Chapter Ins 47

Ins 47.02(5)(a) (a) 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

Ins 47.02(5)(b) (b) Furnish the commissioner with the name and address of a resident of this state upon whom notices or orders of the commissioner or process affecting the nonresident reinsurance intermediary may be served.

Ins 47.02(6) (6) A nonresident reinsurance intermediary licensee shall promptly notify the commissioner in writing of every change in its designated agent for service of process, and the change is not effective until acknowledged by the commissioner.

Ins 47.02(7) (7) The commissioner may refuse to issue or revoke, suspend or summarily suspend, a reinsurance intermediary license if the applicant, anyone named on the application or supplement to the application, or any member, principal, officer or director of the applicant, is not trustworthy, or any controlling person is not trustworthy or any of them has given cause for revocation or suspension of a license, or has failed to comply with any prerequisite for the issuance of a reinsurance intermediary license.

Ins 47.02(8) (8) The commissioner may refuse to issue, suspend, summarily suspend or revoke the license of a reinsurance intermediary for violation of chs. 600 to 645, Stats., a rule adopted under chs. 600 to 645, Stats., or on any grounds described in s. 628.10, Stats.

Ins 47.02(9) (9) Licensed attorneys at law who act solely in their professional capacity as attorneys are exempt from this section.

Ins 47.02 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 47.03 Ins 47.03 Required contract provisions-reinsurance intermediary-brokers. No reinsurance intermediary-broker or insurer may enter into an agreement or arrangement after August 1, 1993 and after September 30, 1994, no reinsurance intermediary-broker may continue an agreement or arrangement, for the reinsurance intermediary-broker to represent the insurer as a reinsurance intermediary-broker unless the reinsurance intermediary-broker obtains written authorization from the insurer, the reinsurance intermediary-broker complies with the terms of the authorization, and the authorization specifies the responsibilities of each party, including, but not limited to, the following:

Ins 47.03(1) (1) The insurer may terminate the reinsurance intermediary-broker authority at any time.

Ins 47.03(2) (2) The 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.

Ins 47.03(3) (3) The reinsurance intermediary-broker will hold all funds collected for the insurer’s account in a fiduciary capacity in a qualified United States financial institution.

Ins 47.03(4) (4) The reinsurance intermediary-broker will comply with s. Ins 47.04.

Ins 47.03(5) (5) The reinsurance intermediary-broker will comply with the written standards established by the insurer for the cession or retrocession of all risks.

Ins 47.03(6) (6) The reinsurance intermediary-broker will disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded.

Ins 47.03 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 47.04 Ins 47.04 Books and records-reinsurance intermediary-brokers.

Ins 47.04(1) (1) A reinsurance intermediary-broker shall keep a complete record for each transaction for at least 10 years after expiration of each contract of reinsurance transacted by the reinsurance intermediary-broker, showing:

Ins 47.04(1)(a) (a) Type of contract, limits, underwriting restrictions, classes or risks and territory;

Ins 47.04(1)(b) (b) Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation;

Ins 47.04(1)(c) (c) Reporting and settlement requirements of balances;

Ins 47.04(1)(d) (d) Rate used to compute the reinsurance premium;

Ins 47.04(1)(e) (e) Names and addresses of assuming reinsurers;

Ins 47.04(1)(f) (f) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the reinsurance intermediary-broker;

Ins 47.04(1)(g) (g) Related correspondence and memoranda;

Ins 47.04(1)(h) (h) Proof of placement;

Ins 47.04(1)(i) (i) Details regarding retrocessions handled by the reinsurance intermediary-broker including the identity of retrocessionaires and percentage of each contract assumed or ceded;

Ins 47.04(1)(j) (j) Financial records, including but not limited to, premium and loss accounts; and

Ins 47.04(1)(k) (k) When the reinsurance intermediary-broker procures a reinsurance contract on behalf of a licensed ceding insurer:

Ins 47.04(1)(k)1. 1. Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or

Ins 47.04(1)(k)2. 2. If placed through a representative of the assuming reinsurer, other than an employe, written evidence that the reinsurer has delegated binding authority to the representative.

Ins 47.04(2) (2) A reinsurance intermediary-broker shall give each insurer it represents access to and the right to copy and audit all accounts and records maintained by the reinsurance intermediary-broker related to the insurer’s business in a form usable by the insurer.

Ins 47.04 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 47.05 Ins 47.05 Duties of insurers utilizing the services of a reinsurance intermediary-broker; prohibited function.

Ins 47.05(1) (1) An insurer may not use the services of any person to act as a reinsurance intermediary-broker on its behalf unless the person is licensed as required by this chapter.

Ins 47.05(2) (2) An insurer may not employ an individual who is employed by a reinsurance intermediary-broker with which it transacts business, unless the reinsurance intermediary-broker is under common control with the insurer and subject to ch. 617, Stats., and ch. Ins 40, or the laws and rules of another state which are determined by the commissioner to be substantially similar to ch. 617, Stats., and ch. Ins 40.

Ins 47.05(3) (3) An insurer shall annually obtain a copy of statements of the financial condition of each reinsurance intermediary-broker with which it transacts business.

Ins 47.05(4) (4) A reinsurance intermediary-broker required to be licensed under this chapter may not bind, and an insurer may not give the reinsurance intermediary-broker authority to bind, ceded reinsurance on behalf of the insurer, except that the reinsurance intermediary-broker may bind ceded facultative reinsurance pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines for the retrocessions. The guidelines shall 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.

Ins 47.05 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 47.06 Ins 47.06 Required contract provisions-reinsurance intermediary-manager. No reinsurance intermediary-manager or reinsurer may enter into an agreement or arrangement, or amend or renew an agreement or arrangement, after August 1, 1993 for the reinsurance intermediary-manager to represent the reinsurer, or continue an agreement or arrangement in effect on August 1, 1993 after September 30, 1994, unless the agreement or arrangement is a written contract which specifies the responsibilities of each party and complies with this section, the reinsurance intermediary-manager complies with the contract, and the contract is approved by the reinsurer’s board of directors, is filed with the commissioner for approval at least 30 days before the reinsurer assumes or cedes business through the reinsurance intermediary-manager, and the commissioner approves the contract. The contract shall specify the responsibilities of the reinsurance intermediary-manager, including, but not limited to, the following:

Ins 47.06(1) (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.

Ins 47.06(2) (2) The reinsurance intermediary-manager will render accounts to the reinsurer accurately detailing all material transactions, including 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.

Ins 47.06(3) (3) All funds collected for the reinsurer’s account will be held by the reinsurance intermediary-manager in a fiduciary capacity in a qualified United States financial institution. The reinsurance intermediary-manager may retain no more than 3 months estimated claims payments and allocated loss adjustment expenses. The reinsurance intermediary-manager shall maintain a separate financial institution account for each reinsurer that it represents.

Ins 47.06(4) (4) For at least 10 years after expiration of each contract of reinsurance transacted by the reinsurance intermediary-manager, the reinsurance intermediary-manager will keep a complete record for each transaction showing:

Ins 47.06(4)(a) (a) The type of contract, limits, underwriting restrictions, classes or risks and territory;

Ins 47.06(4)(b) (b) Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation, and disposition of outstanding reserves on covered risks;

Ins 47.06(4)(c) (c) Reporting and settlement requirements of balances;

Ins 47.06(4)(d) (d) Rate used to compute the reinsurance premium;

Ins 47.06(4)(e) (e) Names and addresses of reinsurers;

Ins 47.06(4)(f) (f) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the reinsurance intermediary-manager;

Ins 47.06(4)(g) (g) Related correspondence and memoranda;

Ins 47.06(4)(h) (h) Proof of placement;

Ins 47.06(4)(i) (i) Details regarding retrocessions handled by the reinsurance intermediary-manager, as permitted under s. Ins 47.08 (4), including the identity of retrocessionaires and percentage of each contract assumed or ceded;

Ins 47.06(4)(j) (j) Financial records, including but not limited to, premium and loss accounts; and

Ins 47.06(4)(k) (k) When the reinsurance intermediary-manager places a reinsurance contract on behalf of a ceding insurer:

Ins 47.06(4)(k)1. 1. Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or

Ins 47.06(4)(k)2. 2. If placed through a representative of the assuming reinsurer, other than an employe, written evidence that the reinsurer has delegated binding authority to the representative.

Ins 47.06(5) (5) A reinsurance intermediary-manager shall give the reinsurer it represents access to and the right to copy and audit all accounts and records maintained by the reinsurance intermediary-manager related to the reinsurer’s business in a form usable by the reinsurer.

Ins 47.06(6) (6) The contract may not be assigned in whole or in part by the reinsurance intermediary-manager.

Ins 47.06(7) (7) The reinsurance intermediary-manager will comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection or cession of all risks.

Ins 47.06(8) (8) Rates, terms and purposes of commissions, charges and other fees which the reinsurance intermediary-manager may levy against the reinsurer.

Ins 47.06(9) (9) If the contract permits the reinsurance intermediary-manager to settle claims on behalf of the reinsurer:

Ins 47.06(9)(a) (a) All claims will be reported to the reinsurer in a timely manner;

Ins 47.06(9)(b) (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:

Ins 47.06(9)(b)1. 1. Has the potential to exceed the lesser of an amount equal to 3% of the reinsurer’s policyholder surplus as of the end of the immediately preceding calendar year or the limit set by the reinsurer;

Ins 47.06(9)(b)2. 2. Involves a coverage dispute;

Ins 47.06(9)(b)3. 3. May exceed the reinsurance intermediary-manager’s claims settlement authority;

Ins 47.06(9)(b)4. 4. Is open for more than 6 months; or

Ins 47.06(9)(b)5. 5. Is closed by payment of an amount equal to or greater than the lesser of 1% of the reinsurer’s policyholder surplus as of the end of the immediately preceding calendar year or an amount set by the reinsurer;

Ins 47.06(9)(c) (c) All claim files will be the joint property of the reinsurer and reinsurance intermediary-manager, but upon an order of liquidation of the reinsurer the files shall become the sole property of the reinsurer or its estate and the reinsurance intermediary-manager shall have reasonable access to and the right to copy the files on a timely basis;

Ins 47.06(9)(d) (d) Any settlement authority granted to the reinsurance intermediary-manager may be terminated for cause upon the reinsurer’s written notice to the reinsurance intermediary-manager 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.

Ins 47.06(10) (10) If the contract provides for a sharing of interim profits by the reinsurance intermediary-manager, that the interim profits will not be paid until one year after the end of each underwriting period for property business and 5 years after the end of each underwriting period for casualty business, or a later period set by order of the commissioner for specified lines of insurance, and not until the adequacy of reserves on remaining claims has been verified pursuant to s. Ins 47.08 (3).

Ins 47.06(11) (11) The reinsurance intermediary-manager will annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant.

Ins 47.06(12) (12) The reinsurer shall at least semiannually conduct an on-site review of the underwriting and claims processing operations of the reinsurance intermediary-manager.

Ins 47.06(13) (13) The reinsurance intermediary-manager will disclose to the reinsurer any relationship it has with any insurer prior to ceding or assuming any business with the insurer under the contract.

Ins 47.06(14) (14) Within the scope of its actual or apparent authority the acts of the reinsurance intermediary-manager are the acts of the reinsurer on whose behalf it is acting.

Ins 47.06 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 47.07 Ins 47.07 Prohibited acts. A reinsurance intermediary-manager may not:

Ins 47.07(1) (1) Cede retrocessions on behalf of the reinsurer, except that the reinsurance intermediary-manager may cede facultative retrocessions pursuant to obligatory facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for the retrocessions. The guidelines shall 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.

Ins 47.07(2) (2) Commit the reinsurer to participate in reinsurance syndicates.

Ins 47.07(3) (3) Appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which the producer is appointed.

Ins 47.07(4) (4) Without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of an amount specified by the reinsurer or one percent of the reinsurer’s policyholder surplus as of December 31 of the last complete calendar year.

Ins 47.07(5) (5) 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, the reinsurance intermediary-manager shall promptly forward a report to the reinsurer.

Ins 47.07(6) (6) Jointly employ an individual who is employed by the reinsurer unless such reinsurance intermediary-manager is under common control with the reinsurer and subject to ch. 617, Stats., and ch. Ins 40, or the laws and rules of another state which are substantially similar to ch. 617, Stats., and ch. Ins 40.

Ins 47.07(7) (7) Appoint a subreinsurance intermediary-manager.

Ins 47.07 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 47.08 Ins 47.08 Duties of reinsurers utilizing the services of a reinsurance intermediary-manager.

Ins 47.08(1) (1) A reinsurer shall not engage the services of any person to act as a reinsurance intermediary-manager on its behalf unless the person is licensed as required by s. Ins 47.02.

Ins 47.08(2) (2) A reinsurer shall annually obtain a copy of statements of the financial condition of each reinsurance intermediary-manager which the reinsurer has engaged prepared by an independent certified accountant in a form acceptable to the commissioner.

Ins 47.08(3) (3) A 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 reinsurance intermediary-manager if the reinsurance intermediary-manager establishes loss reserves. This opinion is in addition to any other required loss reserve certification required under s. Ins 50.30 (1).