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

(1)  The insurer may terminate the contract for causeupon written notice to the managing general agent.  The insurer may suspend theunderwriting authority of the managing general agent during the pendency of anydispute regarding the cause for termination;

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

(3)  All funds collected for the account of an insurershall be held by the managing general agent in a fiduciary capacity anddeposited in an account in a bank which is a member of the Federal ReserveSystem.  This account shall be used for all payments on behalf of the insurerby the managing general agent.  The managing general agent may retain no morethan three months estimated claims payments and allocated loss adjustmentexpenses;

(4)  Separate records of business written by themanaging general agent shall be maintained in the licensee's office.  Theinsurer shall have access to and the right to copy all accounts and records ofthe managing general agent related to the insurer's business in a form usableby the insurer, and the commissioner shall have access to all books, bankaccounts, and records of the managing general agent in a form usable to thecommissioner.  Records shall be in an organized form according to each class ofinsurance and shall include the following information to the extent it isapplicable:

(A)  A record of each insurance contractprocured or issued, together with the names of the insurers and insureds, theamount of premium paid or to be paid, or the basis of the premium orconsideration paid or to be paid, and a statement of the subject of theinsurance;

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

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

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

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

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

(5)  The contract may not be assigned in whole or inpart 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 cancelor nonrenew any policy of insurance subject to the applicable laws and rulesconcerning the cancellation and nonrenewal of insurance policies;

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

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

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

(i)  Has the potential to exceed an amountdetermined 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'sclaims settlement authority;

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

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

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

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

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

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

(9)  The managing general agent shall not:

(A)  Bind reinsurance or retrocessions onbehalf of the insurer, except that the managing general agent may bindfacultative reinsurance contracts pursuant to obligatory facultative agreementsif the contract with the insurer contains reinsurance underwriting guidelinesincluding, for both reinsurance assumed and ceded, a list of reinsurers withwhom those automatic agreements are in effect, the coverages and amounts orpercentages that may be reinsured, and commission schedules;

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

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

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

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

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

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

(H)  Appoint a sub-managing general agent. [L2002, c 155, pt of §2; am L 2003, c 212, §71]