(1) The commissioner may conduct market conduct surveillance of any company as often as the commissioner, in the commissioner's sole discretion, deems appropriate. When initiating market conduct surveillance and in determining its nature, scope, and frequency, the commissioner may consider any market analysis performed pursuant to section 10-1-303 and any other criteria as set forth in the most recent available edition of the Market Regulation Handbook.
For purposes of completing market conduct surveillance of any company under thispart 3, the commissioner may review, evaluate, or analyze any person or the business of any person to the extent the action is, in the sole discretion of the commissioner, necessary or material to the market conduct surveillance.
In conducting market conduct surveillance, market conduct surveillance personnelshall consider those guidelines and procedures set forth in the most recent available edition of the Market Regulation Handbook. The commissioner may also employ other standard insurance industry guidelines or procedures the commissioner deems appropriate.
Any person who knowingly or willfully testifies falsely in reference to any mattermaterial to any market conduct surveillance, or who knowingly or willfully makes any false certificate, entry, or memorandum upon any of the books or papers of a company or upon any statement filed or offered to be filed with the commissioner or used in the course of any market conduct surveillance or inquiry is guilty of a misdemeanor and, upon conviction, shall be punished by a fine of not more than five thousand dollars, or by imprisonment in the county jail for not more than three months, or by both such fine and imprisonment.
(a) Every company or person from whom information is sought and all officers, directors, and agents of the company or person shall provide to the market conduct surveillance personnel timely, convenient, and free access to all books, records, accounts, papers, tapes, computer records, and other documents relating to the property, assets, business, and affairs of the company. The officers, directors, employees, and agents of the company or person shall facilitate the market conduct surveillance and aid in the review, evaluation, or analysis to the extent it is in their power to do so.
(b) (I) The refusal of any company or any of its officers, directors, employees, or agents to submit to any type of market conduct surveillance or to comply with any reasonable written request of market conduct surveillance personnel is grounds for suspension, revocation, denial, or nonrenewal of any license or authority held by the company and subject to the commissioner's jurisdiction.
(II) Proceedings for any suspension or revocation pursuant to this subsection (5)(b) must be conducted in accordance with section 10-1-110.
(6) (a) The company subject to market conduct surveillance shall pay the reasonable fees and expenses of the market conduct surveillance.
(b) (I) The commissioner or the commissioner's assistants shall conduct market conduct surveillance of a domestic company unless the commissioner determines that good cause exists to have the market conduct surveillance conducted by contract market conduct surveillance personnel.
(II) The commissioner shall adopt rules for determining when contract market conduct surveillance personnel may be used and the reasonable fees and expenses that the company subject to the market conduct surveillance shall pay. The rules must include factors such as travel requirements, workload needs, special expertise required for the market conduct surveillance, and market issues requiring any unanticipated market conduct surveillance.
(c) When an insurance company not authorized to do business in this state, a company adjudged insolvent, or a company withdrawing from this state for any cause neglects, fails, or refuses to pay the reasonable fees and expenses for market conduct surveillance as approved by the commissioner:
The state treasurer shall pay the fees and expenses from the general fund upon theorder of the commissioner; and
The amount paid is a first lien upon all assets and property of the company and maybe recovered by suit filed by the attorney general on behalf of the state of Colorado and credited to the general fund.
Nothing in this part 3 limits the commissioner's authority to terminate or suspend anymarket conduct surveillance in order to pursue other legal or regulatory action pursuant to the insurance laws of this state.
(a) Where the reasonable and necessary cost of any type of market conduct surveillance is to be assessed against the company subject to the market conduct surveillance, the fee must be consistent with the Market Regulation Handbook. The fees and expenses must be itemized and must include receipts for all applicable expenses, and invoices shall be provided to the division on at least a monthly basis for review prior to submission to the company for payment. The company subject to the market conduct surveillance shall pay fees and expenses at least monthly.
(b) The commissioner shall maintain active management and oversight of costs, including costs associated with the commissioner's own market conduct surveillance personnel and with retaining qualified contract market conduct surveillance personnel. To the extent the commissioner retains outside assistance, the commissioner shall have written protocols that:
Establish and utilize a dispute resolution or arbitration mechanism to resolve conflictswith companies regarding fees and expenses; and
Require disclosure of the terms of the contracts with the outside consultants that willbe used, including the fees and hourly rates that may be charged.
A company cannot be required to reimburse any portion of fees under this subsection(8) incurred by market conduct surveillance personnel that exceeds the fees prescribed in the Market Regulation Handbook and any successor documents to that handbook, unless the commissioner demonstrates that the fees prescribed in the Market Regulation Handbook are inadequate under the circumstances of the type of market conduct surveillance conducted.
A company may request an independent audit of the fees and expenses charged within twelve months after the completion of any type of market conduct surveillance. The company is responsible for the cost of the independent audit. Market conduct surveillance personnel shall maintain documentation supporting the fees and expenses charged to the company for at least twelve months after the completion of the market conduct surveillance.
Source: L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1563, § 10, effective January 1, 2018.