Common use of Settlement Authority Clause in Contracts

Settlement Authority. If the contract permits the MGA to settle claims on behalf of the insurer: A. All claims must be reported to the insurer in a timely manner; [PL 1997, c. 573, §1 (NEW); PL 1997, c. 573, §2 (AFF).] B. A copy of the claim file must be sent to the insurer at its request or as soon as it becomes known that the claim: (1) Has the potential to exceed an amount determined by the superintendent or exceeds the limit set by the insurer, whichever is less; (2) Involves a coverage dispute; (3) May exceed the MGA's claims settlement authority; (4) Is open for more than 6 months; or (5) Is closed by payment of an amount awarded as a result of a judicial proceeding or an amount set by the insurer, whichever is less; [PL 1997, c. 573, §1 (NEW); PL 1997, c. 573, §2 (AFF).] C. All claim files must be the joint property of the insurer and MGA; except that, upon an order of liquidation of the insurer, the files become the sole property of the insurer or its estate. The MGA must have reasonable access to and may copy the files on a timely basis; and [PL 1997, c. 573, §1 (NEW); PL 1997, c. 573, §2 (AFF).] D. Any settlement authority granted to the MGA may be terminated for cause upon written notice by the insurer to the MGA or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination. Upon termination of the MGA's authority to settle claims, the MGA shall desist from any draw on funds of the insurer and shall immediately forward to the insurer all claims files with the MGA's immediate possession and any claims received thereafter. The MGA shall promptly transfer to the insurer any funds owed to the insurer or to any policyholder and shall transfer to the insurer any property of the insurer that is within the MGA's actual or constructive possession. [PL 1997, c. 573, §1 (NEW); PL 1997, c. 573, §2 (AFF).] [PL 1997, c. 573, §1 (NEW); PL 1997, c. 573, §2 (AFF).]