Wisconsin Administrative Code
Office of the Commissioner of Insurance
Chapter Ins 45 - Business transacted with producer controlled property or casualty insurer
Section Ins 45.03 - Minimum standards
Current through August 26, 2024
A controlled insurer may not accept business from a controlling producer and a controlling producer may not place business with a controlled insurer unless there is a written contract between the controlling producer and the insurer specifying the responsibilities of each party, the contract is approved by the board of directors of the insurer, the controlling producer complies with the contract and the contract contains at least all of the following minimum provisions:
(1) The controlled insurer may terminate the contract for cause, upon written notice to the controlling producer. The controlled insurer may suspend the authority of the controlling producer to write business during the pendency of any dispute regarding the cause for the termination.
(2) The controlling producer 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 producer.
(3) The controlling producer shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis and funds shall be due so that premiums or installments collected are required to be remitted no later than 90 days after the effective date of any policy placed with the controlled insurer under the contract;
(4) All funds collected for the controlled insurer's account shall be held by the controlling producer in a fiduciary capacity, in accounts in one or more financial institutions that are members of the federal reserve system, except the contract may provide that funds of a controlling producer not required to be licensed in this state may be maintained in compliance with the requirements of the controlling producer's state of domicile.
(5) The controlling producer shall maintain records of business written for the controlled insurer which are separate from the records of other business.
(6) The contract shall not be assigned in whole or in part by the controlling producer.
(7) The controlling producer shall obtain and adhere to the controlling insurer's written underwriting standards, rules, procedures, manuals setting forth the rates to be charged, and the conditions for the acceptance or rejection of risks, rates and conditions and the standards, rules, procedures, rates and conditions shall be the same as those applicable to comparable business placed with the controlled insurer by a producer other than the controlling producer.
(8) The rates and terms of the controlling producer's commissions, charges or other fees and the purposes for those charges or fees. The rates of the commissions, charges and other fees shall be no greater than those applicable to comparable business placed with the controlled insurer by producers other than controlling producers. For purposes of this subsection and sub. (7) "comparable business" includes, but is not limited to, the same lines of insurance, same kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business.
(9) If the contract provides that the controlling producer, on insurance business placed with the insurer, is to be compensated contingent upon the insurer's profits on that business, the contract shall also provide that the compensation shall not be determined and paid until at least 5 years after the premiums on liability insurance are earned and at least one year after the premiums are earned on any other insurance. The contract shall provide that the commissions may not be paid until the adequacy of the controlled insurer's reserves on remaining claims has been independently verified under s. Ins 45.06(1).
(10) A limit on the controlling producer's writings in relation to the controlled insurer's policyholder surplus and total writings. The insurer may establish a different limit for each line or sub-line of business. The controlled insurer shall notify the controlling producer when the applicable limit is approached and shall not accept business from the controlling producer if the limit is reached. The controlling producer shall not place business with the controlled insurer if it has been notified by the controlled insurer or knows or reasonably should know that the limit has been reached.
(11) The controlling producer may negotiate but may not bind reinsurance on behalf of the controlled insurer on business the controlling producer places with the controlled insurer, except that the controlling producer may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the controlled insurer contains underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which the automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules.
