Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises Article 18-1

An insurance company may apply to the competent authority for approval to adopt a risk-based internal auditing system. A subsidiary that was evaluated and exempted from adopting the system for implementation in accordance with Paragraph 3, Article 38 shall provide evaluation documents. The competent authority may ask an insurance company to apply for approval to adopt a risk-based internal auditing system in view of the insurance company's asset size, business risks, and other necessary conditions.An insurance company that applies for approval to adopt a risk-based internal auditing system must meet the following criteria:1.The insurance company's capital adequacy ratio and net worth ratio in the most recent filing to the competent authority complies with regulations regarding the capital adequacy ratio in Subparagraph 1, Paragraph 1, Article 5 of the Regulations Governing Capital Adequacy of Insurance Companies.2. The amounts in preparatory funds based on the most recent actuarial opinions meet requirements in related regulations and adequacy requirements.3. The insurance company has established an effective internal control system.The provisions on auditing frequency in Paragraph 1 of the preceding article do not apply to insurance companies that have been approved to adopt a risk-based internal auditing system.The provisions in this article do not apply to branch companies of foreign insurance companies in Taiwan, reinsurance companies, and insurance cooperatives.