The online versions of legislation provided on this website are not official. Enrolled bills are the final version passed by the Ohio General Assembly and presented to the Governor for signature. The official version of acts signed by the Governor are available from the Secretary of State's Office in the Continental Plaza, 180 East Broad St., Columbus.
|
Sub. H. B. No. 341 As Reported by the House Insurance CommitteeAs Reported by the House Insurance Committee
129th General Assembly | Regular Session | 2011-2012 |
| |
Cosponsors:
Representatives Blair, Schuring, Stebelton, Hackett, Foley, Sears, Hottinger
A BILL
To amend sections 3903.81, 3921.10, 3921.13, 3921.19,
3921.22, 3921.28, 3921.29, 3921.30, 3921.31, and
3921.33, to enact new section 3921.35 and sections
3921.101 and 3921.191 and to repeal section
3921.35 of the Revised Code to make changes to the
law regulating fraternal benefit societies.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 3903.81, 3921.10, 3921.13, 3921.19,
3921.22, 3921.28, 3921.29, 3921.30, 3921.31, and 3921.33 be
amended and new section 3921.35 and sections 3921.101 and 3921.191
of the Revised Code be enacted to read as follows:
Sec. 3903.81. As used in sections 3903.81 to 3903.93 of the
Revised Code:
(A) "Adjusted RBC report" means an RBC report that has been
adjusted by the superintendent of insurance in accordance with
division (C) of section 3903.82 of the Revised Code.
(B) "Authorized control level RBC" means the number
determined under the risk-based capital formula in accordance with
the RBC instructions.
(C) "Company action level RBC" means the product of 2.0 and
an insurer's authorized control level RBC.
(D) "Corrective order" means an order issued by the
superintendent of insurance in accordance with division (B)(3) of
section 3903.84 of the Revised Code specifying corrective actions
that the superintendent has determined are required.
(E) "Domestic insurer" means any insurance company organized
under Chapter 3907. or 3925. of the Revised Code.
(F) "Foreign insurer" means any insurance company licensed
under section 3909.01 or 3927.01 of the Revised Code.
(G) "Life or health insurer" means any insurance company
licensed under section 3907.08 or 3909.01 of the Revised Code, or
a company possessing a certificate of authority pursuant to
section 3929.01 of the Revised Code that writes only accident and
health insurance, or a fraternal benefit society licensed under
Chapter 3921. of the Revised Code.
(H) "Mandatory control level RBC" means the product of .70
and an insurer's authorized control level RBC.
(I) "NAIC" means the national association of insurance
commissioners.
(J) "Negative trend" means a negative trend over a period of
time for a life or health insurer as determined in accordance with
the trend test calculation included in the RBC instructions.
(K) "Property and casualty insurer" means any insurance
company that has a certificate of authority pursuant to section
3929.01 of the Revised Code. "Property and casualty insurer" does
not include monoline mortgage guarantee insurers, financial
guarantee insurers, or title insurers.
(L) "RBC" means risk-based capital.
(M) "RBC instructions" means the RBC report, including
risk-based capital instructions, as adopted by the NAIC and as
amended by the NAIC from time to time in accordance with the
procedures adopted by the NAIC. "RBC instructions" shall also
include any modifications adopted by the superintendent, as the
superintendent considers to be necessary.
(N) "RBC level" means an insurer's company action level RBC,
regulatory action level RBC, authorized control level RBC, or
mandatory control level RBC.
(O) "RBC plan" means a comprehensive financial plan
containing the elements specified in division (B) of section
3903.83 of the Revised Code.
(P) "Revised RBC plan" means an RBC plan rejected by the
superintendent of insurance and then revised by an insurer with or
without incorporating the superintendent of insurance's
recommendation.
(Q) "RBC report" means the report required by section 3903.82
of the Revised Code.
(R) "Regulatory action level RBC" means the product of 1.5
and an insurer's authorized control level RBC.
(S) "Total adjusted capital" means the sum of both of the
following:
(1) An insurer's statutory capital and surplus as determined
in accordance with the statutory accounting applicable to the
annual statements prepared on a form adopted under section 3901.77
of the Revised Code, as required to be filed by sections 3907.19,
3909.06, and 3929.30 of the Revised Code;
(2) Such other items, if any, as the RBC instructions may
provide.
Sec. 3921.10. A domestic fraternal benefit society organized
on or after January 1, 1997, shall be formed as follows:
(A) Seven or more citizens of the United States, a majority
of whom are residents of this state, who desire to form a
fraternal benefit society, may make, sign, and acknowledge before
some officer competent to take acknowledgement of deeds, articles
of incorporation stating all of the following:
(1) The proposed corporate name of the society, which name
shall not so closely resemble the name of any society or insurance
company as to be misleading or confusing;
(2) The purposes for which it is being formed and the mode in
which its corporate powers are to be exercised. Such purposes
shall not include more liberal powers than are granted by this
chapter.
(3) The names and residences of the incorporators and the
names, residences, and official titles of all the officers,
trustees, directors, or other persons who are to have and exercise
the general control of the management of the affairs and funds of
the society for the first year or until the ensuing election at
which all such officers shall be elected by the supreme governing
body, which election shall be held not later than one year from
the date of the issuance of the permanent certificate of
authority.
(B) The articles of incorporation, duly certified copies of
the society's bylaws and rules, copies of all proposed forms of
certificates, applications for certificates, and circulars to be
issued by the society, and a bond conditioned upon the return to
applicants of the advanced payments if the organization is not
completed within one year, shall be filed with the superintendent
of insurance, who may require any other information the
superintendent considers necessary. The bond with sureties
approved by the superintendent shall be in such amount, not less
than three hundred thousand dollars nor more than one million five
hundred thousand dollars, as required by the superintendent. All
documents filed shall be in the English language. If the purposes
of the society conform to the requirements of this chapter and all
provisions of the laws of this state have been complied with, the
superintendent shall so certify, retain and file the articles of
incorporation, and furnish the incorporators a preliminary
certificate of authority authorizing the society to solicit
members as provided in this section.
(C) No preliminary certificate of authority granted under
this section shall be valid after one year from its date or after
such additional period, not exceeding one year, as may be
authorized by the superintendent upon cause shown, unless the five
hundred applicants required in division (D) of this section have
been secured and the organization has been completed as provided
in this section. The articles of incorporation and all other
proceedings thereunder shall be void one year after the date of
the preliminary certificate of authority, or at the expiration of
the extended period, unless the society has completed its
organization and has received a certificate of authority to do
business as provided in division (E) of this section.
(D) Upon receipt of a preliminary certificate of authority
from the superintendent, the society may solicit members for the
purpose of completing its organization, shall collect from each
applicant the amount of not less than one regular monthly premium
in accordance with its table of rates, and shall issue to each
applicant a receipt for the amount so collected. No society shall
incur any liability other than for the return of such advance
premium, nor issue any certificate, nor pay, allow, or offer, or
promise to pay or allow, any benefit to any person until all of
the following apply:
(1) Actual bona fide applications for benefits have been
secured aggregating at least two million five hundred thousand
dollars on not less than five hundred applicants, and any
necessary evidence of insurability has been furnished to and
approved by the society.
(2) At least ten subordinate lodges have been established
into which the five hundred applicants have been admitted.
(3) There has been submitted to the superintendent, under
oath of the president or secretary, or corresponding officer of
the society, a list of such applicants, giving their names,
addresses, date each was admitted, name and number of the
subordinate lodge of which each applicant is a member, amount of
benefits to be granted, and premiums for the benefits.
(4) It has been shown to the superintendent, by sworn
statement of the treasurer, or corresponding officer of the
society, that at least five hundred applicants have each paid in
cash at least one regular monthly premium as provided in this
section, which premiums in the aggregate amount to at least one
hundred fifty thousand dollars, all of which is credited to the
fund or funds from which benefits are to be paid and no part of
which may be used for expenses. These advance premiums shall be
held in trust during the period of organization and if the society
has not qualified for a certificate of authority within one year,
as provided in this section, the premiums shall be returned to the
applicants.
(E) The superintendent may make such examination and require
such further information as the superintendent considers
advisable. Upon presentation of satisfactory evidence that the
society has complied with all the provisions of law including the
surplus requirements of section 3921.101 of the Revised Code, the
superintendent shall issue to the society a certificate of
authority to that effect and that the society is authorized to
transact business pursuant to the provisions of this chapter. The
certificate of authority shall be prima facie evidence of the
existence of the society at the date of the certificate. The
superintendent shall cause a record of the certificate of
authority to be made. A certified copy of the record may be given
in evidence with like effect as the original certificate of
authority.
(F) An incorporated society that was organized prior to
January 1, 1997, and that, as of December 31, 1996, is authorized
to transact business in this state shall not be required to
reincorporate, and may exercise all the rights, powers, and
privileges conferred in this chapter and in the society's articles
of incorporation to the extent that the articles are consistent
with this chapter.
Sec. 3921.101. (A)(1) On and after January 1, 2016, a
fraternal benefit society that provides the contractual benefits
listed in division (A)(1) of section 3921.16 of the Revised Code
in this state in a benefit amount of greater than five thousand
dollars shall have and maintain a surplus of two million five
hundred thousand dollars for all lines written.
(2) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(1)
of section 3921.16 of the Revised Code in this state in a benefit
amount of five thousand dollars or less shall have and maintain a
surplus of five hundred thousand dollars.
(B)(1) On and after January 1, 2016, a fraternal benefit
society that provides the contractual benefits listed in division
(A)(2) of section 3921.16 of the Revised Code in this state in a
benefit amount of greater than five thousand dollars shall have
and maintain a surplus of two million five hundred thousand
dollars for all lines written.
(2) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(2)
of section 3921.16 of the Revised Code in this state in a benefit
amount of five thousand dollars or less shall have and maintain a
surplus of five hundred thousand dollars.
(C)(1) On and after January 1, 2016, a fraternal benefit
society that provides the contractual benefits listed in division
(A)(3) of section 3921.16 of the Revised Code in this state in a
benefit amount of greater than five thousand dollars shall have
and maintain a surplus in the aggregate of two million five
hundred thousand dollars for all lines written.
(2) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(3)
of section 3921.16 of the Revised Code in this state in a benefit
amount of five thousand dollars or less shall have and maintain a
surplus of five hundred thousand dollars.
(D) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(4)
of section 3921.16 of the Revised Code in this state shall have
and maintain a surplus of two million five hundred thousand
dollars for all lines written.
(E) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(5)
of section 3921.16 of the Revised Code in this state shall have
and maintain a surplus of two million five hundred thousand
dollars for all lines written.
(F) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(6)
of section 3921.16 of the Revised Code in this state shall have
and maintain a surplus of five hundred thousand dollars.
(G) On and after January 1, 2016, a fraternal benefit society
that provides the contractual benefits listed in division (A)(7)
of section 3921.16 of the Revised Code in this state shall have
and maintain a surplus of two million five hundred thousand
dollars for all lines written.
(H) The surplus requirements of this section are not
cumulative. A society with a surplus of at least two million five
hundred thousand dollars on and after January 1, 2016, satisfies
the surplus requirements of this section.
Sec. 3921.13. (A) A domestic fraternal benefit society may,
by a reinsurance agreement, cede any individual risk or risks in
whole or in part to an insurer, other than another fraternal
benefit society, having the power to make such reinsurance and
authorized to do business in this state, or if not so authorized,
one which is approved by the superintendent of insurance; however,
no society may reinsure substantially all of its insurance in
force without the written permission of the superintendent. It may
take credit for the reserves on the ceded risks to the extent
reinsured, but no credit shall be allowed as an admitted asset or
as a deduction from liability, to a ceding society for reinsurance
made, ceded, renewed, or otherwise becoming effective after
January 1, 1997, unless the reinsurance is payable by the assuming
insurer on the basis of the liability of the ceding society under
the contract or contracts reinsured without diminution because of
the insolvency of the ceding society.
(B) Notwithstanding division (A) of this section, a society
may reinsure the risks of another society in a consolidation or
merger approved by the superintendent under section 3921.14 of the
Revised Code.
(C) A society with assets of less than five billion dollars
that provides contract benefits of major medical, medicare
supplemental, or long-term care pursuant to division (A)(5) of
section 3921.16 of the Revised Code shall reinsure not less than
fifty per cent of the risk arising from those contracts if the
society's risk based capital is less than three hundred per cent.
Sec. 3921.19. (A) Each fraternal benefit society authorized
to do business in this state shall issue to each owner of a
benefit contract a certificate specifying the amount of benefits
provided under the contract. The certificate, together with any
riders or endorsements attached to the certificate, the laws of
the society, the application for membership, the application for
insurance and declaration of insurability, if any, signed by the
applicant, and all amendments to each such document, constitute
the benefit contract, as of the date of issuance, between the
society and the owner, and the certificate shall so state. A copy
of the application for insurance and declaration of insurability,
if any, shall be endorsed upon or attached to the certificate.
All statements made on the application are representations
and not warranties. Any waiver of this provision is void.
(B) Any changes, additions, or amendments to the laws of the
society duly made or enacted subsequent to the issuance of the
certificate, shall bind the owner and the beneficiaries, and shall
govern and control the benefit contract 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
insurance, except that no change, addition, or amendment shall
destroy or diminish benefits that the society contracted to give
the owner as of the date of issuance.
(C) Any person upon whose life a benefit contract is issued
prior to attaining the age of majority shall be bound by the terms
of the application and certificate and by all of the laws and
rules of the society to the same extent as though the age of
majority had been attained at the time of application.
(D) A society shall provide in its laws that if its reserves
as to all or any class of certificates become impaired its board
of directors or corresponding body may require that there shall be
paid by the owner to the society the amount of the owner's
equitable proportion of such deficiency as ascertained by its
board, and that if the payment is not made, either of the
following applies:
(1) It shall stand as an indebtedness against the certificate
and draw interest not to exceed the rate specified for certificate
loans under the certificates;
(2) In lieu of or in combination with division (D)(1) of this
section, the owner may accept a proportionate reduction in
benefits under the certificate.
The society may specify the manner of the election and which
alternative is to be presumed if no election is made.
(E) At least thirty days prior to imposing any indebtedness
upon any owner as provided in division (D) of this section, the
board of directors or corresponding body shall notify the
superintendent of insurance in writing of the board's intent to
require the payment and a statement of the reason that request is
necessary. The notice shall be confidential and not a public
record under section 149.43 of the Revised Code.
(F)(1) Certificates that are delivered or issued for delivery
in this state on or after January 1, 1997, but prior to January 1,
1998, shall comply with the requirements that would have applied
under the laws in effect on December 31, 1996.
(2) No certificate shall be delivered or issued for delivery
in this state on or after January 1, 1998, unless a copy of the
form is filed with and approved by the superintendent of insurance
in accordance with the provisions of law applicable to like
policies issued by life or sickness and accident insurers in this
state.
(3) Each life, sickness and accident, or disability insurance
certificate, and each annuity certificate, that is delivered or
issued for delivery in this state on or after January 1, 1998,
shall comply with the standard contract provision requirements
applicable to like policies issued by life or sickness and
accident insurers in this state, if those requirements are not
inconsistent with this chapter. However, a society may provide in
its certificates for a grace period of one full month for payment
of premiums. A certificate shall also contain a provision that
states the amount of premiums that is payable under the
certificate and that sets forth the substance of any sections of
the society's laws or rules in force at the time of issuance of
the certificate which, if violated, will result in the termination
or reduction of benefits payable under the certificate. If the
laws of the society provide for the expulsion or suspension of a
member, the certificate shall also contain a provision stating
that any member expelled or suspended, except a member expelled or
suspended because of nonpayment of a premium, may maintain, other
than during the contestable period for material misrepresentation
in the application for membership or insurance, the certificate in
force by continuing payment of the required premium.
(F)(G) Benefit contracts issued on the lives of persons under
the society's minimum age for adult membership may provide for
transfer of control of ownership to the insured at an age
specified in the certificate. A society may require approval of an
application for membership in order to effect this transfer, and
may provide in all other respects for the regulation, government,
and control of such certificates and all rights, obligations, and
liabilities incident to and connected with such certificates.
Ownership rights prior to such a transfer shall be specified in
the certificate.
(G)(H) A society may specify the terms and conditions on
which benefit contracts may be assigned.
(H)(I) A copy of any of the documents described in this
section, if certified by the secretary or corresponding officer of
the society, is prima facie evidence of the terms and conditions
of the documents.
Sec. 3921.191. (A) A fraternal benefit society shall provide
an applicant for insurance a disclosure statement at the time of
sale substantially as follows:
".......... (Name of the fraternal benefit society) IS
LICENSED TO DO BUSINESS IN THE STATE OF OHIO. AS A ........
(not-for-profit, tax-exempt, self-governing, or membership
organization), FRATERNAL BENEFIT SOCIETIES ARE NOT INCLUDED IN THE
OHIO GUARANTY ASSOCIATION. THIS MEANS THAT FRATERNAL BENEFIT
SOCIETIES CANNOT BE ASSESSED FOR THE INSOLVENCY OF OTHER LIFE
INSURERS OR OTHER FRATERNAL BENEFIT SOCIETIES. BY LAW, A FRATERNAL
BENEFIT SOCIETY IS RESPONSIBLE FOR ITS OWN SOLVENCY. IF THERE IS
AN IMPAIRMENT OF RESERVES, A CERTIFICATE HOLDER MAY BE ASSESSED A
PROPORTIONATE SHARE OF THE IMPAIRMENT. THIS PROCESS IS DESCRIBED
IN THE CERTIFICATE ISSUED BY THE SOCIETY."
(B) The statement must be signed by the applicant and
maintained in the certificate or contract file by the fraternal
benefit society. The statement may be part of the society's
membership application or certificate or policy application.
(C) This section is applicable only to new business written
by a fraternal benefit society after the effective date of this
section.
Sec. 3921.22. (A) A fraternal benefit society shall hold,
invest, and disburse all assets for the use and benefit of the
society. No member or beneficiary shall have or acquire individual
rights to the assets, or be entitled to any apportionment on the
surrender of any part of the assets, except as provided in the
benefit contract.
(B) A society may create, maintain, invest, disburse, and
apply any special fund or funds necessary to carry out any purpose
permitted by the laws of the society. No society shall, directly
or indirectly, pay or use, or offer, consent, or agree to pay or
use, any of its funds, money, or property for or in aid of any
political party, campaign committee, political action committee,
continuing association, or any other political organization.
(C) A society may, pursuant to resolution of its supreme
governing body, establish and operate one or more separate
accounts and issue contracts on a variable basis, subject to the
provisions of law regulating life insurers that establish such
accounts and issue such contracts including those described in
section 3911.011 of the Revised Code. To the extent the society
considers it necessary in order to comply with any applicable
federal or state law, or any rule issued under that law, the
society may do any of the following:
(1) Adopt special procedures for the conduct of the business
and affairs of a separate account;
(2) For persons having beneficial interests in the account,
provide special voting and other rights, including special rights
and procedures relating to investment policy, investment advisory
services, selection of certified public accountants, and selection
of a committee to manage the business and affairs of the account;
(3) Issue contracts on a variable basis to which divisions
(B) and (D) of section 3921.19 of the Revised Code do not apply.
Sec. 3921.28. (A)(1) Each domestic fraternal benefit society
and each applicant for a certificate of incorporation as a
domestic fraternal benefit society shall be subject to examination
by the superintendent of insurance in accordance with section
3901.07 of the Revised Code. Section 3901.07 of the Revised Code
shall govern every aspect of the examination, including the
circumstances under and frequency with which it is conducted, and
the authority of the superintendent and any examiner or other
person appointed by the superintendent.
(2)(a) A domestic fraternal benefit society shall be liable
for the payment of any additional expense of an examination
resulting from unreasonable delays by the society in fulfilling a
request for documents or information by the examiner conducting
the examination. A delay is deemed unreasonable if the examiner
has made two separate unfulfilled requests for the same documents
or information. A request for records or information from an
examiner shall allow the fraternal benefit society a minimum of
ten business days to fulfill the request.
(b) In the event of an unreasonable delay, the examiner shall
notify the superintendent, who shall set a hearing, under Chapter
119. of the Revised Code, to determine if there has been an
unreasonable delay because of the fraternal benefit society's
response to a request for documents or information and to
calculate the additional expense incurred by the superintendent as
a result of the unreasonable delay.
(3) A summary of the examination of the superintendent and
any recommendations or statements of the superintendent that
accompany the report, shall be read at the first meeting of the
board of directors or corresponding body of the society following
the receipt thereof, and if directed so to do by the
superintendent, shall also be read at the first meeting of the
supreme legislative or governing body of the society following the
receipt thereof. A copy of the report, recommendations, and
statements of the superintendent shall be furnished by the society
to each member of the board of directors or other governing body.
(B) Each foreign or alien fraternal benefit society
transacting or applying for admission to transact business in this
state shall be subject to examination by the superintendent in
accordance with section 3901.07 of the Revised Code. Section
3901.07 of the Revised Code shall govern every aspect of the
examination, including the circumstances under and frequency with
which it is conducted, the authority of the superintendent and any
examiner or other person appointed by the superintendent, the
liability for the assessment of expenses incurred in conducting
the examination, and the remittance of the assessment to the
superintendent's examination fund.
Sec. 3921.29. No foreign or alien fraternal benefit society
shall transact business in this state without a license issued by
the superintendent of insurance. Any such society may be licensed
to transact business in this state upon filing all of the
following with the superintendent:
(A) A duly certified copy of its articles of incorporation;
(B) A copy of its bylaws certified by its secretary or
corresponding officer;
(C) A power of attorney to the superintendent written
appointment of an agent as prescribed in section 3921.35 of the
Revised Code;
(D) A statement of its business made under oath of its
president and secretary or corresponding officers in a form
prescribed by the superintendent and duly verified by an
examination made by the supervising insurance official of its
state of domicile or of any other state, district, territory,
province, or country, which examination is satisfactory to the
superintendent;
(E) Certification from the proper official of its state,
district, territory, province, or country of domicile that the
society is legally incorporated and licensed to transact business
in that state, district, territory, province, or country;
(F) Copies of its certificate forms;
(G) A description of its investments that shows that its
assets are invested in accordance with this chapter;
(H) Any other information the superintendent considers
necessary.
Sec. 3921.30. (A) If the superintendent of insurance finds,
upon investigation, that a domestic fraternal benefit society has
exceeded its powers, has failed to comply with any provision of
this chapter, is not fulfilling its contracts in good faith, has a
membership of less than four hundred after an existence of one
year or more, or is conducting business fraudulently or in a
manner hazardous to its members, creditors, the public, or the
business, the superintendent shall issue a written notice to the
society that sets forth the deficiency and the reasons for the
superintendent's dissatisfaction, and that requires the society to
correct the deficiency within thirty days after receipt of the
notice. If the society fails to correct the deficiency within that
thirty-day period, the superintendent shall notify the society of
its failure to correct the deficiency and shall require the
society to show cause on a date named why it should not be
enjoined from carrying on any business until the violation
complained of has been corrected, or why an action in quo warranto
should not be commenced against the society.
If on that date the society does not present good and
sufficient reasons why it should not be enjoined or why such
action should not be commenced, the superintendent may present the
facts relating thereto to the attorney general. If the attorney
general determines that the circumstances warrant, the attorney
general shall commence an action to enjoin the society from
transacting business or in quo warranto.
The court shall thereupon notify the officers of the society
of a hearing. If after a full hearing it appears that the society
should be enjoined or liquidated or a receiver appointed, the
court shall enter the necessary order.
(B) A society enjoined pursuant to division (A) of this
section shall not have the authority to do business until all of
the following occur:
(1) The superintendent finds that the violation complained of
has been corrected.
(2) The costs of the action have been paid by the society if
the court finds that the society was in default as charged.
(3) The court has dissolved its injunction.
(4) The superintendent has reinstated the certificate of
authority.
(C) If the court orders the society liquidated, the society
shall be enjoined from carrying on any further business, whereupon
the receiver of the society shall proceed at once to take
possession of the books, papers, money, and other assets of the
society and, under the direction of the court, shall close the
affairs of the society and distribute its funds to those entitled
to them.
(D) No action under this section shall be recognized in any
court of this state unless brought by the attorney general upon
request of the superintendent. Whenever a receiver is to be
appointed for a domestic society, the court shall appoint the
superintendent as the receiver.
(E) The provisions of this section relating to a hearing by
the superintendent, action by the attorney general at the request
of the superintendent, hearing by the court, injunction, and
receivership shall apply to any society that voluntarily
determines to discontinue business.
(F) Nothing in this section shall be construed as preventing
the lodges and members of a society from commencing a civil action
against a society for the enforcement of a contract provision or
for the resolution of a dispute concerning an interpretation of
the society's laws, which action is not based on the
superintendent's exercise of authority under this section. A
society shall not prohibit a lodge or member from commencing such
commence an action against it the society under sections 3903.01
to 3903.59 of the Revised Code.
Sec. 3921.31. (A) If the superintendent of insurance finds,
upon investigation, that a foreign or alien fraternal benefit
society transacting or applying to transact business in this state
has exceeded its powers, has failed to comply with any provision
of this chapter, is not fulfilling its contracts in good faith, or
is conducting its business fraudulently or in a manner hazardous
to its members or creditors or the public, the superintendent
shall issue a written notice to the society that sets forth the
deficiency and the reasons for the superintendent's
dissatisfaction, and that requires the society to correct the
deficiency within thirty days after receipt of the notice. If the
society fails to correct the deficiency within that thirty-day
period, the superintendent shall notify the society of its failure
to correct the deficiency and shall require the society to show
cause on a date named why its license should not be suspended,
revoked, or refused.
If on that date the society does not present good and
sufficient reason why its authority to do business in this state
should not be suspended, revoked, or refused, the superintendent
may suspend or refuse the license of the society to do business in
this state until satisfactory evidence is furnished to the
superintendent that the suspension or refusal should be withdrawn,
or the superintendent may revoke the authority of the society to
do business in this state.
(B) Nothing in this section shall be construed as preventing
any foreign or alien society from continuing in good faith all
contracts made in this state during the time the society was
legally authorized to transact business in this state commence an
action against the society under section 3903.71 of the Revised
Code.
Sec. 3921.33. (A) Agents of fraternal benefit societies
shall be licensed in the manner provided for agents of insurance
companies in Chapter 3905. of the Revised Code, and shall be
required to complete continuing education as set forth in section
3905.481 of the Revised Code starting with the twenty-four-month
period commencing on the first day of January of 1999. However, no
written or other examination shall be required of any person whose
application for the original issuance of a license to represent a
fraternal benefit society as its agent was filed with the
superintendent of insurance prior to January 1, 1997.
(B) The following persons shall not be required to be
licensed in accordance with division (A) of this section:
(1) Any regularly salaried officer, employee, or member of a
licensed society who devotes substantially all of the person's
services to activities other than the solicitation of fraternal
insurance contracts from the public, and who receives for the
solicitation of any such contracts no commission or other
compensation directly dependent upon the amount of business
obtained.
The officers, employees, and members described in division
(B)(1) of this section also are not subject to examination by the
superintendent under Chapter 3905. of the Revised Code.
(2) Any agent or representative of a society who devotes, or
intends to devote, less than fifty per cent of the person's time
to the solicitation and procurement of insurance contracts for the
society. For purposes of division (B)(2) of this section, any
person who, in the preceding calendar year, has received a
commission or other compensation for soliciting and procuring any
of the following contracts on behalf of an individual society is
presumed to have devoted, or to have intended to devote, fifty per
cent of the person's time to the solicitation and procurement of
insurance contracts:
(a) Life insurance contracts that, in the aggregate, exceeded
two hundred thousand dollars of coverage for all lives insured for
the preceding calendar year;
(b) A permanent life insurance contract offering more than
ten thousand dollars of coverage on an individual life;
(c) A term life insurance contract offering more than fifty
thousand dollars of coverage on an individual life;
(d) Any insurance contracts other than life that the society
may write and that insure the individual lives of more than
twenty-five individuals;
(e) Any contract issued on a variable basis, as authorized by
division (C) of section 3921.22 of the Revised Code.
(C) Notwithstanding division (B) of this section, any person
selling an annuity contract under the authority of division (A)(3)
of section 3921.16 of the Revised Code shall be licensed pursuant
to Chapter 3905. of the Revised Code.
Sec. 3921.35. (A) Any fraternal benefit society authorized
to transact business in this state shall have and maintain an
agent upon whom may be served any process, notice, or demand
required or permitted by law to be served upon a society.
The agent required under this section may be a natural person
residing in this state or a corporation holding a license under
the laws of this state that is authorized by its articles of
incorporation to act as an agent and that maintains a business
address in this state. A statutory agent is not required to be a
licensed insurance agent.
(B) The written appointment of an agent shall be in the form
the superintendent of insurance prescribes and may include a
consent to service of process.
The appointment shall set forth the name and complete address
of the agent. The agent shall reside or maintain a business
address within this state.
(C) The superintendent shall keep a record of the fraternal
benefit societies transacting business in this state and the name
and address of their respective agents.
(D)(1) If any agent dies, moves out of the state, or resigns,
the society immediately shall appoint another agent and file with
the superintendent a written appointment as described in division
(B) of this section.
(2) If an agent changes the agent's address, the society or
agent immediately shall notify the superintendent of the change,
and shall set forth the agent's new address, on a form prescribed
by the superintendent.
(E) An agent may resign by filing with the superintendent a
written notice signed by the agent. The agent shall send a copy of
the notice to the society at the current or last known address of
the society's principal office prior to the date the notice is
filed with the superintendent.
The notice required under this division shall set forth the
society's name, the current or last known address of the society,
the name and address of the agent, the resignation of the agent,
and a statement that a copy of the notice has been sent to the
society and the date the copy was sent.
The agent's authority to represent the fraternal benefit
society shall terminate thirty days after the notice is filed with
the superintendent under this division.
(F) A society may revoke the appointment of an agent by
filing with the superintendent a written appointment of another
agent and a statement that the appointment of the former agent is
revoked. The authority of the agent whose appointment has been
revoked shall terminate thirty days after the notice required
under this division is filed with the superintendent.
(G) Any process, notice, or demand required or permitted by
law to be served upon a society may be served by delivering a copy
of the process, notice, or demand to the agent of record at the
address appearing in the superintendent's records.
If the agent cannot be found, the agent no longer has that
address, or the society has failed to maintain an agent as
required by this section, the party desiring that the process,
notice, or demand be served, or its agent, may file with the
superintendent an affidavit stating that one of the foregoing
conditions exists and stating the most recent address of the
society that the party, after diligent search, has been able to
ascertain.
Upon the filing of the affidavit, service of process, notice,
or demand may be initiated upon the superintendent as the
society's agent by delivering two copies of the process, notice,
or demand to the superintendent. The superintendent shall give
notice to the society at its principal office as shown in the
superintendent's records or at the address set forth in the
affidavit. The superintendent shall give notice by regular mail
with a copy of the process, notice, or demand enclosed. After the
superintendent has mailed the appropriate documents, service upon
the society is deemed complete.
(H) The superintendent shall keep a record of each process,
notice, and demand delivered to the superintendent under division
(G) of this section or any other law of this state that authorizes
service upon the superintendent.
(I) This section does not limit or affect the right to serve
any process, notice, or demand upon a society in any other manner
permitted by law.
(J) A society shall include a fee of five dollars with any
change of agent appointment or change of address. This division
does not apply to an agent appointment filed with an original
application for a certificate of authority.
(K) If a society fails to appoint or maintain an agent or to
notify the superintendent of an agent's change of address, the
superintendent shall provide notice of that failure to the society
by certified mail. If the society does not remedy the society's
failure within thirty days after the date of the mailing of the
notice or within any additional time the superintendent allows,
the superintendent shall fine the society not less than
twenty-five dollars nor more than two hundred dollars per
violation. The superintendent also may charge a society a
fifty-dollar fee for each time the superintendent is required to
give notice to the society in accordance with division (G) of this
section.
(L) The superintendent shall pay all moneys collected by the
superintendent in accordance with this section into the state
treasury to the credit of the department of insurance operating
fund.
Section 2. That existing sections 3903.81, 3921.10, 3921.13,
3921.19, 3921.22, 3921.28, 3921.29, 3921.30, 3921.31, and 3921.33
and section 3921.35 of the Revised Code are hereby repealed.
Section 3. Section 1 and 2 of this act shall take effect
January 1, 2013.
|