Title 8. Entities That Act as Insurers — Subtitle 5. Reinsurance Intermediaries

is organized or, in the case of a United States office of a foreign banking organization, licensed under the laws of the United States or a state;

is regulated, supervised, and examined by the United States or any state by authorities with regulatory authority over banks and trust companies; and

has been determined by the Commissioner or the securities valuation office of the National Association of Insurance Commissioners to meet the standards of financial condition and standing considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the Commissioner.

“Reinsurance broker” means a person that solicits, negotiates, or places reinsurance cessions or retrocessions for a ceding insurer without the authority to bind reinsurance for the ceding insurer.

“Reinsurance broker” does not include an officer or employee of the ceding insurer.

“Reinsurance manager” means a person that:

“Reinsurance manager” does not include:

an authorized insurer; or

an accepted reinsurer approved by the Commissioner.

Except as otherwise provided in paragraph (2) of this subsection, before a person acts as a reinsurance manager or reinsurance broker in the State, the person:

Before a person acts as a reinsurance manager for a reinsurer domiciled in the State, the person must:

This subsection applies to a person that maintains an office in the State either directly or as a member or employee of a firm or association or as an officer, director, or employee of a corporation that maintains an office in the State.

file a bond from an insurer in an amount acceptable to the Commissioner for the protection of each reinsurer that the reinsurance manager represents; and

maintain an errors and omissions policy in an amount acceptable to the Commissioner.

The bond required under subsection (a)(1) of this section must be written by an insurer that is authorized to write surety insurance in the State and is acceptable to the Commissioner.

Subject to the approval of the Commissioner, a reinsurance manager may provide security other than a bond, including an irrevocable letter of credit, to satisfy the requirements of subsection (a)(1) of this section.

On the form that the Commissioner provides, each nonresident applicant for a license must appoint the Commissioner as attorney for service of process issued against the applicant in the State.

The appointment:

Each nonresident applicant for a license shall provide the Commissioner with the name and address of a resident of the State on whom notice and orders of the Commissioner and process issued against the applicant may be served.

file with the Commissioner an application on the form that the Commissioner provides; and

pay to the Commissioner an application fee of $25.

for a firm or association, the name of each member of the firm or association and of each employee of the firm or association who will act as a reinsurance intermediary under the license; and

for a corporation, the name of each officer of the corporation and of each employee and director of the corporation who will act as a reinsurance intermediary under the license.

meets the requirements of this subtitle; and

pays the applicable fee for a license for an insurance producer under § 2-112 of this article.

In this subsection, “controlling person” means a person that directly or indirectly has the power to direct, or cause to be directed, the management, control, or activities of a reinsurance intermediary.

The Commissioner may refuse to issue a license if the Commissioner finds that the applicant, an individual named on the application, a member, principal, officer, or director of the applicant, or a controlling person of the applicant:

On written request, the Commissioner shall provide a summary of the basis for the refusal to issue a license.

The summary of the basis for refusal is privileged and is not a public document under Title 10, Subtitle 6 of the State Government Article.

a renewal application form; and

a notice that states:

otherwise is entitled to be licensed;

files with the Commissioner a renewal application on the form that the Commissioner provides; and

pays to the Commissioner the applicable renewal fee for an insurance producer under § 2-112 of this article.

may impose a penalty not exceeding $5,000 for each violation of this subtitle;

may bring a civil action for the benefit of an insurer or reinsurer and its policyholders and creditors to recover compensatory damages or may seek other appropriate relief; and

may impose any other penalty authorized by this article.

a reinsurance intermediary or other person has failed to comply materially with this subtitle; and

the failure has caused an insurer under an order of rehabilitation or liquidation to suffer a loss or damage.

on written notice, the authorized insurer may terminate at any time the authority of the reinsurance broker to act for it; and

the reinsurance broker shall:

the type of contract, limits, underwriting restrictions, classes or risks, and territory;

the period of coverage, including effective and expiration dates, cancellation provisions, and required notice of cancellation;

the requirements for reporting and settling balances;

the rate used to compute the reinsurance premium;

the names and addresses of assuming reinsurers;

the rates of all reinsurance commissions, including commissions on any retrocessions handled by the reinsurance broker;

proof of placement;

details of retrocessions handled by the reinsurance broker, including the identity of retrocessionaires and the percentage of each contract assumed or ceded;

financial records, including premium and loss accounts; and

any related correspondence and memoranda.

has agreed to accept the risk, if the reinsurance broker, while acting for a ceding authorized insurer, procured a reinsurance contract directly from an assuming reinsurer; and

has delegated binding authority to its representative, if the reinsurance broker, while acting for a ceding authorized insurer, procures a reinsurance contract from a representative, other than an employee, of an assuming reinsurer.

An authorized insurer shall have reasonable access to and the right to copy and audit all accounts and records maintained by the reinsurance broker that relate to business transactions with the authorized insurer.

The reinsurance broker shall maintain accounts and records in a form usable by the authorized insurer.

A person may not act as a reinsurance manager for a reinsurer without a written contract that:

A reinsurance manager may not assign the contract required under this section.

shall state the rates, terms, and purposes of commissions, charges, and other fees that the reinsurance manager may impose against the reinsurer; and

shall provide that:

If the contract required by this section allows the reinsurance manager to settle claims for the reinsurer:

If the Commissioner obtains an order of liquidation, rehabilitation, reorganization, or conservation against a reinsurer, the files become the sole property of the liquidator, rehabilitator, conservator, or receiver.

the adequacy of reserves on remaining claims is verified as provided in § 8-520(a)(3) of this subtitle.

the type of contract, limits, underwriting restrictions, classes or risks, and territory;

the period of coverage, including effective and expiration dates, cancellation provisions, required notice of cancellation, and disposition of outstanding reserves on covered risks;

the requirements for reporting and settling balances;

the rate used to compute the reinsurance premium;

the names and addresses of assuming reinsurers;

the rates of all reinsurance commissions, including commissions on any retrocessions handled by the reinsurance manager;

proof of placement;

details of retrocessions handled by the reinsurance manager, including the identity of retrocessionaires and the percentage of each contract assumed or ceded;

financial records, including premium and loss accounts; and

any related correspondence and memoranda.

has agreed to accept the risk, if the reinsurance manager, while acting for a ceding authorized insurer, procured a reinsurance contract directly from an assuming reinsurer; and

has delegated binding authority to its representative, if the reinsurance manager, while acting for a ceding authorized insurer, procures a reinsurance contract from a representative, other than an employee, of an assuming reinsurer.

except as provided in subsection (b) of this section, may not cede retrocessions for a reinsurer;

may not commit a reinsurer to participate in reinsurance syndicates;

may not appoint or hire an insurance producer to solicit, procure, or negotiate reinsurance contracts for a reinsurer without ensuring that the insurance producer is qualified under Title 10, Subtitle 1 of this article;

may not take an action that would constitute a violation of § 27-503 of this article if taken directly by a reinsurer;

without the reinsurer’s prior written approval, may not pay or commit a reinsurer to pay a claim, net of reinsurance, that exceeds the lesser of 1% of the reinsurer’s policyholder surplus as of the preceding calendar year and an amount specified by the reinsurer;

subject to subsection (b) of this section and without the reinsurer’s prior written approval:

may not appoint a subreinsurance manager; or

may not employ an individual who is also employed by a reinsurer that transacts business with the reinsurance manager, unless the reinsurance manager is under common control with the reinsurer and is subject to Title 7 of this article.

a list of reinsurers with which any automatic agreements are in effect;

the coverages and amounts or percentages that may be reinsured; and

commission schedules.

engage the services of a person to act as a reinsurance broker on its behalf unless the person has complied with this subtitle; or

employ an individual who also is employed by a reinsurance broker that transacts business with the authorized insurer, unless the reinsurance broker is under common control with the authorized insurer and is subject to Title 7 of this article.

In this subsection, “actuary” means an individual who is a member in good standing of the American Academy of Actuaries.

A reinsurer shall obtain annually a copy of statements by an independent certified accountant in a form acceptable to the Commissioner of the financial condition of each reinsurance manager that transacts business with the reinsurer.

If a reinsurance manager is allowed by contract to maintain loss reserves, a reinsurer shall obtain annually the opinion of an independent actuary attesting to the adequacy of the loss reserves established for losses incurred and outstanding on business produced by the reinsurance manager.

A reinsurer shall conduct at least semiannually an on-site review of the underwriting and claims processing operations of the reinsurance manager.

A reinsurer shall notify the Commissioner, in writing, within 30 days after terminating a contract with a reinsurance manager.

A reinsurer may not engage the services of a person to act as a reinsurance manager on its behalf unless the person has complied with this subtitle.

Unless the relationship between the reinsurer and the reinsurance manager is controlled by and disclosed under § 8-106 of this title or Title 7, Subtitles 6 and 7 of this article, a reinsurer may not have on its board of directors an officer, director, employee, agent, or controlling shareholder of its reinsurance manager.

Subject to the hearing provisions of Title 2 of this article, if a reinsurer violates any provision of this subtitle, the reinsurer may be:

In addition to removal as an accepted reinsurer under Title 5, Subtitle 9 of this article, a reinsurer is subject to a civil penalty not exceeding $5,000 for each violation of this subtitle.