40-2,133. Same; utilization by insurer; acts required to be performed by and prohibitions on insurer.
40-2,133
40-2,133. Same; utilization by insurer; acts required to be performed byand prohibitions on insurer.(a) No insurer may utilize or continue to utilize the services of an MGA on andafter the effective date of this act unless such utilization is in compliancewith this act.
(b) The insurer shall have on file an independent financial examinationin a form acceptable to the commissioner of each MGA with which it has donebusiness.
(c) If an MGA establishes loss reserves, the insurer shall annuallyobtain the opinion of an actuary attesting to the adequacy of loss reservesestablished for losses incurred and outstanding on business produced by theMGA. Such requirement shall be in addition to any other required lossreserve certification.
(d) The insurer shall periodically, but not less frequently thansemi-annually, conduct an on-site review of the underwriting and claimsprocessing operations of the MGA.
(e) Binding authority for all reinsurance contracts or participation ininsurance or reinsurance syndicates shall rest with an officer of theinsurer who shall not be affiliated with the MGA.
(f) Within 30 days of entering into or termination of a contract with anMGA, the insurer shall provide written notification of such appointment ortermination to the commissioner. Notices of appointment of an MGA shallinclude (1) a statement of duties which the applicant is expected toperform onbehalf of the insurer, (2) the lines of insurance for which the applicantis tobe authorized to act, (3) a notification fee in the amount of $100, (4) andany other information the commissioner may request.
(g) An insurer shall each quarter review its books and records todetermine if any agent or broker has become, by operation of subsection (d) ofK.S.A. 40-2,130 and amendments thereto, an MGA asdefined in that subsection. If theinsurer determines that an agent or broker has become an MGA pursuant to theabove, the insurer shall promptly notify the agent or broker and thecommissioner of such determination, and the insurer and agent or broker shallfully comply with the provisions of this act within 30 days.
(h) An insurer shall not appoint to its board of directors an officer,director, employee or controlling shareholder of its MGAs. This subsectionshall not apply to relationships governed by the applicable provisions ofarticle 33 of chapter 40 of the Kansas Statutes Annotated.
History: L. 1990, ch. 158, § 5;L. 1992, ch. 154, § 4; July 1.