§ 58-9-11. Broker and insurer transactions.
§ 58‑9‑11. Brokerand insurer transactions.
(a) Transactionsbetween a broker and the insurer it represents as a broker shall only beentered into pursuant to a written authorization, specifying theresponsibilities of each party. The authorization shall include provisions tothe effect that:
(1) The insurer mayterminate the broker's authority at any time.
(2) The broker willrender accounts to the insurer that accurately detail all materialtransactions, including information necessary to support all commissions,charges, and other fees received by or owing to the broker and will remit allfunds due to the insurer within 30 days after receipt by the broker.
(3) All funds collectedfor the insurer's account will be held by the broker in a fiduciary capacity ina qualified United States financial institution.
(4) The broker willcomply with this Article.
(5) The broker willcomply with the written standards established by the insurer for the cession orretrocession of all risks.
(6) The broker willdisclose to the insurer any relationship with any reinsurer to which businesswill be ceded or retroceded.
(7) The broker willannually provide the insurer with an audited statement of the broker'sfinancial condition, which statement will be prepared by an independentcertified public accountant.
(8) The insurer willhave access and the right to copy and audit all accounts and records maintainedby the broker related to its business, in a form usable by the insurer.
(9) For at least 10years after the expiration of each contract of reinsurance transacted by thebroker, the broker will keep a complete record for each transaction showing:
a. The type ofcontract, limits, underwriting restrictions, classes or risks, and territory;
b. Period of coverage,including effective and expiration dates, cancellation provisions, and noticerequired of cancellation;
c. Reporting andsettlement requirements of balances;
d. Rate or rates usedto compute the reinsurance premium;
e. Names and addressesof assuming reinsurers;
f. Rates of allreinsurance commissions, including the commissions on any retrocession handledby the broker;
g. Relatedcorrespondence and memoranda;
h. Proof of placement;
i. Details regardingretrocessions handled by the broker, including the identity of retrocessionairesand percentage of each contract assumed or ceded;
j. Financial records,including premium and loss accounts; and
k. When the brokerprocures a reinsurance contract on behalf of a licensed ceding insurer:
1. Directly from anyassuming reinsurer, written evidence that the assuming reinsurer has agreed toassume the risk; or
2. If placed through arepresentative of the assuming reinsurer, other than an employee, writtenevidence that the reinsurer has delegated binding authority to the representative.
(b) An insurer shallnot engage the services of any person to act as a broker on its behalf unlessthe person is licensed under G.S. 58‑9‑6 or exempted under thisArticle. An insurer shall not employ an individual who is employed by a brokerwith which it transacts business, unless the broker is under common controlwith the insurer under Article 19 of this Chapter. (1993, c. 452, s. 21; 2001‑223,s. 10.2.)