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How to Become Licensed as a Reinsurance Intermediary Manager

How to Become Licensed as a Reinsurance Intermediary Manager

To apply for a reinsurance intermediary manager (RIM) license, an applicant must complete and submit the following forms to DIFS:

Application Attachments

Along with the completed forms, the following attachments are required:

  • Proof of bond for $100,000 for protection of reinsurer.
  • Proof of Errors and Omissions Policy for $100,000.
  • Template for transactions between the RIM and insurers and list of where each required provision is located in the template (see details below).
  • List of insurance producer and reinsurance intermediary licenses held or previously held in all states – include state, license type, date acquired, and status.
  • List of all qualified U.S. banks used to hold funds collected for insurer accounts – include each bank name and address.

Template for Transactions between RIM and Insurers

Pursuant to MCL 500.1161, transactions between an RIM and the insurer it represents must be entered via a contract with the responsibilities of each party provided that includes the following:

  • The reinsurer may terminate the contract for cause upon written notice to the RIM. The reinsurer may immediately suspend the authority of the RIM to assume or cede business during the pendency of any dispute regarding the cause for termination.
  • The RIM will render accounts to the reinsurer accurately detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to the RIM, and remit all funds due under the contract to the reinsurer on not less than a monthly basis.
  • All funds collected for the reinsurer's account will be held by the RIM in a fiduciary capacity in a bank that is a qualified United States financial institution. The RIM may retain no more than 3 months' estimated claims payments and allocated loss adjustment expenses. The RIM shall maintain a separate bank account for each reinsurer that it represents.
  • The RIM will comply with the record-keeping requirements of MCL 500.1157. In addition to all the records required by MCL 500.1157, the RIM will keep a complete record of all outstanding reserves on covered risks as required by MCL 500.1161(d).
  • The reinsurer will have access and the right to copy all accounts and records maintained by the RIM related to its business in a form usable by the reinsurer.
  • The contract cannot be assigned in whole or in part by the RIM.
  • The RIM will comply with the written underwriting and rating standards established by the insurer for the acceptance, rejection, or cession of all risks.
  • The rates, terms, and purposes of commissions, charges, and other fees that the RIM may levy against the reinsurer are set forth.
  • If the contract permits the RIM to settle claims on behalf of the reinsurer, then all of the following are required:
    • All claims will be reported to the reinsurer in a timely manner.
    • A copy of the claim file will be sent to the reinsurer at its request or as soon as it becomes known that the claim meets any of the following:
      • Has the potential to exceed the lesser of an amount determined by the commissioner or the limit set by the reinsurer.
      • Involves a coverage dispute.
      • May exceed the RIM’s claims settlement authority.
      • Is open for more than 6 months.
      • Is closed by payment of the lesser of an amount set by the commissioner or an amount set by the reinsurer.
    • All claim files will be the joint property of the reinsurer and the RIM. However, upon an order of liquidation of the reinsurer, the files shall become the sole property of the reinsurer or its estate. The RIM shall have reasonable access to and the right to copy the files on a timely basis.
    • Any settlement authority granted to the RIM may be terminated for cause upon the reinsurer's written notice to the RIM or upon the termination of the contract. The reinsurer may suspend the settlement authority during the pendency of any dispute regarding the cause of termination.
  • If the contract provides for a sharing of interim profits by the RIM, that such interim profits will not be paid until 1 year after the end of each underwriting period for policies providing property coverages and 5 years after the end of each underwriting period for policies providing casualty coverages, and in any event, not until the adequacy of reserves on remaining claims has been verified pursuant to MCL 500.1165.
  • The RIM will provide the reinsurer annually with a statement of its financial condition prepared by an independent certified accountant.
  • The reinsurer shall periodically, but at least semiannually, conduct an on-site review of the underwriting and claims processing operations of the RIM.
  • The RIM will disclose to the reinsurer any relationship it has with any insurer prior to ceding or assuming any business with the insurer pursuant to this contract.
  • Within the scope of its actual or apparent authority the acts of the RIM shall be considered to be the acts of the reinsurer on whose behalf it is acting.