§ 24-A §1494 — Required contract provisions

Maine § 24-A §1494

• Jurisdiction: Maine
• Title 24-A: MAINE INSURANCE CODE
• Ch. 16: PRODUCERS, ADJUSTERS AND CONSULTANTS

Text

A person acting in the capacity of an MGA may not place business with an insurer unless there is in force a written contract between the parties that sets forth the responsibilities of each party and, when both parties share responsibility for a particular function, specifies the division of those responsibilities. The contract must contain the following minimum provisions.
1.
Termination.
The insurer may terminate the contract for cause upon written notice to the MGA. The insurer may suspend the underwriting authority of the MGA during the pendency of any dispute regarding the cause for termination. However, the suspension of an MGA does not relieve the MGA of the responsibility to service business in existence at the time of the suspension.
2.
Accounting.
The MGA shall render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer on not less than a monthly basis.
3.
Bank as fiduciary.
All funds collected for the account of an insurer must be held by the MGA in a fiduciary capacity in a bank that is a member of the Federal Reserve System. This account must be used for all payments on behalf of the insurer. The MGA may retain no more than 3 months' estimated claims payments and allocated loss adjustment expenses.
4.
Records.
Separate records of business written by the MGA must be maintained. The insurer must have access and may copy all accounts and records related to its business in a form usable by the insurer. The superintendent must have access to all books, bank accounts and records of the MGA in a form usable to the superintendent. These records must be retained according to section 3408.
5.
Nonassignable.
The contract may not be assigned in whole or part by the MGA.
6.
Guidelines.
The contract must include appropriate underwriting guidelines including:
7.
Settlement authority.
If the contract permits the MGA to settle claims on behalf of the insurer:
8.
Transmission.
When electronic claims files are in existence, the contract must address the timely transmission of the data.
9.
Interim profits.
If the contract provides for a sharing of interim profits by the MGA and the MGA has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments or in any other manner, interim profits may not be paid to the MGA until one year after they are earned for property insurance business and 5 years after they are earned on casualty business and not until the profits have been verified pursuant to section 1495.
10.
Prohibitions.
The MGA may not:

Legislative History

PL 1997, c. 573, §1 (NEW). PL 1997, c. 573, §2 (AFF).