NE Ins. Dept. to Upgrade Use of Electronic Data Processing for On-site Financial Examinations

Nebraska’s Department of Insurance (NDI) issued a statement indicating that due to “advancements in technology” it will be making substantial changes in the periodic on-site financial examinations it conducts of all of the state’s domestic insurance companies.

The NDI bulletin said it “now has the capability to complete all examinations in electronic format.” It envisions companies preparing their data in electronic format in advance of an examiner’s arrival, thus avoiding the time necessary to scan documents, and register them in a computer.

“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,” said the bulletin. “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.”

It indicated that “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.” The NDI asked companies to now have the required information readily available, and emphasized that 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.”

It listed the following as “DOCUMENTATION TO BE SAVED AND MAINTAINED ELECTRONICALLY” under the provisions of Nebraska Revised Statute §44-106:
1. Accounts and Records
2. Articles of Incorporation
3. Bylaws
4. Management Representations of Commitments and Contingent Liabilities
5. Corporate Minutes
6. Internal Auditors Reports
7. Territory and Plan of Operation
8. Holding Company Filings
9. Documentation necessary to support annual statement assets and liabilities.
—a. All written premium transactions for the year.
—b. All transactions associated with reserves and paid contract claims including, for life and health companies, the development of Exhibit 5 & 8 for the year.
—c. All transactions associated with premium and agents’ balances for the year.
—d. Data files, which support values and transactions, reported in the investment schedules of the Annual Statement.
—e. All data files which support the reinsurance balances reflected in the Annual Statement for the year.
—f. Trial balances and adjustments for the year.

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