New Jersey reinsurance manager bonds.
From $1,000.

What the reinsurance intermediary-manager bond guarantees

A reinsurance intermediary-manager has authority to bind, or manages, all or part of a reinsurer’s assumed reinsurance business, including a separate division, department or underwriting office, and acts as that reinsurer’s agent under whatever title (N.J.S.A. 17:22E-1). The definition leaves out the reinsurer’s own employees, the U.S. manager of an alien reinsurer’s U.S. branch, a commonly controlled underwriting manager whose pay is not based solely on premium volume, the manager of a regulated joint-underwriting or joint-reinsurance pool, and a licensed attorney who negotiates contracts or provides general financial counsel, so long as no commission or brokerage fee is paid. New Jersey lets you act as a manager only as a licensed New Jersey producer authorized by the Commissioner of Banking and Insurance, and a reinsurer may not engage a manager who is not authorized (N.J.S.A. 17:22E-2, 17:22E-4 and 17:22E-14).

It is a three-party arrangement: you (the principal), the surety, and the reinsurer contracting with you, which the bond protects. The statute also addresses that reinsurer’s money: the written contract it requires between you and the reinsurer must provide that you hold the funds you collect for the reinsurer’s account in a fiduciary capacity in a qualified U.S. financial institution, keep a separate bank account for each reinsurer you represent, render accounts detailing all material transactions, and remit what is due at least monthly (N.J.S.A. 17:22E-12). If the reinsurer makes a valid claim and the surety pays it, you repay the surety. It is not insurance for you.

The amount is set by the rule, not negotiated: the greater of $100,000 or 25 percent, up to $10,000,000, of the gross direct premium the reinsurer wrote in the previous calendar year that is attributable to you, adjusted on or before April 1 each year (N.J.A.C. 11:17-7.3(c)). On DOBI’s Form A, the reinsurer acknowledges that the bond and the errors and omissions policy must be updated yearly, and renewal notices go to the email on your application. The rule ties the bond to the reinsurer contracting with you and sizes it from that reinsurer’s premium, so if you manage for more than one reinsurer, confirm with each whether it needs a bond of its own.

The bond must be executed by an admitted company authorized to transact fidelity and surety business in New Jersey, and it may not be written by the insurer or an affiliate of the reinsurer you contract with (N.J.A.C. 11:17-7.3(c)2). Two things it is not: the errors and omissions policy that N.J.A.C. 11:17-7.3(d) also requires, with limits set by the same formula, and the managing general agent bond of N.J.A.C. 11:17-6.3, which an MGA for a direct insurer keeps at the greater of $100,000 or 10 percent, up to $500,000, of that insurer’s attributable premium.

You need this bond if you’re