CHAPTER 3. Reciprocal Insurers [1280. - 1560.19.]
Chapter 3 enacted by Stats. 1935, Ch. 145.
§§ 1280–1560.19 · 109 sections
ARTICLE 1. General Provisions §§ 1280–1284 · 7 sections
- § 1280 This chapter shall not in any way affect the rights, duties, or obligations of members of or subscribers at any reciprocal or interinsurance exchange which has…
- § 1280.5 This chapter and the other provisions of this code shall not apply to nor affect unincorporated interindemnity or reciprocal or interinsurance contracts…
- § 1280.7 (a) This chapter and the other provisions of this code, except as set forth in this paragraph, shall not apply to or affect unincorporated interindemnity or…
- § 1281 Reciprocal or interinsurance contracts, the exchange thereof, the subscribers, attorneys in fact, agents, and representatives, and all matters incident to or…
- § 1282 (a) The following provisions of this code shall not be applicable to reciprocal or interinsurance exchanges and their contracts, subscribers, attorneys in…
- § 1283 The provisions of Part 7, Division 2 of the Revenue and Taxation Code shall be applicable to reciprocal or interinsurance exchanges.
- § 1284 Notwithstanding any other provision of this chapter or of this code, any reciprocal or interinsurance exchange which meets all of the conditions of this…
ARTICLE 2. Organization of Exchange §§ 1300–1315 · 16 sections
- § 1300 Any persons may exchange reciprocal or interinsurance contracts with one another providing insurance, other than life, title, mortgage, mortgage guaranty, or…
- § 1301 Such persons are termed subscribers.
- § 1302 Any domestic corporation, in addition to the rights, powers and franchises specified in its articles of incorporation, has full power and authority to enter…
- § 1303 The organization under which such subscribers so exchange contracts is termed a reciprocal or interinsurance exchange, and shall be deemed the insurer while…
- § 1305 Such contracts may be executed by an attorney-in-fact, agent or other representative duly authorized and acting for such subscribers under powers of attorney.…
- § 1306 The principal office of the attorney shall be maintained at a place designated by the subscribers in the power of attorney.
- § 1307 The power of attorney and contracts made thereunder may: (a) Provide for the right of substitution of attorney and revocation of the contract or power. (b)…
- § 1308 The body exercising the subscribers’ rights shall be selected under such rules as the subscribers adopt. It shall supervise the finances of the exchange and…
- § 1309 Such body shall have authority to procure the audit of the accounts and records of the exchange and of the attorney-in-fact, at the expense of the exchange.
- § 1310 Such body shall be composed of subscribers or agents of subscribers. Not more than one-third of the members serving on such body shall be agents, employees or…
- § 1310.1 The board of a reciprocal or interinsurance exchange operating pursuant to Section 1284 shall be composed of members of the governing board of the hospital,…
- § 1311 A reciprocal or interinsurance exchange may engage in the surety insurance business in this state only provided its surplus is at least twice the amount…
- § 1312 (a) Any reciprocal or interinsurance exchange, domestic or foreign, which has obtained a certificate of capability to reinsure or a favorable order under…
- § 1313 Nothing in Chapter 504 of the Statutes of 1965 shall limit or affect the right of an admitted foreign reciprocal or interinsurance exchange to accept…
- § 1314 Any reciprocal or interinsurance exchange, domestic or foreign, which has obtained a certificate of surplus under Section 1401, and whose subscribers by such…
- § 1315 A reciprocal exchange or interinsurance exchange may borrow money to defray the expenses of its organization, provide it with surplus funds, or for any purpose…
ARTICLE 3. Filing of Documents §§ 1320–1330 · 12 sections
- § 1320 The attorney of every admitted reciprocal or interinsurance exchange shall verify and cause to be filed with the commissioner copies of the following forms…
- § 1321 If the name of the exchange does not contain either the words “interinsurance,” “reciprocal” or “exchange,” then such forms shall have printed under such name…
- § 1322 The attorney prior to admission shall file with the commissioner a declaration verified by his oath or, where such attorney is a corporation, by the oath of…
- § 1323 Concurrently with the filing of the declaration provided for by the terms of section 1322 the attorney shall file with the commissioner an instrument in…
- § 1324 Except as provided in Section 1330, the attorney, concurrently with the filing of the declaration provided for in Section 1322, also shall file with the…
- § 1325 Such bond shall be executed by the attorney with an admitted surety insurer as surety.
- § 1325.5 Such attorney may deposit with the commissioner, in lieu of the bond executed by him, securities of a value equal to the required amount of the bond and of the…
- § 1326 The attorney’s bond shall be in the penal sum of fifty thousand dollars ($50,000), conditioned that the attorney will faithfully account for all moneys and…
- § 1327 The attorney’s bond may be sued upon in one and the same action either by any subscriber or any number of subscribers suffering loss through a violation of its…
- § 1328 Any amount recovered on the attorney’s bond shall be deposited in and become a part of the funds of the exchange.
- § 1329 Where provision is made, by the power of attorney executed by the subscribers or the rules adopted by the exchange, for the bonding of the attorney-in-fact…
- § 1330 Where the home office of an exchange is located outside of this State and the attorney files such a bond in the home State, there may be filed with the…
ARTICLE 4. Certificate of Authority §§ 1350–1350.5 · 2 sections
- § 1350 The commissioner shall issue a certificate of authority to the attorney upon compliance with the requirements of this chapter, and the payment of the…
- § 1350.5 In the event of substitution of attorney or a change in any of the matters specified in the certificate of authority pursuant to Section 1350, the attorney…
ARTICLE 5. Finances §§ 1370–1375 · 11 sections
- § 1370 Every exchange shall maintain its required assets in any one, or more, or all of the following forms: (a) In cash or deposits in solvent banks. (b) Invested in…
- § 1370.2 Except as in this article (commencing with Section 1370) otherwise provides, every exchange subject to this chapter (commencing with Section 1280) shall on and…
- § 1370.4 An exchange admitted prior to October 1, 1961, shall be exempt from the provisions of Section 1370.2 until it replaces its attorney in fact, except when the…
- § 1370.8 Any exchange exempted at any time from the provisions of Section 1370. 2 shall irrespective of such exemption be subject to the provisions of this section. No…
- § 1371 If an exchange does either liability or workers’ compensation insurance, it shall at all times maintain assets in a sum sufficient to discharge all liabilities…
- § 1372 Every other exchange shall maintain at all times assets in a sum sufficient to discharge all liabilities and to provide a surplus over all liabilities of fifty…
- § 1373.1 No certificate of authority, other than a renewal certificate of authority, shall be issued to the attorney within three years from and after the time when the…
- § 1373.2 (a) Except as provided in subsection (b) hereof, an exchange, the attorney for which holds a certificate of authority, which has been in business as an insurer…
- § 1374 In estimating the financial condition of any exchange the commissioner shall observe the following rules: (a) He or she shall charge as liabilities the same…
- § 1374.1 (a) “Surplus deposits of subscribers,” as used in this chapter, means amounts, over and above any premium charges, which are contributed by subscribers and…
- § 1375 Where the subscribers are grouped by industries or otherwise under any ruling or agreement which exempts the funds of one group from liability in whole or in…
ARTICLE 6. Assessment of Insurers §§ 1390–1402 · 14 sections
- § 1390 The provisions of this article shall apply only to exchanges writing liability, common carrier liability, or workers’ compensation insurance, except that any…
- § 1391 Whenever an exchange subject to this article, is not possessed of admitted assets sufficient to discharge all liabilities and to maintain the required surplus,…
- § 1392 Except as provided by Sections 1397, 1398, 1400 and 1401, every subscriber of an exchange subject to this article shall be liable to pay, and shall pay, his…
- § 1393 Each such subscriber’s share of the deficiency for which an assessment is made pursuant to this article, shall be determined by applying to the premium earned…
- § 1394 Subscribers liable to assessment under this article shall pay the same without offsetting any claim for unearned premiums or losses payable to or for the…
- § 1395 Assessments under this article shall be made upon the members liable to assessment therefor, in proportion to their several liabilities.
- § 1396 Notice of all such proposed assessments shall be filed with the commissioner and the assessments shall not take effect until approved by him after such…
- § 1397 Assessments under this article, whether levied by the attorney, or the commissioner in the liquidation of such an exchange or otherwise, shall be of no greater…
- § 1398 The power of attorney of an exchange subject to this article may limit the contingent liability of the subscriber for assessment, but such contingent liability…
- § 1399 Each subscriber to an exchange subject to this article may maintain with the exchange, in addition to the premium deposit provided in the policy, a further…
- § 1400 Each such subscriber maintaining a surplus deposit equal to, and in addition to, the amount of the total current annual premium deposit provided in his policy,…
- § 1401 If an exchange has a surplus of admitted assets over all liabilities in a sum equal to 11/2 times the minimum paid-in capital required of incorporated insurers…
- § 1401.5 (a) When the commissioner finds after a public hearing that a reciprocal or interinsurance exchange has at all times during any consecutive five-year period…
- § 1402 All funds of such exchange and the proceeds of the contingent liability of its subscribers shall be available for the payment of any liability of the exchange.
ARTICLE 7. Dividends § 1420 · 1 section
- § 1420 Savings or credits may be returned to the subscribers irrespective of the source from which such savings or credits accrue whenever such returns do not…
ARTICLE 8. Reports and Examination §§ 1430–1434 · 5 sections
- § 1430 The attorney shall make a report, under oath, to the commissioner covering each calendar year. Such report shall be made annually during the time limited for…
- § 1431 The assets, business affairs and records of every exchange and its attorney shall be subject to examination by the commissioner at any reasonable time. The…
- § 1432 The commissioner has: (a) The right of examination of and supervision over reciprocal or interinsurance exchanges, their attorneys, agents and brokers. (b) The…
- § 1433 The commissioner’s right of examination shall include the right to examine the records containing the names and addresses of the subscribers. Any information…
- § 1434 Where the principal office of the attorney is located in another State, the commissioner, in lieu of examination may accept a certified copy of the report of…
ARTICLE 9. Suits §§ 1450–1453 · 4 sections
- § 1450 The exchange may sue or be sued in its own name as in the case of an individual. Any judgment rendered against the exchange shall be binding upon each…
- § 1451 No action shall lie against any subscriber, upon any obligation made or incurred in the name of the exchange, until a final judgment has been obtained against…
- § 1452 Process may be served upon the commissioner as provided in Article 1 (commencing with Section 12919) of Chapter 2 of Division 3.
- § 1453 A judgment rendered in any case where service of process has been made on the commissioner shall be binding against the subscribers as their interests appear.
ARTICLE 10. Policy § 1470 · 1 section
- § 1470 In any form of policy prescribed by this code, the attorney may insert provisions or conditions required by the plan of reciprocal or interinsurance if the…
ARTICLE 12. Agents and Brokers § 1500 · 1 section
- § 1500 The provisions of this code regarding the appointment, licensing, qualification and regulation of insurance agents, brokers and solicitors, apply neither to…
ARTICLE 13. Penalties §§ 1510–1512 · 3 sections
- § 1510 Any attorney-in-fact or representative of such an attorney who exchanges, or solicits or negotiates the exchange of, any contracts of insurance of the kind and…
- § 1511 For the purpose of organization, and upon issuance of permit by the commissioner, powers of attorney and applications for such policies may be solicited…
- § 1512 In addition to the foregoing penalties and where not otherwise provided, the penalty for failure or refusal to comply with any or all of the provisions of this…
ARTICLE 14. Tax Provisions §§ 1530–1531 · 2 sections
- § 1530 In lieu of all other taxes, licenses or fees whatever, state or local, each exchange and its corporate attorney in fact considered as a single unit shall…
- § 1531 (a) On and after January 1, 1994, and before January 1, 1995, every exchange and its corporate attorney in fact that is considered a single unit whose annual…
ARTICLE 15. Merger § 1540 · 1 section
- § 1540 Any two or more domestic reciprocal insurers, upon affirmative vote of not less than two-thirds of the subscribers of each such insurer who vote on such merger…
ARTICLE 16. Merger of Certain Reciprocal Insurers §§ 1550–1559 · 10 sections
- § 1550 This article shall apply only to domestic reciprocal insurers organized after 1974 to provide medical malpractice insurance.
- § 1551 By following the procedure specified in this article, any domestic reciprocal insurer described in this article may merge, consolidate, or otherwise unite with…
- § 1552 The plan and agreement by which the transaction is to be effected shall be submitted to the commissioner, who shall examine it and require those provisions to…
- § 1553 When the plan and agreement has been approved by the commissioner, with any changes required by him or her, it shall require the approval of each domestic…
- § 1554 If one of the insurers that is a party to the transaction is a domestic incorporated insurer, Section 1109 of the Corporations Code shall apply if the…
- § 1555 (a) If the vote is in the affirmative, a certified copy of all proceedings relating to the proposed transaction shall be filed with the commissioner. If one of…
- § 1556 (a) If the surviving entity is a domestic incorporated insurer in a merger in which a domestic reciprocal insurer is a constituent party, after approval of the…
- § 1557 (a) Any plan of merger, consolidation, or other unification under this article shall provide that all rights and properties of the parties to the plan of…
- § 1558 In the event a domestic reciprocal insurer is merged, is consolidated, or is part of a reorganization pursuant to the procedures specified in this article and…
- § 1559 (a) For all purposes for a merger in which the surviving entity is a domestic reciprocal insurer and a domestic incorporated insurer is not a constituent…
ARTICLE 17. Conversion of Certain Reciprocal Insurers to Incorporated Stock Insurers §§ 1560–1560.19 · 19 sections
- § 1560 This article shall apply only to domestic reciprocal insurers organized after 1974 to provide medical malpractice insurance.
- § 1560.01 By following the procedure specified in this article, any domestic reciprocal insurer described in Section 1560 may be converted into an incorporated stock…
- § 1560.02 The definitions in this section apply to the following terms when used in this article: (a) “Adoption date” means the date the governing body adopts the plan…
- § 1560.03 A plan of conversion adopted by a domestic reciprocal insurer for the establishment of a reciprocal holding company shall provide that the domestic reciprocal…
- § 1560.05 (a) The commissioner shall examine the plan submitted pursuant to Section 1560.03. As a part of the examination the commissioner shall order a public hearing…
- § 1560.06 The meeting of subscribers prescribed by subdivision (c) of Section 1560.03 shall be called by the governing board, the chairperson of the board, or the…
- § 1560.07 Nothing in this article shall be deemed to prohibit the inclusion in the plan of conversion of provisions under which the insurer’s officers, directors,…
- § 1560.08 No director, officer, agent, or employee of the domestic reciprocal insurer shall receive any fee, commission, or other valuable consideration whatsoever,…
- § 1560.09 At any time before that plan of conversion becomes effective, the domestic reciprocal company may, by resolution of at least two-thirds of the governing board,…
- § 1560.10 Upon consent by the commissioner to the plan of conversion of a domestic reciprocal insurer and filing of the plan of conversion in accordance with the…
- § 1560.11 (a) Upon the effective date of a plan of conversion in accordance with Section 1560.10, the domestic reciprocal insurer immediately becomes a stock…
- § 1560.12 (a) Prior to, and for a period of five years following, the effective date of the plan of conversion, no person or group of persons acting in concert shall…
- § 1560.13 Unless otherwise provided in the plan of conversion, the governing body and officers of the domestic reciprocal insurer shall serve as directors and officers…
- § 1560.14 (a) Notwithstanding any other provision of law and except as otherwise provided in subdivision (b), actions concerning any plan of conversion, proposed plan of…
- § 1560.15 The offer or sale of securities issued pursuant to the plan of conversion developed and approved in accordance with the provisions of this article, shall be…
- § 1560.16 The commissioner shall have the authority from time to time, to make, amend, and rescind any rules and regulations necessary to carry out the provisions of…
- § 1560.17 Upon completion of the act of conversion and issuance of the certificate of authority under Section 1560.10, the Secretary of State shall accept for filing a…
- § 1560.18 (a) The articles of incorporation of a converted insurer that have been adopted pursuant to a plan of conversion and filed with the Secretary of State in…
- § 1560.19 If the name of a domestic reciprocal insurer converting to a stock insurer pursuant to this article includes the word “reciprocal,” the new stock insurer may…