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, contain provisions specifying all of the following rights and obligations:
(a) The insurer may terminate the reinsurance intermediary-broker’s authority at any time.
(b) 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.
(c) All funds collected for the insurer’s account will be held by the reinsurance intermediary-broker in a fiduciary capacity in a bank which is a qualified United States financial institution.
(d) The reinsurance intermediary-broker will comply with Section 1781.5.
(e) The reinsurance intermediary-broker will comply with written standards established by the insurer for the cession or retrocession of all insured risks.
(f) The reinsurance intermediary-broker will disclose to the insurer any relationship with any reinsurer to which insured risk will be ceded or retroceded.
(Added by Stats. 1991, Ch. 1009, Sec. 1.)
Last modified: October 25, 2018