(a) (1) The provisions of this section shall apply if, in any calendar year, the aggregate amount of gross written premium of business placed with a controlled insurer by a controlling producer is equal to or greater than 5 percent of the admitted assets of the controlled insurer, as reported in the controlled insurersâ quarterly statement filed as of September 30 of the prior year. (2) Notwithstanding paragraph (1) of subdivision (a), the provisions of this section shall not apply if: (A) The controlling producer both (i) places insurance only with the controlled insurer, or only with the controlled insurer and a member or members of the controlled insurerâs holding company system, or the controlled insurerâs parent, affiliate, or subsidiary and receives no compensation based upon the amount of premiums written in connection with that insurance; and (ii) accepts insurance placements only from nonaffiliated subproducers, and not directly from insureds. (B) The controlled insurer, except for insurance business written through a residual market facility such as the California Automobile Assigned Risk Plan, accepts insurance business only from a controlling producer, a producer controlled by the controlled insurer, or a producer that is a subsidiary of the controlled insurer. (b) A controlled insurer shall not accept business from a controlling producer and a controlling producer shall 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, and the contract has been approved by the board of directors of the insurer and contains the following minimum provisions: (1) The controlled insurer may terminate the contract for cause upon written notice to the controlling producer. The controlled insurer shall 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. The due date shall be fixed so that premiums or installments of premiums collected shall be remitted no later than 90 days after the effective date of any policy placed with the controlled insurer under this contract. (4) All funds collected for the controlled insurerâs account shall be held by the controlling producer in a fiduciary capacity, in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System, in accordance with the provisions of the insurance law as applicable. However, funds of a controlling producer not required to be licensed in this state shall be maintained in compliance with the requirements of the controlling producerâs domiciliary jurisdiction. (5) The controlling producer shall maintain separately identifiable records of business written for the controlled insurer. (6) The contract shall not be assigned in whole or in part by the controlling producer. (7) The controlled insurer shall provide the controlling producer 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 producer 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 producer other than the controlling producer. (8) The rates and terms of the controlling producerâs commissions, charges or other fees, and the purposes for those charges or fees. The rat
‹ Prev All California sections Next ›
Lexace provides legal information, not legal advice, and no attorney–client relationship is created. Statute text is provided for general information and may not reflect the most recent amendments; verify against the official state code.