Requirements for retaining authorization as service company; recertification.

(1) No person may act as a service company without a written agreement between such person as service company and a self-insurer or multiple-employer welfare arrangement. Such written agreement shall be retained as part of the official records of each party for the duration of the agreement and for 5 years thereafter.

(2) Each service company shall file, within 30 days of entering into a contract for servicing, either a copy of its service contract or a certification attesting to the fact that the service company has provided sufficient services to fulfill the conditions specified in this act. Such certification shall be made on forms provided.

(3)(a) Each service company shall maintain at one or more locations within this state copies of all contracts with each self-insurer or multiple-employer welfare arrangement that it services and records relating thereto which are sufficient in type and quantity to verify the accuracy and completeness of all reports and documents submitted to the office pursuant to this part. In the event that the service company has its records distributed in multiple locations, it shall inform the office as to the location of each type of record, as well as the location of specific records for the self-insurers or multiple-employer welfare arrangements it services.

(b) These records shall be open to inspection by representatives of the office during regular business hours. All records shall be retained according to the schedule adopted by the commission for similar documents. The location of these records shall be made known to the office as necessary.

(4) The self-insurer or multiple-employer welfare arrangement shall have the right of continuing access to books and records maintained by the service company sufficient to permit the self-insurer or arrangement to fulfill all of its contractual obligations to covered employees, subject to any restrictions in the written agreement between the self-insurer or arrangement and the service company with respect to the proprietary rights of the parties in such books and records.

(5) A service company may use only such advertising pertaining to a self-insured plan as has been approved in writing by an individual self-insurer or multiple-employer welfare arrangement.

(6) Any policies, certificates, booklets, termination notices, or other written communications delivered by any self-insurer to the service company for delivery to participants shall be delivered by the service company promptly after receipt of instructions from the self-insurer to deliver them.

(7) As to the servicing of coverage, the self-insurer or multiple-employer welfare arrangement, not the service company, is responsible for determining the benefits, rates, underwriting criteria, and claims payment procedures.

(8) The service company shall disclose to the self-insurer or multiple-employer welfare arrangement all charges, fees, and commissions received from all services in connection with the provision of administrative services for such self-insurer or arrangement, including any fees or commissions paid by insurers providing reinsurance.

(9) Compensation to a service company for claims adjustment or settlement shall in no way be contingent on claims experience. This section does not prevent the compensation of a service company from being based on premiums or charges collected or the number of claims paid or processed.

(10) Each service company shall identify to the office any ownership interest or affiliation of any kind with any insurance company responsible directly or through reinsurance for providing benefits to any plan for which it provides services.