KRS 304.3-530: Duties and responsibilities of insured and controlling agent.

(1) The insurer shall have on file an independent financial examination, in a form

acceptable to the commissioner, of each controlling agent with which it has done

business.

(2) If a controlling agent establishes loss reserves, the insurer shall annually obtai n the

opinion of an actuary attesting to the adequacy of loss reserves established for

losses incurred and outstanding on business produced by the controlling agent. This

is in addition to any other required loss reserve certification.

(3) The insurer shal l at least semiannually conduct an on -site review of underwriting

and claims processing operations of the controlling agent.

(4) Binding authority for all reinsurance contracts or participation in insurance or

reinsurance syndicates shall rest with an offi cer of the insurer, who shall not be

affiliated with the controlling agent.

(5) Within thirty (30) days of entering into or termination of a contract with a

controlling agent, the insurer shall provide written notification of the appointment

or termination to the commissioner. Notices of appointment of a controlling agent

shall include a statement of the duties which the applicant is expected to perform on

behalf of the insurer, the lines of insurance for which the applicant is authorized to

act, and any other information the commissioner may request.

(6) An insurer shall review its books and records each quarter to determine if any

person producing business has become a controlling agent as defined in KRS 304.3-

500(3). If the insurer determines that a perso n producing business has become a

controlling agent, the insurer shall promptly notify the person producing business

and the commissioner of this determination and the insurer and the person

producing business must fully comply with the provisions of KRS 3 04.3-500 to

304.3-570 within thirty (30) days.

(7) An insurer shall not appoint to its board of directors an officer, director, employee,

subproducer, or controlling shareholder of any of its controlling agents. This

subsection shall not apply to relationships governed by Subtitle 37 of this chapter or

any provisions of this subtitle pertaining to business transacted with a producer

controlled property or casualty insurer.