SB302 Alabama 2013 Session

Sponsors

Session

Regular Session 2013

Title

Insurance, Title 27, certain sections, repealed

Description

<p class="bill_description"> To repeal portions of Title 27 of the Code of Alabama 1975</p><p class="bill_entitled_an_act"> Relating to the Alabama Insurance Code, to repeal the following: 27-5A-4 Transactions between a reinsurance intermediary-broker and the insurer it represents in that 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. (2) The reinsurance intermediary-broker shall 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 shall be held by the reinsurance intermediary-broker in a fiduciary capacity in a bank which is a qualified U.S. financial institution as defined herein. (4) The reinsurance intermediary-broker shall comply with Section 27-5A-5. (5) The reinsurance intermediary-broker shall comply with the written standards established by the insurer for the cession or retrocession of all risks. (6) The reinsurance intermediary-broker shall disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded. 27-5A-5 (a) For at least 10 years after expiration of each contract of reinsurance transacted by the reinsurance intermediary-broker, the reinsurance intermediary-broker shall keep a complete record for each transaction showing all of 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 reinsurance intermediary-broker. (7) Related correspondence and memoranda. (8) Proof of placement. (9) Details regarding retrocessions handled by the reinsurance intermediary-broker 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 reinsurance intermediary-broker 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. 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 and the right to copy and audit all accounts and records maintained by the reinsurance intermediary-broker related to its business in a form usable by the insurer. 27-5A-6 (a) An insurer shall not engage the services of any person, firm, association, or corporation to act as a reinsurance intermediary-broker on its behalf unless the person is licensed as required by subsection (a) of Section 27-5A-3. (b) An insurer may not employ an individual who is employed by a reinsurance intermediary-broker with which it transacts business, unless such reinsurance intermediary-broker is under common control with the insurer and subject to Chapter 29, Title 27. (c) The insurer shall annually obtain a copy of statements of the financial condition of each reinsurance intermediary-broker with which it transacts business. 27-5A-7 Transactions between a reinsurance intermediary-manager and the reinsurer it represents in that 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 30 days before a reinsurer assumes or cedes business through a producer, a true copy of the approved contract shall be filed with the commissioner for approval. The contract shall, at a minimum, provide that: (1) The reinsurer may terminate the contract for cause upon written notice to the reinsurance intermediary-manager. The reinsurer may immediately suspend the authority of the reinsurance intermediary-manager to assume or cede business during the pendency of any dispute regarding the cause for termination. (2) The reinsurance intermediary-manager shall 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 reinsurance intermediary-manager, 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 shall be held by the reinsurance intermediary-manager in a fiduciary capacity in a bank which is a qualified U.S. financial institution as defined herein. 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) For at least 10 years after expiration of each contract of reinsurance transacted by the reinsurance intermediary-manager, the reinsurance intermediary-manager shall keep a complete record for each transaction showing all of 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 reinsurance intermediary-manager. g. Related correspondence and memoranda. h. Proof of placement. i. Details regarding retrocessions handled by the reinsurance intermediary-manager, as permitted by subsection (d) of Section 27-5A-9, 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. k. When the reinsurance intermediary-manager places a reinsurance contract on behalf of a ceding insurer: 1. Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk. 2. If placed through a representative of the assuming reinsurer, other than an employee, written evidence </p>

Subjects

Insurance