Commissions contingent upon adjustment savings; prohibition.

(1) It is unlawful for any insurer to enter into any agreement or understanding with its general or state agent or for any insurer, either directly or through its general or state agent, to enter into any agreement or understanding with any local resident agent of such insurer in this state, the effect of which is to make the net amount of any such agent’s commissions on policies of insurance negotiated and issued by such insurer in this state contingent upon savings effected in the adjustment, settlement, and payment of losses covered by such insurer’s policies, and in pursuance of which agreement or understanding the agent acts as adjuster for claims under such policies and pays claims incurred by such insurer under the policies from a stated percentage of the premiums collected or remitted to the agent thereon and retained by the agent; and any such agreements and understandings now existing are declared unlawful and shall be terminated immediately.

(2) Nothing in this section shall be construed to apply to or affect any contingent commissions agreement under which the general or state agent or local resident agent does not pay claims arising under policies of the insurer he or she represents from a stated percentage of premiums collected by him or her or remitted to such agent and retained by him or her.