Management and agency contracts; regulations.
1. After January 1, 1972, a domestic insurer shall not make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the material exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for the insurer, or, if an officer, director or otherwise part of the insurer’s management, is to receive any commission, bonus or compensation based upon the volume of the insurer’s business or transactions, unless the contract is filed with and not disapproved by the Commissioner. The contract must become effective in accordance with its terms unless disapproved by the Commissioner within 20 days after the date of filing, subject to such reasonable extension of time as the Commissioner may require by notice given within such 20 days. Any disapproval must be delivered to the insurer in writing stating the grounds therefor.
2. Any such contract must provide that any such manager, producer of its business or contract holder shall within 90 days after expiration of each calendar year furnish the insurer’s board of directors a written statement of amounts received under or on account of the contract and amounts expended thereunder during the previous calendar year, with specification of the emoluments received therefrom by the respective directors, officers and other principal management personnel of the manager or producer, and with such classification of items and further detail as the insurer’s board of directors may reasonably require.
3. The Commissioner shall disapprove any such contract if he finds that it:
(a) Subjects the insurer to excessive charges;
(b) Is to extend for an unreasonable length of time;
(c) Does not contain fair and adequate standards of performance; or
(d) Contains other inequitable provision or provisions which impair the proper interests of stockholders or members of the insurer.
4. The Commissioner may, after a hearing held thereon, disapprove any such contract theretofore permitted to become effective, if he finds that the contract should be disapproved on any of the grounds specified in subsection 3.
5. This section does not apply to contracts entered into before January 1, 1972, or to extensions or amendments of such contracts.
6. The Commissioner may adopt regulations governing the management and agency contracts of insurers.
Last modified: February 27, 2006