A person acting as a managing general agent shall not place business with an insurer unless a written contract is in force between the parties. The following requirements apply to such a contract:
(1) The contract must set forth the responsibilities of each party.
(2) The contract must specify the division of responsibility for a particular function, when both parties share responsibility for the function.
(3) The contract must include at least the following provisions:
(a) That the insurer may terminate the contract for cause upon written notice to the managing general agent, and may suspend the underwriting authority of the managing general agent while any dispute regarding the cause for termination is pending.
(b) That at least monthly, the managing general agent shall report all transactions and remit all funds due under the contract to the insurer.
(c) That with respect to all funds collected by a managing general agent for the account of an insurer, the managing general agent must comply with ORS 744.083 or 744.084, except that the managing general agent may retain in the account an amount not exceeding three months’ estimated claims payments and allocated loss adjustment expenses.
(d) That the managing general agent shall maintain separate records of business written by the managing general agent. Further, that the managing general agent shall allow the insurer access to all accounts and records related to its business, shall keep all such accounts and records in a form usable by the insurer and shall allow the insurer to copy all such accounts and records.
(e) That the managing general agent shall not assign the contract either in whole or part.
(f) Appropriate underwriting guidelines, including:
(A) The maximum annual premium volume;
(B) The basis of the rates to be charged;
(C) The types of risks that may be written;
(D) Maximum limits of liability;
(E) Applicable exclusions;
(F) Territorial limitations;
(G) Policy cancellation provisions; and
(H) The maximum policy period.
(g) That the insurer may cancel or nonrenew any policy of insurance, subject to applicable statutes and rules governing cancellation and nonrenewal of insurance policies.
(h) Provisions addressing the timely transmission of the data, when electronic claims files exist.
(i) That if the contract provides for a sharing of interim profits of the managing general agent and if the managing general agent has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments, or in any other manner, interim profits shall not be paid to the managing general agent until one year after they are earned for property or surety insurance business and five years after they are earned on casualty business and not until the profits have been verified pursuant to ORS 744.313.
(j) That a managing general agent shall not do any of the following:
(A) Bind reinsurance or retrocessions on behalf of the insurer, except that the managing general agent may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines that include, for both reinsurance assumed and ceded, a list of reinsurers with which the automatic agreements are in effect, the coverage and amounts or percentages that may be reinsured and commission schedules.
(B) Commit the insurer to participate in insurance or reinsurance syndicates.
(C) Appoint any insurance producer without assuring that the insurance producer is licensed in this state to transact the type of insurance for which the insurance producer is appointed.
(D) Collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer without prior approval of the insurer. The contract must also provide that if prior approval is given, the managing general agent must forward a report to the insurer promptly.
(E) Appoint a submanaging general agent.
(k) Provisions establishing which disputes, if any, arising under the contract shall be decided by arbitration, mediation or other means of dispute resolution.
(L) If the managing general agent will calculate the loss reserves or a portion thereof, provisions:
(A) That the insurer is ultimately responsible for reporting the loss reserves; and
(B) That the insurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves calculated for losses incurred and outstanding on business produced by the managing general agent, in addition to any other required loss reserve actuarial opinion, as provided in ORS 744.313.
(4) In addition to the requirements of subsection (3) of this section, if the contract permits the managing general agent to settle claims on behalf of the insurer, the contract must also include at least the following provisions:
(a) The time requirements within which the managing general agent must report claims to the insurer.
(b) A requirement that the managing general agent must send a copy of the claim file or report of claim to the insurer at its request or as soon as it becomes known to the managing general agent that the claim:
(A) Has the potential of exceeding an amount determined by the Director of the Department of Consumer and Business Services or the limit set by the insurer, whichever is less;
(B) Involves a coverage dispute;
(C) May exceed the claim settlement authority of the managing general agent; or
(D) Is of a serious nature as predetermined by the insurer by written guidelines.
(c) A provision establishing the settlement authority granted the managing general agent for claims in general and specific guidelines for handling claims that exceed the amount established by the director or the insurer, whichever is less.
(d) A provision that all claim files are the joint property of the insurer and managing general agent, except upon an order of liquidation of the insurer, and that in the event of such an order:
(A) The files become the sole property of the insurer or its estate; and
(B) The managing general agent shall have reasonable access to and the right to copy the files on a timely basis.
(e) A provision that the insurer may terminate for cause any settlement authority granted to the managing general agent upon written notice by the insurer to the managing general agent or upon the termination of the contract, and that the insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination.
(5) The contract must provide that the insurer may not allow the managing general agent to pay or commit the insurer to pay a claim in excess of a specified amount, net of reinsurance, without approval by the insurer. The amount shall not exceed the amount established in ORS 744.308. [1991 c.495 §5; 2003 c.364 §120]Section: Previous 744.255 744.260 744.265 744.300 744.301 744.303 744.305 744.306 744.308 744.310 744.311 744.313 744.314 744.315 744.316 Next
Last modified: August 7, 2008