Chapter 33. INSURANCE AND ANNUITY CONTRACTS.
Article 1. General Powers and Duties of Insurance Commissioner.
Revisers’ Note.—This chapter, with eliminations sis hereinafter noted, contains the substance of c. 34, §§10-21a (10) of c. 55, c. 55A, Code 1923, cc. co 15-21, Acts 1923, and cc. 41 and 69, Acts 1925. The au provisions of said c. 34 are classified and grouped c. under arts. 1, 2, 3, 4, 6, 7 and 9; §§10-20 of said c. 55, dealing with farmers’ mutual cooperative fire R insurance companies, constitute art. 5; §§21a(l)-21a cou (10) of said c. 55, dealing with mutual life insurance aud companies, are covered in art. 3; and said c. 55A con tut stitutes art. 8. An attempt is made to eliminate 191 many duplications and some inconsistencies, particu exp larly in the provisions of said c. 34, which is an ac of cumulation of various independent acts, most of ten which, seemingly, have been enacted without any sec comprehensive attempt at correlation with statutes pu existing at the time of the respective enactments. wh The following sections of c. 34, Code 1923, are wo omitted: Section 6a, as covered by arts. 7 and 8, c. wo 3; §15b, as covered by §2, art. 5, c. 57; §16, as to repealed by Acts 1913, c. 19; §34, as covered by Acts ap 1913, c. 19, §15a, and subsequent amendments and an enactments; §37, as covered by §5, art. 1 of this chapter; §§67 and 69, as repealed by Acts 1923, c. 18; §71, as not found sufficiently practicable to war co rant its retention; §72, as covered by §7, art. 1, c. ins 57, and §77, as repealed by Acts 1923, c. 16. The omission, or partial omission, of other sections is sh pointed out in the notes to specific sections of this bu chapter, where it is deemed advisable to explain the me omission in connection with the context. The subten stance of many sections, wholly or partly duplications of one another, such as those prescribing con all ditions precedent to companies and agents doing the business in the State, is embodied in sections deal in ing generally with the subject matter. The sources to of ■ these composite sections and the elimination sh which they involve appear from the statutory history and notes appended to them. (1
Revisers’ Note.—This article contains sections of 34, Code 1923, prescribing general powers and ties of the insurance commissioner. Provisions ealing with his specific powers and duties are inrporated in the proper articles of this chapter.
§1. Insurance Commissioner; Expenses; Assistants.—The auditor of this State shall continue to be the insurance commissioner of this State. He shall be repaid his actual disbursements for traveling expenses expended in the course of his duties, not exceeding one thousand dollars in any one year, an itemized account of which shall be filed with the state auditing board traveling expenses and be audited by it before payment thereof. He shall be provided with furniture, clerical assistants and actuaries and such other help as shall be necessary, such clerical assistants and actuaries to be appointed and their compensation to be fixed by him and paid by the auditor’s warrant drawn on the treasurer.(1907, c. 77, §1; Code 1923, c. 34, §1.)
Revisers’ Note.—The words “expended in the course of his duties” are new. The words “state auditing board of traveling expenses” are substituted for the words “board of public works.” Acts 1917, c. 59 (Code 1923, c. 17, §25), requires traveling expenses to be approved by the state auditing board of traveling expenses. This statute likely was intended to supersede the former provision in this section requiring an auditing before the board of public works. At any rate, no reason is perceived why there should be a double auditing. After the word “appointed,” near the end of the section, the words “by the auditor” are omitted, the effect being to permit the insurance commissioner, as such, to appoint and fix the compensation of his own assistants.
§2. General Duties of Commissioner.—The commissioner shall see that all laws respecting insurance companies are faithfully executed; shall furnish to each insurance company doing business in this State printed forms of the statements required by law; shall on or before the tenth of each month pay into the state treasury the fees which he may have received during the month previous; and may administer oaths in the discharge of his duties. He shall report the governor changes which, in his opinion, should be made in the laws relating to insurance.(1907, c. 77, §2; Code 1923, c. 34, §2.)
Revisers’ Note.—After the first semicolon, the words “may employ clerical aid” are omitted as covered by the preceding section.
§3. Examination of Resident Insurance Companies.—The insurance commissioner shall at least once in four years, either personally, or by his deputy or agent, visit each insurance company incorporated by this State, thoroughly examine its financial condition, and ascertain whether it has complied with all provisions of the laws of this State. All the expenses of such examination shall be borne by the company examined.(1907, c. 77, §11; Code 1923, c. 34, §11.)
Revisers’ Note.—The words “either personally, or by his deputy or agent” are new. Before the words “insurance company,” the word “life” is eliminated, the effect being to make this section apply to all insurance companies. The concluding sentence is new.
§4. Examination of Foreign Companies.—The commissioner may in like manner examine any insurance company not incorporated by this State but doing business herein, and may employ assistants in making the examination; and all the expenses of an examination without the State shall be borne by the company examined.(1907, c. 77, §12; Code 1923, c. 34, §12.)
Revisers’ Note.—Before the words “insurance company,” the word “life” is omitted, the effect being to make this section apply to all insurance companies.
§5. Examination and Supervision of Business Methods of Insurance Companies.—The insurance commissioner may from time to time examine the methods of business of any company, corporation, association, partnership, or combination of persons doing any kind or form of insurance business in this State, and may require them to answer such questions as he may think necessary for the purpose of such inquiry; and if, in his opinion, any such company, corporation, association, partnership or combination of persons is doing business in an illegal, improper or unjust manner, or failing to adjust and pay losses and obligations when they become due, excepting claims to which there is a substantial defense, he may order it to discontinue such illegal or improper method of doing business and may order it to adjust and pay its losses and obligations as they become due.(1907, c. 77, §3; Code 1923, c. 34, §3.)
§6. Enforcement of Orders of Commissioner.—If any such company, corporation, association, partnership, or combination of persons shall fail within ten days to obey any such order of the commissioner, he may apply to a court or judge having jurisdiction for an injunction or for the appointment of a receiver, or for both, and such court or judge may enforce such order of the commissioner by injunction, or by appointing a receiver to take charge of the property and affairs of such company, corporation, association, partnership or combination of persons, or both; and may make all such further orders as may be necessary or proper to carry into effect such an injunction or receivership.(1907, c. 77, §4; Code 1923, c. 34, §4.)
§7. Fees Payable to Commissioner.—Except where it is otherwise specially provided, the commissioner shall demand and receive the following fees from all insurance companies: For annual fee for each license, ten dollars; for receiving and filing annual reports, ten dollars; for valuation of policies of life insurance companies organized under the laws of this State, one cent for each one thousand dollars of insurance; for valuation of policies of life insurance companies organized under the laws of any other state admitted to transact business in this State, such rate for each one thousand dollars of insurance valued as is imposed by such other state upon any similar insurance company organized under the laws of this State admitted to transact business in such other state; for filing any additional paper required by law, twenty-five cents; for every certificate of valuation, copy of report or certificate of condition of company to be filed in any other state, five dollars; for each agent’s certificate of authority and copy of report, five dollars.(Code 1868, c. 34, §4; 1882, c. 85, §4; 1907, c. 77, §5; Code 1923, c. 34, §5.)
Revisers’ Note.—The words “Except where it is otherwise specially provided” are new and are inserted to cover special provisions in other articles of this chapter.
§8. Reports by Commissioner.—The commissioner shall annually, within sixty days after the first day of January, submit to the governor a report of his official acts, and of the condition of insurance companies doing business in this State, with a condensed statement of their reports made to him, an abstract of all accounts rendered to any court by the receivers of insolvent insurance companies, and the reports, or abstracts of the reports, made to the insurance commissioner by such receivers, together with a statement of the fees received from all such companies and paid by him into the state treasury.(1907, c. 77, §6; Code 1923, c. 34, §6.)
Revisers’ Note.—The provision prescribing the time for the report is new.
Article 2. General Provisions.
Revisers’ Note.—Section 60, c. 34, Code 1923, is omitted as covered in §41 of this article. §1 . “Company” Defined.—Whenever the word “company” is used in this chapter it shall be held to include corporations, associations, partnerships or individuals. (1907, c. 77, §76; Code 1923, c. 34, §76.) --- RIGHT COLUMN --—General Provisions. 878
§1. “Company” Defined.—Whenever the word “company” is used in this chapter it shall be held to include corporations, associations, partnerships or individuals.(1907, c. 77, §76; Code 1923, c. 34, §76.)
§2. What Companies Domestic and What Foreign.—Every insurance company having its principal place of business in this State and incorporated by an act of the general assembly of Virginia passed before the twentieth day of June, in the year eighteen hundred and sixty-three, or heretofore or hereafter incorporated under and pursuant to any act of the legislature of this State, shall be deemed a domestic company; and every other incorporated insurance company a foreign company.(1864, c. 33, §12; Code 1868, c. 34, §1; 1882, c. 85, §1; 1901, c. 107, §1; 1907, c. 77, §63; Code 1923, c. 34, §63.)
Revisers’ Note.—The word “incorporated,” near the end of the section, is new.
§3. Charter Not to Issue Except With Approval of Insurance Commissioner.—The secretary of state of this State shall not issue a certificate of incorporation to any insurance company or association until the insurance commissioner shall have examined the same and become satisfied in his opinion that such company or association is in a position to comply with the laws of this State governing insurance companies, and until the insurance commissioner shall have approved the charter in writing.(1907, c. 77, §74; Code 1923, c. 34, §74.)
Revisers’ Note.—This section is redrafted for the purpose of removing ambiguities.
§4. Filing With Commissioner Copy of Charter and Statement of Organization.—Every insurance company or association shall, before issuing a policy, making a contract of insurance, or otherwise engaging in the business of insurance in this State, file with the insurance commissioner a certified copy of its charter or articles of association and a statement, verified by the oath of its president and secretary, showing that said company is duly organized.(1907, c. 77, §54; Code 1923, c. 34, §54.)
Revisers’ Note.—After the word “association” first occurring, the words “incorporated or organized in this State” are omitted, the result being to make this section apply to all insurance companies. The words “or otherwise engaging in the business of insurance in this State” are new.
§5. Issuance of License by Insurance Commissioner.—Upon receiving such certified copy and statement, the insurance commissioner may examine such company or association, and if he finds that it has complied with the terms of its charter or articles of association and the laws of this State, and with all the provisions in other sections of this chapter prescribing conditions precedent to the issuance of a license, or certificate of authority, and is satisfied that it is solvent (or if chartered or organized under the laws of any foreign country, is solvent in the United States), he may issue to it a license, or certificate of authority, stating such facts and authorizing it to issue policies, make contracts of insurance, and transact business in this State.(Code 1868, c. 34, §§2, 3; 1871, c. 107, §2; 1872-3, c. 69, c. 221; 1881, c. 38, §2; 1882, c. 85, §§2, 3; 1891, c. 108, §2; 1907, c. 77, §§14, 47, 55; Code 1923, c. 34, §§14, 47, 55.)
Revisers’ Note.—This section is a composite redraft of §§14, 47 and 55, c. 34, Code 1923, so combined as to make the provisions apply generally to both domestic and foreign companies. The words “may issue” are substituted for “shall issue.”
§6. Compliance With Laws, and License, Conditions Precedent to Doing Business.—No insurance company or association shall transact the business of insurance, enter into any contract of insurance, or issue or deliver within this State any policy or contract of insurance, until such company or association shall have complied with all the laws of this State relating to it as a corporation, insurance company or otherwise, nor until it shall have obtained the license, or certificate of authority, mentioned in the preceding section.(Code 1868, c. 34, §§2, 3; 1871, c. 107, §2; 1872-3, c. 69, c. 221; 1881, c. 38, §2; 1882, c. 85, §§2, 3; 1891, c. 108, §2; 1907, c. 77, §§14, 19, 45; Code 1923, c. 34, §§14, 19, 45.)
Revisers’ Note.—This section is a composite of provisions appearing in §§14, 19 and 45, c. 34, Code 1923, so reconstructed as to apply to all insurance companies, foreign and domestic alike. The rest of said §19 is in §3, art. 7 of this chapter.
§7. Insurance Companies of Foreign Countries; Capital; Deposit of Securities.—No insurance company of any foreign country shall take risks in this State unless it has a cash capital or surplus of two hundred thousand dollars and shall have made a deposit with the insurance commissioner of this State, or with the proper officer of some other state, of not less than two hundred thousand dollars in securities in trust for the benefit of its policy holders in the United States, and no policy issued by such company to any citizen of this State shall be invalidated by a state of war between the government of the United States and the government under the law of which it was organized.(1867, c. 117, §2; Code 1868, c. 34, §2; 1891, c. 108, §2; 1907, c. 77, §41; Code 1923, c. 34, §41.)
Revisers’ Note.—This section and the three following sections, as originally enacted, applied exclusively to fire insurance companies. The intention in this revision is to make them apply generally to all classes of insurance. The words “or surplus” are new. The words “a state of war,” near the end of the section, are substituted for the words “the concurrence of hostilities.”
§8. Conditions to Doing Business by Companies of Foreign Countries.—Every insurance company of any foreign country, shall, before admission to do business in this State, in addition to conforming to other requirements of this chapter, furnish to the insurance commissioner a copy of its annual report made in the country where it was organized, and the certificates of the officer holding in trust said deposit of two hundred thousand dollars, stating the manner in which the same is invested and the purpose for which the same is held; and it shall furnish annually to the insurance commissioner, on or before the first day of April, a statement of the condition of its affairs in the United States in such form as he shall require.(1907, c. 77, §42; Code 1923, c. 34, §42.)
Revisers’ Note.—See revisers’ note to preceding section. The words “in addition to conforming to other requirements of this chapter” are new. The provision requiring a copy of the charter or articles of association to be furnished is omitted as covered by §4 of this article. The provision prescribing the date for the report is new.
§9. What Constitutes Capital of Companies of Foreign Countries.—The capital of every insurance company of any foreign country shall, for all the purposes of the insurance laws of this State, be the aggregate value of its money or securities deposited as aforesaid, and all sums loaned on real estate security in any state in the United States in conformity with the laws of such state providing for the investment of the assets of insurance companies therein, and all other assets in the United States in which insurance companies of the same class organized under the laws of this State may invest: Provided, That such real estate securities and assets shall be held in the United States by trustees who are citizens of the United States, approved by the insurance commissioner, for the benefit of all its policyholders and creditors in the United States, after making the same deduction from such aggregate value for losses and liabilities in the United States, and for premiums upon risks therein, not expired, as is authorized or required by the laws of this State, or by the regulation of its insurance department, with respect to insurance companies of the same class organized under the laws of this State.(1907, c. 77, §43; Code 1923, c. 34, §43.)
Revisers’ Note.—See revisers’ note to §7 of this article. The words “insurance companies of the same class” are substituted for “fire insurance companies.”
§10. How Trustees Appointed; Copies of Trust Deed and Vote of Appointment to be Filed; Examination by Commissioner.—The trustees referred to in the preceding section shall be appointed by the directors of such company, and a certified copy of the vote by which they are appointed and of the trust deed shall be filed in the office of the insurance commissioner; and he may examine such trustees or the agents of such company under oath, and its assets, books and accounts, in the same manner as he may examine the officers, agents, assets, books and accounts of any other company authorized to do insurance business in this State.(1907, c. 77, §44; Code 1923, c. 34, §44.)
Revisers’ Note.—See revisers’ note to §7 of this article. The word “other,” before the word “company” last occurring, is new. The word “fire” is omitted before the words “insurance business” near the end of the section.
§11. No Person to Participate in Unauthorized Insurance Transaction.—No person shall pay or forward any premium or application for insurance or in any manner secure, help or aid in the placing of any insurance, or effect any contract of insurance upon real or personal property or upon life, or other risk or casualty, directly or indirectly, with any insurance company or association which has not been authorized and licensed to do business in this State.[Code 1868, c. 34, § §2, 3; 1871, c. 107, §2; 1872-3, c. 69, c. 221; 1881, c. 38; 1882, c. 85, §§2, 3; 1891, c. 108; 1901, c. 16, §1; Code 1923, c. 34, §60a(l).]
Revisers’ Note.—This section comprises the latter portion of §60a(l), c. 34, Code 1923. See §24 of this article for rest of said §60a(l). The words “or other risk or casualty” are new. After the word “association,” the words “not of this State” are omitted. The words “and licensed” are new.
§12. Time Licenses Shall Continue in Force.—All licenses, or certificates of authority issued by the insurance commissioner to insurance companies or associations, or agents, solicitors or brokers, shall continue in force until the first day of April next following their issuance, unless the same be sooner revoked.(Code 1868, c. 34, §3; 1881, c. 38; 1882, c. 85, §3; 1891, c. 108; 1907, c. 77, §58; Code 1923, c. 34, §58; 1923, c. 15, §58.)
Revisers’ Note.—The date of the beginning of the license is changed from the first day of April to the first day of July, in order to correspond with the date of the beginning of the fiscal year and to harmonize this section with the general provision as to license periods, §16, art. 12, c. 11. The proviso is new. It is partly based on the provisions of §39, c. 32, Code 1923.
Legislative Note.—-April first is retained as the first day of the license year, instead of July first as fixed by the revisers. In view of this change, the proviso added by the revisers is omitted as it was based on their modification of the license year.
§13. Refusal to Issue or Revocation of License.—The insurance commissioner may refuse to issue a certificate of authority to any domestic or foreign company if in his judgment, such refusal will best promote the interests of the people of this State. When the insurance commissioner upon investigation is satisfied that any company acting under his supervision and holding a license, or certificate of authority, from him, is insolvent, or has failed to comply with or is violating the insurance laws of this State, or is conducting business fraudulently, or is not carrying out its contracts in good faith, he shall proceed to revoke such license, or certificate of authority. When the insurance commissioner, on application, shall refuse to issue any license, or certificate of authority, or when he shall proceed to revoke the same, whether for any of the reasons aforesaid or in pursuance of any other provision of this chapter, the company shall be furnished a statement of the reasons for such failure to issue or revocation and shall be given thirty days’ notice of the time and place of a hearing at which the insurance commissioner will proceed to determine whether such license, or certificate, shall be finally refused, or shall be revoked, as the case may be. Such statement and notice, when the company has been admitted to do business in this State, may be served in the manner provided for the service of process in section forty-three of this article. If the company has not been admitted to do business in this State, such statement and notice may be served as a notice is served under section one, article two, chapter fifty-six of this Code, upon any person in this State who shall be designated by the company for such purpose upon the application for such license, or certificate of authority, or by mailing the same addressed to the company at such place as shall be designated by the company on such application, the posting to be at such a time that the statement and notice should reach its destination by due course of mail not less than thirty days before such hearing. The company may appear with witnesses, and may be heard through its officers or agents, or by counsel, or both. The insurance commissioner may take such oral or written proof, for or against the issuance or revocation, as he may deem advisable. If upon the hearing the commissioner finds that the reasons stated for refusing or revoking the license are true, he may finally refuse to issue, or may revoke, the license, or certificate of authority. A stenographic report of each proceeding under this section shall be made at the expense of the commissioner, and a transcript thereof retained in his files, and he shall make a written report of his findings, which shall constitute a part of the record.
Any company, the application of which for a license has been refused, or the license of which has been revoked, in the manner aforesaid, may, within thirty days after the decision of the insurance commissioner upon the hearing aforesaid, present its petition in writing to the circuit court of the county in which the seat of government of this State is situated, or to the judge of such court in vacation, praying for a review and reversal of such decision. Before presenting its petition to the court or judge, the petitioner shall mail a copy thereof to the insurance commissioner. Upon the receipt of such copy, the insurance commissioner shall forthwith transmit to the clerk of such court the record of the proceedings before him. The court or judge shall fix a time for the review of said proceedings at his earliest convenience. Notice in writing of the time and place of such hearing shall be given to the insurance commissioner at least ten days before the date set therefor. The court or judge shall, without a jury, hear and determine the case upon the record of the proceedings before the insurance commissioner. The court or judge may enter an order revising or reversing the decision of the insurance commissioner, if it appears that the decision was clearly wrong, or may affirm such decision. The judgment of the circuit court or judge may be re viewed upon appeal in the supreme court of appeals: Provided, That nothing contained in this section shall be taken or construed as preventing any such company from continuing in good faith all contracts made in this State during the time such company was legally authorized to transact business therein.(1872-3, c. 69, c. 221; 1881, c. 38; 1882, c. 85, §2; 1891, c. 108; 1907, c. 77, §49; 1913, c. 19, §15e; Code 1923, c. 34, §15e.)
Revisers’ Note.—In this section as originally enacted, provision is made for reviewing decisions of the insurance commissioner, with no method of procedure prescribed for such review, wherefore it is doubtful whether the provisions relating to review were practical or operative. In lieu of these provisions, §15e, c. 34, Code 1923, is redrafted for the purpose of prescribing a specific method of procedure. The redraft is largely based on §§8 and 9, art. 1, c. 30.
§14. Reissuance of Revoked License.—When any license, or certificate of authority, has been revoked by the insurance commissioner under the provisions of the preceding section, the same may, except where it is otherwise specially provided by law, be reissued by him when he is satisfied that the conditions causing the revocation have ceased to exist.(1907, c. 77, §49; Code 1923, c. 34, §49.)
Revisers’ Note.—This section is an expansion of the provision in §49, c. 34, Code 1923, authorizing reissuance where the revocation is based on unsoundness of the company. The other provisions of that section are omitted as covered by the provisions of the preceding section.
§15. Insurance Companies Subject to Examination by Insurance Commissioner.—Any insurance company now licensed or which may hereafter be licensed by the insurance commissioner to do business in this State shall, so long as it retains any West Virginia business on its books, be subject to examination by the insurance commissioner. For such purposes, the commissioner, his deputies and agents shall have free access to all books and papers of any insurance company doing business in this State, whether such books or papers be at the home office of the company or elsewhere, and to all books and papers of its agents, and may examine under oath its officers or agents relative to its condition; and if any company, whether incorporated under the laws of this State or of some other state or country, or its officers or agents, shall refuse to submit to such examination, or to comply with any of the provisions of this chapter, the authority of such company to do business in this State shall be revoked.[1872-3, c. 69, c. 221; 1881, c. 38; 1882, c. 85, §2; 1891, c. 108; 1901, c. 16, §§4, 5; 1907, c. 77, §13; 1913, c. 19, §15i; Code 1923, c. 34, §§13, 15i, 60a (4).]
Revisers’ Note.—This section is a composite of §13, and parts of §15i, and 60a (4), c. 34, Code 1923, so reconstructed as to make the provisions apply alike to all insurance companies. The provision in said §15i relating to the auditor as attorney in fact for service of process is omitted as covered by §43 of this article. The concluding sentence of the same section is transferred to §33 of this article. The provisions in §60a(4) relating to the duty of the commissioner to investigate on complaint made are embodied in the following section.
§16. Duty of Commissioner to Investigate on Complaint Made.—It shall be the duty of the insurance commissioner at any and all times, upon complaint made to him in writing and certified to by the oath of the complainant, that any of the provisions of this chapter have been violated, forthwith to inquire into and ascertain the merits of such complaint.[1901, c. 16, §4; Code 1923, c. 34, §60a(4).]
Revisers’ Note.—See revisers’ note to the preceding section.
§17. Penalty for Failure to Produce Books or Papers or Make Affidavit.—Any manager, officer or agent of any insurance company who shall refuse or fail to produce to the insurance commissioner or to his deputy or agent such books and papers as he may demand, or to make the affidavit as provided in section fifteen of this article, shall be guilty of a misdemeanor, and, upon conviction, punished by a fine of not more than five hundred dollars.[1901, c. 16, §§5, 7; Code 1923, c. 34, §§60a(5), 60a(7).]
Revisers’ Note.—The minimum of one hundred dollars prescribed in §60a(7), c. 34, Code 1923, is eliminated from the penalty provision.
§18. Discrimination by Insurance Companies.—No life insurance company doing business in this State shall make or permit any distinction or discrimination in favor of individuals of the same class, or of equal expectation of life, in the amount of payment or return of premiums or rates charged for policies of insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contract it makes, nor shall any such company permit, or agent thereof offer or make, any contract of insurance or agreement as to such contract other than is plainly expressed in the issued policy thereon; and no company authorized or permitted to do an insurance business within this State, or any officer, agent, solicitor or representative thereof, shall make any contract for such insurance on property or risk located within the State or against liability, casualty, accident or hazard that may arise or occur thereon, or any agreement as to such contract, other than as plainly expressed in the policy issued, or to be issued, thereon; and no insurance company, association or society, by itself or any other party, and no insurance agent, solicitor or broker, personally, or by any other party, shall offer, promise, allow, give, set off or pay, directly or indirectly, any rebate of or part of the premium payable on the policy, or on any policy, or agent’s commission thereon, earnings, profits, dividends, or other benefit founded, arising, accruing or to accrue thereon, or therefrom, or any other valuable consideration or inducement to or for insurance, on any risk in this State now or hereafter to be written, which is not specified in the policy contract of insurance; nor shall any such company, association, or society, agent, solicitor, or broker, personally or otherwise, offer, promise, give, sell or purchase any stocks, securities or property, or any dividends or profits accruing or to accrue thereon, or other thing of value whatsoever as inducement to insurance, or in connection therewith, which is not specified in the policy. And no insurance agent, solicitor or broker, personally or by any other party, shall directly or indirectly offer a loan through any building association or bank, or in any other way, as an inducement to insurance; nor shall any insurance agent, solicitor or broker require an applicant for a loan to cancel outstanding insurance in admitted and solvent companies: Provided, That any insurance agent, solicitor or broker may accept the renewal of any policy, even though such agent, solicitor or broker represents a building association, bank or other party making the insured a loan, if the insured protects the lender by an indorsement on such policy in proper form. Upon satisfactory evidence of the violation of any provision of this section by any solicitor or agent of any insurance company, the insurance commissioner shall forthwith revoke the certificate of authority of such solicitor or agent, and no license shall be issued to such agent or solicitor within one year from the date of the revocation of such license; and any insurance company, association, or society, its officers, solicitors or agents, or any insurance broker violating the provisions of this section shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined one hundred dollars for each and every violation, or, in the discreation of the court, imprisoned in the county jail of the county in which the offense is committed for a period of not less than ninety days nor more than six months.(1891, c. 108; 1907, c. 77, §15; 1913, c. 19, §15; Code 1923, c. 34, §15; 1923, c. 20, §15.)
Revisers’ Note.—Section 15, c. 20, Acts 1923, is redrafted without change in substance. The residue of said §15 is covered in the three following sections.
§19. Acceptance of Discrimination or Favor by Insured.—No insured person or party shall receive or accept, directly or indirectly, any rebate or premium or part thereof, or agent’s, solicitor’s or broker’s commission thereon, payable on the policy, or on any policy of insurance or any favor or advantage or share in the dividend or other benefit to accrue thereon, or any valuable consideration or inducement, not specified in the policy contract of insurance. The amount of the insurance whereon the insured has received or accepted, either directly or indirectly, any rebate of the premium, or agent’s, solicitor’s or broker’s commission thereon, shall be reduced in such proportion as the amount of value of such rebate, commission, dividend, or other consideration so received by the insured, bears to the first premium paid on such policy, and any person insured, in addition to having the insurance reduced, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one hundred dollars.(1913, c. 19, §15; Code 1923, c. 34, §15; 1923, c. 20, §15.)
Revisers’ Note.—See revisers’ note to preceding section.
§20. Insurance Commissioner to Investigate Charges of Rebating.—It shall be the duty of the insurance commissioner to investigate any charges of rebating submitted to him. Such charges shall be in writing and shall specify the agent, the company, the party receiving the rebate, and all facts in connection with the transaction within the knowledge of the informant and shall be verified by the oath of the informant. Immediately upon the filing of said charges, the insurance commissioner shall proceed to investigate the same. He shall have power to compel the attendance of witnesses and may examine under oath any person whom he has reason to believe has knowledge of the facts alleged.(1891, c. 108; 1913, c. 19, §15; Code 1923, c. 34, §15; 1923, c. 20, §15.)
Revisers’ Note.—See revisers’ note to §18 of this article. The provision requiring the charges to be in writing and under oath is new. It is in harmony with §16 of this article. At the end of the section, the words “and the making of any false statements on such examination shall be perjury and punishable as a felony” are omitted. The criminal statutes relating to perjury and false swearing are deemed sufficient as prescribing a penalty for violations of the provisions of this section.
§21. Exemptions From Three Preceding Sections.—Nothing in the three preceding sections shall be so construed as to prohibit any company issuing non-participating insurance from paying bonuses to policyholders or otherwise abating their premium in whole or in part out of surplus accumulated from non-participating insurance; nor to prohibit any company transacting industrial insurance on the weekly or monthly payment plan from returning to policyholders who have made premium payments for a period of at least one year directly to the company at its home or district office, a percentage of the premium which the company would have paid for the weekly or monthly collection of such premium; nor to prohibit any life insurance company doing business in this State from issuing policies of life or endowment insurance with or without annuities at rates less than the usual rates of premiums for such policies, insuring members of organizations or employees of any employer, who through their secretary or employer may take out insurance in an aggregate of not less than fifty members and pay their premiums through such secretary or employer; nor to prohibit any person, partnership or corporation or stockholders thereof, from carrying their insurance, at the full premium rate, with and through an insurance agency in which they are interested.(1913, c. 19, §15; Code 1923, c. 34, §15; 1923, c. 20, §15.)
Revisers’ Note.—This section is the concluding portion of §15, c. 20, Acts 1923. See revisers’ note to §18 of this article.
§22. Misrepresentation by Insurer.—No insurance company, association or society, or any officer, director, agent, broker or solicitor thereof, shall issue, circulate or use, or cause or permit to be issued, circulated or used, any written or oral statement, or circular, misrepresenting the terms of any policy issued or to be issued by such company, or misrepresenting the benefit or privileges promised under any such policy, or estimating the future dividends payable under any such policy. No insurance company, association or society, officer, director, agent, solicitor or broker, or any person, firm, association or corporation shall make any misrepresentation or incomplete comparison of policies, oral, written or otherwise, to any person insured in any company for the purpose of inducing or tending to induce such person to take out a policy of insurance, or for the purpose of inducing or tending to induce a policyholder in any company to lapse, forfeit, or surrender his insurance therein, and to take out a policy of insurance in another like company. Upon satisfactory evidence of the violation of any provision of this section by any insurance company, association or society, its officer, solicitor or agent, or any insurance broker, the insurance commissioner shall forthwith revoke the certificate of authority of such offending company, association or society, its officers, solicitors or agents or any insurance broker, and no license shall be issued to such company, association or society, officers, agents, solicitors or brokers, within one year from the date of the revocation of such license: Provided, however, That the violation of this section by an agent, solicitor or broker shall not be considered a violation by the company that such agent, solicitor or broker represents. Any insurance company, association or society, agent, solicitor or broker, or any person, firm, association or corporation violating any provision of this section shall be guilty of a misdemeanor, and, upon conviction thereof, each offender shall be fined one hundred dollars for each and every violation, or, in the discretion of the court, imprisoned for a period of not less than ninety days nor more than six months.(1913, c. 19, §15a; Code 1923, c. 34, §15a.)
Revisers’ Note.—The part of the penalty prescribing the term of imprisonment is new. It is in harmony with §18 of this article.
§23. Mutual Policies Must Show Amount for Which Assured Liable.—Every mutual company shall cause to appear in the body of its policy the total amount for which the assured may be liable under the charter of such company.(1907, c. 77, §70; Code 1923, c. 34, §70.)
§24. Approval of Policies of Foreign Companies by Resident Agent.—Except where it is otherwise specially provided, no insurance company or association not incorporated under the laws of this State, shall make, write, place, or cause to be made, written or placed, any policy, duplicate policy, or contract of insurance of any kind or character, or a general or floating policy, upon property situated or located in this State, or upon life, except after such risk has been approved in writing by an agent who is a resident of this State, regularly commissioned and licensed to transact insurance business herein, who shall countersign all policies so issued and receive the commission thereon when the premium is paid.[1901, c. 16, §1; Code 1923, c. 34, §60a(1).]
Revisers’ Note.—The concluding portion of §60a (1), c. 34, Code 1923, is transferred to §11 of this article. The words at the beginning of the section, “except where it is otherwise specially provided,” are new. At the end of the section, the following words are omitted as superfluous: “to the end that the State may receive the taxes required by law to be paid on the premiums collected for insurance on all property located in this State.”
§25. Transfer of Risk to Unlicensed Company.—No insurance company shall, in any manner whatsoever, accept the whole or any part of a risk on property located in this State and transfer, in any manner whatsoever, to any company not authorized to transact business in this State, such risk or liability assumed by said first named company or any part thereof.[1901, c. 16, §2; Code 1923, c. 34, §60a (2).]
§26. Penalty for Violation of Two Preceding Sections.—Any insurance company or corporation, insurance agency, or any person or agent thereof, violating any provision of the two preceding sections shall be guilty of a misdemeanor, and, upon conviction thereof, fined not more than five hundred dollars.[1901, c. 16, §7; Code 1923, c. 34, §60a (7).]
Revisers’ Note.—The minimum fine of one hundred dollars is eliminated.
§27. Companies Exempted From Sections 11, 24 and 25.—The provisions of sections eleven, twenty-four and twenty-five of this article shall not apply to property of common carriers used by them in their business as such nor to the property of any person while in transit and in the custody of a common carrier.[1901, c. 16 §6; Code 1923, c. 34, §60a (6).]
Revisers’ Note.—Section 60a (6), c. 34, Code 1923, is redrafted to eliminate ambiguities.
§28. No Waiver of Law by Agreement.—No agreement between the company and the policyholder or applicant for insurance shall be held to waive any of the provisions of this chapter.[1907, c. 67, §5; Code 1923, c. 34, §34a (5).]
§29. Limitation by Company of Time for Suit.—No insurance company shall limit the term within which any suit shall be brought against it to a period less than one year from the time when the loss insured against shall occur.(1907, c. 77, §48; Code 1923, c. 34, §48.)
§30. Reduction of Capital.—No company licensed by the insurance commissioner shall reduce its capital stock until such action is approved by the insurance commissioner.(1913, c. 19, §15f; Code 1923, c. 34, §15f.)
§31. Reduction of Surplus by Dividends.—No company licensed by the insurance commissioner shall declare or pay dividends to stockholders until such action be approved by the insurance commissioner, if by the payment of such dividend the net surplus of such company would thereby be reduced to an amount less than one-eighth of its capital stock.(1913, c. 19, §15g; Code 1923, c. 34, §15g.)
§32. Reinsurance.—No company licensed by the insurance commissioner shall transfer or reinsure, directly or indirectly, substantially all of its West Virginia risks or contracts until a certified copy of the agreement or contract by which such transfer or reinsurance is to be effected has been filed with and approved by the insurance commissioner.(1913, c. 19, §15h; Code 1923, c. 34, §15h.)
§33. Reinsurance When Capital Impaired.—If upon examination by the insurance commissioner he shall determine that the capital of any such company is impaired, he shall require it to make good such impairment within thirty days, and, upon failure to comply with this requirement to the satisfaction of the insurance commissioner, it shall immediately reinsure its West Virginia business, complying with the conditions prescribed in the preceding section.(1913, c. 19, §15i; Code 1923, c. 34, §15i.)
Revisers’ Note.—This section is a redraft of the last sentence of §15i, c. 34, Code 1923. The residue of said §15i is in §§15 and 43 of this article. The time period is changed from one month to thirty days. The word “stock” is omitted after the word “capital.”
§34. Penalty for Violation of Sections 30-33.—Every company violating any provision of sections thirty, thirty-one, thirty-two or thirty-three of this article shall be guilty of a misdemeanor, and, upon conviction, fined not more than ten thousand dollars.(1913, c. 19, §15k; Code 1923, c. 34, §15k.)
Revisers’ Note.—The words “and not less than one thousand dollars” are omitted at the end of this section.
§35. Advertisement of Amount of Capital Stock; Advertisements on Face of Policies.—No insurance company shall advertise a greater amount of capital stock than the actual paid up capital stock of such company, nor, except where it is otherwise specially provided in this chapter, print, stamp or otherwise place any advertising matter upon the face of any policy issued.(1907, c. 77, §61; Code 1923, c. 34, §61; 1923, c. 19, §61.)
Revisers’ Note.—This section comprises the concluding portion of §61, c. 19, Acts 1923. The residue of the latter section is transferred to §1, art. 6 of this chapter. The words “except where it is otherwise specially provided in this chapter” are new. They are added particularly because of the provisions in §8, art. 4 of this chapter.
§36. Accounts and Reports of Receivers of Insolvent Companies.—All accounts rendered to any court by the receiver of any insolvent insurance company of this State shall be presented by such receiver to the insurance commissioner for his examination, and the commissioner shall report thereon to the court to which said accounts are rendered before the same shall be accepted by said court. Receivers of insurance companies shall report to the insurance commissioner annually, and oftener in case he shall so direct, in such forms as the commissioner shall prescribe.(1907, c. 77, §§50, 51; Code 1923, c. 34, §§50, 51.)
§37. Annual Return of and Tax on Premiums by Companies of Other States.—Every insurance company or association incorporated by or organized under the laws of any other state and licensed to transact business in this State shall return annually, on or before the first day of March, to the insurance commissioner, under the oath of its president or secretary, a statement of the gross amount of premiums collected and received by it for the previous calendar year of business done in this State; and, upon receiving from the commissioner a certificate of the acceptance of such return and of the amount of tax due thereon, such company shall pay such tax to the insurance commissioner annually on or before the first day of March. The insurance commissioner may, if he deems best, require from every such company a bond, with surety, for the payment of such tax.(1864, c. 33, §§1-4; 1867, c. 117, §1; Code 1868, c. 34, §§7, 8, 11; 1871, c. 107; 1872-3, c. 69, c. 221; 1881, c. 38; 1882, c. 85, §§7, 8, 11; 1901, c. 107, §§7, 8, 11, 13; 1907, c. 77, §65; Code 1923, c. 34, §65; 1925, c. 41, §65.)
Revisers’ Note.—The date for the return is changed from the first day of March to the first day of April; and the date for payment of the tax, from the first day of March to the first day of May.
Legislative Note.—The present law is retained instead of the changes mentioned in the above revisers’ note.
§38. Annual Return of and Tax on Premiums of Companies of Foreign Countries.—Every insurance company or association incorporated by or organized under the laws of any foreign government and licensed to transact business in this State shall return annually, on or before the first day of March, to the insurance commissioner, a statement under oath of the gross amount of premiums collected and received by such company or association for the previous calendar year of business done in this State; and the resident manager of such company or association, upon receiving from the insurance commissioner a certificate of the acceptance of such return and of the amount of tax due thereon, shall annually, on or before the first day of March, pay said tax to the insurance commissioner. The commissioner may, if he deem best, require from every such resident manager a bond with surety for the payment of such tax.(1864, c. 33, §§1-4; 1867, c. 117, §1; Code 1868, c. 34, §§7, 8, 11, 13; 1871, c. 107; 1872-3, c. 69, c. 221; 1881, c. 38; 1882, c. 85, §§7, 8, 11; 1901, c. 107, §§7, 8, 11, 13; 1907, c. 77, §66; Code 1923, c. 34, §66; 1925, c. 41, §66.)
Revisers’ Note.—The words, “of such company or association, upon receiving from the insurance commissioner a certificate of the acceptance of such return and of the amount of tax due thereon,” adopted from the preceding section, are new. The date for the return is changed from the first day of March to the first day of April; and the date for the payment of the tax, from the first day of March to the first day of May. In view of the fact that the amount of the tax is prescribed by the following section, the provision in this section fixing the amount of the tax is omitted.
Legislative Note.—The present law as to the dates for making returns and the payment of the annual license tax, respectively, are retained, instead of the changes mentioned in the above revisers’ note.
§39. Amount of Annual License Tax; Payment Into State Fund.—The annual tax which an insurance company or association is required to pay under the provisions of the two preceding sections shall be a sum equal to two percent of the gross premiums received by it on the business written or renewed in this State, less premiums returnable for cancellation, and including any so-called dividends on participating life insurance policies actually applied in reduction of premiums. All such taxes paid to the commissioner shall be paid by him into the state treasury for the benefit of the state fund.(1864, c. 33, §§1-4; 1867, c. 117, §1; Code 1868, c. 34, §§8, 11, 13; 1871, c. 107; 1872-3, c. 69, c. 221; 1881, c. 38, §2; 1882, c. 85, §13; 1901, c. 107, §13; 1907, c. 77, §73; Code 1923, c. 34, §73.)
Revisers’ Note.—Section 73, c. 34, Code 1923, is redrafted so as to make its provisions expressly apply to taxes prescribed by both of the two preceding sections.
§40. Domestic Companies Doing Business Outside State.—It shall be unlawful for any domestic insurance company, duly qualified under the laws of this State, to do business in any other state or territory of the United States without being first legally admitted and authorized so to do under the laws of such state or territory. For violation of this section by any such insurance company, the insurance commissioner may revoke the license or authority of such company doing business in this State, and may require such company to pay the taxes upon such business so unlawfully written to the state or territory in which such business was so written as provided by the laws of such state or territory.[1923, c. 21, §60a (9).]
§41. Offense Where no Penalty Prescribed.—Every person, association or corporation violating any provision of this chapter for which no penalty is provided shall be guilty of a misdemeanor, and, upon conviction thereof, fined not more than five hundred dollars.(1907, c. 77, §50; Code 1923, c. 34, §59.)
Revisers’ Note.—The provisions of §59, c. 34, Code 1923, are expanded so as to include the effect of §60, c. 34, Code 1923, and the latter section is omitted. The word “association” is new.
§42. Revocation of License on Failure to Perform Judgment or Decree.—If any insurance company or association shall neglect or refuse for thirty days after judgment or decree in any action, suit or proceeding, or if such judgment or decree be stayed pending a writ of error, appeal, or other process of review, then within thirty days from the expiration of such stay, to pay and discharge the amount of any fine, penalty or recovery adjudged against it by such judgment or decree, it shall have its authority to transact business in this State revoked by the insurance commissioner, and such revocation shall continue for at least one year from the date thereof; nor shall any insurance company or association whose authority to transact business in this State shall have been so revoked again be authorized or permitted to transact business therein until it shall have paid the amount of any such judgment, and shall have filed in the office of the insurance commissioner a certificate, signed by its president or other chief officer, to the effect that the terms and obligations of the provisions of this chapter are accepted by it as a part of the conditions of its right and authority to transact business in this State.[1882, c. 85, §2; 1891, c. 108, §2; 1901, c. 16, §8; Code 1923, c. 34, §60a (8).]
Revisers’ Note.—As the provisions of this section stood in the context of Acts 1901, c. 16, they apparently related exclusively to failure to pay fines. The revised section covers failure to perform any adjudication, which seems to have been its original purpose as it appears in §2, c. 85, Acts 1882.
§43. Process; Service on Auditor; When Service on Agent Proper.—The auditor of this State shall be, and is hereby constituted, the attorney in fact of every insurance company, domestic or foreign, doing business in this State, upon whom all legal process in any action, suit or proceeding against it may be served, and he may accept service of such process. Such process shall be served on the auditor, or accepted by him, and payment therefor made, as provided for service of process upon corporations generally.
Except in an action instituted before a justice of the peace, service of process upon, or accept ance of service by, a local or soliciting agent of such insurance company shall not hereafter con stitute or be regarded as proper or legal service upon such company.(1864, c. 33, §§7-10; Code 1868, c. 34, §§15-17; 1882, c. 85, §§15-17; 1913, c. 19, §15i; Code 1923, c. 34, §15i.)
Revisers’ Note.—This section is substantially new. It is intended to cover the provision relating to appointment of the auditor as attorney in fact omitted from §15 of this article.
Committee’s Note.—The last sentence is added.
§44. Officers by Whom Acts May be Performed.—When any report, statement or affidavit is required to be filed or made, or when any act is required to be done, by the president, vice president, secretary or other designated officer of any company, association or society, in pursuance of any provision of this chapter, and such company, association or society shall not have an officer named as designated in such provision, then such report, statement or affidavit shall be filed or made, or such act shall be done, by the officer of such company, association or society corresponding to and performing the duties and functions of the officer named in such provision.
Revisers’ Note.—This section is new.
Article 3. Life Insurance.
Revisers’ Note.—Sections 22 and 24, c. 34, Code 1923, are omitted for reasons stated in the revisers’ note to §28 of this article. The following sections of c. 55, Code 1923, relating to mutual life insurance companies, are omitted from this article: Section 21a(4), as covered by §43, art. 2 of this chapter; §§21a(5) and 21a(7), as covered by the provisions of said art. 2; §21a(8), --- PAGE 888 --887 INSURANCE, ETC as covered by §7, art. 1 of this chapter; §21a(9), as covered by §7, art. 1, c. 57. The provisions, of c. 55, Code 1923, relating to nonstock companies generally are covered in art. 1, c. 31.
§1. Capital of Life Insurance Companies.—No life insurance company shall be admitted to do business in this State, or shall, directly or indirectly, enter into contracts of insurance, issue policies, take risks or transact business in this State, unless it has at least two hundred thousand dollars cash capital fully paid up or a like amount of cash surplus, securely invested: Provided, That this section shall not apply to fraternal benefit societies organized in pursuance of the provisions of article eight of this chapter.
Revisers’ Note.—This section, based partly on the provisions of §2, art. 4 of this chapter, is new. Heretofore, the law has failed to prescribe any minimum of capital for life companies.
§2. Reports to Commissioner by Companies Chartered by This State.—Every life insurance company chartered by this State shall, on or before the first day of March in each year, render to the insurance commissioner a report, signed and sworn to by its president and secretary or other proper officers, of its condition upon the preceding thirty-first day of December, which shall include a detailed statement of its assets and liabilities on that day; the amount and character of the business transacted and moneys received and expended during the year; a descriptive list of all policies and contracts of insurance in force on that day, sufficient to enable the commissioner to calculate the reserve; and such other information as the commissioner may deem necessary.(Code 1868, c. 34, §§7, 8, 11, 13; 1882, c. 85, §§7, 8, 11-13; 1901, c. 107, §§7, 8, 11, 13; 1907, c. 77, §7; Code 1923, c. 34, §7.)
Revisers’ Note.—The date for the report is changed from the first day of March to the first day of April.
Legislative Note.—The date for the report is left as in §7, c. 34, Code 1923, instead of the date mentioned in the above revisers’ note.
§3. Valuation of Life Policies.—Upon the receipt of such report, the commissioner shall make a valuation of all outstanding policies, additions thereto, unpaid dividends and all other obligations of such company. All valuations made by him or by his authority shall be made upon the net premium basis, according to the standard of valuations adopted by the company for the obligations to be valued: Provided, That in every case the standard of valuation employed shall be stated in his annual report. Any company may adopt different standards for obligations of different dates or classes, but if the total value determined by any such standard for the obligations for which it has been adopted shall be less than that determined by the legal minimum standard hereinafter prescribed, or if the company adopt no standard, said legal minimum standard shall be used. The commissioner may vary the standards of interest and mortality in the case of corporations from foreign countries and in particular cases of invalid lives and other extra hazards, and value policies in groups, use approximate averages for fractions of a year or otherwise, and calculate values by net premiums or otherwise, and accept the valuation of the department of insurance of any other state in place of the valuation herein required if the insurance officer of such state accepts as sufficient and valid for all purposes the certificate of valuation of the insurance commissioner of this State. Policies issued by companies doing business in this State may provide for not more than one year preliminary term insurance: Provided, however, That if the premium charged for term insurance under a limited payment life preliminary term policy providing for the payment of all premiums thereof in less than twenty years from the date of the policy, or under an endowment preliminary term policy, exceeds that charged for like insurance under whole life preliminary term policies of the same company, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a whole life preliminary term policy issued in the same year and at the same age, together with an amount which shall be equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium payment period, equal to the difference between the value at the end of such period of such a whole life preliminary term policy and a full reserve at such time of such a limited payment life or endowment policy. The legal minimum standard for contracts issued before the first day of January, in the year nineteen hundred and one, shall be actuaries’ or combined experience table of mortality with interest at four per cent per annum, and for contracts issued on or after said date shall be the “American Experience Table” of mortality with interest at three and one-half per cent per annum, except, however, that any such life insurance company may at any time elect to reserve upon a three per cent reserve basis, and then upon its policies issued upon such reserve, shall be computed upon the basis of the “American Experience Table” of mortality with interest at three per cent per annum and except as hereinbefore provided.(1907, c. 77, §8; Code 1923, c. 34, §8.)
§4. Valuation of Securities.—All bonds or other evidences of debt having a fixed term and rate, held by any life insurance company, assessment life association or fraternal beneficiary society authorized to do business in this State, may, if amply secured and not in default as to principal and interest, be valued as follows: If purchased at par, at the par value; if purchased above par or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made; but the purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, and the insurance commissioner shall have full discretion in determining the method of calculating values according to the foregoing rule.(1921, c. 128, §1; Code 1923, c. 34, §8a.)
§5. Payment of Dividends.—Except where it is otherwise specially provided in this chapter, payments in the form of dividends or otherwise shall not be made to its stockholders by any life insurance company organized under the laws of this State, unless its assets exceed by the amount of such payment the amount of its paid up capital stock and all of its liabilities, including its reinsurance reserve upon policies issued before January first, in the year nineteen hundred and one, computed upon the basis of the actuaries’, or combined experience table of mortality, with compound interest at four per cent per annum, and upon policies issued after said date, computed upon the “American Experience Table” of mortality, with compound interest at three and one-half per cent per annum; and no payment shall be made to the policyholders of any such company except for matured claims and in the purchase of surrendered policies, unless the assets of such company exceed by the amount of such payments its liabilities, including its reinsurance reserve, computed as above provided in this section; but for all other purposes the reinsurance reserve of every such company shall be computed as provided in section three of this article.(1907, c. 77, §9; Code 1923, c. 34, §9.)
Revisers’ Note.—The words at the beginning of the section, “Except where it is otherwise specially provided in this chapter,” are new.
§6. Liability for Violation of Preceding Section.—Every officer or director of any such company who knowingly votes or assents to any payment, either to stockholders or policyholders, in violation of any of the provisions of the preceding section shall forfeit to the State the sum of five thousand dollars to be recovered in an action brought in the name of the insurance commissioner.(1907, c. 77, §10; Code 1923, c. 34, §10.)
§7. Annuities May Be Issued by Life Companies.—Life insurance companies chartered by and doing business in this State, and empowered to make contracts contingent upon life, may grant and issue annuities, either in connection with or separate from contracts of insurance based upon life risks, and all such annuities heretofore issued by such companies shall be valid.(1907, c. 77, §17; Code 1923, c. 34, §17.)
Revisers’ Note.—The word “based” is substituted for the word “predicted.”
§8. Reports by Insurance Companies of Other States; Valuation of Policies.—Every life insurance company organized under the laws of any other state or country, before being admitted to do business in this State, in addition to conforming to requirements of article two of this chapter, shall annually, on or before the first day of March, furnish to the insurance commissioner, on blanks to be furnished by him for that purpose, a full report of its condition on the preceding thirty-first day of December, duly sworn to by its president and secretary or other proper officers, together with a certificate, by the proper officers of the government by whose authority it is organized, of a valuation of its policies by said officers by a standard equivalent to that provided in sections three and five of this article, and that it has complied with the laws of such other state or country and is authorized to transact business therein. No license, or certificate of authority, to do business in this State shall be issued to such company, unless such certificate is furnished and the insurance commissioner is satisfied with such certificate, nor unless such other state or country shall license life insurance companies incorporated by this State to transact business within its jurisdiction upon a similar certificate from the insurance commissioner, until such company makes the report required by companies incorporated by this State. The insurance commissioner may accept the valuation of the policies of any such company made by the proper officer of the government by whose authority it is organized, providing such officer accepts the valuation made by said commissioner of policies of companies incorporated by this State; otherwise, the commissioner may at his discretion value such policies.(1907, c. 77, §18; Code 1923, c. 34, §18.)
Revisers’ Note.—Section 18, c. 34, Code 1923, is redrafted so as to put the provisions relating to issuance of a license in the form of a condition precedent and to harmonize this section with the provisions of art. 2 of this chapter. The date for the annual report is changed from the first day of March to the first day of April.
Legislative Note.—The first day of March is retained as the date for making the annual report.
§9. Participating Policies.—No domestic life insurance company and no domestic stock life insurance company, hereafter issuing or professing to issue any participating policies, shall issue any policies, except annuities, which do not by their terms give to the holders thereof full right to participate in the accumulations of such company, as provided by law. This section shall not apply to paid up or temporary and pure endowment insurance issued or granted in exchange for lapsed or surrendered policies.(1907, c. 33, §1; Code 1923, c. 34, 17a.)
§10. Rights of Insured as to Surplus on Participating Policies.—Every policyholder shall, on all participating policies issued since the twenty-third day of May in the year nineteen hundred and seven, be permitted annually to select the manner and method of the application of the surplus to be annually apportioned to his policy from among those set forth in the policy. All apportioned surplus not actually paid over to the insured, or applied in the reduction of current or future premiums or in the purchase of paid up insurance or pure endowment additions, shall be credited to the insured and carried as an actual liability and be paid at the maturity of the policy.[1907, c. 67, §3; Code 1923, c. 34, §34a (3).]
Revisers’ Note.—The words “issued since the twenty-third day of May in the year nineteen hundred and seven” are substituted for the words “hereafter issued.”
§11. What Are Mutual Companies.—Every company or association which issues to its members certificates or policies agreeing to pay certain benefits to the beneficiaries thereunder, which benefits are, by the contract therefor, to be realized from assessments levied upon the members of said company or association, or any part thereof, shall be deemed a company for the mutual protection and relief of its members.[1885, c. 15, §1; Code 1923, c. 55, §21a (1).]
Revisers’ Note.—After the word “association,” at the beginning of the section, the word “incorporated under the general or any special law of this State, or of any other of the United States,” are omitted. At the end of the first sentence, the words “and shall be subject to the provisions of this act” are omitted. The word “company” is substituted for the word “corporation.” The last sentence of §21a (1), c. 55, Code 1923, defining domestic and foreign companies, is omitted as covered by §2, art. 2 of this chapter.
§12. Statement to be Filed With Insurance Commissioner by Domestic Mutual Company.—Every such domestic company shall, on or before the first day of March in each and every year, file with the insurance commissioner a statement, under oath of the president and secretary thereof, setting forth its condition on the thirty-first day of December then next preceding, which statement shall show:
(a) The name and locality of the company;
(b) The amount of its capital stock;
(c) The amount of its capital stock paid up;
(d) The assets of the company, setting forth the nature of the several items and the securities in which they are invested;
(e) Claims for benefits adjusted and due;
(f) Claims for benefits adjusted but not due;
(g) Claims for benefits unadjusted, reported and in suspense or dispute;
(h) All other claims against the company, and all other amounts due or owing by it.[1885, c. 15, §2; Code 1923, c. 55, §21a (2).]
Revisers’ Note.—The word “company” is substituted for “corporation,” and “insurance commissioner” for “auditor.” The date for the report is changed from March first to April first.
Legislative Note.—March first is retained as the date for the report.
§13. Statement to be Filed With Insurance Commissioner by Foreign Mutual Companies.—Every such foreign company shall, before transacting or continuing to transact business in this State, file with the insurance commissioner a statement similar in character to that required of domestic companies, and shall thereafter, as long as it continues to do business in this State, be subject to the same requirement as to annual statements as are domestic companies.[1885, c. 15, §3; Code 1923, c. 55, §21a (3).]
Revisers’ Note.—“Company” is substituted for “corporation,” and “insurance commissioner” for “auditor.”
§14. When Mutual Company Entitled to License.—A license, or certificate of authority, to do business in this State may be issued to any such mutual company under the conditions prescribed in article two of this chapter, except that no license, or certificate of authority, shall be issued to any such company which grants certificates or policies whereby a benefit or payment is to become due upon the death of any person who, at the time of the execution of the contract, is over sixty-five years of age; nor shall such license, or certificate, be issued, renewed or allowed to remain in force, unless such company furnishes satisfactory evidence to the insurance commissioner that it is engaged in no other business than that authorized by the sections of this article applicable to assessment companies and the laws appertaining thereto, and that it contracts to pay benefits for no other causes than the death of the member, or policyholder, or at the end of a stipulated period of years during the life of the member, or policyholder, or upon his injury by external, violent causes, or disability by sickness or disease.[1885, c. 15, §6; 1887, c. 53, §6; 1893, c. 2, §6; Code 1923, c. 55, §21a (6).]
Revisers’ Note.—This section is a redraft of §21a (6), c. 55, Code 1923, with the elimination of provisions covered by art. 2 of this chapter. “Company” is substituted for “corporation,” and “insurance commissioner” for “auditor.” The words “the sections of this article applicable to assessment companies” are substituted for the words “this act.”
§15. Capital Stock of Mutual Companies.—Mutual life insurance companies may do business within this State with a capital stock or surplus of not less than two hundred thousand dollars, and its capital or surplus shall be invested in the same manner as is provided for the investment of its other funds. Out of the net surplus of the company the holders of the capital stock may receive a dividend of not more than ten per cent per annum, which may be accumulative. Such capital stock shall not be a liability of the company, except that it can be retired as soon as and upon such terms as in the opinion of the insurance commissioner the net surplus of the company will permit; whereupon, said stock shall be surrendered and cancelled and the right to vote thereon shall cease.(1907, c. 77, §33; Code 1923, c. 34, §33.)
Revisers’ Note.—The words in the first sentence, “capital stock or surplus of not less than two hundred thousand dollars,” are substituted for the words “capital stock of not less than one hundred thousand dollars.” The amount of the capital or surplus is changed in pursuance of the policy to require a capital or surplus of at least two hundred thousand dollars from all life companies. See §1 of this article. The word “surplus” is added to cover companies which do not have any capital. Near the beginning of the section, the words “and its capital or surplus” are substituted for the word “which,” to clarify the meaning. At the beginning of the second sentence, “the” is substituted for “this.”
§16. Annual Apportionment of Divisible a Surplus of Mutual Companies.—Every life insurance company doing business in this State conducted on the mutual plan, or in which policyholders are entitled to share in the profits or surplus, shall make an annual apportionment and accounting of divisible surplus to each policyholder, beginning not later than the end of the third policy year on all participating policies issued since the twenty-third day of May in the year nineteen hundred and seven; and each such policyholder shall be entitled to and be credited with or paid, in the manner hereinafter provided, such a portion of the entire divisible surplus as has been contributed thereto by his policy.[1907, c. 67, §1; Code 1923, c. 34, §34a (1).]
Revisers’ Note.—The words “issued since the twenty-third day of May in the year nineteen hundred and seven” are substituted for the words “thereafter issued.”
§17. Contingency Reserve.—Any life insurance company doing business in this State may accumulate and maintain, in addition to the capital and surplus contributed by its stockholders and in addition to an amount equal to the net values of its policies, computed according to the laws of the jurisdiction under which it is organized, a contingency reserve not exceeding the following respective percentages of said net values, to-wit: When such net values are less than one hundred thousand dollars, twenty per cent there of or the sum of ten thousand dollars, whichever is the greater. When such net values are greater than one hundred thousand dollars, the percentage thereof measuring the contingency reserve shall decrease one-half of one per cent for each one hundred thousand dollars of net value up to one million dollars; one-half of one per cent for each additional one million dollars up to ten million dollars; one-half of one per cent for each additional two million five hundred thousand dollars up to twenty million dollars; one-half of one per cent for each additional five million dollars up to fifty million dollars; onehalf of one per cent for each additional twenty-five million dollars up to seventy-five million dollars; and if such net values equal or exceed the last mentioned amount, the contingency reserve shall not exceed five per cent thereof: Provided, That as the net values of such policies increase and the maximum percentage measuring the contingency reserve decreases, such company may maintain the contingency reserve already accumulated hereunder, although for the time being it may exceed the maximum percentage herein prescribed, but may not add to the contingency reserve when the addition will bring it beyond the maximum percentage: And provided further, That for cause shown the commissioner of insurance may at any time and from time to time permit any company to accumulate and maintain a contingency reserve in excess of the limit above mentioned for a prescribed period, not exceeding one year under any one permission, by filing in his office a decision stating his reasons therefor and causing the same to be published in his next annual report. This section shall not apply to any company doing exclusively a nonparticipating business.[1907, c. 67, §2; Code 1923, c. 34, §34a (2).]
Revisers’ Note.—In the provision “one-half of one per cent for each additional one million dollars up to ten million dollars,” “one” is substituted for “the.” Near the beginning of the first proviso, “maximum” is substituted for “minimum.” These changes are made to correct what appear to have been clerical errors in the text.
§18. Rights of Insured After Default in Payment of Premium.—In event of default in payment of any premium due an any policy, provided not less than three full years’ premiums shall have been paid, there shall be secured to the insured, without action on his part, insurance either paid up or extended, or extended as specified in the policy, the net value of which shall be at least equal to the entire net reserve held by the company on such policy, less two and one-half per cent of the amount insured by the policy and dividend additions, if any, and less any outstanding indebtedness to the company on the policy at the time of default. There shall be secured to the insured the right to surrender the policy to the company at its home office within one month after the date of default for the cash value otherwise available for the purchase of the paid up or extended insurance as aforesaid.[1907, c. 67, §4; Code 1923, c. 34, §34a (4).]
Revisers’ Note.—The word “insurance” near the beginning of the section is new.
§19. Lodges, and Contracts Prior to Acts of Eighteen Hundred and Eighty-five, Excepted.—Sections eleven, twelve, thirteen, fourteen, fifteen and sixteen of this article shall not apply to fraternal societies securing members through the lodge system, who do not employ agents except for instituting lodges; nor shall they be so construed as to affect any contract made prior to the twenty-seventh day of May in the year eighteen hundred and eighty-five by any company or association with a resident of this State, nor to prevent any such company or association from continuing and carrying out such contract.[1885, c. 15, §10; Code 1923, c. 55, §21a (10).]
Revisers’ Note.—The words “Sections eleven, twelve, thirteen, fourteen, fifteen and sixteen of this article” are substituted for the words “This act.” The words “made prior to the twenty-seventh day of May in the year eighteen hundred and eighty-five” are substituted for the words “heretofore made.”
§20. Approval of Loans and Investments by Executive Committee or Directors.—No loan or investment shall be made by a life insurance company of this State without the approval of its finance or executive committee, or the approval of a majority of the directors of such company present at a meeting of such directors, and the name of every director approving or disapproving any loan or investment so made shall be entered by the secretary on the records of the company.(1907, c. 77, §26; Code 1923, c. 34, §26.)
§21. Director or Officer Not to Receive Compensation for Negotiating Loans or Investments.—No director or officer of a life insurance company shall receive any money or valuable thing for negotiating or recommending any loan from such company, or for selling or aiding in the sale of any stock or securities to or by such company.(1907, c. 77, §27; Code 1923, c. 34, §27.)
§22. Security for Loans.—No loan shall be made of the capital assets, or income, or any portion thereof, of any life insurance company incorporated by or organized under the laws of this State, unless such loan shall be secured by mortgage on unencumbered real estate worth at least double the amount loaned thereon, or by pledge of bonds or stocks as collateral having a market value at least ten per cent in excess of the amount loaned thereon, or by pledge of United States government bonds, the market value of which shall be equal to the loan. Any such company may make loans on pledge of policies issued by it to an amount not exceeding the net reserve which it maintains upon the policy or policies pledged to secure each such loan.(1907, c. 77, §28; Code 1923, c. 34, §28.)
§23. Investment In Stocks and Bonds.—No portion of the capital, assets, or income, of any life insurance company of this State shall be used in the purchase of the stocks or bonds of any mining or manufacturing company in any event, nor in the purchase of the stocks or bonds of any other private corporation, upon which last mentioned stocks a regular dividend shall have been passed, or upon which last mentioned bonds a regular interest payment shall have defaulted, at any time within three years prior to the contemplated purchase.(1907, c. 77, §29; Code 1923, c. 34, §29.)
Revisers’ Note.—The words “the contemplated purchase,” at the end of the section, are substituted for the words “such investment.”
§24. Notes or Credit for Premiums.—Nothing in this article shall prevent any company from taking premium notes, or extending credit for part of its premiums, in accordance with its usual course of business.(1907, c. 77, §30; Code 1923, c. 34, §30.)
Revisers’ Note.—The word “extending” is substituted for the word “giving.”
§25. Personal Liability and Penalty for Improper Loan or Investment.—Every officer or director of a life insurance company knowingly consenting to a loan or investment in willful violation of any provision of sections twenty, twenty-one, twenty-two or twenty-three of this article shall be personally liable to the company for any loss which may be sustained by such loan or investment, to be recovered in an action to be brought by the insurance commissioner on the complaint of any policyholder or stockholder in the company suffering thereby, and in addition thereto shall be guilty of a misdemeanor, and, upon conviction, punished by a fine of not more than one thousand dollars and imprisoned not more than one year.(1907, c. 77, §31; Code 1923, c. 34, §31.)
Revisers’ Note.—The term of imprisonment is changed from five years to one year in order to conform to the usual maximum term of imprisonment prescribed for misdemeanors.
§26. Taking Stocks or Bonds on Sale of Property Acquired in Payment of Loan.—In all cases in which any life insurance company of this State shall have legally acquired, in payment of a debt previously contracted, any property, real or personal, situated in this State or elsewhere, such insurance company may upon the sale of such property take in payment or part payment there for the stocks or bonds of any company or corporation purchasing said property.(1907, c. 77, §32; Code 1923, c. 34, §32.)
§27. Discontinuance of Business Pending Insolvency or Noncompliance With Laws.—If the insurance commissioner shall at any time find that the assets of any life insurance company incorporated under the laws of this State are less than its liabilities, or if any such company shall fail to comply with any requirement of law, he may notify it to cease the issue of new policies or the payment of dividends to stockholders, or both, until the deficiency be made good or the law complied with.(1907, c. 77, §20; Code 1923, c. 34, §20.)
Revisers’ Note.—This section contains the first sentence of §20, c. 34, Code 1923. A redraft of the residue of said §20 is contained in the following section.
§28. Proceedings on Insolvency.—If at any time the assets of any life insurance company be found by the insurance commissioner to be less than its liabilities, he may bring his suit in equity in the circuit court of the county in which the principal office of such company is located for the purpose of annulling the charter of such company and may pray and apply for the appointment of a receiver or receivers in the manner provided for in other suits in equity. If upon the hearing on the application the court or judge shall find the assets of such company to be less than its liabilities, the court or judge may appoint some disinterested person or persons to be receiver or receivers of such company. Upon the appointment of such receiver or receivers, the assets and liabilities of such company shall be determined and disposed of, the affairs of such company shall be wound up, its charter shall be annulled, and all such proceedings may be had as is provided by law in the case of the dissolution of other corporations; and the court or judge may direct the payment, either in whole or in part, of the present value of such company’s outstanding policies to policyholders out of the avails of such assets, or may direct the use of such avails for the purpose of reinsuring such policies in some solvent company.(1907, c. 77, §20; Code 1923, c. 34, §20.)
Revisers’ Note.—This section, although partly composed of a redraft of those provisions of §20, c. 34, Code 1923, not contained in the preceding section, is largely new. Sections 20, 22, 23 and 24, c. 34, Code 1923, evidently taken from the statutes of some other, state, presumably Connecticut, prescribed a detailed procedure for the winding up of insolvent companies. This procedure, in different instances where an attempt is made to confer original jurisdiction on the supreme court of appeals, would seem to be unconstitutional, and, in general is somewhat foreign to the local practice in analogous cases. Consequently, this section is constructed with the object of prescribing the same procedure on the dissolution of insolvent life insurance companies as prevails in the case of the dissolution of corporations generally. The provisions in §20 relating to the appointment of a receiver by the supreme court of appeals, and the whole of §22, c. 34, Code 1923, which relates to the same subject, are omitted as covered by the general provisions of this section operating with the provisions in §2, art. 6, c. 53, section 24, c. 34, Code 1923, is omitted as covered by the general provisions in this section.
§29. Circuit Judge May Act in Vacation in Insolvency Proceedings.—Whenever proceedings commenced by the insurance commissioner under the provisions of section twenty-seven of this article shall be pending in the circuit court, if said court shall not be in actual session, the judge thereof, upon application and after due notice given, may make such order in the premises as he shall deem proper and may rescind and modify the same to the same extent as such court might do if in session. The judge shall cause all such proceedings had before him, with his orders therein, to be certified to the clerk of such court as orders and proceedings in vacation.(1907, c. 77, §23; Code 1923, c. 34, §23.)
Revisers’ Note.—Section 23, c. 34, Code 1923, is redrafted so as to permit the judge of the circuit court, in lieu of a judge of the supreme court of appeals, to act when the circuit court is not in session. See revisers’ note to §28 of this article.
§30. Ascertainment of Net Value of Policies of Insolvent Companies.—The insurance commissioner shall ascertain the net present value of each policy in force in such company at the time of the repeal of its charter upon the same basis as the policies of such companies were theretofore valued, pursuant to section three of this article, and he shall file with the clerk of such court a certificate showing the net present value of each of such policies, and such net present value shall be the surrender value of each of such policies.(1907, c. 77, §25; Code 1923, c. 34, §25.)
§31. What Liabilities of Life Insurance Company Include.—The liabilities of any such company for all the purposes of the proceedings mentioned in section twenty-eight of this article shall include the net present value of the policies of such company or reinsurance reserve ascertained as required by law.(1907, c. 77, §21; Code 1923, c. 34, §21.)
§32. Obtaining Money From Insurance Company by Fraud.—Every person who shall obtain, or attempt to obtain, from any life or accident insurance company of this State, any money on any policy of insurance issued by it, by falsely or fraudulently representing the insured person as dead, or the person insured against accident as injured, or shall fraudulently obtain, or attempt to obtain, any money from such company on a policy of insurance issued in the name of a fictitious person, shall, if the sum obtained or attempted to be obtained be one hundred dollars or more, be guilty of a felony, and, upon conviction, imprisoned not more than ten years; and if such sum be less than one hundred dollars, he shall be guilty of a misdemeanor, and, upon conviction, fined not more than five hundred dollars, or imprisoned not more than one year, or both.(1907, c. 77, §64; Code 1923, c. 34, §64.)
§33. Vouchers for Disbursements.—No domestic life insurance company shall make any disbursement of one hundred dollars or more unless the same be evidenced by a voucher signed by or on behalf of the person, firm, or corporation receiving the money and correctly describing the consideration for the payment. If the expenditure be for both services and disbursements, the voucher shall set forth the services rendered and an itemized statement of the disbursements made. If the expenditure be in connection with any matter pending before any legislature or public body, or before any department or officer of any state government, the voucher shall correctly describe, in addition, the nature of the matter and of the interest of such company therein. When such voucher cannot be obtained, the expenditure shall be evidenced by an affidavit describing the character and object of the expenditure and stating the reason for not obtaining such voucher.(1907, c. 34, §1; Code 1923, c. 34, §32a.)
§34. Rights of Creditors as to Policies in Favor of Another Person and Policies Assigned.—If a policy of insurance, whether heretofore or hereafter issued, is effected by any person on his own life or on another life, in favor of a person other than himself, or, except in cases of transfer with intent to defraud creditors, if a policy of life insurance is assigned or in any way made payable to any such person, the lawful beneficiary or assignee thereof, other than the insured or the person so effecting such insurance, or his executors or administrators, shall be entitled to its proceeds and avails against the creditors and representatives of the insured and of the person effecting the same, whether or not the right to change the beneficiary is reserved or permitted, and whether or not the policy is made payable to the person whose life is insured if the beneficiary or assignee shall predecease such person: Provided, That, subject to the statute of limitations, the amount of any premiums for such insurance paid with intent to defraud creditors, with interest thereon, shall enure to their benefit from the proceeds of the policy; but the company issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms, unless before such payment the company shall have written notice, by or in behalf of a creditor, of a claim to recover for transfer made or premiums paid with intent to defraud creditors, with specifications of the amount claimed.(1929, c. 27.)
Article 4. Fire and Marine Insurance.
Revisers’ Note.—Section 37, c. 34, Code 1923, is omitted as covered by §5, art. 1 of this chapter.
Committee’s Note.—Subdivisions (2) and (14), §76b, c. 28, Acts 1929, are omitted for the following reasons: Subdivision (2), as unnecessary in view of the provisions of article 1 of this chapter; subdivision (14) because of the comprehensive provisions in this article for the institution of a proceeding by any party interested, including the insurance commissioner, and for the review of the final order of the insurance commissioner by the circuit court, and the review of the circuit court’s judgment in the supreme court of appeals. When this procedure is followed, it should be attended with finality as to the matters determined therein. A material change in conditions from those considered in a proceeding would entitle any party interested to institute a new proceeding. Furthermore, the term “such agreement,” as used in said subdivision (14), makes said subdivision ambiguous. Nowhere in the act is such an agreement provided for as is apparently contem[ plated by the provisions of said subdivision (14), --- PAGE 895 --33-4-1 INSURANCE, ETC.—Fir
§1. Scope of Fire Insurance.—Insurance companies authorized under the laws of this State having power to insure against loss by fire may make insurance (a) against loss or damage to dwelling houses, stores and all kinds of buildings and household furniture, goods, merchandise and chattels of every description, and all other property by fire, lightning, windstorm, tornado, cyclone, earthquake, hail, frost or snow, weather or climatic conditions, including excess or deficiency of moisture, flood, rain or drought, rising of the waters of the ocean or its tributaries and rivers, bombardment, invasion, insurrection, riot, strike, civil war or commotion, military or usurped power, and by explosion whether fire ensues or not;
(b) Against loss or damage by insects or disease to farm crops or products and loss of rental value of land used in producing such crops or products;
(c) Against loss or damage by water or other fluid to any goods or premises arising from the breakage or leakage of sprinklers, pumps or other apparatus erected for extinguishing fires, or of other conduits or containers, or by water entering through leaks or openings in buildings and of water pipes, and against accidental injury to such sprinklers, pumps, apparatus, conduits, containers or water pipes;
(d) Against loss or damage upon vessels, boats, cargoes, goods, merchandise, freight and other property by all or any of the risks of lake, river, canal and inland navigation and transportation ;
(e) Against loss or damage upon automobiles, and airplanes, seaplanes, dirigibles or other aircraft, whether stationary or being operated under their own power, which shall include all or any of the hazards of fire, explosion, transportation, collision, loss by legal liability for damage to property, resulting from the maintenance and use of automobiles, airplanes, seaplanes, dirigibles or other aircraft;
(f) Against loss by burglary or theft, vandalism or malicious mischief, or the wrongful conversion, disposal or concealment of automobiles, whether held under conditional sale contract or subject to chattel mortgages.
Such companies may insure against any one or more of such hazards, and shall have the right to effect reinsurance of any risks taken by them in companies authorized and admitted to do business in this State, but the subject of the insurance and the risks, hazard or peril insured against shall be expressly set forth in the policy of insurance. This section shall not apply to insurance against loss by reason of bodily injury to the person or against loss caused by breach of trust.(1907, c. 77, §40; 1917, c. 18, §1; Code 1923, c. 34, §40; 1923, c. 16, §40.)
Revisers’ Note.—The last paragraph of §40, c. 16, Acts 1923, is redrafted without changing the substance.
§2. Conditions Precedent to Doing Business by Fire and Marine Companies.—No fire or fire and marine insurance company or association incorporated or organized under the laws of this State or of any other state or territory of the United States or the District of Columbia shall, directly or indirectly, take risks or transact any business in this State unless possessed of at least one hundred thousand dollars cash capital paid up and securely invested, and every such company, in addition to conforming to all general provisions in article two of this chapter prescribing conditions precedent to doing business in this State, shall deposit with the insurance commissioner a statement under oath of its president or vice president and secretary, or other proper officers, stating its name and location and other particulars required by section four of this article. No such company or association shall make contracts of insurance on property in this State except through lawfully constituted and licensed resident agents; nor shall any person act as agent for any such company, directly or indirectly taking risks or transacting business of fire insurance in this State, without procuring from the insurance commissioner a certificate of authority, as provided in article seven of this chapter, stating that such company has complied with all the requirements of the law. Such certificate shall continue in force as provided in section twelve of article two of this chapter, unless sooner revoked for cause. The statement required by this section shall be made annually on or before the first day of March, and shall specify the amount of premiums received and losses paid in this State during the preceding calendar year; and the commissioner, on being satisfied that the capital, securities, and investments, remain secure, shall furnish a renewal of his certificate.(Code 1868, c. 34, §§2, 3; 1871, c. 107; 1872-3, c. 69, c. 221; 1881, c. 38; 1882, c. 85, §§2, 3; 1907, c. 77, §36; Code 1923, c. 34, §36; 1923, c. 15, §36.)
Revisers’ Note.—Near the beginning of the section, the words “state or territory” are substituted for the words “state, territory or county,” to correct what seems to have been an error in drafting. After the word “Columbia,” near the beginning of the section, the words “or any foreign country” are omitted, in view of the fact that this provision is in conflict with §7, art. 2 of this chapter. The provision requiring deposit of a certified copy of the charter is omitted as covered by §4, art. 2 of this chapter. The words “in addition to conforming to all general provisions in article two of this chapter prescribing conditions precedent to doing business in this State” are new. The word “calendar” near the end of the section is new. Other formal changes are made. The date for the annual report is changed from March first to April first.
Legislative Note.—March first is retained as the date for the annual report.
§3. Conditions on Which Mutual Companies of Other States May be Admitted.—Any mutual fire or fire and marine insurance company located in any other state or territory of the United States, or the District of Columbia, and possessed of one hundred thousand dollars in cash, or securities invested in available cash assets, may be admitted to take risks and transact business in this State through lawfully constituted and licensed resident agents: Provided, That it shall comply with all requirements of the laws of this State relating to other fire and marine insurance companies of other states, and that similar companies of this State are admitted to transact business in such other state.(1907, c. 77, §38; Code 1923, c. 34, §38.)
§4. Reports to be Made by Fire and Marine Companies.—Every fire and fire and marine insurance company doing business in this State shall annually, on or before the first day of March, render to the insurance commissioner a report, signed and sworn to by its president and secretary, or corresponding officers, of its condition on the thirty-first day of December next preceding, in the following form, namely:
(a) The amount of its capital stock;
(b) Its assets, specifying: (1) The value of its real estate; (2) the amount of its cash on hand and in bank, specifying where it is deposited; (3) the amount of cash in the hands of agents and in course of transmission; (4) the amount of loans secured by mortgages on which there shall be less than one year’s interest due; (5) the amount of such loans with one year’s interest or more due thereon; (6) the amount due on judgments; (7) the amount of its stocks and bonds, with the description of amount, number of shares and the par market value of each; (8) the amount of stocks and bonds held as collateral security for loans, with the amount loaned on each and the par and market value thereof; (9) the amount of assessments on stock or premium notes paid or unpaid; (10) the amount of interest accrued and unpaid; (11) the amount of premium notes on hand on which policies are issued;
(c) Its liabilities, specifying: (1) The amount of losses due and unpaid; (2) the amount of unpaid losses not due; (3) the amount of claims for losses resisted by the company; (4) the amount of losses incurred during the year, including those claimed and not yet due, and those reported to the company upon which, no action has been taken; (5) the amount of dividends due and unpaid; (6) the amount of dividends, either cash or script, not yet payable; (7) the amount of money borrowed and security given for the payment thereof; (8) the amount of premiums received on all risks not terminated; (9) the amount required to reinsure all fire risks in force, computed at fifty per cent of the gross amount of fire premiums less return premiums, and reinsurance received on risks in force, and not perpetual; ninety-five per cent of premiums on perpetual risks in force, and one hundred per cent of the amount of ocean marine premiums received on risks in force, excepting on time hull risks which may be computed at fifty per cent of the amount of premiums received on risks in force; (10) the amount of all other claims against it;
(d) Its income during the preceding year, specifying: (1) The amount of cash premiums received; (2) the amount of notes received for premiums; (3) the amount of interest money received; (4) the amount of income received from other sources;
(e) Its expenditures during the preceding year, specifying: (1) the amount of losses paid, stating how much of the same accrued prior and how much subsequent to its preceding statement, and the amount at which such losses were estimated in such statement; (2) the amount of dividends paid; (3) the amount of expenses paid, including agents’ commissions; (4) the amount paid in taxes; (5) the amount of all other expenditures.(Code 1868, c. 34, §2; 1871, c. 107; 1872-3, c. 69, c. 221; 1881, c. 38; 1882, c. 85, §§2, 3; 1891, c. 108, §2; 1907, c. 77, §35; Code 1923, c. 34, §35; 1923, c. 15, §35.)
Revisers’ Note.—The date for the annual report is changed from March first to April first. In subdivision (c), clause (2), the word “due” is substituted for the word “paid,” in order to correct what is evidently a clerical error. See §4079, Connecticut General Statutes, 1918, from which this section apparently was taken.
Legislative Note.—March first is retained as the date for the annual report.
§5. Fire and Marine Companies to Furnish Statement of Reinsurance.—Every fire or fire and marine insurance company authorized to transact business in this State shall, at the time of making its annual report to the insurance commissioner, furnish a statement of the business written in this State and reinsured in other companies, showing the names of such companies, the amount at risk and the amount of premiums thereon.(1907, c. 77, §75; Code 1923, c. 34, §75.)
Revisers’ Note.—The words “to the end that the State may receive the taxes due on such business,” at the end of §75, c. 34, Code 1923, are omitted as superfluous.
§6. Amount of Insurance Which May be Carried in One Risk.—No fire or fire and marine insurance company doing business in this State shall expose itself to loss on any one risk to an amount exceeding ten per cent of its paid-up capital and surplus, but in determining the amount of said risk no portion thereof which shall have been reinsured in any company or companies authorized to do insurance business in this State shall be included.(1907, c. 77, §46; Code 1923, c. 34, §46.)
Revisers’ Note.—Section 46, c. 34, Code 1923, is redrafted so as to incorporate in it the provisions of §4078, General Statutes of Connecticut, 1918. Said §46 related only to foreign companies and provided that a foreign company should not make itself liable by any one risk “for any greater amount in proportion to its capital than companies which are organized under the laws of this State,” but, seemingly by inadvertence, no provision was enacted fixing the amount as to domestic companies. As a result, the section seems to have been abortive in effect, even with reference to foreign companies. The object of the redraft is to bring all companies within the terms of a single section.
§7. Form of Fire Policies.—No fire insurance company, its officers or agents, shall make, issue or deliver for use any policy against loss by fire only, or the renewal of any such policy, on property in this State other than such as shall conform in all particulars as to blanks, size of type, context, provisions, agreements and condi tions as set forth herein. No........................ [Space for insertion of name of company or companies issuing the policy and other matter permitted to be stated at the head of the policy.] Amount $..........Rate.............Premium $............. In consideration of the stipulations herein named and of...............................................dollars premium does insure............................................ and legal representatives, to the extent of the actual cash value (ascertained with proper de ductions for depreciation) of the property at the time of loss or damage, but not exceeding the amount which it would cost to repair or replace the same with material of like kind and quality within a reasonable time after such loss or damage, without allowance for any increased cost of repair or reconstruction • by reason of any ordinance or law regulating construction or repair and without compensation for loss result ing from interruption of business or manufac ture, for the term of.............................................. from the..........day of............, 19... ., at noon, to the..............day of ......, 19...., at noon, against all direct loss and damage by fire and by removal from premises endangered by fire, except as herein provided, to an amount not exceeding .................................................. dollars to the following described property while lo cated and contained as described herein, or pro rata for five days at each proper place to which any of the property shall necessarily be re moved for preservation from fire, but not else where, to-wit: e and Marine Insurance. 896 [Space for description of property.] This policy is made and accepted subject to the foregoing stipulations and conditions, and to the stipulations and conditions printed on the back hereof, which are hereby made a part of this policy, together with such other provisions, stipulations and conditions as may be indorsed hereon or added hereto as herein provided. In Witness Whereof, this company has ex ecuted and attested these presents. [Space for date and for signatures and titles of officers and agent.] Fraud, misrepre- This entire policy shall be void if sentation, etc. the insured has concealed or mis represented any material fact or circumstance concerning this insurance or the sub ject thereof; or in case of any fraud or false swear ing by the insured touching any matter relating to this insurance or the subject thereof, whether be fore or after a loss. Uninsurable This policy shall not cover ac and excepted counts, bills, currency, deeds, evi property. dences of debt, money, notes or securities; nor, unless specifically named hereon in writing, bullion, manuscripts, me chanical drawings dies or patterns. Hazards not This Company shall not be liable covered. for loss or damage caused di rectly or indirectly by invasion, in surrection, riot, civil war or commotion, or military or usurped power, or by order of any civil author ity; or by theft; or by neglect of the insured to use all reasonable means to save and preserve the prop erty at and after a fire or when the property is en dangered by fire in neighboring premises. This entire policy shall be void, unless otherwise provided by agreement in writing added hereto, Ownership, etc. (a) if the interest of the insured be other than unconditional and sole ownership; or (b) if the subject of insurance be a building on ground not owned by the insured in fee simple; or (c) if, with the knowledge of the insured, foreclosure proceedings be commenced or notice given of sale of any property insured hereunder by reason of any mortgage or trust deed; or (d) if any change, other than by the death of an insured, take place in the interest, title or possession of the sub ject of insurance (except change of occupants with out increase of hazard); or (e) if this policy be as signed before a loss. Unless otherwise provided by agreement in writ ing added hereto this Company shall not be liable for loss or damage occurring, Other insurance, (a) while the insured shall have any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy; or Increase of (b) while the hazard is increased hazard. by any means within the control or knowledge of the insured; or Repairs, etc. (c) while mechanics are employed in building, altering or repairing the described premises beyond a period of fifteen days; or 897 INSURANCE, ETC.—Fir Explosives, (d) while illuminating gas or vapor gas, etc. is generated on the described prem ises; or while (any usage or cus tom to the contrary notwithstanding) there is kept, used or allowed on the described premises fireworks, greek fire, phosphorus, explosives, benzine, gasoline, naphtha or any other petroleum product of greater inflammability than kerosene oil, gunpowder exceed ing twenty-five pounds, or kerosene oil exceeding five barrels; or Factories. (e) if the subject of insurance be a manufacturing establishment while operated in whole or in part between the hours of ten P. M. and five A. M., or while it ceases to be operated beyond a period of ten days; or Unoccupancy. (f) while a described building, whether intended for occupancy by owner or tenant, is vacant or unoccupied beyond a period of ten days; or Explosion, (g) by explosion or lightning, un Lightning. less fire ensue, and, in that event, for loss or damage by fire only. Chattel Unless otherwise provided by mortgage. agreement in writing added hereto this Company shall not be liable for loss or damage to any property insured here under while encumbered by a chattel mortgage, and during the time of such encumbrance this Company shall be liable only for loss or damage to any other property insured hereunder. Fall of building. If a building, or any material part thereof, fall except as the result of fire, all insurance by this policy on such building or its contents shall immediately cease. Added Clauses. The extent of the application of in surance under this policy and of the contribution to be made by this Company in case of loss or damage, and any other agreement not in consistent with or a waiver of any of the conditions or provisions of this policy, may be provided for by agreement in writing added hereto. Waiver. No one shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement added hereto, nor shall any such provision or condition be held to be waived unless such waiver shall be in writing added hereto, nor shall any provision or condition of this policy or any forfeiture be held to be waived by any require ment, act or proceeding on the part of this Company relating to appraisal or to any examination herein provided for; nor shall any privilege or permission affecting the insurance hereunder exist or be claimed by the insured unless granted herein or by rider added hereto. Cancellation This policy shall be cancelled at of policy. any time at the request of the in sured, in which case the Company shall, upon demand and surrender of this policy, re fund the excess of paid premium above the cus tomary short rates for the expired time. This policy may be cancelled at any time by the Company by giving to the insured a five days’ written notice of cancellation with or without tender of the excess of paid premium above the pro rata premium for the expired time, which excess, if not tendered, shall be refunded on demand. Notice of cancellation shall state that said excess premium (if not tendered) will be refunded on demand. re and Marine Insurance. 33-4-7 Pro rata This Company shall not be liable liability. for a greater proportion of any loss or damage than the amount hereby insured shall bear to the whole insurance covering the property, whether valid or not and whether collectible or not. Noon. The word “noon” herein means Mortgage noon of standard time at the place interests. of loss or damage. If loss or dam age is made payable, in whole or in part, to a mortgagee not named herein as the insured, this policy may be cancelled as to such interest by giving to such mortgagee a ten days’ written notice of cancellation. Upon failure of the insured to render proof of loss such mortgagee shall, as if named as insured hereunder, but within sixty days after notice of such failure, render proof of loss and shall be subject to the provisions hereof as to appraisal and times of payment and of bringing suit. On payment to such mortgagee of any sum for loss or damage hereunder, if this Company shall claim that as to the mortgagor or owner, no liability ex isted, it shall, to the extent of such payment be subro gated to the mortgagee’s right of recovery and claim upon the collateral to the mortgage debt, but without impairing the mortgagee’s right to sue; or it may pay the mortgage debt and require an assignment thereof and of the mortgage. Other provisions relating to the interests and obligations of such mortgagee may be added hereto by agreement in writing. Requirements The insured shall give immediate in case of loss, notice, in writing, to this Company, of any loss or damage, protect the property from further damage, forthwith separate the damaged and undamaged personal property, put it in the best possible order, furnish a complete in ventory of the destroyed, damaged and undamaged property, stating the quantity and cost of each article and the amount claimed thereon; and, the insured shall, within sixty days after the fire, unless such time is extended in writing by this Company, render to this Company a proof of loss, signed and sworn.to by the insured, stating the knowledge and belief of the insured as to the following: the time and origin of the fire, the interest of the insured and of all others in the property, the cash value of each item thereof and the amount of loss dr damage thereto, all en cumbrances thereon, all other contracts of insurance, whether valid or not, covering any of said property, any changes in the title, use, occupation, location, possession, or exposures of said property since the issuing of this policy, by whom and for what purpose any building herein described and the several parts thereof were occupied at the time of fire; and shall furnish a copy of all the descriptions and schedules in all policies and if required, verified plans and speci fications of any building, fixtures or machinery de stroyed or damaged. The insured, as often as may be reasonably required, shall exhibit to any person designated by this Company all that remains of any property herein described, and submit to examina tions under oath by any person named by this Com pany, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices, and other vouch ers, or certified copies thereof, if originals be lost, at such reasonable time and place as may be desig nated by this Company or its representative, and shall permit extracts and copies thereof to be made. Appraisal. In case the insured and this Com pany shall fail to agree as to the amount of loss or damage, each shall, on the written demand of either, select a competent and disinter e and Marine Insurance.898 It is important that the written portions of all policies covering the same property read ex actly alike. If they do not they should be made uniform at once.(1907, c. 77, §68; Code 1923, c. 34, §68; 1923, c. 18, §68.)
Revisers’ Note.—The words near the beginning of the section, “policy against loss by fire only,” are substituted for the words “fire insurance policy.” The object of this change is to make it clear that the form of policy prescribed by this section is not in tended to apply to the other classes of insurance in which fire companies may issue policies under the provisions of §1 of this article. The rest of §68, c. 18, Acts 1923, is in the following section.
§8. Additional Matter Which May be Inserted in Fire Policy.—No other or different provision, agreement, condition or clause shall be in any manner made a part of such contract or policy or indorsed thereon or added thereto or delivered therewith, except as follows, to-wit:
(a) There may be printed at the head of said policy in the space indicated by the words “space for insertion of name of company or companies issuing the policy and other matter permitted to be stated at the head of the policy ” the name of the company, or companies, issuing the policy; the location and place of business thereof; the date of incorporation or organization thereof; whether said company, or companies, are stock or mutual corporations; and such device or devices as the company, or companies, issuing said policy shall desire;
(b) There may be printed at the end of the first page of said policy in the space indicated therefor by the words “space for date and for signatures and titles of officers and agent,” the names and titles of the officers executing and attesting the policy, and the words “but this policy shall not be valid until countersigned by the duly authorized agent of the company at…… ” (or the “manager” in place of the word “agent”) and the words “countersigned at ………this..........day of....... ,” followed by a blank space for the signature of such duly authorized agent or manager, and the word “agent” or “manager”;
(c) There may be printed in the space indicated by the words “space for description of property,” or added to the policy at such space by agreement in writing thereon or by rider attached thereto the following: (1) Descriptions and specifications, by schedule or otherwise, of the property covered by the policy; (2) The extent of the application of insurance under the policy; (3) The extent of the contribution to be made under the policy in case of loss or damage; (4) Any other matter necessary clearly to express all the facts and conditions of insurance on any particular risk. Provided, however, That no such agreement or rider shall be inconsistent with or a waiver of any of the conditions or provisions of the standard fire insurance policy hereby established, except that in the case of a mortgagee not named in the policy as the insured, such provisions may be added as shall not be inconsistent with or a waiver of any of the provisions of the said standard policy relating to mortgage interests, but if so added, shall include the provisions of a standard rider or indorsement relating to such interest the form of which shall have been approved by the insurance commissioner and filed in his office as hereinafter provided;
(d) There may be added to the policy, with the approval of the insurance commissioner, any provision which any company issuing a policy is required by law to insert in its policies, not in conflict with the provisions of such “standard fire insurance policy.” All such provisions shall be printed in a group apart from the other provisions, agreements or conditions of the policy under separate title as follows: “Provisions required by law to be stated in this policy”;
(e) If the policy be made by a mutual or other company having special regulations lawfully applicable to its organization, membership, policies or contracts of insurance, such regulations may, with the approval of the insurance commissioner, be written or printed upon, attached or appended to the policy, upon the third page of such standard policy, but shall be preceded by the words “This policy is issued by a mutual company having special regulations lawfully applicable to its organization, membership, policies or contracts of insurance of which the following shall apply to and form a part of this policy”;
(f) Contracts for temporary insurance may be made for a period not exceeding fifteen days, which shall be deemed to include all of the provisions of the standard policy with such agreements and riders in writing added thereto as may be necessary to effect valid insurance of the described property and such other agreements not inconsistent with or a waiver of any condition or provision of the standard policy as may be expressed in such contract, except that the cancellation clause of the standard policy shall be superseded by the provisions of any such temporary contract regulating cancellation or termination of insurance thereunder, and except that where any such contract for temporary insurance shall specify the hour of the day when liability shall commence, such statement of time shall supersede the provisions of such standard fire insurance policy to the contrary, and such statement shall be deemed to refer to standard time at the place of loss or damage;
(g) The standard policy provided for herein need not be used for effecting reinsurance be tween insurers;
(h) There may be printed upon the filing back of said policy the name of the company or companies issuing the policy; the location and place of business thereof; statement of the amount of capital thereof; such device or devices as the company or companies issuing said policy shall desire, and if the policy be a combination policy, such distinctive title therefor as may be authorized for use as herein provided. There may also be printed, stamped or otherwise indorsed upon the filing back of said policy the name with the word “agent” or “agents” and place of business of any insurance agent or agents. The words at the top of the filing back of said policy, “standard fire insurance policy of the State of West Virginia” may be changed by the use of the word “States” instead of “State” and by adding after the words “West Virginia” the names of any states in which the said policy form shall be standard when the policy is issued;
(i) There may be printed upon said policy form, elsewhere than upon the first and second pages or the filing back thereof, the names of the officers and directors of the company or companies issuing the said policy, and any form providing for assignment of interest or removal, and any blank form of receipt, approved by the insurance commissioner.
The insurance commissioner, either in person or by any one or more competent and disinterested persons specially appointed by him for that purpose, shall have access to and may at any time examine the books, papers and documents of any fire insurance corporation doing business in this State, or of any corporation, association or bureau maintained for the purpose of suggesting, approving or making rates to be used by more than one underwriter for insurances on property located in this State, for the purpose of determining the number and extent of use of any riders, indorsements, clauses, permits, forms or other memoranda attached to and made a part of any fire insurance contract relating to property located in this State; and after such examination and inspection such insurance commissioner may determine that the use of any such rider, indorsement, clause, permit, form or other memoranda is so extensive that there should be in his judgment a standard form thereof, and he shall thereupon prepare and file in his office such standard form of rider, indorsement, clause, permit, form or other memoranda, and there after no fire insurance corporation shall attach to any such standard policy of insurance, any rider, indorsement, clause, permit, form or other memoranda covering substantially the same agreement provided for by such standard rider, indorsement, clause, permit, form or other memoranda except it be in the precise language of the form so filed by the insurance commissioner. Forms of riders, indorsements, clauses, permits, forms or other memoranda to be attached to and made a part of fire insurance contracts relating to property located in this State may be presented for filing in the office of the insurance commissioner by any corporation, association or bureau maintained for the purpose of suggesting, approving or making rates to be used by more than one underwriter for insurances on property located in this State, and when approved and filed by such insurance commissioner, shall thereupon become standard forms of riders, indorsements, clauses, permits, forms or other memoranda and their use shall be required, as hereinbefore provided. Whenever, in the judgment of the insurance commissioner, there shall be no further necessity for requiring the use of any standard form of rider, indorsement, clause, permit, form or other memorandum in the precise language theretofore required, he may give notice in writing of such determination, to each fire insurance corporation doing business in this State, and to each such corporation, association or bureau maintained for the purpose of suggesting, approving or making rates, as aforesaid, and thereafter the use of such standard form shall not be required as herein provided.
Appropriate forms of supplemental contract or contracts whereby the property described in such policy shall be insured against one or more of the risks specified in section one of this article, in addition to the risk of direct loss or damage by fire, may be approved by the insurance commissioner, and their use in connection with a standard fire insurance policy may be authorized by him. Provided, however, That nothing in this section or the preceding section shall relate or apply to farmers’ mutual insurance companies organized under article five of this chapter. The insurance commissioner may, upon complaint, after hearing, reduce any fire insurance rate that is excessive.(1907, c. 77, §68; Code 1923, c. 34, §68; 1923, c. 18, §68.)
Revisers’ Note.—The rest of §68, c. 18, Acts 1923, is in the preceding section.
§9. Liability of Fire Insurance Company in Case of Total or Partial Loss.—All fire insurance companies doing business in this State shall be liable, in case of total loss by fire or otherwise, as stated in the policy on any real estate insured, for the whole amount of insurance stated in the policy of insurance upon such real estate; and in case of partial loss by fire or otherwise, as aforesaid, of the real estate insured, the liability shall be for the total amount of such partial loss, not to exceed the whole amount of insurance stated in the policy of insurance effected upon such real estate; and the insured shall have the right to enforce his claim for such loss in any court having jurisdiction.(1899, c. 33, §1; Code 1923, c. 34, §40a.)
Revisers’ Note.—The portion of this section coming between the semicolons is a redraft. In Hinkle v. North River Insurance Co., 70 W. Va. 681, the court decided that this section was not repealed by §68, c. 77, Acts 1907 (Code 1923, c. 34, §68), although the latter section prescribed the New York form of policy limiting the liability to the actual cash value of the property insured. Said §68 was amended and reenacted by Acts 1923, c. 18, §68, by way of incorporating a literal form of the policy, but since the amended section seems to do no more by way of literal incorporation than the original section did by way of reference, it is believed that §40a, c. 34, Code 1923, was not affected by the amendment made in 1923 and it is therefore retained.
§10. Proceedings on Insolvency of Fire and Marine Companies.—The insurance commissioner, either personally or by a committee appointed by him consisting of one or more persons not directors, officers, or agents, of any fire or fire and marine insurance company doing business in this State, may at any time examine into the affairs of any fire or fire and marine insurance company incorporated by or doing business in this State. The officers or agents of such company shall exhibit its books to said commissioner or committee, and otherwise facilitate such examination, and the commissioner or committee may examine under oath the officers and agents of any such company in relation to its affairs, and the commissioner may publish the result of such investigation in one or more newspapers published in this State. In relation to the affairs of any company incorporated by or organized under the laws of any other state or territory of the United States, he may, in lieu of such investigation, accept the certificate of the insurance commissioner or superintendent of such state or territory as to its condition. Whenever the commissioner shall ascertain that the assets of any fire or fire and marine insurance company incorporated by this State, after deducting for reinsurance and its proper liabilities, excepting capital, amount to less than its capital stock, if it have a stock capital, or, in the case of a mutual company, if the assets, less the unsettled claims and other absolute liabilities, amount to less than the sum requisite for reinsurance, he shall call upon it to make up such deficiency within such reasonable time as he shall fix, and on its failure to comply with such requirement shall bring his suit in equity in the circuit court of the county in which the seat of government of this State is situated praying for an injunction restraining said company from the further prosecution of the business of making or renewing insurance until said deficiency is made up.(1907, c. 77, §39; Code 1923, c. 34, §39.)
Revisers’ Note.—The word “territory” is substituted for the word “county,” to correct what seems to have been an error in drafting. The concluding part of §39, c. 34, Code 1923, authorizing the issuance of an injunction, is redrafted so as to provide in general terms for a suit in equity seeking injunctive relief and the venue is fixed in the county where the seat of government is situated.
§11. Rating Bureaus; Membership; Expense; Fee; Vote.—Every fire insurance company or other insurer authorized to effect insurance against the risk of loss or damage by fire in this State shall maintain or be a member of a rating bureau. No such insurer shall be a member of more than one rating bureau for the purpose of rating the same risk. A rating bureau may consist of one or more insurers, and when consisting of two or more insurers, shall admit to membership or furnish service to any authorized insurer applying therefor. The expense of the bureau shall be shared in proportion to the gross premiums less return premiums and premiums on marine and farm risks and premiums for reinsurance and less any return of gains and savings on participating policies received by each member during the preceding year in this State, to which may be added a reasonable annual fee not exceeding twenty-five dollars. Each member shall have one vote.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (1), (3).]
§12. Specification of Membership in Rating Bureau.—Every fire insurance company or other insurer aforesaid shall, in its annual application for license, specify each rating bureau making rates upon property located within this State of which it is a member, and, during the year, file with the insurance commissioner a written notice of any other rating bureaus of which it shall become a member.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (4).]
Committee’s Note.—The provision for filing a notice within 60 days after the act took effect, is omitted as having served its purpose.
§13. Rate Schedules to be Filed; Rating Survey; Articles of Association, By-laws, Rules and Regulations.—Every rating bureau engaged in making rates on property located in this State shall inspect every risk specifically rated by it upon schedule and shall make a written rating survey of such risk which shall be filed as a permanent record in the office of such bureau. Rates for insurance on all property rated upon a flat rate basis shall also be filed in such office. A copy of such survey shall be furnished without cost to the owner of any risk upon his request. Within sixty days after the establishment of any rating bureau in this State, it shall file with the insurance commissioner a copy of its articles of association and by-laws, and any and all schedules used by it as a basis for the making of rates. The bureau shall also file with said commissioner the basis or table rate that is used in each town in West Virginia. It shall also file with said commissioner all regulations or rules of any such rating bureau. No rule, regulation, or by-law, shall be passed by any bureau which interferes with the legal operation of any member or subscriber to its service.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (5), (6).]
§14. Rate Changes at Request of Bureau; at Direction of Commissioner; Review of Orders.—In the event that any rating bureau should desire to make a change in its established schedules, rules, regulations, contracts or agreements, it shall submit such proposed change in writing to the insurance commissioner and the commissioner shall thereupon order a hearing not earlier than twenty days thereafter, which hearing may be attended by any persons whose interests may be affected by such proposed change. At the conclusion of such hearing, the commissioner shall enter an order showing his finding in the premises. In the event any party in interest is dissatisfied with such order, he may, within thirty days after the entry thereof, file a petition for the review of such order, and such filing and all other proceedings with respect to such petition shall be as provided in section thirteen, article two of this chapter. Pending such review the order of the commissioner shall remain in full force and effect. When the insurance commissioner shall determine, after a full hearing upon notice served in the manner prescribed by law upon all of the insurance companies and rating bureaus which may be affected, that any rate or rates made by such bureau in this State are excessive or unreasonably high or that such rate or rates are discriminatory, he is authorized to direct such bureau to change such rate or rates and to publish and file a rate or rates prescribed by him which are just and reasonable and nondiscriminatory, and the commissioner shall enter an order showing his findings in the premises. Any party in interest being dissatisfied with any such order of the commissioner may, within thirty days from the entry of such order, file a petition and have proceedings thereon as hereinbefore provided. During the pendency of such proceedings the order shall be suspended, and, in the event of final determination against any insurer, any overcharge during the pendency of such proceedings shall be refunded by the insurer to the person entitled thereto. The commissioner may compel obedience to his lawful orders by proceedings of mandamus or injunction or other proper proceedings in the name of the State in any circuit court having jurisdiction of the parties or of the subject matter.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (7).]
Committee’s Note.—A uniform and definite method of reviewing orders of the insurance commissioner is provided in lieu of the somewhat uncertain provisions in that regard found in subdivisions (7), (12), (13) and (14) of §76b, c. 28, Acts 1929. See revisers’ note to §25, art. 3, c. 11, for reasons covering the omission of priority provisions such as the one appearing at the end of subdivision (7) of §76b, c. 28, Acts 1929.
§15. Commissioner May Require Reports as to Organization and Operation of Rating Bureaus.—The insurance commissioner may from time to time address inquiries to any individual or bureau which is engaged in making rates upon property in this State, in relation to its organization, maintenance or operation or any other matter connected with its transactions and may also require the filing of schedules, written reports of surveys in individual cases, rates, forms, rules and regulations and other information and he may also require resurvey of any risk or group of risks. It shall be the duty of every individual, association or bureau to comply promptly with his request: Provided, however, That surveys and completed schedules and resurveys upon individual risks may be required only where written complaint is filed with the commissioner by the owner of such risk.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (8).]
§16. Examination of Bureaus; Expense; Report.—The insurance commissioner shall have the power to examine any such rating bureau as often as he deems it expedient to do so, but not less than once every three years. A report there of shall be filed in his office. The expense of such examinations shall be paid by such rating bureau. A statement with regard to such examination shall be made in the annual report of the commissioner.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (9).]
§17. Unfair Discrimination Prohibited.—No fire insurance company or other insurer against the risk of fire, nor any rating bureau, shall fix or charge any rate for fire insurance upon property in this State which discriminates unfairly between risks in the application of like charges and credits, or which discriminates unfairly between risks of essentially the same hazards, and having substantially the same degree of protection against fire.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (10).]
§18. Uniform Deviations; Notice.—Any deviation of any company or insurer from the schedule of rates established and maintained by the bureau which it maintains, or of which it is a member, shall be uniform in its application to all of the risks in the class for which the variation is made, and no such uniform deviation shall be made unless notice thereof shall be filed with the bureau of which the insurer is a member and the insurance commissioner, at least fifteen days before such uniform variation is in effect, and schedules providing for such variation shall be filed with the rating bureau and the commissioner showing the amended basis rate and amended as charges and credits and application of the amended schedules to individual risks in the class or classes affected. Every company or insurer shall be permitted to make uniform deviations by schedule percentage reductions in the specific rates of any bureau of which it is a member or subscriber, and rating bureaus shall not have rules and regulations which interfere with making such uniform reductions or uniform deviations by schedule.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (11).]
§19. Discrimination in Rates; Hearing; Review.—The insurance commissioner may, upon written complaint that discrimination in rates exists between risks in the application of like charges or credits, or discrimination between risks of essentially the same hazard and having substantially the same degree of protection, against fire, order a hearing to be had only upon notice served in the manner prescribed by law upon all parties interested, for the purpose of determining such questions of discrimination. If upon such hearing the commissioner shall determine that the rate complained of is discriminatory, he shall have power to order the discrimination removed and a rate substituted by the rating bureau or insurer which is not discriminatory. Any party in interest being dissatisfied with such order may, within thirty days after the entry thereof, file a petition and have proceedings thereon as provided in section fourteen of this article. During the pendency of such proceedings the order shall be suspended, and in the event of final determination against any insurer, any overcharge during the pendency of such proceedings shall be refunded by the insurer to the person entitled thereto.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (12).]
Committee’s Note.—See first paragraph of committee’s note to §14 of this article covering the procedure for review.
§20. Schedules of Premium Receipts and Losses Paid to be Filed; Rate Changes Based Thereon; Review.—Every insurance company shall on or before the first day of March of each calendar year file in the office of the insurance commissioner a classification schedule of premium receipts and losses paid on risks in the State of West Virginia during the preceding calendar year. In addition to such reports the commissioner may require such companies to file such classification schedules for a number of years, not exceeding five years prior to the eighth day of March nineteen hundred and twenty-nine. If, at any time, it shall appear to the commissioner that the rates charged for fire insurance in this State are excessive or unreasonable, in that the results of business of stock fire insurance companies in this State, during the five years next preceding the year in which investigation is made as indicated by the classification schedules filed as provided for herein, show an aggregate underwriting profit in excess of a reasonable amount upon any class or classes of risks, then the commissioner shall have power to order a reduction in rates upon such class or classes of risks. If in the same manner it appears that the rates upon any class or classes of risks are insufficient to show a reasonable underwriting profit, then the commissioner shall have power to increase the rates upon such class or classes of risks so as to produce a reasonable profit. In determining the question of a reasonable under writing profit the commissioner as a protection to policyholders shall give proper and reasonable consideration to the conflagration liability within and without this State. No such change in rates shall be ordered by the commissioner except after a hearing upon notice served in the manner prescribed by law upon the insurance companies and rating bureaus which may be affected by such order. In addition to such insurance companies and rating bureaus any other person or corporation having an interest in the subject matter may become a party to such hearing. Any order of the commissioner in this connection shall be subject to review as provided in section fourteen of this article.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (13).]
Committee’s Note.—Changes are made in order to make the provisions of the above section as to notice and review the same as corresponding provisions in other sections of this article.
§21. Exemptions; Right to Secure Information; Adjustments Obligatory at Request of any Company; Charges.—This article shall not apply to farmers’ mutual insurance companies organized under the laws of this State; nor to the rolling stock of railroad corporations, or property in transit while in the possession of railroad companies or other common carriers, nor to the property of such common carriers used or employed by them in their business of carrying freight, merchandise or passengers, or to properties protected by automatic sprinklers: Provided, however, That any company, association, or person, licensed under the insurance laws of this State, may at their request be entitled to receive any or all of the rates, bulletins, and other information published or prepared by such rate making association, on payment of such reasonable charges as may be made: Provided further, That it shall be obligatory upon any adjuster, adjusting bureau or corporation making adjustments on any property or properties, insured in this State by more than one company, to make adjustments for any or all companies making request for same, charging each company making such request a pro rata amount of the expenses incurred in making such adjustment.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, c. 28, §76b (15).]
§22. Violations; Penalties.—Any violation of the provisions of this article by any fire insurance company or other insurer, or by any rate-making bureau, adjusting bureau, or officer or agent of either, shall be a misdemeanor and shall be punishable by a fine of not less than twenty-five nor more than two hundred dollars for each such violation, and in the event any insurer, insurance company, individual or rating bureau shall be found guilty of the violation of any provision of this article and subjected to the penalty herein provided, and the same shall not be paid within thirty days after final judgment, the insurance commissioner may, in his discretion, revoke the license of such insurer or insurance company and suspend the certificate of authority of such person or rating bureau until such fine has been paid.[1913, c. 20; 1921, c. 149; Code 1923, c. 34, §76b; 1927, c. 31; 1929, C. 28, §76b (16).]
Article 5. Farmers’ Mutual Cooperative Fire Insurance Companies.
Revisers’ Note.—This article contains those sections of c. 32, Acts 1908 (Code 1923, c. 55), which superseded c. 55, Acts 1877, as amended by c. 89, --- PAGE 905 --33-5-1 INSURANCE, ETC.—Farme Acts 1879, and e. 98, Acts 1882, relating to mutual fire insurance companies generally. Since c. 32, Acts 1908, is a general substitute for the original statute, no attempt is made to carry the statutory history of the sections in this article back of the Acts of 1908. The following sections are omitted: Sections 21a(4), 21a(5) and 21a(7), as covered by general provisions in art. 2 of this chapter; §21a(8), as covered by §7, art. 1 of this chapter and §21a(9) as covered by §7, art. 1, c. 57. The provisions of c. 55 relating to nonstock companies generally are covered in art. 1, c. 31.
§1. Definition.—A farmers’ mutual cooperative fire insurance company is hereby defined to mean a company incorporated under the laws of this State for the purpose of insuring property against damage by fire, lightning, hail or tornadoes, without capital stock, and which operates on the assessment plan, and is limited to one or more counties in the transaction of its business as hereinafter provided.(1908, c. 32, §11; Code 1923, c. 55, §11.)
Committee’s Note.—This section is broadened to include hail insurance.
§2. Approval of Charter by Insurance Commissioner.—No charter issued under the provisions of this Code to a farmers’ mutual cooperative fire insurance company shall have any force or effect until the same is approved in writing by the insurance commissioner.(1908, c. 32, §10; Code 1923, c. 55, §10.)
Revisers’ Note.—After the word “company,” the provision, “nor to any other fire insurance company, nor to any fraternal beneficiary society” is omitted. It is covered by §3, art. 2, and §12, art. 8 of this chapter.
§3. Necessity and Issuance of Certificate of Authority.—No such company shall commence the transaction of business until it receives from the insurance commissioner a certificate of authority, which certificate shall state that such company has complied with the provisions of this article and all other provisions of this Code prescribing conditions precedent to its doing business in this State. Before such certificate may be issued, such company shall file with the insurance commissioner a certified copy of its charter, together with a sworn statement by three of the incorporators that bona fide applications have been made by not less than twenty-five citizens for not less than twenty-five thousand dollars of insurance, of which amount no one or more risks subject to one fire shall exceed one thousand dollars, said risks to be located in the State of West Virginia.(1908, c. 32, §12; Code 1923, c. 55, §12.)
Revisers’ Note.—The words “article and all other provisions of this Code prescribing conditions precedent to its doing business in this State,” are substituted for the word “chapter.”
§4. Issuance and Contents of Policies.—Every such company, when so authorized to transact business, may issue policies of insurance, signed by its president and secretary, agreeing in the name of the company to pay all damages caused by fire, lightning, hail or tornado to the property insured during the life of the policy, and may use in such policies the two-thirds, three-fourths, eighty percent and ninety percent value clauses and all similar clauses, when properly incorporated in or attached to such policies; and when so used and incorporated, such clauses shall be valid and effective. There shall be a clause plainly printed on the policy that the holder thereof (the insured) is liable for such assessments as may be necessary to pay in full his pro rata share of all losses and expenses incurred by the company. The form of all such policies shall be subject to regulation and approval by the insurance commissioner, and the insurance commissioner may, if he deems fit, prescribe a general form or forms for such policies, or specific provisions which shall be inserted in such policies, and all such policies thereafter issued shall conform to all such regulations prescribed by the insurance commissioner.(1908, c. 32, §13; Code 1923, c. 55, §13; 1929, c. 25.)
Revisers’ Note.—The last sentence of this section is new. Heretofore, such policies have not been subject to any regulation.
Committee’s Note.—The provisions of Acts 1929, c. 25, are incorporated in the first sentence of this section. The section is also broadened to include hail insurance.
§5. Collection of Assessments.—The secretary of any such company shall notify every member of the company of amounts due by written or printed notice signed by him, stating the amount due the company from the members and the time and place and to whom it shall be paid. Such payment shall be made by the members within sixty days from the delivery of the notice, which notice may be delivered personally, or by mail, and if by mail, it shall be addressed to each member at the last post-office address given as shown by the company’s books of record. The company shall have a lien upon the property insured to secure the payment of all such assessments and calls as shall be legally made under the contract of insurance, by-laws of the company, or provisions of this article, and it may maintain an action against any member thereof to recover all such assessments and calls which he may neglect or refuse to pay when legally due and payable.(1908, c. 32, §14; Code 1923, c. 55, §14.)
Revisers’ Note.—The last sentence of §14, c. 55, Code 1923, is redrafted for the purpose of making the meaning clearer but with no intention of changing the substance.
§6. Surplus or Emergency Fund.—Ever such company is authorized to accumulate a surplus or emergency fund in such amount as may be deemed advisable by its board of directors.(1908, c. 32, §15; Code 1923, c. 55, §15.)
§7. Annual Meetings; Votes; Transaction of Business; Election of Officers.—It shall be the duty of the board of directors to notify all policyholders of the time and place of the annual meeting of such policyholders, either by printing the same on their policies or by written notice delivered as prescribed in section five of this article, and to report at such annual meeting all matters pertaining to the operations of the company. At said annual meeting the board of directors shall be elected and such other business may be transacted by the policyholders as may legally come before them. Every policyholder in good standing having complied with the by-laws shall be entitled to one or more votes, based upon the insurance in force, the number of policies held, or the amount of premium paid, as may be provided in the by-laws, and such policyholder may vote in person, by proxy, or by ballot transmitted by mail, or as provided by the by-laws, in any election of directors or upon any other question. Immediately after the annual meeting of the policyholders, the board of directors shall meet and transact any business before it and shall elect a president, a vice president, a secretary and treasurer, and such other officers and employees as they may deem necessary. Regular meetings of the board may be held as often as the by-laws may provide; and special meetings may be held at the call of the president, secretary, or the majority of the board of directors. The board of directors shall consist of not less than six nor more than fifteen policyholders. The president and the vice president shall be members of such board.(1908, c. 32, §16; Code 1923, c. 55, §16.)
Revisers’ Note.—The words in the first sentence, “written notice delivered as prescribed in section five of this article,” are substituted for the word “notice.” The advisability of this change is suggested by the provision in §5.
Committee’s Note.—The provision as to voting is changed in view of that prescribed in §5, art. 10 of this chapter.
§8. Person Passing on Application Not to Receive Commission.—No officer or other person whose duty it is to determine the character of the risk and upon whose decision the application shall be finally accepted or rejected shall receive as any part of his compensation a commission upon the premium, but his compensation shall be a fixed salary or such share of the net profits of the corporation as the directors may determine.(1908, c. 32, §17; Code 1923, c. 55, §17.)
§9. Amount of Risk; What Insurance Contract Includes.—The maximum amount carried in any one risk or hazard subject to one fire shall not exceed one per cent of the whole amount of insurance in force at the time such risk is accepted. The insurance contracts of all such companies shall be made to conform to the provisions of this article and shall consist of the policy proper, constitution and by-laws of the company, all indorsements made on or attached to the policy, such parts of the application as are attached to or incorporated in the insurance contract, and any premium note or other policy obligation given by a member, all of which shall be binding on the insured as long as he remains a member or policyholder of the company.(1908, c. 32, §18; Code 1923, c. 55, §18.)
§10. Dividends; Liability of Policyholder Limited to Losses and Expenses Incurred While Policy in Effect.—The dividends to policyholders may be paid annually or as the directors may determine, but the per cent of dividends shall not be so large as to require the payment during any calendar year of more than fifty per cent of the net cash surplus at the beginning of that year. No policyholder shall be liable to assessments to pay losses and expenses accruing previous to the time his policy takes effect, nor to losses and expenses accruing after the time his policy terminates.(1908, c. 32, §19; Code 1923, c. 55, §19.)
§11. Supervision by Insurance Commissioner; Annual Report; Fees; Agents; Companies Doing Similar Business.—Every such company shall be examined by the insurance commissioner or some other person appointed by him at least once in three years, and oftener if he deems it necessary. He shall have free access to the books, papers and records of the company, and is authorized to examine members, officers and employees of the company under oath touching any matters pertaining to the operation of the company. Every company operating under this article shall make an annual report to the insurance commissioner on or before the first day of March, showing the condition of the company on the thirty-first day of December next preceding, on such form as he shall prescribe and under the same requirements as are made of stock fire to insurance companies doing business in this State, and shall pay the insurance commissioner a fee of five dollars at the time of filing the annual statement. Every such company shall be required to obtain from the insurance commissioner a certificate of authority for each of its agents who solicits or writes insurance in this State, the fee for which shall be one dollar. Insurance companies coming within the provisions of this article and now doing business in this State, but not organized under the provisions thereof, may continue such business by satisfactory report to the insurance commissioner, as heretofore, or by organizing under and complying with the provisions of this article hereinbefore set forth. All certificates of authority to companies and agents shall continue in force until the first day of April next after their issue, unless sooner revoked for cause.(1908, c. 32, §20; Code 1923, c. 55, §20; 1925, c. 70, §20.)
Revisers’ Note.—The date for the annual report is changed from the first day of March to the first day of April. The last sentence is new.
Legislative Note.—The date for the annual report and for the expiration of the annual license is kept as is now provided by law. The portion of the last sentence as reported by the revisers, dealing with renewals, is omitted as it was based on a change made in the license year by the revisers, which change, as noted above, is not retained.
Article 6. Insurance Other Than Life, Fire and Marine.
§1. Domestic Companies; Capital; Policies.—Every insurance company or association, other than life, fire or marine, incorporated under the laws of this State, and having its principal office or place of business within this State, except where it is otherwise specially provided, shall have a paid up capital stock of at least one hundred thousand dollars invested in securities as prescribed in section twenty-two, article three of this chapter, the market value of which shall be at par, and in addition thereto shall maintain a reserve equal to the unearned portion of the gross premium charged for covering all risks written, and shall state on the face of its policies or certificates all agreements with the assured: Provided, however, That accident or accident and health insurance companies which under their policies agree to pay weekly indemnity, not to exceed thirty dollars per week, and a principal sum not to exceed three thousand dollars, may be licensed to transact business within this State by having a paid up capital in cash of fifty thousand dollars, if their assets are, in the opinion of the insurance commissioner, fully sufficient to protect their policyholders, and in other respects they comply with the provisions of this section and all other provisions of this chapter applicable to them.(1907, c. 77, §61; Code 1923, c. 34, §61; 1923, c. 19, §61.)
Revisers’ Note.—In view of the fact that marine insurance is dealt with in connection with fire insurance in art. 4 of this chapter, the words “life, fire or marine,” at the beginning of the section, are substituted for the words “fire or life.” The words “except where it is otherwise specially provided,” near the beginning of the section, are new. The concluding portion of §61, c. 19, Acts 1923, relating to advertisement of the amount of capital stock and advertisements on the face of policies is transferred to §35, art. 2 of this chapter.
§2. Foreign Companies; Admission to do Business; Policies.—Every insurance company or association other than life, fire or marine, incorporated under the laws of any other state of the United States or any foreign country and having its principal office or place of business outside of this State, shall be governed by the laws of this State regulating the admission of fire insurance companies of such other state or country doing business in this State: Provided, however, That the form of policy prescribed for fire insurance companies shall not apply to a company or association covered by this section; but such company or association shall state on the face of its policies or certificates all agreements with the assured.(1907, c. 77, §62; Code 1923, c. 34, §62.)
Revisers’ Note.—Near the beginning of the section, the words “life, fire or marine” are substituted for the words “fire or life.” See revisers’ note to preceding section. Near the middle of the section, the words “fire insurance companies of such other state or country” are substituted for the words “foreign fire insurance companies.”
§3. Policies Subject to Regulation by Insurance Commissioner.—In addition to conforming to the provisions of the two preceding sections, the forms of all policies issued by such companies shall be subject to regulation and approval by the insurance commissioner, and the insurance commissioner may, if he deems fit, prescribe a general form or forms for all such policies, or specific provisions which shall be inserted in such policies, and all policies thereafter issued by such companies shall conform to all such regulations prescribed by the insurance commissioner.
Revisers’ Note.—This section is new. Heretofore, the law has given the insurance commissioner no such regulatory powers.
§4. Reserves.—The insurance commissioner may require the same standards for reserves for companies other than life, fire or marine licensed to do business in this State, as are required by any of the states in which companies of the same class do business: Provided, That in no case shall the reserve be less than that required by the laws of this State.(1913, c. 19, §15j; Code 1923, c. 34, §15j.)
Revisers’ Note.—The words “life, fire or marine” are substituted for the words “life and fire.” See revisers’ note to §1 of this article.
§5. Adjustment of Claims by Accident and Health Companies; Improper Practices.—The insurance commissioner is hereby given power to investigate the method of adjusting all claims and to examine adjusting agents of any company doing accident and health insurance business in the State, and if it be ascertained from such investigation and examination, or otherwise, that the profit or pay of any such agent is in any manner contingent upon the amount paid upon any claim adjusted by such agent, then the insurance commissioner shall forthwith serve notice upon the agent and such insurance company to discontinue the adjustment of claims by or through such agent, and, if the insurance company, after the receipt of such notice, fails to discontinue adjusting claims through such agent, the commissioner may cancel the agent’s commission and shall refuse to renew the authority of such insurance company to transact business within the State.(1923, c. 19, §62a.)
Article 7. Agents, Solicitors and Brokers.
Revisers’ Note.—Provisions dealing with matters relating to agents, solicitors and brokers in connection with other subject matter will be found in the other articles of this chapter.
§1. Licenses of Agents, Solicitors and Brokers; Compliance With Laws.—No person shall act in the solicitation or procurement of applications for, or policies of, insurance for any company referred to in this chapter, except as solicitor under the following section, without first procuring a license, or certificate of authority, as agent, solicitor or broker, from the insurance commissioner, all of which licenses, or certificates, hereafter issued shall be renewable on the first day of April in each year. The insurance commissioner, except where it is otherwise specially provided, shall not issue such license, or certificate of authority, to any person who is not a resident of this State, or whom he finds not trustworthy and competent to transact the business for authority to do which application is made. Nor shall any person act as agent, solicitor or broker of any insurance company until he shall in all respects have complied with all the general provisions of this chapter regulating his duties and obligations: Provided, however, That, as to the business of life insurance, such residence shall not be required when a nonresident applicant for a license promises and agrees, as a condition of being licensed, that all life insurance policies issued as a result of solicitation on his part or in his behalf in this State shall be reported, placed and consummated through a duly licensed resident agent of the insurer or insurers taking such risks, and such licensed non-resident agents may receive commissions on such insurance. On conviction of any person acting as such agent, solicitor or broker of the violation of any provision of this chapter, the insurance commissioner shall forthwith revoke the certificate of authority issued to him, and no certificate shall thereafter be issued to such convicted person, until one year from the date of conviction.(Code 1868, c. 34, §§2, 3; 1871, c. 107; 1872-3, c. 69, c. 221; 1881, c. 38; 1882, c. 85, §§2, 3; 1891, c. 108; 1907, c. 77, §§52, 56; 1913, c. 19, §15d; Code 1923, c. 34, §§15d, 52, 56; 1923, c. 15, §§15d, 56; 1925, c. 69, §15d.)
Revisers’ Note.—This section is a composite redraft of the first paragraph of §15d, c. 69, Acts 1925, §52, c. 34, Code 1923, and part of §56, c. 15, Acts 1923. The first proviso is new. The residue of said §§15d and 56 is transferred to §§4 and 3, respectively, of this article. In pursuance of the policy in this revision to make licenses expire with the fiscal year, the date of renewal is changed from April 1 to July 1. See revisers’ note to §12, art. 2 of this chapter.
Legislative Note.—April first is retained as the renewal date. See legislative note to §12, art. 2 of this chapter.
§2. Special Licenses of Solicitors.—Any duly licensed insurance agent for a company other than life may, with the approval of such company, apply to the insurance commissioner for licenses for not to exceed two solicitors. If, after due investigation, the insurance commissioner finds the person or persons for whom such license is applied, competent and trustworthy and resident in this State, he shall issue such solicitors’ licenses, which shall be subject to the same law as to revocation, expiration and renewal as the agent’s license, and the fee for which shall be one dollar for each license. Such solicitor shall solicit and receive applications for insurance for the appointing agent only, and he shall report all business through him. The expiration, cancellation, or revocation of the license of the appointing agent shall automatically cancel the solicitor’s license, and the appointing agent may cancel the solicitor’s license at any time by request to the insurance commissioner. In no case shall a solicitor’s license be requested when the principal use of such license is to effect insurance on the property, person or liability of the solicitor, or to circumvent the enforcement of the anti-rebate laws. Any agent who employs, or accepts the services of, any solicitor except a solicitor duly authorized and licensed under the provisions of this section shall have his license revoked.(1913, c. 19, §15c; 1921, c. 129, §15c; Code 1923, c. 34, §15c.)
Revisers’ Note.—The last sentence of this section is new.
§3. Necessity of Company License; Contents of Agent’s License.—No person, corporation or association shall issue or deliver within this State any policy or contract of insurance of any insurance company, or solicit or procure policies or risks from or in any insurance company, which has not obtained a license to transact business within this State and complied with all the laws of this State in regard thereto, or after revocation of such license. Any license, or certificate of authority, issued by the insurance commissioner to any agent, solicitor or broker shall state that the company for which the agent, solicitor or broker proposes to act has complied with all the laws of this State relative to such company and has been duly authorized to do business in this State.(Code 1868, c. 34, §§2, 3; 1871, c. 107; 1872-3, c. 69, c. 221; 1881, c. 38; 1882, c. 85, §§2, 3; 1891, c. 108; 1907, c. 77, §§19, 56, 57; Code 1923, c. 34, §§19, 56, 57; 1923, c. 15, §56.)
Revisers’ Note.—-The first sentence of this section is §19, c. 34, Code 1923, formerly relating only to life insurance companies, but so redrafted as to apply to all insurance companies, with interpolations from §57, c. 34, Code 1923. The second sentence is a redraft of §56, c. 15, Acts 1923. See §1 of this article for other portions of said §56, and §10 of this article for the penalty provision in said §57.
§4. Revocation of Licenses.—Whenever the insurance commissioner upon investigation is satisfied that any agent, solicitor or broker acting under his supervision and holding a certificate of authority from him is violating or has violated any provision of this chapter, or that he is incompetent or untrustworthy, he shall proceed to revoke the certificate, or license, of such agent, solicitor or broker. Whenever the insurance commissioner shall proceed to revoke such license, or certificate, whether for the reasons aforesaid or in pursuance of any other provision or provisions of this chapter, he shall first notify such person of his findings and state in writing the complaint against him and require such person, on a date named, which date shall not be less than thirty days after service of notice, to show cause why his license should not be revoked. On the date stated in such notice, the insurance commissioner shall proceed to a hearing and decision in the manner provided in section thirteen of article two of this chapter, and if such person does not present good and sufficient reasons why his authority to transact business in this State should not be revoked, the commissioner may revoke such person’s license, or certificate of authority. All decisions and findings of the insurance commissioner made under the provisions of this section may be contested and reviewed in the manner prescribed in section thirteen of article two of this chapter: Provided, however, That nothing contained in this section shall be taken or construed as preventing any such agent, solicitor or broker from doing business under the authority of such license, or certificate, during the pendency of any proceeding taken to contest and review an adverse decision of the insurance commissioner.(1913, c. 19, §15d; Code 1923, c. 34, §15d; 1923, c. 15, §15d; 1925, c. 69, §15d.)
Revisers’ Note.—This section contains a redraft of the last two paragraphs of §15d, c. 69, Acts 1925. See revisers’ note to §1 of this article. The method prescribed for review of decisions of the commissioner is modified so as to conform to the provisions of §13, art. 2 of this chapter.
§5. Nonresident Brokers.—The insurance commissioner may, upon receipt of ten dollars, except as hereinafter provided, issue to any suitable person, resident in any other state, a license to act as an insurance broker to negotiate contracts of insurance or reinsurance or place risks or effect insurance or reinsurance with the authorized agent of any qualified domestic insurance company, or with the authorized agent in this State of any foreign insurance company duly admitted to do business in this State, and not otherwise, upon the following conditions: The applicant for such license shall file with the insurance commissioner an application which shall be in writing upon a form to be provided by the insurance commissioner, and shall be executed by the applicant under oath and kept on file by the insurance commissioner. Such application shall state the name, age, residence and occupation of the applicant at the time of making application, his occupation for five years next preceding the date of filing the application and shall state that the applicant intends to hold himself out and carry on business in good faith as an insurance broker and shall give such other in formation as the commissioner may require. The application shall be accompanied by a state ment upon a blank furnished by the insurance commissioner as to the trustworthiness and competency of the applicant, signed by at least three reputable citizens of this State. If the insurance commissioner is satisfied that the applicant is trustworthy and competent and intends to hold himself out and carry on business in good faith as an insurance broker, he may issue to him the license applied for. The commissioner may at any time after the granting of a broker’s license, for cause shown and after a hearing in the manner provided in section four of this article, determine that the licensee has not complied with the insurance laws or is not trustworthy or competent, or is not holding himself out and actually carrying on business as an insurance broker, or is not a suitable person to act as such broker, or has placed insurance on risks in this State in companies or other insurers not authorized to transact business in this State, and he shall thereupon revoke the license of such broker and notify him that the license has been revoked. All such brokers’ licenses hereafter issued shall expire on the last day of March after their issue unless sooner revoked by the insurance commissioner for cause, as above provided; and all such licenses heretofore issued shall expire and may be renewed as provided in section twelve of article two of this chapter. The insurance commissioner shall publish a notice of the revocation of a broker’s license in such manner as he deems proper for the protection of the public. Broker’s licenses issued on application, as herein provided, may in the discretion of the insurance commissioner be renewed upon the payment of the proper fees without his requiring anew the details required in the original application.(1921, c. 127, §1; Code 1923, c. 34, §53a; 1923, c. 17, §1.)
Revisers’ Note.—The words “in the manner provided in section four of this article,” after the word “hearing,” are new. The date of expiration of the license is changed from March to June. See revisers’ note to §1 of this article. The provision operating by way of reference to §12, art. 2, is new. The rest of §53a, c. 34, Code 1923, is covered in §§6 and 7 of this article.
Legislative Note.—The last day of March is retained as the expiration date for the license, instead of the date fixed by the revisers.
§6. Unauthorized Transactions With Foreign Brokers.—Any insurance agent who shall accept any contract of insurance from any nonresident of West Virginia not a duly licensed broker, as provided in the preceding section, and who shall pay to such nonresident any commission thereon or accept said contract at lower than the published rate, shall have his certificate of authority revoked for the period of one year.(1921, c. 127, §2; Code 1923, c. 34, §53a.)
Revisers’ Note.—The rest of §53a, c. 34, Code 1923, is covered in §§5 and 7 of this article.
§7. Foreign Brokers Subject to Obligations and Prohibitions Imposed Outside State on Brokers of This State.—When by the laws of any other state, district, territory or nation, any tax, fine, penalty, license fee or other obligation or prohibition is imposed on agents or brokers residents of this State, the same fine, penalty, license fee or other obligation or prohibition shall be imposed upon agents or brokers of such other state, district, territory or nation doing business or seeking to do business in this State, except that the minimum broker’s license fee shall be ten dollars: Provided, That nothing in this section or the two preceding sections shall authorize the licensing of nonresident insurance agents in contravention of the resident agent’s law.(1872-3, c. 69, c. 221; 1881, c. 38; 1882, c. 85, §2; 1891, c. 108; 1921, c. 127, §3; Code 1923, c. 34, §53a.)
Revisers’ Note.—The rest of §53a, c. 34, Code 1923, is covered in §§5 and 6 of this article.
§8. Rate of Commission to be Paid Foreign Broker; Penalty.—It shall be unlawful for any resident fire insurance agent licensed to do business in this State to pay any nonresident insurance broker or agent a greater rate of commission than ten per cent of the premium on any fire insurance policy covering properties in this State; or for any fire insurance company licensed to do business in this State to pay any nonresident broker or agent any commission on fire insurance covering property in this State other than the commission to be paid the nonresident broker or agent by the resident agent writing or countersigning the policies. Any resident agent, fire insurance broker or fire insurance company violating any of the provisions of the preceding section shall be deemed guilty of a misdemeanor, and, upon conviction thereof, shall be fined not less than five hundred nor more than two thousand dollars, and, in addition thereto, the insurance commissioner shall revoke his or its license to do business within the State.(1925, c. 71, §§1, 2, 4.)
Revisers’ Note.—This section is a composite of §§1, 2 and 4, c. 71, Acts 1925. The words “to be paid,” near the end of the first sentence of the section, are substituted for the word “paid.”
§9. Facilities for Enforcement of Preceding Section.—For the purpose of enforcing the provisions of the preceding section, the insurance commissioner may require any licensed resident agent, fire insurance broker, or officer of a fire insurance company to make a sworn statement covering such facts as may be demanded or required by the commissioner and all books and records of any licensed resident agent, fire insurance broker or fire insurance company shall be open to the inspection of the insurance commissioner.(1925, c. 71, §3.)
Revisers’ Note.—The words “officer of a” are new. “Statement” is substituted for “affidavit.”
§10. General Penalty for Violation of Provisions of This Article.—Any person violating any provision of sections one and three of this article, or of any other section of this article where no specific penalty is provided, shall be guilty of a misdemeanor, and, upon conviction, punished by a fine of not more than one thousand dollars.(1907, c. 77, §57; Code 1923, c. 34, §57.)
Revisers’ Note.—The penalty in this section is taken from §57, c. 34, Code 1923. The substance of the residue of the section is incorporated in §3 of this article.
§11. Liability of Agent for Reinsurance in Unauthorized Company.—Any person acting, or assuming to act, as the agent of any insurance company, authorized to do business in this State, who shall accept any risk or issue any policy of insurance on any risk in this State and reinsure the same or any part thereof in any company or companies not authorized to do business in this State, shall be deemed guilty of a misdemeanor and, on conviction thereof, punished by a fine of not more than five hundred dollars.[1901, c. 16, §3; Code 1923, c. 34, §60a (3).]
§12. Personal Liability of Agent.—The agent of any insurance company which has not been authorized to transact business in this State shall be personally liable upon all contracts made by or through him, directly or indirectly, for or in behalf of any such company.(1907, c. 77, §53; Code 1923, c. 34, §53.)
Revisers’ Note.—After the word “company” first appearing, the words “of any other state or foreign government” are omitted. The effect of this omission is to make the section apply to all agents and companies, foreign or domestic.
§13. Solicitor is Agent of Insurer.—Any person who shall solicit an application for insurance shall, in any controversy between the assured or his beneficiary and the company is suing any policy upon such application, be regarded as the agent of the company and not the agent of the assured.(1907, c. 53, §1; Code 1923, c. 34, §17b.)
Revisers’ Note.—After the word “insurance,” the words “upon the life of another” are eliminated, the effect being to make this section apply to all classes of insurance.
Article 8. Fraternal Beneficiary Societies.
§1. Definitions.—Any corporation, society, order or voluntary association, without capital stock, organized and carried on solely for the mutual benefit of its members and their beneficiaries, and not for profit, and having a lodge system with ritualistic form of work and a representative form of government and which shall make provision for the payment of benefits in accordance with section five of this article, is hereby declared to be a fraternal benefit society. The word “society,” as used in this article, shall be taken and construed as meaning a fraternal benefit society as herein defined. The words “domestic society” shall be taken and construed as meaning a society organized or incorporated under the laws of this State. The words “foreign society” shall be taken and construed as meaning a society organized or incorporated under the laws of another territory, district, state, province or country. All provisions of each section of this article, except as otherwise provided, shall be taken and construed as applying to both domestic and foreign societies.(1908, c. 32, §§21, 35; 1909, c. 71, §§1, 32; Code 1923, c. 55A, §§1, 32.)
§2. When Society Deemed Operating on Lodge System.—Any society having a supreme governing or legislative body and subordinate lodges or branches, by whatever name known, into which members shall be elected and initiated or admitted in accordance with its constitution, laws, rules, regulations, and prescribed ritualistic ceremonies, which subordinate lodges or branches shall be required by the laws of such society to hold regular or stated meetings at least once in each month, shall be deemed to be operating on the lodge system.(1908, c. 32, §22; 1909, c. 71, §2; Code 1923, c. 55A, §2.)
§3. What a Representative Form of Government.—Any such society shall be deemed to have a representative form of government when it shall provide in its constitution and laws for a supreme legislative or governing body, composed of representatives elected either by the members or by delegates elected directly or indirectly by the members, together with such other members as may be prescribed by its constitution and laws: Provided, That the elective members shall constitute a majority in number and have not less than a majority of the votes, nor less than the votes required to amend its constitution and laws, and that the meetings of the supreme or governing body and the election of officers shall be held as often as once in four years.(1908, c. 32, §22: 1909. c. 71, §3; Code 1923, c. 55A, §3.)
§4. Insurance Laws not Applicable.—Except as provided in this article, and except where such societies are expressly designated in other provisions of this chapter, such societies shall be governed by this article, and shall be exempt from all provisions of the insurance laws of this State, not only in governmental relations with the State, but for every other purpose, and no law hereafter enacted shall apply to them unless they be expressly designated therein.(1909, c. 71, §4; Code 1923, c. 55A, §4.)
Revisers’ Note.—The words “and except where such societies are expressly designated in other provisions of this chapter” are new.
§5. Benefits.—Every society transacting business under this article shall provide for the payment of death benefits and may provide for the payment of benefits in case of temporary or permanent physical disability, either as a result of disease, accident or old age: Provided, That the period of life at which the payment of benefits for disability on account of old age shall commence shall not be under seventy years; and may provide for the payment to such member as a cash dividend of a sum not exceeding the maximum named in the certificate of membership, after such certificate has been in force at least five years as provided by the laws and regulations of such association, and shall have the right to erect monuments to the memory of its deceased members. Such society shall have the power to give a member, when permanently disabled or on attaining the age of seventy, the option to surrender his certificate and accept in lieu thereof all or such a portion of the face value of his certificate as the laws of the society may provide: Provided, That nothing in this article contained shall be so construed as to prevent the issuing of benefit certificates for a term of years less than the whole life, which are payable only upon the death or disability of the member occurring within the term for which the benefit certificate may be issued. Such society shall have the power to accept a part of the periodical contributions in cash, and charge the remainder as a lien on the certificate. Such society shall also have the power to grant surrender values, not to exceed the net value of the certificates, less any surrender charge specified by the laws of the society.(1908, c. 32, §23; 1909, c. 71, §5; Code 1923, c. 55A, §5.)
§6. Persons Who May be Beneficiaries of Death Benefits.—The payment of death benefits shall be confined to the wife, husband, relative by blood to the fourth degree ascending or descending, step-father, step-mother, step-children, or children by legal adoption, of the member, or to a person or persons depending upon the member: Provided, That if after the issuance of the original certificate the member shall become dependent upon the charity of an individual or of an institution, he shall have the privilege, with the consent of the society, to make such individual or institution his beneficiary; and that any society may, by its laws, limit the scope of beneficiaries within the above classes. Within the above restrictions, each member shall have the right to designate his beneficiary and from time to time have the same changed in accordance with the laws, rules or regulations of the society, and no beneficiary shall have or obtain any vested interest in the said benefit until the same has become due and payable upon the death of the said member.(1908, c. 32, §23; 1909, c. 71, §6; Code 1923, c. 55A, §6.)
Revisers’ Note.—The part of the proviso coming after the semicolon is transposed from the end of the section.
§7. Qualifications for Membership.—Any society may admit to beneficial membership any person over sixteen and under sixty years of age, who has been examined by a competent physician, and whose examination has been supervised and approved in accordance with the laws of the society: Provided, That no medical examination shall be required of persons applying for disability certificates maturing at periods not exceeding six years and paying death benefits not exceeding three hundred and seventy-five dollars; and that any beneficiary member of such society who shall apply for a certificate providing for disability benefits need not be required to pass an additional medical examination therefor. Nothing herein contained shall prevent such society from accepting general or social members.(1908, c. 32, §23; 1909, c. 71, §7; Code 1923, c. 55A, §7.)
§8. Certificates; Membership Agreement.—Every certificate issued by any such society shall specify the maximum amount of benefit provided thereby, and shall provide that the certificate, the charter or articles of incorporation, or if a voluntary association, the articles of association, the constitution and laws of the society and the application for membership and medical examination signed by the applicant, and all amendments to each thereof, shall constitute the agreement between the society and the member, and copies of the same, certified by the secretary of the society or corresponding officer, shall be received in evidence of the terms and conditions thereof; and any changes, additions or amendments to said charter or articles of incorporation, or articles of association, if a voluntary association, or constitution or laws, duly made or enacted subsequent to the issuance of the benefit certificate, shall bind the member and his beneficiaries and shall govern and control the agreement in all respects, the same as though such changes, additions or amendments had been made prior to, and were in force at the time of, the application for membership.(1908, c. 32, §24; 1909, c. 71, §8; Code 1923, c. 55A, §8.)
§9. Reserve Funds; Funds From Which Benefits and Expenses to be Paid.—Any society may create, maintain, invest, disburse and apply a reserve, emergency or surplus fund in accordance with its laws. Unless otherwise provided in the contract, such funds shall be held, invested and disbursed for the use and benefit of the society, no member or beneficiary having or acquiring any individual rights therein or becoming entitled to any apportionment or the surrender of any part thereof. The funds from which benefits shall be paid and the funds from which the expenses of the society shall be defrayed shall be derived from periodical or other payments by the members of the society and accretions of said funds.(1908, c. 32, §25; 1909, c, 71, §9; Code 1923, c. 55A, §9.)
§10. Investments.—Any society may invest its funds in real estate for office or lodge purposes, and may hold or sell and convey any real estate acquired by foreclosure or received in satisfaction of loans. It may also invest its funds in liens against the certificates of its members (not exceeding ninety per cent of the reserve credit thereunder), or in government, state, provincial, county or municipal bonds, or bonds of any district, park or school district having taxing powers: Provided, That such bonds shall be a direct obligation on all the taxable property within such municipality or district; or in mortgage bonds of any railroad company which has for the preceding two years been paying interest on its junior obligations, or in first mortgages, or first mortgage bonds or ground rents upon improved real estate, not exceeding fifty per cent of the market value thereof.(1908, c. 32, §25; 1909, c. 71, §10; Code 1923, c. 55A, §10.)
§11. Disposition of Funds Paid by Members and of Reserve Funds.—Every provision for payment by members of such a society, in whatever form made, shall distinctly state the purpose of the same and the proportion thereof which may be used for expenses, and no part of the money collected for mortuary or disability purposes and no part of the reserve, emergency or surplus funds or the net accretions of either or of any of said funds shall be used for expenses: Provided, That expenses incident to the examination, investigation, adjustment and litigation of death and disability claims may be paid from the mortuary and disability funds; and that all expenses incident to the investment, care and maintenance of any reserve, emergency or surplus funds, or expenses incident to litigation concerning the same, may be paid from such funds.(1908, c. 32, §25; 1909, c. 71, §11; Code 1923, c. 55A, §11.)
§12. Organization; Certificate of Authority.—Five or more persons, citizens of the United States, and a majority of whom are citizens of this State, who desire to form a fraternal benefit society as defined by this article, may make and sign (giving their addresses) and acknowledge before some officer competent to take acknowledgments of deeds, articles of incorporation, in which shall be stated:
(a) The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company already transacting business in this State as to mislead the public or to lead to confusion;
(b) The purpose for which it is formed, which shall not include more liberal powers than are granted by this article: Provided, That any lawful social, intellectual, educational, moral or religious advantages may be set forth among the purposes of the society; and the mode in which its corporate powers are to be exercised;
(c) The names, residences and official titles of all the officers, trustees, directors, or other persons who are to have and exercise the general control and management of the affairs and funds of the society for the first year until the ensuing election, at which all such officers shall be elected by the supreme legislative governing body.
Such articles of incorporation and duly certified copies of the constitution and laws, rules and regulations, and copies of all proposed forms of benefit certificates, applications therefor and circulars to be issued by such society and a bond in the sum of five thousand dollars with sureties approved by the insurance commissioner, conditioned upon the return of the advanced payments, as provided in this section, to applicants, if the organization is not completed within one year, shall be filed with the insurance commissioner, who may require such further in formation as he deems necessary; and, if the purposes of the society conform to the requirements of this article and all provisions of law have been complied with, the insurance commissioner shall so certify and retain and record the articles of incorporation in a book kept for that purpose, and furnish the incorporators a preliminary certificate authorizing said society to solicit members as hereinafter provided.
Upon receipt of said certificate from the insurance commissioner, said society may solicit members for the purpose of completing its organization and shall collect from each applicant the amount of not less than one monthly payment applicable to death benefits, in accordance with its tables of rates as provided by its constitution and laws, and shall issue to each such applicant a receipt for the amount so collected. But no such society shall incur any liability other than for such advanced payments, nor issue any benefit certificate nor pay or allow, or offer or promise to pay or allow, to any person any death or disability benefit, until actual bona fide application for death benefit certificates have been secured upon at least five hundred lives, for at least one thousand dollars each, and all such applicants for death benefits shall have been regularly examined by legally qualified practicing physicians and certificates of such examinations have been duly filed and approved by the chief medical examiner of such society, nor until there shall be established ten subordinate branches or lodges into which said five hundred applicants have been initiated, nor until there has been submitted to the insurance commissioner, under oath of the president and secretary or corresponding officer of such society, a list of such applicants, giving their names, addresses, date examined, date approved, date initiated, name and number of the subordinate branch of which each applicant is a member, amount of benefits to be granted, and rate of regular periodical payments, nor until it shall be shown to the insurance commissioner by the sworn statement of the treasurer or corresponding officer of such society that at least five hundred applicants have each paid in cash at least one regular monthly payment of dues as herein provided for one thousand dollars of indemnity to be effected, which payments in the aggregate shall amount to at least twenty-five hundred dollars, all of which shall be credited to the mortuary or disability fund on account of such applicants and no part of which may be used for expenses. Said advanced payments shall during the period of organization be held in trust for, and, if the organization is not completed within one year as hereinafter provided, returned to, such applicants.
The insurance commissioner may make such examination and require such further information as he deems advisable, and, upon presentation of satisfactory evidence that the society has complied with all the provisions of law, he shall issue to such society a certificate to that effect. Such certificate shall be prima facie evidence of the existence of such society at the date of such certificate.
No preliminary certificate granted under the provisions of this section shall be valid after one year from its date, or after such further period, not exceeding one year, as may be authorized by the insurance commissioner, upon cause shown, unless the five hundred applicants herein required have been secured and the organization has been completed as herein provided; and the articles of incorporation and all proceedings thereunder shall become null and void in one year from the date of said preliminary certificate, or at the expiration of said extended period, unless such society shall have completed its organization and commenced business as herein provided. No charter issued to such society shall have any force or effect until the same is approved in writing by the insurance commissioner. When any domestic society shall have discontinued business for the period of one year, its charter shall be null and void.(1908, c. 32, §§10, 26; 1909, c. 71, §12; Code 1923, c. 55, §10, c. 55A, §12.)
Revisers’ Note.—The words “monthly payment applicable to death benefits,” near the beginning of the sixth paragraph, are substituted for the words “death benefit payment.” In the second sentence of the sixth paragraph, the word “being” is eliminated before the words “legally qualified.” The provision as to the evidentiary effect of a certified copy is omitted, as covered in §7, art. 1, c. 57. In the last paragraph, before the words “all proceedings,” the word “and” is substituted for “in.” In the last sentence, “be” is substituted for “become.” The sentence next to the last is new. It is transferred in substance from §10, c. 55, Code 1923.
§13. Existing Societies May Continue to Operate Under Present Charters or Reincorporate.—Any society now engaged in transacting business in this State may exercise, after the adoption of this Code, all the rights conferred hereby, and all of the rights, powers and privileges now exercised or possessed by it under its charter or articles of incorporation not in consistent with this article, or it may be reincorporated hereunder, but no society already organized shall be required to reincorporate here under, and any such society may amend its articles of incorporation from time to time, in the manner provided therein, or in its constitution or laws, and all such amendments shall be filed with the insurance commissioner and shall become operative upon such filing, unless a later time be provided in such amendments or in its articles of incorporation, constitution or laws.(1908, c. 32, §27; 1909, c. 71, §13; Code 1923, c. 55A, §13.)
§14. Transfer of Membership and Funds.—No domestic society shall transfer its membership or funds to any society not authorized by the insurance commissioner to transact business in this State; nor shall any such society transfer its membership or funds to any licensed society, unless the said contract of transfer has been approved by a two-thirds vote of the members of the supreme body of the society whose membership is proposed to be transferred, and by a two-thirds vote of the trustees or board having charge of the society proposing to take such membership, such transfer to be approved by the insurance commissioners of the states in which such societies were chartered.(1908, c. 32, §27; 1909, c. 71, §14; Code 1923, c. 55A, §14.)
§15. Time for Suits.—No member of any society organized or operating under the provisions of this article, or his beneficiary, or his legal representative, or any other person in any way interested in any of his benefits, or any person deriving legal rights from him, shall commence any action or other legal proceedings in any of the courts of this State, on account of his certificate, against such society, until after he shall have exhausted all the remedies provided in its constitution and laws for appeals and otherwise that can be determined within three months after the filing of proof of death or disability.(1909, c. 71, §15; Code 1923, c. 55A, §15.)
Revisers’ Note.—Section 16, c. 71, Acts 1909, is omitted as having served its purpose.
§16. Foreign Societies; License.—No foreign society shall transact any business within this State without a license from the insurance commissioner. On seeking admission to do business in this State, such society shall file with the insurance commissioner a duly certified copy of its charter or articles of incorporation, or articles of association, if it is a voluntary association; a copy of its constitution and laws, certified by its secretary or corresponding officer; a copy of its application form, certificate of membership and of all circulars in use by it; a statement under oath by its president and secretary or corresponding officers, in the form hereinafter prescribed, duly verified by an examination made by the insurance commissioner official of its home state, of its business for the preceding year; a certificate from the proper official in its home state, territory, district, province or country, that the society is legally organized, and that it has the further qualifications required of domestic societies organized under this article, and has its assets invested as required by the laws of the state, territory, district, province, or country where it is organized. When such society meets the requirements herein specified, the insurance commissioner may issue to it a license, for which the society shall pay to the insurance commissioner a fee of twenty-five dollars. When the insurance commissioner refuses to license any society, or revokes its authority to do business in this State, he shall reduce his ruling, order or decision to writing and file the same in his office and shall furnish a copy thereof, together with a statement of his reasons therefor, to the officers of the society; and the action of the said insurance commissioner may be contested and reviewed in the manner prescribed in section thirteen of article two of this chapter: Provided, however, That nothing contained in this section shall be taken or construed as preventing any such society from continuing in good faith all contracts made in this State during the time such society was legally authorized to transact business therein.(1908, c. 32, §28; 1909, c. 71, §17; Code 1923, c. 55A, §17.)
Revisers’ Note.—Transpositions of portions of the second sentence of §17, c. 55A, Code 1923, are made in the second sentence of this section. The provision requiring appointment of an attorney in fact to accept service of process is omitted. See the following section. The provision that the action of the insurance commissioner “may be contested and reviewed in the manner prescribed in section thirteen of article two of this chapter” is new. It is substituted for the provision that “the action of the insurance commissioner shall be reviewable by proper proceedings in any court of competent jurisdiction within this State.” See revisers’ note to §13, art. 2 of this chapter.
§17. Society May Sue or be Sued; Auditor Attorney in Fact for Service of Process.—Such society may sue or be sued as such, without the necessity of joining any of its members in any suit or action. The auditor of this State shall be, and is hereby constituted, the attorney in fact of every such society, domestic or foreign, upon whom all legal process in any action, suit or proceeding against it may be served, and he may accept service of such process. Such process shall be served on the auditor, or accepted by him, in the manner provided for service of process upon corporations generally.(1908, c. 32, §29; 1909, c. 71, §18; Code 1923, c. 55A, §18.)
Revisers’ Note.—The first sentence of this section is new. The residue of the section is a redraft of §18, c. 55A, Code 1923. The principal effect of the redraft is to dispense with the necessity for appointment of the auditor as attorney in fact and to make the mode of service conform to that prescribed for corporations generally, in lieu of the specific directions in the original section.
§18. Place of Meetings and Principal Office of Domestic Societies.—Any domestic society may provide that the meetings of its legislative or governing body may be held in any state, district, province or territory wherein such society has subordinate branches, and all business transacted at such meetings shall be as valid in all respects as if such meetings were held in this State; but its principal office shall be located in this State.(1909, c. 71, §19; Code 1923, c. 55A, §19.)
§19. Officers and Members Not Liable for Benefits.—Officers and members of the supreme, grand or any subordinate body of any such incorporated society shall not be individually liable for the payment of any disability or death benefit provided in the laws and agreements of such society, but the same shall be payable only out of the funds of such society and in the manner provided by its laws.(1909, c. 71, §20; Code 1923, c. 55A, §20.)
§20. Waiver of Constitution or By-Laws.—The constitution and laws of the society may provide that no subordinate body, nor any of its subordinate officers or members, shall have the power or authority to waive any of the provisions of the laws and constitution of the society and the same shall be binding on the society and each and every member thereof and of all beneficiaries of members.(1909, c. 71, §21; Code 1923, c. 55A, §21.)
§21. Seizure of Funds Under Legal Process.—No money or other benefits, charity or relief or aid to be paid, provided or rendered by any such society shall be liable to attachment, garnishment or other process, or be seized, taken, appropriated or applied by any legal or equitable process or operation of law, to pay any debt or liability of a member or beneficiary, or of any person who may have a right thereunder, either before or after payment.(1909, c. 71, §22; Code 1923, c. 55A, §22.)
Revisers’ Note.—This section is subdivision (b) of §22, c. 55A, Code 1923. It evidently was intended to apply to all societies coming under the provisions of this article. As it stood in the context of the original section, it might be taken as referring only to grand lodges mentioned in subdivision (a), of that section. The residue of said §22 is covered in the next following section.
§22. Grand Lodges as Federation; Reports by.—All grand lodges, by whatever name known, unless incorporated in this State, holding charters from a supreme governing body, which, upon the adoption of this Code, are conducting business in this State as a fraternal beneficiary society upon what is known as the separate jurisdiction plan, shall be treated as a federation of grand lodges and not as a single state organization, and all reports required by the provisions of this article shall be made and furnished by the officers of such supreme governing body and shall embrace and contain the transactions, liabilities and assets of the entire order.(1909, c. 71, §22; Code 1923, c. 55A, §22.)
Revisers’ Note.—This section is subdivision (a), §22, c. 55A, Code 1923. See revisers’ note to preceding section.
§23. Filing Copies of Amendments to Constitution or By-Laws.—Every society transacting business under this article shall file with the insurance commissioner a duly certified copy of all amendments of or additions to its constitution and laws within ninety days after the enactment of the same. Printed copies of the constitution and laws as amended, changed or added to, certified by the secretary or corresponding officer of the association, shall be prima facie evidence of legal adoption thereof.(1909, c. 71, §23; Code 1923, c. 55A, §23.)
§24. Annual Statements; Extra Assessments.—Every society transacting business in this State shall annually, on or before the first day of March, file with the insurance commissioner, in such form as is hereinafter provided, a statement under oath of its president and secretary or corresponding officers, of its condition and standing on the thirty-first day of December next preceding and of its transactions for the year ending on the said thirty-first day of December. The fee for filing the annual report herein required shall be ten dollars, which must be remitted to the insurance commissioner at the time when the report is filed. The annual report shall be in such form as may be prescribed by the insurance commissioner of this State. The laws of such society shall provide that if the stipulated payments by the members are insufficient to pay all matured death or disability claims in full, and to provide for the creation and maintenance of the funds required by its laws, additional or extra rates of contribution may be collected from the members to meet such deficiency.(1908, c. 32, §29; 1909, c. 71, §24; Code 1923, c. 55A, §24.)
Revisers’ Note.—The date for the annual report is changed from the first day of March to the first day of April.
Legislative Note.—The first day of March is retained as the date for the annual report.
§25. Supervision by Insurance Commissioner of Domestic Societies; Dissolution; Receivers.—The insurance commissioner, or any person he may appoint, shall have the power of visitation and examination into the affairs of any domestic society. He may employ assistants for the purposes of such examination, and he, or any person he may appoint, shall have free access to all the books, papers and documents that relate to the business of the society and may summon and qualify as witnesses under oath and examine its officers, agents and employees or other persons in relation to the affairs, transactions and conditions of the society. The expenses of such examination shall be paid by the society so examined. Whenever after examination the insurance commissioner is satisfied that any domestic society has failed to comply with any provision of this article, or is exceeding its powers, or is not carrying out its contracts in good faith, or is transacting business fraudulently, or whenever any domestic society shall have existed a year or more with a membership of less than three hundred, or shall determine to discontinue business, the insurance commissioner may present the facts relating thereto to the attorney general, who shall, if he deems the circumstances warrant, commence an action in quo warranto in a court of competent jurisdiction, and such court shall thereupon notify the officers of such society of a hearing, and if it shall then appear that such society should be closed, said society shall be enjoined from carrying on any further business and some person shall be appointed receiver of such society, and shall proceed at once to take possession of the books, papers, moneys and other assets of the society, and shall forthwith, under the direction of the court, proceed to close the affairs of the society and to distribute its funds to those entitled thereto. No such proceeding shall be commenced by the attorney general against any such society until after notice has been duly served on the chief executive officers of the society and a reasonable opportunity has been given to it, on a date to be named in said notice, which shall not be less than thirty days after service of notice, to show cause why such proceedings should not be commenced.(1908, c. 32, §30; 1909, c. 71, §25; Code 1923, c. 55A, §25.)
§26. Examination of Foreign Societies; Failure to Submit to Examination.—The insurance commissioner, or any person whom he may appoint, may examine any foreign society transacting or applying for admission to transact business in this State. The insurance commissioner may employ assistants for the purpose of such examination, and he, or any person he may appoint, shall have free access to all the books, papers and documents that relate to the business of the society, and may summon and qualify as witnesses under oath and examine its officers, agents, employees and other persons in relation to the affairs, transactions and conditions of the society. He may in his discretion accept in lieu of such examination the examination of the insurance department of the state, territory, district, province or country where such society is organized. All examinations made under the provisions of this section shall be made at the expense of the society examined. If any such society, or its officers, refuse to submit to such examination, or to comply with the provisions of this section relating thereto, the authority of such society to write new business in this State shall be revoked until satisfactory evidence is furnished the insurance commissioner relating to the condition and affairs of the society, and during such revocation the society shall not write any new business in this State; but no such revocation shall be made until after at least thirty days’ notice is given such society of the proposed revocation.(1908, c. 32, §31; 1909, c. 71, §26; Code 1923, c. 55A, §26.)
§27. Public Statement Pending Investigation.—Pending, during and after an examination or investigation of any such society, either domestic or foreign, the insurance commissioner shall make public no statement, report or finding, nor shall he permit to become public any statement, report or finding, affecting the status, standing or rights of any such society until a copy thereof shall have been served upon the president or secretary, or corresponding officers, of such society, nor until such society shall have been afforded a reasonable opportunity to answer any such statement, report or finding, and to make such showing in connection therewith as it may desire. If such statement, report or finding shall not be withdrawn after such hearing, it shall not thereafter be made public, except in connection with the answer or explanation of the society concerned.(1909, c. 71, §27; Code 1923, c. 55A, §27.)
§28. Revocation of License of Foreign Society.—When the insurance commissioner on investigation is satisfied that any foreign society transacting business under this article has exceeded its powers, or has failed to comply with any provision of this article, or is conducting business fraudulently, or is not carrying out its contracts in good faith, he shall notify its president and secretary, or other officers corresponding thereto, of his findings, and state in writing the grounds of his dissatisfaction, and after reasonable notice require said society, on a date named, which date shall not be less than thirty days after service of notice, to show cause why its license should not be revoked. If on the date named in such notice such objections have not been removed to the satisfaction of the insurance commissioner, or the society does not present good and sufficient reasons why its authority to transact business in this State should not at that time be revoked, he may revoke the authority of the society to continue business in this State. All decisions and findings of the insurance commissioner made under the provisions of this section may be contested and reviewed as provided in section sixteen of this article.(1908, c. 32, §32; 1909, c. 71, §28; Code 1923, c. 55A, §28.)
§29. Lodges Exempt From the Provision of this Article.—Nothing contained in this article shall be construed to affect or apply to grand or subordinate lodges of Masons, Odd Fellows or Knights of Pythias (exclusive of the insurance department of the supreme lodge, Knights of Pythias), nor the Junior Order of United American Mechanics (exclusive of the beneficiary degree or insurance branch of the national council Junior Order United American Mechanics), nor to similar societies which do not issue insurance certificates; nor to an association of local lodges of a society now doing business in this State, which provide death benefits not exceeding three hundred dollars to any one person, or disability benefits not exceeding five hundred dollars in any one year to any one person, or both; nor to any contract of reinsurance of or between such local lodges of such society now doing business on such plan in this State; nor to domestic societies which limit their membership to the employees of a particular city or town, designated firm, business house or corporation; nor to domestic lodges, orders or associations of a purely religious, charitable and benevolent description, which do not provide for a death benefit of more than one hundred dollars, nor for disability benefits of more than one hundred and fifty dollars to any one person in any one year: Provided, however, That any such domestic order or society which has more than five hundred members and provides for death or disability benefits, and any such domestic lodge, order or society which issues to any person a certificate providing for the payment of benefits, shall not be exempt by the provisions of this section, but shall comply with all requirements of this article. The insurance commissioner may require from any society such information as will enable him to determine whether such society is exempt from the provisions of this article.(1909, c. 71, §29; Code 1923, c. 55A, §29.)
§30. Fraud in Obtaining Membership or Benefits; Unauthorized Solicitation; Penalties.—Any person, officer, member or examining physician of any society authorized to do business under this article who shall knowingly or wilfully make any false or fraudulent statement or representation in or with reference to any application for membership, or for the purpose of obtaining money from or benefit in any society transacting business under this article, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be punished by a fine of not less than one hundred nor more than five hundred dollars, or imprisonment in the county jail for not less than thirty days nor more than one year, or both, in the discretion of the court. Any person who shall wilfully make a false statement of any material fact or thing in a sworn statement as to the death or disability of a certificate holder in any such society for the purpose of procuring payment of the benefit named in the certificate of such holder, and any person who shall wilfully make any false statement in any verified report or declaration under oath required or authorized by this article, shall be guilty of perjury and shall be proceeded against and punished as provided by the statutes of this State in relation to the crime of perjury. Any person who shall solicit membership for, or in any manner assist in procuring membership in, any fraternal benefit society not licensed to do business in this State, or who shall solicit membership for, or in any manner assist in procuring membership in, any such society not authorized as herein provided to do business as herein defined in this State, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be punished by a fine of not less than fifty nor more than two hundred dollars. Any society, or officer, agent or employee thereof, neglecting or refusing to comply with or violating any of the provisions of this article, the penalty for which neglect, refusal or violation is not specified in this section, shall be guilty of a misdemeanor, and, upon conviction thereof, be fined not exceeding two hundred dollars.(1908, c. 32, §§33, 34; 1909, c. 71, §31; Code 1923, c. 55A, §31.)
§31. Child Insurance.—Any fraternal benefit society organized under the laws of this State or doing business in this State may issue certificates for the payment of sick, death or annuity benefits upon the fives of children between the ages of one and eighteen years who have been examined and approved in accordance with the laws of such society: Provided, That the application for such a benefit certificate shall be made by a parent or guardian of such child or some person upon whom such child is dependent for support. "When such child shall arrive at the age permitting personal application for insurance under the laws of such association, the certificate issued under this section may be exchanged for any other form of certificate issued by the society, such exchange to be in accordance with the constitution, laws and regulations of such association, and the free designation of a beneficiary in such exchange being left to such child.(1919, c. 47, §33; Code 1923, c. 55A, §33.)
Revisers’ Note.—The words “beneficiary association” are changed to “fraternal benefit society”; and “association,” wherever occurring, to “society.”
§32. Minimum Amount of Child Insurance Allowable.—Such society shall not issue any benefit certificate authorized by the preceding section until after it shall have simultaneously put in force at least five hundred such certificates on each of which at least one assessment has been paid; nor where the number of lives represented by such certificates falls below five hundred.(1919, c. 47, §34; Code 1923, c. 55A, §34.)
Revisers’ Note.—“Association” is changed to “society.”
§33. Basis of Rates on Child Insurance; Use of Funds.—The net beneficiary assessment collected upon such certificate shall be based upon the standard industrial table of mortality now adopted by the State of New York and interest at the rate of three and one-half per cent per annum, or upon a higher standard. The funds so collected shall be kept as separate and distinct funds and shall not be liable nor used for the payment of debts and obligations of the society other than the benefits herein authorized.(1919, c. 47, §35; Code 1923, c. 55A, §35.)
§34. Amount of Child Benefits Allowed.—Death benefits shall be made to increase with advancing age but shall not exceed the sum specified in the following table, the age therein specified being the ages at the time of death:
Between the ages of two and three years, thirty-four dollars;
Between the ages of three and four years, forty dollars;
Between the ages of four and five years, forty-eight dollars;
Between the ages of five and six years, fifty-eight dollars;
Between the ages of six and seven years, one hundred and forty dollars;
Between the ages of seven and eight years, one hundred and sixty-eight dollars; Between the ages of eight and nine years, two hundred dollars;
Between the ages of nine and ten years, two hundred and forty dollars;
Between the ages of ten and eleven years, three hundred dollars;
Between the ages of eleven and twelve years, three hundred and eighty dollars;
Between the ages of twelve and thirteen years, four hundred and sixty dollars;
Between the ages of thirteen and sixteen years, five hundred and twenty dollars;
Between the ages of sixteen and seventeen years, six hundred and twelve dollars;
Between the ages of seventeen and eighteen years, seven hundred dollars.(1919, c. 47, §36; Code 1923, c. 55A, §36.)
§35. Exemption From Taxation.—Every fraternal benefit society organized or licensed under this article is hereby declared to be a charitable and benevolent institution, and all of its funds shall be exempt from all state, county, district and municipal taxes other than taxes on real estate and office equipment.(1909, c. 71, §30; Code 1923, c. 55A, §30.)
Article 9. Annuity Contracts.
§1. License From Insurance Commissioner Prerequisite to Engaging in Business.—No person, association or corporation shall engage in the business of soliciting or receiving deposits or payments on any annuity contract or certificate or annuity bond in fixed and stipulated installments, within this State, without first having obtained from the insurance commissioner a license to do business in this State: Provided, however, That this article shall not be construed as applying to persons, associations or corporations engaged in selling merchandise in installments, insurance companies, foreign or domestic, duly authorized to do business in this State, building and loan associations, national banks and banking institutions organized and authorized to do business under the laws of this State, fraternal insurance societies, or surety companies doing business under the laws of this State. Such license shall be issued for one year, or the fractional part of a year, and for issuing the same a fee of ten dollars shall be charged; and the provisions of section twelve, article two of this chapter shall apply to such license.(1911, c. 33, §3; Code 1923, c. 34, §76a; 1929, c. 66, §1.)
Revisers’ Note.—The word “societies,” near the end of the section, is substituted for “companies.” The last sentence is new. The residue of §76a, c. 34, Code 1923, is incorporated in the following sections of this article.
Committee’s Note.—The last sentence covers the license provisions appearing near the end of the next to the last paragraph of §5, c. 66, Acts 1929. The reference to §12, art. 2 of this chapter, included in the revisers’ report, is inserted for the purpose of uniformity and clarity. The term “license” is used throughout the article. In c. 66, Acts 1929, the words “license” and “permit” were used interchangeably.
Legislative Note.—The reference to §12, art. 2 of this chapter is modified in view of the changes made in said §12.
§2. License Prerequisite to Negotiating Contracts.—No person, association or corporation shall sell or offer for sale or deliver within this State any contract, certificate or bond of any person, association or corporation required by this article to obtain a license from the insurance commissioner to transact business in this State until such license has been issued by said insurance commissioner.(1911, c. 33, §2; Code 1923, c. 34, §76a; 1929, c. 66, §2.)
Revisers’ Note.—See revisers’ note to §1 of this article.
§3. Deposits to be Made With the Treasurer.—Before a license to transact business in this State shall be issued by the insurance commissioner to any person, association, or corporation within the purview of section one of this article, the insurance commissioner shall require the applicant to deposit with the state treasurer (in accordance with article five, chapter twelve of this Code), in trust, for the benefit of its contract holders, bonds and securities approved by said insurance commissioner to the amount of one hundred thousand dollars, and, in addition to such deposit, such person, association or corporation shall maintain at all times a deposit with the state treasurer of bonds and securities approved by the insurance commissioner to an amount equal to the total amount which such person, association or corporation may be liable to pay in cash to the holders of all contracts under the terms thereof at the time of the deposit: Provided, That when, by the laws of any other state, any such person, association or corporation shall have been required to make and shall have made such deposit in such state, equal or greater in amount for the benefit of contract holders in such state, upon the filing of a certificate to such effect from the proper officer in such state with the insurance commissioner of this State, such person, association or corporation shall not be required to make such deposit with the treasurer of this State for the benefit of its contract holders in such other state; and when the laws of any other state require such a deposit less in amount, such person, association or corporation shall file a certificate from the proper officer in such state with the insurance commissioner of this State showing the amount of the deposit made, and shall deposit with the treasurer of this State an amount which, together with the deposit made in such other state, shall make up the total amount required by this State to be deposited by such person, association or corporation, and such contract holders in such other state shall not be entitled to the benefit of the securities deposited with the treasurer of this State under this article, except so much of such deposit as may be made to complete the total amount required by this article where the law of any other state requires a lesser amount.
The insurance commissioner may require an independent appraisal, at the expense of the company, of any property on which it holds a mortgage or trust deed or any bond or other investment offered by such company for the purpose of complying with the deposit provisions of this article.[1911, c. 33, §3; 1917, c. 40, §76a (3); 1921, c. 130, §§76a (3), 76a (5 1/2); Code 1923, c.34, §76a; 1929, c. 66, §§3, 5.]
Revisers’ Note.—This section is a composite of the third, fourth and seventh paragraphs of §76a, c 34, Code 1923. See revisers’ note to §1 of this article.
Committee’s Note.—Sections 3 and 5, c. 66, Acts 1929, are combined in the above section as they both concern deposits. Presumably by inadvertence the insurance commissioner is referred to in said §5 as the officer with whom deposits of securities are made, instead of the treasurer. This is changed to conform to the provisions of said §3, now appearing at the beginning of the above section, which make the treasurer the officer to receive such deposits. The first sentence of said §5, as redrafted for the purpose of clarity, is placed at the end of the above section. The definition of “one hundred percent liability,” appearing at the end of said §5, is combined with the direct provision as to deposits equal to such liability which appears near the end of said §3. The provision as to vaults in said §3 is omitted as covered more accurately by the reference in the above section to art. 5, c. 12 of this Code. The provisions as to the issuance of a permit, appearing near the end of the next to the last paragraph of said §5, is incorporated in the license provisions of §1 of this article.
§4. “Bonds and Securities’’ Defined.—The words “bonds and securities,” used in the foregoing section, shall be construed to mean bonds or obligations of the United States; or bonds of any state or any political subdivision thereof; or bonds or obligations of any foreign government, or territorial possession thereof; or bonds of any private corporation secured by first mortgage or trust deed on its property; or debentures, notes, preferred or guaranteed stocks of a corporation whose net income applicable to payment of dividends for five years next preceding the date of their being offered for deposit shall have been equal to at least four per cent per annum on the par value on all its outstanding stock, or, in case its stock has no par value, then on the value at which such stock was issued; or bills and acceptances eligible for purchase by federal reserve banks; or notes or bonds secured by first mortgage or trust deed on improved real estate, to an amount not exceeding fifty per cent of its appraised value, if they be accompanied by proper abstract of title and fire insurance policy or policies to adequately protect the improvements on such real estate: Provided, That no corporation shall deposit, under this article, more than ten per cent of any preferred or guaranteed stock of any issuing corporation.(1929, c.66, §4.)
Committee’s Note.—Section 4, c. 66, Acts 1929, is redrafted for the purpose of clarity. The provision as to stock with a consistent rate of earning and a ready market value is omitted as being too indefinite and not in harmony with the 4% net income requirement as to preferred or guaranteed stocks.
§5. Revocation of License on Failure to Make Additional Deposits or Insufficiency of Assets.—On the failure of such person, association or corporation to deposit such additional bonds and securities with the state treasurer when so required by the insurance commissioner, the license to do business in this State shall be revoked by the insurance commissioner. Whenever the insurance commissioner, upon an examination of the affairs of any such person, association or corporation, finds that the liabilities of such person, association or corporation exceed the assets thereof, the insurance commissioner shall suspend the license of such person, association or corporation until he is satisfied that the assets of such person, association or corporation are increased to exceed said liabilities.(1911, c. 33, §4; Code 1923, c. 34, §76a; 1929, c. 66, §6.)
Revisers’ Note.—See revisers’ note to §1 of this article.
§6. Examination by Insurance Commissioner; Annual Reports.—The insurance commissioner shall annually examine, or cause to be examined, the affairs of all persons, associations and corporations coming within the purview of this article, at the expense of such persons, associations and corporations, and shall certify to such person, association or corporation so examined the result of such examination, and shall require an annual report of the financial condition of all such persons, associations and corporations as of the thirty-first day of December of each year, and such report shall be returned to said insurance commissioner on or before the first day of March next ensuing.(1911, c. 33, §5; Code 1923, c. 34, §76a; 1929, c. 66, §7.)
Revisers’ Note.—The date for the annual report is changed from “on or before the thirty-first day of January” to “on or before the first day of April,” in order to conform to other provisions for reports in this chapter. See revisers’ note to §1 of this article.
Committee’s Note.—The provision in the revisers’ report as to returning reports on or before April 1st is used instead of March 1st, as provided in §7, c. 66, Acts 1929. See revisers’ note above covering this change.
Legislative Note.—The date for the annual report is retained as fixed in §7, c. 66, Acts 1929.
§7. Limitation on Loans and Investments.—No officer, director, or stockholder of any company licensed under this article shall borrow, directly or indirectly, more than ten per cent of the total capital and surplus of such company, nor shall such company invest more than ten per cent of its assets in the securities of any one corporation.(1929, c. 66, §9.)
Committee’s Note.—The words “chartered or” appearing before the word “licensed” in §9, c. 66, Acts 1929, are omitted, as annuity companies are chartered under art. 1, c. 31.
§8. Loans and Investments to be Approved by Directors.—No loan or investment shall be made by any company licensed under this article without either the approval of a majority of a committee of at least three directors empowered by such corporation to make investments, or the approval of a majority of the directors of such company present at a meeting of such directors.(1929, c. 66, §10.)
Committee’s Note.—See committee’s note to §7 of this article covering the omission of the words “chartered or.”
§9. Reward for Negotiating or Recommending Loan From, or Aiding in Sale of Securities to, Company Prohibited.—No director or officer of any company licensed under this article shall receive any money or valuable thing for negotiating or recommending any loan from such company, or for aiding in the sale of any stocks, bonds, or other securities to such company.(1929, c. 66, §11.)
Committee’s Note.—See committee’s note to §7 of this article covering the omission of the words “chartered or.”
§10. Authority of Insurance Commissioner; Control of Deposit Where License Revoked.—The insurance commissioner shall have the same authority over every person, association, or corporation engaged in selling annuity contracts, certificates, or bonds, as over insurance companies, and if in his opinion the assets are impaired or such person, association or corporation is not complying with the law, said commissioner shall have authority to revoke the license of such person, association, or corporation to do business in this State, and, if such license is so revoked, the deposit or a sufficient amount of same, shall remain under the authority and control of the insurance commissioner until the total liability of all the contracts, certificates or annuity bonds or contracts issued by such person, association or corporation in this State is redeemed or settled.(1929, c. 66, §12.)
§11. Knowingly Consenting to Unlawful Loan or Investment; Liability; Penalty.—Every officer or director of any company within the purview of this article, knowingly consenting to a loan or investment in willful violation of any of the provisions of this article, shall be personally liable to the company for any loss which may be sustained by such investment or loan, to be recovered in an action to be brought by the insurance commissioner on the complaint of the holder of any contract, certificate, or annuity bond or contract, certificate or share interest in the company suffering thereby; and such officer or director shall also be guilty of a felony, and, upon conviction thereof, shall be fined not more than one thousand dollars and confined in the penitentiary not more than five years.(1929, c. 66, §13.)
Committee’s Note.—Section 13, c. 66, Acts 1929, is redrafted so as to distinguish between the provisions for a civil suit and those relating to a criminal proceeding.
§12. Penalty for Violation of Provisions of This Article.—Except as otherwise expressly provided, any person, association or corporation violating any provision of this article shall be guilty of a misdemeanor, and, upon conviction, punished by a fine of not less than fifty nor more than five hundred dollars.(1911, c. 33, §6; Code 1923, c. 34, §76a; 1929, c. 66, §8.)
Revisers’ Note.—This section is a redraft of the last paragraph of §76a, c. 34, Code 1923. See revisers’ note to §1 of this article.
Committee’s Note.—An excepting clause is inserted at the beginning of the section in view of the provisions of §11 of this article.
Article 10. Automobile Mutual Insurance Companies.
Committee’s Note.—Sections 3, 5, 6 and 19, c. 30, Acts 1927, are omitted for the following reasons: §3, in view of §§3 and 4, art. 2, of this chapter; §5, as covered by subdivision (a), §6, art. 1, c. 31; §6, in view of the general provisions of art. 1, c. 31 and art. 2 of this chapter; and §19, in view of the general provisions of art. 2 of this chapter.
§1. Incorporators.—That any number of persons, not less than twenty, a majority of whom shall be bona fide residents of this State, by complying with the provisions of this article, may become, together with others who may thereafter be associated with them or their successors, a body corporate, for the purpose of carrying on the business of mutual automobile insurance as provided in this article.(1927, c. 30, §1.)
§2. Agreement of Incorporation; Name.—Persons desiring to form any such corporation shall sign and acknowledge an agreement of incorporation as provided in article one, chapter thirty-one of this Code: Provided, That the name of every such corporation shall contain the word “mutual” and shall end with the word “company, ” “ corporation, ” or “incorporated.”(1927, c. 30, §§2, 4.)
Committee’s Note.—The provisions of §2, c. 30, Acts 1927, as to the contents of the articles of association, are omitted because covered by the general provisions of art. 1, c. 31.
§3. Conditions Precedent to Doing Business.—No such corporation shall issue policies or transact any business of insurance until it has complied with the following conditions:
(a) It shall hold bona fide applications for insurance upon which it shall issue simultaneously at least twenty policies to at least twenty members of the same kind of insurance, upon not less than two hundred separate risks, each within the single risk described herein;
(b) The maximum single risk shall not exceed twenty per cent of its admitted assets, or three times the average policy, or one per cent of the insurance in force, whichever is the greater, any reinsurance taking effect simultaneously with the policy, being deducted in determining such maximum single risk;
(c) It shall hold admitted assets equal to at least five times the maximum single risk assumed.(1927, c. 30, §8.)
Committee’s Note.—The provision in §8, c. 30, Acts 1927, as to the issuance of a formal license by the insurance commissioner is omitted in view of the general provisions as to conditions precedent to doing business in art. 2 of this chapter.
§4. Powers.—Any corporation organized under the provisions of this article is empowered and authorized to make contracts of insurance, or to reinsure or accept reinsurance on any portion thereof, against loss, expense and liability resulting from the ownership, maintenance or use of any automobile or other vehicle.
Such contracts may be made with any person, firm, public or private corporation, board, association or estate or any trustee or legal repreentative of same, in this State or elsewhere. Such corporation shall also have power to prescribe the qualifications and the manner and form of the admission and withdrawal of members; to make all necessary rules and regulations concerning the hazards incurred, the premium rates to be used and the adjustment and payment of losses; and to make all further necessary provisions concerning the conduct of its business or affairs.(1927, c. 30, §§7, 9.)
Committee’s Note.—This is a composite redraft of §§7 and 9, c. 30, Acts 1927.
§5. Policyholders to be Members; Voting.—Every policyholder shall be a member of the corporation and shall be entitled to one or more votes, based upon the insurance in force, the number of policies held, or the amount of premium paid, as may be provided in the by-laws, and such members may vote in person or by proxy.(1927, c. 30, §10.)
§6. Policies With Limited Contingent Liability.—The by-laws shall provide for a cash premium, or a cash premium deposit and may limit the contingent liability of the members to an amount not less than one nor more than ten times the cash premium or cash premium deposit expressed in the policy. The maximum contingent liability of the holder of each policy shall be plainly stated as a part of each policy.(1927, c. 30, §11.)
§7. Policies Without Contingent Liability.—The by-laws may also provide for policies to be issued for cash premiums or cash premium deposits without contingent liability of policyholders: Provided, That the corporation possess a surplus of at least one hundred thousand dollars and not less in amount than the capital required of a domestic stock insurance company transacting the same kind of insurance.(1927, c. 30, §12.)
§8. Reserves Required.—Such corporation shall maintain premium deposits, unearned premium and other reserves, upon such basis as will provide for all liabilities as fully as the reserves required by law of domestic stock companies writing the same kind of insurance: Provided, however, That any reserve for loss or claims based upon the premium income shall be computed upon the net premium income, after deducting any so-called dividend or premium returned or credited to the member.(1927, c. 30, §14.)
§9. Assessments to Meet Deficiencies; Relief by Insurance Commissioner.—Such corporation not possessed of assets at least equal to the unearned premium reserve and other liabilities, shall make an assessment upon its members liable to assessment, to provide for such deficiency, such assessment to be levied upon such member in proportion to such liability as may be expressed in his policy: Provided, That the insurance commissioner may, by written order, relieve the corporation from an assessment or other proceeding to restore such assets during the time fixed in such order.(1927, c. 30, §15.)
§10. Advancement of Funds; Regulations; Report.—Any director, officer or member of any such corporation, or any other person, may advance to such corporation any sum or sums of money necessary for the purpose of its business, or to enable it to comply with any of the requirements of the law, and such moneys and such interest thereon as may have been agreed upon, not exceeding ten per cent per annum, shall be repaid only out of the surplus earnings of such corporation.
No commission or promotion expenses shall be paid in connection with the advance of any money to the corporation, and the amount of such advance shall be reported in each annual statement.(1927, c. 30, §16.)
Committee’s Note.—The words “shall not be a liability or claim against the corporation or any of its assets, except as herein provided” are omitted as unnecessary in view of the repayment limitation.
§11. Investment of Assets.—No such corporation shall invest any of its assets except in accordance with the laws of this State relating to the investment of funds of domestic stock in surance companies doing a similar business.(1927, c. 30, §13.)
§12. Annual Report.—The president or vice president, together with the secretary of each corporation organized or authorized to do business under this article, shall annually, on or before the first day of March, prepare under oath, if required, and file with the insurance commissioner a full, true and complete statement of the condition of the company on the thirty-first day of December next preceding, in such form as shall be prescribed by the insurance commissioner.(1927, c. 30, §17.)
Committee’s Note.—The time within which annual reports are to be made is changed so as to correspond to similar provisions for other insurance companies.
Legislative Note.—In view of changes made throughout the chapter with respect to the time for making annual reports, the first day of March is used instead of the first day of April.
§13. When Mutual Companies of Othe States May be Admitted.—When by the laws of any other state, district or territory, any corporation is authorized to engage in the insurance business on the mutual plan in accordance with the laws of the state, district or territory in which the corporation is organized and is possessed of one hundred thousand dollars in cash, or securities invested in available cash assets, it may be admitted to do the kinds of insurance business authorized by this article: Provided, That it shall have complied with all of the laws of this State relating to companies authorized to do a similar business, and that similar companies of this State are admitted to transact business in such other state: Provided further, That it shall have complied with the following requirements, to-wit:
(a) Filed with the insurance commissioner a duly certified copy of the charter or articles of association;
(b) Paid the insurance commissioner a fee of twenty-five dollars;
(c) Filed with the insurance commissioner a copy of its by-laws certified by its secretary;
(d) Filed a certificate with the insurance commissioner that such corporation is organized and authorized to do such business in the state, district, or territory in which it is incorporated;
(e) Filed a financial statement under oath, in such form as may be required and have complied with other provisions of law applicable to the filing of papers by and the audit and inspection of stock companies transacting the same kind of insurance.(1927, c. 30, §18.)
Committee’s Note.—Section 18, c. 30, Acts 1927, is enlarged by adding the scope of the provisions of §3, art. 4, c. 33, as to certain other mutual insurance companies of other states. Subdivision (d) of said §18 is omitted as covered by §43, art. 2, c. 33. Subdivision (g) of said §18 is omitted as the first sentence thereof is covered by the general provisions of art. 2, c. 33, and the remainder is covered by §43, art. 2, c. 33 and §71, art. 1, c. 31.
§14. Taxes; Computation.—Every company incorporated or authorized to do business under this article shall be subject to such taxes as are now provided by law for mutual companies organized within or without this State, respectively. The taxable premiums used as a basis for such taxation shall be the deposit premiums in force on each risk in this State during the year, deducting the unabsorbed portion of the deposit premiums computed on the basis of the rate of return actually made on policies expiring during the year.(1927, c. 30, §20.)
§15. Failure to Make Report and/ or Pay Tax; Penalty.—Any company, incorporated or authorized to do business under this article, failing to make any report and/or pay the tax provided for in this article, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not less than one hundred nor more than five hundred dollars.(1927, c. 30, §21.)
Committee’s Note.—The failure to make a report or pay the tax is made a misdemeanor.