Ins 47.08 Duties of reinsurers utilizing the services of a reinsurance intermediary-manager.
Ins 47.09 Effect of noncompliance on contract terms.
Ins 47.10 Examination authority.
Ch. Ins 47 Note
Note: Chapter
Ins 47 was created as an emergency rule effective March 12, 1993.
Ins 47.01
Ins 47.01 Definitions. In this chapter:
Ins 47.01(1)
(1) “Actuary"" means a person who is a member in good standing of the American academy of actuaries.
Ins 47.01(2)
(2) “Controlling person" means any person who directly or indirectly has the power to direct or cause to be directed, the management, control or activities of the reinsurance intermediary.
Ins 47.01(4)
(4) “Policyholder surplus" means capital and surplus.
Ins 47.01(5)
(5) “Reinsurer" means an insurer licensed in this state with the authority to assume reinsurance under
ch. 627, Stats.
Ins 47.01(6)
(6) “Reinsurance intermediary" means a reinsurance intermediary-broker or a reinsurance intermediary-manager.
Ins 47.01(7)
(7) “Reinsurance intermediary-broker" means any person, other than an officer or employe of the ceding insurer, who solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer.
Ins 47.01(8)(a)(a) “Reinsurance intermediary-manager" means any person not excluded under
par. (b) who:
Ins 47.01(8)(a)1.
1. Has authority to bind, manages a separate division, department or underwriting office with responsibility for, or manages all or part of, assumed reinsurance business of a reinsurer; and
Ins 47.01(8)(b)2.
2. A United States manager of the United States branch of an alien reinsurer;
Ins 47.01(8)(b)3.
3. An underwriting manager which, pursuant to contract, manages all or part of the reinsurance operations of the reinsurer, is under common control with the reinsurer, is 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, and whose compensation is not based on the volume of premiums written.
Ins 47.01(8)(b)4.
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.
Ins 47.01(9)
(9) “Qualified United States financial institution" means a financial institution that:
Ins 47.01(9)(a)
(a) 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;
Ins 47.01(9)(b)
(b) Is regulated, supervised and examined by federal or state authorities having regulatory authority over financial institutions; and
Ins 47.01(9)(c)
(c) Has been determined by either the commissioner, or 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.
Ins 47.01 History
History: Cr.
Register, July, 1993, No. 451, eff. 8-1-93.
Ins 47.02(1)(a)
(a) No person may act as a reinsurance intermediary-broker in this state if the reinsurance intermediary-broker maintains an office either directly or as a member or employe of a firm or association, or an officer, director or employe of a corporation:
Ins 47.02(1)(a)1.
1. In this state, unless the reinsurance intermediary-broker is a licensed reinsurance intermediary-broker in this state;
Ins 47.02(1)(a)2.
2. In another state, unless the reinsurance intermediary-broker is a licensed reinsurance intermediary-broker in this state or for that function in another state having a law or rule substantially similar to this chapter.
Ins 47.02(1)(b)
(b) Except as provided by
sub. (2), no person may act as a reinsurance intermediary-manager:
Ins 47.02(1)(b)1.
1. For a reinsurer domiciled in this state, unless the person is a licensed reinsurance intermediary-manager in this state;
Ins 47.02(1)(b)2.
2. In this state, if the person maintains an office either directly or as a member or employe of a firm or association, or an officer, director or employe of a corporation in this state, unless the person is a licensed reinsurance intermediary-manager in this state; or
Ins 47.02(1)(b)3.
3. In another state for a nondomestic insurer, unless the person is a licensed reinsurance intermediary-manager in this state or for that function in another state having a law substantially similar to this chapter.
Ins 47.02(2)
(2) This section does not apply to a natural person if:
Ins 47.02(2)(a)
(a) The natural person is named in the application or supplement to an application for a reinsurance intermediary license and the license designates the natural person as authorized to act under the license; and
Ins 47.02(2)(b)
(b) The natural person is a member or employe of a firm or association licensed as a reinsurance intermediary or is an officer, director or employe of a corporation licensed as an intermediary.
Ins 47.02(3)
(3) The commissioner may require a reinsurance intermediary-manager required to be licensed under
sub. (1) to:
Ins 47.02(3)(a)
(a) File a bond in an amount and from an insurer acceptable to the commissioner for the protection of the reinsurer; and
Ins 47.02(3)(b)
(b) Maintain an errors and omissions policy in an amount acceptable to the commissioner.
Ins 47.02(4)
(4) The commissioner may issue a reinsurance intermediary license to any person who complies with the requirements of this chapter and
s. Ins 6.58 or
6.59.
Ins 47.02(5)
(5) If the applicant for a reinsurance intermediary license is a nonresident, the applicant, as a condition precedent to receiving or holding a license, shall:
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(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)(f)
(f) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the reinsurance intermediary-broker;
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;
