Vermont § 4818 - Contract required

§ 4818. Contract required

• (a) No person shall transact business with a managing general agent, a reinsurance intermediary-manager,
  or a controlling producer as qualified by section 4816 of this title unless there is in force a written contract between the parties that sets forth the
  respective responsibilities of each party and, where both parties share responsibility
  for a particular function, specifies the division of such responsibilities. The contract
  must be approved by the board of directors of a reinsurer represented by a reinsurance
  intermediary-manager or the board of directors of a controlled insurer. At least 30
  days before such reinsurer assumes or cedes business through such manager, or reinsurance
  intermediary, a true copy of the approved contract shall be filed with the Commissioner
  for approval. (b) The contract required under subsection (a) of this section shall contain the following
  minimum provisions: (1) The contract may be terminated by the insurer or reinsurer for cause upon written
  notice. (2) The authority to write business, underwrite, assume, or cede business, or settle claims
  may be suspended by the insurer or reinsurer during the pendency of any dispute regarding
  the cause for termination. (3) All funds due under the contract shall be remitted not less than monthly together
  with an accounting; however, the due date shall be fixed so that premiums or installments
  thereof collected shall be remitted not later than 90 days after the effective date
  of any policy for which the funds are collected. (4) All funds collected for an insurer or reinsurer under the contract shall be held in
  a fiduciary capacity in a financial institution approved by the Commissioner; however,
  funds of a controlling producer not required to be licensed in this State shall be
  maintained in compliance with the requirements of the controlling producer’s domiciliary
  jurisdiction. (5) Separate records of all business written under the contract shall be maintained. The
  contracting insurer or reinsurer shall have access to and the right to copy all accounts
  and records related to its business in a form usable by the insurer or reinsurer. (6) The contract may not be assigned in whole or in part. (7) The required use of underwriting, rating, or reinsurance underwriting standards formulated
  by the insurer or reinsurer when underwriting or reinsurance underwriting authority
  is transferred to a party to the contract. (8) The required use of a claims handling or settlement procedure formulated by the insurer
  or reinsurer when claims handling or settlement authority is transferred to a party
  to the contract. (9) The insurer shall have the right to cancel or nonrenew any policy of insurance subject
  to any applicable laws and regulations. (10) The required use of written standards established by the insurer for the cession or
  retrocession of all risks when ceding or retroceding authority is transferred to a
  party to the contract. (11) The managing general agent, reinsurance intermediary-manager, or controlling producer
  shall not bind or cede reinsurance on behalf of the insurer, reinsurer, or controlled
  insurer, except for facultative reinsurance contracts pursuant to obligatory facultative
  agreements if the contract contains reinsurance underwriting guidelines for reinsurance
  ceded and assumed. The guidelines must list the reinsurers with which such automatic
  agreements are in effect, the coverages and amounts or percentages that may be reinsured,
  and commission schedules. (c) Transactions between a reinsurance intermediary broker 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: (1) The insurer may terminate the reinsurance intermediary broker’s authority at any time. (2) The reinsurance intermediary broker will 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. (3) All funds collected for the insurer’s account will be held by the reinsurance intermediary
  broker in a fiduciary capacity in a financial institution approved by the Commissioner. (4) The reinsurance intermediary broker will comply with subsection 4821(c) of this title. (5) The reinsurance intermediary broker will comply with the written standards established
  by the insurer for the cession or retrocession of all risks. (6) The reinsurance intermediary broker will disclose to the insurer any relationship
  with any reinsurer to which business will be ceded or retroceded. (Added 1991, No. 249 (Adj. Sess.), § 18, eff. Jan. 1, 1993; amended 1993, No. 12, § 8, eff. April 26, 1993; 2005, No. 122 (Adj. Sess.), § 1; 2021, No. 105 (Adj. Sess.), § 230, eff. July 1, 2022.)