Wyo. Stat. Ann. tit. 26, ch. 45 — Broker Controlled Insurers | Wyoming Statutes Annotated — Wyoming

Wyo. Stat. Ann. § 26-45-101 Short title.

This article may be cited as the "Broker Controlled Insurer Act."

Wyo. Stat. Ann. § 26-45-102 Definitions.

(a) As used in this article: (i) "Accredited state" means a state in which the insurance department or regulatory agency has qualified as meeting the minimum financial regulatory standards promulgated and established by the National Association of Insurance Commissioners; (ii) "Broker" means an insurance broker as defined in W.S. 26-1-102(a)(vi) or any other person, firm, association or corporation, when, for any compensation, commission or other thing of value, the person, firm, association or corporation acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance contract on behalf of an insured other than the person, firm, association or corporation; (iii) "Control" or "controlled" means as defined in W.S. 26-44-101(a)(iii); (iv) "Controlled insurer" means a licensed insurer which is controlled, directly or indirectly, by a broker; (v) "Controlling broker" means a broker who, directly or indirectly, controls an insurer; (vi) "Independent casualty actuary" means a casualty actuary who is a member in good standing of the American Academy of Actuaries and who is not an employee, principal, or indirect owner of, or in any way controlled by or affiliated with the insurer or broker; (vii) "Licensed insurer" means any person duly licensed to transact a property or casualty insurance business in this state. The following are not licensed insurers for the purposes of this article: (A) Risk retention groups as defined in the Wyoming Risk Retention Act; (B) Residual market pools and joint underwriting authorities or associations; and (C) Captive insurers. For purposes of this article, captive insurers are insurance companies owned by another organization and whose exclusive purpose is to insure risks of the parent organization and affiliated companies or, in the case of groups and associations, insurance organizations owned by the insureds whose exclusive purpose is to insure risks of member organizations or group members and their affiliates.

Wyo. Stat. Ann. § 26-45-103 Applicability.

This article shall apply to licensed insurers either domiciled in this state or domiciled in a state that is not an accredited state having in effect a substantially similar law. All provisions of the Insurance Holding Company System Regulatory Act, to the extent they are not superseded by this article, shall continue to apply to all parties within holding company systems subject to this article.

Wyo. Stat. Ann. § 26-45-104 Minimum standards.

(a) The provisions of this section shall apply if, in any calendar year, the aggregate amount of gross written premium on business placed with a controlled insurer by a controlling broker is equal to or greater than five percent (5%) of the admitted assets of the controlled insurer, as reported in the controlled insurer's quarterly statement filed as of September 30 of the prior year. (b) Notwithstanding subsection (a) of this section, the provisions of this section shall not apply if: (i) The controlled insurer, except for insurance business written through a residual market facility such as the Wyoming Assigned Risk Plan, accepts insurance business only from a controlling broker, a broker controlled by the controlled insurer, or a broker that is a subsidiary of the controlled insurer; and (ii) The controlling broker: (A) Places insurance only with the controlled insurer, or only with the controlled insurer and a member or members of the controlled insurer's holding company system, or the controlled insurer's parent, affiliate or subsidiary and receives no compensation based upon the amount of premiums written in connection with the insurance placed; and (B) Accepts insurance placements only from nonaffiliated subproducers, and not directly from insureds. (c) The controlled insurer shall not accept business from a controlling broker and a controlling broker shall not place business with a controlled insurer except pursuant to a written contract, which has been approved by the board of directors of the insurer. The contract shall be subject to the following requirements: (i) A domestic controlled insurer shall file the contract with, and obtain the approval of, the commissioner prior to the effective date of the contract and in accordance with W.S. 26-15-110(b) and 26-15-111. In all other cases the insurer shall file the contract, or any amendment to a contract, with the commissioner within fifteen (15) days after it has been signed; (ii) The contract shall specify the responsibilities of each party and contain the following minimum provisions: (A) The controlled insurer may terminate the contract for cause upon written notice to the controlling broker. The controlled insurer shall suspend the authority of the controlling broker to write business during the pendency of any dispute regarding the cause for the termination; (B) The controlling broker shall render accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing to, the controlling broker; (C) The controlling broker shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis. The due date shall be fixed so that premiums collected from the insured shall be remitted no later than ninety (90) days after the effective date of the policy; (D) All funds collected for the controlled insurer's account shall be held by the controlling broker in a fiduciary capacity in accordance with W.S. 26-9-229, in one (1) or more appropriately identified bank accounts in banks that are organized or licensed under the laws of the United States or any state and are insured by an instrumentality of the United States government and have been determined by either the insurance 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. Funds of a controlling broker not required to be licensed in this state shall be maintained in compliance with the requirements of the controlling broker's domiciliary jurisdiction; (E) The controlling broker shall maintain separately identifiable records of business written for the controlled insurer; (F) The contract shall not be assigned in whole or in part by the controlling broker; (G) The controlled insurer shall provide the controlling broker with its underwriting standards, rules and procedures, manuals setting forth the rates to be charged, and the conditions for the acceptance or rejection of risks. The controlling broker shall adhere to the standards, rules, procedures, rates and conditions. The standards, rules, procedures, rates and conditions shall be the same as those applicable to comparable business placed with the controlled insurer by a broker other than the controlling broker; (H) The rates and terms of the controlling broker's commissions, charges or other fees and the purposes for those charges or fees shall be defined in the contract and shall be no greater than those applicable to comparable business placed with the controlled insurer by brokers other than controlling brokers. For purposes of this subsection, "comparable business" includes but is not limited to the same lines of insurance, same kinds of insurance, similar policy limits, similar types of risk and similar quality of business; (J) If the contract provides that the controlling broker, on insurance business placed with the insurer, is to be compensated contingent upon the insurer's profits on that business, then the compensation shall not be determined and paid until: (I) The adequacy of the controlled insurer's reserves on remaining claims has been independently verified pursuant to subsection (e) of this section; and (II) For casualty insurance, at least five (5) years after the premiums are earned; and (III) On any other insurance, at least one (1) year after the premiums are earned. (K) The contract shall place a limit on the controlling broker's writings in relation to the controlled insurer's surplus and total writings. The insurer may establish a different limit for each line or subline of business. The controlled insurer shall notify the controlling broker when the applicable limit is approached and shall not accept business from the controlling broker if the limit is reached. The controlling broker shall not place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been reached; and (M) The controlling broker may negotiate but shall not bind reinsurance on behalf of the controlled insurer on business the controlling broker places with the controlled insurer. (d) Every controlled insurer shall have an audit committee of the board of directors composed of independent directors. The audit committee shall annually meet with management, the insurer's independent certified public accountants, and an independent casualty actuary or other independent loss reserve specialist acceptable to the commissioner to review the adequacy of the insurer's loss reserves. (e) In addition to any other required loss reserve certification, the controlled insurer shall annually, on April 1 of each year, file with the commissioner an opinion of an independent casualty actuary or other independent loss reserve specialist acceptable to the commissioner reporting loss ratios for each line of business written and attesting to the adequacy of loss reserves established for losses incurred and outstanding as of year-end, including losses incurred but not reported, on business placed by the broker. (f) The controlled insurer shall annually file a report with the commissioner showing: (i) The percentage that the amounts specified in paragraphs (ii) through (iv) of this subsection represent of the controlled insurer's net premiums written for each line of insurance; (ii) The amount of premiums on insurance business placed with the controlled insurer by the controlling broker; (iii) The amount of commissions, charges or other fees paid by the controlled insurer to the controlling broker during the previous calendar year; and (iv) The amounts owed to the controlling broker on the business by line of insurance on the annual statement.

Wyo. Stat. Ann. § 26-45-105 Disclosure.

The controlling broker, prior to the effective date of the policy, shall deliver written notice to the prospective insured disclosing the relationship between the broker and the controlled insurer, except that, if the business is placed through a subproducer who is not a controlling broker, the controlling broker shall retain in his records a signed commitment from the subproducer that the subproducer is aware of the relationship between the insurer and the broker and that the subproducer has or will notify the insured.

Wyo. Stat. Ann. § 26-45-106 Penalties and liabilities.

(a) If the commissioner finds after a hearing conducted in accordance with W.S. 26-2-125 that any person has violated any provision of this article, the commissioner may order any or all of the following: (i) For each separate violation, a civil penalty not to exceed five thousand dollars ($5,000.00); (ii) For any controlling broker violating this article, revocation or suspension of the controlling broker's license; (iii) The controlling broker to reimburse the insurer, the rehabilitator or liquidator of the insurer for any losses incurred by the insurer caused by a violation of this article committed by the controlling broker; (iv) The controlling broker to cease placing business with the controlled insurer. (b) Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided for in this code. (c) Nothing contained in this section is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, creditors or other third parties.

Wyo. Stat. Ann. § 26-45-107 Rules and regulations.

The commissioner may adopt reasonable rules and regulations for the implementation and administration of this article.

Wyo. Stat. Ann. § 26-45-108 Compliance with this article.

Controlled insurers and controlling brokers shall comply with W.S. 26-45-104 by September 1, 1992, and with W.S. 26-45-105 beginning with all policies written or renewed on or after September 1, 1992.