SC Code § 38-46-70 (2021)
2021 South Carolina Code of Laws|Title 38 - Insurance|Chapter 46 - Reinsurance Intermediary Act|Section 38-46-70. Transactions between reinsurance intermediary-manager and reinsurer it represents regulated; written contract required; approval by reinsurer's directors and by director; terms contract must include.

 Transactions between a reinsurance intermediary-manager and the reinsurer it represents in that capacity only may be entered into pursuant to a written contract specifying the responsibilities of each party, which must be approved by the reinsurer's board of directors. No contract by which a reinsurer assumes or cedes business through a reinsurance intermediary-manager may be entered into unless the insurer has notified the department in writing at least thirty days in advance of its intention to enter into the contract, has furnished a true copy of the contract to the director or his designee, and the director or his designee has not disapproved it within the thirty days. The contract, at a minimum, must provide:  (1) The reinsurer may terminate the contract for cause upon written notice to the reinsurance-intermediary manager. The reinsurer immediately may suspend the authority of the reinsurance intermediary-manager to assume or cede business during the pendency of a dispute regarding the cause for termination.  (2) The reinsurance intermediary-manager 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 reinsurance intermediary-manager and remit all funds due under the contract to the reinsurer within thirty days.  (3) All funds collected for the reinsurer's account must be held by the reinsurance intermediary-manager in a fiduciary capacity in a bank which is a qualified United States financial institution. The reinsurance intermediary-manager may retain no more than ninety days estimated claims payments and allocated loss adjustment expenses. The reinsurance intermediary-manager shall maintain a separate bank account for each reinsurer that it represents.  (4) For at least ten years after expiration of each contract of reinsurance transacted by the reinsurance intermediary-manager, he shall keep a complete record for each transaction showing:  (a) the type of contract, limits, underwriting restrictions, classes or risks, and territory;  (b) the period of coverage, including effective and expiration dates, cancellation provisions, notice required of cancellation, and disposition of outstanding reserves on covered risks;  (c) reporting and settlement requirements of balances;  (d) the rate used to compute the reinsurance premium;  (e) the names and addresses of reinsurers;  (f) the rates of all reinsurance commissions, including the commissions on retrocessions handled by the reinsurance intermediary-manager;  (g) related correspondence and memoranda;  (h) proof of placement;  (i) the details regarding retrocessions handled by the reinsurance intermediary-manager, as permitted by Section 38-46-90(D), 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 reinsurance intermediary-manager places a reinsurance contract on behalf of a ceding insurer:  (i) directly from an 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.  (5) The reinsurer must have access and the right to copy all accounts and records maintained by the reinsurance intermediary-manager related to its business in a form usable by the reinsurer.  (6) The contract must not be assigned in whole or in part by the reinsurance intermediary-manager.  (7) The reinsurance intermediary-manager shall comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection, or cession of all risks.  (8) The rates, terms, and purposes of commissions, charges, and other fees which the reinsurance intermediary-manager may levy against the reinsurer must be set forth.  (9) If the contract permits the reinsurance intermediary-manager to settle claims on behalf of the reinsurer:  (a) All claims must be reported to the reinsurer in a timely manner.  (b) A copy of the claim file must be sent to the reinsurer at its request or as soon as it becomes known that the claim:  (i) has the potential to exceed fifty thousand dollars or the limit set by the reinsurer, whichever is less;  (ii) involves a coverage dispute;  (iii) may exceed the reinsurance intermediary-manager's claims settlement authority;  (iv) is open for more than six months; or  (v) is closed by payment of fifty thousand dollars or an amount set by the reinsurer, whichever is less;  (c) All claim files must be the joint property of the reinsurer and reinsurance intermediary-manager. However, upon an order of liquidation of the reinsurer the files become the sole property of the reinsurer or its estate. The reinsurance intermediary-manager must have reasonable access to and the right to copy the files on a timely basis.  (d) Settlement authority granted to the reinsurance intermediary-manager may be terminated for cause upon the reinsurer's written notice to the reinsurance intermediary-manager 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.  (10) If the contract provides for a sharing of interim profits by the reinsurance intermediary-manager, interim profits must 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 director or his designee for specified lines of insurance, and not until the adequacy of reserves on remaining claims has been verified pursuant to Section 38-46-90(C).  (11) The reinsurance intermediary-manager annually shall provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant.  (12) The reinsurer at least semi-annually shall conduct an on-site review of the underwriting and claims processing operations of the reinsurance intermediary-manager.  (13) The reinsurance intermediary-manager shall disclose to the reinsurer relationships it has with an insurer before ceding or assuming business with the insurer pursuant to this contract.  (14) Within the scope of its actual or apparent authority the acts of the reinsurance intermediary-manager are considered to be the acts of the reinsurer on whose behalf it is acting.  HISTORY: 1992 Act No. 332, Section 1; 1993 Act No. 181, Section 676.