WILLIAM DONALD SCHAEFER, Governor                          H.B. 422

(A)     A REINSURER MAY NOT ENGAGE THE SERVICES OF ANY PERSON TO ACT
AS A REINSURANCE MANAGER ON ITS BEHALF, UNLESS THE PERSON HAS COMPLIED
WITH THE PROVISIONS OF THIS SUBTITLE.

(B)      THE REINSURER SHALL OBTAIN ANNUALLY A COPY OF STATEMENTS BY
AN INDEPENDENT CERTIFIED ACCOUNTANT IN A FORM ACCEPTABLE TO THE
COMMISSIONER OF THE FINANCIAL CONDITION OF EACH REINSURANCE MANAGER
WITH WHICH IT HAS DONE BUSINESS.

(C)      A REINSURER THAT, PURSUANT TO CONTRACT, PERMITS A REINSURANCE
MANAGER TO MAINTAIN LOSS RESERVES, SHALL OBTAIN ANNUALLY THE OPINION
OF AN INDEPENDENT ACTUARY ATTESTING TO THE ADEQUACY OF THE LOSS
RESERVES ESTABLISHED FOR LOSSES INCURRED AND OUTSTANDING ON BUSINESS
PRODUCED BY THE REINSURANCE MANAGER.

(D)     THE AUTHORIZED INSURER SHALL CONDUCT AT LEAST SEMIANNUALLY
AN ON-SITE REVIEW OF THE UNDERWRITING AND CLAIMS PROCESSING
OPERATIONS OF THE REINSURANCE MANAGER.

(E)      THE REINSURER SHALL NOTIFY THE COMMISSIONER, IN WRITING,
WITHIN 30 DAYS OF TERMINATING A CONTRACT WITH A REINSURANCE MANAGER.

(F)      UNLESS THE RELATIONSHIP BETWEEN THE REINSURER AND THE
REINSURANCE MANAGER IS CONTROLLED BY AND DISCLOSED PURSUANT TO §§ 495
AND 496 OR § 633(B) OF THIS ARTICLE, A REINSURER MAY NOT HAVE ON ITS BOARD
OF DIRECTORS AN OFFICER, DIRECTOR, EMPLOYEE, AGENT, OR CONTROLLING
SHAREHOLDER OF ITS REINSURANCE MANAGER.

(G)     THE BINDING AUTHORITY FOR ALL RETROCESSIONAL CONTRACTS OR
PARTICIPATION IN REINSURANCE SYNDICATES SHALL REST WITH AN OFFICER OF
THE REINSURER WHO MAY NOT BE AFFILIATED WITH THE REINSURANCE

MANAGER.

(H) (1) SUBJECT TO THE HEARING PROVISIONS OF SUBTITLE 2 OF THIS
ARTICLE, A REINSURER WHO VIOLATES THE PROVISIONS OF THIS SUBTITLE MAY BE:

(I)       REFUSED APPROVAL AS AN ACCEPTED REINSURER; OR

(II)     DISAPPROVED AS AN ACCEPTED REINSURER UNDER § 74 OF
THIS ARTICLE.

(2) IN ADDITION TO REMOVAL AS AN ACCEPTED REINSURER UNDER §
74 OF THIS ARTICLE, THE REINSURER MAY BE SUBJECT TO IMPOSITION OF A CIVIL
PENALTY NOT TO EXCEED $5,000 FOR EACH VIOLATION OF THIS SUBTITLE.

713.

THE ACTS OF A REINSURANCE MANAGER SHALL BE CONSIDERED TO BE THE
ACTS OF THE REINSURER ON WHOSE BEHALF IT IS ACTING.

714.

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