IC 27-6-6-1 Subscribers; authority to exchange reciprocal or interinsurance
contracts; title insurance exception
Sec. 1. Individuals, partnerships, limited liability companies, and
corporations of this state, hereby designated "subscribers," are
hereby authorized to exchange reciprocal or interinsurance contracts
with each other or with individuals, partnerships, limited liability
companies, and corporations of other states and countries, providing
indemnity among themselves from any loss which may be insured
against under the fire or casualty classifications as authorized by the
insurance laws of this state, except title insurance. (Formerly: Acts 1919, c.102, s.1; Acts 1967, c.232, s.1.) As amended
by 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 or
other representative, herein designated "attorney," duly authorized
and acting for such subscribers. The office or offices of such attorney
may be maintained at such place or places as may be designated by
the 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 a
declaration verified by the oath of such attorney, or where such
attorney 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 to
exchange such indemnity contracts. Such name or title shall not
be so similar to any other name or title previously adopted by a
similar organization or by any insurance corporation or
association as in the opinion of the insurance department is
likely 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 or
by which such insurance is to be effected or exchanged.
(d) A copy of the form of power of attorney or other authority
of such attorney under which such insurance is to be effected or
exchanged; provided, that a copy of any amendment to or
substitution of such form shall be filed with the insurance
department prior to its use.
(e) The location of the office or offices from which such
contracts 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 than
one and one-half million dollars ($1,500,000) as represented by
executed contracts or bona fide applications to become
concurrently effective in the case of fire insurance, and in the
case of automobile insurance, executed contracts or bona fide
applications for indemnity upon two hundred and fifty (250)
separate risks aggregating not less than one and one-half million
dollars ($1,500,000) or any or all classes of automobile
insurance effected by said subscriber through said attorney.
(g) That there is in the possession of such attorney and available
for the payment of losses, assets conforming to the requirements
of section 6 of this chapter.
(h) A financial statement under oath in form prescribed for the
annual statement.
(i) The instrument authorizing service of process as provided
for 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 provided
for by the terms of section 3 of this chapter, the attorney (as defined
in section 2 of this chapter) shall file with the department of
insurance, state of Indiana, an instrument in writing, executed by him
for said subscribers, conditioned that, upon the issuance of a
certificate of authority provided for in section 9 of this chapter,
service of process may be had upon the individual resident of
Indiana, corporate resident of Indiana, or authorized Indiana insurer,
appointed by the subscribers as the subscribers' agent for service of
process in all suits in this state arising out of such policies, contracts,
or agreements, which service shall be valid and binding upon all
subscribers exchanging at any time reciprocal or interinsurance
contracts through such attorney.
(b) Service of process under subsection (a) shall be made by
delivering to the subscribers' agent two (2) copies of process with a
complaint attached.
(c) It shall be the duty of the subscribers' agent, upon service, to
promptly send one (1) copy of such summons, by registered letter, to
the attorney specified in subsection (a) and to file the other copy of
summons in the office of the subscribers' agent. (Formerly: Acts 1919, c.102, s.4; Acts 1967, c.232, s.3.) As amended
by 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 insurance
shall so require, a statement under oath of such attorney, showing, in
the case of fire or casualty classifications as authorized by the
insurance laws of Indiana, except title insurance, the maximum
amount of indemnity upon a single risk, and no reciprocal shall
assume on any single fire or casualty classifications as authorized by
the insurance laws of Indiana, except title insurance, risk in an
amount greater than ten percent (10%) of the net worth of the
reciprocal. (Formerly: Acts 1919, c.102, s.5; Acts 1967, c.232, s.4.) As amended
by 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 in
cash or securities of the kind designated by the laws of the state
where the principal office is located for the investment of funds of
insurance companies, doing the same kinds of business, amounting
to fifty per cent (50%) of the net annual deposits, collected, and
credited to the accounts of subscribers on policies having one (1)
year or less to run and pro rata on those for longer periods; in
addition to which there shall be maintained in cash or such securities
assets sufficient to discharge all liabilities on all outstanding losses
arising under policies issued, same to be calculated on the basis of
net premiums or deposits as in this section defined and in accordance
with the laws of the state relating to similar reserves for companies
insuring similar risks. For the purpose of computing said reserves
and assets, net deposits shall be construed to mean the payments of
subscribers collected or in the course of collection after deducting
therefrom the amounts provided in the subscribers' agreement for
expenses except payments or credits to the attorney-in-fact. If at any
time the assets so held in cash or such securities shall be less than
required above, or be less than three hundred thousand dollars
($300,000), the subscribers or their attorney for them shall make up
the deficiency within thirty (30) days after notice from the
department of insurance so to do: Provided, however, That as to
reciprocal or interinsurance exchanges now licensed and authorized
to do business in Indiana, the alternative minimum of cash or
securities 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 examination
of another state
Sec. 7. Such attorney shall, within the time limited for filing the
annual statement by insurance companies transacting the same kind
of business, make a report under oath to the insurance department for
each calendar year showing the financial condition of affairs at the
office where such contracts are issued and shall furnish such
additional information and reports as may be required. The business
affairs, records, and assets of any such organization shall be subject
to examination by the insurance department at any reasonable time,
and such examination shall be at the expense of the organization
examined. Where the principal office of the attorney is located in
another state, the insurance department may in lieu of the
examination provided for in this section, accept a certified copy of
the report of examination made by the insurance department of the
state 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 laws
of this state, shall, in addition to the rights, powers and franchises
specified in its articles of incorporation, have full power and
authority, as a subscriber, to exchange insurance contracts of the kind
and character herein mentioned. The right to exchange such contracts
is hereby declared to be incidental to the purposes for which such
corporations are organized and as much granted as the rights and
powers 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 a
license to the attorney authorizing him to make such contracts of
insurance and shall contain the name of the attorney, the location of
the principal office, and the name or the designation under which
such contracts of insurance are issued. Such license shall be renewed
annually, upon a showing that the standard of solvency required in
this section has been maintained and all fees and taxes required have
been paid; provided, no certificate of authority shall be issued under
this section unless and until the subscribers and the attorney shall
have complied with the same character and fitness qualifications,
plan of operation, and standards for officers and directors as is
required of stock and mutual insurance companies under this title. (Formerly: Acts 1919, c.102, s.9; Acts 1967, c.232, s.7.) As amended
by P.L.252-1985, SEC.219.
IC 27-6-6-10 Violations
Sec. 10. An attorney who exchanges a contract of insurance of the
kind and character specified in this chapter, or solicits or negotiates
any application for such a contract, without complying with this
chapter, commits a Class C infraction. For the purpose of
organization and upon issuance of permit by the insurance
department, powers of attorney and applications for such contracts
may be solicited without compliance with this chapter, but a person
may not make or issue any such contracts until this chapter is
complied with. (Formerly: Acts 1919, c.102, s.10; Acts 1967, c.232, s.8.) As
amended 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 chapter
and where not otherwise provided, the penalty for failure or refusal
to comply with any or all of the terms and provisions of this chapter,
upon the part of the attorney, shall be the refusal, suspension, or
revocation of certificate of authority or license by the insurance
department, after due notice and opportunity for hearing has been
given such attorney, so that he may appear and show cause why such
action should not be taken. (Formerly: Acts 1919, c.102, s.11; Acts 1967, c.232, s.9.) As
amended 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 of
such business in this state, the same taxes, licenses and fees as are
required to be paid by mutual insurance companies with principal
office similarly located and transacting the same kind of business. In
the application of the retaliatory law, the taxes and fees exacted by
another state from an exchange with principal office in Indiana shall
apply. (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 prescribed
by the laws of this state any provisions or conditions required by the
plan of reciprocal or interinsurance, Provided That same shall not be
inconsistent with or in conflict with the law of this state. Such policy
in lieu of conforming to the language and form prescribed by such
law, shall be held to conform thereto in substance if such policy
includes a provision or endorsement reciting that the policy shall be
construed as if in the language and form prescribed by such law. Any
such 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 to
insurance shall apply to the exchange of indemnity contracts
described 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 or
interinsurance exchange organized under this law may on behalf of
the subscribers borrow or assume a loan or advance for the
repayment of a sum of money sufficient to defray the reasonable
expenses in the establishment of such an exchange or to enable the
attorney for the subscribers at the exchange to comply with any
requirement of the law or as a guarantee fund upon agreement. The
borrowing or assumption shall first be submitted to and approved by
the department, and shall be repaid only out of the surplus, earnings
or profits at the exchange with the approval of the department. The
department shall withhold its approval of any repayment whenever
in its judgment the financial condition of the attorney for the
subscribers at such exchange shall warrant, but shall not withhold its
approval if after the repayment the attorney-in-fact for subscribers at
the exchange shall have and be in possession of a surplus equal to ten
percent (10%) or more of the gross annual premium of the
subscribers. Any such loan or advance shall not form a part of the
legal liabilities of the attorney for the subscribers at the exchange but
until repaid, all statements published by the attorney for the
subscribers or filed with the department, shall show the amount
thereof then remaining unpaid. However, this section shall not be
construed as an extension of the liability of any subscriber beyond
that expressly provided for in the subscribers' agreement or power of
attorney. The per annum interest rate on any loan or advance shall
not exceed three-quarters of one percent (.75%) above the prevailing
prime bank rate charged by national banks and banks chartered by
the state of Indiana with their principal offices in Indiana, or ten
percent (10%), whichever is less. The department shall establish the
prevailing prime bank rate for each calendar quarter equal to this rate
for the first working day of the subsequent calendar quarter. The
prime bank rate for any bank on a given day is the rate of interest it
charges on unsecured loans made that day to its most credit-worthy
customers. In establishing the prevailing prime bank rate the
department may use the prime bank rate charged by the fifteen (15)
largest banks with their principal offices in Indiana, or such other
number as the department deems adequate. The total amount of
interest shall be calculated on a three hundred sixty (360) day basis. (Formerly: Acts 1919, c.102, s.14a; Acts 1967, c.232, s.11.) As
amended by Acts 1977, P.L.287, SEC.1.
IC 27-6-6-1 Subscribers; authority to exchange reciprocal or interinsurance
contracts; title insurance exception
Sec. 1. Individuals, partnerships, limited liability companies, and
corporations of this state, hereby designated "subscribers," are
hereby authorized to exchange reciprocal or interinsurance contracts
with each other or with individuals, partnerships, limited liability
companies, and corporations of other states and countries, providing
indemnity among themselves from any loss which may be insured
against under the fire or casualty classifications as authorized by the
insurance laws of this state, except title insurance. (Formerly: Acts 1919, c.102, s.1; Acts 1967, c.232, s.1.) As amended
by 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 or
other representative, herein designated "attorney," duly authorized
and acting for such subscribers. The office or offices of such attorney
may be maintained at such place or places as may be designated by
the 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 a
declaration verified by the oath of such attorney, or where such
attorney 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 to
exchange such indemnity contracts. Such name or title shall not
be so similar to any other name or title previously adopted by a
similar organization or by any insurance corporation or
association as in the opinion of the insurance department is
likely 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 or
by which such insurance is to be effected or exchanged.
(d) A copy of the form of power of attorney or other authority
of such attorney under which such insurance is to be effected or
exchanged; provided, that a copy of any amendment to or
substitution of such form shall be filed with the insurance
department prior to its use.
(e) The location of the office or offices from which such
contracts 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 than
one and one-half million dollars ($1,500,000) as represented by
executed contracts or bona fide applications to become
concurrently effective in the case of fire insurance, and in the
case of automobile insurance, executed contracts or bona fide
applications for indemnity upon two hundred and fifty (250)
separate risks aggregating not less than one and one-half million
dollars ($1,500,000) or any or all classes of automobile
insurance effected by said subscriber through said attorney.
(g) That there is in the possession of such attorney and available
for the payment of losses, assets conforming to the requirements
of section 6 of this chapter.
(h) A financial statement under oath in form prescribed for the
annual statement.
(i) The instrument authorizing service of process as provided
for 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 provided
for by the terms of section 3 of this chapter, the attorney (as defined
in section 2 of this chapter) shall file with the department of
insurance, state of Indiana, an instrument in writing, executed by him
for said subscribers, conditioned that, upon the issuance of a
certificate of authority provided for in section 9 of this chapter,
service of process may be had upon the individual resident of
Indiana, corporate resident of Indiana, or authorized Indiana insurer,
appointed by the subscribers as the subscribers' agent for service of
process in all suits in this state arising out of such policies, contracts,
or agreements, which service shall be valid and binding upon all
subscribers exchanging at any time reciprocal or interinsurance
contracts through such attorney.
(b) Service of process under subsection (a) shall be made by
delivering to the subscribers' agent two (2) copies of process with a
complaint attached.
(c) It shall be the duty of the subscribers' agent, upon service, to
promptly send one (1) copy of such summons, by registered letter, to
the attorney specified in subsection (a) and to file the other copy of
summons in the office of the subscribers' agent. (Formerly: Acts 1919, c.102, s.4; Acts 1967, c.232, s.3.) As amended
by 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 insurance
shall so require, a statement under oath of such attorney, showing, in
the case of fire or casualty classifications as authorized by the
insurance laws of Indiana, except title insurance, the maximum
amount of indemnity upon a single risk, and no reciprocal shall
assume on any single fire or casualty classifications as authorized by
the insurance laws of Indiana, except title insurance, risk in an
amount greater than ten percent (10%) of the net worth of the
reciprocal. (Formerly: Acts 1919, c.102, s.5; Acts 1967, c.232, s.4.) As amended
by 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 in
cash or securities of the kind designated by the laws of the state
where the principal office is located for the investment of funds of
insurance companies, doing the same kinds of business, amounting
to fifty per cent (50%) of the net annual deposits, collected, and
credited to the accounts of subscribers on policies having one (1)
year or less to run and pro rata on those for longer periods; in
addition to which there shall be maintained in cash or such securities
assets sufficient to discharge all liabilities on all outstanding losses
arising under policies issued, same to be calculated on the basis of
net premiums or deposits as in this section defined and in accordance
with the laws of the state relating to similar reserves for companies
insuring similar risks. For the purpose of computing said reserves
and assets, net deposits shall be construed to mean the payments of
subscribers collected or in the course of collection after deducting
therefrom the amounts provided in the subscribers' agreement for
expenses except payments or credits to the attorney-in-fact. If at any
time the assets so held in cash or such securities shall be less than
required above, or be less than three hundred thousand dollars
($300,000), the subscribers or their attorney for them shall make up
the deficiency within thirty (30) days after notice from the
department of insurance so to do: Provided, however, That as to
reciprocal or interinsurance exchanges now licensed and authorized
to do business in Indiana, the alternative minimum of cash or
securities 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 examination
of another state
Sec. 7. Such attorney shall, within the time limited for filing the
annual statement by insurance companies transacting the same kind
of business, make a report under oath to the insurance department for
each calendar year showing the financial condition of affairs at the
office where such contracts are issued and shall furnish such
additional information and reports as may be required. The business
affairs, records, and assets of any such organization shall be subject
to examination by the insurance department at any reasonable time,
and such examination shall be at the expense of the organization
examined. Where the principal office of the attorney is located in
another state, the insurance department may in lieu of the
examination provided for in this section, accept a certified copy of
the report of examination made by the insurance department of the
state 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 laws
of this state, shall, in addition to the rights, powers and franchises
specified in its articles of incorporation, have full power and
authority, as a subscriber, to exchange insurance contracts of the kind
and character herein mentioned. The right to exchange such contracts
is hereby declared to be incidental to the purposes for which such
corporations are organized and as much granted as the rights and
powers 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 a
license to the attorney authorizing him to make such contracts of
insurance and shall contain the name of the attorney, the location of
the principal office, and the name or the designation under which
such contracts of insurance are issued. Such license shall be renewed
annually, upon a showing that the standard of solvency required in
this section has been maintained and all fees and taxes required have
been paid; provided, no certificate of authority shall be issued under
this section unless and until the subscribers and the attorney shall
have complied with the same character and fitness qualifications,
plan of operation, and standards for officers and directors as is
required of stock and mutual insurance companies under this title. (Formerly: Acts 1919, c.102, s.9; Acts 1967, c.232, s.7.) As amended
by P.L.252-1985, SEC.219.
IC 27-6-6-10 Violations
Sec. 10. An attorney who exchanges a contract of insurance of the
kind and character specified in this chapter, or solicits or negotiates
any application for such a contract, without complying with this
chapter, commits a Class C infraction. For the purpose of
organization and upon issuance of permit by the insurance
department, powers of attorney and applications for such contracts
may be solicited without compliance with this chapter, but a person
may not make or issue any such contracts until this chapter is
complied with. (Formerly: Acts 1919, c.102, s.10; Acts 1967, c.232, s.8.) As
amended 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 chapter
and where not otherwise provided, the penalty for failure or refusal
to comply with any or all of the terms and provisions of this chapter,
upon the part of the attorney, shall be the refusal, suspension, or
revocation of certificate of authority or license by the insurance
department, after due notice and opportunity for hearing has been
given such attorney, so that he may appear and show cause why such
action should not be taken. (Formerly: Acts 1919, c.102, s.11; Acts 1967, c.232, s.9.) As
amended 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 of
such business in this state, the same taxes, licenses and fees as are
required to be paid by mutual insurance companies with principal
office similarly located and transacting the same kind of business. In
the application of the retaliatory law, the taxes and fees exacted by
another state from an exchange with principal office in Indiana shall
apply. (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 prescribed
by the laws of this state any provisions or conditions required by the
plan of reciprocal or interinsurance, Provided That same shall not be
inconsistent with or in conflict with the law of this state. Such policy
in lieu of conforming to the language and form prescribed by such
law, shall be held to conform thereto in substance if such policy
includes a provision or endorsement reciting that the policy shall be
construed as if in the language and form prescribed by such law. Any
such 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 to
insurance shall apply to the exchange of indemnity contracts
described 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 or
interinsurance exchange organized under this law may on behalf of
the subscribers borrow or assume a loan or advance for the
repayment of a sum of money sufficient to defray the reasonable
expenses in the establishment of such an exchange or to enable the
attorney for the subscribers at the exchange to comply with any
requirement of the law or as a guarantee fund upon agreement. The
borrowing or assumption shall first be submitted to and approved by
the department, and shall be repaid only out of the surplus, earnings
or profits at the exchange with the approval of the department. The
department shall withhold its approval of any repayment whenever
in its judgment the financial condition of the attorney for the
subscribers at such exchange shall warrant, but shall not withhold its
approval if after the repayment the attorney-in-fact for subscribers at
the exchange shall have and be in possession of a surplus equal to ten
percent (10%) or more of the gross annual premium of the
subscribers. Any such loan or advance shall not form a part of the
legal liabilities of the attorney for the subscribers at the exchange but
until repaid, all statements published by the attorney for the
subscribers or filed with the department, shall show the amount
thereof then remaining unpaid. However, this section shall not be
construed as an extension of the liability of any subscriber beyond
that expressly provided for in the subscribers' agreement or power of
attorney. The per annum interest rate on any loan or advance shall
not exceed three-quarters of one percent (.75%) above the prevailing
prime bank rate charged by national banks and banks chartered by
the state of Indiana with their principal offices in Indiana, or ten
percent (10%), whichever is less. The department shall establish the
prevailing prime bank rate for each calendar quarter equal to this rate
for the first working day of the subsequent calendar quarter. The
prime bank rate for any bank on a given day is the rate of interest it
charges on unsecured loans made that day to its most credit-worthy
customers. In establishing the prevailing prime bank rate the
department may use the prime bank rate charged by the fifteen (15)
largest banks with their principal offices in Indiana, or such other
number as the department deems adequate. The total amount of
interest shall be calculated on a three hundred sixty (360) day basis. (Formerly: Acts 1919, c.102, s.14a; Acts 1967, c.232, s.11.) As
amended by Acts 1977, P.L.287, SEC.1.
IC 27-6-6-1 Subscribers; authority to exchange reciprocal or interinsurance
contracts; title insurance exception
Sec. 1. Individuals, partnerships, limited liability companies, and
corporations of this state, hereby designated "subscribers," are
hereby authorized to exchange reciprocal or interinsurance contracts
with each other or with individuals, partnerships, limited liability
companies, and corporations of other states and countries, providing
indemnity among themselves from any loss which may be insured
against under the fire or casualty classifications as authorized by the
insurance laws of this state, except title insurance. (Formerly: Acts 1919, c.102, s.1; Acts 1967, c.232, s.1.) As amended
by 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 or
other representative, herein designated "attorney," duly authorized
and acting for such subscribers. The office or offices of such attorney
may be maintained at such place or places as may be designated by
the 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 a
declaration verified by the oath of such attorney, or where such
attorney 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 to
exchange such indemnity contracts. Such name or title shall not
be so similar to any other name or title previously adopted by a
similar organization or by any insurance corporation or
association as in the opinion of the insurance department is
likely 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 or
by which such insurance is to be effected or exchanged.
(d) A copy of the form of power of attorney or other authority
of such attorney under which such insurance is to be effected or
exchanged; provided, that a copy of any amendment to or
substitution of such form shall be filed with the insurance
department prior to its use.
(e) The location of the office or offices from which such
contracts 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 than
one and one-half million dollars ($1,500,000) as represented by
executed contracts or bona fide applications to become
concurrently effective in the case of fire insurance, and in the
case of automobile insurance, executed contracts or bona fide
applications for indemnity upon two hundred and fifty (250)
separate risks aggregating not less than one and one-half million
dollars ($1,500,000) or any or all classes of automobile
insurance effected by said subscriber through said attorney.
(g) That there is in the possession of such attorney and available
for the payment of losses, assets conforming to the requirements
of section 6 of this chapter.
(h) A financial statement under oath in form prescribed for the
annual statement.
(i) The instrument authorizing service of process as provided
for 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 provided
for by the terms of section 3 of this chapter, the attorney (as defined
in section 2 of this chapter) shall file with the department of
insurance, state of Indiana, an instrument in writing, executed by him
for said subscribers, conditioned that, upon the issuance of a
certificate of authority provided for in section 9 of this chapter,
service of process may be had upon the individual resident of
Indiana, corporate resident of Indiana, or authorized Indiana insurer,
appointed by the subscribers as the subscribers' agent for service of
process in all suits in this state arising out of such policies, contracts,
or agreements, which service shall be valid and binding upon all
subscribers exchanging at any time reciprocal or interinsurance
contracts through such attorney.
(b) Service of process under subsection (a) shall be made by
delivering to the subscribers' agent two (2) copies of process with a
complaint attached.
(c) It shall be the duty of the subscribers' agent, upon service, to
promptly send one (1) copy of such summons, by registered letter, to
the attorney specified in subsection (a) and to file the other copy of
summons in the office of the subscribers' agent. (Formerly: Acts 1919, c.102, s.4; Acts 1967, c.232, s.3.) As amended
by 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 insurance
shall so require, a statement under oath of such attorney, showing, in
the case of fire or casualty classifications as authorized by the
insurance laws of Indiana, except title insurance, the maximum
amount of indemnity upon a single risk, and no reciprocal shall
assume on any single fire or casualty classifications as authorized by
the insurance laws of Indiana, except title insurance, risk in an
amount greater than ten percent (10%) of the net worth of the
reciprocal. (Formerly: Acts 1919, c.102, s.5; Acts 1967, c.232, s.4.) As amended
by 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 in
cash or securities of the kind designated by the laws of the state
where the principal office is located for the investment of funds of
insurance companies, doing the same kinds of business, amounting
to fifty per cent (50%) of the net annual deposits, collected, and
credited to the accounts of subscribers on policies having one (1)
year or less to run and pro rata on those for longer periods; in
addition to which there shall be maintained in cash or such securities
assets sufficient to discharge all liabilities on all outstanding losses
arising under policies issued, same to be calculated on the basis of
net premiums or deposits as in this section defined and in accordance
with the laws of the state relating to similar reserves for companies
insuring similar risks. For the purpose of computing said reserves
and assets, net deposits shall be construed to mean the payments of
subscribers collected or in the course of collection after deducting
therefrom the amounts provided in the subscribers' agreement for
expenses except payments or credits to the attorney-in-fact. If at any
time the assets so held in cash or such securities shall be less than
required above, or be less than three hundred thousand dollars
($300,000), the subscribers or their attorney for them shall make up
the deficiency within thirty (30) days after notice from the
department of insurance so to do: Provided, however, That as to
reciprocal or interinsurance exchanges now licensed and authorized
to do business in Indiana, the alternative minimum of cash or
securities 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 examination
of another state
Sec. 7. Such attorney shall, within the time limited for filing the
annual statement by insurance companies transacting the same kind
of business, make a report under oath to the insurance department for
each calendar year showing the financial condition of affairs at the
office where such contracts are issued and shall furnish such
additional information and reports as may be required. The business
affairs, records, and assets of any such organization shall be subject
to examination by the insurance department at any reasonable time,
and such examination shall be at the expense of the organization
examined. Where the principal office of the attorney is located in
another state, the insurance department may in lieu of the
examination provided for in this section, accept a certified copy of
the report of examination made by the insurance department of the
state 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 laws
of this state, shall, in addition to the rights, powers and franchises
specified in its articles of incorporation, have full power and
authority, as a subscriber, to exchange insurance contracts of the kind
and character herein mentioned. The right to exchange such contracts
is hereby declared to be incidental to the purposes for which such
corporations are organized and as much granted as the rights and
powers 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 a
license to the attorney authorizing him to make such contracts of
insurance and shall contain the name of the attorney, the location of
the principal office, and the name or the designation under which
such contracts of insurance are issued. Such license shall be renewed
annually, upon a showing that the standard of solvency required in
this section has been maintained and all fees and taxes required have
been paid; provided, no certificate of authority shall be issued under
this section unless and until the subscribers and the attorney shall
have complied with the same character and fitness qualifications,
plan of operation, and standards for officers and directors as is
required of stock and mutual insurance companies under this title. (Formerly: Acts 1919, c.102, s.9; Acts 1967, c.232, s.7.) As amended
by P.L.252-1985, SEC.219.
IC 27-6-6-10 Violations
Sec. 10. An attorney who exchanges a contract of insurance of the
kind and character specified in this chapter, or solicits or negotiates
any application for such a contract, without complying with this
chapter, commits a Class C infraction. For the purpose of
organization and upon issuance of permit by the insurance
department, powers of attorney and applications for such contracts
may be solicited without compliance with this chapter, but a person
may not make or issue any such contracts until this chapter is
complied with. (Formerly: Acts 1919, c.102, s.10; Acts 1967, c.232, s.8.) As
amended 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 chapter
and where not otherwise provided, the penalty for failure or refusal
to comply with any or all of the terms and provisions of this chapter,
upon the part of the attorney, shall be the refusal, suspension, or
revocation of certificate of authority or license by the insurance
department, after due notice and opportunity for hearing has been
given such attorney, so that he may appear and show cause why such
action should not be taken. (Formerly: Acts 1919, c.102, s.11; Acts 1967, c.232, s.9.) As
amended 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 of
such business in this state, the same taxes, licenses and fees as are
required to be paid by mutual insurance companies with principal
office similarly located and transacting the same kind of business. In
the application of the retaliatory law, the taxes and fees exacted by
another state from an exchange with principal office in Indiana shall
apply. (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 prescribed
by the laws of this state any provisions or conditions required by the
plan of reciprocal or interinsurance, Provided That same shall not be
inconsistent with or in conflict with the law of this state. Such policy
in lieu of conforming to the language and form prescribed by such
law, shall be held to conform thereto in substance if such policy
includes a provision or endorsement reciting that the policy shall be
construed as if in the language and form prescribed by such law. Any
such 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 to
insurance shall apply to the exchange of indemnity contracts
described 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 or
interinsurance exchange organized under this law may on behalf of
the subscribers borrow or assume a loan or advance for the
repayment of a sum of money sufficient to defray the reasonable
expenses in the establishment of such an exchange or to enable the
attorney for the subscribers at the exchange to comply with any
requirement of the law or as a guarantee fund upon agreement. The
borrowing or assumption shall first be submitted to and approved by
the department, and shall be repaid only out of the surplus, earnings
or profits at the exchange with the approval of the department. The
department shall withhold its approval of any repayment whenever
in its judgment the financial condition of the attorney for the
subscribers at such exchange shall warrant, but shall not withhold its
approval if after the repayment the attorney-in-fact for subscribers at
the exchange shall have and be in possession of a surplus equal to ten
percent (10%) or more of the gross annual premium of the
subscribers. Any such loan or advance shall not form a part of the
legal liabilities of the attorney for the subscribers at the exchange but
until repaid, all statements published by the attorney for the
subscribers or filed with the department, shall show the amount
thereof then remaining unpaid. However, this section shall not be
construed as an extension of the liability of any subscriber beyond
that expressly provided for in the subscribers' agreement or power of
attorney. The per annum interest rate on any loan or advance shall
not exceed three-quarters of one percent (.75%) above the prevailing
prime bank rate charged by national banks and banks chartered by
the state of Indiana with their principal offices in Indiana, or ten
percent (10%), whichever is less. The department shall establish the
prevailing prime bank rate for each calendar quarter equal to this rate
for the first working day of the subsequent calendar quarter. The
prime bank rate for any bank on a given day is the rate of interest it
charges on unsecured loans made that day to its most credit-worthy
customers. In establishing the prevailing prime bank rate the
department may use the prime bank rate charged by the fifteen (15)
largest banks with their principal offices in Indiana, or such other
number as the department deems adequate. The total amount of
interest shall be calculated on a three hundred sixty (360) day basis. (Formerly: Acts 1919, c.102, s.14a; Acts 1967, c.232, s.11.) As
amended by Acts 1977, P.L.287, SEC.1.
