Wisconsin law defines a managing general agent as a person who manages all or part of the insurance business of an insurer or manages a separate division, department or underwriting office; acts as an agent for the insurer; AND with or without the authority, either separately or together with affiliates, directly or indirectly:
- produces and underwrites in any one quarter or year an amount of gross direct written premium equal to or more than 5% of the policyholder surplus as reported in the last annual statement of the insurer; and
- adjusts or pays claims in any one quarter or year in excess of 3% of the policyholder surplus as reported in the last annual statement of the insurer, or negotiates reinsurance on behalf of the insurer, or both.
No person may act as a managing general agent for an insurer unless the person first enters into and subsequently complies with 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 the responsibilities, and which contains the following minimum provisions:
- The insurer may terminate the contract for cause upon written notice to the managing general agent. The insurer may suspend the underwriting authority of the managing general agent during the pendency of any dispute regarding the cause for termination.
- The managing general agent 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.
- All funds collected for the account of an insurer will be held by the managing general agent in a fiduciary capacity in a financial institution which is a member of the federal reserve system. This account shall be used for all payments on behalf of the insurer. The managing general agent may retain no more than 3 months estimated claims payments and allocated loss adjustment expenses.
- The managing general agent will maintain separate records of business written by the managing general agent for the insurer. The insurer shall have access to, and the right to copy, all accounts and records related to its business in a form usable by the insurer and the commissioner shall have access to all books, bank accounts and records of the managing general in a form usable by the Commissioner. The managing general agent shall retain records for the duration required by law.
- The managing general agent may not assign the contract in whole or in part.
- Appropriate underwriting guidelines include, but are not limited to:
- the maximum annual premium volume;
- the basis of the rates to be charged;
- the types of risks which may be written;
- maximum limits of liability;
- applicable exclusions;
- territorial limitations;
- policy cancellation provisions; and
- the maximum policy period.
- The insurer may cancel or nonrenew any policy of insurance subject to the applicable laws and rules.
- If the contract permits the managing general agent to settle claims on behalf of the insurer:
- the managing general agent shall report all claims to the insurer in a timely manner; and
- shall send a copy of the claim file to the insurer at its request or as soon as it becomes known that the claim has equalled or exceeded or has the potential to equal or exceed an amount which is .5% of the insurer's policyholder surplus as of December 31 of the immediately preceding calendar year or exceeds the limit set by the insurer, whichever is less; involves a coverage dispute; may exceed the managing general agent claims settlement authority; is open for more than 6 months; or is closed by payment of an amount equal to or greater than .5% of the insurer's policyholder surplus as of December 31 of the immediately preceding calendar year or an amount set by the insurer, whichever is less.
- All claim files will be the joint property of the insurer and managing general agent. However, upon an order of liquidation of the insurer the files shall become the sole property of the insurer or its estate. The contract may provide that the managing general agent may have reasonable access to and the right to copy the files on a timely basis.
- Any settlement authority granted to the managing general agent may be terminated for cause upon the insurer's written notice to the managing general agent 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.
- The managing general agent will timely transmit to the insurer appropriate data from electronic claims files.
- If the contract provides for a sharing of interim profits by the managing general agent, and the managing general agent 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 managing general agent until one year after they are earned for property insurance business and 5 years after they are earned on casualty business and not until the profits have been verified as required by law.
- The managing general may not:
- bind reinsurance or retrocessions on behalf of the insurer, except that the managing general agent may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance 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;
- commit the insurer to participate in insurance or reinsurance syndicates;
- appoint any subproducer without assuring that the subproducer is lawfully licensed to transact the type of insurance for which the subproducer is appointed;
- without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which shall not exceed 1% of the insurer's policyholder surplus as of December 31 of the last completed calendar year;
- collect any payment from a reinsurer, or commit the insurer to any claim settlement with a reinsurer, without prior approval of the insurer. If prior approval is given, a report must be promptly forwarded to the insurer;
- permit is subproducer to serve on the insurer's board of directors;
- jointly employ an individual who is employed by the insurer; or
- appoint a submanaging general agent.
Individuals: Resident/Nonresident Managing General Agent License Application, OCI 11-044. Individuals must hold a current intermediary license prior to applying.
Firms: Business Entity Insurance License Application, OCI 11-050.
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