FROM: David L. Krumm, Chief Examiner
DATE: December 13, 2002
RE: On-site Financial Examinations
The Nebraska Department of Insurance conducts on-site financial examinations of all domestic insurance companies on a periodic basis. Because of the advancements in technology, we are making substantial changes in our examination procedures. We now have the capability to complete all examinations in electronic format.
Our existing process requires the examiner to go to the jobsite and request documentation that supports the Annual Statement line items. Hardcopy data must be scanned into the computer application that manages the examination process. Scanning takes a considerable amount of time. After reviewing the existing examination process, we believe that we can eliminate some of the examination time if your company provides the necessary documentation in electronic format in advance of the examiners' arrival at your company.
As part of the examination effort, the examiners employ electronic data processing (EDP) audit software to perform audit work on specific items. In order to perform these EDP applications, the examiners request data files in an electronic format. Each company should be prepared to supply necessary data files. The data files are, for the most part, files that support the values recorded in the Annual Statement and its related documents. Previously, certain file requests needed to be reconstructed by the company's data processing department at great expense in terms of processing time and audit delay. For these files to be readily available, each company should save and store all electronic data files that support or were used in preparation of annual statement values, and related documents, for each year-end.
DOCUMENTATION TO BE SAVED AND MAINTAINED ELECTRONICALLY
Certain documentation is requested by the examination staff at each and every financial examination. We are requesting that the insurance companies annually save such documentation electronically. Please view this list as a minimum requirement for data files under the provisions of Nebraska Revised Statute §44-106.
If you have any questions regarding this memo please contact:
James G. Nixon
fax (402) 471-4610