{"data":{"id":"us-ok/okla.-stat.-tit.-36-36-1674","jurisdiction":"us-ok","citation":"Okla. Stat. tit. 36, § 36-1674","heading":"Required contract provisions - Producers and insurers","body":"affected - Audit Committees - Reporting requirements.\n\nA. Applicability of section.\n\n1. The provisions of this section shall apply if, in any\n\ncalendar year, the aggregate amount of gross written premium on\n\nbusiness placed with a controlled insurer by a controlling producer\n\nis equal to or greater than five percent (5%) of the admitted assets\n\nof the controlled insurer, as reported in the controlled insurers'\n\nquarterly statement filed as of September 30 of the prior year.\n\n2. Notwithstanding paragraph 1 of this subsection, the\n\nprovisions of this section shall not apply if:\n\na. the controlling producer:\n\n(1) places insurance only with the controlled\n\ninsurer, or only with the controlled insurer and\n\na member or members of the controlled insurer's\n\nholding company system, or the controlled\n\ninsurer's parent, affiliate or subsidiary and\n\nreceives no compensation based upon the amount of\n\npremiums written in connection with such\n\ninsurance, and\n\n(2) accepts insurance placements only from\n\nnonaffiliated subproducers, and not directly from\n\ninsureds, and\n\nb. the controlled insurer, except for insurance business\n\nwritten through a residual market facility, accepts\n\ninsurance business only from a controlling producer, a\n\nproducer controlled by the controlled insurer, or a\n\nproducer that is a subsidiary of the controlled\n\ninsurer.\n\nB. Required contract provisions. A controlled insurer shall\n\nnot accept business from a controlling producer and a controlling\n\nproducer shall not place business with a controlled insurer unless\n\nthere is a written contract between the controlling producer and the\n\ninsurer specifying the responsibilities of each party, which\n\ncontract has been approved by the board of directors of the insurer\n\nand contains the following minimum provisions:\n\n1. The controlled insurer may terminate the contract for cause,\n\nupon written notice to the controlling producer. The controlled\n\ninsurer shall suspend the authority of the controlling producer to\n\nwrite business during the pendency of any dispute regarding the\n\ncause for the termination;\n\n2. The controlling producer shall render accounts to the\n\ncontrolled insurer detailing all material transactions, including\n\ninformation necessary to support all commissions, charges and other\n\nfees received by, or owing to, the controlling producer;\n\n3. The controlling producer shall remit all funds due under the\n\nterms of the contract to the controlled insurer on at least a\n\nmonthly basis. The due date shall be fixed so that premiums or\n\ninstallments thereof collected shall be remitted no later than\n\nninety (90) days after the effective date of any policy placed with\n\nthe controlled insurer under this contract;\n\n4. All funds collected for the controlled insurer's account\n\nshall be held by the controlling producer in a fiduciary capacity,\n\nin one or more appropriately identified bank accounts in banks that\n\nare members of the Federal Reserve System, in accordance with the\n\nprovisions of the insurance law as applicable. However, funds of a\n\ncontrolling producer not required to be licensed in this state shall\n\nbe maintained in compliance with the requirements of the controlling\n\nproducer's domiciliary jurisdiction;\n\n5. The controlling producer shall maintain separately\n\nidentifiable records of business written for the controlled insurer;\n\n6. The contract shall not be assigned in whole or in part by\n\nthe controlling producer;\n\n7. The controlled insurer shall provide the controlling\n\nproducer with its underwriting standards, rules and procedures,\n\nmanuals setting forth the rates to be charged, and the conditions\n\nfor the acceptance or rejection of risks. The controlling producer\n\nshall adhere to the standards, rules, procedures, rates and\n\nconditions. The standards, rules, procedures, rates and conditions\n\nshall be the same as those applicable to comparable business placed\nng\n\nproducer with its underwriting standards, rules and procedures,\n\nmanuals setting forth the rates to be charged, and the conditions\n\nfor the acceptance or rejection of risks. The controlling producer\n\nshall adhere to the standards, rules, procedures, rates and\n\nconditions. The standards, rules, procedures, rates and conditions\n\nshall be the same as those applicable to comparable business placed\n\nwith the controlled insurer by a producer other than the controlling\n\nproducer;\n\n8. The rate and terms of the controlling producer's\n\ncommissions, charges or other fees and the purposes for those\n\ncharges or fees. The rates of the commissions, charges and other\n\nfees shall be no greater than those applicable to comparable\n\nbusiness placed with the controlled insurer by producers other than\n\ncontrolling producers. For purposes of this paragraph and paragraph\n\n7 of this subsection, examples of \"comparable business\" include the\n\nsame lines of insurance, same kinds of insurance, same kinds of\n\nrisks, similar policy limits, and similar quality of business;\n\n9. If the contract provides that the controlling producer, on\n\ninsurance business placed with the insurer, is to be compensated\n\ncontingent upon the insurer's profits on that business, then such\n\ncompensation shall not be determined and paid until at least five\n\n(5) years after the premiums on liability insurance are earned and\n\nat least one (1) year after the premiums are earned on any other\n\ninsurance. In no event shall the commissions be paid until the\n\nadequacy of the controlled insurer's reserves on remaining claims\n\nhas been independently verified pursuant to subsection D of this\n\nsection;\n\n10. A limit on the controlling producer's writings in relation\n\nto the controlled insurer's surplus and total writings. The insurer\n\nmay establish a different limit for each line or subline of\n\nbusiness. The controlled insurer shall notify the controlling\n\nproducer when the applicable limit is approached and shall not\n\naccept business from the controlling producer if the limit is\n\nreached. The controlling producer shall not place business with the\n\ncontrolled insurer if it has been notified by the controlled insurer\n\nthat the limit has been reached; and\n\n11. The controlling producer may negotiate but shall not bind\n\nreinsurance on behalf of the controlled insurer on business the\n\ncontrolling producer places with the controlled insurer, except that\n\nthe controlling producer may bind facultative reinsurance contracts\n\npursuant to obligatory facultative agreements if the contract with\n\nthe controlled insurer contains underwriting guidelines including,\n\nfor both reinsurance assumed and ceded, a list of reinsurers with\n\nwhich such automatic agreements are in effect, the coverages and\n\namounts of percentages that may be reinsured and commission\n\nschedules.\n\nC. Audit Committee. Every controlled insurer shall have an\n\nAudit Committee of the Board of Directors composed of independent\n\ndirectors. The Audit Committee shall annually meet with management,\n\nthe insurer's licensed public accountant or a certified public\n\naccountant holding a permit to practice in this state and an\n\nindependent casualty actuary or other independent loss reserve\n\nspecialist acceptable to the Commissioner to review the adequacy of\n\nthe insurer's loss reserves.\n\nD. Reporting requirements.\n\n1. In addition to any other required loss reserve\n\ncertification, the controlled insurer shall annually, on April 1 of\n\neach year, file with the Commissioner an opinion of an independent\n\ncasualty actuary, or such other independent loss reserve specialist\n\nacceptable to the Commissioner, reporting loss ratios for each line\n\nof business written and attesting to the adequacy of loss reserves\n\nestablished for losses incurred and outstanding as of year-end,\n\nincluding incurred but not reported losses, on business placed by\n\nthe producer; and\nlty actuary, or such other independent loss reserve specialist\n\nacceptable to the Commissioner, reporting loss ratios for each line\n\nof business written and attesting to the adequacy of loss reserves\n\nestablished for losses incurred and outstanding as of year-end,\n\nincluding incurred but not reported losses, on business placed by\n\nthe producer; and\n\n2. The controlled insurer shall annually report to the\n\nCommissioner the amount of commissions paid to the producer, the\n\npercentage such amount represents of the net premiums written and\n\ncomparable amounts and percentage paid to noncontrolling producers\n\nfor placements of the same kinds of insurance.","path":["OK Code","Title 36"],"source_url":"https://www.oklegislature.gov/OK_Statutes/CompleteTitles/os36.pdf","current_through":"2026-08-14","vintage":"open-us-law v2026.08, retrieved 2026-09-14","retrieved_at":"2026-09-14T18:32:36Z","sha256":"607bddaaa2f2955bf9ff0895bc1705a49d99246f8113ad81f580068e39d86180","source_id":"us-ok","stale":false,"prev":"us-ok/okla.-stat.-tit.-36-36-1673","next":"us-ok/okla.-stat.-tit.-36-36-1675"},"notice":"GroundRules: Original legal text. Not legal advice."}