1. (1) The audit committee shall be directly responsible for the appointment, compensation and oversight of the work of any CPA (including resolution of disagreements between management and the CPA regarding financial reporting) for the purpose of preparing or issuing the audited financial report or related work pursuant to this Part. Every CPA shall report directly to the audit committee.
2. (2) The audit committee shall be responsible for overseeing the company’s internal audit function and granting the person or persons performing the function suitable authority and resources to fulfill their responsibilities if required by section 89.16 of this Part.
3. (b) Every member of the audit committee shall be a member of the board of directors, a member of the board of directors of a member of the holding company system described in section 89.1(j) of this Part or, for a United States branch of an alien company, a member of the audit committee of the person that controls the branch.
4. (c) In order to be considered independent for purposes of this section, a member of the audit committee may not, other than in the member's capacity as a member of the audit committee, the board of directors, or any other board committee, accept any consulting, advisory or other compensatory fee from the company or be an affiliated person of the company or any subsidiary thereof, except to the extent that any law may require board participation by otherwise non-independent members, and, in such case, the member may participate in the audit committee and be designated as independent for audit committee purposes, unless the member is an officer or employee of the company or one of its affiliates.
5. (d) If a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, that person may remain an audit committee member of the responsible company until the earlier of the next annual meeting of the responsible company or one year from the occurrence of the event that caused the member to be no longer independent, provided that the company promptly notifies the superintendent.

6. (e) The company shall give written notice to the superintendent of the selection of its audit committee within 30 days of the effective date of this Part and within 30 days of any change in membership of the audit committee. The notice shall include a description of the reason for the change.

   1. (1) The audit committee shall require the CPA that performs any audit for a company that is required by this Part to timely report to the audit committee:

      1. (i) all significant accounting policies and material permitted practices;
      2. (ii) all material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the company, ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the CPA; and
      3. (iii) other material written communications between the CPA and the management of the company, such as any management letter or schedule of unadjusted differences.
   2. (2) If a company is a member of a group of companies, the reports required by paragraph (1) of this subdivision may be provided to the audit committee on an aggregate basis for the group, provided that any substantial differences among companies in the system are identified to the audit committee.

   (f)

7. (g) The proportion of independent audit committee members for a company shall meet or exceed the following minimum criteria:

   1. (1) if the company's prior calendar year direct written and assumed premiums are equal to or less than $300,000,000, no members of the audit committee shall be required to be independent;
   2. (2) if the company's prior calendar year direct written and assumed premiums are greater than $300,000,000 but not more than $500,000,000, 50 percent or more of the members of the audit committee shall be independent, unless otherwise provided by law as for a MCO; or

   3. (3) if the company's prior calendar year direct written and assumed premiums are more than $500,000,000, 75 percent or more of the members of the audit committee shall be independent.

      (h) Changes in required number of independent audit committee members.

   4. (1) A company that is required to have a higher number of independent audit committee members due to changes in premium shall have one year following the year the threshold is exceeded to comply with the independence requirements; and
   5. (2) a company that becomes subject to a different independence requirement as a result of a business combination shall have one calendar year following the date of acquisition or combination to comply with the newly effective independence requirements.

8. (i) This section shall not apply to:

   1. (1) a domestic life insurer if its holding company or parent corporation is a foreign or domestic insurer, a mutual insurance holding company established pursuant to the laws of the United States, or a publicly held corporation incorporated in the United States, having a board of directors and committees thereof that meet the same requirements as have been established for a domestic stock life insurer pursuant to Insurance Law, section 1202(b)(1) and (2);
   2. (2) a foreign insurer or an alien insurer not entered into this State through a United States branch; or
   3. (3) a company that is a SOX compliant company or a directly or indirectly wholly-owned subsidiary of a SOX compliant company.

(a)