2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 510 - MANAGING GENERAL AGENTS AND THIRD=PARTY ADMINISTRATORS
510.5 - REQUIRED CONTRACT PROVISIONS -- LIMITATIONS.

        510.5  REQUIRED CONTRACT PROVISIONS -- LIMITATIONS.
         1.  A person acting in the capacity of a managing general agent
      shall not place business with an insurer unless a written contract is
      in force between the parties which sets forth the responsibilities of
      each party.  If both parties share responsibility for a particular
      function, the contract must specify the division of such
      responsibilities, and must contain, at a minimum, all of the
      following provisions:
         a.  The insurer may terminate the contract for cause upon
      written notice to the managing general agent.  The insurer may
      suspend the underwriting authority of a managing general agent during
      the pendency of any dispute regarding the cause for termination.  The
      insurer shall advise the commissioner of a termination or a
      suspension pursuant to this paragraph.
         b.  A managing general agent shall render accounts to the
      insurer detailing all transactions and remit all funds due under the
      contract to the insurer on not less than a monthly basis.
         c.  All funds collected for the account of an insurer shall be
      held by a managing general agent in a fiduciary capacity in a bank
      which is a member of the federal reserve system.  This account shall
      be used for all payments on behalf of the insurer.  A managing
      general agent may retain no more than three months' estimated claims
      payments and allocated loss adjustment expenses.
         d.  Separate records of business written by a managing general
      agent shall be maintained.  An insurer shall have access and a right
      to copy all accounts and records related to the insurer's business in
      a form usable by the insurer and the commissioner shall have access
      to all books, bank accounts, and records of a managing general agent
      in a form usable by the commissioner.  Such records shall be retained
      at least until after completion by the insurance division of the next
      examination of the insurer.
         e.  Appropriate underwriting guidelines including but not
      limited to the following:
         (1)  The maximum annual premium volume.
         (2)  The basis of the rates to be charged.
         (3)  The types of risks which may be written.
         (4)  Maximum limits of liability.
         (5)  Applicable exclusions.
         (6)  Territorial limitations.
         (7)  Policy cancellation provisions.
         (8)  The maximum length or duration of the policy period.
         The insurer may cancel or refuse to renew any policy of insurance
      produced or underwritten by a managing general agent, subject to the
      applicable laws and rules concerning the cancellation and nonrenewal
      of insurance policies.
         2.  Permissible provisions in a contract and their requirements
      include the following:
         a.  If the contract permits a managing general agent to settle
      claims on behalf of the insurer all of the following requirements
      apply:
         (1)  All claims reported must be reported by the managing general
      agent to the insurer in a timely manner.
         (2)  A copy of the claim file must be sent to the insurer at its
      request or as soon as the managing general agent knows that the claim
      meets one or more of the following conditions:
         (a)  The claim has the potential to exceed an amount determined by
      the commissioner or exceeds the limit set by the insurer, whichever
      is less.
         (b)  The claim involves a coverage dispute.
         (c)  The claim may exceed the claims settlement authority of the
      managing general agent.
         (d)  The claim is open for more than six months.
         (e)  The claim is closed by payment of an amount set by the
      commissioner or an amount set by the insurer, whichever is less.
         (3)  All claim files shall be the joint property of the insurer
      and the managing general agent.  However, upon an order of
      liquidation of the insurer the files become the sole property of the
      insurer or its estate.  The managing general agent shall have
      reasonable access to and the right to copy the files on a timely
      basis.
         (4)  Any settlement authority granted to the managing general
      agent may be terminated for cause upon the insurer's written notice
      to the managing general agent or upon the termination of the
      contract.  The insurer may suspend the settlement authority during
      the pendency of any dispute regarding the cause for termination.
         b.  If electronic claims files are in existence, the contract
      must address the timely transmission or transfer of the data
      contained in the files.
         c.  If the contract provides for a sharing of interim profits
      by the managing general agent, and the managing general agent has the
      authority to determine the amount of interim profits by establishing
      loss reserves, by controlling claim payments, or by determining the
      amount of interim profits in any other manner, interim profits shall
      not be paid to the managing general agent until one year after they
      are earned for property insurance business and five years after they
      are earned for casualty insurance business, and not until the interim
      profits have been verified pursuant to section 510.6.
         3.  A managing general agent shall not do any of the following:
         a.  Bind reinsurance or retrocessions on behalf of the
      insurer, except that a managing general agent may bind facultative
      reinsurance contracts pursuant to obligatory facultative agreements
      if the contract with the insurer contains reinsurance underwriting
      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.
         b.  Commit the insurer to participate in insurance or
      reinsurance syndicates.
         c.  Appoint any producer without assuring that the producer is
      lawfully licensed to transact the type of insurance for which the
      producer is appointed.
         d.  Without prior approval of the insurer, pay or commit the
      insurer to pay a claim over a specified amount, net of reinsurance,
      which exceeds one percent of the policyholder's surplus of the
      insurer as of December 31 of the previous calendar year.
         e.  Collect any payment from a reinsurer or commit the insurer
      to any claim settlement with a reinsurer without prior approval of
      the insurer.  If prior approval is given, a report must be promptly
      forwarded by the managing general agent to the insurer.
         f.  Permit its subproducer to serve on the insurer's board of
      directors.
         g.  Jointly employ an individual who is employed by the
      insurer.
         h.  Appoint a submanaging general agent.  

         91 Acts, ch 26, §4; 2008 Acts, ch 1123, §19
         Referred to in § 510.10
         Contracts; see also §510.2