MANAGING GENERAL AGENTS
In this chapter:
I. "Actuary" means a person who is a member in good standing of the American Academy of Actuaries.
II. "Insurer" means any person, firm, association or corporation duly licensed in this state as an insurance company pursuant to title XXXVII.
III. (a) "Managing general agent" (MGA) means any person, firm, association or corporation who negotiates and binds ceding reinsurance contracts on behalf of an insurer or manages all or part of the insurance business of an insurer, including the management of a separate division, department or underwriting office, and acts as an agent for such insurer whether known as a managing general agent, manager or other similar term, who, with or without the authority, either separately or together with affiliates, produces, directly or indirectly, and underwrites an amount of gross direct written premiums equal to or more than 5 percent of the policyholder surplus as reported in the last annual statement of the insurer in any one quarter or year together with one or more of the following:
(1) Adjusts or pays claims in excess of $200,000; or
(2) Negotiates reinsurance on behalf of the insurer.
(b) Notwithstanding subparagraph (a), the following persons shall not be considered as MGAs for the purposes of this chapter:
(1) An employee of the insurer.
(2) A U.S. manager of the United States branch of an alien insurer.
(3) An underwriting manager which, pursuant to contract, manages all insurance operations of the insurer other than those managed by the insurer itself, is under common control with the insurer, subject to RSA 401-B, the holding company regulatory act, and whose compensation is not based on the volume of premiums written.
(4) The attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer or inter-insurance exchange under powers of attorney.
IV. "Underwrite" means the authority to accept or reject risk on behalf of the insurer.
Source. 1991, 95:1. 2003, 144:4, eff. Jan. 1, 2004.
I. No person, firm, association, corporation, or other entity shall act as an MGA until an MGA license has been issued by the commissioner. The license shall be renewed annually thereafter so long as the MGA complies with applicable law and rules and upon remittance of the renewal fee.
II. No person, firm, association, or corporation shall act in the capacity of an MGA with respect to risks located in this state for an insurer licensed in this state, unless such person is a licensed producer in this state.
III. No person, firm, association, or corporation shall act in the capacity of an MGA representing an insurer domiciled in this state with respect to risks located outside this state unless such person is licensed as a producer in this state, pursuant to the provisions of this chapter. Such license may be a nonresident license.
IV. The commissioner may require a bond in an amount acceptable to the commissioner for the protection of the insurer.
V. The commissioner may require the MGA to maintain an errors and omissions policy.
VI. The commissioner may require financial and other data in form and context satisfactory to the commissioner as part of the license application process.
Source. 1991, 95:1. 1997, 284:2, eff. Jan. 1, 1998.
402-E:3 Required Contract Provisions.
No person, firm, association or corporation acting in the capacity of an MGA shall place business with an insurer unless there is in force a written contract between the parties which sets forth the responsibilities of each party and where both parties share responsibility for a particular function, specifies the division of such responsibilities, and contains the following minimum provisions:
I. The insurer may terminate the contract for cause upon written notice to the MGA. The insurer may suspend the underwriting authority of the MGA during the pendency of any dispute regarding the cause for termination.
II. The MGA will render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer on not less than a monthly basis.
III. All funds collected for the account of an insurer shall be held by the MGA in a fiduciary capacity in a bank which is a member of the Federal Reserve System. This account shall be used for all payments on behalf of the insurer. The MGA may retain no more than 3 months' estimated claims payments and allocated loss adjustment expenses.
IV. Separate records of business written by the MGA shall be maintained. The insurer shall have access and rights to copy all accounts and records related to its business in a form usable by the insurer, and the commissioner shall have access to all books, bank accounts and records of the MGA in a form usable to the commissioner.
V. The contract shall not be assigned in whole or part by the MGA.
VI. Appropriate underwriting guidelines, including:
(a) The maximum annual premium volume;
(b) The basis of the rates to be charged;
(c) The types of risks which may be written;
(d) Maximum limits of liability;
(e) Applicable exclusions;
(f) Territorial limitations;
(g) Policy cancellation provisions; and
(h) The maximum policy period.
The insurer may cancel or non-renew any policy of insurance subject to the applicable laws and rules concerning the cancellation and nonrenewal of insurance policies.
VII. If the contract permits the MGA to settle claims on behalf of the insurer:
(a) All claims shall be reported to the company in a timely manner.
(b) A copy of the claim file shall be sent to the insurer at its request or as soon as it becomes known that the claim:
(1) Has the potential to exceed an amount determined by the commissioner or exceeds the limit set by the company, whichever is less.
(2) Involves a coverage dispute.
(3) May exceed the MGA's claims settlement authority.
(4) Is open for more than 6 months.
(5) Is closed by payment of an amount set by the commissioner or an amount set by the company, whichever is less.
(c) All claim files shall be the joint property of the insurer and MGA. However, upon an order of liquidation of the insurer such files shall become the sole property of the insurer or its estate; the MGA shall have reasonable access to and the right to copy the files on a timely basis.
(d) Any settlement authority granted to the MGA may be terminated for cause upon the insurer's written notice to the MGA or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination.
(e) Any person who, in any manner or capacity other than purely clerical, handles, services or adjusts claims for or on behalf of an MGA shall be licensed as required by RSA 402-B.
VIII. Where electronic claims files are in existence, the contract shall address the timely transmission of the data.
IX. If the contract provides for a sharing of interim profits by the MGA, and the MGA 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 MGA until one year after they are earned for property insurance business and 5 years after they are earned on casualty business and not until the profits have been verified pursuant to RSA 402-E:4.
X. The MGA shall not:
(a) Bind reinsurance or retrocessions on behalf of the insurer, except that the MGA may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages 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 producer without assuring that the producer is lawfully licensed to transact the type of insurance for which he is appointed.
(d) Without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which shall not exceed one percent of the insurer's policyholders' surplus as of December 31 of the last completed calendar year.
(e) Collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer, without prior approval of the insurer. If prior approval is given, a report shall be promptly forwarded to the insurer.
(f) Permit its subproducer to serve on the insurer's board of directors.
(g) Jointly employ an individual who is employed with the insurer.
(h) Appoint a sub-MGA.
Source. 1991, 95:1. 1997, 284:3, eff. Jan. 1, 1998.
402-E:4 Duties of Insurers.
I. The insurer shall have on file an independent financial examination, in a form acceptable to the commissioner, of each MGA with which it has done business.
II. If an MGA establishes loss reserves, the insurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the MGA. This is in addition to any other required loss reserve certification.
III. The insurer, at least 2 times each year, shall conduct an on-site review of the underwriting and claims processing operations of the MGA.
IV. Binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an officer of the insurer, who shall not be affiliated with the MGA.
V. Within 30 days of entering into or termination of a contract with an MGA, the insurer shall provide written notification of such appointment or termination to the commissioner. Notices of appointment of an MGA shall include a statement of duties which the applicant is expected to perform on behalf of the insurer, the lines of insurance for which the applicant is to be authorized to act, and any other information the commissioner may request.
VI. An insurer shall review its books and records each quarter to determine if any producer has become an MGA. If the insurer determines that a producer has become an MGA, the insurer shall promptly notify the producer and the commissioner of such determination, and the insurer and producer shall fully comply with the provisions of this chapter within 30 days.
VII. An insurer shall not appoint to its board of directors an officer, director, employee, subproducer, or controlling shareholder of its MGAs. This paragraph shall not apply to relationships governed by RSA 401-B.
Source. 1991, 95:1, eff. Jan. 1, 1992.
402-E:5 Examination Authority.
I. The acts of the MGA are considered to be the acts of the insurer on whose behalf it is acting. An MGA may be examined as if it were the insurer.
II. The commissioner may designate examiners or consultants, as appropriate, to perform an audit of an MGA when the commissioner considers an audit necessary. The audit shall be conducted at the expense of the MGA. MGA's shall make all records and books of account available to the examiners or consultants, and shall otherwise facilitate the performance of the audit.
Source. 1991, 95:1. 1997, 284:4, eff. Jan. 1, 1998.
402-E:6 Penalties and Liabilities.
I. If the commissioner finds after notice and hearing that any person has violated any provision of this chapter, or rules adopted pursuant to this chapter, the commissioner may order:
(a) For each separate violation, a penalty in an amount of $2,500.
(b) Revocation or suspension of the producer's license.
(c) The MGA to reimburse the insurer, the rehabilitator or liquidator of the insurer for any losses incurred by the insurer caused by a violation of this chapter committed by the MGA.
(d) Any other applicable penalty provided for in the insurance law.
I-a. Any person who shall practice or attempt to practice as an MGA in this state without a license shall be guilty of a class A misdemeanor if a natural person, or guilty of a felony if any other person.
II. Nothing contained in this chapter is intended to or shall in any manner limit or restrict the rights of policyholders, claimants and auditors.
Source. 1991, 95:1. 1997, 284:5. 2005, 206:4, eff. Jan. 1, 2006.
The commissioner of the insurance department may adopt rules, under RSA 541-A, necessary for the implementation and administration of this chapter.
Source. 1991, 95:1. 2002, 207:45, eff. July 15, 2002.
402-E:8 Other Applicable Provisions.
The provisions of title XXXVII apply to managing general agents.
Source. 1997, 284:6, eff. Jan. 1, 1998.