T41CH51
Title 41 > T41CH51
Sections (11)
41-5101
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5101. Short title. This chapter may be cited as the Reinsurance Intermediary Act. History: [41-5101, added 1992, ch. 82, sec. 1, p. 249.]
41-5102
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5102. Definitions. As used in this chapter: (1) Actuary means a person who is a member in good standing of the American academy of actuaries. (2) Controlling person means any person, firm, association or corporation who directly or indirectly has the power to direct or cause to be directed, the management, control or activities of the reinsurance intermediary. (3) Insurer means any person, firm, association or corporation duly licensed in this state pursuant to the applicable provisions of the insurance law as an insurer. (4) Licensed producer means an agent, broker or reinsurance intermediary licensed pursuant to the applicable provision of the insurance law. (5) Qualified United States financial institution means for purposes of this chapter, a qualified United States financial institution that: (a) Is organized or, in the case of a United States office of a foreign banking organization, licensed, under the laws of the United States or any state thereof; (b) Is regulated, supervised and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and (c) Has been determined by either the director, 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 to regulate the quality of financial institutions whose letters of credit will be acceptable to the director. (6) Reinsurance intermediary means a reinsurance intermediary-broker, or a reinsurance intermediary-manager as these terms are defined in subsections (7) and (8) of this section. (7) Reinsurance intermediary-broker (RB) means any person, other than an officer or employee of the ceding insurer, firm, association or corporation who solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of such insurer. (8) Reinsurance intermediary-manager (RM) means any person, firm, association or corporation who has authority to bind or manage all or part of the assumed reinsurance business of a reinsurer (including the management of a separate division, department or underwriting office) and acts as an agent for such reinsurer whether known as a RM, manager or other similar term. Notwithstanding the above, the following persons shall not be considered a RM, with respect to such reinsurer, for the purposes of this chapter: (a) An employee of the reinsurer; (b) A United States manager of the United States branch of an alien reinsurer; (c) An underwriting manager which, pursuant to contract, manages all the reinsurance operations of the reinsurer, is under common control with the reinsurer, subject to chapter 38, title 41 , Idaho Code, and whose compensation is not based on the volume of premiums written; or (d) The manager of a group, association, pool o
41-5103
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5103. Licensure. (1) No person, firm, association or corporation shall act as a RB in this state if the RB maintains an office either directly or as a member or employee of a firm or association, or an officer, director or employee of a corporation: (a) In this state, unless such RB is a licensed producer in this state; or (b) In another state, unless such RB is a licensed producer in this state or another state having a law substantially similar to this law or such RB is licensed in this state as a nonresident reinsurance intermediary. (2) No person, firm, association or corporation shall act as a RM: (a) For a reinsurer domiciled in this state, unless such RM is a licensed producer in this state; (b) In this state, if the RM maintains an office either directly or as a member or employee of a firm or association, or an officer, director or employee of a corporation in this state, unless such RM is a licensed producer in this state; (c) In another state for a nondomestic insurer, unless such RM is a licensed producer in this state or another state having a law substantially similar to this law or such person is licensed in this state as a nonresident reinsurance intermediary. (3) The director may require a RM subject to subsection (2) of this section to: (a) File a bond in an amount from an insurer acceptable to the director for the protection of the reinsurer; and (b) Maintain an errors and omissions policy in an amount acceptable to the director. (4) (a) The director may issue a reinsurance intermediary license to any person, firm, association or corporation who has complied with the requirements of this chapter. Any such license issued to a firm or association will authorize all the members of such firm or association and any designated employees to act as reinsurance intermediaries under the license, and all such persons shall be named in the application and any supplements thereto. Any such license issued to a corporation shall authorize all of the officers, and any designated employees and directors thereof to act as reinsurance intermediaries on behalf of such corporation, and all such persons shall be named in the application and any supplements thereto. (b) If the applicant for a reinsurance intermediary license is a nonresident, such applicant, as a condition precedent to receiving or holding a license, shall designate the director as agent for service of process in the manner, and with the same legal effect, provided for in this title for designation of service of process upon unauthorized insurers, and shall also furnish the director with the name and address of a resident of this state upon whom notices or orders of the director or process affecting such nonresident reinsurance intermediary may be served. Such licensee shall promptly notify the director in writing of every change in its designated agent for service of process, and such change shall not become effective unt
41-5104
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5104. Required contract provisions — Reinsurance intermediary — Brokers. Transactions between a RB and the insurer it represents in such capacity shall only be entered into pursuant to a written authorization, specifying the responsibilities of each party. The authorization shall, at a minimum, provide that: (1) The insurer may terminate the RB’s authority at any time. (2) The RB will render accounts to the insurer accurately detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing, to the RB, and remit all funds due to the insurer within thirty (30) days of receipt. (3) All funds collected for the insurer’s account will be held by the RB in a fiduciary capacity in a bank which is a qualified United States financial institution as defined herein. (4) The RB will comply with the provisions of section 41-5105 , Idaho Code. (5) The RB will comply with the written standards established by the insurer for the cession or retrocession of all risks. (6) The RB will disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded. History: [41-5104, added 1992, ch. 82, sec. 1, p. 251.]
41-5105
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5105. Books and records — Reinsurance intermediary brokers. (1) For at least ten (10) years after expiration of each contract of reinsurance transacted by the RB, the RB will keep a complete record for each transaction showing: (a) The type of contract, limits, underwriting restrictions, classes or risks and territory; (b) Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation; (c) Reporting and settlement requirements of balances; (d) Rate used to compute the reinsurance premium; (e) Names and addresses of assuming reinsurers; (f) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RB; (g) Related correspondence and memoranda; (h) Proof of placement; (i) Details regarding retrocessions handled by the RB 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; and (k) When the RB procures a reinsurance contract on behalf of a licensed ceding insurer: (i) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or (ii) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative. (2) The insurer will have access and the right to copy and audit all accounts and records maintained by the RB related to its business in a form usable by the insurer. History: [41-5105, added 1992, ch. 82, sec. 1, p. 252.]
41-5106
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5106. Duties of insurers utilizing the services of a reinsurance intermediary — Broker. (1) An insurer shall not engage the services of any person, firm, association or corporation to act as a RB on its behalf unless such person is licensed as required in section 41-5103 (1), Idaho Code. (2) An insurer may not employ an individual who is employed by a RB with which it transacts business, unless such RB is under common control with the insurer and subject to the provisions of chapter 38, title 41 , Idaho Code. (3) The insurer shall annually obtain a copy of the statement of the financial condition of each RB with which it transacts business. History: [41-5106, added 1992, ch. 82, sec. 1, p. 252.]
41-5107
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5107. Required contract provisions — Reinsurance intermediary — Managers. Transactions between a RM and the reinsurer it 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 (30) days before such reinsurer assumes or cedes business through such producer, a true copy of the approved contract shall be filed with the director for approval. The contract shall, at a minimum, contain provisions that: (1) The reinsurer may terminate the contract for cause upon written notice to the RM. The reinsurer may immediately suspend the authority of the RM to assume or cede business during the pendency of any dispute regarding the cause for termination. (2) The RM will 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 RM, and 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 will be held by the RM in a fiduciary capacity in a bank which is a qualified United States financial institution as defined herein. The RM may retain no more than three (3) months estimated claims payments and allocated loss adjustment expenses. The RM shall maintain a separate bank account for each reinsurer that it represents. (4) For at least ten (10) years after expiration of each contract of reinsurance transacted by the RM, the RM will keep a complete record for each transaction showing: (a) The type of contract, limits, underwriting restrictions, classes or risks and territory; (b) Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation, and disposition of outstanding reserves on covered risks; (c) Reporting and settlement requirements of balances; (d) Rate used to compute the reinsurance premium; (e) Names and addresses of reinsurers; (f) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RM; (g) Related correspondence and memoranda; (h) Proof of placement; (i) Details regarding retrocessions handled by the RM, as permitted under the provisions of section 41-5109 (4), Idaho Code, 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; and (k) When the RM places a reinsurance contract on behalf of a ceding insurer: (i) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or (ii) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representa
41-5108
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5108. Prohibited acts. The RM shall not: (1) Cede retrocessions on behalf of the reinsurer, except that the RM may cede facultative retrocessions pursuant to obligatory facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for such retrocessions. Such guidelines shall include a list of reinsurers with which such automatic agreements are in effect, and for each such reinsurer, the coverages and amounts or percentages that may be reinsured, and commission schedules. (2) Commit the reinsurer to participate in reinsurance syndicates. (3) Appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which he is appointed. (4) Without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of an amount specified by the reinsurer or one per cent (1%) of the reinsurer’s policyholder surplus as of December 31 of the last complete calendar year. (5) Collect any payment from a retrocessionaire or commit the reinsurer to any claim settlement with a retrocessionaire, without prior approval of the reinsurer. If prior approval is given, a report must be promptly forwarded to the reinsurer. (6) Jointly employ an individual who is employed by the reinsurer unless such RM is under common control with the reinsurer subject to chapter 38, title 41 , Idaho Code. (7) Appoint a sub-RM. History: [41-5108, added 1992, ch. 82, sec. 1, p. 254.]
41-5109
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5109. Duties of reinsurers utilizing the services of a reinsurance intermediary — Manager. (1) A reinsurer shall not engage the services of any person, firm, association or corporation to act as a RM on its behalf unless such person is licensed as required in section 41-5103 (2), Idaho Code. (2) The reinsurer shall annually obtain a copy of the statement(s) of the financial condition of each RM which such reinsurer has engaged, prepared by an independent certified accountant in a form acceptable to the director. (3) If a RM establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the RM. This opinion shall be in addition to any other required loss reserve certification. (4) Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who shall not be affiliated with the RM. (5) Within thirty (30) days of termination of a contract with a RM, the reinsurer shall provide written notification of such termination to the director. (6) A reinsurer shall not appoint to its board of directors, any officer, director, employee, controlling shareholder or subproducer of its RM. The provisions of this subsection shall not apply to relationships governed by chapter 38, title 41 , Idaho Code, or if applicable, chapter 17, title 41 , Idaho Code. History: [41-5109, added 1992, ch. 82, sec. 1, p. 255; am. 1993, ch. 194, sec. 35, p. 530.]
41-5110
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5110. Examination authority. (1) A reinsurance intermediary shall be subject to examination by the director. The director shall have access to all books, bank accounts and records of the reinsurance intermediary in a form usable to the director. (2) A RM may be examined as if it were the reinsurer. History: [41-5110, added 1992, ch. 82, sec. 1, p. 255.]
41-5111
TITLE 41 INSURANCE CHAPTER 51 REINSURANCE INTERMEDIARY ACT 41-5111. Penalties and liabilities. (1) A reinsurance intermediary, insurer or reinsurer found by the director, after a hearing conducted in accordance with chapter 52, title 67 , Idaho Code, to be in violation of any provision(s) of this chapter shall: (a) For each separate violation, pay a penalty in an amount not exceeding five thousand dollars ($5,000); (b) Be subject to revocation or suspension of its license; and (c) If a violation was committed by the reinsurance intermediary, such reinsurance intermediary shall make restitution to the insurer, reinsurer, rehabilitator or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer attributable to such violation. (2) The decision, determination or order of the director pursuant to subsection (1) of this section shall be subject to judicial review pursuant to chapter 52, title 67 , Idaho Code. (3) Nothing contained in this section shall affect the right of the director to impose any other penalties provided in the insurance law. (4) Nothing contained in this chapter is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, creditors or other third parties or confer any rights to such persons. History: [41-5111, added 1992, ch. 82, sec. 1, p. 256.]