§ 27-1-35-11 — Written contract requirement

Indiana § 27-1-35-11

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 1: DEPARTMENT OF INSURANCE
• Ch. 35: Business Transacted With Producer Controlled Property

Text

A controlled insurer shall not accept
business from a controlling producer and a controlling producer shall
not place business with a controlled insurer unless there is a written
contract between the controlling producer and the controlled insurer
specifying the responsibilities of each party, which contract has been
approved by the board of directors of the controlled insurer and
contains the following minimum provisions:
(1) The controlled insurer may terminate the contract for cause,
upon written notice to the controlling producer. The controlled
insurer shall suspend the authority of the controlling producer to
write business during the pendency of any dispute regarding the
cause for the termination.
(2) The controlling producer shall render accounts to the
controlled insurer detailing all material transactions, including
information necessary to support all commissions, charges, and
other fees received by or owing to the controlling producer.
(3) The controlling producer shall remit all funds due under the
terms of the contract to the controlled insurer on at least a
monthly basis. The due date shall be fixed so that premiums or
installments of premiums collected shall be remitted not later than
ninety (90) days after the effective date of any policy placed with
the controlled insurer under this contract.
(4) All funds collected for the controlled insurer's account shall be
held by the controlling producer in a fiduciary capacity, in one (1)
or more appropriately identified bank accounts in banks that are
members of the Federal Reserve System, in accordance with the
provisions of the insurance law as applicable. However, funds of
a controlling producer not required to be licensed in Indiana shall
be maintained in compliance with the requirements of the
controlling producer's domiciliary jurisdiction.
(5) The controlling producer shall maintain separately identifiable
records of business written for the controlled insurer.
(6) The contract shall not be assigned in whole or in part by the
controlling producer.
(7) The controlled insurer shall provide the controlling producer
with the controlled insurer's underwriting standards, rules, and
procedures, manuals setting forth the rates to be charged, and the
conditions for the acceptance or rejection of risks. The controlling
producer shall adhere to the standards, rules, procedures, rates,
and conditions. The standards, rules, procedures, rates, and
conditions shall be the same as those applicable to comparable
business placed with the controlled insurer by a producer other
than the controlling producer.
(8) The rates and terms of the controlling producer's commissions,
charges, or other fees, and the purposes for those charges or fees.
The rates of the commissions, charges, and other fees shall be no
greater than those applicable to comparable business placed with
the controlled insurer by producers other than controlling
producers. For purposes of this subdivision and subdivision (7),
examples of "comparable business" include the same lines of
insurance, same kinds of insurance, same kinds of risks, similar
policy limits, and similar quality of business.
(9) If the contract provides that the controlling producer, on
insurance business placed with the insurer, is to be compensated
contingent upon the insurer's profits on that business, then such
compensation shall not be determined and paid until at least five
(5) years after the premiums on liability insurance are earned and
at least one (1) year after the premiums are earned on any other
insurance. The commissions may not be paid until the adequacy
of the controlled insurer's reserves on remaining claims has been
independently verified under section 13 of this chapter.
(10) A limit on the controlling producer's writings in relation to
the controlled insurer's surplus and total writings. The insurer may
establish a different limit for each line or sub-line of business.
The controlled insurer shall notify the controlling producer when
the applicable limit is approached and shall not accept business
from the controlling producer if the limit is reached. The
controlling producer shall not place business with the controlled
insurer if the controlling producer has been notified by the
controlled insurer that the limit has been reached.
(11) The controlling producer may negotiate but shall not bind
reinsurance on behalf of the controlled insurer on business the
controlling producer places with the controlled insurer, except
that the controlling producer may bind facultative reinsurance
contracts under obligatory facultative agreements if the contract
with the controlled insurer contains underwriting guidelines,
including for both reinsurance assumed and ceded a list of
reinsurers with which such automatic agreements are in effect, the
coverages and amounts or percentages that may be reinsured, and
commission schedules.

Legislative History

As added by P.L.130-1994, SEC.36 and P.L.116-1994, SEC.47.