REPORT DIGEST
DEPARTMENT OF INSURANCE
COMPLIANCE EXAMINATION
For the Year Ended June 30, 2010
Summary of Findings:
Total this audit: 3
Total last audit: 2*
Repeated from last audit: 1*
Release Date: May 12, 2011
State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL
To obtain a copy of the Report contact:
Office of the Auditor General, Iles Park Plaza, 740 E. Ash Street, Springfield, IL 62703
(217) 782-6046 or TTY (888) 261-2887
This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov
____________________________
INTRODUCTION
The Department of Insurance (Department) was established on
June 1, 2009 by Executive Order 2009-04.
The Department was previously a part of the Department of Financial and
Professional Regulation as the Division of Insurance. This was the initial compliance examination
of the Department. *Findings relating to
the Division of Insurance were reported as a part of the compliance examination
of the Department of Financial and Professional Regulation for the year ended
June 30, 2008.
SYNOPSIS
• The Department did not timely approve or deny life,
accident, and/or health insurance policy forms.
• The Department did not maintain time sheets for employees
in compliance with the State Officials and
Employees Ethics Act.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
UNTIMELY APPROVAL OR DENIAL OF LIFE, ACCIDENT, AND/OR HEALTH
INSURANCE POLICY FORMS
The Department failed to approve/deny life, accident, and/or
health insurance policy forms submitted by insurance companies in a timely
manner as required by the Illinois Insurance Code (Code).
We noted that 39 out of 50 (78%) policy forms reviewed were
not approved or denied on a timely basis.
These policy forms were approved or denied between 36 and 716 days later
than the maximum 90 day time period. (Finding 10-1, page 10)
We recommended the Department implement procedures to ensure
life, accident, and/or health insurance policy forms are properly approved or
disapproved in a timely manner as required by the Code.
Department officials concurred with our recommendation and
stated they have already implemented several critical path processes for
expediting the approval/disapproval of certain filing types and expanded
existing staff responsibilities to include the review and approval/disapproval
of life, accident, and health insurance policy forms. They further stated they will continue to
seek appropriate staffing levels needed to consistently meet the
timeframes.
TIMESHEETS NOT MAINTAINED IN COMPLIANCE WITH THE STATE
OFFICIALS AND EMPLOYEE ETHICS ACT
The Department did not maintain time sheets for employees in
compliance with the State Officials and Employees Ethics Act (Act).
During testing of the Department’s Ethics Timekeeping Work
Diary, we noted the following:
• In 16 out of 25 (64%) employee Ethics Timekeeping Work
Diary’s reviewed, time was not entered for any days worked by the employee for
the selected pay period.
• In 2 out of 25 (8%) employee Ethics Timekeeping Work
Diary’s reviewed, time was not entered in the work diary for every day worked
by the employee for the selected pay period. (Finding 10-3, pages 12-13)
We recommended the Department monitor the entries made into
the Ethics Timekeeping Work Diary to ensure compliance with the Act.
Department officials concurred with our recommendation and
stated they will seek to implement improved methods to monitor the entries made
into the Ethics Timekeeping Work Diary.
OTHER FINDING
The remaining finding is reportedly being given attention by
the Department. We will review the
Department’s progress towards the implementation of our recommendations in our
next engagement.
AUDITORS’ OPINION
We conducted a compliance examination of the Department as
required by the Illinois State Auditing Act.
The Department has no funds that require an audit leading to an opinion
of financial statements.
WILLIAM G. HOLLAND
Auditor General
WGH:PH:pp
SPECIAL ASSISTANT AUDITORS
Sikich LLP were our special assistant auditors.