EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

1-1 Section 1. Chapter 679B of NRS is hereby amended by adding

1-2 thereto the provisions set forth as sections 2 to 9, inclusive, of this act.

1-3 Sec. 2. As used in sections 2 to 9, inclusive, of this act, unless the

1-4 context otherwise requires, the words and terms defined in sections 3 and

1-5 4 of this act have the meanings ascribed to them in those sections.

1-6 Sec. 3. "Insurance compliance audit" means a voluntary, internal

1-7 evaluation, review, assessment, audit or investigation conducted by an

1-8 insurer or at the request of an insurer to identify or prevent the

1-9 noncompliance by the insurer with applicable federal and state laws,

1-10 regulations, orders and other professional standards relating to the

1-11 transacting of insurance, and to promote compliance by the insurer with

1-12 those laws, regulations, orders and other standards.

1-13 Sec. 4. "Insurance compliance audit document" means any

1-14 document that is prepared as a result of or in connection with an

1-15 insurance compliance audit. The term includes, without limitation:

2-1 1. Field notes and records of observation, findings, opinions,

2-2 suggestions, conclusions, drafts, memoranda, drawings, photographs,

2-3 exhibits, information that is generated by a computer or electronically

2-4 recorded, telephone records, maps, charts, graphs and surveys which are

2-5 collected or developed during the course of an insurance compliance

2-6 audit.

2-7 2. Reports on the insurance compliance audit that were prepared by

2-8 an auditor, regardless of whether the auditor is an employee of the

2-9 insurer or an independent contractor, which include, without limitation,

2-10 the scope of the audit, the information obtained during the audit, any

2-11 conclusions and recommendations of the auditor based on the audit, and

2-12 any appendices and exhibits attached to the audit or the report on the

2-13 audit.

2-14 3. Memoranda and other documents in which any portion of a report

2-15 on an insurance compliance audit is analyzed or any potential correction

2-16 needed as a result of the insurance compliance audit is discussed.

2-17 4. Implementation plans that set forth proposed actions intended to

2-18 correct past noncompliance, improve current compliance or prevent

2-19 future noncompliance with federal and state laws, regulations, orders

2-20 and other professional standards relating to the transacting of insurance.

2-21 5. Analytic data that is generated in the course of conducting the

2-22 insurance compliance audit.

2-23 Sec. 5. 1. An insurance compliance audit document and the

2-24 information contained therein shall be deemed to be an absolutely

2-25 privileged communication. Except as otherwise provided in sections 2 to

2-26 9, inclusive, of this act, an insurance compliance audit document and the

2-27 information contained therein that is subject to the privilege of

2-28 confidentiality provided by this section is not admissible as evidence in

2-29 any action or proceeding.

2-30 2. An insurer that is the subject of an insurance compliance audit

2-31 document may expressly waive in writing the privilege of confidentiality

2-32 relating to the document and the information contained therein.

2-33 3. The privilege of confidentiality for insurance compliance audit

2-34 documents, and the information contained therein, provided by this

2-35 section is in addition to and supplements any other statutory or common

2-36 law privilege that otherwise applies to the documents or information.

2-37 4. Absent the express written waiver of the privilege of confidentiality

2-38 by the insurer for which the insurance compliance audit was conducted,

2-39 disclosure of any insurance compliance audit document and any

2-40 information contained therein, regardless of whether the disclosure is

2-41 voluntary or involuntary, does not constitute a waiver of the privilege.

3-1 Sec. 6. 1. An insurer may, in connection with an investigation or

3-2 examination conducted pursuant to this Code, voluntarily submit an

3-3 insurance compliance audit document to the commissioner, attorney

3-4 general or any other person designated to conduct the investigation or

3-5 examination. Notwithstanding any specific statute to the contrary, the

3-6 privilege of confidentiality of the documents and information contained

3-7 therein is not waived or otherwise lost because the insurer voluntarily

3-8 submitted the information or documents pursuant to this subsection to

3-9 the commissioner, attorney general or other person conducting the

3-10 investigation or examination. The provisions of this subsection do not

3-11 authorize the commissioner, attorney general or other person conducting

3-12 an investigation or examination pursuant to this Code to compel the

3-13 insurer to disclose or otherwise provide an insurance compliance audit

3-14 document or any information contained therein.

3-15 2. An insurance compliance audit document that is voluntarily

3-16 submitted pursuant to this section to the commissioner, attorney general

3-17 or other person conducting an investigation or examination remains the

3-18 property of the insurer that submitted the document.

3-19 Sec. 7. 1. In an administrative, a civil or a criminal proceeding,

3-20 examination or investigation involving an insurer relating to the

3-21 transacting of insurance in this state, the commissioner or attorney

3-22 general may request, in writing, that an insurer disclose an insurance

3-23 compliance audit document pertaining to the insurer. The request for

3-24 disclosure must be sent by certified mail to the insurer.

3-25 2. If the insurer refuses to disclose the insurance compliance audit

3-26 document on the basis that the document or information contained

3-27 therein is a privileged communication, the insurer shall, not later than 30

3-28 days after the date on which it receives the request for disclosure, file a

3-29 petition with a court of competent jurisdiction requesting an in camera

3-30 hearing for a determination as to whether the document or information

3-31 contained therein is a privileged communication. The petition must

3-32 include:

3-33 (a) The date on which the insurance compliance audit document was

3-34 made;

3-35 (b) The identity of the person that conducted the insurance

3-36 compliance audit;

3-37 (c) The general nature of the activities covered by the insurance

3-38 compliance audit; and

3-39 (d) An identification of the portions of the insurance compliance audit

3-40 document for which the privilege is being asserted.

3-41 3. The submission of an insurance compliance audit document by an

3-42 insurer to the commissioner or attorney general pursuant to a request for

3-43 disclosure shall be deemed to be a waiver of the privilege of

4-1 confidentiality for the insurance compliance audit document and the

4-2 information contained therein only for the purpose of the specific request

4-3 pursuant to which the document was submitted, unless the insurer

4-4 expressly waives in writing the privilege of confidentiality for the

4-5 insurance compliance audit document and the information contained

4-6 therein.

4-7 Sec. 8. 1. Upon the filing of a petition with a court of competent

4-8 jurisdiction pursuant to section 7 of this act, the court shall schedule an

4-9 in camera hearing not later than 45 days after the date on which the

4-10 petition was filed.

4-11 2. If the insurance compliance audit document was requested for a

4-12 civil or administrative proceeding, examination or investigation, the

4-13 court may require the disclosure of the document, subject to the

4-14 provisions of subsection 4, only if the court finds that:

4-15 (a) The purpose for which the privilege is being asserted is fraudulent;

4-16 or

4-17 (b) The document or information contained therein is not subject to

4-18 the privilege.

4-19 3. If the insurance compliance audit document was requested for a

4-20 criminal proceeding or investigation, the court may require the

4-21 disclosure of the document, subject to the provisions of subsection 4, only

4-22 if the court finds that:

4-23 (a) The purpose for which the privilege is being asserted is fraudulent;

4-24 (b) The document or information contained therein is not subject to

4-25 the privilege; or

4-26 (c) The document contains evidence that is relevant to the commission

4-27 of a criminal offense, and:

4-28 (1) The commissioner or attorney general, as appropriate, has a

4-29 compelling need for the evidence;

4-30 (2) The evidence is not otherwise available; and

4-31 (3) The commissioner or attorney general, as appropriate, is unable

4-32 to obtain the substantial equivalent of the evidence by any other means

4-33 without incurring unreasonable delay or cost.

4-34 4. The court may only compel the disclosure of those portions of an

4-35 insurance compliance audit document that are relevant to the issues of

4-36 the underlying proceeding, examination or investigation for which the

4-37 disclosure of the document is sought.

4-38 5. The insurer and the commissioner or attorney general, as

4-39 appropriate, may stipulate whether the privilege of confidentiality may be

4-40 asserted for a specific insurance compliance audit document or the

4-41 information contained therein, or whether the document or information

5-1 may be disclosed. Such a stipulation is limited in scope to the instant

5-2 proceeding, examination or investigation and is not applicable to any

5-3 other proceeding, examination or investigation, absent specific language

5-4 in the stipulation to the contrary.

5-5 6. Disclosure of an insurance compliance audit document, or any

5-6 information contained therein, pursuant to this section constitutes a

5-7 waiver of the privilege of confidentiality only for the specific purpose for

5-8 which the document was sought.

5-9 7. If the court orders the disclosure of an insurance compliance

5-10 audit document or any information contained therein, the insurer may

5-11 apply to the court for an order protecting the document or information

5-12 from further disclosure.

5-13 Sec. 9. The privilege of confidentiality set forth in section 5 of this

5-14 act does not apply to:

5-15 1. Documents, communications, data, reports or other information

5-16 expressly required to be collected, developed, maintained or reported to

5-17 the commissioner, the division or any other regulatory agency pursuant

5-18 to state or federal law;

5-19 2. Information obtained by the commissioner or his designee, the

5-20 division or any other regulatory agency through observation or

5-21 monitoring of the insurer; or

5-22 3. Information obtained from a source that is independent from the

5-23 insurance compliance audit.

5-24 Sec. 10. NRS 679B.250 is hereby amended to read as follows:

5-25 679B.250 1. When the commissioner determines to examine the

5-43 inadequate, or inadequately kept or posted, he may employ experts to

6-1 reconstruct, rewrite, post or balance them at the expense of the person

6-2 being examined if that person has failed to maintain, complete or correct

6-3 the records or accounting after the commissioner or examiner has given

6-4 him written notice and a reasonable opportunity to do so.

6-5 6. Neither the commissioner nor any examiner may remove any

6-6 record, account, document, file or other property of the person being

6-7 examined from the offices or place of the person examined except with his

6-8 written consent before removal or pursuant to an order of court duly

6-9 obtained. This provision does not affect the making and removal of copies

6-10 or abstracts of any such record, account, document or file.

6-11 7. [Any] Except as otherwise provided in sections 2 to 9, inclusive, of

6-12 this act, any person who refuses without just cause to be examined under

6-13 oath or who willfully obstructs or interferes with the examiners in the

6-14 exercise of their authority pursuant to this section is guilty of a

6-15 misdemeanor.

6-16 8. This chapter does not limit the commissioner’s authority:

6-17 (a) To terminate or suspend an examination in order to pursue other

6-18 legal or regulatory action.

6-19 (b) During any hearing or any legal action, to use and, if so ordered by

6-20 a court, to make public a final or preliminary report of an examination,

6-21 working papers or other documents of an examiner or insurer, or any other

6-22 information discovered or developed during the course of an examination.

6-23 Such documents must be given their appropriate evidentiary weight and

6-24 must not be accepted as prima facie evidence of the facts contained therein.

6-25 Sec. 11. This act becomes effective on July 1, 1999.