivision 1.    Definitions.  The definitions in this 
 subdivision apply to this section.  

    (a) "Qualified actuary," except as it relates to 
 subdivision 2, paragraph (c), for companies authorized to 
 provide life insurance coverage under section 60A.06, 
 subdivision 1, clause (4), is a person who is either: 

    (1) a member in good standing of the Casualty Actuarial 
 Society; or 

    (2) a member in good standing of the American Academy of 
 Actuaries who has been approved as qualified for signing 
 casualty loss reserve opinions by the Casualty Practice Council 
 of the American Academy of Actuaries; or 

    (3) a person who otherwise has competency in loss reserve 
 evaluation as demonstrated to the satisfaction of the insurance 
 regulatory official of the domiciliary state.  In such case, at 
 least 90 days prior to the filing of its annual statement, the 
 insurer must request approval that the person be deemed 
 qualified and that request must be approved or denied.  The 
 request must include the National Association of Insurance 
 Commissioners biographical form and a list of all loss reserve 
 opinions issued in the last three years by this person. 

    (b) For purposes of subdivision 2, paragraph (c), a 
 qualified actuary for companies authorized to write life 
 insurance coverage under section 60A.06, subdivision 1, clause 
 (4), shall be:  

    (1) a member in good standing of the American Academy of 
 Actuaries; 

    (2) qualified to sign statements of actuarial opinion for 
 life and health insurance company annual statements in 
 accordance with the American Academy of Actuaries qualification 
 standards for actuaries signing these statements; 

    (3) familiar with the valuation requirements applicable to 
 life and health insurance companies.  

    (c) A qualified actuary as defined by this subdivision is 
 an individual who:  

    (1) has not been found by the commissioner, or if so found 
 has subsequently been reinstated as a qualified actuary, 
 following appropriate notice and hearing to have:  

    (i) violated any provision of, or any obligation imposed 
 by, the state insurance law or other law in the course of the 
 actuary's dealings as a qualified actuary; 

    (ii) been found guilty of fraudulent or dishonest 
 practices; 

    (iii) demonstrated incompetency, lack of cooperation, or 
 untrustworthiness to act as a qualified actuary; or 

    (iv) submitted to the commissioner during the past five 
 years, pursuant to this chapter, an actuarial opinion that the 
 commissioner rejected because it did not meet the provisions of 
 this chapter including standards set by the actuarial standards 
 board; 

    (2) has resigned or been removed as an actuary within the 
 past five years as a result of acts or omissions indicated in 
 any adverse report on examination or as a result of failure to 
 adhere to generally acceptable actuarial standards of the 
 American Academy of Actuaries; and 

    (3) has not failed to notify the commissioner of any action 
 taken by any commissioner of any other state similar to that 
 under clause (1). 

    (d) "Accountant" and "independent public accountant" mean 
 an independent certified public accountant or accounting firm in 
 good standing with the American Institute of Certified Public 
 Accountants and in all states in which the accountant or firm is 
 licensed to practice.  For Canadian and British companies, the 
 term means a Canadian-chartered or British-chartered accountant. 

    Subd. 2.    Loss reserve certification.  (a) Each 
 domestic company engaged in providing the types of coverage 
 described in section 60A.06, subdivision 1, clause (1), (2), 
 (3), (5)(b), (6), (8), (9), (10), (11), (12), (13), or (14), 
 must have its loss reserves certified by a qualified actuary.  
 The company must file the certification with the commissioner 
 within 30 days of completion of the certification, but not later 
 than June 1.  The actuary providing the certification must not 
 be an employee of the company.  This subdivision does not apply 
 to township mutual companies, or to other domestic insurers 
 having less than $1,000,000 of premiums written in any year and 
 fewer than 1,000 policyholders.  The commissioner may allow an 
 exception to the stand alone certification where it can be 
 demonstrated that a company in a group has a pooling or 100 
 percent reinsurance agreement used in a group which 
 substantially affects the solvency and integrity of the reserves 
 of the company, or where it is only the parent company of a 
 group which is licensed to do business in Minnesota.  If these 
 circumstances exist, the company may file a written request with 
 the commissioner for an exception.  Companies writing 
 reinsurance alone are not exempt from this requirement.  The 
 certification must contain the following statement:  "The loss 
 reserves and loss expense reserves have been examined and found 
 to be calculated in accordance with generally accepted actuarial 
 principles and practices and are fairly stated."  

    (b) Each foreign company engaged in providing the types of 
 coverage described in section 60A.06, subdivision 1, clause (1), 
 (2), (3), (5)(b), (6), (8), (9), (10), (11), (12), (13), or 
 (14), required by this section to file an annual audited 
 financial report, whose total net earned premium for Schedule P, 
 Part 1A to Part 1H plus Part 1R, (Schedule P, Part 1A to Part 1H 
 plus Part 1R, Column 4, current year premiums earned, from the 
 company's most currently filed annual statement) is equal to 
 one-third or more of the company's total net earned premium 
 (Underwriting and Investment Exhibit, Part 2, Column 4, total 
 line, of the annual statement) must have a reserve certification 
 by a qualified actuary at least every three years.  In the year 
 that the certification is due, the company must file the 
 certification with the commissioner within 30 days of completion 
 of the certification, but not later than June 1.  The actuary 
 providing the certification must not be an employee of the 
 company.  Companies writing reinsurance alone are not exempt 
 from this requirement.  The certification must contain the 
 following statement:  "The loss reserves and loss expense 
 reserves have been examined and found to be calculated in 
 accordance with generally accepted actuarial principles and 
 practices and are fairly stated."  

    (c) Each company providing life and/or health insurance 
 coverages described in section 60A.06, subdivision 1, clause (4) 
 or (5)(a), required by this section to file an audited annual 
 financial report, whose premiums and annuity considerations (net 
 of reinsurance) from accident and health equal one-third or more 
 of the company's total premiums and annuity considerations (net 
 of reinsurance), as reported in the summary of operations, must 
 have its aggregate reserve for accident and health policies and 
 liability for policy and contract claims for accident and health 
 certified by a qualified actuary at least once every three 
 years.  The actuary providing the certification must not be an 
 employee of the company.  Companies writing reinsurance alone 
 are not exempt from this requirement.  The certification must 
 contain the following statement:  "The policy and contract 
 claims reserves for accident and health have been examined and 
 found to be calculated in accordance with generally accepted 
 actuarial principles and practices and are fairly stated." 

    Subd. 3.    Annual audit.  (a) Every insurance company 
 doing business in this state, including fraternal benefit 
 societies, reciprocal exchanges, service plan corporations 
 licensed pursuant to chapter 62C, and legal service plans 
 licensed pursuant to chapter 62G, unless exempted by the 
 commissioner pursuant to subdivision 5, paragraph (a), or by 
 subdivision 7, shall have an annual audit of the financial 
 activities of the most recently completed calendar year 
 performed by an independent certified public accountant, and 
 shall file the report of this audit with the commissioner on or 
 before June 1 for the immediately preceding year ending December 
 31.  The commissioner may require an insurer to file an audited 
 financial report earlier than June 1 with 90 days' advance 
 notice to the insurer. 

    Extensions of the June 1 filing date may be granted by the 
 commissioner for 30-day periods upon a showing by the insurer 
 and its independent certified public accountant of the reasons 
 for requesting the extension and a determination by the 
 commissioner of good cause for the extension.  

    The request for extension must be submitted in writing not 
 less than ten days before the due date in sufficient detail to 
 permit the commissioner to make an informed decision with 
 respect to the requested extension.  

    (b) Foreign and alien insurers filing audited financial 
 reports in another state under the other state's requirements of 
 audited financial reports which have been found by the 
 commissioner to be substantially similar to these requirements 
 are exempt from this subdivision if a copy of the audited 
 financial report, accountant's letter of qualifications, and 
 report on significant deficiencies in internal controls, which 
 are filed with the other state, are filed with the commissioner 
 in accordance with the filing dates specified in paragraphs (a) 
 and (l), (Canadian insurers may submit accountants' reports as 
 filed with the Canadian Dominion Department of Insurance); and a 
 copy of any notification of adverse financial condition report 
 filed with the other state is filed with the commissioner within 
 the time specified in paragraph (k).  This paragraph does not 
 prohibit or in any way limit the commissioner from ordering, 
 conducting, and performing examinations of insurers under the 
 authority of this chapter. 

    (c)(i) The annual audited financial report shall report, in 
 conformity with statutory accounting practices required or 
 permitted by the commissioner of insurance of the state of 
 domicile, the financial position of the insurer as of the end of 
 the most recent calendar year and the results of its operations, 
 cash flows, and changes in capital and surplus for the year 
 ended.  The annual audited financial report shall include a 
 report of an independent certified public accountant; a balance 
 sheet reporting admitted assets, liabilities, capital, and 
 surplus; a statement of operations; a statement of cash flows; a 
 statement of changes in capital and surplus; and notes to the 
 financial statements.  

    (ii) The notes required under item (i) shall be those 
 required by the appropriate National Association of Insurance 
 Commissioners annual statement instructions and any other notes 
 required by generally accepted accounting principles and shall 
 include reconciliation of differences, if any, between the 
 audited statutory financial statements and the annual statement 
 filed under section 60A.13, subdivision 1, with a written 
 description of the nature of these differences; and shall also 
 include a summary of ownership and relationships of the insurer 
 and all affiliated companies.  

    (iii) The financial statements included in the audited 
 financial report shall be prepared in a form and using language 
 and groupings substantially the same as the relevant sections of 
 the annual statement of the insurer filed with the 
 commissioner.  The financial statement shall be comparative, 
 presenting the amounts as of December 31 of the current year and 
 the amounts as of the immediately preceding December 31.  In the 
 first year in which an insurer is required to file an audited 
 financial report, the comparative data may be omitted.  The 
 amounts may be rounded to the nearest $1,000, and all 
 insignificant amounts may be combined.  

    (d) Each insurer required by this section to file an annual 
 audited financial report must notify the commissioner in writing 
 of the name and address of the independent certified public 
 accountant or accounting firm retained to conduct the annual 
 audit within 60 days after becoming subject to the annual audit 
 requirement.  The insurer shall obtain from the accountant a 
 letter which states that the accountant is aware of the 
 provisions that relate to accounting and financial matters in 
 the insurance laws and the rules of the insurance regulatory 
 authority of the state of domicile.  The letter shall affirm 
 that the accountant will express an opinion on the financial 
 statements in terms of their conformity to the statutory 
 accounting practices prescribed or otherwise permitted by that 
 insurance regulatory authority, specifying the exceptions 
 believed to be appropriate.  A copy of the accountant's letter 
 shall be filed with the commissioner.  

    (e) If an accountant who was the accountant for the 
 immediately preceding filed audited financial report is 
 dismissed or resigns, the insurer shall notify the commissioner 
 of this event within five business days.  Within ten business 
 days of this notification, the insurer shall also furnish the 
 commissioner with a separate letter stating whether in the 24 
 months preceding this event there were any disagreements with 
 the former accountant 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 accountant, would have caused that person to make 
 reference to the subject matter of the disagreement in 
 connection with the opinion.  The disagreements required to be 
 reported in response to this paragraph include both those 
 resolved to the former accountant's satisfaction and those not 
 resolved to the former accountant's satisfaction.  Disagreements 
 contemplated by this section are those disagreements between 
 personnel of the insurer responsible for presentation of its 
 financial statements and personnel of the accounting firm 
 responsible for rendering its report.  The insurer shall also in 
 writing request the former accountant to furnish a letter 
 addressed to the insurer stating whether the accountant agrees 
 with the statements contained in the insurer's letter and, if 
 not, stating the reasons for any disagreement.  The insurer 
 shall furnish this responsive letter from the former accountant 
 to the commissioner together with its own. 

    (f) The commissioner shall not recognize any person or firm 
 as a qualified independent certified public accountant that is 
 not in good standing with the American Institute of Certified 
 Public Accountants and in all states in which the accountant is 
 licensed to practice, or for a Canadian or British company, that 
 is not a chartered accountant.  Except as otherwise provided, an 
 independent certified public accountant shall be recognized as 
 qualified as long as the person conforms to the standards of the 
 person's profession, as contained in the Code of Professional 
 Ethics of the American Institute of Certified Public Accountants 
 and the rules of professional conduct of the Minnesota board of 
 public accountancy or similar code.  

    (g) No partner or other person responsible for rendering a 
 report for calendar year 1997 and thereafter may act in that 
 capacity for more than seven consecutive years.  Following any 
 period of service, the person shall be disqualified from acting 
 in that or a similar capacity for the same company or its 
 insurance subsidiaries or affiliates for a period of two years.  
 An insurer may make application to the commissioner for relief 
 from the above rotation requirement on the basis of unusual 
 circumstances.  The commissioner may consider the number of 
 partners, the expertise of the partners or the number of 
 insurance clients in the currently registered firm, the premium 
 volume of the insurer, or the number of jurisdictions in which 
 the insurer transacts business in determining if the relief 
 should be granted. 

    (h) The commissioner shall not recognize as a qualified 
 independent certified public accountant, nor accept any audited 
 financial report, prepared in whole or in part by any natural 
 person who has been convicted of fraud, bribery, a violation of 
 the Racketeer Influenced and Corrupt Organizations Act, United 
 States Code, title 18, sections 1961 to 1968, or any dishonest 
 conduct or practices under federal or state law, has been found 
 to have violated the insurance laws of this state with respect 
 to any previous reports submitted under this section, or has 
 demonstrated a pattern or practice of failing to detect or 
 disclose material information in previous reports filed under 
 the provisions of this section. 

    (i) The commissioner, after notice and hearing under 
 chapter 14, may find that the accountant is not qualified for 
 purposes of expressing an opinion on the financial statements in 
 the annual audited financial report.  The commissioner may 
 require the insurer to replace the accountant with another whose 
 relationship with the insurer is qualified within the meaning of 
 this section. 

    (j) Financial statements furnished under paragraph (a), 
 shall be examined by an independent certified public 
 accountant.  The examination of the insurer's financial 
 statements shall be conducted in accordance with generally 
 accepted auditing standards and consideration should be given to 
 other procedures illustrated in the Financial Condition 
 Examiners Handbook, issued by the National Association of 
 Insurance Commissioners, as the independent certified public 
 accountant considers necessary.  

    (k) The insurer required to furnish the annual audited 
 financial report shall require the independent certified public 
 accountant to provide written notice within five business days 
 to the board of directors of the insurer or its audit committee 
 of any determination by that independent certified public 
 accountant that the insurer has materially misstated its 
 financial condition as reported to the commissioner as of the 
 balance sheet date currently under examination or that the 
 insurer does not meet the minimum capital and surplus 
 requirement of section 60A.07 as of that date.  An insurer 
 required to file an annual audited financial report who received 
 a notification of adverse financial condition from the 
 accountant shall file a copy of the notification with the 
 commissioner within five business days of the receipt of the 
 notification.  The insurer shall provide the independent 
 certified public accountant making the notification with 
 evidence of the report being furnished to the commissioner.  If 
 the independent certified public accountant fails to receive the 
 evidence within the required five-day period, the independent 
 certified public accountant shall furnish to the commissioner a 
 copy of the notification to the board of directors or its audit 
 committee within the next five business days.  No independent 
 certified public accountant shall be liable in any manner to any 
 person for any statement made in connection with this paragraph 
 if the statement is made in good faith in compliance with this 
 paragraph.  If the accountant becomes aware of facts which might 
 have affected the audited financial report after the date it was 
 filed under this section, the accountant shall take the action 
 prescribed by Professional Standards issued by the American 
 Institute of Certified Public Accountants. 

    (l) In addition to the annual audited financial statements, 
 each insurer shall furnish the commissioner with a written 
 report prepared by the accountant describing significant 
 deficiencies in the insurer's internal control structure noted 
 by the accountant during the audit.  The accountant shall follow 
 the professional standards issued by the American Institute of 
 Certified Public Accountants, which require an accountant to 
 communicate significant deficiencies, known as reportable 
 conditions, noted during a financial statement audit, to the 
 appropriate parties within an entity.  No report shall be issued 
 if the accountant does not identify significant deficiencies.  
 Any such report by the accountant describing significant 
 deficiencies in the insurer's internal control structure, shall 
 be filed annually by the insurer with the commissioner within 60 
 days after the filing of the annual audited financial 
 statements.  This report on internal control shall be in the 
 form prescribed by generally accepted auditing standards.  The 
 insurer shall provide the commissioner with a description of 
 remedial actions taken or proposed to correct significant 
 deficiencies, if those actions are not described in the 
 accountant's report. 

    (m) The accountant shall furnish the insurer in connection 
 with, and for inclusion in, the filing of the annual audited 
 financial report, a letter stating that the accountant is 
 independent with respect to the insurer and conforms to the 
 standards of the accountant's profession as contained in the 
 Code of Professional Ethics of the American Institute of 
 Certified Public Accountants and the rules of professional 
 conduct of the Minnesota board of accountancy or similar code; 
 the background and experience in general, and the experience in 
 audits of insurers of the staff assigned to the engagement and 
 whether each is an independent certified public accountant; that 
 the accountant understands that the annual audited financial 
 report and the opinion thereon will be filed in compliance with 
 this statute and that the commissioner will be relying on this 
 information in the monitoring and regulation of the financial 
 position of insurers; that the accountant consents to the 
 requirements of paragraph (n) and that the accountant consents 
 and agrees to make available for review by the commissioner, or 
 the commissioner's designee or appointed agent, the workpapers, 
 as defined in paragraph (n); a representation that the 
 accountant is properly licensed by the appropriate state 
 licensing authority and is a member in good standing in the 
 American Institute of Certified Public Accountants; and, a 
 representation that the accountant complies with paragraph (f).  
 Nothing in this section shall be construed as prohibiting the 
 accountant from utilizing staff the accountant deems appropriate 
 where use is consistent with the standards prescribed by 
 generally accepted auditing standards. 

    (n) Workpapers are the records kept by the independent 
 certified public accountant of the procedures followed, tests 
 performed, information obtained, and conclusions reached 
 pertinent to the independent certified public accountant's 
 examination of the financial statements of an insurer.  
 Workpapers may include audit planning documents, work programs, 
 analyses, memoranda, letters of confirmation and representation, 
 management letters, abstracts of company documents, and 
 schedules or commentaries prepared or obtained by the 
 independent certified public accountant in the course of the 
 examination of the financial statements of an insurer and that 
 support the accountant's opinion.  Every insurer required to 
 file an audited financial report shall require the accountant, 
 through the insurer, to make available for review by the 
 examiners the workpapers prepared in the conduct of the 
 examination and any communications related to the audit between 
 the accountant and the insurer.  The workpapers shall be made 
 available at the offices of the insurer, at the offices of the 
 commissioner, or at any other reasonable place designated by the 
 commissioner.  The insurer shall require that the accountant 
 retain the audit workpapers and communications until the 
 commissioner has filed a report on examination covering the 
 period of the audit but no longer than seven years after the 
 period reported upon.  In the conduct of the periodic review by 
 the examiners, it shall be agreed that photocopies of pertinent 
 audit workpapers may be made and retained by the commissioner.  
 These copies shall be part of the commissioner's workpapers and 
 shall be given the same confidentiality as other examination 
 workpapers generated by the commissioner. 

    (o)(i) In the case of Canadian and British insurers, the 
 annual audited financial report means the annual statement of 
 total business on the form filed by these companies with their 
 domiciliary supervision authority and duly audited by an 
 independent chartered accountant. 

    (ii) For these insurers, the letter required in paragraph 
 (d), shall state that the accountant is aware of the 
 requirements relating to the annual audited statement filed with 
 the commissioner under paragraph (a), and shall affirm that the 
 opinion expressed is in conformity with those requirements. 

    (p) The audit report of the independent certified public 
 accountant that performs the audit of an insurer's annual 
 statement as required under paragraph (a), shall contain a 
 statement as to whether anything, in connection with the audit, 
 came to the accountant's attention that caused the accountant to 
 believe that the insurer failed to adopt and consistently apply 
 the valuation procedures as required by sections 60A.122 and 
 60A.123. 

    Subd. 4.    Examinations.  (a) The commissioner or a 
 designated representative shall determine the nature, scope, and 
 frequency of examinations under this section conducted by 
 examiners under section 60A.031.  These examinations may cover 
 all aspects of the insurer's assets, condition, affairs, and 
 operations and may include and be supplemented by audit 
 procedures performed by independent certified public 
 accountants.  Scheduling of examinations will take into account 
 all relevant matters with respect to the insurer's condition, 
 including results of the National Association of Insurance 
 Commissioners, Insurance Regulatory Information Systems, changes 
 in management, results of market conduct examinations, and 
 audited financial reports.  The type of examinations performed 
 by examiners under this section shall be compliance 
 examinations, targeted examinations, and comprehensive 
 examinations. 

    (b) Compliance examinations will consist of a review of the 
 accountant's workpapers defined under this section and a general 
 review of the insurer's corporate affairs and insurance 
 operations to determine compliance with the Minnesota insurance 
 laws and the rules of the department of commerce.  The examiners 
 may perform alternative or additional examination procedures to 
 supplement those performed by the accountant when the examiners 
 determine that the procedures are necessary to verify the 
 financial condition of the insurer. 

    (c) Targeted examinations may cover limited areas of the 
 insurer's operations as the commissioner may deem appropriate. 

    (d) Comprehensive examinations will be performed when the 
 report of the accountant as provided for in subdivision 3, 
 paragraph (g), the notification required by subdivision 3, 
 paragraph (h), the results of compliance or targeted 
 examinations, or other circumstances indicate in the judgment of 
 the commissioner or a designated representative that a complete 
 examination of the condition and affairs of the insurer is 
 necessary. 

    (e) Upon completion of each targeted, compliance, or 
 comprehensive examination, the examiner appointed by the 
 commissioner shall make a full and true report on the results of 
 the examination.  Each report shall include a general 
 description of the audit procedures performed by the examiners 
 and the procedures of the accountant that the examiners may have 
 utilized to supplement their examination procedures and the 
 procedures that were performed by the registered independent 
 certified public accountant if included as a supplement to the 
 examination. 

    Subd. 5.    Consolidated filing.  (a) The commissioner 
 may allow an insurer to file a consolidated loss reserve 
 certification required by subdivision 2, in lieu of separate 
 loss certifications and may allow an insurer to file 
 consolidated or combined audited financial statements required 
 by subdivision 3, paragraph (a), in lieu of separate annual 
 audited financial statements, where it can be demonstrated that 
 an insurer is part of a group of insurance companies that has a 
 pooling or 100 percent reinsurance agreement which substantially 
 affects the solvency and integrity of the reserves of the 
 insurer and the insurer cedes all of its direct and assumed 
 business to the pool.  If these circumstances exist, then the 
 company may file a written application to file a consolidated 
 loss reserve certification and/or consolidated or combined 
 audited financial statements.  This application shall be for a 
 specified period. 

    (b) A consolidated annual audit filing shall include a 
 columnar consolidated or combining worksheet.  Amounts shown on 
 the audited consolidated or combined financial statement shall 
 be shown on the worksheet.  Amounts for each insurer shall be 
 stated separately.  Noninsurance operations may be shown on the 
 worksheet on a combined or individual basis.  Explanations of 
 consolidating or eliminating entries shall be shown on the 
 worksheet.  A reconciliation of any differences between the 
 amounts shown in the individual insurer columns of the worksheet 
 and comparable amounts shown on the annual statement of the 
 insurers shall be included on the worksheet. 

    Subd. 6.    Penalties.  No annual statement, report, or 
 document related to the business of insurance shall be filed 
 with the commissioner or issued to the public if it is signed by 
 anyone who is represented in the instrument as an "actuary" or 
 "accountant," unless the person is qualified as defined by this 
 section.  A violation of this subdivision is a violation of 
 section 72A.19 and punishable in accordance with section 72A.25. 

    Subd. 7.    Exemptions.  (a) Upon written application of 
 any insurer, the commissioner may grant an exemption from 
 compliance with the provisions of this section.  In order to 
 receive an exemption, an insurer must demonstrate to the 
 satisfaction of the commissioner that compliance would 
 constitute a financial or organizational hardship upon the 
 insurer.  An exemption may be granted at any time and from time 
 to time for specified periods.  Within ten days from the denial 
 of an insurer's written request for an exemption, the insurer 
 may request in writing a hearing on its application for an 
 exemption.  This hearing shall be held in accordance with 
 chapter 14.  Upon written application of any insurer, the 
 commissioner may permit an insurer to file annual audited 
 financial reports on some basis other than a calendar year basis 
 for a specified period.  No exemption shall be granted until the 
 insurer presents an alternative method satisfying the purposes 
 of this section.  Within ten days from a denial of a written 
 request for an exemption, the insurer may request in writing a 
 hearing on its application.  The hearing shall be held in 
 accordance with chapter 14. 

    (b) This section applies to all insurers, unless otherwise 
 indicated, required to file an annual audit by subdivision 3, 
 paragraph (a), except insurers having less than $1,000,000 of 
 direct written premiums in this state in any calendar year and 
 fewer than 1,000 policyholders or certificate holders of 
 directly written policies nationwide at the end of the calendar 
 year, are exempt from this section for that year, unless the 
 commissioner makes a specific finding that compliance is 
 necessary for the commissioner to carry out statutory 
 responsibilities, except that insurers having assumed premiums 
 from reinsurance contracts or treaties of $1,000,000 or more are 
 not exempt. 

    HIST: 1993 c 299 s 3; 1994 c 426 s 4-6