MN Stat § 60A.73 (2021)
2021 Minnesota Statutes|Chapters 59A - 79A — Insurance|Chapter 60A — General Insurance Powers|Section 60A.73 — Required Contract Provisions; Reinsurance Intermediary-managers.

60A.73 REQUIRED CONTRACT PROVISIONS; REINSURANCE INTERMEDIARY-MANAGERS. Subdivision 1. Approval by commissioner. Transactions between an RM and the reinsurer it represents in this capacity must only be entered into pursuant to a written contract, specifying the responsibilities of each party. The contract shall be approved by the reinsurer's board of directors. At least 30 days before the reinsurer assumes or cedes business through this producer, a true copy of the approved contract must be filed with the commissioner for approval. The contract must, at a minimum, contain the provisions in subdivisions 2 to 14. Subd. 2. Terminations. 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. Subd. 3. Periodic accounting. The RM will 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. Subd. 4. Handling of funds. All funds collected for the reinsurer's account will be held by the RM in a fiduciary capacity in a bank which is a qualified United States financial institution as defined herein and may be invested in direct obligations of, or obligations guaranteed or insured by, the United States, its agencies, or its instrumentalities, excluding mortgage-backed securities. These funds may not be invested in obligations whose maturities exceed 90 days. The RM may retain no more than three months estimated claims payments and allocated loss adjustment expenses. The RM shall maintain a separate account for each reinsurer that it represents. Subd. 5. Business records. For at least ten years after expiration of each contract of reinsurance transacted by the RM, the RM will keep a complete record for each transaction showing: (1) the type of contract, limits, underwriting restrictions, classes or risks, and territory; (2) period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation, and disposition of outstanding reserves on covered risks; (3) reporting and settlement requirements of balances; (4) rate used to compute the reinsurance premium; (5) names and addresses of reinsurers; (6) rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RM; (7) related correspondence and memoranda; (8) proof of placement; (9) details regarding retrocessions handled by the RM, as permitted by section 60A.74, subdivision 4, including the identity of retrocessionaires and percentage of each contract assumed or ceded; (10) financial records, including, but not limited to, premium and loss accounts; and (11) when the RM places a reinsurance contract on behalf of a ceding insurer: (i) directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or (ii) if placed through a representative of the assuming reinsurer, other than an employee, written evidence that the reinsurer has delegated binding authority to the representative. Subd. 6. Reinsurer access to records. The reinsurer will 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. Subd. 7. Nonassignment of contract. The contract cannot be assigned in whole or in part by the RM. Subd. 8. Underwriting and rating standards. The RM will comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection, or cession of all risks. Subd. 9. Charges and commissions. The rates, terms and purposes of commission, charges, and other fees which the RM may levy against the reinsurer will be specified in the contract. Subd. 10. Claims settlement. If the contract permits the RM to settle claims on behalf of the reinsurer, the contract will specify that: (1) all claims will be reported to the reinsurer in a timely manner; (2) a copy of the claim file will be sent to the reinsurer at its request or as soon as it becomes known that the claim: (i) has the potential to exceed the lesser of an amount determined by the commissioner or the limit set by the reinsurer; (ii) involves a coverage dispute; (iii) may exceed the RM's claims settlement authority; (iv) is open for more than six months; or (v) is closed by payment of the lesser of an amount set by the commissioner or an amount set by the reinsurer; (3) all claim files will be the joint property of the reinsurer and RM. However, upon an order of liquidation of the reinsurer the files become the sole property of the reinsurer or its estate. The RM shall have reasonable access to and the right to copy the files on a timely basis; and (4) 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. Subd. 11. Interim profits. If the contract provides for a sharing of interim profits by the RM, interim profits will not be paid until one year after the end of each underwriting period for property business and five 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 section 60A.74, subdivision 3. Subd. 12. Certified financial statement. The RM will annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant. Subd. 13. On-site review by reinsurer. The reinsurer shall periodically, at least semiannually, conduct an on-site review of the underwriting and claims processing operations of the RM. Subd. 14. Disclosure of insurer relationship. The RM will disclose to the reinsurer any relationship it has with any insurer before ceding or assuming any business with the insurer pursuant to this contract. Subd. 15. Responsibility of reinsurer. Within the scope of its actual or apparent authority, the acts of the RM are considered to be the acts of the reinsurer on whose behalf it is acting. History:  1991 c 325 art 11 s 7; 1995 c 163 s 2