Section 322.3 - Required contract provisionsNo person, firm, association or corporation acting in the capacity of an MGA shall place business with an insurer unless there is in force a written contract between the parties which sets forth the responsibilities of each party, and where both parties share responsibility for a particular function, specifies the division of such responsibilities, and which contains the following minimum provisions:
(1) The insurer may terminate the contract for cause upon written notice to the MGA. The insurer may suspend the underwriting authority of the MGA during the pendency of any dispute regarding the cause for termination.(2) The MGA will 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.(3) All funds collected for the account of an insurer will be held by the MGA 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. The MGA may retain no more than three months' estimated claims payments and allocated loss adjustment expenses.(4) Separate records of business written by the MGA will be maintained. The insurer shall have access and the right to copy all accounts and the records related to its business in a form usable by the insurer, and the department shall have access to all books, bank accounts, and records of the MGA in a form usable to the department. These records shall be retained according to the laws pertaining to the conduct of examinations.(5) The contract may not be assigned in whole or part by the MGA.(6) Appropriate underwriting guidelines, including all of the following:(i) The maximum annual premium volume.(ii) The basis of the rates to be charged.(iii) The types of risks which may be written.(iv) Maximum limits of liability.(v) Applicable exclusions.(vi) Territorial limitations.(vii) Policy cancellation provisions.(viii) The maximum policy period.(7) The insurer shall have the right to cancel or nonrenew any policy of insurance, subject to the applicable laws and regulations concerning the cancellation and nonrenewal of insurance policies.(8) If the contract permits the MGA to settle claims on behalf of the insurer, the following shall apply:(i) All claims must be reported to the company in a timely manner.(ii) A copy of the claim file shall be sent to the insurer at its request or as soon as it becomes known that the claim:(A) has the potential to exceed an amount determined by the commissioner or exceeds the limit set by the company, whichever is less;(B) involves a coverage dispute;(C) may exceed the MGA's claims settlement authority;(D) is open for more than six months; or(E) is closed by payment of an amount set by the department or an amount set by the company, whichever is less.(iii) All claim files shall be the joint property of the insurer and the MGA. However, upon an order of liquidation of the insurer, such files shall become the sole property of the insurer or its estate. The MGA shall have reasonable access to and the right to copy the files on a timely basis.(iv) Any settlement authority granted to the MGA may be terminated for cause upon the insurer's written notice to the MGA 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.(9) When electronic claims files are in existence, the contract must address the timely transmission of the data.(10) If the contract provides for a sharing of interim profits by the MGA and the MGA has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments or in any other manner, interim profits will not be paid to the MGA until one year after they are earned for property insurance business and five years after they are earned on casualty business and not until the profits have been verified pursuant to section 805. 1921, May 17, P.L. 789, No. 285, art. VIII, § 803, added 1992, Dec. 18, P.L. 1469, No. 177, § 12, effective in 120 days.