§ 26-45-104 — Minimum standards

Wyoming § 26-45-104

• Jurisdiction: Wyoming
• Title 26: Insurance Code
• Ch. 45: BROKER CONTROLLED INSURERS

Text

(a) The provisions of this section shall apply if, in any
calendar year, the aggregate amount of gross written premium on
business placed with a controlled insurer by a controlling
broker is equal to or greater than five percent (5%) of the
admitted assets of the controlled insurer, as reported in the
controlled insurer's quarterly statement filed as of September
30 of the prior year.
(b) Notwithstanding subsection (a) of this section, the
provisions of this section shall not apply if:
(i) The controlled insurer, except for insurance
business written through a residual market facility such as the
Wyoming Assigned Risk Plan, accepts insurance business only from
a controlling broker, a broker controlled by the controlled
insurer, or a broker that is a subsidiary of the controlled
insurer; and
(ii) The controlling broker:
(A) Places insurance only with the controlled
insurer, or only with the controlled insurer and a member or
members of the controlled insurer's holding company system, or
the controlled insurer's parent, affiliate or subsidiary and
receives no compensation based upon the amount of premiums
written in connection with the insurance placed; and
(B) Accepts insurance placements only from
nonaffiliated subproducers, and not directly from insureds.
(c) The controlled insurer shall not accept business from
a controlling broker and a controlling broker shall not place
business with a controlled insurer except pursuant to a written
contract, which has been approved by the board of directors of
the insurer. The contract shall be subject to the following
requirements:
(i) A domestic controlled insurer shall file the
contract with, and obtain the approval of, the commissioner
prior to the effective date of the contract and in accordance
with W.S. 26-15-110(b) and 26-15-111. In all other cases the
insurer shall file the contract, or any amendment to a contract,
with the commissioner within fifteen (15) days after it has been
signed;
(ii) The contract shall specify the responsibilities
of each party and contain the following minimum provisions:
(A) The controlled insurer may terminate the
contract for cause upon written notice to the controlling
broker. The controlled insurer shall suspend the authority of
the controlling broker to write business during the pendency of
any dispute regarding the cause for the termination;
(B) The controlling broker 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
broker;
(C) The controlling broker 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 collected from the insured shall be remitted no later
than ninety (90) days after the effective date of the policy;
(D) All funds collected for the controlled
insurer's account shall be held by the controlling broker in a
fiduciary capacity in accordance with W.S. 26-9-229, in one (1)
or more appropriately identified bank accounts in banks that are
organized or licensed under the laws of the United States or any
state and are insured by an instrumentality of the United States
government and have been determined by either the insurance
commissioner or the securities valuation office of the National
Association of Insurance Commissioners to meet such standards of
financial condition and standing as are considered necessary and
appropriate. Funds of a controlling broker not required to be
licensed in this state shall be maintained in compliance with
the requirements of the controlling broker's domiciliary
jurisdiction;
(E) The controlling broker shall maintain
separately identifiable records of business written for the
controlled insurer;
(F) The contract shall not be assigned in whole
or in part by the controlling broker;
(G) The controlled insurer shall provide the
controlling broker with its 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 broker 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 broker other than the controlling broker;
(H) The rates and terms of the controlling
broker's commissions, charges or other fees and the purposes for
those charges or fees shall be defined in the contract and shall
be no greater than those applicable to comparable business
placed with the controlled insurer by brokers other than
controlling brokers. For purposes of this subsection,
"comparable business" includes but is not limited to the same
lines of insurance, same kinds of insurance, similar policy
limits, similar types of risk and similar quality of business;
(J) If the contract provides that the
controlling broker, on insurance business placed with the
insurer, is to be compensated contingent upon the insurer's
profits on that business, then the compensation shall not be
determined and paid until:
(I) The adequacy of the controlled
insurer's reserves on remaining claims has been independently
verified pursuant to subsection (e) of this section; and
(II) For casualty insurance, at least five
(5) years after the premiums are earned; and
(III) On any other insurance, at least one
(1) year after the premiums are earned.
(K) The contract shall place a limit on the
controlling broker's writings in relation to the controlled
insurer's surplus and total writings. The insurer may establish
a different limit for each line or subline of business. The
controlled insurer shall notify the controlling broker when the
applicable limit is approached and shall not accept business
from the controlling broker if the limit is reached. The
controlling broker shall not place business with the controlled
insurer if it has been notified by the controlled insurer that
the limit has been reached; and
(M) The controlling broker may negotiate but
shall not bind reinsurance on behalf of the controlled insurer
on business the controlling broker places with the controlled
insurer.
(d) Every controlled insurer shall have an audit committee
of the board of directors composed of independent directors. The
audit committee shall annually meet with management, the
insurer's independent certified public accountants, and an
independent casualty actuary or other independent loss reserve
specialist acceptable to the commissioner to review the adequacy
of the insurer's loss reserves.
(e) In addition to any other required loss reserve
certification, the controlled insurer shall annually, on April 1
of each year, file with the commissioner an opinion of an
independent casualty actuary or other independent loss reserve
specialist acceptable to the commissioner reporting loss ratios
for each line of business written and attesting to the adequacy
of loss reserves established for losses incurred and outstanding
as of year-end, including losses incurred but not reported, on
business placed by the broker.
(f) The controlled insurer shall annually file a report
with the commissioner showing:
(i) The percentage that the amounts specified in
paragraphs (ii) through (iv) of this subsection represent of the
controlled insurer's net premiums written for each line of
insurance;
(ii) The amount of premiums on insurance business
placed with the controlled insurer by the controlling broker;
(iii) The amount of commissions, charges or other
fees paid by the controlled insurer to the controlling broker
during the previous calendar year; and
(iv) The amounts owed to the controlling broker on
the business by line of insurance on the annual statement.