Wisconsin Administrative Code › Office of the Commissioner of Insurance › Chapter Ins 45 - Business transacted with producer controlled property or casualty insurer › Section Ins 45.03 - Minimum standards

Current through June 24, 2024
A controlled insurer may not accept business from a controlling
				producer and a controlling producer may not place business with a controlled
				insurer unless there is a written contract between the controlling producer and
				the insurer specifying the responsibilities of each party, the contract is
				approved by the board of directors of the insurer, the controlling producer
				complies with the contract and the contract contains at least all of the
				following minimum provisions:
(1) The
			 controlled insurer may terminate the contract for cause, upon written notice to
			 the controlling producer. The controlled insurer may suspend the authority of
			 the controlling producer to write business during the pendency of any dispute
			 regarding the cause for the termination.
(2) 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.
(3) The controlling producer shall remit all
			 funds due under the terms of the contract to the controlled insurer on at least
			 a monthly basis and funds shall be due so that premiums or installments
			 collected are required to be remitted no later than 90 days after the effective
			 date of any policy placed with the controlled insurer under the
			 contract;
(4) All funds collected
			 for the controlled insurer's account shall be held by the controlling producer
			 in a fiduciary capacity, in accounts in one or more financial institutions that
			 are members of the federal reserve system, except the contract may provide that
			 funds of a controlling producer not required to be licensed in this state may
			 be maintained in compliance with the requirements of the controlling producer's
			 state of domicile.
(5) The
			 controlling producer shall maintain records of business written for the
			 controlled insurer which are separate from the records of other
			 business.
(6) The contract shall
			 not be assigned in whole or in part by the controlling producer.
(7) The controlling producer shall obtain and
			 adhere to the controlling insurer's written underwriting standards, rules,
			 procedures, manuals setting forth the rates to be charged, and the conditions
			 for the acceptance or rejection of risks, rates and conditions and 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.
(8) The rates and terms of the controlling
			 producer's commissions, charges or other fees and the purposes for those
			 charges or fees. 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 subsection and sub. (7) "comparable business" includes, but is not
			 limited to, the same lines of insurance, same kinds of insurance, same kinds of
			 risks, similar policy limits, and similar quality of business.
(9) 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, the
			 contract shall also provide that the compensation shall not be determined and
			 paid until at least 5 years after the premiums on liability insurance are
			 earned and at least one year after the premiums are earned on any other
			 insurance. The contract shall provide that the commissions may not be paid
			 until the adequacy of the controlled insurer's reserves on remaining claims has
			 been independently verified under s.
			 Ins
			 45.06(1).
(10) A limit on the controlling producer's
			 writings in relation to the controlled insurer's policyholder 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 or knows or reasonably should know that the limit has been
			 reached.
(11) The controlling
			 producer may negotiate but may 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 underwriting guidelines including, for both
			 reinsurance assumed and ceded, a list of reinsurers with which the automatic
			 agreements are in effect, the coverages and amounts or percentages that may be
			 reinsured and commission schedules.