§ 521C.7 — Required contract provisions — reinsurance intermediary-managers

Iowa § 521C.7

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 521C: REINSURANCE INTERMEDIARIES

Text

Transactions between a reinsurance intermediary-manager and the reinsurer that the
reinsurance intermediary-manager represents in such capacity shall only be entered into
pursuant to a written contract, specifying the responsibilities of each party, which shall be
approved by the reinsurer’s board of directors. At least thirty days before the reinsurer
assumes or cedes business through a reinsurance intermediary-manager, a true copy of the
approved contract shall be filed with the commissioner for approval by the commissioner.
The contract, at a minimum, shall contain the following provisions:
1. The reinsurer may terminate the contract for cause upon written notice to the
reinsurance intermediary-manager. The reinsurer may 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 shall 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 shall 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 shall be held by the reinsurance
intermediary-manager in a fiduciary capacity in a bank which is a qualified United States
financial institution, as defined in section 521C.2. 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 the reinsurance intermediary-manager represents.
4. For at least ten years after expiration of each contract of reinsurance transacted by
the reinsurance intermediary-manager, the reinsurance intermediary-manager shall keep a
complete record for each transaction showing all of the following:
a. The type of contract, limits, underwriting restrictions, classes or risks, and territory.
b. The period of coverage, including effective and expiration dates, cancellation
provisions and notice required of cancellation, and disposition of outstanding reserves on
covered risks.
c. The reporting and settlement requirements of balances.
d. The rate used to compute the reinsurance premium.
e. The names and addresses of reinsurers.
f. The rates of all reinsurance commissions, including the commissions on any
retrocessions handled by the reinsurance intermediary-manager.
g. Any related correspondence and memoranda.
5 REINSURANCE INTERMEDIARIES, §521C.7
h. Proof of placement.
i. The details regarding retrocessions handled by the reinsurance intermediary-manager,
as permitted by section 521C.9, subsection 4, 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.
k. If the reinsurance intermediary-manager places a reinsurance contract on behalf of a
ceding insurer one or both of the following shall be included in the record:
(1) Directly from any assuming reinsurer, written evidence that the assuming reinsurer
has agreed to assume the risk.
(2) If placed through a representative of the assuming reinsurer, other than an employee,
written evidence that the assuming reinsurer has delegated binding authority to the
representative.
5. The reinsurer has a right of 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 shall comply with the written underwriting and
rating standards established by the insurer for the acceptance, rejection, or cession of all
risks.
8. The contract shall set forth the rates, terms, and purposes of commissions, charges,
and other fees which 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, all of the following apply:
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 meets any or all of the following conditions:
(1) The claim has the potential to exceed the lesser of an amount determined by the
commissioner or the limit set by the reinsurer.
(2) The claim involves a coverage dispute.
(3) The claim may exceed the claims settlement authority of the reinsurance
intermediary-manager.
(4) The claim is open for more than six months.
(5) The claim 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.
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, interim profits shall not be paid until one year after the end of each
underwriting period for property insurance business and five years after the end of each
underwriting period for casualty insurance business, or a later period as determined by the
commissioner for each type of insurance, but in no case until the adequacy of reserves on
remaining claims has been verified pursuant to section 521C.9, subsection 3.
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 periodically, but not less than semiannually, conduct an
on-site review of the underwriting and claims processing operations of the reinsurance
intermediary-manager.
§521C.7, REINSURANCE INTERMEDIARIES 6
13. Thereinsuranceintermediary-managershalldisclosetothereinsureranyrelationship
the reinsurance intermediary-manager has with any insurer prior to ceding or assuming any
business with the insurer pursuant to this contract.
14. The acts of the reinsurance intermediary-manager are deemed to be the acts of the
reinsurer on whose behalf the reinsurance intermediary-manager is acting.