| (B) If the contract is with an MGA that is an affiliate of the insurer, the contract must specify that the insurer shall cause to be conducted an annual examination of such affiliated MGA with which the insurer had done business during the previous year. (C) If the insurer's aggregate premium volume increases by 30% in any 30-day period, the insurer shall cause to be conducted an examination within 90 days of any Texas MGA that writes more than 20% of the insurer's volume and that has experienced an increase of 20% in premium volume during the same 30-day period. (20) The contract must specify that the examinations required in paragraph (19) of this subsection must adequately provide the commissioner with the information required under subparagraphs (A)-(E) of this paragraph; must be made available to the commissioner for review; must remain on file with the insurer for at least three years; and
must, at a minimum, contain the following information required by subparagraphs (A)-(E) of this paragraph: (A) claims procedures; (B) timeliness of claims payments; i.e., lag time between date claim is reported and date claim is paid; (C) timeliness of premium reporting and collection; (D) compliance with underwriting guidelines as developed in accordance with paragraph (10) of this subsection; and (E) reconciliation of policy inventory. (21) The contract must state that the MGA must notify the insurer in writing within 30 days if there is a change in: (A) ownership of 10% or more of the outstanding stock of the MGA; (B) any principal officer of the MGA; or (C) any director of the MGA. (22) The contract shall not allow an MGA to offset balances due under any contract with any offset due
under any other contract. (23) The contract must state that the MGA holds all funds of the insurer in a fiduciary capacity. (24) The contract must state that the insurer retains final authority over disputes concerning claims settlement and setting of loss reserves. (c) The provisions of paragraph (1) and paragraph (2) of this subsection are permissive and may be included in a contract between a managing general agent and an insurer. These two permissive contract terms are included in order to clarify that these terms are acceptable as written in this subsection. This subsection is not intended to preclude the inclusion of other provisions in the contract in addition to those listed in this subsection. (1) The contract may authorize the MGA to accept premiums net of commissions due to agents and to retain from the premiums, as received, commissions due the MGA as specified in the contract.
(2) The contract may authorize an MGA to pay reinsurance premiums if the MGA is not an affiliate, as defined in this subchapter, of the insurer or of the reinsurer. (d) A written contract between an MGA and an insurer which provides that the MGA may not place business with the insurer need not comply with the requirements of this section.
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