CHAPTER 2. FARM MUTUAL INSURANCE COMPANIES
IC 27-5.1-2
Chapter 2. Farm Mutual Insurance Companies
IC 27-5.1-2-1
Applicability
Sec. 1. This chapter applies to a farm mutual insurance companyregulated under this article.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-2
Farm mutual insurance companies existing on June 30, 2003
Sec. 2. (a) A farm mutual insurance company that holds acertificate of authority to do business in Indiana on June 30, 2003, isa standard company under this article unless the farm mutualinsurance company:
(1) elects to become an extended company under IC 27-5.1-4;and
(2) is authorized by the commissioner to do business as anextended company.
(b) A standard company described in subsection (a) may elect tobecome an extended company at any time by:
(1) complying with IC 27-5.1-4-2(b); and
(2) submitting to an examination that may be conducted at thediscretion of the commissioner.
(c) An election made under this section is effective upon the datethe commissioner issues a new certificate of authority.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-3
Proposed farm mutual insurance companies; application forcertificate of authority
Sec. 3. (a) If a proposed farm mutual insurance company does nothold a certificate of authority to do business in Indiana on June 30,2003, an application may be made to the commissioner on a formprescribed by the commissioner for a certificate of authority for theproposed farm mutual insurance company to do business in Indianaas a standard company.
(b) An application described in subsection (a) must include thefollowing concerning the proposed farm mutual insurance company:
(1) The name.
(2) The location and address of the principal office.
(3) The names and addresses of the officers and directors.
(4) Three (3) copies of the articles of incorporation.
(5) A copy of the bylaws.
(c) A standard company described in subsection (a), not earlierthan three (3) years after it is granted a certificate of authority to dobusiness as a standard company, may elect to obtain a certificate ofauthority to do business as an extended company if the standardcompany:
(1) has an annual direct written premium of more than one
million dollars ($1,000,000); and
(2) complies with IC 27-5.1-4-2.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-4
Proposed farm mutual insurance company requirements forcertificate of authority
Sec. 4. A farm mutual insurance company that is established afterJune 30, 2003, must have at least:
(1) two hundred fifty (250) applications for insurance policies;and
(2) one hundred thousand dollars ($100,000) in annual directwritten premiums;
before issuing an insurance policy.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-5
Powers and duties
Sec. 5. (a) A farm mutual insurance company has all the powers,rights, privileges, duties, and obligations of a company organizedunder IC 27-1-6 except where IC 27-1-6 is inconsistent with thisarticle.
(b) A farm mutual insurance company has the following:
(1) The power to borrow money.
(2) The ability to sue or be sued.
(3) The power to make contracts of insurance or indemnitywith:
(A) a person;
(B) a firm;
(C) a public corporation;
(D) a private corporation;
(E) a board;
(F) an association;
(G) an estate; or
(H) a trustee or legal representative of an estate.
(4) The power to cede or obtain reinsurance from an insurancecompany legally operating in Indiana.
(5) The power to participate with a financially stable insurancecompany in:
(A) a plan for reinsurance; or
(B) catastrophe protection.
(6) The power to determine the qualifications and the mannerby which to admit or withdraw policyholders.
(7) The power to use a common seal, which the farm mutualinsurance company may change or alter.
(8) The power to purchase, lease, hold, and dispose of:
(A) real property; and
(B) personal property;
in the farm mutual insurance company's name for use incarrying out the purposes of the farm mutual insurance
company.
(9) The power to classify risks according to the hazardsinvolved.
(10) The power to establish rates according to the classificationof risk.
(11) The power to determine the acceptability of risk andhazards insured.
(12) The power to determine the cost of insurance issued by thefarm mutual insurance company and the adjustment andpayment of losses.
(13) The power to determine the compensation of directors andofficers of the farm mutual insurance company.
(14) The power to require that directors and officers of the farmmutual insurance company be bonded in the performance of theduties of the directors and officers.
(15) The power to adopt or amend bylaws and articles ofincorporation of the farm mutual insurance company.
(16) The power to adopt or amend policy forms and applicationforms used by the farm mutual insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-6
Exclusion of companies
Sec. 6. A farm mutual insurance company with an annual directwritten premium of more than ten million dollars ($10,000,000) maynot function as a farm mutual insurance company and shall beregulated as a domestic mutual insurance company described inIC 27-1-6-15.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-7
Exemption from Indiana insurance laws
Sec. 7. Except as provided in section 8 of this chapter, a farmmutual insurance company that operates under this article is exemptfrom any other Indiana insurance law unless the law expressly statesthat the law is applicable to a farm mutual insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-8
Application of Indiana insurance laws
Sec. 8. The following provisions apply to standard companies andextended companies:
(1) IC 27-1-3.
(2) IC 27-1-3.1.
(3) IC 27-1-5-3.
(4) IC 27-1-7-14 through IC 27-1-7-16.
(5) IC 27-1-7-21 through IC 27-1-7-23.
(6) IC 27-1-9.
(7) IC 27-1-10.
(8) IC 27-1-13-3 through IC 27-1-13-4. (9) IC 27-1-13-6 through IC 27-1-13-9.
(10) IC 27-1-15.6.
(11) IC 27-1-18-2.
(12) IC 27-1-20-1.
(13) IC 27-1-20-4.
(14) IC 27-1-20-6.
(15) IC 27-1-20-9 through IC 27-1-20-11.
(16) IC 27-1-20-14.
(17) IC 27-1-20-19 through IC 27-1-20-21.3.
(18) IC 27-1-20-23.
(19) IC 27-1-20-30.
(20) IC 27-1-22.
(21) IC 27-4-1.
(22) Except as provided in IC 27-6-1.1-6, IC 27-6-1.1-2.
(23) IC 27-6-2.
(24) IC 27-7-2.
(25) IC 27-9.
(26) IC 34-30-17.
As added by P.L.129-2003, SEC.8. Amended by P.L.137-2006,SEC.14 and P.L.162-2006, SEC.47.
IC 27-5.1-2-9
Location of insurance business
Sec. 9. A farm mutual insurance company may engage in thebusiness of insurance in any location in Indiana other than a firstclass city. However, a farm mutual insurance company may continueto insure property in a first class city in Indiana if the insurancepolicy under which the property is insured was originally issuedbefore July 1, 2003, or if the insurance policy was originally issuedbefore the city became a first class city.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-10
Annual policyholder meeting
Sec. 10. (a) A farm mutual insurance company shall hold anannual meeting of the policyholders of the farm mutual insurancecompany on the date, time, and location set forth in the articles ofincorporation of the farm mutual insurance company. If the articlesof incorporation do not specify the date, time, and location of theannual meeting, the meeting shall be held on the first Monday inApril at the registered principal office of the farm mutual insurancecompany.
(b) A quorum for purposes of an annual policyholder meetingmust be defined in a farm mutual insurance company's articles ofincorporation.
(c) Each policyholder of a farm mutual insurance company isentitled to one (1) vote on any issue voted upon at a policyholdermeeting.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-11
Board of directors
Sec. 11. (a) A farm mutual insurance company shall elect a boardof directors consisting of at least five (5) policyholders.
(b) To be elected to the board of directors of a farm mutualinsurance company, an individual must be the owner of an insurancepolicy issued by the farm mutual insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-12
Election of director; term of office; election of officers; annualboard meeting
Sec. 12. (a) Unless a farm mutual insurance company's articles ofincorporation specify otherwise, a director of a farm mutualinsurance company must be elected at the farm mutual insurancecompany's annual policyholder meeting by the affirmative vote of amajority of:
(1) the policyholders present and voting; and
(2) the policyholders voting by proxy, if voting by proxy isallowed by the farm mutual insurance company's articles ofincorporation.
(b) The term of office of a director must be at least one (1) yearbut not more than five (5) years. A farm mutual insurance company'sarticles of incorporation may provide for the classification ofdirectors into three (3) groups, and the terms of the directors may bestaggered. A vacancy on the board of directors may be filled for theunexpired term through an appointment made by the remainingdirectors.
(c) The board of directors of a farm mutual insurance companyshall, by vote of a majority of the directors, elect the officersdesignated in the farm mutual insurance company's bylaws. Thedirectors may also elect any additional officers that the directorsdetermine are necessary. An officer elected under this subsection isnot required to be a director.
(d) The term of an officer elected under subsection (c) may not beless than one (1) year or more than three (3) years. An outgoingofficer shall hold office until the officer's successor is either electedor selected and qualified.
(e) The board of directors of a farm mutual insurance companyshall hold a separate meeting of the board of directors immediatelyafter the farm mutual insurance company's annual meeting.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-13
Articles of incorporation; amendment
Sec. 13. (a) Unless a farm mutual insurance company's articles ofincorporation specify otherwise, the articles of incorporation of afarm mutual insurance company may be amended by an affirmativevote of two-thirds (2/3) of the farm mutual insurance company'spolicyholders who are voting in person or by proxy at any
policyholder meeting if the policyholders are given at least thirty(30) days notice of:
(1) the meeting; and
(2) the subject matter of the proposed amendments.
(b) After a farm mutual insurance company has adopted anamendment to the farm mutual insurance company's articles ofincorporation, three (3) copies of the amendment must be filed withthe commissioner.
(c) The commissioner shall determine whether to approve anamendment specified under subsection (b) and, if the amendment isapproved, shall return a copy of the filed amendment and a certificateof approval to the farm mutual insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-14
Bylaws; amendment
Sec. 14. (a) Bylaws of a farm mutual insurance company may beamended by the farm mutual insurance company in accordance withthe farm mutual insurance company's articles of incorporation. Allamendments to the bylaws must be filed with the commissioner.
(b) Bylaws of a farm mutual insurance company may not beinconsistent with this article, other applicable laws, or the farmmutual insurance company's articles of incorporation.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-15
Commissioner filing fee
Sec. 15. The commissioner may charge a farm mutual insurancecompany a reasonable fee, as provided in IC 27-1-3-15, for a filingunder this article.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-16
Form and rate filing file and use; commissioner disapproval;judicial review
Sec. 16. (a) A farm mutual insurance company may not deliver orissue for delivery an insurance policy or an endorsement or a rider toan insurance policy until a copy of the form and the rates charged forthe insurance policy are filed with the commissioner.
(b) A farm mutual insurance company may use any form or ratefiled with the commissioner unless the commissioner notifies thefarm mutual insurance company in writing that the form isdisapproved not more than thirty (30) days after the commissioner'sreceipt of the rate or form filing. The commissioner may disapprovea rate or form for the following reasons:
(1) An inconsistency with this article or another applicable statelaw.
(2) A provision that is:
(A) deceptive;
(B) ambiguous; or (C) misleading.
(c) If the commissioner disapproves a rate or form under thissection, the commissioner shall notify the farm mutual insurancecompany of the reason that the rate or form was disapproved. Thefarm mutual insurance company may request a hearing before thecommissioner under IC 4-21.5 concerning the disapproval.
(d) A farm mutual insurance company may seek judicial reviewunder IC 4-21.5-5 of the commissioner's final disapproval of a rateor form under this section.
(e) The commissioner may charge a farm mutual insurancecompany a reasonable fee as provided in IC 27-1-3-15 for the filingof a rate or form.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-17
Commissioner examination
Sec. 17. (a) The commissioner may examine the affairs of a farmmutual insurance company under IC 27-1-3.1.
(b) The commissioner may take an action that may protect apolicyholder's interest if the commissioner determines that a farmmutual insurance company conducts business in a manner that is:
(1) contrary to law applying to a farm mutual insurancecompany; or
(2) detrimental to policyholder interests.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-18
Unsafe business practice; insufficient assets; commissioner notice;remedies; court proceedings; injunction; liquidation
Sec. 18. (a) If the commissioner determines from:
(1) a statement filed by a farm mutual insurance company;
(2) an examination under section 17 of this chapter; or
(3) other information obtained by the commissioner;
that a farm mutual insurance company is conducting business in anunsafe manner or that a farm mutual insurance company's assets areinsufficient to justify continuing the business, the commissioner shallsend written notice of the commissioner's concerns regarding thefarm mutual insurance company to the officers and directors of thefarm mutual insurance company.
(b) Not more than thirty (30) days after receiving a notice undersubsection (a), the farm mutual insurance company's officers anddirectors shall:
(1) remedy; or
(2) establish a plan to remedy;
the commissioner's concerns.
(c) If:
(1) a farm mutual insurance company does not remedy orestablish a plan to remedy the commissioner's concerns undersubsection (b); or
(2) the commissioner determines that the continuation of a farm
mutual insurance company is not in the best interests of thefarm mutual insurance company's policyholders;
the commissioner shall institute proceedings in the Marion Countycircuit court to enjoin the farm mutual insurance company fromconducting any further business transactions.
(d) If the commissioner seeks a permanent injunction against afarm mutual insurance company under subsection (c), thecommissioner shall also institute proceedings to settle and wind upthe affairs of the farm mutual insurance company and liquidate anddissolve the farm mutual insurance company, as provided in IC 27-9.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-19
Application for coverage; policyholder status
Sec. 19. (a) A person, including a person described in subsection(b), that has a risk that is insurable under this article in a territory inwhich a farm mutual insurance company operates may apply forinsurance coverage with the farm mutual insurance company. If thefarm mutual insurance company accepts the person as a policyholder,the person becomes a policyholder of the farm mutual insurancecompany and is entitled to all the rights and privileges of apolicyholder.
(b) Any of the following that own property within the territory ofa farm mutual insurance company may apply for insurance, enter intoan agreement for an insurance policy, and hold an insurance policyissued by a farm mutual insurance company:
(1) A corporation.
(2) An estate.
(3) An association.
(c) An officer, a trustee, a board member, or a legal representativeof an entity described in subsection (b) may be recognized as actingfor or on behalf of the entity for the purpose of membership.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-20
Insurance producers
Sec. 20. A person that solicits or negotiates insurance on behalfof a farm mutual insurance company must be licensed as aninsurance producer under IC 27-1-15.6.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-21
Merger; plan; policyholder notice
Sec. 21. (a) Two (2) or more farm mutual insurance companiesmay merge into one (1) farm mutual insurance company uponapproval of a merger plan by the policyholders of each farm mutualinsurance company as provided in subsection (b).
(b) Before a merger described in subsection (a) may take place:
(1) the board of directors of each farm mutual insurancecompany must approve a merger plan; and (2) the merger plan must be approved by the affirmative vote oftwo-thirds (2/3) of the policyholders of each farm mutualinsurance company who vote in person or by proxy.
(c) Before a meeting at which a proposed merger under thissection may be considered:
(1) the policyholders of a farm mutual insurance company forwhich the merger is proposed must be provided, by first classmail:
(A) written notice of the date, time, and location of themeeting;
(B) written notice that a proposed merger will be discussedand voted on at the meeting; and
(C) a copy or summary of the merger plan; and
(2) a general notice stating:
(A) the date, time, and location of the meeting; and
(B) that a proposed merger or transfer will be discussed andvoted on at the meeting;
must be published in a newspaper of general circulation in thecounty in which the principal office of the farm mutualinsurance company is located.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-22
Merger files; commissioner review; notice and hearing; approval;modification; experts; costs
Sec. 22. (a) Each farm mutual insurance company that decides tomerge under section 21 of this chapter shall file the followingdocuments with the commissioner:
(1) A petition for merger.
(2) The farm mutual insurance company's merger plan.
(3) Articles of merger.
(4) A copy of the minutes of a meeting at which the merger planwas approved.
(5) Proof of compliance with section 21 of this chapter.
(b) The commissioner shall:
(1) review a filing submitted under subsection (a); and
(2) schedule a hearing under IC 4-21.5 if the commissionerconsiders a hearing necessary.
The commissioner may waive a hearing under this subsection if thecommissioner determines that a proposed merger does not prejudicethe interests of policyholders of the farm mutual insurance company.
(c) If the commissioner determines under subsection (b) that ahearing is necessary, the commissioner shall provide written noticeof the hearing to the farm mutual insurance company that filed thepetition for merger. The commissioner may require the farm mutualinsurance company to provide the farm mutual insurance company'spolicyholders with written notice of the hearing, including the date,time, and place of the hearing.
(d) If the commissioner requires a farm mutual insurancecompany to provide the farm mutual insurance company's
policyholders with notice of a hearing under subsection (c), thenotice must meet the following requirements:
(1) Be published in at least two (2) daily newspapers that thecommissioner may designate.
(2) Be published in the newspapers designated undersubdivision (1):
(A) not less than one (1) time per week;
(B) for two (2) successive weeks; and
(C) on the same day of the week.
(3) The last publication of notice must appear not more thanfive (5) calendar days before the date of the hearing.
(e) The commissioner may require a farm mutual insurancecompany to provide more notice than is required by subsection (d)if the commissioner determines that more notice is required under thecircumstances concerning the farm mutual insurance company.
(f) In a hearing conducted under this section, the commissionermay examine a farm mutual insurance company's business affairs by:
(1) requiring and compelling the production of documents,records, books, papers, contracts, or other evidence; and
(2) compelling the attendance of, and examining under oath, adirector, an officer, an agent, an employee, a solicitor, or anattorney of the farm mutual insurance company, or anotherperson.
(g) A person who has an interest in a hearing conducted under thissection may appear and testify at the hearing.
(h) The commissioner shall approve and authorize a proposedmerger if the commissioner determines the following:
(1) That the interests of policyholders of the merging farmmutual insurance companies are properly protected.
(2) That a reasonable objection to the proposed merger does notexist.
(i) The commissioner may order a modification of the merger planor articles of merger for a proposed merger if the commissionerdetermines that the modification is in the best interest ofpolicyholders.
(j) The commissioner may hire experts the commissionerconsiders necessary to review a merger plan filed under this section.
(k) A farm mutual insurance company that files a petition formerger shall pay the costs of a hearing under this section.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-23
Merger plan performance; surviving company
Sec. 23. (a) The commissioner may establish the time frame inwhich a farm mutual insurance company must perform the terms ofa merger plan approved under section 22 of this chapter.
(b) After a farm mutual insurance company that is a party to amerger under sections 21 and 22 of this chapter performs the termsof the merger plan, the surviving farm mutual insurance companyshall file with the commissioner written notice of the surviving farm
mutual insurance company's compliance with the merger plan.
(c) The commissioner shall determine whether the terms of amerger plan are performed adequately by a farm mutual insurancecompany that is a party to a merger under sections 21 and 22 of thischapter. If the commissioner determines that the terms of the mergerplan are met, the commissioner shall issue a certificate of merger tothe surviving farm mutual insurance company.
(d) The commissioner may charge a farm mutual insurancecompany the fee set forth in IC 27-1-3-15 for a filing made under thissection.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-24
Certificate of merger
Sec. 24. Upon the commissioner's issuance of a certificate ofmerger under section 23 of this chapter, the farm mutual insurancecompanies that are parties to the merger plan become a singlesurviving farm mutual insurance company. The separate existence ofeach farm mutual insurance company that is a party to the mergerplan ceases upon the issuance of the certificate of merger.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-25
Notice of contract to manage or control; commissionerdetermination; managing general agent
Sec. 25. (a) A person that intends to enter into a contract for theexclusive or dominant right to manage or control a farm mutualinsurance company shall file notice of the contract with thecommissioner at least thirty (30) days before entering into thecontract.
(b) The commissioner may approve a contract or proposedcontract described in subsection (a) only if the contract is notdetrimental to:
(1) the policyholders of the farm mutual insurance company; or
(2) the public.
(c) If the commissioner disapproves a contract or proposedcontract described in subsection (a), the commissioner shall providewritten notice of the disapproval to the parties to the contract. Aperson that entered into a contract described in subsection (a) maynot manage or control the farm mutual insurance company under thecontract after receiving notice of the commissioner's disapproval ofthe contract.
(d) A person that enters into a contract for the exclusive ordominant right to manage or control a farm mutual insurancecompany is the managing general agent (as defined in IC 27-1-33-4)of the farm mutual insurance company and shall comply with therequirements that apply to a managing general agent under IC 27.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-26 Violations of law; commissioner orders
Sec. 26. If the commissioner determines, after notice and ahearing under IC 4-21.5, that a farm mutual insurance company hasviolated a provision of this article or a rule or order issued under thisarticle, the commissioner may issue an order requiring the farmmutual insurance company to refrain from the unlawful practice orto take an affirmative action that the commissioner considersnecessary to carry out the purposes of this article.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-27
Judicial review
Sec. 27. (a) A decision, a determination, or an order of thecommissioner under section 26 of this chapter is subject to judicialreview under IC 4-21.5-5.
(b) If a farm mutual insurance company does not seek judicialreview of the commissioner's determination to issue an order undersection 26 of this chapter less than thirty (30) days after thecommissioner notifies the farm mutual insurance company of thecommissioner's determination, the order is final.
(c) If a farm mutual insurance company seeks judicial review ofthe commissioner's determination under section 26 of this chapterand the commissioner's determination is upheld, the order is final.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-28
Willful violation; penalties
Sec. 28. If a farm mutual insurance company willfully violates aprovision of an order under section 26 of this chapter, thecommissioner may do the following:
(1) Impose a civil penalty on the farm mutual insurancecompany of not more than ten thousand dollars ($10,000).
(2) Suspend or revoke the farm mutual insurance company'scertificate of authority.
(3) Institute proceedings to enjoin the farm mutual insurancecompany from conducting further business.
(4) Institute proceedings to wind up the affairs of the farmmutual insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-29
Notice of intent to waive term of policy, right, or defense
Sec. 29. (a) A farm mutual insurance company may not waive:
(1) a term of an insurance policy; or
(2) a right or defense of the farm mutual insurance company;
unless the farm mutual insurance company states in a letter or otherwritten or printed document to a policyholder that the farm mutualinsurance company intends to specifically waive the term, right, ordefense.
(b) A letter or other written or printed document required under
subsection (a) must include the signature of an officer or otherrepresentative of the farm mutual insurance company who isauthorized to execute the particular type of waiver.
(c) A letter or other written or printed document under this sectionis the only admissible evidence of a waiver by the farm mutualinsurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-30
Premium plus assessment basis; policyholder liability
Sec. 30. (a) A policyholder of a farm mutual insurance companyoperating on a premium plus assessment basis under this article isliable for the policyholder's share of the amount necessary to:
(1) pay the losses and necessary expenses incurred by the farmmutual insurance company; and
(2) maintain an adequate reserve or safety fund as determinedby the farm mutual insurance company's directors;
while the policyholder's insurance policy is in effect.
(b) Notwithstanding subsection (a), a farm mutual insurancecompany shall limit a policyholder's contingent liability during anyone (1) year to an amount not to exceed the limitation set forth in thefarm mutual insurance company's bylaws. The limitation set forth inthe farm mutual insurance company's bylaws under this subsectionmust be an amount equal to not less than three percent (3%) of theinsurance carried by the policyholder.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-31
Assessment collection; verification of loss
Sec. 31. (a) A farm mutual insurance company shall collect anassessment from a policyholder in the manner prescribed by the farmmutual insurance company's bylaws.
(b) After a farm mutual insurance company that operates on apremium plus assessment basis receives:
(1) notice of a loss or damage to a policyholder's property; or
(2) a judgment against the farm mutual insurance company;
the directors of the farm mutual insurance company shall verify theloss, damage, or judgment and shall, subject to the limitation setforth in the farm mutual insurance company's bylaws under section30 of this chapter, assess each policyholder an amount proportionateto the amount of risk the policyholder has with the farm mutualinsurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-32
Policyholder failure to pay assessment
Sec. 32. (a) If a policyholder is assessed and fails to pay theassessment, the farm mutual insurance company may, upon providingwritten notice of failure to pay:
(1) suspend the farm mutual insurance company's liability for
loss under the policyholder's insurance policy for the timeduring which the assessment is not paid; or
(2) cancel the policyholder's insurance policy if the assessmentis not paid less than thirty (30) days after notice of theassessment is sent to the policyholder.
The farm mutual insurance company may deduct the assessmentfrom the policyholder's deposit before returning the remainder of adeposit, if any, to the policyholder.
(b) If an assessment is paid by a policyholder after a farm mutualinsurance company takes an action under subsection (a), the farmmutual insurance company may reinstate the policyholder's insurancepolicy effective beginning on the date on which the payment isreceived, but a deduction or credit may not be made to an assessmentbecause of the suspension of the insurance policy.
(c) A farm mutual insurance company may file an action tocompel a policyholder to pay an assessment.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-33
Policyholder liability after policy termination
Sec. 33. (a) A policyholder is not liable for an assessment oflosses or expenses that are incurred by a farm mutual insurancecompany after the policyholder has terminated the policyholder'sinsurance policy.
(b) A former policyholder is not liable for an assessment forobligations incurred by a farm mutual insurance company before thepolicyholder terminated the insurance policy on which theassessment is made unless the farm mutual insurance company givesthe former policyholder notice of the assessment less than one (1)year after the date of termination of the insurance policy.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-34
Notice of premium plus assessment policy; civil actions; limitation
Sec. 34. (a) A premium plus assessment insurance policy mustexpressly and prominently state on the face page of the insurancepolicy that the insurance policy is a premium plus assessmentinsurance policy.
(b) A suit or action for a loss under a premium plus assessmentinsurance policy may not be commenced until:
(1) the loss is due in accordance with the premium plusassessment insurance policy; or
(2) not less than sixty (60) days after proof of loss was given tothe farm mutual insurance company that issued the premiumplus assessment insurance policy.
(c) Requirements that a policyholder must meet to sustain a legalcause of action under this section must be disclosed clearly andprominently on the face page of the premium plus assessmentinsurance policy.
(d) Notwithstanding IC 34-11-2-11, the statute of limitations for
a claim on a premium plus assessment insurance policy under thissection is two (2) years after the date of the loss.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-35
Payment of losses and judgments; insufficient funds; assessments
Sec. 35. (a) A farm mutual insurance company that operates on apremium plus assessment basis must pay losses and judgments of thefarm mutual insurance company from premiums received or amountscollected on promissory notes. The amount:
(1) deducted from a policyholder's premium paid; or
(2) demanded from a policyholder's promissory note;
must bear the same relationship to the total loss as the policyholder'stotal premium bears to the total premiums collected in the calendaryear that the loss is incurred.
(b) If funds collected under subsection (a) are insufficient to covera loss or judgment, the directors of the farm mutual insurancecompany may, subject to the limitation set forth in the farm mutualinsurance company's bylaws under section 30 of this chapter, assesseach policyholder in the same manner. However, a farm mutualinsurance company may not assess policyholders more than one (1)time in a calendar year for losses incurred by the farm mutualinsurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-36
Borrowing funds; assessment
Sec. 36. (a) A farm mutual insurance company may borrow moneyfor the payment of accrued losses and expenses.
(b) A farm mutual insurance company that borrows money undersubsection (a) shall assess policyholders the full amount necessaryto fully repay the loan in the assessment immediately following thedate the money is borrowed. Unless the commissioner authorizes alonger period, the assessment must be levied not more than twelve(12) months after the losses or expenses paid by the farm mutualinsurance company through the loan are incurred.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-37
Policy cancellation; notice
Sec. 37. (a) A farm mutual insurance company may cancel, inwhole or in part, a policyholder's insurance policy after giving thepolicyholder written notice of the cancellation as follows:
(1) The written notice must be delivered or mailed to thepolicyholder at the last known address of the policyholder.
(2) The written notice must specify the effective date of thecancellation.
(3) Upon request of the policyholder, the written notice must beaccompanied by a written explanation of the specific reasonsfor the cancellation. (b) A farm mutual insurance company shall provide the writtennotice specified in subsection (a) at least:
(1) ten (10) days before canceling the insurance policy, if thecancellation is for nonpayment of premium;
(2) twenty (20) days before canceling the insurance policy, ifthe cancellation occurs more than sixty (60) days after the dateof issuance of the policy; and
(3) ten (10) days before canceling the insurance policy, if thecancellation occurs less than sixty-one (61) days after the dateof issuance of the policy.
(c) If the insurance policy was procured by an independentinsurance producer licensed in Indiana, the farm mutual insurancecompany shall deliver or mail notice of cancellation to the insuranceproducer not less than ten (10) days before the farm mutual insurancecompany delivers or mails the notice to the policyholder, unless theobligation to notify the insurance producer is waived in writing bythe insurance producer.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-38
Discontinuation of company
Sec. 38. A farm mutual insurance company may vote todiscontinue operations and settle its affairs under IC 27-1-10.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-39
Misconduct; Class C felony
Sec. 39. A director, an officer, a member, an insurance producer,or an employee of a farm mutual insurance company who knowinglyor intentionally, directly or indirectly, uses or employs, or allowsanother person to use or employ, money, funds, securities, or assetsof the farm mutual insurance company for private profit or gaincommits a Class C felony.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-40
Investment gain; policyholder surplus
Sec. 40. This article does not prohibit a farm mutual insurancecompany from doing the following:
(1) Distributing underwriting or investment gain topolicyholders of a farm mutual insurance company.
(2) Accumulating a reasonable policyholder surplus for thepayment of losses or other expenses.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-41
Election to be subject to Indiana insurance law
Sec. 41. (a) A farm mutual insurance company may elect to besubject to the provisions of IC 27-1, as provided by IC 27-1-11-1,with the rights, privileges, and franchises provided under IC 27-1. (b) An election under subsection (a) becomes effective on the dateof issuance of a new certificate of authority under IC 27-1-11-7.
(c) An insurance policy that is:
(1) issued or bound by a farm mutual insurance company thatmakes an election under subsection (a); and
(2) in effect on the date the election becomes effective;
is not invalidated by IC 27-1, but remains in full force and effectuntil expiration or termination of the insurance policy. However,IC 27-1 applies to an insurance policy described in this subsectionbeginning three (3) years after the date the election becomeseffective.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-42
Exemption from regulation
Sec. 42. A company or association organized before January 1,1870, that provides the kind of insurance described in this article andhas not made an election under IC 27-5-1-14 (before its repeal) is notsubject to this article unless the company or association elects toconduct the company's or association's business under this article bya resolution:
(1) adopted by the company's or association's board of directorsor policyholders;
(2) filed with the commissioner; and
(3) approved by the commissioner.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-43
Administrative rules
Sec. 43. The commissioner may adopt rules under IC 4-22-2 toimplement this article.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-44
Validity of rate or form filed under prior law
Sec. 44. A rate or form filed by a farm mutual insurance companybefore July 1, 2003, is valid and remains in effect notwithstandingthe repeal of IC 27-5 and the addition of this article.
As added by P.L.16-2009, SEC.28.