17:22C-7. Audit; loss reserve opinion, on-site procedural audit

400 words·~2 min read·/nj/title-17/chapter-22c/17-22c-7

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7. a. The insurer shall conduct and have on file an independent audit in a form acceptable to the commissioner of each managing general agent with which it has done business.

b. If a managing general agent establishes loss reserves, the insurer 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 managing general agent. Such loss reserve opinion shall be in the format of and otherwise satisfy all requirements established by the commissioner for loss reserve opinions required to be submitted by licensed insurers in this State.

c. The insurer shall at least biannually conduct an on-site procedural audit of the underwriting and claims processing operations of the managing general agent.

d. The managing general agent may negotiate reinsurance contracts or participation in insurance or reinsurance syndicates on behalf of the insurer. However, binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an officer of the insurer, who shall not be affiliated with the managing general agent.

e. Within 30 days of entering into, or within 15 days of termination of, a contract with a managing general agent, the insurer shall provide written notification of that appointment or termination to the commissioner. Notices of appointment of a managing general agent shall include a statement of duties which the managing general agent is expected to perform on behalf of the insurer, the lines of insurance for which the managing general agent is to be authorized to act, and any other information the commissioner may request.

f. An insurer shall review each quarter its books and records to determine if any insurance producer has become a managing general agent as defined in section 1 of this act. If the insurer determines that an insurance producer has become a managing general agent, the insurer shall promptly notify the insurance producer and the commissioner of such determination and the insurer and insurance producer shall fully comply with the provisions of this act within 30 days.

g. An insurer shall not appoint to its board of directors an officer, director, employee or controlling shareholder of its managing general agents. This subsection shall not apply to relationships governed by P.L.1970, c.22 (C.17:27A-1 et seq.) or, if applicable, any laws governing business transacted by producer-controlled property and casualty insurers in this State.

L.1993,c.237,s.7.