IC 27-1-35
    Chapter 35. Business Transacted With Producer ControlledProperty and Casualty Insurers

IC 27-1-35-1
Applicability of law
    Sec. 1. This chapter applies to licensed insurers either domiciledin Indiana or domiciled in a state that is not an accredited statehaving in effect a substantially similar law. All provisions of theInsurance Holding Company System Regulation Act, to the extentthe provisions are not superseded by this chapter, continue to applyto all parties within holding company systems subject to this chapter.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-2
"Accredited state" defined
    Sec. 2. As used in this chapter, "accredited state" means a state inwhich the insurance department or regulatory agency has qualifiedas meeting the minimum financial regulatory standards promulgatedand established periodically by the National Association of InsuranceCommissioners (NAIC).
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-3
"Captive insurer" defined
    Sec. 3. As used in this chapter, "captive insurer" means aninsurance company owned by another organization whose exclusivepurpose is to insure risks of the parent organization and affiliatedcompanies, or in the case of groups and associations, insuranceorganizations owned by the insureds whose exclusive purpose is toinsure risks of any of the following:
        (1) Member organizations.
        (2) Group members and their affiliates.
        (3) Member organizations and group members and theiraffiliates.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-4
"Control" or "controlled" defined
    Sec. 4. As used in this chapter, "control" or "controlled" has themeaning set forth in IC 27-1-23-1.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-5
"Controlled insurer" defined
    Sec. 5. As used in this chapter, "controlled insurer" means alicensed insurer that is controlled, directly or indirectly, by aproducer.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.
IC 27-1-35-6
"Controlling producer" defined
    Sec. 6. As used in this chapter, "controlling producer" means aproducer that, directly or indirectly, controls an insurer.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-7
"Licensed insurer" or "insurer" defined
    Sec. 7. As used in this chapter, "licensed insurer" or "insurer"means any person, firm, association, or corporation licensed totransact a property/casualty insurance business in Indiana. Thefollowing are not licensed insurers for the purposes of this chapter:
        (1) All risk retention groups (as defined in the SuperfundAmendments Reauthorization Act of 1986, Pub. L. No. 99-499,100 Stat. 1613 (1986), the Risk Retention Act, 15 U.S.C.Section 3901 et seq. (1982 & Supp. 1986), and IC 27-7-10-11).
        (2) All residual market pools and joint underwriting authoritiesor associations.
        (3) All captive insurers.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-8
"Producer" defined
    Sec. 8. As used in this chapter, "producer" means an insurancebroker or brokers or any other person, firm, association, orcorporation, when, for any compensation, commission, or other thingof value, the person, firm, association, or corporation acts or aids inany manner in soliciting, negotiating, or procuring the making of anyinsurance contract on behalf of an insured other than the person,firm, association, or corporation.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-9
Threshold limit of premiums
    Sec. 9. The provisions of sections 11 through 14 of this chapterapply if, in any calendar year, the aggregate amount of gross writtenpremiums on business placed with a controlled insurer by acontrolling producer is equal to or greater than five percent (5%) ofthe admitted assets of the controlled insurer, as reported in thecontrolled insurer's quarterly statement filed as of September 30 ofthe prior year.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-10
Exempt transactions
    Sec. 10. Notwithstanding section 9 of this chapter, the provisionsof sections 11 through 14 of this chapter do not apply if:
        (1) the controlling producer:
            (A) places insurance only with the controlled insurer, or onlywith the controlled insurer and a member or members of the

controlled insurer's holding company system, or thecontrolled insurer's parent, affiliate, or subsidiary andreceives no compensation based upon the amount ofpremiums written in connection with such insurance; and
            (B) accepts insurance placements only from nonaffiliatedsubproducers, and not directly from insureds; and
        (2) the controlled insurer, except for insurance business writtenthrough a residual market facility accepts insurance businessonly from a controlling producer, a producer controlled by thecontrolled insurer, or a producer that is a subsidiary of thecontrolled insurer.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-11
Written contract requirement
    Sec. 11. A controlled insurer shall not accept business from acontrolling producer and a controlling producer shall not placebusiness with a controlled insurer unless there is a written contractbetween the controlling producer and the controlled insurerspecifying the responsibilities of each party, which contract has beenapproved by the board of directors of the controlled insurer andcontains the following minimum provisions:
        (1) The controlled insurer may terminate the contract for cause,upon written notice to the controlling producer. The controlledinsurer shall suspend the authority of the controlling producerto write business during the pendency of any dispute regardingthe cause for the termination.
        (2) The controlling producer shall render accounts to thecontrolled insurer detailing all material transactions, includinginformation necessary to support all commissions, charges, andother fees received by or owing to the controlling producer.
        (3) The controlling producer shall remit all funds due under theterms of the contract to the controlled insurer on at least amonthly basis. The due date shall be fixed so that premiums orinstallments of premiums collected shall be remitted not laterthan ninety (90) days after the effective date of any policyplaced with the controlled insurer under this contract.
        (4) All funds collected for the controlled insurer's account shallbe held by the controlling producer in a fiduciary capacity, inone (1) or more appropriately identified bank accounts in banksthat are members of the Federal Reserve System, in accordancewith the provisions of the insurance law as applicable.However, funds of a controlling producer not required to belicensed in Indiana shall be maintained in compliance with therequirements of the controlling producer's domiciliaryjurisdiction.
        (5) The controlling producer shall maintain separatelyidentifiable records of business written for the controlledinsurer.
        (6) The contract shall not be assigned in whole or in part by the

controlling producer.
        (7) The controlled insurer shall provide the controlling producerwith the controlled insurer's underwriting standards, rules, andprocedures, manuals setting forth the rates to be charged, andthe conditions for the acceptance or rejection of risks. Thecontrolling producer shall adhere to the standards, rules,procedures, rates, and conditions. The standards, rules,procedures, rates, and conditions shall be the same as thoseapplicable to comparable business placed with the controlledinsurer by a producer other than the controlling producer.
        (8) The rates and terms of the controlling producer'scommissions, charges, or other fees, and the purposes for thosecharges or fees. The rates of the commissions, charges, andother fees shall be no greater than those applicable tocomparable business placed with the controlled insurer byproducers other than controlling producers. For purposes of thissubdivision and subdivision (7), examples of "comparablebusiness" include the same lines of insurance, same kinds ofinsurance, same kinds of risks, similar policy limits, and similarquality of business.
        (9) If the contract provides that the controlling producer, oninsurance business placed with the insurer, is to be compensatedcontingent upon the insurer's profits on that business, then suchcompensation shall not be determined and paid until at leastfive (5) years after the premiums on liability insurance areearned and at least one (1) year after the premiums are earnedon any other insurance. The commissions may not be paid untilthe adequacy of the controlled insurer's reserves on remainingclaims has been independently verified under section 13 of thischapter.
        (10) A limit on the controlling producer's writings in relation tothe controlled insurer's surplus and total writings. The insurermay establish a different limit for each line or sub-line ofbusiness. The controlled insurer shall notify the controllingproducer when the applicable limit is approached and shall notaccept business from the controlling producer if the limit isreached. The controlling producer shall not place business withthe controlled insurer if the controlling producer has beennotified by the controlled insurer that the limit has beenreached.
        (11) The controlling producer may negotiate but shall not bindreinsurance on behalf of the controlled insurer on business thecontrolling producer places with the controlled insurer, exceptthat the controlling producer may bind facultative reinsurancecontracts under obligatory facultative agreements if the contractwith the controlled insurer contains underwriting guidelines,including for both reinsurance assumed and ceded a list ofreinsurers with which such automatic agreements are in effect,the coverages and amounts or percentages that may bereinsured, and commission schedules.As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-12
Audit committees
    Sec. 12. Each controlled insurer shall have an audit committee ofthe board of directors composed of independent directors. The auditcommittee shall annually meet with management, the insurer'sindependent certified public accountants, and an independentcasualty actuary or other independent loss reserve specialistacceptable to the commissioner to review the adequacy of theinsurer's loss reserves.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-13
Opinions of independent casualty actuaries or independent lossreserve specialists
    Sec. 13. In addition to any other required loss reservecertification, the controlled insurer shall annually, on April 1 of eachyear, file with the commissioner an opinion of an independentcasualty actuary or such other independent loss reserve specialistacceptable to the commissioner reporting loss ratios for each line ofbusiness written and attesting to the adequacy of loss reservesestablished for losses incurred and outstanding as of year end(including incurred but not reported) on business placed by theproducer.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-14
Annual reports
    Sec. 14. The controlled insurer shall annually report to thecommissioner the amount of commissions paid to the producer, thepercentage this amount represents of the net premiums written, andcomparable amounts and percentage paid to noncontrollingproducers for placements of the same kind of insurance.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-15
Notice of relationship
    Sec. 15. A producer, before the effective date of the policy, shalldeliver written notice to the prospective insured disclosing therelationship between the producer and the controlled insurer, exceptthat, if the business is placed through a subproducer who is not acontrolling producer, the controlling producer shall retain in thecontrolling producer's records a signed commitment from thesubproducer that the subproducer is aware of the relationshipbetween the insurer and the producer and that the subproducer has orwill notify the insured.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-16 Orders to cease placing business
    Sec. 16. If the commissioner believes that the controlling produceror any other person has not materially complied with this chapter orany rule or order adopted under this chapter, after notice andopportunity to be heard, the commissioner may order the controllingproducer to cease placing business with the controlled insurer.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-17
Civil actions by commissioner
    Sec. 17. If the commissioner finds that because of a materialnoncompliance under section 16 of this chapter the controlled insureror any policyholder of the controlled insurer has suffered any loss ordamage, the commissioner may maintain a civil action or intervenein an action brought by or on behalf of the insurer or policyholder forrecovery of compensatory damages for the benefit of the insurer orpolicyholder or other appropriate relief.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-18
Civil actions by receivers
    Sec. 18. If an order for liquidation or rehabilitation of thecontrolled insurer has been entered under IC 27-9, and the receiverappointed under that order believes that the controlling producer orany other person has not materially complied with this chapter or anyrule or order adopted under this chapter, and the insurer suffered anyloss or damage therefrom, the receiver may maintain a civil actionfor recovery of damages or other appropriate sanctions for the benefitof the insurer.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.

IC 27-1-35-19
Other rights not affected
    Sec. 19. Sections 16 through 18 of this chapter do not:
        (1) affect the right of the commissioner to impose any otherpenalties provided by Indiana law; or
        (2) in any manner alter or affect the rights of policyholders,claimants, creditors, or other third parties.
As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.