N.J. Admin. Code § 11:27-12.4

Current through Register Vol. 57, No. 1, January 6, 2025

Section 11:27-12.4 - Independent board member committees

(a) The board of directors of an insurer shall establish one or more independent board member committees. Such committees shall be comprised of at least two members and shall be comprised solely of directors who are not officers or employees of the insurer or of any entity controlling, controlled by, or under common control with, the insurer and who are not beneficial owners of a controlling interest in the voting securities of the insurer or any such entity. Such committees shall meet not less than quarterly. Such committees shall be responsible for recommending the selection of independent certified public accountants and reviewing the insurer's financial condition, the scope and results of any independent audit or review, and any internal audit.

1. The requirements imposed by (a) above and by N.J.A.C. 11:27-12.3 shall not apply to an insurer that is a direct subsidiary of an entity that satisfies the requirements set forth therein.

(b) Every insurer shall establish an independent board member committee which shall be directly responsible for the appointment, compensation and oversight of the work of any accountant (including resolution of disagreements between management and the accountant regarding financial reporting) for the purpose of preparing or issuing the audited financial report or related work pursuant to N.J.A.C. 11:2-26. Each accountant shall report directly to the independent board member committee responsible for such oversight.

(c) The board committee referenced in (a) above shall require the accountant that performs for the insurer any audit required by N.J.A.C. 11:2-26 to timely report the results of the audit to the independent committee in accordance with the requirements of "SAS 61, Communication with Audit Committees," or its replacement, including:

1. All significant accounting policies and material permitted practices;

2. All material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the insurer, ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the accountant; and

3. Other material written communications between the accountant and the management of the insurer, such as any management letter or schedule of unadjusted differences.

N.J. Admin. Code § 11:27-12.4