TITLE XXXVII
INSURANCE
Chapter 402-F
REINSURANCE INTERMEDIARIES
Section 402-F:1
402-F:1 Definitions. –
In this chapter:
I. "Actuary" means a person who is a member in good standing of the American Academy of Actuaries.
II. "Controlling person" means any person, firm, association or corporation who directly or indirectly has the power to direct or cause to be directed, the management, control or activities of the reinsurance intermediary.
III. "Insurer" means any person, firm, association or corporation duly licensed in this state pursuant to the applicable provisions of the insurance laws as an insurer.
IV. "Licensed producer" means an agent, broker or reinsurance intermediary licensed pursuant to the applicable provisions of the insurance laws.
V. "Reinsurance intermediary" means a reinsurance intermediary-broker or a reinsurance intermediary-manager.
VI. "Reinsurance intermediary-broker" or "RB" means a person, other than an officer or employee of the ceding insurer, firm, association or corporation who solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer without acting as a reinsurance intermediary-manager (RM) on behalf of such insurer.
VII. "Reinsurance intermediary-manager" or "RM" means a person, firm, association or corporation, whether known as an RM, manager, or other similar term, who has authority to bind or manages all or part of the assumed reinsurance business of a reinsurer, including the management of a separate division, department or underwriting office, and acts as an agent for such reinsurer , except the following:
(a) An employee of the reinsurer.
(b) A United States manager of the U.S. branch of an alien reinsurer.
(c) An underwriting manager that, pursuant to contract, manages all or part of the reinsurance operations of the reinsurer, is under common control with the reinsurer, subject to RSA 401-B, and that is not compensated on the volume of premiums written.
(d) The manager of a group, association, pool or organization of insurers which engage in joint underwriting or joint reinsurance but only if the group, association, pool, or organization of insurers , as distinguished from its members, is subject to examination by the insurance commissioner of the state in which the manager's principal business office is located.
VIII. "Reinsurer" means a person, firm, association or corporation duly licensed in this state pursuant to the applicable provisions of the insurance law as an insurer with the authority to assume reinsurance.
IX. "To be in violation" means that the reinsurance intermediary, insurer or reinsurer for whom the reinsurance intermediary was acting failed to substantially comply with the provisions of this chapter.
X. "Qualified U.S. financial institution" means an institution that:
(a) Is organized or, in the case of a U.S. office of a foreign banking organization, licensed, under the laws of the United States or any state thereof;
(b) Is regulated, supervised and examined by U.S. federal or state authorities having regulatory authority over banks and trust companies; and
(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 shall be acceptable to the commissioner.
Source. 1991, 200:1. 1993, 254:6. 2007, 255:1, eff. Jan. 1, 2008.
Section 402-F:2
402-F:2 Licensure. –
I. No person, firm, association or corporation shall act as an RB in this state if the RB maintains an office either directly or as a member or employee of a firm or association, or an officer, director or employee of a corporation:
(a) In this state, unless the RB is a licensed producer or reinsurance intermediary in this state; or
(b) In another state, unless the RB is a licensed producer or reinsurance intermediary in this state or another state having a law substantially similar to this law.
II. No person, firm, association or corporation shall act as an RM:
(a) For a reinsurer domiciled in this state, unless the RM is a licensed producer or reinsurance intermediary in this state.
(b) In this state, if the RM maintains an office either directly or as a member or employee of a firm or association, or an officer, director or employee of a corporation in this state, unless the RM is a licensed producer or reinsurance intermediary in this state.
III. The commissioner may require a resident RM subject to paragraph II to:
(a) File a bond in an amount from an insurer acceptable to the commissioner for the protection of the reinsurer; and
(b) Maintain an errors and omissions policy in an amount acceptable to the commissioner.
IV. The commissioner may issue a reinsurance intermediary license to any person, firm, association or corporation who has complied with the requirements of this chapter. A license issued to a firm or association will authorize all the members of such firm or association and any designated employees to act as reinsurance intermediaries under the license, and all such persons shall be named in the application and any supplements to the application. A license issued to a corporation shall authorize all of the officers, and any designated employees and directors of the corporation, to act as reinsurance intermediaries on behalf of the corporation, and all such persons shall be named in the application and any supplements to the application.
V. The commissioner shall issue a nonresident reinsurance intermediary license if:
(a) The person is currently licensed as a resident reinsurance intermediary or insurance producer and in good standing in his or her home state.
(b) The person has submitted the proper request for licensure and has paid the fees required by RSA 400-A:29.
(c) The person has submitted or transmitted to the insurance commissioner the application for licensure that the person submitted to his or her home state, or in lieu of that application, a completed application deemed appropriate by the commissioner.
(d) The person's home state awards nonresident licenses to residents of this state on the same basis.
VI. The commissioner may refuse to issue a reinsurance intermediary license if, in his or her judgment, the applicant, anyone named on the application, or any member, principal, officer or director of the applicant, is not trustworthy, or that any controlling person of such applicant is not trustworthy to act as a reinsurance intermediary, or that any of the foregoing has given cause for revocation or suspension of such license, or has failed to comply with any prerequisite for the issuance of such license. Upon written request, the commissioner shall furnish a summary of the basis for refusal to issue a license, which document shall be privileged and not subject to RSA 91-A.
VII. Licensed attorneys at law of this state when acting in their professional capacity as such shall be exempt from this section.
Source. 1991, 200:1. 1993, 254:7. 1997, 284:7. 2007, 255:2, eff. Jan. 1, 2008.
Section 402-F:3
402-F:3 Required Contract Provisions; Reinsurance Intermediary-Brokers. –
Transactions between an RB and the insurer it represents in such capacity shall only be entered into pursuant to a written authorization, specifying the responsibilities of each party. The authorization shall, at a minimum, provide that:
I. The insurer may terminate the RB's authority at any time.
II. The RB 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 RB, and remit all funds due to the insurer within 30 days of receipt.
III. All funds collected for the insurer's account shall be held by the RB in a fiduciary capacity in a bank that is a qualified U.S. financial institution, as defined in RSA 402-F:1, X.
IV. The RB shall comply with the written standards established by the insurer for the cession or retrocession of all risks.
V. The RB shall disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded.
VI. The RB shall comply with RSA 402-F:4.
Source. 1991, 200:1. 2007, 255:2, eff. Jan. 1, 2008.
Section 402-F:4
402-F:4 Books and Records; Reinsurance Intermediary-Brokers. –
I. For at least 10 years after expiration of each contract of reinsurance transacted by the RB, the RB shall keep a complete record for each transaction showing:
(a) The type of contract, limits, underwriting restrictions, classes or risks and territory.
(b) Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation.
(c) Reporting and settlement requirements of balances.
(d) Rates used to compute the reinsurance premium.
(e) Names and addresses of assuming reinsurers.
(f) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RB.
(g) Related correspondence and memoranda.
(h) Proof of placement.
(i) Details regarding retrocessions handled by the RB, including the identity of retrocessionaires and percentage of each contract assumed or ceded.
(j) Financial records, including but not limited to, premium and loss accounts.
(k) When the RB procures a reinsurance contract on behalf of a licensed ceding insurer:
(1) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or
(2) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative.
II. The insurer shall have access and the right to copy and audit all accounts and records maintained by the RB related to its business in a form usable by the insurer.
Source. 1991, 200:1. 2007, 255:2, eff. Jan. 1, 2008.
Section 402-F:5
402-F:5 Duties of Insurers Utilizing the Services of a Reinsurance Intermediary-Broker. –
I. An insurer shall not engage the services of any person, firm, association or corporation to act as an RB on its behalf, unless the person is licensed as required by RSA 402-F:2, I.
II. An insurer may not employ an individual who is employed by an RB with which it transacts business, unless the RB is under common control with the insurer and subject to RSA 401-B.
III. The insurer shall annually obtain a copy of statements of the financial condition of each RB with which it transacts business.
Source. 1991, 200:1. 2007, 255:2, eff. Jan. 1, 2008.
Section 402-F:6
402-F:6 Required Contract Provisions; Reinsurance Intermediary-Managers. –
Transactions between an RM and the reinsurer it represents in such capacity shall only be entered into pursuant to a written contract, specifying the responsibilities of each party, which shall be approved by the reinsurer's board of directors. At least 30 days before such reinsurer assumes or cedes business through the producer, a true copy of the approved contract shall be filed with the commissioner for approval. The contract shall, at a minimum, provide that:
I. The reinsurer may terminate the contract for cause upon written notice to the RM. The reinsurer may immediately suspend the authority of the RM to assume or cede business during the pendency of any dispute regarding the cause for termination.
II. The RM shall render accounts to the reinsurer accurately detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing to the RM, and remit all funds due under the contract to the reinsurer on not less than a monthly basis.
III. All funds collected for the reinsurer's account shall be held by the RM in a fiduciary capacity in a bank that is a qualified U.S. financial institution, as defined in RSA 402-F:1, X. The RM may retain no more than 3 months' estimated claims payments and allocated loss adjustment expenses. The RM shall maintain a separate bank account for each reinsurer that it represents.
IV. For at least 10 years after expiration of each contract of reinsurance transacted by the RM, the RM shall keep a complete record for each transaction showing:
(a) The type of contract, limits, underwriting restrictions, classes or risks and territory.
(b) Period of coverage, including effective and expiration dates, cancellation provisions and notices required of cancellation, and disposition of outstanding reserves on covered risks.
(c) Reporting and settlement requirements of balances.
(d) Rates used to compute the reinsurance premium.
(e) Names and addresses of reinsurers.
(f) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RM.
(g) Related correspondence and memoranda.
(h) Proof of placement.
(i) Details regarding retrocessions handled by the RM, as permitted by RSA 402-F:8, IV, including the identity of retrocessionaires and percentage of each contract assumed or ceded.
(j) Financial records, including but not limited to, premium and loss accounts.
(k) When the RM places a reinsurance contract on behalf of a ceding insurer:
(1) Directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or
(2) If placed through a representative of the assuming reinsurer, other than an employee, written evidence that such reinsurer has delegated binding authority to the representative.
V. The reinsurer shall have access and the right to copy all accounts and records maintained by the RM related to its business in a form usable by the reinsurer.
VI. The contract cannot be assigned in whole or in part by the RM.
VII. The RM shall comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection or cession of all risks.
VIII. Rates, terms and purposes of commissions, charges and other fees which the RM may levy against the reinsurer as are set forth.
IX. If the contract permits the RM to settle claims on behalf of the reinsurer:
(a) All claims shall be reported to the reinsurer in a timely manner.
(b) A copy of the claim file shall be sent to the reinsurer at its request or as soon as it becomes known that the claim:
(1) Has the potential to exceed the lesser of an amount determined by the commissioner or the limit set by the reinsurer;
(2) Involves a coverage dispute;
(3) May exceed the RM's claims settlement authority;
(4) Is open for more than 6 months; or
(5) Is closed by payment of the lesser of an amount set by the commissioner or an amount set by the reinsurer.
(c) All claim files shall be the joint property of the reinsurer and the RM. However, upon an order of liquidation of the reinsurer such files shall become the sole property of the reinsurer or its estate, and the RM shall have reasonable access to and the right to copy the files on a timely basis.
(d) Any settlement authority granted to the RM may be terminated for cause upon the reinsurer's written notice to the RM or upon the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding the cause of termination.
X. If the contract provides for a sharing of interim profits by the RM, interim profits shall not be paid until one year after the end of each underwriting period for property business and 5 years after the end of each underwriting period for casualty business, or a later period set by the commissioner for specified lines of insurance, and not until the adequacy of reserves on remaining claims has been verified pursuant to RSA 402-F:8, III.
XI. The RM shall annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant.
XII. The reinsurer shall periodically, at least semi-annually, conduct an on-site review of the underwriting and claims processing operation of the RM.
XIII. The RM shall disclose to the reinsurer any relationship it has with any insurer prior to ceding or assuming any business with such insurer pursuant to this contract.
XIV. Within the scope of its actual or apparent authority, the acts of the RM shall be deemed to be the acts of the reinsurer on whose behalf it is acting.
Source. 1991, 200:1. 1997, 284:8. 2007, 255:2, eff. Jan. 1, 2008.
Section 402-F:7
402-F:7 Prohibited Acts. –
The RM shall not:
I. Cede retrocessions on behalf of the reinsurer, except that the RM may cede facultative retrocessions pursuant to obligatory facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for such retrocession. The guidelines shall include a list of reinsurers with which such automatic agreements are in effect, and for each such reinsurer, the coverages and amounts or percentages that may be reinsured, and commission schedules.
II. Commit the reinsurer to participate in reinsurance syndicates.
III. Appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which he or she is appointed.
IV. Without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of an amount specified by the reinsurer or one percent of the reinsurer's policyholders' surplus as of December 31 of the last complete calendar year.
V. Collect any payment from a retrocessionaire or commit the reinsurer to any claim settlement with a retrocessionaire, without prior approval of the reinsurer. If prior approval is given, a report must be promptly forwarded to the reinsurer.
VI. Jointly employ an individual who is employed by the reinsurer unless such RM is under common control with the reinsurer subject to RSA 401-B.
VII. Appoint a sub-RM.
Source. 1991, 200:1. 1993, 254:8. 2007, 255:2, eff. Jan. 1, 2008.
Section 402-F:8
402-F:8 Duties of Reinsurers Utilizing the Services of an RM. –
I. A reinsurer shall not engage the services of any person, firm, association or corporation to act as an RM on its behalf unless the person is licensed as required by RSA 402-F:2.
II. The reinsurer shall annually obtain a copy of statements of the financial condition of each RM which such reinsurer has engaged prepared by an independent certified accountant in a form acceptable to the commissioner.
III. If an RM establishes loss reserves, the reinsurer 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 RM. This opinion shall be in addition to any other required loss reserve certification.
IV. Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who shall not be affiliated with the RM.
V. Within 30 days of termination of a contract with an RM, the reinsurer shall provide written notification of termination to the commissioner.
VI. A reinsurer shall not appoint to its board of directors any officer, director, employee, controlling shareholder or subproducer of its RM. This paragraph shall not apply to relationships governed by RSA 401-B.
Source. 1991, 200:1. 2007, 255:2, eff. Jan. 1, 2008.
Section 402-F:9
402-F:9 Examination Authority. –
I. A reinsurance intermediary shall be subject to examination by the commissioner. The commissioner shall have access to all books, bank accounts and records of the reinsurance intermediary in a form usable to the commissioner.
II. An RM may be examined as if it were the reinsurer.
Source. 1991, 200:1. 1993, 254:9. 1997, 284:9. 2007, 255:2, eff. Jan. 1, 2008.
Section 402-F:9-a
402-F:9-a Compliance With Orders. –
I. An RB or RM shall comply with any order of a court of competent jurisdiction or a duly constituted arbitration panel requiring the production of non-privileged documents by the RB or RM, or the testimony of an employee or other individual otherwise under the control of the RB or RM with respect to any reinsurance transaction for which it acted as an RB or RM.
II. Compliance shall be subject to the right of the RB or RM, and the parties to the reinsurance transaction, to object to the court or arbitration panel concerning the nature or scope of the documents or testimony or the time within which it must comply with the order. Failure to comply with the order shall be deemed to be a material non-compliance with this chapter. However, in no event shall this section be construed to require more than one appearance by the same witness in a single action or arbitration.
Source. 2007, 255:3, eff. Jan. 1, 2008.
Section 402-F:10
402-F:10 Penalties and Liabilities. –
I. If the commissioner determines that the reinsurance intermediary or any other person has not materially complied with this chapter, or any rule or order adopted under this chapter, after notice and opportunity to be heard, the commissioner may order:
(a) For each separate violation, a civil penalty in an amount not exceeding $5,000.
(b) Revocation or suspension of the reinsurance intermediary's license; and
(c) If it was found that because of such material non-compliance that the insurer or reinsurer has suffered any loss or damage, the commissioner may maintain a civil action brought by or on behalf of the reinsurer or insurer and its policyholders and creditors for recovery of compensatory damages for the benefit of the reinsurer or insurer and its policyholders and creditors or seek other appropriate relief.
II. If an order of rehabilitation or liquidation of the insurer has been entered pursuant to RSA 402-C, and the receiver appointed under that order determines that the reinsurance intermediary or any other person has not materially complied with this chapter, or any rule or order promulgated under this chapter, and the insurer suffered any loss or damage therefrom, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the insurer.
III. Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided in the insurance laws.
IV. Nothing contained in this chapter shall in any manner limit or restrict the rights of policyholders, claimants, creditors, or other third parties or confer any rights to such persons.
Source. 1991, 200:1. 1997, 284:10. 2005, 206:5. 2007, 255:4, eff. Jan. 1, 2008.
Section 402-F:10-a
402-F:10-a Reciprocity. –
I. The insurance commissioner shall waive any requirements for a nonresident license application with a valid license from the applicant's home state, except the requirements imposed by RSA 402-F:2, if the applicant's home state awards nonresident licenses to residents of this state on the same basis.
II. A nonresident reinsurance intermediary's satisfaction of any applicable home state continuing education requirements, if any, for licenses as insurance producers or reinsurance intermediaries shall constitute satisfaction of the state's continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed upon producers or reinsurance intermediaries from this state on the same basis.
Source. 2007, 255:5, eff. Jan. 1, 2008.
Section 402-F:10-b
402-F:10-b Service of Process. –
A reinsurance intermediary, by accepting licensure in this state, is deemed to have consented to the jurisdiction of the commissioner and the courts of this state with respect to all activities conducted under the license, and to have designated the commissioner as its agent for service of process. Each licensed reinsurance intermediary shall furnish the commissioner with the name and address of a designated contact resident of this state to whom notices or orders of the commissioner or process affecting the reinsurance intermediary may be forwarded. The licensee shall promptly notify the commissioner in writing of every change in this designated contact for service of process, and such changes shall not become effective until acknowledged by the commissioner.
Source. 2007, 255:5, eff. Jan. 1, 2008.
Section 402-F:11
402-F:11 Rulemaking. –
The commissioner may adopt rules, under RSA 541-A which are reasonable and necessary for the implementation and administration of this chapter, relative to:
I. Qualifications and application review procedures for licensure under RSA 402-F:2.
II. License suspension and revocation procedures.
III. Procedures for inspecting books, accounts, and records, under RSA 402-F:9.
IV. Hearings, appeals, and enforcement procedures.
V. [Repealed.]
Source. 1991, 200:1. 2002, 207:29. 2012, 171:26, XIX, eff. Aug. 10, 2012.
Section 402-F:12
402-F:12 Other Applicable Provisions. –
The provisions of title XXXVII apply to reinsurance intermediaries.
Source. 1997, 284:11, eff. Jan. 1, 1998.