As Introduced

129th General Assembly
Regular Session
2011-2012
H. B. No. 341


Representative Henne 

Cosponsors: Representatives Blair, Schuring, Stebelton, Hackett, Foley, Sears 

A BILL
To amend sections 3903.81, 3921.10, 3921.13, 3921.19, 1
3921.22, 3921.28, 3921.29, 3921.30, 3921.31, and 2
3921.33, to enact new section 3921.35 and sections 3
3921.101 and 3921.191 and to repeal section 4
3921.35 of the Revised Code to make changes to the 5
law regulating fraternal benefit societies.6


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1.  That sections 3903.81, 3921.10, 3921.13, 3921.19, 7
3921.22, 3921.28, 3921.29, 3921.30, 3921.31, and 3921.33 be 8
amended and new section 3921.35 and sections 3921.101 and 3921.191 9
of the Revised Code be enacted to read as follows: 10

       Sec. 3903.81.  As used in sections 3903.81 to 3903.93 of the 11
Revised Code:12

       (A) "Adjusted RBC report" means an RBC report that has been 13
adjusted by the superintendent of insurance in accordance with 14
division (C) of section 3903.82 of the Revised Code.15

       (B) "Authorized control level RBC" means the number 16
determined under the risk-based capital formula in accordance with 17
the RBC instructions.18

       (C) "Company action level RBC" means the product of 2.0 and 19
an insurer's authorized control level RBC.20

       (D) "Corrective order" means an order issued by the 21
superintendent of insurance in accordance with division (B)(3) of 22
section 3903.84 of the Revised Code specifying corrective actions 23
that the superintendent has determined are required.24

       (E) "Domestic insurer" means any insurance company organized 25
under Chapter 3907. or 3925. of the Revised Code.26

       (F) "Foreign insurer" means any insurance company licensed 27
under section 3909.01 or 3927.01 of the Revised Code.28

       (G) "Life or health insurer" means any insurance company 29
licensed under section 3907.08 or 3909.01 of the Revised Code, or30
a company possessing a certificate of authority pursuant to 31
section 3929.01 of the Revised Code that writes only accident and 32
health insurance, or a fraternal benefit society licensed under 33
Chapter 3921. of the Revised Code.34

       (H) "Mandatory control level RBC" means the product of .70 35
and an insurer's authorized control level RBC.36

       (I) "NAIC" means the national association of insurance 37
commissioners.38

       (J) "Negative trend" means a negative trend over a period of 39
time for a life or health insurer as determined in accordance with 40
the trend test calculation included in the RBC instructions.41

       (K) "Property and casualty insurer" means any insurance 42
company that has a certificate of authority pursuant to section 43
3929.01 of the Revised Code. "Property and casualty insurer" does 44
not include monoline mortgage guarantee insurers, financial 45
guarantee insurers, or title insurers.46

       (L) "RBC" means risk-based capital.47

       (M) "RBC instructions" means the RBC report, including 48
risk-based capital instructions, as adopted by the NAIC and as 49
amended by the NAIC from time to time in accordance with the 50
procedures adopted by the NAIC. "RBC instructions" shall also 51
include any modifications adopted by the superintendent, as the 52
superintendent considers to be necessary.53

       (N) "RBC level" means an insurer's company action level RBC, 54
regulatory action level RBC, authorized control level RBC, or 55
mandatory control level RBC.56

       (O) "RBC plan" means a comprehensive financial plan 57
containing the elements specified in division (B) of section 58
3903.83 of the Revised Code.59

       (P) "Revised RBC plan" means an RBC plan rejected by the 60
superintendent of insurance and then revised by an insurer with or 61
without incorporating the superintendent of insurance's 62
recommendation.63

       (Q) "RBC report" means the report required by section 3903.82 64
of the Revised Code.65

       (R) "Regulatory action level RBC" means the product of 1.5 66
and an insurer's authorized control level RBC.67

       (S) "Total adjusted capital" means the sum of both of the 68
following:69

       (1) An insurer's statutory capital and surplus as determined 70
in accordance with the statutory accounting applicable to the 71
annual statements prepared on a form adopted under section 3901.77 72
of the Revised Code, as required to be filed by sections 3907.19, 73
3909.06, and 3929.30 of the Revised Code;74

       (2) Such other items, if any, as the RBC instructions may 75
provide.76

       Sec. 3921.10.  A domestic fraternal benefit society organized 77
on or after January 1, 1997, shall be formed as follows:78

       (A) Seven or more citizens of the United States, a majority 79
of whom are residents of this state, who desire to form a 80
fraternal benefit society, may make, sign, and acknowledge before 81
some officer competent to take acknowledgement of deeds, articles 82
of incorporation stating all of the following:83

       (1) The proposed corporate name of the society, which name 84
shall not so closely resemble the name of any society or insurance 85
company as to be misleading or confusing;86

       (2) The purposes for which it is being formed and the mode in 87
which its corporate powers are to be exercised. Such purposes 88
shall not include more liberal powers than are granted by this 89
chapter. 90

       (3) The names and residences of the incorporators and the 91
names, residences, and official titles of all the officers, 92
trustees, directors, or other persons who are to have and exercise 93
the general control of the management of the affairs and funds of 94
the society for the first year or until the ensuing election at 95
which all such officers shall be elected by the supreme governing 96
body, which election shall be held not later than one year from 97
the date of the issuance of the permanent certificate of 98
authority.99

       (B) The articles of incorporation, duly certified copies of 100
the society's bylaws and rules, copies of all proposed forms of 101
certificates, applications for certificates, and circulars to be 102
issued by the society, and a bond conditioned upon the return to 103
applicants of the advanced payments if the organization is not 104
completed within one year, shall be filed with the superintendent 105
of insurance, who may require any other information the 106
superintendent considers necessary. The bond with sureties 107
approved by the superintendent shall be in such amount, not less 108
than three hundred thousand dollars nor more than one million five 109
hundred thousand dollars, as required by the superintendent. All 110
documents filed shall be in the English language. If the purposes 111
of the society conform to the requirements of this chapter and all 112
provisions of the laws of this state have been complied with, the 113
superintendent shall so certify, retain and file the articles of 114
incorporation, and furnish the incorporators a preliminary 115
certificate of authority authorizing the society to solicit 116
members as provided in this section.117

       (C) No preliminary certificate of authority granted under 118
this section shall be valid after one year from its date or after 119
such additional period, not exceeding one year, as may be 120
authorized by the superintendent upon cause shown, unless the five 121
hundred applicants required in division (D) of this section have 122
been secured and the organization has been completed as provided 123
in this section. The articles of incorporation and all other 124
proceedings thereunder shall be void one year after the date of 125
the preliminary certificate of authority, or at the expiration of 126
the extended period, unless the society has completed its 127
organization and has received a certificate of authority to do 128
business as provided in division (E) of this section.129

       (D) Upon receipt of a preliminary certificate of authority 130
from the superintendent, the society may solicit members for the 131
purpose of completing its organization, shall collect from each 132
applicant the amount of not less than one regular monthly premium 133
in accordance with its table of rates, and shall issue to each 134
applicant a receipt for the amount so collected. No society shall 135
incur any liability other than for the return of such advance 136
premium, nor issue any certificate, nor pay, allow, or offer, or 137
promise to pay or allow, any benefit to any person until all of 138
the following apply:139

       (1) Actual bona fide applications for benefits have been 140
secured aggregating at least two million five hundred thousand 141
dollars on not less than five hundred applicants, and any 142
necessary evidence of insurability has been furnished to and 143
approved by the society.144

       (2) At least ten subordinate lodges have been established 145
into which the five hundred applicants have been admitted.146

       (3) There has been submitted to the superintendent, under 147
oath of the president or secretary, or corresponding officer of 148
the society, a list of such applicants, giving their names, 149
addresses, date each was admitted, name and number of the 150
subordinate lodge of which each applicant is a member, amount of 151
benefits to be granted, and premiums for the benefits.152

       (4) It has been shown to the superintendent, by sworn 153
statement of the treasurer, or corresponding officer of the 154
society, that at least five hundred applicants have each paid in 155
cash at least one regular monthly premium as provided in this 156
section, which premiums in the aggregate amount to at least one 157
hundred fifty thousand dollars, all of which is credited to the 158
fund or funds from which benefits are to be paid and no part of 159
which may be used for expenses. These advance premiums shall be 160
held in trust during the period of organization and if the society 161
has not qualified for a certificate of authority within one year, 162
as provided in this section, the premiums shall be returned to the 163
applicants.164

       (E) The superintendent may make such examination and require 165
such further information as the superintendent considers 166
advisable. Upon presentation of satisfactory evidence that the 167
society has complied with all the provisions of law including the 168
surplus requirements of section 3921.101 of the Revised Code, the 169
superintendent shall issue to the society a certificate of 170
authority to that effect and that the society is authorized to 171
transact business pursuant to the provisions of this chapter. The 172
certificate of authority shall be prima facie evidence of the 173
existence of the society at the date of the certificate. The 174
superintendent shall cause a record of the certificate of 175
authority to be made. A certified copy of the record may be given 176
in evidence with like effect as the original certificate of 177
authority.178

       (F) An incorporated society that was organized prior to 179
January 1, 1997, and that, as of December 31, 1996, is authorized 180
to transact business in this state shall not be required to 181
reincorporate, and may exercise all the rights, powers, and 182
privileges conferred in this chapter and in the society's articles 183
of incorporation to the extent that the articles are consistent 184
with this chapter.185

       Sec. 3921.101.  (A)(1) A fraternal benefit society that 186
provides the contractual benefits listed in division (A)(1) of 187
section 3921.16 of the Revised Code in this state in a benefit 188
amount of greater than five thousand dollars shall have and 189
maintain a surplus of two million five hundred thousand dollars 190
for all lines written. 191

       (2) A fraternal benefit society that provides the contractual 192
benefits listed in division (A)(1) of section 3921.16 of the 193
Revised Code in this state in a benefit amount of five thousand 194
dollars or less shall have and maintain a surplus of five hundred 195
thousand dollars. 196

       (B)(1) A fraternal benefit society that provides the 197
contractual benefits listed in division (A)(2) of section 3921.16 198
of the Revised Code in this state in a benefit amount of greater 199
than five thousand dollars shall have and maintain a surplus of 200
two million five hundred thousand dollars for all lines written. 201

       (2) A fraternal benefit society that provides the contractual 202
benefits listed in division (A)(2) of section 3921.16 of the 203
Revised Code in this state in a benefit amount of five thousand 204
dollars or less shall have and maintain a surplus of five hundred 205
thousand dollars.206

       (C)(1) A fraternal benefit society that provides the 207
contractual benefits listed in division (A)(3) of section 3921.16 208
of the Revised Code in this state in a benefit amount of greater 209
than five thousand dollars shall have and maintain a surplus in 210
the aggregate of two million five hundred thousand dollars for all 211
lines written. 212

       (2) A fraternal benefit society that provides the contractual 213
benefits listed in division (A)(3) of section 3921.16 of the 214
Revised Code in this state in a benefit amount of five thousand 215
dollars or less shall have and maintain a surplus of five hundred 216
thousand dollars.217

       (D) A fraternal benefit society that provides the contractual 218
benefits listed in division (A)(4) of section 3921.16 of the 219
Revised Code in this state shall have and maintain a surplus of 220
two million five hundred thousand dollars for all lines written.221

       (E) A fraternal benefit society that provides the contractual 222
benefits listed in division (A)(5) of section 3921.16 of the 223
Revised Code in this state shall have and maintain a surplus of 224
two million five hundred thousand dollars for all lines written.225

       (F) A fraternal benefit society that provides the contractual 226
benefits listed in division (A)(6) of section 3921.16 of the 227
Revised Code in this state shall have and maintain a surplus of 228
five hundred thousand dollars.229

       (G) A fraternal benefit society that provides the contractual 230
benefits listed in division (A)(7) of section 3921.16 of the 231
Revised Code in this state shall have and maintain a surplus of 232
two million five hundred thousand dollars for all lines written. 233

       (H) The surplus requirements of this section are not 234
cumulative. A society with a surplus of at least two million five 235
hundred thousand dollars satisfies the surplus requirements of 236
this section.237

       Sec. 3921.13.  (A) A domestic fraternal benefit society may, 238
by a reinsurance agreement, cede any individual risk or risks in 239
whole or in part to an insurer, other than another fraternal 240
benefit society, having the power to make such reinsurance and 241
authorized to do business in this state, or if not so authorized, 242
one which is approved by the superintendent of insurance; however, 243
no society may reinsure substantially all of its insurance in 244
force without the written permission of the superintendent. It may 245
take credit for the reserves on the ceded risks to the extent 246
reinsured, but no credit shall be allowed as an admitted asset or 247
as a deduction from liability, to a ceding society for reinsurance 248
made, ceded, renewed, or otherwise becoming effective after 249
January 1, 1997, unless the reinsurance is payable by the assuming 250
insurer on the basis of the liability of the ceding society under 251
the contract or contracts reinsured without diminution because of 252
the insolvency of the ceding society.253

       (B) Notwithstanding division (A) of this section, a society 254
may reinsure the risks of another society in a consolidation or 255
merger approved by the superintendent under section 3921.14 of the 256
Revised Code.257

       (C) A society with assets of less than five billion dollars 258
that provides contract benefits of major medical, medicare 259
supplemental, or long term care pursuant to division (A)(5) of 260
section 3921.16 of the Revised Code shall reinsure no less than 261
fifty per cent of the risk arising from those contracts if the 262
society's risk based capital is less than three hundred per cent.263

       Sec. 3921.19.  (A) Each fraternal benefit society authorized 264
to do business in this state shall issue to each owner of a 265
benefit contract a certificate specifying the amount of benefits 266
provided under the contract. The certificate, together with any 267
riders or endorsements attached to the certificate, the laws of 268
the society, the application for membership, the application for 269
insurance and declaration of insurability, if any, signed by the 270
applicant, and all amendments to each such document, constitute 271
the benefit contract, as of the date of issuance, between the 272
society and the owner, and the certificate shall so state. A copy 273
of the application for insurance and declaration of insurability, 274
if any, shall be endorsed upon or attached to the certificate.275

       All statements made on the application are representations 276
and not warranties. Any waiver of this provision is void.277

       (B) Any changes, additions, or amendments to the laws of the 278
society duly made or enacted subsequent to the issuance of the 279
certificate, shall bind the owner and the beneficiaries, and shall 280
govern and control the benefit contract in all respects the same 281
as though such changes, additions, or amendments had been made 282
prior to and were in force at the time of the application for 283
insurance, except that no change, addition, or amendment shall 284
destroy or diminish benefits that the society contracted to give 285
the owner as of the date of issuance.286

       (C) Any person upon whose life a benefit contract is issued 287
prior to attaining the age of majority shall be bound by the terms 288
of the application and certificate and by all of the laws and 289
rules of the society to the same extent as though the age of 290
majority had been attained at the time of application.291

       (D) A society shall provide in its laws that if its reserves 292
as to all or any class of certificates become impaired its board 293
of directors or corresponding body may require that there shall be 294
paid by the owner to the society the amount of the owner's 295
equitable proportion of such deficiency as ascertained by its 296
board, and that if the payment is not made, either of the 297
following applies:298

       (1) It shall stand as an indebtedness against the certificate 299
and draw interest not to exceed the rate specified for certificate 300
loans under the certificates;301

       (2) In lieu of or in combination with division (D)(1) of this 302
section, the owner may accept a proportionate reduction in 303
benefits under the certificate.304

       The society may specify the manner of the election and which 305
alternative is to be presumed if no election is made.306

       (E) At least thirty days prior to imposing any indebtedness 307
upon any owner as provided in division (D) of this section, the 308
board of directors or corresponding body shall notify 309
superintendent of insurance in writing of the board's intent to 310
require the payment and a statement of the reason that request is 311
necessary. The notice shall be confidential and not a public 312
record under section 149.43 of the Revised Code.313

       (F)(1) Certificates that are delivered or issued for delivery 314
in this state on or after January 1, 1997, but prior to January 1, 315
1998, shall comply with the requirements that would have applied 316
under the laws in effect on December 31, 1996.317

       (2) No certificate shall be delivered or issued for delivery 318
in this state on or after January 1, 1998, unless a copy of the 319
form is filed with and approved by the superintendent of insurance 320
in accordance with the provisions of law applicable to like 321
policies issued by life or sickness and accident insurers in this 322
state.323

       (3) Each life, sickness and accident, or disability insurance 324
certificate, and each annuity certificate, that is delivered or 325
issued for delivery in this state on or after January 1, 1998, 326
shall comply with the standard contract provision requirements 327
applicable to like policies issued by life or sickness and 328
accident insurers in this state, if those requirements are not 329
inconsistent with this chapter. However, a society may provide in 330
its certificates for a grace period of one full month for payment 331
of premiums. A certificate shall also contain a provision that 332
states the amount of premiums that is payable under the 333
certificate and that sets forth the substance of any sections of 334
the society's laws or rules in force at the time of issuance of 335
the certificate which, if violated, will result in the termination 336
or reduction of benefits payable under the certificate. If the 337
laws of the society provide for the expulsion or suspension of a 338
member, the certificate shall also contain a provision stating 339
that any member expelled or suspended, except a member expelled or 340
suspended because of nonpayment of a premium, may maintain, other 341
than during the contestable period for material misrepresentation 342
in the application for membership or insurance, the certificate in 343
force by continuing payment of the required premium.344

       (F)(G) Benefit contracts issued on the lives of persons under 345
the society's minimum age for adult membership may provide for 346
transfer of control of ownership to the insured at an age 347
specified in the certificate. A society may require approval of an 348
application for membership in order to effect this transfer, and 349
may provide in all other respects for the regulation, government, 350
and control of such certificates and all rights, obligations, and 351
liabilities incident to and connected with such certificates. 352
Ownership rights prior to such a transfer shall be specified in 353
the certificate.354

       (G)(H) A society may specify the terms and conditions on 355
which benefit contracts may be assigned.356

       (H)(I) A copy of any of the documents described in this 357
section, if certified by the secretary or corresponding officer of 358
the society, is prima facie evidence of the terms and conditions 359
of the documents.360

       Sec. 3921.191.  (A) A fraternal benefit society shall provide 361
an applicant for insurance a disclosure statement at the time of 362
sale substantially as follows:363

       ".......... (Name of the fraternal benefit society) IS 364
LICENSED TO DO BUSINESS IN THE STATE OF OHIO. AS A ........ 365
(not-for-profit, tax-exempt, self-governing, or membership 366
organization), FRATERNAL BENEFIT SOCIETIES ARE NOT INCLUDED IN THE 367
OHIO GUARANTY ASSOCIATION. THIS MEANS THAT FRATERNAL BENEFIT 368
SOCIETIES CANNOT BE ASSESSED FOR THE INSOLVENCY OF OTHER LIFE 369
INSURERS OR OTHER FRATERNAL BENEFIT SOCIETIES. BY LAW, A FRATERNAL 370
BENEFIT SOCIETY IS RESPONSIBLE FOR ITS OWN SOLVENCY. IF THERE IS 371
AN IMPAIRMENT OF RESERVES, A CERTIFICATE HOLDER MAY BE ASSESSED A 372
PROPORTIONATE SHARE OF THE IMPAIRMENT. THIS PROCESS IS DESCRIBED 373
IN THE CERTIFICATE ISSUED BY THE SOCIETY." 374

       (B) The statement must be signed by the applicant and 375
maintained in the certificate or contract file by the fraternal 376
benefit society. The statement may be part of the society's 377
membership application or certificate or policy application.378

       (C) This section is applicable only to new business written 379
by a fraternal benefit society after the effective date of this 380
section. 381

       Sec. 3921.22.  (A) A fraternal benefit society shall hold, 382
invest, and disburse all assets for the use and benefit of the 383
society. No member or beneficiary shall have or acquire individual 384
rights to the assets, or be entitled to any apportionment on the 385
surrender of any part of the assets, except as provided in the 386
benefit contract.387

       (B) A society may create, maintain, invest, disburse, and 388
apply any special fund or funds necessary to carry out any purpose 389
permitted by the laws of the society. No society shall, directly 390
or indirectly, pay or use, or offer, consent, or agree to pay or 391
use, any of its funds, money, or property for or in aid of any 392
political party, campaign committee, political action committee, 393
continuing association, or any other political organization.394

       (C) A society may, pursuant to resolution of its supreme 395
governing body, establish and operate one or more separate 396
accounts and issue contracts on a variable basis, subject to the 397
provisions of law regulating life insurers that establish such 398
accounts and issue such contracts including section 3911.011 of 399
the Revised Code. To the extent the society considers it necessary 400
in order to comply with any applicable federal or state law, or 401
any rule issued under that law, the society may do any of the 402
following:403

       (1) Adopt special procedures for the conduct of the business 404
and affairs of a separate account;405

       (2) For persons having beneficial interests in the account, 406
provide special voting and other rights, including special rights 407
and procedures relating to investment policy, investment advisory 408
services, selection of certified public accountants, and selection 409
of a committee to manage the business and affairs of the account;410

       (3) Issue contracts on a variable basis to which divisions 411
(B) and (D) of section 3921.19 of the Revised Code do not apply.412

       Sec. 3921.28.  (A)(1) Each domestic fraternal benefit society 413
and each applicant for a certificate of incorporation as a 414
domestic fraternal benefit society shall be subject to examination 415
by the superintendent of insurance in accordance with section 416
3901.07 of the Revised Code. Section 3901.07 of the Revised Code 417
shall govern every aspect of the examination, including the 418
circumstances under and frequency with which it is conducted, and 419
the authority of the superintendent and any examiner or other 420
person appointed by the superintendent.421

       (2)(a) A domestic fraternal benefit society shall be liable 422
for the payment of any additional expense of an examination 423
resulting from unreasonable delays by the society in fulfilling a 424
request for documents or information by the examiner conducting 425
the examination. A delay is deemed unreasonable if the examiner 426
has made two separate unfulfilled requests for the same documents 427
or information. A request for records or information from an 428
examiner shall allow the fraternal benefit society a minimum of 429
ten business days to fulfill the request.430

       (b) In the event of an unreasonable delay, the examiner shall 431
notify the superintendent, who shall set a hearing, under Chapter 432
119. of the Revised Code, to determine if there has been an 433
unreasonable delay because of the fraternal benefit society's 434
response to a request for documents or information and to 435
calculate the additional expense incurred by the superintendent as 436
a result of the unreasonable delay.437

       (3) A summary of the examination of the superintendent and 438
any recommendations or statements of the superintendent that 439
accompany the report, shall be read at the first meeting of the 440
board of directors or corresponding body of the society following 441
the receipt thereof, and if directed so to do by the 442
superintendent, shall also be read at the first meeting of the 443
supreme legislative or governing body of the society following the 444
receipt thereof. A copy of the report, recommendations, and 445
statements of the superintendent shall be furnished by the society 446
to each member of the board of directors or other governing body.447

       (B) Each foreign or alien fraternal benefit society 448
transacting or applying for admission to transact business in this 449
state shall be subject to examination by the superintendent in 450
accordance with section 3901.07 of the Revised Code. Section 451
3901.07 of the Revised Code shall govern every aspect of the 452
examination, including the circumstances under and frequency with 453
which it is conducted, the authority of the superintendent and any 454
examiner or other person appointed by the superintendent, the 455
liability for the assessment of expenses incurred in conducting 456
the examination, and the remittance of the assessment to the 457
superintendent's examination fund.458

       Sec. 3921.29.  No foreign or alien fraternal benefit society 459
shall transact business in this state without a license issued by 460
the superintendent of insurance. Any such society may be licensed 461
to transact business in this state upon filing all of the 462
following with the superintendent:463

       (A) A duly certified copy of its articles of incorporation;464

       (B) A copy of its bylaws certified by its secretary or 465
corresponding officer;466

       (C) A power of attorney to the superintendentwritten 467
appointment of an agent as prescribed in section 3921.35 of the 468
Revised Code;469

       (D) A statement of its business made under oath of its 470
president and secretary or corresponding officers in a form 471
prescribed by the superintendent and duly verified by an 472
examination made by the supervising insurance official of its 473
state of domicile or of any other state, district, territory, 474
province, or country, which examination is satisfactory to the 475
superintendent;476

       (E) Certification from the proper official of its state, 477
district, territory, province, or country of domicile that the 478
society is legally incorporated and licensed to transact business 479
in that state, district, territory, province, or country;480

       (F) Copies of its certificate forms;481

       (G) A description of its investments that shows that its 482
assets are invested in accordance with this chapter;483

       (H) Any other information the superintendent considers 484
necessary.485

       Sec. 3921.30. (A) If the superintendent of insurance finds, 486
upon investigation, that a domestic fraternal benefit society has 487
exceeded its powers, has failed to comply with any provision of 488
this chapter, is not fulfilling its contracts in good faith, has a 489
membership of less than four hundred after an existence of one 490
year or more, or is conducting business fraudulently or in a 491
manner hazardous to its members, creditors, the public, or the 492
business, the superintendent shall issue a written notice to the 493
society that sets forth the deficiency and the reasons for the 494
superintendent's dissatisfaction, and that requires the society to 495
correct the deficiency within thirty days after receipt of the 496
notice. If the society fails to correct the deficiency within that 497
thirty-day period, the superintendent shall notify the society of 498
its failure to correct the deficiency and shall require the 499
society to show cause on a date named why it should not be 500
enjoined from carrying on any business until the violation 501
complained of has been corrected, or why an action in quo warranto 502
should not be commenced against the society.503

       If on that date the society does not present good and 504
sufficient reasons why it should not be enjoined or why such 505
action should not be commenced, the superintendent may present the 506
facts relating thereto to the attorney general. If the attorney 507
general determines that the circumstances warrant, the attorney 508
general shall commence an action to enjoin the society from 509
transacting business or in quo warranto.510

       The court shall thereupon notify the officers of the society 511
of a hearing. If after a full hearing it appears that the society 512
should be enjoined or liquidated or a receiver appointed, the 513
court shall enter the necessary order.514

       (B) A society enjoined pursuant to division (A) of this 515
section shall not have the authority to do business until all of 516
the following occur:517

       (1) The superintendent finds that the violation complained of 518
has been corrected.519

       (2) The costs of the action have been paid by the society if 520
the court finds that the society was in default as charged.521

       (3) The court has dissolved its injunction.522

       (4) The superintendent has reinstated the certificate of 523
authority.524

       (C) If the court orders the society liquidated, the society 525
shall be enjoined from carrying on any further business, whereupon 526
the receiver of the society shall proceed at once to take 527
possession of the books, papers, money, and other assets of the 528
society and, under the direction of the court, shall close the 529
affairs of the society and distribute its funds to those entitled 530
to them.531

       (D) No action under this section shall be recognized in any 532
court of this state unless brought by the attorney general upon 533
request of the superintendent. Whenever a receiver is to be 534
appointed for a domestic society, the court shall appoint the 535
superintendent as the receiver.536

       (E) The provisions of this section relating to a hearing by 537
the superintendent, action by the attorney general at the request 538
of the superintendent, hearing by the court, injunction, and 539
receivership shall apply to any society that voluntarily 540
determines to discontinue business.541

       (F) Nothing in this section shall be construed as preventing 542
the lodges and members of a society from commencing a civil action 543
against a society for the enforcement of a contract provision or 544
for the resolution of a dispute concerning an interpretation of 545
the society's laws, which action is not based on the 546
superintendent's exercise of authority under this section. A 547
society shall not prohibit a lodge or member from commencing such 548
an action against itcommence an action against the society under 549
sections 3903.01 to 3903.59 of the Revised Code.550

       Sec. 3921.31. (A) If the superintendent of insurance finds, 551
upon investigation, that a foreign or alien fraternal benefit 552
society transacting or applying to transact business in this state 553
has exceeded its powers, has failed to comply with any provision 554
of this chapter, is not fulfilling its contracts in good faith, or 555
is conducting its business fraudulently or in a manner hazardous 556
to its members or creditors or the public, the superintendent 557
shall issue a written notice to the society that sets forth the 558
deficiency and the reasons for the superintendent's 559
dissatisfaction, and that requires the society to correct the 560
deficiency within thirty days after receipt of the notice. If the 561
society fails to correct the deficiency within that thirty-day 562
period, the superintendent shall notify the society of its failure 563
to correct the deficiency and shall require the society to show 564
cause on a date named why its license should not be suspended, 565
revoked, or refused.566

       If on that date the society does not present good and 567
sufficient reason why its authority to do business in this state 568
should not be suspended, revoked, or refused, the superintendent 569
may suspend or refuse the license of the society to do business in 570
this state until satisfactory evidence is furnished to the 571
superintendent that the suspension or refusal should be withdrawn, 572
or the superintendent may revoke the authority of the society to 573
do business in this state.574

       (B) Nothing in this section shall be construed as preventing 575
any foreign or alien society from continuing in good faith all 576
contracts made in this state during the time the society was 577
legally authorized to transact business in this statecommence an 578
action against the society under section 3903.71 of the Revised 579
Code.580

       Sec. 3921.33.  (A) Agents of fraternal benefit societies 581
shall be licensed in the manner provided for agents of insurance 582
companies in Chapter 3905. of the Revised Code, and shall be 583
required to complete continuing education as set forth in section 584
3905.481 of the Revised Code starting with the twenty-four-month 585
period commencing on the first day of January of 1999. However, no 586
written or other examination shall be required of any person whose 587
application for the original issuance of a license to represent a 588
fraternal benefit society as its agent was filed with the 589
superintendent of insurance prior to January 1, 1997.590

       (B) The following persons shall not be required to be 591
licensed in accordance with division (A) of this section:592

       (1) Any regularly salaried officer, employee, or member of a 593
licensed society who devotes substantially all of the person's 594
services to activities other than the solicitation of fraternal 595
insurance contracts from the public, and who receives for the 596
solicitation of any such contracts no commission or other 597
compensation directly dependent upon the amount of business 598
obtained.599

       The officers, employees, and members described in division 600
(B)(1) of this section also are not subject to examination by the 601
superintendent under Chapter 3905. of the Revised Code.602

       (2) Any agent or representative of a society who devotes, or 603
intends to devote, less than fifty per cent of the person's time 604
to the solicitation and procurement of insurance contracts for the 605
society. For purposes of division (B)(2) of this section, any 606
person who, in the preceding calendar year, has received a 607
commission or other compensation for soliciting and procuring any 608
of the following contracts on behalf of an individual society is 609
presumed to have devoted, or to have intended to devote, fifty per 610
cent of the person's time to the solicitation and procurement of 611
insurance contracts:612

       (a) Life insurance contracts that, in the aggregate, exceeded 613
two hundred thousand dollars of coverage for all lives insured for 614
the preceding calendar year;615

       (b) A permanent life insurance contract offering more than 616
ten thousand dollars of coverage on an individual life;617

       (c) A term life insurance contract offering more than fifty 618
thousand dollars of coverage on an individual life;619

       (d) Any insurance contracts other than life that the society 620
may write and that insure the individual lives of more than 621
twenty-five individuals;622

       (e) Any contract issued on a variable basis, as authorized by 623
division (C) of section 3921.22 of the Revised Code.624

       (C) Notwithstanding division (B) of this section, any person 625
selling an annuity contract under the authority of division (A)(3) 626
of section 3921.16 of the Revised Code shall be licensed pursuant 627
to Chapter 3905. of the Revised Code. 628

       Sec. 3921.35.  (A) Any fraternal benefit society authorized 629
to transact business in this state shall have and maintain an 630
agent upon whom may be served any process, notice, or demand 631
required or permitted by law to be served upon a society. 632

       The agent required under this section may be a natural person 633
residing in this state or a corporation holding a license under 634
the laws of this state that is authorized by its articles of 635
incorporation to act as an agent and that maintains a business 636
address in this state. A statutory agent is not required to be a 637
licensed insurance agent.638

       (B) The written appointment of an agent shall be in the form 639
the superintendent of insurance prescribes and may include a 640
consent to service of process. 641

       The appointment shall set forth the name and complete address 642
of the agent. The agent shall reside or maintain a business 643
address within this state.644

       (C) The superintendent shall keep a record of the fraternal 645
benefit societies transacting business in this state and the name 646
and address of their respective agents.647

       (D)(1) If any agent dies, moves out of the state, or resigns, 648
the society immediately shall appoint another agent and file with 649
the superintendent a written appointment as described in division 650
(B) of this section.651

       (2) If an agent changes the agent's address, the society or 652
agent immediately shall notify the superintendent of the change, 653
and shall set forth the agent's new address, on a form prescribed 654
by the superintendent.655

       (E) An agent may resign by filing with the superintendent a 656
written notice signed by the agent. The agent shall send a copy of 657
the notice to the society at the current or last known address of 658
the society's principal office prior to the date the notice is 659
filed with the superintendent. 660

       The notice required under this division shall set forth the 661
society's name, the current or last known address of the society, 662
the name and address of the agent, the resignation of the agent, 663
and a statement that a copy of the notice has been sent to the 664
society and the date the copy was sent. 665

       The agent's authority to represent the fraternal benefit 666
society shall terminate thirty days after the notice is filed with 667
the superintendent under this division.668

       (F) A society may revoke the appointment of an agent by 669
filing with the superintendent a written appointment of another 670
agent and a statement that the appointment of the former agent is 671
revoked. The authority of the agent whose appointment has been 672
revoked shall terminate thirty days after the notice required 673
under this division is filed with the superintendent.674

       (G) Any process, notice, or demand required or permitted by 675
law to be served upon a society may be served by delivering a copy 676
of the process, notice, or demand to the agent of record at the 677
address appearing in the superintendent's records. 678

       If the agent cannot be found, the agent no longer has that 679
address, or the society has failed to maintain an agent as 680
required by this section, the party desiring that the process, 681
notice, or demand be served, or its agent, may file with the 682
superintendent an affidavit stating that one of the foregoing 683
conditions exists and stating the most recent address of the 684
society that the party, after diligent search, has been able to 685
ascertain. 686

       Upon the filing of the affidavit, service of process, notice, 687
or demand may be initiated upon the superintendent as the 688
society's agent by delivering two copies of the process, notice, 689
or demand to the superintendent. The superintendent shall give 690
notice to the society at its principal office as shown in the 691
superintendent's records or at the address set forth in the 692
affidavit. The superintendent shall give notice by regular mail 693
with a copy of the process, notice, or demand enclosed. After the 694
superintendent has mailed the appropriate documents, service upon 695
the society is deemed complete.696

       (H) The superintendent shall keep a record of each process, 697
notice, and demand delivered to the superintendent under division 698
(G) of this section or any other law of this state that authorizes 699
service upon the superintendent.700

       (I) This section does not limit or affect the right to serve 701
any process, notice, or demand upon a society in any other manner 702
permitted by law.703

       (J) A society shall include a fee of five dollars with any 704
change of agent appointment or change of address. This division 705
does not apply to an agent appointment filed with an original 706
application for a certificate of authority.707

       (K) If a society fails to appoint or maintain an agent or to 708
notify the superintendent of an agent's change of address, the 709
superintendent shall provide notice of that failure to the society 710
by certified mail. If the society does not remedy the society's 711
failure within thirty days after the date of the mailing of the 712
notice or within any additional time the superintendent allows, 713
the superintendent shall fine the society not less than 714
twenty-five dollars nor more than two hundred dollars per 715
violation. The superintendent also may charge a society a 716
fifty-dollar fee for each time the superintendent is required to 717
give notice to the society in accordance with division (G) of this 718
section.719

       (L) The superintendent shall pay all moneys collected by the 720
superintendent in accordance with this section into the state 721
treasury to the credit of the department of insurance operating 722
fund.723

       Section 2.  That existing sections 3903.81, 3921.10, 3921.13, 724
3921.19, 3921.22, 3921.28, 3921.29, 3921.30, 3921.31, and 3921.33 725
and section 3921.35 of the Revised Code are hereby repealed.726

       Section 3. Section 3921.101 of the Revised Code as enacted by 727
this act and section 3921.33 of the Revised Code as amended by 728
this act shall take effect January 1, 2013.729