DEPARTMENT OF REGULATORY AGENCIES
Division of Insurance
3 CCR 702-3
Financial Issues
Amended Regulation 3-1-10
CONCERNING FINANCIAL STATEMENT FILINGS, ACCOUNTING STANDARDS AND REPORTING OF LIABILITIES
Section 1Authority
Section 2Scope and Purpose
Section 3Applicability
Section 4Rule
Section 5Severability
Section 6Enforcement
Section 7Effective Date
Section 8History
Section 1Authority
This regulation is promulgated under the authority of §§ 10-1-108, 10-1-109, 10-3-109, 10-3-208, 10-5-117, 10-6-129, 10-14-505, 10-14-602, 10-16-109, and 10-16-111, Colorado Revised Statutes (C.R.S.).
Section 2Scope and Purpose
Colorado insurance law provides that regulated companies must file financial statements annually with the Commissioner of Insurance. Insurers subject to the provisions of § 10-3-208, C.R.S. are required to file what is known as the convention blank adopted from year to year by the National Association of Insurance Commissioners (NAIC). Colorado law does not specifically prescribe a form of the annual statement filing for nonprofit hospital, medical-surgical, and health service corporations, health maintenance organizations,prepaid dental care plan organizations, group captive insurersand fraternal benefit societies. However, the NAIC does adopt convention blanks for each of these regulated companies and the Commissioner has been provided the authority to designate the form of the annual filing for these entities.
In addition to the annual statements, the NAIC also adopts instruction and procedure manuals for the convention blanks.These manuals include information which contributes to the body of knowledge referred to as statutory accounting practices.
The purpose of this regulation is twofold:
1.To enhance the consistency of the accounting treatment of assets, liabilities, reserves, income and expenses by setting forth the accounting standards, practices and procedures to be followed in completing all of the required annual statements.
2.To set forth the form of the financial statements to be filed for those entities which do not have the form prescribed in statute.
Section 3Applicability
This regulation shall apply to all Colorado domestic insurers as well as to each domestic group captive insurer, fraternal benefit society, health maintenance organization, prepaid dental care plan organization, and non-profit hospital, medical-surgical and health service corporation.
Section 4Rule
A.Standards, Practices and Procedures
Statutory financial statements must be completed in accordance with statutory accounting principles and practices as prescribed by Colorado insurance laws, regulations, and rulings, including the instructions, footnotes, annual statement accounting practices and procedures developed by the NAIC.These NAIC documents include the appropriate Annual Statement Instructions Manual and the Accounting Practices and Procedures Manual.These manuals provide direction, procedures, and methods of completing the annual statements and include those categories for which a company is required to establish reserves or liabilities.Liabilities and reserves which are to be established shall include, but are not necessarily limited to, life reserves, active life reserves, unearned premium reserves, loss reserves for claims both known and unknown, loss adjustment expenses both allocated and unallocated, unpaid claims, unpaid claims adjustment expenses, and accounts payable.
B.Filing
1.The form of the annual statement to be filed by a group captive insurer,nonprofit hospital, medical-surgical, and health service corporation, health maintenance organization, prepaid dental care plan organization, and fraternal benefit society is the NAIC convention blank form for each of these types of entities.
2.All entities required to file with the NAIC must file on diskette and pay the NAIC filing fees.
C.Notwithstanding the foregoing, it should be noted that while the NAIC's Accounting Practices and Procedures Manual identifies and establishes generally accepted statutory accounting principles, such principles and procedures do not supersede any specific statutes, regulations, orders or rulings of the state of Colorado or this office.
Section 5Severability
If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected.
Section 6Enforcement
Noncompliance with this regulation may result in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance, or other laws, which include the imposition of civil penalties, issuance of cease and desist orders, and/or suspensions or revocation of license, subject to the requirements of due process.
Section 7Effective Date
This regulation shall be effective July 1, 2012.
Section 8History
Originally effective November 1, 1992.
Amended effective April 1, 2001.
Amended effective July 1, 2012.