§431:9B-106  Required contract provisions;
reinsurance intermediary-managers.  Transactions between a reinsurance
intermediary-manager and the reinsurer it represents in that capacity shall
only be entered into pursuant to a written contract, specifying the
responsibilities of each party that shall be approved by the reinsurer's board
of directors.  At least thirty days before the reinsurer assumes or cedes
business through the reinsurance intermediary-manager, a true copy of the
approved contract shall be filed with the commissioner for approval.  The
contract, at a minimum, shall provide that:



(1)  The reinsurer may terminate the contract for
cause upon written notice to the reinsurance intermediary-manager.  The
reinsurer may immediately suspend the authority of the reinsurance
intermediary-manager to assume or cede business during the pendency of any
dispute regarding the cause for termination;



(2)  The reinsurance intermediary-manager will render
accounts to the reinsurer accurately detailing all material transactions,
including information necessary to support all commissions, charges, and other
fees received by or owing to the reinsurance intermediary-manager, and remit
all funds due under the contract to the reinsurer on not less than a monthly
basis;



(3)  All funds collected for the reinsurer's account
will be held by the reinsurance intermediary-manager in a fiduciary capacity
and deposited in a bank that is a qualified United States financial
institution.  The reinsurance intermediary-manager may retain no more than
three months estimated claims payments and allocated loss adjustment expenses. 
The reinsurance intermediary-manager shall maintain a separate bank account for
each reinsurer that it represents;



(4)  For at least ten years after expiration of each
contract of reinsurance transacted by the reinsurance intermediary-manager, the
reinsurance intermediary-manager will keep a complete record for each
transaction showing:



(A)  The type of contract, limits, underwriting
restrictions, classes or risks, and territory;



(B)  Period of coverage, including effective
and expiration dates, cancellation provisions and notice required for
cancellation, and disposition of outstanding reserves on covered risks;



(C)  Reporting and settlement requirements of balances;



(D)  Rate used to compute the reinsurance
premium;



(E)  Names and addresses of reinsurers;



(F)  Rates of all reinsurance commissions,
including the commissions on any retrocessions handled by the reinsurance
intermediary-manager;



(G)  Related correspondence and memoranda;



(H)  Proof of placement;



(I)  Details regarding retrocessions handled by
the reinsurance intermediary-manager, as permitted by section 431:9B-108(d),
including the identity of retrocessionaires and percentage of each contract
assumed or ceded;



(J)  Financial records, including but not
limited to, premium and loss accounts; and



(K)  When the reinsurance intermediary-manager
places a reinsurance contract on behalf of a ceding insurer:



(i)  Directly from any assuming reinsurer,
written evidence that the assuming reinsurer has agreed to assume the risk; or



(ii)  If placed through a representative of the
assuming reinsurer, other than an employee, written evidence that the reinsurer
has delegated binding authority to the representative;



(5)  The reinsurer will have access and the right to
copy all accounts and records maintained by the reinsurance
intermediary-manager related to its business in a form usable by the reinsurer;



(6)  The contract cannot be assigned in whole or in
part by the reinsurance intermediary-manager;



(7)  The reinsurance intermediary-manager will comply
with the written underwriting and rating standards established by the insurer
for the acceptance, rejection, or cession of all risks;



(8)  Sets forth the rates, terms, and purposes of
commissions, charges, and other fees that the reinsurance intermediary-manager
may levy against the reinsurer;



(9)  If the contract permits the reinsurance
intermediary-manager to settle claims on behalf of the reinsurer:



(A)  All claims shall be reported to the
reinsurer in a timely manner;



(B)  A copy of the claim file shall be sent to
the reinsurer at its request or as soon as it becomes known that the claim:



(i)  Has the potential to exceed the lesser of
an amount determined by the commissioner or the limit set by the reinsurer;



(ii)  Involves a coverage dispute;



(iii)  May exceed the reinsurance
intermediary-manager's claims settlement authority;



(iv)  Is open for more than six months; or



(v)  Is closed by payment of the lesser of an
amount set by the commissioner or an amount set by the reinsurer;



(C)  All claim files shall be the joint
property of the reinsurer and reinsurance intermediary-manager.  However, upon
an order of liquidation of the reinsurer, the files shall become the sole
property of the reinsurer or its estate; the reinsurance intermediary-manager
shall have reasonable access to  and the right to copy the files on a timely
basis; and



(D)  Any settlement authority granted to the
reinsurance intermediary-manager may be terminated for cause upon the
reinsurer's written notice to the reinsurance intermediary-manager or upon the
termination of the contract.  The reinsurer may suspend the settlement
authority during the pendency of the dispute regarding the cause of
termination;



(10)  If the contract provides for a sharing of interim
profits by the reinsurance intermediary-manager, that such interim profits
shall not be paid until one year after the end of each underwriting period for
property business and five years after the end of each underwriting period for
casualty business (or a later period set by the commissioner for specified
lines of insurance) and not until the adequacy of reserves on remaining claims
has been verified pursuant to section 431:9B-108(c);



(11)  The reinsurance intermediary-manager shall
annually provide the reinsurer with a statement of its financial condition
prepared by an independent certified accountant;



(12)  The reinsurer shall at a minimum semiannually
conduct an on-site review of the underwriting and claims processing operations
of the reinsurance intermediary-manager;



(13)  The reinsurance intermediary-manager shall
disclose to the reinsurer any relationship it has with any insurer prior to
ceding or assuming any business with the insurer pursuant to the contract; and



(14)  Within the scope of its actual or apparent
authority the acts of the reinsurance intermediary-manager shall be deemed to
be the acts of the reinsurer on whose behalf it is acting. [L 1992, c 176, pt
of §6; am L 1993, c 6, §19 and c 321, §13]