Wisconsin Legislature: Ins 47.01(3)

Chapter Ins 47

REINSURANCE INTERMEDIARY REGULATION

Ins 47.01 Definitions.

Ins 47.02 Licensure.

Ins 47.03 Required contract provisions-reinsurance intermediary-brokers.

Ins 47.04 Books and records-reinsurance intermediary-brokers.

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

Ins 47.06 Required contract provisions-reinsurance intermediary-manager.

Ins 47.07 Prohibited acts.

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(3) (3) “Insurer" means an insurer as defined under s. 600.03 (27), Stats., which has a certificate of authority under ch. 611, 612, 613, 614 or 618, Stats.

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) (8)

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)(a)2. 2. Acts as an agent for the reinsurer.

Ins 47.01(8)(b) (b) “Reinsurance intermediary-manager" does not include:

Ins 47.01(8)(b)1. 1. An employe of the reinsurer;

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 Ins 47.02 Licensure.

Ins 47.02(1) (1) Except as provided by sub. (2):

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(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;