40-2,132.Same; written contract to be in force prior to placement ofbusiness with insurer, minimum provisions governing relationship.No person, firm, association or corporation acting in the capacity of an MGAshall place business with an insurer unless there is in force a writtencontract between the parties which sets forth the responsibilities of eachparty, specifies the division of responsibilities where both parties haveresponsibility for a particular function, and contains the following minimumprovisions:
(a) The insurer may terminate the contract for cause upon written noticeto the MGA. The insurer may suspend the underwriting authority of the MGAduring the pendency of any dispute regarding the cause for termination.
(b) The MGA will render accounts to the insurer detailing alltransactions and remit all funds due under the contract to the insurer onnot less than a monthly basis.
(c) All funds collected for the account of an insurer will be held bythe MGA in a fiduciary capacity in a bank which is a member of the federalreserve system. This account shall be used for all payments on behalf ofthe insurer. The MGA may retain no more than three months estimated claimpayments and allocated loss adjustment expenses.
(d) Separate records of business written by the MGA will be maintained. The insurer shall have access and right to copy all accounts and recordsrelated to its business in a form usable by the insurer, and thecommissioner shall have access to all books, bank accounts and records ofthe MGA in a form usable to the commissioner. Such records shall beretained until the insurer and business to which they pertain has been thesubject of an examination pursuant to the provisions of K.S.A. 40-222 andamendments thereto.
(e) The contract may not be assigned in whole or part by the MGA.
The insurer shall have the right to cancel or non-renew any policy ofinsurance subject to the applicable laws and regulations relating to thecancellation and non-renewal of insurance policies.
(g) If the contract permits the MGA to settle claims on behalf of the insurer:
(1) All claims must be reported to the company in a timely manner.
(2) A copy of the claim file will be sent to the insurer at its requestor as soon as it becomes known that the claim:
(A) Has the potential to exceed an amount determined by the commissioneror exceeds the limit set by the company, whichever is less;
(B) involves a coverage dispute;
(C) may exceed the MGA's claims settlement authority;
(D) is open for more than six months; or
(E) is closed by payment of an amount set by the commissioner or anamount set by the company, whichever is less.
(3) All claim files will be the joint property of the insurer and MGA. However, upon an order of liquidation of the insurer such files shallbecome the sole property of the insurer or its estate, but the MGA shallhave reasonable access to and the right to copy the files on a timely basis.
(4) Any settlement authority granted to the MGA may be terminated forcause upon the insurer's written notice to the MGA or upon the terminationof the contract. The insurer may suspend the settlement authority duringthe pendency of any dispute regarding the cause for termination.
(h) Where electronic claims files are in existence, the contract shalladdress the timely transmission of the data.
(i) If the contract provides for a sharing of interim profits by the MGAand the MGA has the authority to determine the amount of the interimprofits by establishing loss reserves or controlling claim payments or byany other manner, interim profits will not be paid to the MGA until oneyear after they are earned for property insurance business and five yearsafter they are earned on casualty business and not until the profits havebeen verified pursuant to K.S.A. 40-2,133.
(j) The MGA shall not:
(1) Bind reinsurance or retrocessions on behalf of the insurer, exceptthat the MGA may bind facultative reinsurance contracts pursuant toobligatory facultative agreements if the contract with the insurer containsreinsurance underwriting guidelines including, for both reinsurance assumedand ceded, a list of reinsurers with which such automatic agreements are ineffect, the coverages and amounts or percentages that may be reinsured andcommission schedules;
(2) commit the insurer to participate in insurance or reinsurancesyndicates;
(3) appoint any agent or broker without assuring that the agent orbroker is lawfully licensed to transact the type of insurance for whichsuch agent or broker is appointed;
(4) without prior approval of the insurer, pay or commit the insurer topay a claim over a specified amount, net of reinsurance, which shall notexceed 1% of the insurer's policyholder's surplus as of December 31 of thelast completed calendar year;
(5) collect any payment from a reinsurer or commit the insurer to anyclaim settlement with a reinsurer without prior approval of the insurer. If prior approval is given, a report shall be promptly forwarded to the insurer;
(6) permit its subagent or broker to serve on its board of directors;
(7) jointly employ an individual who is employed with the insurer; or
40-2,132.Same; written contract to be in force prior to placement ofbusiness with insurer, minimum provisions governing relationship.No person, firm, association or corporation acting in the capacity of an MGAshall place business with an insurer unless there is in force a writtencontract between the parties which sets forth the responsibilities of eachparty, specifies the division of responsibilities where both parties haveresponsibility for a particular function, and contains the following minimumprovisions:
(a) The insurer may terminate the contract for cause upon written noticeto the MGA. The insurer may suspend the underwriting authority of the MGAduring the pendency of any dispute regarding the cause for termination.
(b) The MGA will render accounts to the insurer detailing alltransactions and remit all funds due under the contract to the insurer onnot less than a monthly basis.
(c) All funds collected for the account of an insurer will be held bythe MGA in a fiduciary capacity in a bank which is a member of the federalreserve system. This account shall be used for all payments on behalf ofthe insurer. The MGA may retain no more than three months estimated claimpayments and allocated loss adjustment expenses.
(d) Separate records of business written by the MGA will be maintained. The insurer shall have access and right to copy all accounts and recordsrelated to its business in a form usable by the insurer, and thecommissioner shall have access to all books, bank accounts and records ofthe MGA in a form usable to the commissioner. Such records shall beretained until the insurer and business to which they pertain has been thesubject of an examination pursuant to the provisions of K.S.A. 40-222 andamendments thereto.
(e) The contract may not be assigned in whole or part by the MGA.
The insurer shall have the right to cancel or non-renew any policy ofinsurance subject to the applicable laws and regulations relating to thecancellation and non-renewal of insurance policies.
(g) If the contract permits the MGA to settle claims on behalf of the insurer:
(1) All claims must be reported to the company in a timely manner.
(2) A copy of the claim file will be sent to the insurer at its requestor as soon as it becomes known that the claim:
(A) Has the potential to exceed an amount determined by the commissioneror exceeds the limit set by the company, whichever is less;
(B) involves a coverage dispute;
(C) may exceed the MGA's claims settlement authority;
(D) is open for more than six months; or
(E) is closed by payment of an amount set by the commissioner or anamount set by the company, whichever is less.
(3) All claim files will be the joint property of the insurer and MGA. However, upon an order of liquidation of the insurer such files shallbecome the sole property of the insurer or its estate, but the MGA shallhave reasonable access to and the right to copy the files on a timely basis.
(4) Any settlement authority granted to the MGA may be terminated forcause upon the insurer's written notice to the MGA or upon the terminationof the contract. The insurer may suspend the settlement authority duringthe pendency of any dispute regarding the cause for termination.
(h) Where electronic claims files are in existence, the contract shalladdress the timely transmission of the data.
(i) If the contract provides for a sharing of interim profits by the MGAand the MGA has the authority to determine the amount of the interimprofits by establishing loss reserves or controlling claim payments or byany other manner, interim profits will not be paid to the MGA until oneyear after they are earned for property insurance business and five yearsafter they are earned on casualty business and not until the profits havebeen verified pursuant to K.S.A. 40-2,133.
(j) The MGA shall not:
(1) Bind reinsurance or retrocessions on behalf of the insurer, exceptthat the MGA may bind facultative reinsurance contracts pursuant toobligatory facultative agreements if the contract with the insurer containsreinsurance underwriting guidelines including, for both reinsurance assumedand ceded, a list of reinsurers with which such automatic agreements are ineffect, the coverages and amounts or percentages that may be reinsured andcommission schedules;
(2) commit the insurer to participate in insurance or reinsurancesyndicates;
(3) appoint any agent or broker without assuring that the agent orbroker is lawfully licensed to transact the type of insurance for whichsuch agent or broker is appointed;
(4) without prior approval of the insurer, pay or commit the insurer topay a claim over a specified amount, net of reinsurance, which shall notexceed 1% of the insurer's policyholder's surplus as of December 31 of thelast completed calendar year;
(5) collect any payment from a reinsurer or commit the insurer to anyclaim settlement with a reinsurer without prior approval of the insurer. If prior approval is given, a report shall be promptly forwarded to the insurer;
(6) permit its subagent or broker to serve on its board of directors;
(7) jointly employ an individual who is employed with the insurer; or
40-2,132.Same; written contract to be in force prior to placement ofbusiness with insurer, minimum provisions governing relationship.No person, firm, association or corporation acting in the capacity of an MGAshall place business with an insurer unless there is in force a writtencontract between the parties which sets forth the responsibilities of eachparty, specifies the division of responsibilities where both parties haveresponsibility for a particular function, and contains the following minimumprovisions:
(a) The insurer may terminate the contract for cause upon written noticeto the MGA. The insurer may suspend the underwriting authority of the MGAduring the pendency of any dispute regarding the cause for termination.
(b) The MGA will render accounts to the insurer detailing alltransactions and remit all funds due under the contract to the insurer onnot less than a monthly basis.
(c) All funds collected for the account of an insurer will be held bythe MGA in a fiduciary capacity in a bank which is a member of the federalreserve system. This account shall be used for all payments on behalf ofthe insurer. The MGA may retain no more than three months estimated claimpayments and allocated loss adjustment expenses.
(d) Separate records of business written by the MGA will be maintained. The insurer shall have access and right to copy all accounts and recordsrelated to its business in a form usable by the insurer, and thecommissioner shall have access to all books, bank accounts and records ofthe MGA in a form usable to the commissioner. Such records shall beretained until the insurer and business to which they pertain has been thesubject of an examination pursuant to the provisions of K.S.A. 40-222 andamendments thereto.
(e) The contract may not be assigned in whole or part by the MGA.
The insurer shall have the right to cancel or non-renew any policy ofinsurance subject to the applicable laws and regulations relating to thecancellation and non-renewal of insurance policies.
(g) If the contract permits the MGA to settle claims on behalf of the insurer:
(1) All claims must be reported to the company in a timely manner.
(2) A copy of the claim file will be sent to the insurer at its requestor as soon as it becomes known that the claim:
(A) Has the potential to exceed an amount determined by the commissioneror exceeds the limit set by the company, whichever is less;
(B) involves a coverage dispute;
(C) may exceed the MGA's claims settlement authority;
(D) is open for more than six months; or
(E) is closed by payment of an amount set by the commissioner or anamount set by the company, whichever is less.
(3) All claim files will be the joint property of the insurer and MGA. However, upon an order of liquidation of the insurer such files shallbecome the sole property of the insurer or its estate, but the MGA shallhave reasonable access to and the right to copy the files on a timely basis.
(4) Any settlement authority granted to the MGA may be terminated forcause upon the insurer's written notice to the MGA or upon the terminationof the contract. The insurer may suspend the settlement authority duringthe pendency of any dispute regarding the cause for termination.
(h) Where electronic claims files are in existence, the contract shalladdress the timely transmission of the data.
(i) If the contract provides for a sharing of interim profits by the MGAand the MGA has the authority to determine the amount of the interimprofits by establishing loss reserves or controlling claim payments or byany other manner, interim profits will not be paid to the MGA until oneyear after they are earned for property insurance business and five yearsafter they are earned on casualty business and not until the profits havebeen verified pursuant to K.S.A. 40-2,133.
(j) The MGA shall not:
(1) Bind reinsurance or retrocessions on behalf of the insurer, exceptthat the MGA may bind facultative reinsurance contracts pursuant toobligatory facultative agreements if the contract with the insurer containsreinsurance underwriting guidelines including, for both reinsurance assumedand ceded, a list of reinsurers with which such automatic agreements are ineffect, the coverages and amounts or percentages that may be reinsured andcommission schedules;
(2) commit the insurer to participate in insurance or reinsurancesyndicates;
(3) appoint any agent or broker without assuring that the agent orbroker is lawfully licensed to transact the type of insurance for whichsuch agent or broker is appointed;
(4) without prior approval of the insurer, pay or commit the insurer topay a claim over a specified amount, net of reinsurance, which shall notexceed 1% of the insurer's policyholder's surplus as of December 31 of thelast completed calendar year;
(5) collect any payment from a reinsurer or commit the insurer to anyclaim settlement with a reinsurer without prior approval of the insurer. If prior approval is given, a report shall be promptly forwarded to the insurer;
(6) permit its subagent or broker to serve on its board of directors;
(7) jointly employ an individual who is employed with the insurer; or
