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§ 991.1302. Limitation on business placed with controlled insurer

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 40 P.S. Insurance

Purdon's Pennsylvania Statutes and Consolidated Statutes
Title 40 P.S. Insurance (Refs & Annos)
Chapter 2. Insurance Companies (Refs & Annos)
Article XIII. Broker Controlled Property and Casualty Insurers
40 P.S. § 991.1302
§ 991.1302. Limitation on business placed with controlled insurer
Currentness
(a) No broker which has control of a licensed property or casualty insurer may directly or indirectly place business with such insurer in any transaction in which such broker, at the time the business is placed, is acting as such on behalf of the insured for any compensation, commission or other thing of value, unless the requirements of this section are met, including all of the following:
(1) There is a written contract between the controlling broker and the insurer, which contract has been approved by the board of directors of the insurer.
(2) The broker, prior to the effective date of the policy, delivers written notice to the prospective insured disclosing the relationship between that broker and the controlled insurer. This disclosure, signed by the insured, shall be retained in the underwriting file until the filing of the report on the examination covering the period in which the coverage is in effect. If, however, the business is placed through a subbroker who is not a controlling broker, the controlling broker shall retain in its records a signed commitment from the subbroker that the subbroker is aware of the relationship between the insurer and the broker and that the subbroker has or will notify the insured.
(3) All funds collected for the account of the insurer by the controlling broker are paid, net of commissions, cancellations and other adjustments, to the insurer no less often than quarterly.
(b) In addition to any other required loss reserve certification, the controlled insurer shall annually, on the first day of April of each year, file with the department an opinion of an independent casualty actuary 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 such broker.
(c) The controlled insurer shall annually report to the department the amount of commissions paid to the broker, the percentage such amount represents of the net premiums written and comparable amounts and percentage paid to noncontrolling brokers for placements of the same kinds of insurance.
(d) Every controlled insurer shall have an audit committee of the board of directors composed of several directors. Prior to approval of the annual financial statement, the audit committee shall meet with management, the insurer's independent certified public accountants and an independent casualty actuary to review the adequacy of the insurer's loss reserves.
(e) No reinsurance intermediary which has control of an assuming insurer may directly or indirectly place business with such insurer in any transaction in which such reinsurance intermediary is acting as a broker on behalf of the ceding insurer. No reinsurance intermediary which has control of a ceding insurer may directly or indirectly accept business from such insurer in any transaction in which the reinsurance intermediary is acting as a broker on behalf of the assuming insurer. The prohibitions in this subsection shall not apply to a reinsurance intermediary which makes a full and complete written disclosure to the parties of its relationship with the assuming or ceding insurer prior to completion of the transaction.

Credits

1921, May 17, P.L. 682, No. 284, art. XIII, § 1302, added 1992, Dec. 18, P.L. 1519, No. 178, § 19, effective in 120 days.
40 P.S. § 991.1302, PA ST 40 P.S. § 991.1302
Current through Act 10 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
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