Vermont § 4824 - Other requirements of controlling producers

§ 4824. Other requirements of controlling producers

• (a) All provisions of chapter 101, subchapter 13 of this title, to the extent they are
  not in conflict with the provisions of this subchapter, shall continue to apply to
  all parties within holding company systems subject to this subchapter. (b)(1) The controlled insurer shall provide the controlling producer with its underwriting
  standards, rules, and procedures, manuals setting forth the rates to be charged, and
  the conditions for the acceptance or rejection of risks. The controlling producer
  shall adhere to the standards, rules, procedures, rates, and conditions. The standards,
  rules, procedures, rates and conditions shall be the same as those applicable to comparable
  business placed with the controlled insurer by a producer other than the controlling
  producer. (2) The rates of the commissions, charges, and other fees shall be no greater than those
  applicable to comparable business placed with the controlled insurer by producers
  other than controlling producers. For purposes of this subdivision and subdivision
  (1) of this subsection, examples of “comparable business” include the same lines of
  insurance, same kinds of insurance, same kinds of risks, similar policy limits, and
  similar quality of business. (3) If the contract provides that the controlling producer, on insurance business placed
  with the insurer, is to be compensated contingent upon the insurer’s profits on that
  business, then such compensation shall not be determined and paid until at least five
  years after the premiums on liability insurance are earned and at least one year after
  the premiums are earned on any other insurance. In no event shall the commissions
  be paid until the adequacy of the controlled insurer’s reserves on remaining claims
  has been independently verified pursuant to subdivision (6) of this subsection. (4) A controlled insurer shall limit the controlling producer’s writings in relation to
  the controlled insurer’s surplus and total writings. The insurer may establish a different
  limit for each line or sub-line of business. The controlled insurer shall notify the
  controlling producer when the applicable limit is approached and shall not accept
  business from the controlling producer if the limit is reached. The controlling producer
  shall not place business with the controlled insurer if it has been notified by the
  controlled insurer that the limit has been reached. (5) A controlled insurer shall have an audit committee of the board of directors composed
  of independent directors. The audit committee shall annually meet with management,
  the insurer’s independent certified public accountants, and an independent casualty
  actuary or other independent loss reserve specialist acceptable to the Commissioner
  to review the adequacy of the insurer’s loss reserves. (6) In addition to any other required loss reserve certification, a controlled insurer
  shall annually, on April 1 of each year, file with the Commissioner an opinion of
  an independent casualty actuary, or such other independent loss reserve specialist
  acceptable to the Commissioner, reporting loss ratios for each line of business written
  and attesting to the adequacy of loss reserves established for losses incurred and
  outstanding as of year-end, including incurred but not reported, on business placed
  by the producer. (7) A controlled insurer shall annually report to the Commissioner the amount of commissions
  paid to the producer, the percentage such amount represents of the net premiums written,
  and comparable amounts and percentages paid to noncontrolling producers for placements
  of the same kinds of insurance. (8) A controlled insurer shall deliver written notice to the prospective insured disclosing
  the relationship between the producer and the controlled insurer; except that, if
  the business is placed through a subproducer who is not a controlling producer, the
  controlling producer shall retain in his or her records a signed commitment from the
  subproducer that the subproducer is aware of the relationship between the insurer
  and the producer and that the subproducer has or will notify the insured. (Added 1991, No. 249 (Adj. Sess.), § 18, eff. Jan. 1, 1993.)