2018 Wyoming Statutes
TITLE 26 - INSURANCE CODE
CHAPTER 45 - BROKER CONTROLLED INSURERS
SECTION 26-45-104 - Minimum standards.
26-45-104. Minimum standards.
(a) The provisions of this section shall apply if, in any calendar year, the aggregate amount of gross written premium on business placed with a controlled insurer by a controlling broker is equal to or greater than five percent (5%) of the admitted assets of the controlled insurer, as reported in the controlled insurer's quarterly statement filed as of September 30 of the prior year.
(b) Notwithstanding subsection (a) of this section, the provisions of this section shall not apply if:
(i) The controlled insurer, except for insurance business written through a residual market facility such as the Wyoming Assigned Risk Plan, accepts insurance business only from a controlling broker, a broker controlled by the controlled insurer, or a broker that is a subsidiary of the controlled insurer; and
(ii) The controlling broker:
(A) Places insurance only with the controlled insurer, or only with the controlled insurer and a member or members of the controlled insurer's holding company system, or the controlled insurer's parent, affiliate or subsidiary and receives no compensation based upon the amount of premiums written in connection with the insurance placed; and
(B) Accepts insurance placements only from nonaffiliated subproducers, and not directly from insureds.
(c) The controlled insurer shall not accept business from a controlling broker and a controlling broker shall not place business with a controlled insurer except pursuant to a written contract, which has been approved by the board of directors of the insurer. The contract shall be subject to the following requirements:
(i) A domestic controlled insurer shall file the contract with, and obtain the approval of, the commissioner prior to the effective date of the contract and in accordance with W.S. 26-15-110(b) and 26-15-111. In all other cases the insurer shall file the contract, or any amendment to a contract, with the commissioner within fifteen (15) days after it has been signed;
(ii) The contract shall specify the responsibilities of each party and contain the following minimum provisions:
(A) The controlled insurer may terminate the contract for cause upon written notice to the controlling broker. The controlled insurer shall suspend the authority of the controlling broker to write business during the pendency of any dispute regarding the cause for the termination;
(B) The controlling broker 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 broker;
(C) The controlling broker shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis. The due date shall be fixed so that premiums collected from the insured shall be remitted no later than ninety (90) days after the effective date of the policy;
(D) All funds collected for the controlled insurer's account shall be held by the controlling broker in a fiduciary capacity in accordance with W.S. 26-9-229, in one (1) or more appropriately identified bank accounts in banks that are organized or licensed under the laws of the United States or any state and are insured by an instrumentality of the United States government and have been determined by either the insurance commissioner or the securities valuation office of the National Association of Insurance Commissioners to meet such standards of financial condition and standing as are considered necessary and appropriate. Funds of a controlling broker not required to be licensed in this state shall be maintained in compliance with the requirements of the controlling broker's domiciliary jurisdiction;
(E) The controlling broker shall maintain separately identifiable records of business written for the controlled insurer;
(F) The contract shall not be assigned in whole or in part by the controlling broker;
(G) The controlled insurer shall provide the controlling broker 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 broker 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 broker other than the controlling broker;
(H) The rates and terms of the controlling broker's commissions, charges or other fees and the purposes for those charges or fees shall be defined in the contract and shall be no greater than those applicable to comparable business placed with the controlled insurer by brokers other than controlling brokers. For purposes of this subsection, "comparable business" includes but is not limited to the same lines of insurance, same kinds of insurance, similar policy limits, similar types of risk and similar quality of business;
(J) If the contract provides that the controlling broker, on insurance business placed with the insurer, is to be compensated contingent upon the insurer's profits on that business, then the compensation shall not be determined and paid until:
(I) The adequacy of the controlled insurer's reserves on remaining claims has been independently verified pursuant to subsection (e) of this section; and
(II) For casualty insurance, at least five (5) years after the premiums are earned; and
(III) On any other insurance, at least one (1) year after the premiums are earned.
(K) The contract shall place a limit on the controlling broker's writings in relation to the controlled insurer's surplus and total writings. The insurer may establish a different limit for each line or subline of business. The controlled insurer shall notify the controlling broker when the applicable limit is approached and shall not accept business from the controlling broker if the limit is reached. The controlling broker shall not place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been reached; and
(M) The controlling broker may negotiate but shall not bind reinsurance on behalf of the controlled insurer on business the controlling broker places with the controlled insurer.
(d) Every controlled insurer shall have an audit committee of the board of directors composed of independent directors. The audit committee shall annually meet with management, the insurer's independent certified public accountants, and an independent casualty actuary or other independent loss reserve specialist acceptable to the commissioner to review the adequacy of the insurer's loss reserves.
(e) In addition to any other required loss reserve certification, the controlled insurer shall annually, on April 1 of each year, file with the commissioner an opinion of an independent casualty actuary or other independent loss reserve specialist acceptable to the commissioner 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 losses incurred but not reported, on business placed by the broker.
(f) The controlled insurer shall annually file a report with the commissioner showing:
(i) The percentage that the amounts specified in paragraphs (ii) through (iv) of this subsection represent of the controlled insurer's net premiums written for each line of insurance;
(ii) The amount of premiums on insurance business placed with the controlled insurer by the controlling broker;
(iii) The amount of commissions, charges or other fees paid by the controlled insurer to the controlling broker during the previous calendar year; and
(iv) The amounts owed to the controlling broker on the business by line of insurance on the annual statement.