§431:9C-103  Required contract provisions. 
No person, firm, association, or corporation acting as a managing general agent
shall place business with an insurer unless there is in force, a written
contract between the managing general agent and the insurer which sets forth
the responsibilities of each party and, where both the managing general agent
and the insurer share responsibility for a particular function, specifies the
division of those responsibilities, and which contains at least the following additional
provisions:



(1)  The insurer may terminate the contract for cause
upon written notice to the managing general agent.  The insurer may suspend the
underwriting authority of the managing general agent during the pendency of any
dispute regarding the cause for termination;



(2)  The managing general agent shall render accounts
to the insurer detailing all transactions and remit all funds due under the
contract to the insurer on not less than a monthly basis;



(3)  All funds collected for the account of an insurer
shall be held by the managing general agent in a fiduciary capacity and
deposited in an account in a bank which is a member of the Federal Reserve
System.  This account shall be used for all payments on behalf of the insurer
by the managing general agent.  The managing general agent may retain no more
than three months estimated claims payments and allocated loss adjustment
expenses;



(4)  Separate records of business written by the
managing general agent shall be maintained in the licensee's office.  The
insurer shall have access to and the right to copy all accounts and records of
the managing general agent related to the insurer's business in a form usable
by the insurer, and the commissioner shall have access to all books, bank
accounts, and records of the managing general agent in a form usable to the
commissioner.  Records shall be in an organized form according to each class of
insurance and shall include the following information to the extent it is
applicable:



(A)  A record of each insurance contract
procured or issued, together with the names of the insurers and insureds, the
amount of premium paid or to be paid, or the basis of the premium or
consideration paid or to be paid, and a statement of the subject of the
insurance;



(B)  The names of any other licensees from whom
business is accepted and the names of persons to whom commissions or allowances
of any kind are promised or paid;



(C)  A record of each investigation or
adjustment undertaken or consummated and a statement of any fee, commission, or
other compensation received or to be received by the adjuster on account of the
investigation or adjustment;



(D)  A record of each bill reviewed and a
statement of any fee, commission, or other compensation received or to be
received by the independent bill reviewer on account of the bill reviewed; and



(E)  Any additional information as shall be
customary or as may reasonably be required by the commissioner.



This paragraph shall not apply to life or
accident and health or sickness insurance if the records required of such
insurance are customarily maintained in the offices of the insurer;



(5)  The contract may not be assigned in whole or in
part by the managing general agent;



(6)  Appropriate underwriting guidelines including:



(A)  The maximum annual premium volume;



(B)  The basis of the rates to be charged;



(C)  The types of risks which may be written;



(D)  Maximum limits of liability;



(E)  Applicable exclusions;



(F)  Territorial limitations;



(G)  Policy cancellation provisions; and



(H)  The maximum policy period.



The insurer shall have the right to cancel
or nonrenew any policy of insurance subject to the applicable laws and rules
concerning the cancellation and nonrenewal of insurance policies;



(7)  If the contract permits the managing general
agent to settle claims on behalf of the insurer:



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



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



(i)  Has the potential to exceed an amount
determined by the commissioner or exceeds the limit set by the insurer,
whichever is less;



(ii)  Involves a coverage dispute;



(iii)  May exceed the managing general agent's
claims settlement authority;



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



(v)  Is closed by payment of an amount set by
the commissioner or an amount set by the insurer, whichever is less;



(C)  All claim files shall be the joint
property of the insurer and managing general agent.  However, upon an order of
liquidation of the insurer, the files shall become the sole property of the
insurer or its estate; provided that the managing general agent shall have
reasonable access to and the right to copy the files on a timely basis;



(D)  Any settlement authority granted to the
managing general agent may be terminated for cause upon the insurer's written
notice to the managing general agent or upon the termination of the contract. 
The insurer may suspend the settlement authority during the pendency of any
dispute regarding the cause for termination; and



(E)  Where electronic claims files are in
existence, the contract shall address the timely transmission of the data;



(8)  If the contract provides for a sharing of interim
profits by the managing general agent, and the managing general agent has the
authority to determine the amount of the interim profits by establishing loss
reserves or controlling claim payments, or in any other manner, interim profits
shall not be paid to the managing general agent until one year after they are
earned for property insurance business and five years after they are earned on
casualty business and, in any event, not until the profits have been verified
through examination pursuant to section 431:9C-105; and



(9)  The managing general agent shall not:



(A)  Bind reinsurance or retrocessions on
behalf of the insurer, except that the managing general agent may bind
facultative reinsurance contracts pursuant to obligatory facultative agreements
if the contract with the insurer contains reinsurance underwriting guidelines
including, for both reinsurance assumed and ceded, a list of reinsurers with
whom those automatic agreements are in effect, the coverages and amounts or
percentages that may be reinsured, and commission schedules;



(B)  Commit the insurer to participate in
insurance or reinsurance syndicates;



(C)  Appoint any producer without assuring that
the producer is lawfully licensed to transact the type of insurance for which
the producer is appointed;



(D)  Without prior approval of the insurer, pay
or commit the insurer to pay a claim over a specified amount, net of
reinsurance, which shall not exceed one per cent of the insurer's
policyholder's surplus as of December 31 of the last completed calendar year;



(E)  Collect any payment from a reinsurer or
commit the insurer to any claim settlement with a reinsurer without prior
approval of the insurer.  If prior approval is given, a report shall be
promptly forwarded to the insurer;



(F)  Permit its subagent to serve on the board
of directors of the insurer;



(G)  Employ an individual who is employed by
the insurer also; or



(H)  Appoint a sub-managing general agent. [L
2002, c 155, pt of §2; am L 2003, c 212, §71]