CHAPTER 6. INTERINSURANCE
IC 27-6-6
Chapter 6. Interinsurance
IC 27-6-6-1
Subscribers; authority to exchange reciprocal or interinsurancecontracts; title insurance exception
Sec. 1. Individuals, partnerships, limited liability companies, andcorporations of this state, hereby designated "subscribers," arehereby authorized to exchange reciprocal or interinsurance contractswith each other or with individuals, partnerships, limited liabilitycompanies, and corporations of other states and countries, providingindemnity among themselves from any loss which may be insuredagainst under the fire or casualty classifications as authorized by theinsurance laws of this state, except title insurance.
(Formerly: Acts 1919, c.102, s.1; Acts 1967, c.232, s.1.) As amendedby P.L.8-1993, SEC.421.
IC 27-6-6-2
Execution of contracts; attorneys; location of office of attorney
Sec. 2. Such contracts may be executed by an attorney, agent orother representative, herein designated "attorney," duly authorizedand acting for such subscribers. The office or offices of such attorneymay be maintained at such place or places as may be designated bythe subscribers in the power of attorney.
(Formerly: Acts 1919, c.102, s.2.)
IC 27-6-6-3
Declaration of subscribers
Sec. 3. Such subscribers so contracting among themselves shall,through their attorney, file with the insurance department adeclaration verified by the oath of such attorney, or where suchattorney is a corporation, by the oath of a chief officer thereof,setting forth the following:
(a) The name or title adopted by such subscribers proposing toexchange such indemnity contracts. Such name or title shall notbe so similar to any other name or title previously adopted by asimilar organization or by any insurance corporation orassociation as in the opinion of the insurance department islikely to result in confusion or deception.
(b) The kind or kinds of insurance to be effected or exchanged.
(c) A copy of the form of policy contract or agreement under orby which such insurance is to be effected or exchanged.
(d) A copy of the form of power of attorney or other authorityof such attorney under which such insurance is to be effected orexchanged; provided, that a copy of any amendment to orsubstitution of such form shall be filed with the insurancedepartment prior to its use.
(e) The location of the office or offices from which suchcontracts or agreements are to be issued.
(f) That applications have been made for indemnity upon at
least one hundred (100) separate risks aggregating not less thanone and one-half million dollars ($1,500,000) as represented byexecuted contracts or bona fide applications to becomeconcurrently effective in the case of fire insurance, and in thecase of automobile insurance, executed contracts or bona fideapplications for indemnity upon two hundred and fifty (250)separate risks aggregating not less than one and one-half milliondollars ($1,500,000) or any or all classes of automobileinsurance effected by said subscriber through said attorney.
(g) That there is in the possession of such attorney and availablefor the payment of losses, assets conforming to the requirementsof section 6 of this chapter.
(h) A financial statement under oath in form prescribed for theannual statement.
(i) The instrument authorizing service of process as providedfor in this chapter.
(Formerly: Acts 1919, c.102, s.3; Acts 1963, c.315, s.1; Acts 1967,c.232, s.2.) As amended by P.L.252-1985, SEC.217.
IC 27-6-6-4
Instrument authorizing service of process on subscriber's agent;procedure for service
Sec. 4. (a) Concurrently with the filing of the declaration providedfor by the terms of section 3 of this chapter, the attorney (as definedin section 2 of this chapter) shall file with the department ofinsurance, state of Indiana, an instrument in writing, executed by himfor said subscribers, conditioned that, upon the issuance of acertificate of authority provided for in section 9 of this chapter,service of process may be had upon the individual resident ofIndiana, corporate resident of Indiana, or authorized Indiana insurer,appointed by the subscribers as the subscribers' agent for service ofprocess in all suits in this state arising out of such policies, contracts,or agreements, which service shall be valid and binding upon allsubscribers exchanging at any time reciprocal or interinsurancecontracts through such attorney.
(b) Service of process under subsection (a) shall be made bydelivering to the subscribers' agent two (2) copies of process with acomplaint attached.
(c) It shall be the duty of the subscribers' agent, upon service, topromptly send one (1) copy of such summons, by registered letter, tothe attorney specified in subsection (a) and to file the other copy ofsummons in the office of the subscribers' agent.
(Formerly: Acts 1919, c.102, s.4; Acts 1967, c.232, s.3.) As amendedby P.L.252-1985, SEC.218; P.L.130-1994, SEC.40; P.L.116-1994,SEC.52; P.L.268-1999, SEC.15.
IC 27-6-6-5
Statement of maximum amount of single fire insurance risk;limitation on amount assumed
Sec. 5. There shall be filed with the department of insurance, state
of Indiana, by such attorney, whenever the department of insuranceshall so require, a statement under oath of such attorney, showing, inthe case of fire or casualty classifications as authorized by theinsurance laws of Indiana, except title insurance, the maximumamount of indemnity upon a single risk, and no reciprocal shallassume on any single fire or casualty classifications as authorized bythe insurance laws of Indiana, except title insurance, risk in anamount greater than ten percent (10%) of the net worth of thereciprocal.
(Formerly: Acts 1919, c.102, s.5; Acts 1967, c.232, s.4.) As amendedby P.L.116-1994, SEC.53; P.L.255-1995, SEC.6.
IC 27-6-6-6
Assets and reserves
Sec. 6. There shall at all times be maintained as assets a sum incash or securities of the kind designated by the laws of the statewhere the principal office is located for the investment of funds ofinsurance companies, doing the same kinds of business, amountingto fifty per cent (50%) of the net annual deposits, collected, andcredited to the accounts of subscribers on policies having one (1)year or less to run and pro rata on those for longer periods; inaddition to which there shall be maintained in cash or such securitiesassets sufficient to discharge all liabilities on all outstanding lossesarising under policies issued, same to be calculated on the basis ofnet premiums or deposits as in this section defined and in accordancewith the laws of the state relating to similar reserves for companiesinsuring similar risks. For the purpose of computing said reservesand assets, net deposits shall be construed to mean the payments ofsubscribers collected or in the course of collection after deductingtherefrom the amounts provided in the subscribers' agreement forexpenses except payments or credits to the attorney-in-fact. If at anytime the assets so held in cash or such securities shall be less thanrequired above, or be less than three hundred thousand dollars($300,000), the subscribers or their attorney for them shall make upthe deficiency within thirty (30) days after notice from thedepartment of insurance so to do: Provided, however, That as toreciprocal or interinsurance exchanges now licensed and authorizedto do business in Indiana, the alternative minimum of cash orsecurities required to be held shall be one hundred thousand dollars($100,000).
(Formerly: Acts 1919, c.102, s.6; Acts 1963, c.315, s.2; Acts 1967,c.232, s.5.)
IC 27-6-6-7
Annual financial report; examination; acceptance of examinationof another state
Sec. 7. Such attorney shall, within the time limited for filing theannual statement by insurance companies transacting the same kindof business, make a report under oath to the insurance department foreach calendar year showing the financial condition of affairs at the
office where such contracts are issued and shall furnish suchadditional information and reports as may be required. The businessaffairs, records, and assets of any such organization shall be subjectto examination by the insurance department at any reasonable time,and such examination shall be at the expense of the organizationexamined. Where the principal office of the attorney is located inanother state, the insurance department may in lieu of theexamination provided for in this section, accept a certified copy ofthe report of examination made by the insurance department of thestate where the principal office is located.
(Formerly: Acts 1919, c.102, s.7; Acts 1963, c.315, s.3; Acts 1967,c.232, s.6.)
IC 27-6-6-8
Right of domestic corporation to exchange contracts
Sec. 8. Any corporation now or hereafter organized under the lawsof this state, shall, in addition to the rights, powers and franchisesspecified in its articles of incorporation, have full power andauthority, as a subscriber, to exchange insurance contracts of the kindand character herein mentioned. The right to exchange such contractsis hereby declared to be incidental to the purposes for which suchcorporations are organized and as much granted as the rights andpowers expressly conferred.
(Formerly: Acts 1919, c.102, s.8.)
IC 27-6-6-9
Certificate of authority
Sec. 9. Upon compliance with the requirements of this chapter,the insurance department shall issue a certificate of authority or alicense to the attorney authorizing him to make such contracts ofinsurance and shall contain the name of the attorney, the location ofthe principal office, and the name or the designation under whichsuch contracts of insurance are issued. Such license shall be renewedannually, upon a showing that the standard of solvency required inthis section has been maintained and all fees and taxes required havebeen paid; provided, no certificate of authority shall be issued underthis section unless and until the subscribers and the attorney shallhave complied with the same character and fitness qualifications,plan of operation, and standards for officers and directors as isrequired of stock and mutual insurance companies under this title.
(Formerly: Acts 1919, c.102, s.9; Acts 1967, c.232, s.7.) As amendedby P.L.252-1985, SEC.219.
IC 27-6-6-10
Violations
Sec. 10. An attorney who exchanges a contract of insurance of thekind and character specified in this chapter, or solicits or negotiatesany application for such a contract, without complying with thischapter, commits a Class C infraction. For the purpose oforganization and upon issuance of permit by the insurance
department, powers of attorney and applications for such contractsmay be solicited without compliance with this chapter, but a personmay not make or issue any such contracts until this chapter iscomplied with.
(Formerly: Acts 1919, c.102, s.10; Acts 1967, c.232, s.8.) Asamended by Acts 1978, P.L.2, SEC.2722.
IC 27-6-6-11
Refusal, suspension, or revocation of certificate of authority
Sec. 11. In addition to the penalties in section 10 of this chapterand where not otherwise provided, the penalty for failure or refusalto comply with any or all of the terms and provisions of this chapter,upon the part of the attorney, shall be the refusal, suspension, orrevocation of certificate of authority or license by the insurancedepartment, after due notice and opportunity for hearing has beengiven such attorney, so that he may appear and show cause why suchaction should not be taken.
(Formerly: Acts 1919, c.102, s.11; Acts 1967, c.232, s.9.) Asamended by P.L.252-1985, SEC.220.
IC 27-6-6-12
Taxation
Sec. 12. In lieu of all other taxes, licenses or fees, state or local,such attorney shall pay annually, on account of the transaction ofsuch business in this state, the same taxes, licenses and fees as arerequired to be paid by mutual insurance companies with principaloffice similarly located and transacting the same kind of business. Inthe application of the retaliatory law, the taxes and fees exacted byanother state from an exchange with principal office in Indiana shallapply.
(Formerly: Acts 1919, c.102, s.12.)
IC 27-6-6-13
Terms inserted in policy; conformity to state law
Sec. 13. The attorney may insert in any form of policy prescribedby the laws of this state any provisions or conditions required by theplan of reciprocal or interinsurance, Provided That same shall not beinconsistent with or in conflict with the law of this state. Such policyin lieu of conforming to the language and form prescribed by suchlaw, shall be held to conform thereto in substance if such policyincludes a provision or endorsement reciting that the policy shall beconstrued as if in the language and form prescribed by such law. Anysuch endorsement shall first be filed with the insurance department.
(Formerly: Acts 1919, c.102, s.13; Acts 1967, c.232, s.10.)
IC 27-6-6-14
Application of state insurance law
Sec. 14. Except as herein provided, no law of this state relating toinsurance shall apply to the exchange of indemnity contractsdescribed herein, unless they are specifically mentioned therein.(Formerly: Acts 1919, c.102, s.14.)
IC 27-6-6-15
Loans or advances; purposes; repayment; approval; interest rate;restrictions
Sec. 15. The attorney for the subscribers at a reciprocal orinterinsurance exchange organized under this law may on behalf ofthe subscribers borrow or assume a loan or advance for therepayment of a sum of money sufficient to defray the reasonableexpenses in the establishment of such an exchange or to enable theattorney for the subscribers at the exchange to comply with anyrequirement of the law or as a guarantee fund upon agreement. Theborrowing or assumption shall first be submitted to and approved bythe department, and shall be repaid only out of the surplus, earningsor profits at the exchange with the approval of the department. Thedepartment shall withhold its approval of any repayment wheneverin its judgment the financial condition of the attorney for thesubscribers at such exchange shall warrant, but shall not withhold itsapproval if after the repayment the attorney-in-fact for subscribers atthe exchange shall have and be in possession of a surplus equal to tenpercent (10%) or more of the gross annual premium of thesubscribers. Any such loan or advance shall not form a part of thelegal liabilities of the attorney for the subscribers at the exchange butuntil repaid, all statements published by the attorney for thesubscribers or filed with the department, shall show the amountthereof then remaining unpaid. However, this section shall not beconstrued as an extension of the liability of any subscriber beyondthat expressly provided for in the subscribers' agreement or power ofattorney. The per annum interest rate on any loan or advance shallnot exceed three-quarters of one percent (.75%) above the prevailingprime bank rate charged by national banks and banks chartered bythe state of Indiana with their principal offices in Indiana, or tenpercent (10%), whichever is less. The department shall establish theprevailing prime bank rate for each calendar quarter equal to this ratefor the first working day of the subsequent calendar quarter. Theprime bank rate for any bank on a given day is the rate of interest itcharges on unsecured loans made that day to its most credit-worthycustomers. In establishing the prevailing prime bank rate thedepartment may use the prime bank rate charged by the fifteen (15)largest banks with their principal offices in Indiana, or such othernumber as the department deems adequate. The total amount ofinterest shall be calculated on a three hundred sixty (360) day basis.
(Formerly: Acts 1919, c.102, s.14a; Acts 1967, c.232, s.11.) Asamended by Acts 1977, P.L.287, SEC.1.