Information Maintained by the Office of Code Revision Indiana Legislative Services Agency
IC 27-6-9
     Chapter 9. Reinsurance Intermediaries

IC 27-6-9-1
Actuary
    
Sec. 1. As used in this chapter, "actuary" means a person who is a member in good standing of the American Academy of Actuaries.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-2
Commissioner
    
Sec. 2. As used in this chapter, "commissioner" refers to the insurance commissioner appointed under IC 27-1-1-2.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-3
Controlling person
    
Sec. 3. As used in this chapter, "controlling person" means any person, firm, association, limited liability company, or corporation who directly or indirectly has the power to direct or cause to be directed, the management, control, or activities of a reinsurance intermediary.
As added by P.L.26-1991, SEC.26. Amended by P.L.8-1993, SEC.423.

IC 27-6-9-4
Insurer
    
Sec. 4. As used in this chapter, "insurer" means any person, firm, association or corporation duly licensed in Indiana pursuant to the applicable provisions of the insurance law as an insurer.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-5
Licensed producer
    
Sec. 5. As used in this chapter, "licensed producer" means an insurance producer, broker, or reinsurance intermediary licensed pursuant to the applicable provision of the insurance law.
As added by P.L.26-1991, SEC.26. Amended by P.L.178-2003, SEC.44.

IC 27-6-9-6
Reinsurance intermediary
    
Sec. 6. As used in this chapter, "reinsurance intermediary" means:
        (1) a reinsurance intermediary-broker; or
        (2) a reinsurance intermediary-manager.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-7
Reinsurance intermediary-broker
    
Sec. 7. As used in this chapter, "reinsurance intermediary-broker"

or, "RB" means any person, other than an officer or employee of the ceding insurer, "firm," association, or corporation who solicits, negotiates, or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of that insurer.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-8
Reinsurance intermediary-manager
    
Sec. 8. (a) As used in this chapter, "reinsurance intermediary-manager" (or, RM) means any person, firm, association or corporation that:
        (1) has authority to bind or manages all or part of the assumed reinsurance business of a reinsurer (including the management of a separate division, department, or underwriting office); and
        (2) acts as an agent for that reinsurer;
whether known as a RM, manager, or other similar term.
    (b) Notwithstanding subsection (a), the following persons may not be considered a RM, with respect to a reinsurer, for the purposes of this chapter:
        (1) An employee of the reinsurer.
        (2) A United States manager of the United States branch of an alien reinsurer.
        (3) An underwriting manager which, pursuant to contract:
            (A) manages all or part of the reinsurance operations of the reinsurer;
            (B) is under common control with the reinsurer, subject to IC 27-1-23; and
            (C) whose compensation is not based on the volume of premiums written.
        (4) The manager of a group, association, pool, or organization of insurers which engage in joint underwriting or joint reinsurance and who are subject to examination by the insurance commissioner of the state in which the manager's principal business office is located.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-9
Reinsurer
    
Sec. 9. As used in this chapter, "reinsurer" means any person, firm, association, or corporation duly licensed in Indiana pursuant to the applicable provisions of the insurance law as an insurer with the authority to assume reinsurance.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-10
To be in violation
    
Sec. 10. As used in this chapter, "to be in violation" means that the reinsurance intermediary, insurer, or reinsurer for whom the reinsurance intermediary was acting failed to substantially comply

with the provisions of this chapter.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-11
Qualified United States financial institution
    
Sec. 11. As used in this chapter, "qualified United States financial institution" means an institution that:
        (1) 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 any state;
        (2) is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies; and
        (3) has been determined by:
            (A) the commissioner; or
            (B) the Securities Valuation Office of the National Association of Insurance Commissioners;
        to meet such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the commissioner.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-12
Reinsurance intermediary-broker; requirements
    
Sec. 12. No person, firm, association, or corporation may act as a RB in Indiana if the RB maintains an office either directly, or as a member or employee of a firm or association, or as an officer, director, or employee of a corporation:
        (1) in Indiana, unless the RB is a licensed producer in Indiana; or
        (2) in another state, unless the RB:
            (A) is a licensed producer in Indiana or another state having a law substantially similar to this chapter; or
            (B) is licensed in Indiana as a nonresident reinsurance intermediary.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-13
Reinsurance intermediary-manager; requirements
    
Sec. 13. No person, firm, association, or corporation may act as a RM:
        (1) for a reinsurer domiciled in this state, unless the RM is a licensed producer in this state;
        (2) in this state, if the RM maintains an office either directly, or as a member or employee of a firm, limited liability company, or association, or as an officer, director, or employee of a corporation in this state, unless the RM is a licensed producer in this state;
        (3) in another state for a nondomestic insurer, unless the RM is:


            (A) a licensed producer in Indiana or another state having a law substantially similar to this chapter; or
            (B) the person is licensed in this state as a nonresident reinsurance intermediary.
As added by P.L.26-1991, SEC.26. Amended by P.L.8-1993, SEC.424.

IC 27-6-9-14
Bond; errors and omissions policy
    
Sec. 14. The commissioner may require a RM subject to section 13 of this chapter to:
        (1) file a bond from an insurer in an amount acceptable to the commissioner for the protection of the reinsurer; and
        (2) maintain an errors and omissions policy in an amount acceptable to the commissioner.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-15
Reinsurance intermediary license; issuance; application; authority to act; nonresidents
    
Sec. 15. (a) The commissioner may issue a reinsurance intermediary license to any person, firm, association, or corporation who has complied with the requirements of this chapter. Any license issued to a firm or association under this section authorizes all the members of the firm or association and any designated employees to act as reinsurance intermediaries under the license, and all such persons must be named in the application and any supplements thereto. Any license issued to a corporation under this section authorizes all of the officers of the corporation, and any designated employees and directors of the corporation, to act as reinsurance intermediaries on behalf of the corporation, and all such persons must be named in the application and any supplements thereto.
    (b) If the applicant for a reinsurance intermediary license is a nonresident, the applicant, as a condition precedent to receiving or holding a license, must:
        (1) designate the commissioner as agent for service of process in the manner, and with the same legal effect, provided for by this chapter for designation of service of process upon unauthorized insurers; and
        (2) furnish the commissioner with the name and address of a resident of Indiana upon whom notices or orders of the commissioner or process affecting such nonresident reinsurance intermediary may be served.
    (c) A licensee who receives a license under subsection (b) shall promptly notify the commissioner in writing of every change in its designated agent for service of process, and a change in the licensee's designated agent does not become effective until acknowledged by the commissioner.
As added by P.L.26-1991, SEC.26.


IC 27-6-9-16
Refusal to issue license; conditions; summary
    
Sec. 16. (a) The commissioner may refuse to issue a reinsurance intermediary license if, in the commissioner's judgment:
        (1) the applicant, anyone named on the application, or any member, principal, officer, or director of the applicant, is not trustworthy;
        (2) any controlling person of the applicant is not trustworthy to act as a reinsurance intermediary; or
        (3) any of the foregoing has given cause for revocation or suspension of such license, or has failed to comply with any prerequisite for the issuance of such license.
    (b) Upon written request therefor, the commissioner shall furnish a summary of the basis for refusal to issue a license. A summary furnished under this subsection is declared confidential for the purposes of IC 5-14-3-4(a)(1) and is not subject to inspection and copying as a public record.
As added by P.L.26-1991, SEC.26. Amended by P.L.1-2002, SEC.110.

IC 27-6-9-17
Attorneys; exemptions
    
Sec. 17. Attorneys licensed to practice in Indiana, when acting in their professional capacity, are exempt from sections 12 through 16 of this chapter.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-18
Transactions between reinsurance intermediary-broker and insurer; written authorization; contents
    
Sec. 18. Transactions between a RB and the insurer it represents in the capacity of RB shall only be entered into pursuant to a written authorization, specifying the responsibilities of each party. The authorization shall, at a minimum, contain provisions stating the following:
        (1) The insurer may terminate the RB's authority at any time.
        (2) The RB will:
            (A) render accounts to the insurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to, the RB; and
            (B) remit all funds due to the insurer within thirty (30) days of receipt.
        (3) All funds collected for the insurer's account will be held by the RB in a fiduciary capacity in a bank which is a qualified United States financial institution.
        (4) The RB will comply with section 19 of this chapter.
        (5) The RB will comply with the written standards established by the insurer for the cession or retrocession of all risks.
        (6) The RB will disclose to the insurer any relationship with

any reinsurer to which business will be ceded or retroceded.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-19
Record of transactions; contents; insurer access
    
Sec. 19. (a) For at least ten (10) years after the expiration of each contract of reinsurance transacted by the RB, the RB will keep a complete record for each transaction showing the following:
        (1) The type of contract, limits, underwriting restrictions, classes or risks and territory.
        (2) Period of coverage, including effective and expiration dates, cancellation provisions, and notice required of cancellation.
        (3) Reporting and settlement requirements of balances.
        (4) Rate used to compute the reinsurance premium.
        (5) Names and addresses of assuming reinsurers.
        (6) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RB.
        (7) Related correspondence and memoranda.
        (8) Proof of placement.
        (9) Details regarding retrocessions handled by the RB, including the identity of retrocessionaires and percentage of each contract assumed or ceded.
        (10) Financial records, including but not limited to, premium and loss accounts.
        (11) When the RB procures a reinsurance contract on behalf of a licensed ceding insurer:
            (A) directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or
            (B) if placed through a representative of the assuming reinsurer, other than an employee, written evidence that the reinsurer has delegated binding authority to the representative.
    (b) The insurer shall have access to and the right to copy and audit all accounts and records maintained by the RB related to its business in a form usable by the insurer.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-20
Engagement of services of reinsurance intermediary-broker; employment of an individual employed by an RB; financial condition; requirements
    
Sec. 20. (a) An insurer may not engage the services of any person, firm, association, or corporation to act as a RB on its behalf unless such person is licensed as required by section 12 of this chapter.
    (b) An insurer may not employ an individual who is employed by a RB with which it transacts business unless the RB is under common control with the insurer and subject to IC 27-1-23.
    (c) The insurer shall annually obtain a copy of statements of the financial condition of each RB with which it transacts business.
As added by P.L.26-1991, SEC.26.



IC 27-6-9-21
Transactions between reinsurance intermediary-manager and reinsurer; written contract; contents
    
Sec. 21. Transactions between a RM and the reinsurer it represents in the capacity of RM may only be entered into pursuant to a written contract, specifying the responsibilities of each party, which must be approved by the reinsurer's board of directors. At least thirty (30) days before a reinsurer assumes or cedes business through a RM, a true copy of the approved contract must be filed with the commissioner for approval. The contract must, at a minimum, contain provisions that state the following:
        (1) The reinsurer may terminate the contract for cause upon written notice to the RM, and may suspend the authority of the RM to assume or cede business during the pendency of any dispute regarding the cause for termination.
        (2) The RM will:
            (A) render accounts to the reinsurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to, the RM; and
            (B) remit all funds due under the contract to the reinsurer on not less than a monthly basis.
        (3) All funds collected for the reinsurer's account will be held by the RM in a fiduciary capacity in a bank which is a qualified United States financial institution. The RM may retain no more than three (3) months estimated claims payments and allocated loss adjustment expenses. The RM shall maintain a separate bank account for each reinsurer that it represents.
        (4) For at least ten (10) years after expiration of each contract of reinsurance transacted by the RM, the RM will keep a complete record for each transactions showing the following:
            (A) The type of contract, limits, underwriting restrictions, classes or risks, and territory.
            (B) Period of coverage, including effective and expiration dates, cancellation provisions and notice required of cancellation, and disposition of outstanding reserves on covered risks.
            (C) Reporting and settlement requirements of balances.
            (D) Rate used to compute the reinsurance premium.
            (E) Names and addresses of reinsurers.
            (F) Rates of all reinsurance commissions, including the commissions on any retrocessions handled by the RM.
            (G) Related correspondence and memoranda.
            (H) Proof of placement.
            (I) Details regarding retrocessions handled by the RM, as permitted by section 23(d) of this chapter, including the identity of retrocessionaires and percentage of each contract assumed or ceded.
            (J) Financial records, including premium and loss accounts.
            (K) When the RM places a reinsurance contract on behalf of

a ceding insurer:
                (i) directly from any assuming reinsurer, written evidence that the assuming reinsurer has agreed to assume the risk; or
                (ii) if placed through a representative of the assuming reinsurer, other than an employee, written evidence that the reinsurer has delegated binding authority to the representative.
        (5) The reinsurer will have access and the right to copy all accounts and records maintained by the RM related to its business in a form usable by the reinsurer.
        (6) The contract cannot be assigned in whole or in part by the RM.
        (7) The RM will comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection, or cession of all risks.
        (8) The rates, terms, and purposes of commissions, charges, and other fees which the RM may levy against the reinsurer.
        (9) If the contract permits the RM to settle claims on behalf of the reinsurer the following apply:
            (A) All claims will be reported to the reinsurer in a timely manner.
            (B) A copy of the claim file will be sent to the reinsurer at its request or as soon as it becomes known that the claim:
                (i) has the potential to exceed the lesser of an amount determined by the commissioner or the limit set by the reinsurer;
                (ii) involves a coverage dispute;
                (iii) may exceed the RM's claims settlement authority;
                (iv) is open for more than six (6) months; or
                (v) is closed by payment of the lesser of an amount set by the commissioner or an amount set by the reinsurer.
            (C) All claim files will be the joint property of the reinsurer and RM. However, upon an order of liquidation of the reinsurer, the files shall become the sole property of the reinsurer or its estate, and the RM shall have reasonable access to and the right to copy the files on a timely basis.
            (D) Any settlement authority granted to the RM may be terminated for cause upon the reinsurer's written notice to the RM or upon the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of the dispute regarding the cause of termination.
        (10) If the contract provides for a sharing of interim profits by the RM, that those interim profits will not be paid until one (1) year after the end of each underwriting period for property business and five (5) years after the end of each underwriting period for casualty business (or a later period set by the commissioner for specified lines of insurance) and not until the adequacy of reserves on remaining claims has been verified under section 23(c) of this chapter.


        (11) The RM will annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant.
        (12) The reinsurer shall periodically (at least semiannually) conduct an on-site review of the underwriting and claims processing operations of the RM.
        (13) The RM will disclose to the reinsurer any relationship it has with any insurer prior to ceding or assuming any business with that insurer pursuant to the contract.
        (14) The acts of the RM shall be considered to be the acts of the reinsurer on whose behalf the RM is acting.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-22
Binding of retrocessions on behalf of reinsurers by RM; conditions; reinsurance syndicates; appointment of producers; payment of claims; collection of payment; settlements; employment of reinsurer employee; sub-RMs
    
Sec. 22. (a) A RM may not bind retrocessions on behalf of the reinsurer, except that the RM may bind facultative retrocessions pursuant to obligatory facultative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for such retrocessions. Guidelines referred to in this subsection must include a list of reinsurers with which the automatic agreements are in effect, and, for each such reinsurer, the coverages and amounts or percentages that may be reinsured, and commission schedules.
    (b) A RM may not commit the reinsurer to participate in reinsurance syndicates.
    (c) A RM may not appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which the producer is appointed.
    (d) A RM may not, without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of:
        (1) an amount specified by the reinsurer; or
        (2) one percent (1%) of the reinsurer's policyholder's surplus as of December 31 of the last complete calendar year before the payment or commitment.
    (e) A RM may not collect any payment from a retrocessionaire or commit the reinsurer to any claim settlement with a retrocessionaire without prior approval of the reinsurer. If prior approval is given, a report must be promptly forwarded to the reinsurer.
    (f) A RM may not jointly employ an individual who is employed by the reinsurer.
    (g) A RM may not appoint a sub-RM.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-23
Engagement of services of a reinsurance intermediary-manager; statement of financial condition; loss reserves; authority to

contract; termination; board of directors
    
Sec. 23. (a) A reinsurer may not engage the services of any person, firm, association, or corporation to act as a RM on its behalf unless the person engaged is licensed as required by section 13 of this chapter.
    (b) A reinsurer shall annually obtain a copy of statements of the financial condition of each RM which the reinsurer has engaged, prepared by an independent certified accountant in a form acceptable to the commissioner.
    (c) If a RM establishes loss reserves, the reinsurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the RM. This opinion shall be in addition to any other required loss reserve certification.
    (d) Binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer, who must not be affiliated with the RM.
    (e) Within thirty (30) days of termination of a contract with a RM, the reinsurer shall provide written notification of the termination to the commissioner.
    (f) A reinsurer may not appoint to its board of directors any officer, director, employee, controlling shareholder, or subproducer of its RM. This subsection does not apply to relationships governed by IC 27-1-23.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-24
Examination by commissioner; access to records
    
Sec. 24. (a) A reinsurance intermediary is subject to examination by the commissioner. The commissioner shall have access to all books, bank accounts, and records of the reinsurance intermediary in a form usable to the commissioner.
    (b) A RM may be examined as if it were the reinsurer.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-25
Violations; penalties; review; effect on third parties
    
Sec. 25. (a) A reinsurance intermediary, insurer, or reinsurer found by the commissioner, after a hearing conducted in accordance with IC 4-21.5, to be in violation of any provision of this chapter, shall:
        (1) for each separate violation, pay an administrative penalty in an amount not exceeding five thousand dollars ($5,000);
        (2) be subject to revocation or suspension of its license; and
        (3) if a violation was committed by the reinsurance intermediary, the reinsurance intermediary shall make restitution to the insurer, reinsurer, rehabilitator, or liquidator of the insurer or reinsurer for the net losses incurred by the insurer or reinsurer attributable to the reinsurance intermediary's violation.


    (b) The decision, determination, or order of the commissioner pursuant to subsection (a) is subject to judicial review pursuant to IC 4-21.5.
    (c) Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided by law.
    (d) Nothing contained in this chapter is intended to, or shall in any manner, limit or restrict the rights of policyholders, claimants, creditors, or other third parties, or confer any rights upon those persons.
As added by P.L.26-1991, SEC.26.

IC 27-6-9-26
Rules for implementation and administration of chapter
    
Sec. 26. The commissioner may adopt rules under IC 4-22-2 for the implementation and administration of this chapter.
As added by P.L.26-1991, SEC.26.