CHAPTER 9. REINSURANCE INTERMEDIARIES
IC 27-6-9
Chapter 9. Reinsurance Intermediaries
IC 27-6-9-1
Actuary
Sec. 1. As used in this chapter, "actuary" means a person who is
a member in good standing of the American Academy of Actuaries.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-2
Commissioner
Sec. 2. As used in this chapter, "commissioner" refers to the
insurance commissioner appointed under IC 27-1-1-2.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-3
Controlling person
Sec. 3. As used in this chapter, "controlling person" means any
person, firm, association, limited liability company, or corporation
who directly or indirectly has the power to direct or cause to be
directed, the management, control, or activities of a reinsurance
intermediary.
As added by P.L.26-1991, SEC.26. Amended by P.L.8-1993,
SEC.423.
IC 27-6-9-4
Insurer
Sec. 4. As used in this chapter, "insurer" means any person, firm,
association or corporation duly licensed in Indiana pursuant to the
applicable provisions of the insurance law as an insurer.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-5
Licensed producer
Sec. 5. As used in this chapter, "licensed producer" means an
insurance producer, broker, or reinsurance intermediary licensed
pursuant to the applicable provision of the insurance law.
As added by P.L.26-1991, SEC.26. Amended by P.L.178-2003,
SEC.44.
IC 27-6-9-6
Reinsurance intermediary
Sec. 6. As used in this chapter, "reinsurance intermediary" means:
(1) a reinsurance intermediary-broker; or
(2) a reinsurance intermediary-manager.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-7
Reinsurance intermediary-broker
Sec. 7. As used in this chapter, "reinsurance intermediary-broker"
or, "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 that insurer.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-8
Reinsurance intermediary-manager
Sec. 8. (a) As used in this chapter, "reinsurance
intermediary-manager" (or, RM) means any person, firm, association
or corporation that:
(1) has authority to bind or manages all or part of the assumed
reinsurance business of a reinsurer (including the management
of a separate division, department, or underwriting office); and
(2) acts as an agent for that reinsurer;
whether known as a RM, manager, or other similar term.
(b) Notwithstanding subsection (a), the following persons may not
be considered a RM, with respect to a reinsurer, for the purposes of
this chapter:
(1) An employee of the reinsurer.
(2) A United States manager of the United States branch of an
alien reinsurer.
(3) An underwriting manager which, pursuant to contract:
(A) manages all or part of the reinsurance operations of the
reinsurer;
(B) is under common control with the reinsurer, subject to
IC 27-1-23; and
(C) whose compensation is not based on the volume of
premiums written.
(4) The manager of a group, association, pool, or organization
of insurers which engage in joint underwriting or joint
reinsurance and who are subject to examination by the
insurance commissioner of the state in which the manager's
principal business office is located.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-9
Reinsurer
Sec. 9. As used in this chapter, "reinsurer" means any person,
firm, association, or corporation duly licensed in Indiana pursuant to
the applicable provisions of the insurance law as an insurer with the
authority to assume reinsurance.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-10
To be in violation
Sec. 10. As used in this chapter, "to be in violation" means that
the reinsurance intermediary, insurer, or reinsurer for whom the
reinsurance intermediary was acting failed to substantially comply
with the provisions of this chapter.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-11
Qualified United States financial institution
Sec. 11. As used in this chapter, "qualified United States financial
institution" means an institution that:
(1) 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;
(2) is regulated, supervised, and examined by United States
federal or state authorities having regulatory authority over
banks and trust companies; and
(3) has been determined by:
(A) the commissioner; or
(B) 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 commissioner.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-12
Reinsurance intermediary-broker; requirements
Sec. 12. No person, firm, association, or corporation may act as
a RB in Indiana if the RB maintains an office either directly, or as a
member or employee of a firm or association, or as an officer,
director, or employee of a corporation:
(1) in Indiana, unless the RB is a licensed producer in Indiana;
or
(2) in another state, unless the RB:
(A) is a licensed producer in Indiana or another state having
a law substantially similar to this chapter; or
(B) is licensed in Indiana as a nonresident reinsurance
intermediary.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-13
Reinsurance intermediary-manager; requirements
Sec. 13. No person, firm, association, or corporation may act as
a RM:
(1) for a reinsurer domiciled in this state, unless the RM is a
licensed producer in this state;
(2) in this state, if the RM maintains an office either directly, or
as a member or employee of a firm, limited liability company,
or association, or as an officer, director, or employee of a
corporation in this state, unless the RM is a licensed producer
in this state;
(3) in another state for a nondomestic insurer, unless the RM is:
(A) a licensed producer in Indiana or another state having a
law substantially similar to this chapter; or
(B) the person is licensed in this state as a nonresident
reinsurance intermediary.
As added by P.L.26-1991, SEC.26. Amended by P.L.8-1993,
SEC.424.
IC 27-6-9-14
Bond; errors and omissions policy
Sec. 14. The commissioner may require a RM subject to section
13 of this chapter to:
(1) file a bond from an insurer in an amount acceptable to the
commissioner for the protection of the reinsurer; and
(2) maintain an errors and omissions policy in an amount
acceptable to the commissioner.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-15
Reinsurance intermediary license; issuance; application; authority
to act; nonresidents
Sec. 15. (a) The commissioner may issue a reinsurance
intermediary license to any person, firm, association, or corporation
who has complied with the requirements of this chapter. Any license
issued to a firm or association under this section authorizes all the
members of the firm or association and any designated employees to
act as reinsurance intermediaries under the license, and all such
persons must be named in the application and any supplements
thereto. Any license issued to a corporation under this section
authorizes all of the officers of the corporation, and any designated
employees and directors of the corporation, to act as reinsurance
intermediaries on behalf of the corporation, and all such persons
must be named in the application and any supplements thereto.
(b) If the applicant for a reinsurance intermediary license is a
nonresident, the applicant, as a condition precedent to receiving or
holding a license, must:
(1) designate the commissioner as agent for service of process
in the manner, and with the same legal effect, provided for by
this chapter for designation of service of process upon
unauthorized insurers; and
(2) furnish the commissioner with the name and address of a
resident of Indiana upon whom notices or orders of the
commissioner or process affecting such nonresident reinsurance
intermediary may be served.
(c) A licensee who receives a license under subsection (b) shall
promptly notify the commissioner in writing of every change in its
designated agent for service of process, and a change in the licensee's
designated agent does not become effective until acknowledged by
the commissioner.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-16
Refusal to issue license; conditions; summary
Sec. 16. (a) The commissioner may refuse to issue a reinsurance
intermediary license if, in the commissioner's judgment:
(1) the applicant, anyone named on the application, or any
member, principal, officer, or director of the applicant, is not
trustworthy;
(2) any controlling person of the applicant is not trustworthy to
act as a reinsurance intermediary; or
(3) any of the foregoing has given cause for revocation or
suspension of such license, or has failed to comply with any
prerequisite for the issuance of such license.
(b) Upon written request therefor, the commissioner shall furnish
a summary of the basis for refusal to issue a license. A summary
furnished under this subsection is declared confidential for the
purposes of IC 5-14-3-4(a)(1) and is not subject to inspection and
copying as a public record.
As added by P.L.26-1991, SEC.26. Amended by P.L.1-2002,
SEC.110.
IC 27-6-9-17
Attorneys; exemptions
Sec. 17. Attorneys licensed to practice in Indiana, when acting in
their professional capacity, are exempt from sections 12 through 16
of this chapter.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-18
Transactions between reinsurance intermediary-broker and
insurer; written authorization; contents
Sec. 18. Transactions between a RB and the insurer it represents
in the capacity of RB shall only be entered into pursuant to a written
authorization, specifying the responsibilities of each party. The
authorization shall, at a minimum, contain provisions stating the
following:
(1) The insurer may terminate the RB's authority at any time.
(2) The RB will:
(A) 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
(B) 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.
(4) The RB will comply with section 19 of this chapter.
(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.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-19
Record of transactions; contents; insurer access
Sec. 19. (a) For at least ten (10) years after the expiration of each
contract of reinsurance transacted by the RB, the RB will keep a
complete record for each transaction showing the following:
(1) The type of contract, limits, underwriting restrictions,
classes or risks and territory.
(2) Period of coverage, including effective and expiration dates,
cancellation provisions, and notice required of cancellation.
(3) Reporting and settlement requirements of balances.
(4) Rate used to compute the reinsurance premium.
(5) Names and addresses of assuming reinsurers.
(6) Rates of all reinsurance commissions, including the
commissions on any retrocessions handled by the RB.
(7) Related correspondence and memoranda.
(8) Proof of placement.
(9) Details regarding retrocessions handled by the RB,
including the identity of retrocessionaires and percentage of
each contract assumed or ceded.
(10) Financial records, including but not limited to, premium
and loss accounts.
(11) When the RB procures a reinsurance contract on behalf of
a licensed ceding insurer:
(A) directly from any assuming reinsurer, written evidence
that the assuming reinsurer has agreed to assume the risk; or
(B) if placed through a representative of the assuming
reinsurer, other than an employee, written evidence that the
reinsurer has delegated binding authority to the
representative.
(b) The insurer shall have access to 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.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-20
Engagement of services of reinsurance intermediary-broker;
employment of an individual employed by an RB; financial
condition; requirements
Sec. 20. (a) An insurer may 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 by section 12 of this chapter.
(b) An insurer may not employ an individual who is employed by
a RB with which it transacts business unless the RB is under
common control with the insurer and subject to IC 27-1-23.
(c) The insurer shall annually obtain a copy of statements of the
financial condition of each RB with which it transacts business.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-21
Transactions between reinsurance intermediary-manager and
reinsurer; written contract; contents
Sec. 21. Transactions between a RM and the reinsurer it
represents in the capacity of RM may only be entered into pursuant
to a written contract, specifying the responsibilities of each party,
which must be approved by the reinsurer's board of directors. At least
thirty (30) days before a reinsurer assumes or cedes business through
a RM, a true copy of the approved contract must be filed with the
commissioner for approval. The contract must, at a minimum,
contain provisions that state the following:
(1) The reinsurer may terminate the contract for cause upon
written notice to the RM, and may 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:
(A) 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
(B) 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. 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 transactions showing the following:
(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 by section 23(d) of this chapter, including the
identity of retrocessionaires and percentage of each contract
assumed or ceded.
(J) Financial records, including premium and loss accounts.
(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
the reinsurer has delegated binding authority to the
representative.
(5) The reinsurer will have access and the right to copy all
accounts and records maintained by the RM related to its
business in a form usable by the reinsurer.
(6) The contract cannot be assigned in whole or in part by the
RM.
(7) The RM will comply with the written underwriting and
rating standards established by the insurer for the acceptance,
rejection, or cession of all risks.
(8) The rates, terms, and purposes of commissions, charges, and
other fees which the RM may levy against the reinsurer.
(9) If the contract permits the RM to settle claims on behalf of
the reinsurer the following apply:
(A) All claims will be reported to the reinsurer in a timely
manner.
(B) A copy of the claim file will be sent to the reinsurer at its
request or as soon as it becomes known that the claim:
(i) has the potential to exceed the lesser of an amount
determined by the commissioner or the limit set by the
reinsurer;
(ii) involves a coverage dispute;
(iii) may exceed the RM's claims settlement authority;
(iv) is open for more than six (6) months; or
(v) is closed by payment of the lesser of an amount set by
the commissioner or an amount set by the reinsurer.
(C) All claim files will be the joint property of the reinsurer
and RM. However, upon an order of liquidation of the
reinsurer, the files shall become the sole property of the
reinsurer or its estate, and the RM shall have reasonable
access to and the right to copy the files on a timely basis.
(D) Any settlement authority granted to the RM may be
terminated for cause upon the reinsurer's written notice to
the RM or upon the termination of the contract. The
reinsurer may suspend the settlement authority during the
pendency of the dispute regarding the cause of termination.
(10) If the contract provides for a sharing of interim profits by
the RM, that those interim profits will not be paid until one (1)
year after the end of each underwriting period for property
business and five (5) years after the end of each underwriting
period for casualty business (or a later period set by the
commissioner for specified lines of insurance) and not until the
adequacy of reserves on remaining claims has been verified
under section 23(c) of this chapter.
(11) The RM will annually provide the reinsurer with a
statement of its financial condition prepared by an independent
certified accountant.
(12) The reinsurer shall periodically (at least semiannually)
conduct an on-site review of the underwriting and claims
processing operations of the RM.
(13) The RM will disclose to the reinsurer any relationship it
has with any insurer prior to ceding or assuming any business
with that insurer pursuant to the contract.
(14) The acts of the RM shall be considered to be the acts of the
reinsurer on whose behalf the RM is acting.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-22
Binding of retrocessions on behalf of reinsurers by RM; conditions;
reinsurance syndicates; appointment of producers; payment of
claims; collection of payment; settlements; employment of
reinsurer employee; sub-RMs
Sec. 22. (a) A RM may not bind retrocessions on behalf of the
reinsurer, except that the RM may bind facultative retrocessions
pursuant to obligatory facultative agreements if the contract with the
reinsurer contains reinsurance underwriting guidelines for such
retrocessions. Guidelines referred to in this subsection must include
a list of reinsurers with which the automatic agreements are in effect,
and, for each such reinsurer, the coverages and amounts or
percentages that may be reinsured, and commission schedules.
(b) A RM may not commit the reinsurer to participate in
reinsurance syndicates.
(c) A RM may not appoint any producer without assuring that the
producer is lawfully licensed to transact the type of reinsurance for
which the producer is appointed.
(d) A RM may not, without prior approval of the reinsurer, pay or
commit the reinsurer to pay a claim, net of retrocessions, that
exceeds the lesser of:
(1) an amount specified by the reinsurer; or
(2) one percent (1%) of the reinsurer's policyholder's surplus as
of December 31 of the last complete calendar year before the
payment or commitment.
(e) A RM may not 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.
(f) A RM may not jointly employ an individual who is employed
by the reinsurer.
(g) A RM may not appoint a sub-RM.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-23
Engagement of services of a reinsurance intermediary-manager;
statement of financial condition; loss reserves; authority to
contract; termination; board of directors
Sec. 23. (a) A reinsurer may not engage the services of any
person, firm, association, or corporation to act as a RM on its behalf
unless the person engaged is licensed as required by section 13 of
this chapter.
(b) A reinsurer shall annually obtain a copy of statements of the
financial condition of each RM which the reinsurer has engaged,
prepared by an independent certified accountant in a form acceptable
to the commissioner.
(c) 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.
(d) Binding authority for all retrocessional contracts or
participation in reinsurance syndicates shall rest with an officer of
the reinsurer, who must not be affiliated with the RM.
(e) Within thirty (30) days of termination of a contract with a RM,
the reinsurer shall provide written notification of the termination to
the commissioner.
(f) A reinsurer may not appoint to its board of directors any
officer, director, employee, controlling shareholder, or subproducer
of its RM. This subsection does not apply to relationships governed
by IC 27-1-23.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-24
Examination by commissioner; access to records
Sec. 24. (a) A reinsurance intermediary is subject to examination
by the commissioner. The commissioner shall have access to all
books, bank accounts, and records of the reinsurance intermediary in
a form usable to the commissioner.
(b) A RM may be examined as if it were the reinsurer.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-25
Violations; penalties; review; effect on third parties
Sec. 25. (a) A reinsurance intermediary, insurer, or reinsurer
found by the commissioner, after a hearing conducted in accordance
with IC 4-21.5, to be in violation of any provision of this chapter,
shall:
(1) for each separate violation, pay an administrative penalty in
an amount not exceeding five thousand dollars ($5,000);
(2) be subject to revocation or suspension of its license; and
(3) if a violation was committed by the reinsurance
intermediary, the 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 the reinsurance
intermediary's violation.
(b) The decision, determination, or order of the commissioner
pursuant to subsection (a) is subject to judicial review pursuant to
IC 4-21.5.
(c) Nothing contained in this section shall affect the right of the
commissioner to impose any other penalties provided by law.
(d) 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 upon those
persons.
As added by P.L.26-1991, SEC.26.
IC 27-6-9-26
Rules for implementation and administration of chapter
Sec. 26. The commissioner may adopt rules under IC 4-22-2 for
the implementation and administration of this chapter.
As added by P.L.26-1991, SEC.26.