Sec. 32.1. Verification of coverage and disclosure

(a)

(1) Where the reinsurance intermediary acts in procuring reinsurance for a licensed ceding insurer or accepting reinsurance for a licensed assuming insurer, such intermediary shall have written evidence from such insurer of authority to procure or accept specified types of reinsurance, and the scope of such authority.

(2) The written evidence shall be executed by a responsible officer of the insurer granting the authority and shall include:

(i) the name of insurer(s);

(ii) the kinds of insurance;

(iii) the type of reinsurance or retrocessions;

(iv) the limits of coverage; and

(v) the effective date and expiration date of the authority.

(b) When a reinsurance intermediary procures a reinsurance contract on behalf of a licensed ceding insurer:

(1) directly from any assuming insurer or insurers, written evidence must be furnished to the ceding insurer, that the assuming insurer or insurers have agreed to assume the risk; or

(2) from a representative, other than an employee of the assuming insurer or insurers, he shall obtain written evidence from the assuming insurer or insurers of the fact that such insurer or insurers have given authority to the representative to bind risks in their name and the scope of such authority. The written evidence shall be submitted to the ceding insurer.

(c) If the reinsurance intermediary places reinsurance on behalf of a licensed ceding insurer with an unauthorized reinsurer, which is not an accredited reinsurer or which has not placed adequate funds with the ceding insurer pursuant to section 1301(a)(15) of the Insurance Law, he shall inquire into the financial condition of the assuming unauthorized reinsurer and in connection with such inquiry disclose such findings to the ceding insurer and make available to the ceding insurer a copy of the most recent financial statement. Notwithstanding the above, the ceding insurer may assume the obligation under this subdivision by releasing the intermediary in writing from his obligations under this subdivision.

(d) Where a reinsurance intermediary acts for a licensed assuming insurer in accepting a reinsurance contract, the reinsurance intermediary shall act only within the authority granted by such insurer and shall promptly notify the insurer in writing of any commitment made on its behalf. If on a bordereau basis, such notification shall be made at least quarterly.

(e) No reinsurance intermediary shall procure a reinsurance contract with one or more unauthorized reinsurers, unless there is provision in such agreement for the appointment by the reinsurer or reinsurers of an attorney in this State, as the true and lawful attorney of each such insurer, upon whom all lawful process may be served in any action, suit or proceeding instituted in this State by or on behalf of a licensed ceding insurer, arising out of the contract of reinsurance.

(f) Every reinsurance intermediary shall make full written disclosure, at the time of negotiations, to the parties to any reinsurance transactions, of:

(1) any control over such intermediary by, or any control by such intermediary over any of the parties to or any other reinsurance intermediary involved in said transaction and/or any retrocessions placed by the intermediary affecting said transaction. For purposes of this paragraph, control means the possession directly or indirectly of the power to direct or cause the direction of the management and policies of such party, whether through the ownership of voting securities, by contract other than commercial contract for goods or nonmanagement services, or otherwise. Control shall be presumed to exist if any person directly or indirectly owns, controls or holds with the power to vote 10 percent or more of the voting securities of any other person; provided that no person shall be deemed to control another person solely by reason of his being an officer of such other person;

(2) any retrocessions placed by the intermediary, directly or indirectly, in connection with said transaction including the identity of such retrocessionaires; and

(3) the commissions earned or expected to be earned by the reinsurance intermediary, directly or indirectly, in connection with any retrocessions applicable to the original reinsurance transaction.

Such reinsurance intermediary shall amend the original disclosure to reflect any additions involving paragraph (1), (2) or (3) of this subdivision as they may occur.