This guidance is intended for agents/agencies to assist them if they are subject to an examination by the Division of Insurance. A copy of this guide is required to be given to each licensee being examined at the start of the examination. An examination is a procedure authorized by law. The following information will be helpful in understanding the rights and obligations of the agent/agency as well as what to expect from an examiner:
- Admission of Service — At the onset of the examination, the examiner should provide you with a copy of the examination order along with an admission of service. The admission merely acknowledges you have received the examination order and does not in any way constitute an admission of any act or omission on the part of the licensee.
- Cooperation Required — The agent/agency being examined and any of those entities or individuals affiliated with it must, by law, cooperate with an examination by providing records and information and otherwise facilitating the examination. The penalties for non-cooperation can be severe and could include suspension or revocation of a license. In the extreme case where a licensee would refuse to submit to an examination, an emergency suspension of the license could be issued immediately. If a licensee refused to submit to an examination or otherwise does not cooperate, the examiner is instructed to call back to the Division's offices in Pierre to discuss this matter with one of the supervisory staff, who will determine the appropriate action to take.
Examiner Access to Documents — The examiner is required to review the documents firsthand wherever they are located. For instance, if the files in question are electronic, access to the agency computer(s) will be necessary so as to personally conduct a review. Likewise, if the files are in a filing cabinet, the examiner must be given access to that filing cabinet.
- Sources of Information — An examiner is under instruction not to divulge the source or reason for the examination such as the source of information that gave rise to the examination.
- Examiner Authority — An examiner does not have authority to determine whether a penalty should be levied against a licensee or what that penalty should be.
- Examiner Conduct — You should expect an examiner to be courteous and professional in his or her demeanor.
- Scope of Examination — The scope of an examination can be very narrow or very broad depending upon the nature of the problem and what the examiner finds during the course of the examination. The following are types of records and information frequently subject to examination:
- Customer files
- Accounts receivable/payable and billings
- Bank records including registers, cancelled checks, deposits, transfers and monthly statements
- Company contracts
- Interviews with the licensee and others working in or affiliated with the agency which are typically under oath
This is not an all-inclusive list of the types of information and or records subject to examination but serves as a guide for the most common types of information or records that would be required. The examiner is instructed to go over the list with the licensee to advise what, at least initially, will be examined.
- Length of Examination — The examination may or may not be completed within one business day. Examinations can typically take two to three business days. In some instances, it will be necessary for the examiner to return and make a subsequent trip or trips to the agency in question.
- Resolution Procedures — Upon completion of the on-site portion of the examination, the matter could be resolved in several different ways:
- Examination Report — In the event that an examination report is issued, the licensee has 30 days in which to submit a written rebuttal. The Director would then have the authority to accept, modify or reject the examination report. The Director could also hold an investigatory hearing.
- Settlements — If the matter were settled, it would be through the mutual agreement of the Division and the licensee. Such settlements are in the form of a consent order whereby both parties agree to conclude the matter based upon the terms of the consent order.
- Hearings — If an examination reveals what the Division determines are violations and there is not mutually agreed upon resolution, the Division would be required to call for a hearing at which the licensee could be represented by an attorney. The hearing would be conducted by the Office of Hearings Examiners. The hearing examiner would make proposed findings of fact and conclusions of law. The Director could accept modify or reject the findings and/or conclusions of the hearing examiner.
- Appeals to Circuit Court — Any adverse action, including an examination report, and an order for suspension or revocation of a license, can be appealed to circuit court
If you have any questions or concerns with the examination or the manner in which it is being conducted you may contact the Division of Insurance.
South Dakota Division of Insurance
445 East Capitol Avenue
Pierre, SD 57501