An insurer shall not claim as an asset by reason of any provision of a contingent or retrospective compensation arrangement, any account due from the other party pursuant to such an arrangement in an amount in excess of the money actually held by such party in a trusteed bank account for such insurer, unless such party is solvent without giving effect to any contingent or retrospective compensation not specifically acknowledged in writing by the insurer as settled in amount and payable in cash, or usable as an absolute offset against the insurer, within 90 days.

If the commissioner has reason to doubt the solvency of any person dealing with an insurer under a contingent or retrospective commission arrangement, he may examine him at the expense of the insurer.

Terms Used In California Insurance Code 995.2

  • Commissioner: means the Insurance Commissioner of this State. See California Insurance Code 20
  • Person: means any person, association, organization, partnership, business trust, limited liability company, or corporation. See California Insurance Code 19
  • retrospective commission arrangement: means an arrangement having as its purpose the retention by the insurer of a fixed proportion of the gross premiums, or gross premiums plus policy fees with the balance of the premiums, or premiums plus policy fees, retained by the producer of the business, who assumes to pay therefrom all losses, all subordinate commissions, loss adjustment expenses and his profit, if any, with other provisions of the arrangement auxiliary or incidental to such purpose. See California Insurance Code 995

Nothing contained in this section is intended to modify any provision contained in Section 1735 of this code.

(Added by Stats. 1965, Ch. 1818.)

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