TITLE 41

INSURANCE

CHAPTER 28

ORGANIZATION AND CORPORATE PROCEDURES OF STOCK AND MUTUAL INSURERS

41-2838.  Management and exclusive agency contracts. (1) No domestic insurer shall hereafter make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the substantial exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for the insurer, or, if an officer, director or otherwise part of the insurer’s management, is to receive any commission, bonus or compensation based upon the volume of the insurer’s business or transactions, unless the contract is filed with and approved by the director. The contract shall be deemed approved unless disapproved by the director within twenty (20) days after date of filing, subject to such reasonable extension of time as the director may require by notice given within such twenty (20) days. Any disapproval shall be delivered to the insurer in writing, stating the grounds therefor.

(2)  Any such contract, or contract holder, shall provide that any such manager or producer of its business shall within ninety (90) days after expiration of each calendar year furnish the insurer’s board of directors a written statement of amounts received under or on account of the contract and amounts expended thereunder during such calendar year, including the emoluments received therefrom by the respective directors, officers, and other principal management personnel of the manager or producer, and with such classification of items and further detail as the insurer’s board of directors may reasonably require.

(3)  The director shall disapprove any such contract if he finds that it:

(a)  Subjects the insurer to unreasonable or excessive charges; or

(b)  Is to extend for an unreasonable length of time; or

(c)  Does not contain fair and adequate standards of performance; or

(d)  Contains other inequitable provision or provisions which impair the proper interests of stockholders or policyholders of the insurer.

(4)  The director may, after a hearing held thereon, withdraw his approval of any such contract theretofore approved by him, if he finds that the bases of his original approval no longer exist, or that the contract has, in actual operation, shown itself to be subject to disapproval on any of the grounds referred to in subsection (3) above.

(5)  This section does not apply as to contracts entered into prior to the effective date of this code, nor to extensions or amendments to such contracts.

History:

[41-2838, added 1961, ch. 330, sec. 606, p. 645; am. 1969, ch. 214, sec. 67, p. 625.]