Compilation of Rules and Regulations of the State of Georgia › Department 120 - OFFICE OF COMMISSIONER OF INSURANCE, SAFETY FIRE COMMISSIONER AND INDUSTRIAL LOAN COMMISSIONER › Chapter 120-2 - RULES OF COMMISSIONER OF INSURANCE › Subject 120-2-64 - PRODUCER CONTROLLED PROPERTY AND CASUALTY INSURERS REGULATION › Rule 120-2-64-.02 - Required Contract Provisions

Current through Rules and Regulations filed through June 27, 2024
The contract between controlled insurer and controlling
				  producer must be in writing, must be approved by the board of directors, and
				  must contain the following minimum provisions:
(a) The controlled insurer may terminate the
				contract for cause, upon written notice to the controlling producer. The
				controlled insurer shall suspend the authority of the controlling producer to
				write business during the pendency of any dispute regarding the cause for the
				termination;
(b) The Controlling
				producer shall render accounts to the controlled insurer detailing all material
				transactions, including information necessary to support all commissions,
				charges and other fees received by, or owing to, the controlling
				producer;
(c) All funds collected
				for the controlled insurer's account shall be held by the controlling producer
				in a fiduciary capacity, in one or more appropriately identified bank accounts
				in banks that are members of the Federal Reserve System. (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);
(d) The
				controlling producer shall maintain separately identifiable records of business
				written for the controlled insurer;
(e) The contract shall not be assigned in
				whole or in part by the controlling producer;
(f) 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;
(g) The
				rates and terms of the controlling producer's commissions 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
				subparagraph and subparagraph (f) above, examples of comparable business"
				include the same line of insurance, same kinds of insurance, same kinds of
				risks, similar policy limits, and similar quality of business;
(h) If the contract provides that the
				controlling producer, on insurance business placed with the insurer, is to be
				compensated contingent upon the insurers profits on that business, then such
				compensation shall not be determined and paid until at least five (5) years
				after the premiums on liability insurance are earned and at least one (1) 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 O.C.G.A. Sec.
				33-48-3(a)(4);
(i) The controlled insurer shall establish
				limits on the controlling producer's writings in relation to the 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;
				and
(j) The controlling producer
				may negotiate but shall not bind reinsurance on behalf of the controlled
				insurer on business the controlling producer places with the controlled
				insurer, except that the controlling producer may bind facultative reinsurance
				contracts pursuant to obligatory facultative agreements if the contract with
				the controlled insurer contains under writing guidelines including, for both
				reinsurance assumed and ceded, a list of reinsurers with which such automatic
				agreements are in effect, the coverages and amounts or percentages that may be
				reinsured and commission schedules.
O.C.G.A. Secs.
				  33-2-9,
				  33-48-3.