PURPOSE: This rule implements the purposes of section 374.185, RSMo, and establishes uniform post-examination standards for the director and the company following a market conduct examination pursuant to sections 374.202 to 374.207, RSMo.

1. (1) The post-examination procedure shall be conducted in a manner consistent with the purposes of section 374.185, RSMo. In accordance with the National Association of Insurance Commissioners (NAIC) market conduct uniform examination procedures, the director shall require the following timelines and procedures following the completion of an examination:

   1. (A) No later than sixty (60) days following completion of the examination, the examinerin-charge or audit manager shall file with the department a verified draft report of examination under oath. Within ten (10) days of receipt of the verified draft report, the department shall send the draft report via certified mail to the company together with a notice which shall afford the company examined a reasonable opportunity to respond with written comments or make a written submission or rebuttal with respect to any matter contained in the examination report;
   2. (B) Completion of the examination shall be defined as the date the examiner-in-charge signs and submits the draft report to the audit manager for approval and signature;
   3. (C) The company is not obligated to submit written comments, submissions, or rebuttals to the draft report as allowed in subsection (1)(A) of this rule. However, if the company chooses to do so, it shall respond with written comments within thirty (30) days of receipt of the draft report, unless a mutual agreement is reached with the department to extend the deadline;
   4. (D) The division shall make a good faith effort to resolve issues and prepare a final report within thirty (30) days of receipt of the company’s written comments, submissions, or rebuttals, unless a mutual agreement is reached to extend the deadline;
   5. (E) The division may modify the examination findings and finalize the report, as appropriate. Upon determination that the report is final, the division shall forward a copy of the final report to the company along with a notice apprising the company of its rights under subsection (1)(F), below;
   6. (F) The company shall, within thirty (30) days of receipt of the final report, accept the final report, accept the findings of the report, file written comments, or petition to modify the findings with a request for hearing. The company is not obligated to submit a response to the final report. The director may allow an additional thirty (30) days if requested by the company. Any petition to modify the findings with a hearing request shall be made in writing, and a hearing shall be held. After a hearing the director shall issue final examination findings; and

   7. (G) Within thirty (30) days of the end of the period allowed for the receipt of an acceptance or comments by the company or following a hearing, the director shall fully consider and review the report, together with any written comments and any relevant portions of the examiner’s work papers and enter an order:

      1. 1. Accepting the examination report as

filed or with modification or corrections. If the examination report reveals that the company is operating in violation of any law, regulation, or prior order of the director, the director may issue an order for any legal or regulatory action as the director deems appropriate, provided that this order shall be a confidential internal order directing the department to take certain action, or the company and the division may negotiate a consent order, curative order, or settlement agreement. Any such order or agreement shall be final once issued or approved by the director;

1. 2. Rejecting the examination report with

directions to the examiners to reopen the examination for purposes of obtaining additional documents, data, information, and requiring the submission of either a new report or a supplemental report; or

1. 3. For an investigatory hearing with no

less than twenty (20) days’ notice to the company for purposes of obtaining additional documents, data, information, and testimony.

1. (2) Once all administrative proceedings regarding the examination pursuant to subsections (1)(F) and (1)(G) are final, the department shall make available written and electronic versions of the final report. Both versions of the final report shall include the company’s written response, if any, and any negotiated text of the examination report and the concluding document, whether that is an administrative order of the director, curative order of the director, or a stipulation of settlement and order.
2. (3) All orders entered pursuant to subsection (1)(G) shall be accompanied by findings and conclusions resulting from the director’s consideration and review of the examination report, relevant examiner work papers, and written submissions, rebuttals, or comments, if any submitted by the company. A finding issued under subsection (1)(F) shall not be considered a final order. Any order issued under paragraph (1)(G)1. shall be considered a final administrative decision and may be appealed pursuant to section 374.055, RSMo, Chapter 536, RSMo, and 20 CSR 800-1.100 and shall be served upon the company by certified mail, together with a copy of the final examination report. Within thirty (30) days of the issuance of the final findings, as outlined in subsection (1)(G), the company shall file affidavits executed by each of its directors stating under oath that they have received a copy of the final report and related orders.

3. (4) In conducting an investigatory hearing pursuant to paragraph (1)(G)3.—

   1. (A) The hearing shall proceed expeditiously with discovery by the company limited to the examiner’s work papers which tend to substantiate any assertions set forth in any written submission or rebuttal.
   2. (B) The director may issue subpoenas for the attendance of any witnesses or the production of any documents deemed relevant to the investigation whether under the control of the department, the company, or other persons. The documents produced shall be 20 CSR 100-8

included in the record, and testimony taken by the director shall be under oath and preserved for the record.

1. (C) The provisions of this section shall not require the director to disclose any information or records which would indicate or show the existence of any investigation or activity of a criminal justice agency.
2. (D) The division shall proceed with evidence, including representatives of the company. Thereafter, the company may present testimony relevant to the investigation.
3. (E) The company and the division shall be permitted to make closing statements.

AUTHORITY: sections 374.045 and 374.205, RSMo 2000 and section 374.185, RSMo Supp. 2007.* Original rule filed April 1, 2008, effective Nov. 30, 2008.

*Original authority: 374.045, RSMo 1967, amended 1993, 1995; 374.185, RSMo 2007; and 374.205, RSMo 1992, amended 1997, 1999.