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Introduced Version House Bill 3141 History

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hb3141 intr
H. B. 3141


(By Delegates H. White, R. M. Thompson,

Hrutkay,

Perry, Azinger and Frich)

[Introduced March 22, 2005; referred to the

Committee on Banking and Insurance then the Judiciary.]




A BILL to amend and reenact §33-38-2, §33-38-3 and §33-38-13 of the Code of West Virginia, 1931, as amended; and to amend said code by adding thereto two new sections, designated §33-38-3a and §33-38-14, all relating to reinsurance intermediaries; defining terms; establishing licensing requirements and procedures; setting fees; providing for service of process; and providing for reciprocity in certain instances.

Be it enacted by the Legislature of West Virginia:

That §33-38-2, §33-38-3 and §33-38-13 of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that said code be amended by adding thereto two new sections, designated §33-38-3a and §33-38-14, all to read as follows:

ARTICLE 38. REINSURANCE INTERMEDIARY ACT.

§33-38-2. Definitions.

The definitions set forth in section two, article twelve of
this chapter apply to this article. In addition, As as used in this article:
(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) "Commissioner" means the Insurance Commissioner of West Virginia.

(d) "Insurer" means any person, firm, association or corporation duly licensed in this state pursuant to the applicable provisions of this chapter as an insurer.

(e) "Firm" means an individual doing business as a sole proprietor, a partnership, limited liability company, limited liability partnership or other legal entity.

(e) (f) "Licensed producer" means an agent insurance producer or reinsurance intermediary licensed pursuant to the applicable provisions of this chapter.

(f) (g) "Reinsurance intermediary" means a reinsurance intermediary-broker or a reinsurance intermediary-manager as these terms are defined in subdivisions (g) and (h) of this section.

(g) (h) "Reinsurance intermediary-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.
(h) (i) "Reinsurance intermediary-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 intermediary-manager, manager or other similar term. Notwithstanding the above, the following persons are not considered a reinsurance intermediary-manager, with respect to such reinsurer, for the purposes of this article:

(1) An employee of the reinsurer;

(2) A United States 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 article twenty-seven of this chapter, 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 official charged with regulation of insurance in the state in which the manager's principal business office is located.
(i) (j) "Reinsurer" means any person, firm, association or corporation duly licensed or accredited in this state pursuant to the applicable provisions of this chapter as an insurer with the authority to assume reinsurance.

(j) (k) "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 article.

(k) (l) For purposes of this article, a 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 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.
§33-38-3. Licensure.

(a) No person, firm, association or corporation may act as a reinsurance intermediary-broker in this state if the reinsurance intermediary-broker 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:

(1) In this state, unless such reinsurance intermediary-broker is a licensed insurance producer or reinsurance intermediary in this state; or

(2) In another state, unless such reinsurance intermediary-broker is a licensed insurance producer or reinsurance intermediary in this state or another state having an article substantially similar to this law or such reinsurance intermediary-broker is licensed in this state as a nonresident reinsurance intermediary.

(b) No person, firm, association or corporation may act as a reinsurance intermediary-manager:

(1) For a reinsurer domiciled in this state, unless such reinsurance intermediary-manager is a licensed insurance producer or reinsurance intermediary in this state;

(2) In this state, if the reinsurance intermediary-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 intermediary-manager is a licensed insurance producer or reinsurance intermediary in this state;
(3) In another state for a nondomestic insurer, unless such reinsurance intermediary-manager is a licensed insurance producer in this state or another state having an article a law substantially similar to this law article or such person is licensed in this state as a nonresident reinsurance intermediary.

(c) The Commissioner may require a reinsurance intermediary-manager subject to the provisions of subsection (b) of this section to:

(1) File a bond in an amount from an insurer 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.

(d) The commissioner may issue a reinsurance intermediary license to any person, firm, association or corporation who has complied with the requirements of this article. Any license issued to a firm or association authorizes all the members of the firm or association and any designated employees to act as reinsurance intermediaries under the license, and all of these persons shall be named in the application and any supplements thereto. Any 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 of these persons shall be named in the application and any supplements thereto.
(e) If the applicant for a reinsurance intermediary license is a nonresident, the 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 provided for by this chapter for designation of service of process upon unauthorized insurers. The applicant shall also 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. The licensee shall promptly notify the commissioner in writing of every change in its designated agent for service of process, and the change shall not become effective until acknowledged by the commissioner.

(f) The commissioner may refuse to issue a reinsurance intermediary license if, in his or her judgment, the applicant, any one named on the application or any member, principal, officer or director of the applicant is not trustworthy or that any controlling person of the applicant is not trustworthy to act as a reinsurance intermediary or that 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 the license. Upon
written request therefor, the commissioner shall furnish a summary of the basis for refusal to issue a license, which document shall be privileged and not subject to the provisions of article one, chapter twenty-nine of this code.
(g) (d) Licensed attorneys at law of this state when acting in their professional capacity are exempt from this section.

§33-38-3a. License applications, issuance, refusal and renewal.

(a) An applicant for a reinsurance intermediary license shall file with the Commissioner an application on the form prescribed by the Commissioner and pay a nonrefundable application fee of five hundred dollars.

(b) The application shall include: (1) For a firm or association, the name of each member of the firm or association and of each employee of the firm or association who will act as a reinsurance intermediary under the license; and (2) for a corporation, the name of each officer of the corporation and of each employee and director of the corporation who will act as a reinsurance intermediary under the license.

(c) The Commissioner shall issue a nonresident reinsurance intermediary license if: (1) The applicant is currently licensed as a resident reinsurance intermediary or insurance producer and is in good standing in his or her home state, has submitted either the application for licensure that the person submitted to his or her home state or a completed application deemed appropriate by the
Commissioner, and has paid the fees required by this section, and (2) the applicant's home state awards nonresident licenses to residents of this state on the same basis.
(d) Any license issued to a firm or association authorizes all the members of the firm or association and any designated employees to act as reinsurance intermediaries under the license, and all of these persons shall be named in the application and any supplements thereto. Any 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 of these persons shall be named in the application and any supplements thereto. To add a name to or delete a name from a reinsurance intermediary license, the licensee shall submit to the Commissioner the change on a form prescribed by the Commissioner.

(e) The Commissioner may refuse to issue or renew a reinsurance intermediary license if the Commissioner finds that the applicant, any individual named on the application, a member, principal, officer, or director of the applicant, or a controlling person of the applicant is not trustworthy to act as a reinsurance intermediary, has given cause for revocation or suspension of a license, or has failed to comply with a requirement for issuance of a license.

(f) Every nonresident firm, association or corporation
licensed as a reinsurance intermediary in this state shall be subject to the provisions of section twelve, article four of this chapter to the same extent as licensed insurers with regard to the service of process and payment of fees. Any person acting as a reinsurance intermediary in this state who is not licensed in this state shall be subject to the provisions of section thirteen, article four of this chapter governing service of process on unlicensed insurers.
(g) Upon written request, the Commissioner shall furnish a summary of the basis for refusal to issue or renew a license, which document shall be privileged and not subject to the provisions of article one, chapter twenty-nine of this code. Within ten days of receipt of the summary, if the applicant or licensee makes a written demand upon the Commissioner for a hearing to determine the reasonableness of the Commissioner's action, a hearing shall be conducted in accordance with the provisions of section thirteen, article two of this chapter.

(h) Each license issued pursuant to this article expires on the thirtieth day of June next following the date of issuance. Between the first day of May and the first day of June of the renewal year, each licensed reinsurance intermediary shall submit to the Commissioner a renewal application and a nonrefundable annual renewal fee of two hundred dollars: Provided, That a reinsurance intermediary who allows the reinsurance intermediary
license to lapse may, within eleven months from the expiration date, reinstate the same license upon payment of a renewal fee of four hundred dollars.
(i) All application and renewal fees collected by the Commissioner pursuant to the provisions of this section shall be paid into the State Treasury and credited to the special revenue account created in section thirteen, article three of this chapter.

(j) Within thirty days of a change in its legal name or mailing address, a licensee shall notify the Commissioner of such change on a form prescribed by the Commissioner, and failure to timely file such form may result in a penalty pursuant to section eleven of this article.

§33-38-13. Fees.

This article shall take effect on the first day of January, one thousand nine hundred ninety-four. No insurer or reinsurer may continue to utilize the services of a reinsurance intermediary on and after the effective date unless utilization is in compliance with this article.

Except where it is otherwise specially provided, the Commissioner shall demand and receive the following fees from all reinsurance intermediaries: For receiving and filing annual reports, one hundred dollars; for filing certified copy of articles of incorporation, fifty dollars; for filing copy of its charter, fifty dollars; for filing statements preliminary to admission, one
hundred dollars; for filing of designated contract, twenty-five dollars; for filing of notification of termination of a contract with a reinsurance intermediary-manager by the reinsurer, ten dollars; for filing to add or delete names on the reinsurance intermediary license, twenty-five dollars; for filing an address change, twenty-five dollars; for filing a legal name change, seventy-five dollars; for filing of a bond or errors and omissions policy, twenty-five dollars; and for filing any additional documents as required by law or furnishing copies thereof, copies of reports or certificates of condition of reinsurance intermediary to be filed in any other state, twenty dollars. All such fees shall be paid into the State Treasury and credited to the special revenue account created in section thirteen, article three of this chapter.
§33-38-14. Reciprocity.

(a) The Commissioner may waive any requirements for a nonresident license applicant with a valid license from the applicant's home state, except the requirements imposed by sections three and three-a of this article, if the applicant's home state awards nonresident licenses to residents of this state on the same basis.

(b) A nonresident reinsurance intermediary's satisfaction of his or her home state's continuing education requirements for licensed insurance producers or reinsurance intermediaries shall
constitute satisfaction of this state's continuing education requirements if the nonresident's home state recognizes the satisfaction of its continuing education requirements imposed upon insurance producers or reinsurance intermediaries from this state on the same basis.

NOTE: The purpose of this bill is to provide for the licensing term, application procedures, and fee for reinsurance intermediaries.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

§§33-38-3a and 33-38-14 are new; therefore, underscoring and strike-throughs have been omitted.

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