Arizona Laws 20-486.05. Required contract provisions; reinsurance intermediary managers
A reinsurance intermediary manager and the reinsurer it represents as a reinsurance intermediary shall enter into a written contract that specifies the responsibilities of each party. The reinsurer’s board of directors shall approve the contract. At least thirty days before the reinsurer assumes or cedes business through the producer, a true copy of the approved contract shall be filed with the director for approval. The contract at a minimum shall provide that:
Terms Used In Arizona Laws 20-486.05
- Contract: A legal written agreement that becomes binding when signed.
- Fiduciary: A trustee, executor, or administrator.
- including: means not limited to and is not a term of exclusion. See Arizona Laws 1-215
- Insurer: means a person, firm, association or corporation licensed to transact insurance business in this state. See Arizona Laws 20-486
- Property: includes both real and personal property. See Arizona Laws 1-215
- Reinsurance intermediary: means a reinsurance intermediary broker or a reinsurance intermediary manager. See Arizona Laws 20-486
- Reinsurance intermediary manager: means a person, firm, association or corporation that 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 that acts as an agent for the reinsurer whether the reinsurer is known as a reinsurance intermediary manager, a manager or another similar term. See Arizona Laws 20-486
- Reinsurer: means a person, firm, association or corporation licensed to transact reinsurance business in this state. See Arizona Laws 20-486
- sent: means to deliver by United States mail, personal delivery or fax or by electronic means consistent with the requirements of section 20-239. See Arizona Laws 20-117
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- United States: includes the District of Columbia and the territories. See Arizona Laws 1-215
1. The reinsurer may terminate the contract for cause on written notice to the reinsurance intermediary manager. The reinsurer immediately may suspend the authority of the reinsurance intermediary manager to assume or cede business during the pendency of a dispute regarding the cause for termination.
2. The reinsurance intermediary manager shall render accounts to the reinsurer that accurately detail all material transactions, including information necessary to support all commissions, charges and other fees received by or owed to the reinsurance intermediary manager, and shall remit all monies due under the contract to the reinsurer on not less than a monthly basis.
3. All monies collected for the reinsurer’s account be held in a fiduciary capacity by the reinsurance intermediary manager in a bank that is a qualified United States financial institution as defined in section 20-486. 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 it represents.
4. The reinsurance intermediary manager comply with the provisions of Section 20-481.06.
5. The contract cannot be assigned in whole or in part by the reinsurance intermediary manager.
6. The reinsurance intermediary manager comply with the written underwriting and rating standards that are established by the insurer for the acceptance, rejection or cession of all risks.
7. The rates, terms and purposes of commissions, charges and other fees that the reinsurance intermediary manager may levy against the reinsurer be set forth.
8. If the contract permits the reinsurance intermediary manager to settle claims on behalf of the reinsurer, all claims be reported to the reinsurer in a timely manner and a copy of the claim file be sent to the reinsurer on request or as soon as it becomes known that the claim:
(a) May exceed the lesser of an amount determined by the director or the limit set by the reinsurer.
(b) Involves a coverage dispute.
(c) May exceed the reinsurance intermediary manager’s claims settlement authority.
(d) Is open for more than six months.
(e) Is closed by payment of the lesser of an amount set by the director or an amount set by the reinsurer.
All claim files are the joint property of the reinsurer and the reinsurance intermediary manager. On 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. Any settlement authority granted to the reinsurance intermediary manager may be terminated for cause on the reinsurer’s written notice to the reinsurance intermediary manager or on the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding the cause of termination.
9. If the contract provides for a sharing of interim profits by the reinsurance intermediary manager, the interim profits shall not be paid until one year after the end of each underwriting period for property business, five years after the end of each underwriting period for casualty business or a later period set by the director for specified lines of insurance and not until the adequacy of reserves on remaining claims is verified pursuant to Section 20-486.08, subsection C.
10. The reinsurance intermediary manager annually shall provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant.
11. The reinsurer at least semiannually shall conduct an on-site review of the underwriting and claims processing operations of the reinsurance intermediary manager.
12. The reinsurance intermediary manager shall disclose to the reinsurer a relationship it has with an insurer before ceding or assuming any business with the insurer pursuant to the contract.
13. Within the scope of its actual or apparent authority, the acts of the reinsurance intermediary manager be deemed to be the acts of the reinsurer on whose behalf it is acting.