The Vermont Statutes Online
Banking and Insurance
REGULATION OF MANAGING GENERAL AGENTS, REINSURANCE INTERMEDIARIES, AND PRODUCER CONTROLLED INSURERS
4818. Contract required
(a) No person
shall transact business with a managing general agent, a reinsurance
intermediary-manager, or a controlling producer as qualified by section 4816 of
this title unless there is in force a written contract between the parties
which sets forth the respective responsibilities of each party and where both
parties share responsibility for a particular function, specifies the division
of such responsibilities. The contract must be approved by the board of
directors of a reinsurer represented by a reinsurance intermediary-manager or
the board of directors of a controlled insurer. At least 30 days before such
reinsurer assumes or cedes business through such manager, or reinsurance
intermediary, a true copy of the approved contract shall be filed with the
Commissioner for approval.
(b) The contract
required under subsection (a) of this section shall contain the following
(1) The contract
may be terminated by the insurer or reinsurer for cause upon written notice.
authority to write business, underwrite, assume, or cede business, or settle
claims may be suspended by the insurer or reinsurer during the pendency of any
dispute regarding the cause for termination.
(3) All funds
due under the contract shall be remitted not less than monthly together with an
accounting; however, the due date shall be fixed so that premiums or
installments thereof collected shall be remitted no later than 90 days after
the effective date of any policy for which the funds are collected.
(4) All funds
collected for an insurer or reinsurer under the contract shall be held in a
fiduciary capacity in a financial institution approved by the Commissioner;
however, funds of a controlling producer not required to be licensed in this
State shall be maintained in compliance with the requirements of the
controlling producer's domiciliary jurisdiction.
records of all business written under the contract shall be maintained. The
contracting insurer or reinsurer shall have access to and the right to copy all
accounts and records related to its business in a form usable by the insurer or
(6) The contract
may not be assigned in whole or in part.
(7) The required
use of underwriting, rating, or reinsurance underwriting standards formulated
by the insurer or reinsurer when underwriting or reinsurance underwriting
authority is transferred to a party to the contract.
(8) The required
use of a claims handling or settlement procedure formulated by the insurer or
reinsurer when claims handling or settlement authority is transferred to a
party to the contract.
(9) The insurer
shall have the right to cancel or nonrenew any policy of insurance subject to
any applicable laws and regulations.
required use of written standards established by the insurer for the cession or
retrocession of all risks when ceding or retroceding authority is transferred
to a party to the contract.
managing general agent, reinsurance intermediary-manager, or controlling
producer shall not bind or cede reinsurance on behalf of the insurer,
reinsurer, or controlled insurer, except for facultative reinsurance contracts
pursuant to obligatory facultative agreements if the contract contains
reinsurance underwriting guidelines for reinsurance ceded and assumed. The
guidelines must list the reinsurers with which such automatic agreements are in
effect, the coverages and amounts or percentages that may be reinsured and
between a reinsurance intermediary broker 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 reinsurance intermediary broker's authority at any time.
reinsurance intermediary broker 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
reinsurance intermediary broker, and remit all funds due to the insurer within
30 days of receipt.
(3) All funds
collected for the insurer's account will be held by the reinsurance
intermediary broker in a fiduciary capacity in a financial institution approved
by the Commissioner.
reinsurance intermediary broker will comply with subsection 4821(c) of this
reinsurance intermediary broker will comply with the written standards
established by the insurer for the cession or retrocession of all risks.
reinsurance intermediary broker will disclose to the insurer any relationship
with any reinsurer to which business will be ceded or retroceded. (Added 1991,
No. 249 (Adj. Sess.), § 18, eff. Jan. 1, 1993; amended 1993, No. 12, § 8, eff.
April 26, 1993; 2005, No. 122 (Adj. Sess.), § 1.)