History: L. 1992, ch. 15, § 1; Dec. 31.
(a) "Actuary" means a person who is a member in good standing of the American academy of actuaries.
(b) "Controlling person" means any person, firm, association or corporation who directly or indirectly has the power to direct or cause to be directed, the management, control or activities of the reinsurance intermediary.
(c) "Insurer" means any person, firm, association or corporation duly licensed in this state, pursuant to chapter 40 of the Kansas Statutes Annotated, as an insurer.
(d) "Licensed producer" means an agent or reinsurance intermediary licensed pursuant to the applicable provision of the Kansas Statutes Annotated.
(e) "Reinsurance intermediary" means a reinsurance intermediary-broker or a reinsurance intermediary-manager as these terms are defined in subsections (f) and (g).
(f) "Reinsurance intermediary-broker" or "reinsurance broker" 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 such insurer.
(g) "Reinsurance intermediary-manager" or "reinsurance manager" means any person, firm, association or corporation who 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 acts as an agent for such reinsurer whether known as a reinsurance manager, manager or other similar term. Notwithstanding the above, the following persons shall not be considered a reinsurance manager, with respect to such reinsurer, for the purposes of this act:
(1) An employee of the reinsurer;
(2) a U.S. manager of the United States branch of an alien reinsurer;
(3) an underwriting manager who, pursuant to contract, manages all the reinsurance operations of the reinsurer, is under common control with the reinsurer, subject to the holding company act, and 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 chief insurance regulatory official of the state in which the manager's principal business office is located.
(h) "Reinsurer" means any person, firm, association or corporation duly licensed in this state pursuant to chapter 40 of the Kansas Statutes Annotated as an insurer with the authority to assume reinsurance.
(i) "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 act.
(j) For purposes of this act, a "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 thereof;
(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 either the commissioner, or 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.
(k) "Commissioner" means the commissioner of insurance of this state.
History: L. 1992, ch. 15, § 2; L. 2005, ch. 163, § 8; July 1.
(1) In this state, unless such reinsurance broker is a licensed producer in this state; or
(2) in another state, unless such reinsurance broker is a licensed producer in this state or another state having a law substantially similar to this act or such reinsurance broker is licensed in this state as a nonresident reinsurance intermediary.
(b) No person, firm, association or corporation shall act as a reinsurance manager:
(1) For a reinsurer domiciled in this state, unless such reinsurance manager is a licensed producer in this state;
(2) in this state, if the reinsurance manager maintains an office either directly or as a member or employee of a firm or association, or an officer, director or employee of a corporation in this state, unless such reinsurance manager is a licensed producer in this state;
(3) in another state for a nondomestic insurer, unless such reinsurance manager is a licensed producer in this state or another state having a law substantially similar to this act or such person is licensed in this state as a nonresident reinsurance intermediary.
(c) The commissioner may require a reinsurance manager subject to subsection (b) to file a bond in an amount from an insurer acceptable to the commissioner for the protection of each reinsurer represented.
(d) (1) The commissioner may issue a reinsurance intermediary license to any person, firm, association or corporation who has complied with the requirements of this act. Before any such license may be issued, the applicant shall submit proper application therefor on a form prescribed by the commissioner which shall be accompanied by an initial fee of $150. Any license so issued shall remain in effect until suspended, revoked, voluntarily surrendered or otherwise terminated by the commissioner or licensee subject to payment of an annual continuation fee of $100 on or before May 1 of each year. Any such license issued to a firm or association will authorize all the members of such firm or association and any designated employees to act as reinsurance intermediaries under the license, and all such persons shall be named in the application and any supplements thereto. Any such license issued to a corporation shall authorize all of the officers, and any designated employees and directors thereof, to act as reinsurance intermediaries on behalf of such corporation, and all such persons shall be named in the application and any supplements thereto.
(2) If the applicant for a reinsurance intermediary license is a nonresident, such applicant, as a condition precedent to receiving or holding a license, shall designate the commissioner as agent for service of process in the manner, and with the same legal effect, as is provided for by this act for designation of service of process upon insurers holding a Kansas certificate of authority. Such applicant shall furnish the commissioner with the name and address of a resident of this state upon whom notices or orders of the commissioner or process affecting such nonresident reinsurance intermediary may be served. Such licensee shall promptly notify the commissioner in writing of every change in its designated agent for service of process, and such change shall not become effective until acknowledged by the commissioner.
(e) The commissioner may, after a hearing conducted in accordance with the provisions of the Kansas administrative procedure act, held on not less than 20 days notice, refuse to issue a reinsurance intermediary license if, in the judgment of the commissioner, the applicant, any one named on the application, or any member, principal, officer or director of the applicant, is not trustworthy, or any controlling person of such applicant is not trustworthy to act as a reinsurance intermediary, or 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.
(f) Licensed attorneys at law in this state when acting in their professional capacity as such shall be exempt from this section.
History: L. 1992, ch. 15, § 3; L. 2004, ch. 159, § 4; May 27.
(a) The insurer may terminate the reinsurance broker's authority at any time;
(b) the reinsurance broker shall 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 reinsurance broker, and remit all funds due to the insurer within 30 days of receipt;
(c) all funds collected for the insurer's account shall be held by the reinsurance broker in a fiduciary capacity in a bank which is a qualified United States financial institution as defined herein;
(d) the reinsurance broker shall comply with K.S.A. 40-4505;
(e) the reinsurance broker shall comply with the written standards established by the insurer for the cession or retrocession of all risks; and
(f) the reinsurance broker shall disclose to the insurer any relationship with any reinsurer to which business will be ceded or retroceded.
History: L. 1992, ch. 15, § 4; Dec. 31.
(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 reinsurance broker;
(7) related correspondence and memoranda;
(8) proof of placement;
(9) details regarding retrocessions handled by the reinsurance broker including the identity of retrocessionaires and percentages of each contract assumed or ceded;
(10) financial records, including but not limited to, premium and loss accounts; and
(11) when the reinsurance broker 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 such reinsurer has delegated binding authority to the representative.
(b) The insurer shall have access and the right to copy and audit all accounts and records maintained by the reinsurance broker related to its business in a form usable by the insurer.
History: L. 1992, ch. 15, § 5; Dec. 31.
(b) An insurer may not employ an individual who is employed by a reinsurance broker with which it transacts business, unless such reinsurance broker is under common control with the insurer and subject to the holding company act.
(c) The insurer shall annually obtain a copy of statements of the financial condition of each reinsurance broker with which it transacts business.
History: L. 1992, ch. 15, § 6; Dec. 31.
(a) The reinsurer may terminate the contract for cause upon written notice to the reinsurance manager. The reinsurer may immediately suspend the authority of the reinsurance manager to assume or cede business during the pendency of any dispute regarding the cause for termination;
(b) the reinsurance manager will 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 reinsurance manager, and remit all funds due under the contract to the reinsurer on not less than a monthly basis;
(c) all funds collected for the reinsurer's account will be held by the reinsurance manager in a fiduciary capacity in a bank which is a qualified United States financial institution as defined herein. The reinsurance manager may retain no more than three months estimated claims payments and allocated loss adjustment expenses. The reinsurance manager shall maintain a separate bank account for each reinsurer that it represents;
(d) for at least 10 years after expiration of each contract of reinsurance transacted by the reinsurance manager, the reinsurance manager shall keep a complete record for each transaction showing:
(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, and disposition of outstanding reserves on covered risks;
(3) reporting and settlement requirements of balances;
(4) rate used to compute the reinsurance premium;
(5) names and addresses of reinsurers;
(6) rates of all reinsurance commissions, including the commissions on any retrocessions handled by the reinsurance manager;
(7) related correspondence and memoranda;
(8) proof of placement;
(9) details regarding retrocessions handled by the reinsurance manager, as permitted by subsection (d) of K.S.A. 40-4509, 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; and
(11) when the reinsurance manager places a reinsurance contract on behalf of a 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 such reinsurer has delegated binding authority to the representative.
(e) the reinsurer shall have access and the right to copy all accounts and records maintained by the reinsurance manager related to its business in a form usable by the reinsurer;
(f) the contract cannot be assigned in whole or in part by the reinsurance manager;
(g) the reinsurance manager shall comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection or cession of all risks;
(h) sets forth the rates, terms and purposes of commissions, charges and other fees which the reinsurance manager may levy against the reinsurer;
(i) if the contract permits the reinsurance manager to settle claims on behalf of the reinsurer:
(1) All claims shall be reported to the reinsurer in a timely manner;
(2) a copy of the claim file shall be sent to the reinsurer at its request or as soon as it becomes known that the claim:
(A) Has the potential to exceed the lesser of an amount determined by the commissioner or the limit set by the reinsurer;
(B) involves a coverage dispute;
(C) may exceed the reinsurance manager's claims settlement authority;
(D) is open for more than six months; or
(E) is closed by payment of the lesser of an amount set by the commissioner or an amount set by the reinsurer;
(3) all claim files will be the joint property of the reinsurer and reinsurance manager. However, upon an order of liquidation of the reinsurer such files shall become the sole property of the reinsurer or its estate; the reinsurance manager shall have reasonable access to and the right to copy the files on a timely basis;
(4) any settlement authority granted to the reinsurance manager may be terminated for cause upon the reinsurer's written notice to the reinsurance manager 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.
(j) if the contract provides for a sharing of interim profits by the reinsurance manager, that such interim profits will not be paid until one year after the end of each underwriting period for property business and five years after the end of each underwriting period for casualty business and not until the adequacy of reserves on remaining claims has been verified pursuant to subsection (c) of K.S.A. 40-4509;
(k) the reinsurance manager shall annually provide the reinsurer with a statement of its financial condition prepared by an independent certified accountant;
(l) the reinsurer shall periodically but not less than semiannually, conduct an on-site review of the underwriting and claims processing operations of the reinsurance manager;
(m) the reinsurance manager shall disclose to the reinsurer any relationship it has with any insurer prior to ceding or assuming any business with such insurer pursuant to this contract;
(n) within the scope of its actual or apparent authority the acts of the reinsurance manager shall be deemed to be the acts of the reinsurer on whose behalf it is acting.
History: L. 1992, ch. 15, § 7; Dec. 31.
(a) Cede retrocessions on behalf of the reinsurer, except that the reinsurance manager may cede faculative retrocessions pursuant to obligatory faculative agreements if the contract with the reinsurer contains reinsurance underwriting guidelines for such retrocessions. Such guidelines shall include a list of reinsurers with which such automatic agreements are in effect, and for each such reinsurer, the coverages and amounts or percentages that may be reinsured, and commission schedules;
(b) commit the reinsurer to participate in reinsurance syndicates;
(c) appoint any producer without assuring that the producer is lawfully licensed to transact the type of reinsurance for which such producer is appointed;
(d) without prior approval of the reinsurer, pay or commit the reinsurer to pay a claim, net of retrocessions, that exceeds the lesser of an amount specified by the reinsurer or one percent of the reinsurer's policyholder's surplus as of December 31 of the last complete calendar year;
(e) 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) jointly employ an individual who is employed by the reinsurer unless such reinsurance manager is under common control with the reinsurer subject to the holding company act;
(g) appoint a sub-reinsurance manager.
History: L. 1992, ch. 15, § 8; Dec. 31.
(b) The reinsurer shall annually obtain a copy of statements of the financial condition of each reinsurance manager which such reinsurer has engaged to be prepared by an independent certified accountant in a form acceptable to the commissioner.
(c) If a reinsurance manager 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 reinsurance manager. 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 shall not be affiliated with the reinsurance manager.
(e) Within 30 days of termination of a contract with a reinsurance manager, the reinsurer shall provide written notification of such termination to the commissioner.
(f) A reinsurer shall not appoint to its board of directors, any officer, director, employee, controlling shareholder or subproducer of its reinsurance manager. This subsection shall not apply to relationships governed by the holding company act or, if applicable, the broker controlled insurer act.
History: L. 1992, ch. 15, § 9; Dec. 31.
(b) A reinsurance manager may be examined as if it were the reinsurer.
History: L. 1992, ch. 15, § 10; Dec. 31.
History: L. 1992, ch. 15, § 11; Repealed, L. 1997, ch. 24, § 7; July 1.
History: L. 1992, ch. 15, § 12; Dec. 31.
History: L. 1992, ch. 15, § 13; Dec. 31.