Kan. Admin. Regs. § 40-3-48 - Insurance companies; managing general agents; definitions; requirements
(a) The terms
"managing general agent" and "MGA," as defined in
K.S.A. 40-2,130(d) and amendments
thereto, shall include any person who, in addition to the criteria set forth in
that statute, adjusts or pays any claim in excess of $10,000 per claim or
negotiates reinsurance on behalf of the insurer.
(b) The term "total annual written premium"
shall include all direct premiums written by a managing general agent
regardless of where the risks are located.
(c)
(1) Each
managing general agent shall acquire and maintain a fidelity bond for the
protection of the insurer contracting with the managing general agent. The bond
shall be in the amount of at least $100,000 or 10 percent of the managing
general agent's total annual written premium nationwide that was produced by
the MGA for the insurer in the prior calendar year. The bond shall not exceed
$500,000. The bond amount shall be adjusted accordingly on or before April 1 of
each year.
(2) Coverage shall not
be written by the insurer or an affiliate of the insurer contracting with the
managing general agent. The bond shall be executed by a fidelity insurer
admitted to do business in Kansas, or an insurer appearing on the list
maintained by the commissioner pursuant to
K.S.A. 40-246e and amendments thereto, on a form
supplied by the department.
(3) A
copy of the executed bond shall be filed with the department.
(d) Each contract entered into
between a managing general agent and a domestic insurer shall be retained by
the insurer.
(e) Each managing
general agent shall keep the usual and customary records pertaining to
transactions taking place under the managing general agent agreements at the
managing general agent's place of business. All books, bank accounts, and
records shall be kept available and open to the inspection of the commissioner
or the commissioner's representatives at any time during business hours. These
records shall be retained by the managing general agent until the insurer and
the business to which the records pertain has been the subject of an
examination pursuant to the provisions of
K.S.A. 40-222 and amendments thereto.
(f) If the contract between an insurer and a
managing general agent is terminated for any reason, the managing general agent
shall, upon request of the insurer, deliver all records to the insurer within
90 days of the request.
(g) Each
managing general agent shall send the insurer a claim file when the managing
general agent first knows that the claim might exceed a limit set by the
insurer, or one-quarter of one percent of the policyholder surplus as reported
in the last annual statement of the insurer, whichever is less.
(h) Each managing general agent shall send
the insurer a claim file when the managing general agent first knows that the
claim file is closed by payment of an amount set by the insurer, or an amount
in excess of one-quarter of one percent of the policyholder surplus as reported
in the last annual statement of the insurer, whichever is less.
(i) Each insurer licensed to write business
in the state of Kansas shall file with the department, on or before March 1 of
each year, a current list of names and addresses of all managing general agents
with which the insurer has a contract and the name of an officer of the insurer
responsible for the contract. The insurer shall provide written notification of
changes to the list on a continuing basis.
(j) An independent audit by a certified
public accountant shall be conducted annually upon managing general agents
currently under contract and shall be contracted for by the insurer. The
independent audit shall include the following:
(1) A report of an independent certified
public accountant;
(2) a balance
sheet;
(3) a statement of income;
(4) a statement of cash flows;
(5) a statement of income and
retained earnings;
(6) the notes
to financial statements required by generally accepted accounting principles;
and
(7) a listing of all
exceptions and internal control weaknesses noted in the course of the audit.
(k) Each insurer shall
retain a current independent audit report by a certified public accountant of
each managing general agent with which the insurer has done business.
(l) The authority to examine a
managing general agent shall be retained by the commissioner, notwithstanding
termination of the managing general agent's contractual authority. The insurer
employing the managing general agent shall reimburse the department for the
expense of the examination according to the provisions of
K.S.A. 40-223 and amendments thereto.
Notes
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