2005 Nevada Revised Statutes - Chapter 681A — Kinds of Insurance; Limits on Risk; Reinsurance
CHAPTER 681A - KINDS OF INSURANCE; LIMITSON RISK; REINSURANCE
GENERAL PROVISIONS
NRS 681A.010 Definitionsnot mutually exclusive.
NRS 681A.020 Casualtyinsurance defined.
NRS 681A.030 Healthinsurance defined.
NRS 681A.040 Lifeinsurance defined.
NRS 681A.050 Marineand transportation and wet marine and transportation insurance defined.
NRS 681A.060 Propertyinsurance defined.
NRS 681A.070 Suretyinsurance defined.
NRS 681A.080 Titleinsurance defined.
KINDS OF INSURANCE
NRS 681A.090 Multipleline insurers.
NRS 681A.095 Insuranceagainst legal liability for exemplary or punitive damages.
LIMITS ON RISK
NRS 681A.100 Amountof risk that insurer may retain; method for determining risk; applicability.
REINSURANCE
Miscellaneous Provisions
NRS 681A.110 Reinsuranceauthorized for all or part of risk; requirements for reinsurance withunauthorized insurer.
NRS 681A.120 Cancellationor material changes in treaties or arrangements for reinsurance.
NRS 681A.130 Regulations.
Credit as Asset or Deduction From Liability
NRS 681A.140 Qualifiedfinancial institution in the United States defined.
NRS 681A.150 Requirementsfor taking credit.
NRS 681A.160 Reinsuranceceded to assuming accredited reinsurer in Nevada.
NRS 681A.170 Reinsuranceceded to assuming alien insurer.
NRS 681A.180 Reinsuranceceded to assuming insurer which maintains trust fund for payment of validclaims; exceptions.
NRS 681A.190 Reinsuranceceded to group of incorporated insurers under common administration.
NRS 681A.200 Requirementsfor establishment or amendment of certain trusts.
NRS 681A.210 Requirementswhen assuming insurer is not licensed or accredited to transact insurance orreinsurance in this State.
NRS 681A.220 Requirementswhen assuming insurer does not meet certain requirements.
NRS 681A.230 Cedinginsurer to be allowed credit if reinsurance lawfully ceded to qualifiedassuming insurer; domiciliary liquidator of insolvent ceding insurer to givenotice to assuming insurer of any claim against ceding insurer.
NRS 681A.240 Requirementsfor reduction from liability when assuming insurer does not meet certainrequirements concerning risk-based capital.
Brokers and Managers
NRS 681A.250 Definitions.
NRS 681A.260 Actuarydefined.
NRS 681A.270 Automaticagreement defined.
NRS 681A.280 Brokerfor reinsurance defined.
NRS 681A.290 Cededefined.
NRS 681A.300 Cessiondefined.
NRS 681A.310 Controllingperson defined.
NRS 681A.320 Facultativedefined.
NRS 681A.330 Intermediarydefined.
NRS 681A.340 Licensedproducer defined.
NRS 681A.350 Managerfor reinsurance defined.
NRS 681A.360 Reinsureddefined.
NRS 681A.370 Reinsurerdefined.
NRS 681A.380 Retrocessiondefined.
NRS 681A.390 Retrocessionairedefined.
NRS 681A.400 Syndicatedefined.
NRS 681A.410 Violationdefined.
NRS 681A.420 Limitationsand requirements.
NRS 681A.430 Licenseto act as intermediary.
NRS 681A.440 Circumstancesunder which Commissioner is authorized to refuse to issue license.
NRS 681A.450 Licensedattorney acting as intermediary.
NRS 681A.460 Brokers:Transactions with insurer; termination; duties.
NRS 681A.470 Brokers:Maintenance of records of transactions; access to accounts and records byinsurer.
NRS 681A.480 Brokers:Conditions for employment; annual statement of financial condition.
NRS 681A.490 Managers:Transactions with reinsurer; termination; duties.
NRS 681A.500 Managers:Compliance with certain standards established by insurer; required provisionsin contract; relationship with reinsurer.
NRS 681A.510 Managers:Requirements for settlement of claims; ownership of claims files; terminationof authority to settle claims.
NRS 681A.520 Managers:Sharing of interim profits.
NRS 681A.530 Managers:Maintenance of records of transactions; access to accounts and records byreinsurer.
NRS 681A.540 Managers:Prohibited acts.
NRS 681A.550 Managers:Conditions for employment; annual statement of financial condition; reservesfor losses; retrocessional contracts; notice of termination; prohibitionagainst serving on board of directors of reinsurer.
NRS 681A.560 Examinationof intermediary by Commissioner.
NRS 681A.570 Actionsthat may be taken against intermediary who fails to comply with laws.
NRS 681A.580 Rightsof relevant parties not limited or expanded.
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GENERAL PROVISIONS
NRS
1. As used in this Code, unless the context otherwiserequires, the words and terms defined in NRS681A.020 to 681A.080, inclusive,shall have the meanings ascribed to them in NRS681A.020 to 681A.080, inclusive.
2. It is intended that certain insurance coverages maycome within the definitions of two or more kinds of insurance as defined inthis chapter, and the inclusion of such coverage within one definition shallnot exclude it as to any other kind of insurance within the definition of whichsuch coverage is likewise reasonably includable.
(Added to NRS by 1971, 1601)
NRS
1. Casualty insurance includes:
(a) Vehicle insurance. Insurance against loss of ordamage to any land vehicle or aircraft or any draft or riding animal or toproperty while contained therein or thereon or being loaded or unloaded thereinor therefrom, from any hazard or cause, and against any loss, liability orexpense resulting from or incidental to ownership, maintenance or use of anysuch vehicle, aircraft or animal, together with insurance against accidentalinjury to natural persons, irrespective of legal liability of the insured,including the named insured, while in, entering, alighting from, adjusting,repairing, cranking, or caused by being struck by a vehicle, aircraft or draftor riding animal, if such insurance is issued as an incidental part ofinsurance on the vehicle, aircraft or draft or riding animal.
(b) Liability insurance. Insurance against legalliability for the death, injury or disability of any human being, or for damageto property, including liability resulting from negligence in rendering expert,fiduciary or professional services; and provisions of medical, hospital, surgical,disability benefits to injured persons and funeral and death benefits todependents, beneficiaries or personal representatives of persons killed,irrespective of legal liability of the insured, when issued as an incidental coveragewith or supplemental to liability insurance.
(c) Workmens compensation and employers liability.Insurance of the obligations accepted by, imposed upon or assumed by employersunder law for death, disablement or injury of employees.
(d) Burglary and theft. Insurance against loss ordamage by burglary, theft, larceny, robbery, forgery, fraud, vandalism,malicious mischief, confiscation, or wrongful conversion, disposal orconcealment, or from any attempt at any of the foregoing, includingsupplemental coverage for medical, hospital, surgical and funeral expenseincurred by the named insured or any other person as a result of bodily injuryduring the commission of a burglary, robbery or theft by another, and also,insurance against loss of or damage to moneys, coins, bullion, securities,notes, drafts, acceptances or any other valuable papers and documents,resulting from any cause.
(e) Personal property floater. Insurance upon personaleffects against loss or damage from any cause.
(f) Glass. Insurance against loss or damage to glass,including its lettering, ornamentation and fittings.
(g) Boiler and machinery. Insurance against anyliability and loss or damage to property or interest resulting from accidentsto or explosions of boilers, pipes, pressure containers, machinery orapparatus, and to make inspection of and issue certificates of inspection uponboilers, machinery and apparatus of any kind, whether or not insured.
(h) Leakage and fire extinguishing equipment. Insuranceagainst loss or damage to any property or interest caused by the breakage orleakage of sprinklers, hoses, pumps and other fire-extinguishing equipment orapparatus, water pipes or containers, or by water entering through leaks oropenings in buildings, and insurance against loss or damage to such sprinklers,hoses, pumps and other fire-extinguishing equipment or apparatus.
(i) Credit and mortgage guaranty. Insurance againstloss or damage resulting from failure of debtors to pay their obligations tothe insured, and insurance of real property mortgage lenders against loss byreason of nonpayment of the mortgage indebtedness.
(j) Elevator. Insurance against loss of or damage toany property of the insured, resulting from the ownership, maintenance or useof elevators, except loss or damage by fire, and to make inspection of andissue certificates of inspection upon, elevators.
(k) Congenital defects. Insurance against congenitaldefects in human beings.
(l) Livestock. Insurance against loss or damage tolivestock, and services of a veterinary for such animals.
(m) Entertainments. Insurance indemnifying the producerof any motion picture, television, radio, theatrical, sport, spectacle,entertainment, or similar production, event or exhibition against loss frominterruption, postponement or cancellation thereof due to death, accidentalinjury or sickness of performers, participants, directors or other principals.
(n) Miscellaneous. Insurance against any other kind ofloss, damage or liability properly a subject of insurance and not within anyother kind of insurance as defined in this chapter, if such insurance is notdisapproved by the Commissioner as being contrary to law or public policy,including insurance for home protection issued pursuant to
2. Provision of medical, hospital, surgical andfuneral benefits, and of coverage against accidental death or injury, asincidental to and part of other insurance as stated under paragraphs (a)(vehicle), (b) (liability), (d) (burglary), (g) (boiler and machinery), and (j)(elevator) of subsection 1 shall for all purposes be deemed to be the same kindof insurance to which it is so incidental, and is not subject to provisions ofthis Code applicable to life and health insurances.
(Added to NRS by 1971, 1601; A 1975, 400; 1981, 1319)
NRS
(Added to NRS by 1971, 1603)
NRS
(Added to NRS by 1971, 1603)
NRS
1. Marine and transportation insurance includes:
(a) Insurance against any kinds of loss or damage to:
(1) Vessels, craft, aircraft, cars, automobilesand vehicles of every kind, as well as all goods, freights, cargoes,merchandise, effects, disbursements, profits, moneys, bullion, precious stones,securities, choses in action, evidences of debt, valuable papers, bottomry andrespondentia interests and all other kinds of property and interest therein, inconnection with any and all risks or perils of navigation, transit ortransportation, including war risks, on or under any seas or other waters, onland or in the air, or while being assembled, packed, crated, baled, compressedor similarly prepared for shipment or while awaiting the same or during anydelays, storage, transshipment or reshipment incidental thereto, includingmarine builders risks and all personal property floater risks;
(2) Person or property in connection with amarine, inland marine, transit or transportation insurance, including liabilityfor loss of or damage to either, arising out of or in connection with theconstruction, repair, operation, maintenance or use of the subject matter of suchinsurance (but not including life insurance or surety bonds or insuranceagainst loss by reason of bodily injury to the person arising out of theownership, maintenance or use of automobiles);
(3) Precious stones, jewels, jewelry, gold,silver and other precious metals, whether used in business or trade orotherwise and whether the same is in the course of transportation or otherwise;and
(4) Bridges, tunnels and other instrumentalitiesof transportation and communication (excluding buildings, their furniture andfurnishings, fixed contents and supplies held in storage) unless fire, tornado,sprinkler leakage, hail, explosion, earthquake, riot or civil commotion are theonly hazards to be covered; piers, wharves, docks and slips, excluding therisks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot orcivil commotion; other aids to navigation and transportation, including drydocks and marine railways, against all risks.
(b) Marine protection and indemnity insurance,meaning insurance against, or against legal liability of the insured for, loss,damage or expense arising out of, or incidental to, the ownership, operation,chartering, maintenance, use, repair or construction of any vessel, craft orinstrumentality in use in ocean or inland waterways, including liability of theinsured for personal injury, illness or death or for loss of or damage to theproperty of another person.
2. For the purposes of this Code, wet marine andtransportation insurance is that part of marine and transportation insurancewhich includes only:
(a) Insurance upon vessels, crafts, hulls and ofinterests therein or with relation thereto;
(b) Insurance of marine builders risks, marine war risksand contracts of marine protection and indemnity insurance;
(c) Insurance of freights and disbursements pertainingto a subject of insurance coming within this definition; and
(d) Insurance of personal property and intereststherein, in the course of exportation from or importation into any country, orin the course of transportation coastwise or on inland waters, includingtransportation by land, water or air from point of origin to final destination,in connection with any and all risks or perils of navigation, transit ortransportation, and while being prepared for and while awaiting shipment, andduring any delays, storage, transshipment or reshipment incident thereto.
(Added to NRS by 1971, 1603)
NRS
1. Property insurance is insurance on real orpersonal property of every kind and of every interest therein against loss ordamage from any and all hazards or causes, and against loss consequential uponsuch loss or damage, other than noncontractual legal liability for any suchloss or damage.
2. Property insurance does not include titleinsurance, as defined in NRS 681A.080.
(Added to NRS by 1971, 1604)
NRS
1. Fidelity insurance, which is insurance guaranteeingthe fidelity of persons holding positions of public or private trust.
2. Insurance guaranteeing the performance ofcontracts, other than insurance policies, and guaranteeing and executing bonds,undertakings and contracts of suretyship.
3. Insurance indemnifying banks, bankers, brokers,financial or moneyed corporations or associations against loss, resulting fromany cause, of bills of exchange, notes, bonds, securities, evidences of debt,deeds, mortgages, warehouse receipts or other valuable papers, documents,money, precious metals and articles made therefrom, jewelry, watches, gems,precious and semiprecious stones, including any loss while the same are beingtransported in armored motor vehicles, or by messenger, but not including anyother risks of transportation or navigation, and also insurance against loss ordamage to such an insureds premises or to his furnishings, fixtures,equipment, safes and vaults therein, caused by burglary, robbery, theft,vandalism or malicious mischief, or any attempt thereat.
4. Financial guaranty insurance, which is insurance orbonding that guarantees the payment of the principal and interest on a securityif the issuer of the security defaults in the payment of the principal orinterest. Financial guaranty insurance does not include coverage for itemsdescribed in subsection 3.
(Added to NRS by 1971, 1604; A 1991, 2030)
NRS
1. Liens, encumbrances, security interests and defectsin, or the unmarketability of, the title to the property; or
2. Invalidity or unenforceability of liens,encumbrances or security interests on the property,
and anyother activity substantially equivalent to these activities.
(Added to NRS by 1971, 1605; A 1977, 984)
KINDS OF INSURANCE
NRS
1. Any two or more kinds of insurance, as defined in
2. Life insurance if so authorized pursuant tosubsection 1 of NRS 680A.110(combinations of insuring powers).
(Added to NRS by 1971, 1605)
NRS
(Added to NRS by 1995, 2671)
LIMITS ON RISK
NRS
1. Except as otherwise provided for domestic mutualinsurers in NRS 692B.200, an insurershall not retain any risk on any one subject of insurance, whether located orto be performed in this state or elsewhere, in an amount exceeding 10 percentof its surplus to policyholders.
2. A subject of insurance for the purposes of thissection, as to insurance against fire and hazard other than windstorm,earthquake and other catastrophic hazards, includes all properties insured bythe same insurer which are customarily considered by underwriters to be subjectto loss or damage from the same fire or the same occurrence of any other hazardinsured against.
3. Reinsurance ceded as authorized by
4. As to alien insurers, this section relates only torisks and surplus to policyholders of the insurers branch in the UnitedStates.
5. Surplus to policyholders for the purposes of thissection, in addition to the insurers capital and surplus, includes anyvoluntary reserves which are not required pursuant to law, and must bedetermined from the last sworn statement of the insurer on file with theCommissioner, or by the last report of examination of the insurer, whichever isthe more recent at time of assumption of risk.
6. This section does not apply to life or healthinsurance, annuities, title insurance, insurance of wet marine andtransportation risks, workmens compensation insurance, financial guarantyinsurance, or to any policy or type of coverage as to which the maximumpossible loss to the insurer is not readily ascertainable on issuance of thepolicy.
(Added to NRS by 1971, 1605; A 1977, 620; 1993, 2385;1995, 1767)
REINSURANCE
Miscellaneous Provisions
NRS
1. The domestic insurer has the Commissioners writtenapproval; or
2. The insurer accepting the reinsurance meets therequirements for credit provided in NRS681A.150 to 681A.190, inclusive.
(Added to NRS by 1971, 1606; A 1983, 432; 1987, 648;1991, 254; 1993, 2386; 1995, 1767)
NRS
(Added to NRS by 1995, 1759)
NRS
(Added to NRS by 1995, 1759)
Credit as Asset or Deduction From Liability
NRS
1. Is organized, or in the case of a branch or agencyof a foreign banking organization in the United States licensed, under the lawsof the United States or any state thereof and has been granted authority tooperate with fiduciary powers; and
2. Is regulated, supervised and examined by federal orstate authorities having regulatory authority over banks and trust companies.
(Added to NRS by 1995, 1756)
NRS
(Added to NRS by 1995, 1756)
NRS
1. Except as otherwise provided in subsection 2,credit must be allowed if reinsurance is ceded to an assuming insurer which isaccredited as a reinsurer in this state. An accredited reinsurer is one which:
(a) Files with the Commissioner an executed formapproved by the Commissioner as evidence of its submission to this statesjurisdiction;
(b) Submits to this states authority to examine itsbooks and records;
(c) Files with the Commissioner a certified copy of acertificate of authority or other evidence approved by the Commissionerindicating that it is licensed to transact insurance or reinsurance in at leastone state, or in the case of a branch in the United States of an alien assuminginsurer is entered through and licensed to transact insurance or reinsurance inat least one state;
(d) Files annually with the Commissioner a copy of itsannual statement filed with the Division of its state of domicile or entry anda copy of its most recent audited financial statement; and
(e) Maintains a surplus as regards policyholders in anamount which is not less than $20,000,000 and whose accreditation:
(1) Has not been denied by the Commissionerwithin 90 days after its submission; or
(2) Has been approved by the Commissioner.
2. No credit may be allowed for a domestic cedinginsurer if the assuming insurers accreditation has been revoked by theCommissioner after notice and a hearing.
(Added to NRS by 1995, 1756; A
NRS
1. Except as otherwise provided in subsection 2,credit must be allowed if reinsurance is ceded to an assuming insurer which isdomiciled and licensed in, or in the case of a branch in the United States ofan alien assuming insurer is entered through, a state which employs standardsregarding credit for reinsurance substantially similar to those applicableunder this chapter and the assuming insurer or branch in the United States ofan alien assuming insurer:
(a) Maintains a surplus as regards policyholders in anamount not less than $20,000,000; and
(b) Submits to the authority of this state to examineits books and records.
2. The requirement of paragraph (a) of subsection 1does not apply to reinsurance ceded and assumed pursuant to pooling amonginsurers affiliated with the same holding company.
(Added to NRS by 1995, 1757)
NRS
1. Except as otherwise provided in subsection 4,credit must be allowed if reinsurance is ceded to an assuming insurer whichmaintains a trust fund in a qualified financial institution in the UnitedStates for the payment of the valid claims of its policyholders and cedinginsurers in the United States, their assigns and successors in interest. Theassuming insurer shall report annually to the Commissioner informationsubstantially the same as that required to be reported on the National Associationof Insurance Commissioners form of annual statement by licensed insurers toenable the Commissioner to determine the sufficiency of the trust fund.
2. In the case of a single assuming insurer, the trustmust consist of an account in trust equal to the assuming insurers liabilitiesattributable to business written in the United States and the assuming insurershall maintain a surplus in trust of not less than $20,000,000.
3. In the case of a group of incorporated andindividual unincorporated underwriters, the trust must consist of an account intrust equal to the groups liabilities attributable to business written in theUnited States and the group shall maintain a surplus in trust of which$100,000,000 must be held jointly for the benefit of ceding insurers in theUnited States to any member of the group, and the group shall make available tothe Commissioner an annual certification of the solvency of each underwriter bythe groups domiciliary regulator and its independent public accountants.
4. If the assuming insurer does not meet therequirements of NRS 681A.110,
(a) Notwithstanding any provision to the contrary inthe trust instrument, if the trust fund consists of an amount that is less thanthe amount required pursuant to this section, or if the grantor of the trustfund is declared to be insolvent or placed into receivership, rehabilitation,liquidation or a similar proceeding in accordance with the laws of thegrantors state or country of domicile, the trustee of the trust fund mustcomply with an order of the commissioner of insurance or other appropriateperson with regulatory authority over the trust fund in that state or countryor a court of competent jurisdiction requiring the trustee to transfer to thatcommissioner or person all the assets of the trust fund;
(b) The assets of the trust fund must be distributed byand claims filed with and valued by the commissioner of insurance or otherappropriate person with regulatory authority over the trust fund in accordancewith the laws of the state in which the trust fund is domiciled that areapplicable to the liquidation of domestic insurers in that state;
(c) If the commissioner of insurance or otherappropriate person with regulatory authority over the trust fund determinesthat the assets of the trust fund or any portion of the trust fund are notrequired to satisfy any claim of any ceding insurer of the grantor of the trustfund in the United States, the assets must be returned by that commissioner orperson to the trustee of the trust fund for distribution in accordance with thetrust agreement; and
(d) The grantor of the trust must waive any right that:
(1) Is otherwise available to him under the lawsof the United States; and
(2) Is inconsistent with the provisions of thissubsection.
(Added to NRS by 1995, 1757; A
NRS
1. Credit must be allowed if reinsurance is ceded to agroup of incorporated insurers under common administration which:
(a) Does not engage in any business other thanunderwriting as a member of the group;
(b) Is subject to the same amount of regulation andsolvency control by the groups domiciliary regulator as are the unincorporatedmembers of the group;
(c) Reports annually to the Commissioner theinformation required by subsection 1 of NRS681A.180;
(d) Has continuously transacted insurance outside theUnited States for at least 3 years immediately before making an application foraccreditation;
(e) Submits to this states authority to examine itsbooks and records and bears the expense of the examination;
(f) Has aggregate policyholders surplus of$10,000,000,000; and
(g) Maintains a trust pursuant to subsection 2.
2. The trust must be in an amount equal to the groupsseveral liabilities attributable to business ceded by ceding insurers in theUnited States to any member of the group pursuant to contracts of reinsuranceissued in the name of the group, and the group shall maintain a joint surplusin trust of which $100,000,000 must be held jointly for the benefit of cedinginsurers in the United States to any member of the group as additional securityfor any such liabilities.
3. Each member of the group shall, within 90 daysafter the date its financial statements must be filed with the groupsdomiciliary regulator, make available to the Commissioner an annualcertification of the members solvency by the members domiciliary regulatorand its independent public accountant.
(Added to NRS by 1995, 1757; A
NRS
1. A trust for the purposes of
(a) The Commissioner; and
(b) The commissioner of insurance or other appropriateperson of:
(1) The state in which the trust is domiciled;or
(2) Any other state that, pursuant to the trustinstrument, accepts regulatory authority over the trust.
2. The form of the trust and any amendment to thetrust must be filed with the commissioner of insurance or other appropriateperson of each state in which the policyholders of the ceding insurer who arethe beneficiaries of the trust are domiciled.
3. The trust instrument must provide that contestedclaims become valid, enforceable and payable from money held in the trust fundto the extent that the contested claims remain unsatisfied, within 30 daysafter the entry of the final order of any court of competent jurisdiction inthe United States. The trust must vest legal title to its assets in thetrustees of the trust for its policyholders and ceding insurers in the UnitedStates, their assigns and successors in interest. The trust and the assuminginsurer are subject to examination as determined by the Commissioner. The trustmust remain in effect for as long as the assuming insurer or any member orformer member of the group of insurers has outstanding obligations due underthe agreements for reinsurance subject to the trust.
4. Not later than February 28 of each year thetrustees of the trust shall report to the Commissioner in writing setting forththe balance of the trust and listing the trusts investments at the end of thepreceding year and shall certify the date of termination of the trust, if soplanned, or certify that the trust will not expire before the next followingDecember 31.
(Added to NRS by 1995, 1758; A
NRS
1. Except as otherwise provided in subsection 2, ifthe assuming insurer is not licensed or accredited to transact insurance orreinsurance in this State, the credit permitted by
(a) That in the event of the failure of the assuminginsurer to perform its obligations under the terms of the agreement, theassuming insurer, at the request of the ceding insurer, will submit to thejurisdiction of any court of competent jurisdiction in any state of the UnitedStates, will comply with all requirements necessary to give the courtjurisdiction, and will abide by the final decision of the court or of any appellatecourt in the event of an appeal;
(b) To designate the Commissioner or a designatedattorney as its true and lawful attorney upon whom may be served any lawfulprocess in an action, suit or proceeding instituted by or on behalf of theceding company; and
(c) To comply with the conditions set forth insubsection 4 of NRS 681A.180.
2. This section does not conflict with or override theobligation of the parties to an agreement for reinsurance to arbitrate theirdisputes if such an obligation is created in the agreement.
(Added to NRS by 1995, 1758; A
NRS
(Added to NRS by 1995, 1758)
NRS
1. Credit must be allowed asan asset or as a deduction from liability to any ceding insurer for reinsurancelawfully ceded to an assuming insurer qualified therefor pursuant to
(a) The contract ofreinsurance or other written contract specifically designates another payee ofthe payments in the event of the insolvency of the ceding insurer; or
(b) The assuming insurer,with the consent of the persons directly insured, has assumed the obligationsfrom the policies issued by the ceding insurer as direct obligations of theassuming insurer, and in substitution for the obligations of the cedinginsurer, to the payees under those policies.
2. The domiciliaryliquidator of an insolvent ceding insurer shall give written notice to theassuming insurer of the pendency of any claim against the ceding insurer on anycontract reinsured within a reasonable time after such a claim is filed in theliquidation proceeding. During the pendency of the claim, the assuming insurermay investigate the claim and, at its own expense, interpose in the proceedingin which the claim is to be adjudicated any defense that the assuming insurerdeems available to the ceding insurer or its liquidator.
(Added to NRS by 1995, 1759; A 1997, 3021;
NRS
1. Cash.
2. Securities listed by the Securities ValuationOffice of the National Association of Insurance Commissioners and qualifying asadmitted assets.
3. Irrevocable, unconditional letters of credit, eachissued or confirmed by a qualified financial institution in the United Stateswhich has been determined by the Commissioner, or the Securities ValuationOffice of the National Association of Insurance Commissioners, to meet suchstandards of financial condition and standing as are considered necessary orappropriate to regulate the quality of financial institutions whose letters ofcredit are acceptable to the Commissioner, no later than December 31 of theyear for which filing is made, and in the possession of the ceding company onor before the date of filing its annual statement. A letter of credit meetingapplicable standards of acceptability of its issuer as of the date of itsissuance or confirmation, notwithstanding the issuing or confirminginstitutions subsequent failure to meet applicable standards of acceptability,continues to be acceptable as security until its expiration, extension,renewal, modification or amendment, whichever first occurs.
4. Any other form of security acceptable to theCommissioner.
(Added to NRS by 1995, 1759)
Brokers and Managers
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(Added to NRS by 1995, 1759)
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(Added to NRS by 1995, 1759)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
NRS
1. An employee of the reinsurer;
2. A manager of a branch of an alien reinsurer locatedin the United States;
3. An underwriting manager who, pursuant to acontract, manages all or part of the reinsurance of the reinsurer, is undercommon control with the reinsurer within the meaning of
4. The manager of a group, association, pool ororganization of insurers who engage in joint underwriting or joint reinsuranceand who are subject to examination by the commissioner of the state in whichthe principal business office of the manager is located.
(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1760)
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(Added to NRS by 1995, 1761)
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(Added to NRS by 1995, 1761)
NRS
1. A person shall not act as a broker for reinsurancefor a domestic insurer or reinsurer unless he is:
(a) A licensed producer in this state; or
(b) Licensed as a nonresident intermediary forreinsurance in this state.
2. A person shall not act as a broker for reinsurancefor a foreign or alien insurer or reinsurer if he maintains an office, directlyor as a member or employee of a firm or association or as an officer, directoror employee of a corporation in this state, unless he is:
(a) A licensed producer in this state; or
(b) Licensed as a nonresident intermediary forreinsurance in this state.
3. A person shall not act as a manager for reinsurancefor a domestic insurer or reinsurer unless he is:
(a) A licensed producer in this state; or
(b) Licensed as a nonresident manager for reinsurancein this state.
4. A person shall not act as a manager for reinsurancefor any foreign or alien insurer or reinsurer if he maintains an office,directly or as a member or employee of a firm or association or as an officer,director or employee of a corporation in this state, unless he is:
(a) A licensed producer in this state; or
(b) Licensed as a nonresident manager for reinsurancein this state.
5. A manager for reinsurance shall:
(a) File a bond from an insurer in an amount that isacceptable to the Commissioner for the protection of the reinsurer; and
(b) Maintain a policy covering errors and omissions inan amount that is acceptable to the Commissioner.
(Added to NRS by 1995, 1761; A
NRS
1. The Commissioner may issue a license to act as anintermediary to any person who has complied with the requirements of
2. If an applicant for a license to act as anintermediary is a nonresident, he shall:
(a) Designate the Commissioner as agent for service ofprocess;
(b) Furnish the Commissioner with the name and addressof a resident of Nevada upon whom notices or orders of the Commissioner orprocess affecting the nonresident reinsurance intermediary may be served; and
(c) Promptly notify the Commissioner in writing ofevery change in his designated agent for service of process. The change is noteffective until acknowledged by the Commissioner.
(Added to NRS by 1995, 1761; A 1997, 3022)
NRS
1. The Commissioner may refuse to issue a license toact as an intermediary if, in his judgment:
(a) The applicant, anyone named on the application, orany member, principal, officer or director of the applicant, is not trustworthyto act as an intermediary;
(b) Any controlling person of the applicant is nottrustworthy to act as an intermediary;
(c) The applicant, a person named on the application,any member, principal, officer or director of the applicant or any controllingperson of the applicant has given cause for the revocation or suspension of alicense to act as an intermediary; or
(d) The applicant, a person named on the application,any member, principal, officer or director of the applicant or any controllingperson of the applicant has failed to comply with any prerequisite for theissuance of a license to act as an intermediary.
2. Upon receipt of a written request, the Commissionershall furnish a summary of the basis for his refusal to issue a license to actas an intermediary. The summary is confidential.
(Added to NRS by 1995, 1761)
NRS
(Added to NRS by 1995, 1762)
NRS
1. A transaction between a broker for reinsurance andthe insurer he represents may only be entered into by written agreement. Theagreement must specify the responsibilities of each party.
2. The insurer may terminate the authority of thebroker for reinsurance at any time.
3. The broker for reinsurance shall:
(a) Render accounts to the insurer accurately detailingall material transactions, including information necessary to support allcommissions, charges and other fees received by or owing to the broker forreinsurance; and
(b) Remit all money due to the insurer within 30 daysafter receipt.
4. All money collected for the account of the insurermust be held by the broker for reinsurance in a fiduciary capacity in a bank orcredit union which is a qualified financial institution.
5. The broker for reinsurance shall comply with thewritten standards established by the insurer for the cession or retrocession ofall risks.
6. The broker for reinsurance shall disclose to theinsurer any relationship with any reinsurer to which insurance will be ceded orretroceded.
(Added to NRS by 1995, 1762; A
NRS
1. For 10 years after expiration of each contract of reinsurancetransacted by the broker for reinsurance, he shall keep a complete record foreach transaction, including evidence of:
(a) The type of contract, limits, underwritingrestrictions, classes or risks and territory;
(b) The period of coverage, including effective andexpiration dates and the provisions concerning cancellation and notice ofcancellation;
(c) The requirements for reporting and settlingbalances;
(d) The rate used to compute the reinsurance premium;
(e) The names and addresses of assuming reinsurers;
(f) The rates of all commissions for reinsurance,including the commissions on any retrocessions handled by the broker forreinsurance;
(g) Any related correspondence and memoranda;
(h) Proof of placement;
(i) Details regarding retrocessions handled by thebroker for reinsurance, including the identity of retrocessionaires and thepercentage of each contract assumed or ceded;
(j) Financial records, including accounts of premiumand loss; and
(k) If the broker for reinsurance procures a contractof reinsurance on behalf of a licensed ceding insurer:
(1) Directly from any assuming reinsurer,written evidence that the assuming reinsurer has agreed to assume the risk; or
(2) Through a representative of the assumingreinsurer, other than an employee, written evidence that the reinsurer hasdelegated binding authority to the representative.
2. A broker for reinsurance shall allow an insurer tohave access to and to copy and audit all accounts and records maintained by himrelated to its contract.
(Added to NRS by 1995, 1762)
NRS
1. An insurer shall not engage the services of anyperson to act as a broker for reinsurance on its behalf unless he is licensedpursuant to NRS 681A.430.
2. An insurer may not employ a person who is employedby a broker for reinsurance with whom it transacts business, unless the brokerfor reinsurance is under common control with the insurer within the meaning of
3. The insurer shall annually obtain a copy ofstatements of the financial condition of each broker for reinsurance with whichit transacts business.
(Added to NRS by 1995, 1763)
NRS
1. Transactions between a manager for reinsurance andthe reinsurer he represents must only be entered into pursuant to a writtencontract which specifies the responsibilities of each party and is approved bythe board of directors of the reinsurer. At least 30 days before a reinsurerassumes or cedes insurance, a copy of the contract must be filed with the Commissionerfor approval.
2. The reinsurer may terminate the contract for causeupon written notice to the manager for reinsurance and the reinsurer maysuspend the authority of the manager for reinsurance to assume or cedeinsurance during the pendency of any dispute regarding the cause fortermination.
3. The manager for reinsurance shall:
(a) Render accounts to the reinsurer accuratelydetailing all material transactions, including information necessary to supportall commissions, charges and other fees received by or owing to him; and
(b) Remit all money due pursuant to the contract to thereinsurer monthly.
4. All money collected for the account of thereinsurer must be held by the manager for reinsurance, in a fiduciary capacity,in a bank or credit union which is a qualified financial institution. Themanager for reinsurance may retain no more than the total of 3 monthsestimated payments on claims and allocated expenses of adjusting losses. Themanager for reinsurance shall maintain a separate account in a bank or creditunion for each reinsurer that he represents.
5. The contract must not be assigned in whole or inpart by the manager for reinsurance.
(Added to NRS by 1995, 1763; A
NRS
1. A manager for reinsurance shall comply with thewritten underwriting and rating standards established by the insurer herepresents for the acceptance, rejection or cession of all risks.
2. The contract must set forth the rates, terms andpurposes of commissions, charges and other fees which the manager forreinsurance may levy against the reinsurer.
3. The manager for reinsurance shall annually providethe reinsurer with a statement of his financial condition prepared by anindependent certified public accountant.
4. The reinsurer shall conduct a review ofunderwriting and the handling of claims by the manager for reinsurance at thelocation of his operations at least twice each calendar year.
5. The manager for reinsurance shall disclose to thereinsurer any relationship he has with an insurer before ceding or assuminginsurance to or from the insurer pursuant to the contract.
6. The acts of the manager for reinsurance shall bedeemed to be the acts of the reinsurer on whose behalf he is acting.
(Added to NRS by 1995, 1763)
NRS
1. If a contract between a manager for reinsurance andthe reinsurer he represents permits him to settle claims on behalf of thereinsurer:
(a) All claims must be reported to the reinsurer in atimely manner; and
(b) A copy of the claim file must be sent to thereinsurer at its request or as soon as it becomes known that the claim:
(1) Potentially exceeds the amount determined bythe Commissioner or the limit set by the reinsurer, whichever is the lesseramount;
(2) Involves a dispute over coverage;
(3) May exceed the authority of the manager forreinsurance to settle claims;
(4) Has been open for more than 6 months; or
(5) Is closed by payment of the lesser of anamount set by the Commissioner or an amount set by the reinsurer.
2. All claims files are the joint property of thereinsurer and the manager for reinsurance. Upon an order of liquidation of thereinsurer, the files become the sole property of the reinsurer or its estate.The reinsurer or its estate shall allow the manager for reinsurance to havereasonable access to and to copy the files on a timely basis.
3. The reinsurer may terminate any authority to makesettlements granted to the manager for reinsurance for cause upon writtennotice to him or upon the termination of the contract. The reinsurer maysuspend the authority of the manager for reinsurance to make settlements duringthe pendency of the dispute regarding the cause of termination.
(Added to NRS by 1995, 1764)
NRS
(Added to NRS by 1995, 1764)
NRS
1. For at least 10 years after expiration of eachcontract of reinsurance transacted by a manager for reinsurance, he shall keepa complete record for each transaction, including evidence of:
(a) The type of contract, limits, underwritingrestrictions, classes or risks and territory;
(b) The period of coverage, including effective andexpiration dates, provisions concerning cancellation and notice ofcancellation, and disposition of outstanding reserves on covered risks;
(c) The requirements for reporting and settlingbalances;
(d) The rate used to compute the reinsurance premium;
(e) The names and addresses of reinsurers;
(f) The rates of all commissions for reinsurance,including the commissions on any retrocessions handled by the manager forreinsurance;
(g) Any related correspondence and memoranda;
(h) Proof of placement;
(i) Any details regarding retrocessions handled by themanager for reinsurance, including the identity of retrocessionaires andpercentage of each contract assumed or ceded;
(j) Financial records, including accounts of premiumand loss; and
(k) If the manager for reinsurance places a contract ofreinsurance on behalf of a ceding insurer:
(1) Directly from any assuming reinsurer,written evidence that the assuming reinsurer has agreed to assume the risk; or
(2) Through a representative of the assumingreinsurer, other than an employee, written evidence that the reinsurer hasdelegated binding authority to the representative.
2. The manager for reinsurance shall allow a reinsurerto have access and to copy all accounts and records maintained by him relatedto its business in a form usable by the reinsurer.
(Added to NRS by 1995, 1764)
NRS
1. Except as otherwise provided in this section, cederetrocessions on behalf of the reinsurer. A manager for reinsurance may cedefacultative retrocessions pursuant to facultative agreements if the contractwith the reinsurer contains guidelines for underwriting the retrocessions. Theguidelines must include a list of reinsurers with which automatic agreementsare in effect, and for each reinsurer, the coverages and amounts or percentagesthat may be reinsured, and commission schedules.
2. Commit the reinsurer to participate in syndicatesfor reinsurance.
3. Appoint any producer without verifying that theproducer is licensed to transact the type of reinsurance for which he isappointed.
4. Without approval of the reinsurer, pay or committhe reinsurer to pay a claim, net of retrocessions, that exceeds the lesser ofan amount specified by the reinsurer or 1 percent of the policyholders surplusof the reinsurer as of December 31 of the last complete calendar year.
5. Collect any payment from a retrocessionaire orcommit the reinsurer to any settlement of a claim with a retrocessionaire,without the approval of the reinsurer. If approval is given, the manager forreinsurance shall promptly forward a report to the reinsurer.
6. Employ a person who is employed by the reinsurerunless the manager for reinsurance is under common control with the reinsurerwithin the meaning of chapter 692C of NRS.
7. Appoint another person to act as a manager forreinsurance.
(Added to NRS by 1995, 1765; A 1997, 3022)
NRS
1. A reinsurer shall not engage the services of anyperson to act as a manager for reinsurance on its behalf unless he is licensedas required by NRS 681A.430.
2. A reinsurer shall annually obtain a copy ofstatements of the financial condition of each manager for reinsurance whom thereinsurer has engaged. The statements must be prepared by an independentcertified public accountant in a form approved by the Commissioner.
3. If a manager for reinsurance establishes reservesfor losses, the reinsurer shall annually obtain the opinion of an actuaryattesting to the adequacy of reserves established for losses incurred andoutstanding on the business produced by the manager for reinsurance. Theopinion of the actuary must be in addition to any other required certification.
4. An officer of the reinsurer must have authority tobind a reinsurer for all retrocessional contracts and for participation insyndicates for reinsurance. The officer must not be affiliated with the managerfor reinsurance.
5. At least 30 days before termination of a contractwith a manager for reinsurance, the reinsurer shall provide writtennotification of the termination to the Commissioner.
6. Except as otherwise provided in
(Added to NRS by 1995, 1766)
NRS
1. An intermediary is subject to examination by theCommissioner. The intermediary shall allow the Commissioner to have access toall of his books, bank accounts and records in a form usable to theCommissioner.
2. A manager for reinsurance may be examined as if hewere the reinsurer.
(Added to NRS by 1995, 1766)
NRS
1. If the Commissioner believes that the reinsuranceintermediary or any other person has not materially complied with
(a) For each separate violation, the payment of apenalty in an amount not exceeding $5,000; and
(b) The revocation or suspension of the license of thereinsurance intermediary.
2. If the Commissioner finds that the materialnoncompliance of the reinsurance intermediary has caused the insurer orreinsurer any loss or damage, the Commissioner may initiate a civil actionagainst the intermediary on behalf of the insurer or reinsurer and thepolicyholders and creditors of the insurer or reinsurer to recover compensatorydamages or other appropriate relief for the benefit of the insurer or reinsurerand the policyholders and creditors.
3. If an order of rehabilitation or liquidation of theinsurer has been entered and the receiver appointed by that order determinesthat:
(a) The reinsurance intermediary or any other personhas not materially complied with NRS681A.250 to 681A.560, inclusive,or any regulation adopted or order issued pursuant thereto; and
(b) The insurer has suffered any loss or damage as aresult of that noncompliance,
the receivermay bring a civil action for the recovery of damages or for any otherappropriate sanctions on behalf of the insurer.
(Added to NRS by 1995, 1766; A 1997, 3023)
NRS
(Added to NRS by 1995, 1767)
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