PRIOR PRINTER'S NOS. 656, 3636 PRINTER'S NO. 4107
No. 599 Session of 2001
INTRODUCED BY MICOZZIE, PIPPY, FICHTER, MELIO, BELARDI, CALTAGIRONE, CAWLEY, FRANKEL, GEORGE, HARHAI, HERMAN, KAISER, LEH, LESCOVITZ, LEVDANSKY, S. MILLER, PRESTON, ROONEY, SAINATO, SAYLOR, SCRIMENTI, STABACK, STERN, E. Z. TAYLOR, TIGUE, TRELLO, WALKO, WILT, WOJNAROSKI, YOUNGBLOOD, YUDICHAK, DeLUCA, CIVERA, THOMAS, BELFANTI, SOLOBAY, ADOLPH, WASHINGTON, DALEY AND MAHER, FEBRUARY 8, 2001
AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES, JUNE 25, 2002
AN ACT 1 Amending the act of December 14, 1992 (P.L.835, No.134), <-- 2 entitled "An act providing for the establishment, 3 organization, operation and termination of fraternal benefit 4 societies; imposing additional powers and duties on the 5 Insurance Department and on the Insurance Commissioner; 6 providing penalties; and making repeals," further providing 7 for licensing of agents. 8 AMENDING THE ACT OF MAY 17, 1921 (P.L.682, NO.284), ENTITLED "AN <-- 9 ACT RELATING TO INSURANCE; AMENDING, REVISING, AND 10 CONSOLIDATING THE LAW PROVIDING FOR THE INCORPORATION OF 11 INSURANCE COMPANIES, AND THE REGULATION, SUPERVISION, AND 12 PROTECTION OF HOME AND FOREIGN INSURANCE COMPANIES, LLOYDS 13 ASSOCIATIONS, RECIPROCAL AND INTER-INSURANCE EXCHANGES, AND 14 FIRE INSURANCE RATING BUREAUS, AND THE REGULATION AND 15 SUPERVISION OF INSURANCE CARRIED BY SUCH COMPANIES, 16 ASSOCIATIONS, AND EXCHANGES, INCLUDING INSURANCE CARRIED BY 17 THE STATE WORKMEN'S INSURANCE FUND; PROVIDING PENALTIES; AND 18 REPEALING EXISTING LAWS," FURTHER PROVIDING FOR REQUISITES 19 FOR FOREIGN COMPANIES TO DO BUSINESS; DELETING PROVISIONS 20 RELATING TO ADMITTED ASSETS; FURTHER PROVIDING FOR STANDARD 21 NONFORFEITURE LAW FOR INDIVIDUAL DEFERRED ANNUITIES AND FOR 22 TITLE INSURANCE AGENTS; FURTHER DEFINING "WET MARINE AND 23 TRANSPORTATION INSURANCE"; FURTHER PROVIDING FOR PLACEMENT OF 24 SURPLUS LINES INSURANCE, FOR REQUIREMENTS FOR ELIGIBLE 25 SURPLUS LINES INSURERS, FOR SURPLUS LINES LICENSEE'S DUTY TO 26 NOTIFY INSURED, FOR DECLARATIONS, FOR LICENSING OF SURPLUS 27 LINES LICENSEE, FOR RECORDS OF SURPLUS LINES LICENSEE, FOR 28 SUSPENSION, REVOCATION OR NONRENEWAL OF SURPLUS LINES
1 LICENSEE'S LICENSE AND FOR SERVICE OF PROCESS IN ACTIONS 2 AGAINST SURPLUS LINES INSURER; PROVIDING FOR FRATERNAL 3 BENEFIT SOCIETIES; AND MAKING A REPEAL. 4 The General Assembly of the Commonwealth of Pennsylvania 5 hereby enacts as follows: 6 Section 1. Sections 609 and 614(d) of the act of December <-- 7 14, 1992 (P.L.835, No.134), known as the Fraternal Benefit 8 Societies Code, are amended to read: 9 Section 609. Licensing of agents. 10 (a) General rule.--Agents of societies shall be licensed in 11 accordance with the insurance laws regulating the licensing, 12 revocation, suspension or termination of license of resident and 13 nonresident agents. 14 (b) Exemptions from licensure.--No examination or license 15 shall be required of any regular salaried officer, employee or 16 member of a licensed society who devotes substantially all of 17 his services to activities other than the solicitation of 18 fraternal insurance contracts from the public and who receives 19 for the solicitation of such contracts no commission or other 20 compensation directly dependent upon the amount of business 21 obtained. 22 (c) Examination.-- 23 (1) Any person who in the preceding calendar year has 24 solicited and procured life insurance contracts on behalf of 25 any society in an amount of insurance in excess of [$100,000] 26 $200,000 or, in the case of any other kind or kinds of 27 insurance which the society might write, on the persons of 28 more than 25 individuals and who has received or will receive 29 a commission or other compensation therefor shall be required 30 to take an examination. No examination shall be required of 31 any agent who was in the service of a society on January 28, 20010H0599B4107 - 2 -
1 1978. 2 (2) Beginning July 1, 2007, and every five years 3 thereafter, the commissioner shall review the monetary limit 4 contained in this subsection and may, in the commissioner's 5 discretion, adjust the amount. Any adjustment to the amount 6 shall be published as a notice in the Pennsylvania Bulletin. 7 The adjustment shall not exceed the percentage change in the 8 Consumer Price Index for All Urban Consumers (CPI-U) for the 9 Pennsylvania, New Jersey, Delaware and Maryland area, 10 officially reported by the United States Department of Labor, 11 Bureau of Labor Statistics, for the period since the last 12 adjustment made pursuant to this subsection. 13 (d) Limitation.--No society doing business in this 14 Commonwealth shall pay any commission or other compensation to 15 any person for any services in obtaining in this Commonwealth 16 any new contract of life, accident or health insurance, or any 17 new annuity contract, except to a licensed fraternal insurance 18 agent of that society. 19 Section 614. Penalties. 20 * * * 21 (d) Penalty for other violation.--A person who willfully 22 violates, neglects or refuses to comply with the provisions of 23 this act for which a penalty is not otherwise prescribed, 24 commits a summary offense and shall, upon conviction, be 25 sentenced to pay a fine of not more than $500. Upon satisfactory 26 evidence of a violation of any provision of this act, the 27 commissioner may in [his] the commissioner's discretion, in lieu 28 of seeking criminal prosecution, pursue any one or more of the 29 following courses of action: 30 (1) Suspend or revoke or refuse to renew the license of 20010H0599B4107 - 3 -
1 the offending party or parties. 2 (2) Impose a civil penalty of not more than [$1,000] 3 $5,000 for each [and every] act in violation of the 4 provisions of this act [by the party or parties]. 5 Section 2. This act shall take effect in 60 days. 6 SECTION 1. SECTION 301(D) OF THE ACT OF MAY 17, 1921 <-- 7 (P.L.682, NO.284), KNOWN AS THE INSURANCE COMPANY LAW OF 1921, 8 IS AMENDED TO READ: 9 SECTION 301. REQUISITES FOR FOREIGN COMPANIES TO DO 10 BUSINESS.--NO STOCK OR MUTUAL INSURANCE COMPANY OR ASSOCIATION 11 OF ANY OTHER STATE OR FOREIGN GOVERNMENT SHALL BE ADMITTED AND 12 AUTHORIZED TO DO BUSINESS UNTIL: 13 * * * 14 [(D) IT SHALL FILE IN THE OFFICE OF THE AUDITOR GENERAL A 15 STATEMENT SHOWING: (I) THE NAME OF THE COMPANY OR ASSOCIATION; 16 (II) THE DATE OF INCORPORATION OR ORGANIZATION; (III) THE ACT OF 17 ASSEMBLY OR AUTHORITY UNDER WHICH INCORPORATED OR ORGANIZED; 18 (IV) THE PLACE OF BUSINESS; (V) THE POST OFFICE ADDRESS AND 19 NAMES OF THE PRESIDENT, SECRETARY, AND TREASURER; (VI) THE 20 AMOUNT OF CAPITAL AUTHORIZED BY ITS CHARTER; AND (VII) THE 21 AMOUNT OF CAPITAL PAID INTO THE TREASURY OF THE COMPANY. 22 ANY COMPANY OR ASSOCIATION WHICH SHALL NEGLECT OR REFUSE TO 23 FILE SUCH STATEMENT SHALL BE SUBJECT TO A PENALTY OF FIVE 24 HUNDRED DOLLARS ($500.00), WHICH PENALTY SHALL BE COLLECTED, ON 25 AN ACCOUNT SETTLED BY THE AUDITOR GENERAL AND STATE TREASURER, 26 IN THE SAME MANNER AS TAXES ON STOCK ARE SETTLED AND COLLECTED.] 27 * * * 28 SECTION 2. SECTION 320.1 OF THE ACT IS REPEALED. 29 SECTION 3. SECTION 410C OF THE ACT IS AMENDED BY ADDING A 30 SUBSECTION TO READ: 20010H0599B4107 - 4 -
1 SECTION 410C. STANDARD NONFORFEITURE LAW FOR INDIVIDUAL 2 DEFERRED ANNUITIES.--* * * 3 (M) NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (D), FOR 4 ANY CONTRACT ISSUED ON OR AFTER JULY 1, 2002, AND BEFORE JANUARY 5 1, 2005, THE INTEREST RATE AT WHICH MINIMUM NONFORFEITURE 6 AMOUNTS, PARTIAL WITHDRAWALS AND PARTIAL SURRENDERS SHALL BE 7 ACCUMULATED SHALL BE ONE AND ONE-HALF PER CENTUM (1.5%) PER 8 ANNUM. 9 SECTION 4. SECTION 724(B) OF THE ACT, AMENDED DECEMBER 21, 10 1995 (P.L.714, NO.79), IS AMENDED TO READ: 11 SECTION 724. AGENTS; DEFINED.--* * * 12 [(B) NO BANK, TRUST COMPANY, BANK AND TRUST COMPANY OR OTHER 13 LENDING INSTITUTION, MORTGAGE SERVICE, MORTGAGE BROKERAGE OR 14 MORTGAGE GUARANTY COMPANY OR ANY OFFICER OR EMPLOYE OF ANY OF 15 THE FOREGOING SHALL BE PERMITTED TO ACT AS AN AGENT FOR A TITLE 16 INSURANCE COMPANY.] THE WORD "AGENT" SHALL NOT INCLUDE APPROVED 17 ATTORNEYS, NOR SHALL IT INCLUDE OFFICERS AND SALARIED EMPLOYES 18 OF ANY TITLE INSURANCE COMPANY AUTHORIZED TO DO A TITLE 19 INSURANCE BUSINESS WITHIN THIS COMMONWEALTH. 20 SECTION 5. THE DEFINITION OF "WET MARINE AND TRANSPORTATION 21 INSURANCE" IN SECTION 1602 OF THE ACT, ADDED DECEMBER 18, 1992 22 (P.L.1519, NO.178), IS AMENDED TO READ: 23 SECTION 1602. DEFINITIONS.--AS USED IN THIS ARTICLE THE 24 FOLLOWING WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO 25 THEM IN THIS SECTION: 26 * * * 27 "WET MARINE AND TRANSPORTATION INSURANCE." ANY OF THE 28 FOLLOWING: 29 (1) INSURANCE UPON VESSELS, CRAFTS OR HULLS AND OF INTERESTS 30 THEREIN OR WITH RELATION THERETO. 20010H0599B4107 - 5 -
1 (2) INSURANCE OF MARINE BUILDER'S RISKS, MARINE WAR RISKS 2 AND CONTRACTS OF MARINE PROTECTION AND INDEMNITY INSURANCE. 3 (3) INSURANCE OF FREIGHTS AND DISBURSEMENTS PERTAINING TO A 4 SUBJECT OF INSURANCE COMING WITHIN THIS DEFINITION. 5 (4) INSURANCE OF PERSONAL PROPERTY AND INTEREST THEREIN, IN 6 THE COURSE OF EXPORTATION FROM OR IMPORTATION INTO ANY COUNTRY, 7 OR IN THE COURSE OF TRANSPORTATION COASTWISE OR ON INLAND 8 WATERS, INCLUDING TRANSPORTATION BY LAND, WATER OR AIR FROM 9 POINT OF ORIGIN TO FINAL DESTINATION, IN CONNECTION WITH ANY AND 10 ALL RISKS OR PERILS OF NAVIGATION, TRANSIT OR TRANSPORTATION, 11 AND WHILE BEING PREPARED FOR AND WHILE AWAITING SHIPMENT, AND 12 DURING ANY DELAYS, TRANSSHIPMENT OR RESHIPMENT [INCIDENT 13 THERETO]. INSURANCE OF PERSONAL PROPERTY AND INTERESTS THEREIN 14 SHALL NOT BE CONSIDERED WET MARINE AND TRANSPORTATION INSURANCE 15 IF: 16 (I) THE PROPERTY HAS BEEN TRANSPORTED SOLELY BY 17 LAND; 18 (II) THE PROPERTY HAS REACHED ITS FINAL DESTINATION 19 AS SPECIFIED IN THE BILL OF LADING OR OTHER SHIPPING 20 DOCUMENT; OR 21 (III) THE INSURED NO LONGER HAS AN INSURABLE 22 INTEREST IN THE PROPERTY. 23 SECTION 6. SECTION 1604 OF THE ACT, ADDED DECEMBER 18, 1992 24 (P.L.1519, NO.178), IS AMENDED TO READ: 25 SECTION 1604. PLACEMENT OF SURPLUS LINES INSURANCE.-- 26 INSURANCE MAY BE PROCURED THROUGH A SURPLUS LINES LICENSEE FROM 27 NONADMITTED INSURERS IF THE FOLLOWING REQUIREMENTS ARE MET: 28 (1) EACH INSURER IS AN ELIGIBLE SURPLUS LINES INSURER. 29 (2) THE PLACEMENT SATISFIES THE CRITERIA SET FORTH IN AT 30 LEAST ONE OF THE FOLLOWING SUBPARAGRAPHS: 20010H0599B4107 - 6 -
1 (I) THE FULL AMOUNT OR KIND OF INSURANCE CANNOT BE OBTAINED 2 FROM ADMITTED INSURERS. SUCH FULL AMOUNT OR KIND OF INSURANCE OR 3 ANY PORTION THEREOF MAY BE PROCURED FROM ELIGIBLE SURPLUS LINES 4 INSURERS, PROVIDED THAT A DILIGENT SEARCH IS MADE AMONG THE 5 ADMITTED INSURERS WHO ARE WRITING, IN THIS COMMONWEALTH, 6 COVERAGE COMPARABLE TO THE COVERAGE BEING SOUGHT. 7 (II) THE FULL AMOUNT OR KIND OF INSURANCE CANNOT BE OBTAINED 8 FROM ANY ADMITTED INSURERS BECAUSE [NO SUCH INSURERS ARE 9 WRITING] COVERAGE COMPARABLE TO THE COVERAGE BEING SOUGHT 10 GENERALLY IS NOT AVAILABLE IN THE AUTHORIZED MARKET. 11 (III) THE KIND OF INSURANCE SOUGHT TO BE OBTAINED FROM 12 ADMITTED INSURERS REQUIRES A UNIQUE FORM OF COVERAGE NOT 13 AVAILABLE IN THE ADMITTED MARKET. 14 (3) [THE] WITH RESPECT TO PERSONAL LINES POLICIES OR 15 CONTRACT FORMS, THE POLICY OR CONTRACT FORM USED BY THE INSURER 16 DOES NOT DIFFER MATERIALLY FROM POLICIES OR CONTRACTS 17 CUSTOMARILY USED BY ADMITTED INSURERS FOR THE KIND OF INSURANCE 18 INVOLVED. [COVERAGE] PERSONAL LINES COVERAGE MAY BE PLACED IN AN 19 ELIGIBLE SURPLUS LINES INSURER USING A UNIQUE FORM OR POLICY 20 DESIGNED FOR THE KIND OF INSURANCE ONLY IF A COPY OF SUCH FORM 21 IS FIRST FILED WITH THE DEPARTMENT BY THE SURPLUS LINES LICENSEE 22 DESIRING TO USE IT [SIMULTANEOUSLY WITH THE AFFIDAVIT REQUIRED 23 BY SECTION 1609]. THE FORM SHALL BE DEEMED APPROVED BY THE 24 COMMISSIONER UNLESS WITHIN TEN (10) DAYS AFTER RECEIPT OF THE 25 SAME, THE COMMISSIONER SHALL FIND THAT THE USE OF SUCH FORM WILL 26 BE CONTRARY TO LAW OR PUBLIC POLICY. 27 (4) ALL OTHER REQUIREMENTS OF THIS ARTICLE ARE MET. 28 SECTION 7. SECTION 1605 OF THE ACT, AMENDED OR ADDED 29 DECEMBER 18, 1992 (P.L.1519, NO.178) AND FEBRUARY 17, 1994 30 (P.L.92, NO.9), IS AMENDED TO READ: 20010H0599B4107 - 7 -
1 SECTION 1605. REQUIREMENTS FOR ELIGIBLE SURPLUS LINES
2 INSURERS.--(A) NO SURPLUS LINES LICENSEE SHALL PLACE ANY
3 COVERAGE WITH A NONADMITTED INSURER UNLESS, AT THE TIME OF
4 PLACEMENT, SUCH NONADMITTED INSURER:
5 (1) IS OF GOOD REPUTE AND FINANCIAL INTEGRITY.
6 (2) QUALIFIES UNDER ANY OF THE FOLLOWING SUBPARAGRAPHS:
7 (I) HAS POLICYHOLDER SURPLUS EQUAL TO OR GREATER THAN TWO
8 TIMES THE MINIMUM CAPITAL AND SURPLUS REQUIRED TO BE FULLY
9 LICENSED IN THIS COMMONWEALTH. TWO (2) YEARS FROM THE EFFECTIVE
10 DATE OF THIS ARTICLE IS GRANTED TO ALLOW THOSE NONADMITTED
11 INSURERS WHICH ARE ELIGIBLE SURPLUS LINES INSURERS ON THE
12 EFFECTIVE DATE OF THIS ARTICLE TO ACHIEVE THIS CAPITAL AND
13 SURPLUS REQUIREMENT. IF AN ALIEN INSURER, AS DEFINED BY THE ACT
14 OF DECEMBER 10, 1974 (P.L.804, NO.266), REFERRED TO AS THE ALIEN
15 INSURER DOMESTICATION LAW, IT SHALL MAINTAIN IN THE UNITED
16 STATES AN IRREVOCABLE TRUST FUND IN EITHER A NATIONAL BANK OR A
17 MEMBER OF THE FEDERAL RESERVE SYSTEM, IN AN AMOUNT NOT LESS THAN
18 THAT CURRENTLY REQUIRED BY THE NATIONAL ASSOCIATION OF INSURANCE
19 COMMISSIONERS' [NONADMITTED INSURERS INFORMATION OFFICE]
20 INTERNATIONAL INSURERS DEPARTMENT OR ITS SUCCESSOR FOR THE
21 PROTECTION OF ALL OF ITS POLICYHOLDERS IN THE UNITED STATES, AND
22 SUCH TRUST FUND CONSISTS OF CASH, SECURITIES, LETTERS OF CREDIT
23 OR INVESTMENTS OF SUBSTANTIALLY THE SAME CHARACTER AND QUALITY
24 AS THOSE WHICH ARE ELIGIBLE INVESTMENTS FOR ADMITTED INSURERS
25 AUTHORIZED TO WRITE LIKE KINDS OF INSURANCE IN THIS
26 COMMONWEALTH. SUCH TRUST FUND WILL BE IN ADDITION TO THE CAPITAL
27 AND SURPLUS REQUIRED IN THIS SUBPARAGRAPH AND SHALL HAVE AN
28 EXPIRATION DATE WHICH AT NO TIME SHALL BE LESS THAN FIVE (5)
29 YEARS.
30 (II) IS ANY LLOYD'S OR OTHER SIMILAR GROUP OF INSURERS WHICH
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1 INCLUDES UNINCORPORATED INDIVIDUAL INSURERS THAT MAINTAINS A 2 TRUST FUND OF NOT LESS THAN FIFTY MILLION ($50,000,000) DOLLARS 3 AS SECURITY TO THE FULL AMOUNT THEREOF FOR ALL POLICYHOLDERS AND 4 CREDITORS IN THE UNITED STATES OF EACH MEMBER OF THE GROUP. SUCH 5 TRUST FUNDS SHALL LIKEWISE COMPLY WITH THE TERMS AND CONDITIONS 6 ESTABLISHED IN SUBPARAGRAPH (I) FOR ALIEN INSURERS. 7 (III) IS AN INSURANCE EXCHANGE CREATED BY THE LAWS OF 8 INDIVIDUAL STATES THAT MAINTAINS CAPITAL AND SURPLUS OR THE 9 SUBSTANTIAL EQUIVALENT THEREOF OF NOT LESS THAN FIFTEEN MILLION 10 ($15,000,000) DOLLARS IN THE AGGREGATE. FOR INSURANCE EXCHANGES 11 WHICH MAINTAIN FUNDS FOR THE PROTECTION OF ALL INSURANCE 12 EXCHANGE POLICYHOLDERS, EACH INDIVIDUAL SYNDICATE SHALL MAINTAIN 13 MINIMUM CAPITAL AND SURPLUS OR THE SUBSTANTIAL EQUIVALENT 14 THEREOF OF NOT LESS THAN ONE MILLION FIVE HUNDRED THOUSAND 15 ($1,500,000) DOLLARS. IN THE EVENT THE INSURANCE EXCHANGE DOES 16 NOT MAINTAIN FUNDS FOR THE PROTECTION OF ALL INSURANCE EXCHANGE 17 POLICYHOLDERS, EACH INDIVIDUAL SYNDICATE SHALL MEET THE MINIMUM 18 CAPITAL AND SURPLUS REQUIREMENTS OF SUBPARAGRAPH (I). 19 (3) HAS PROVIDED TO THE DEPARTMENT A COPY OF ITS CURRENT 20 ANNUAL FINANCIAL STATEMENT CERTIFIED BY SUCH INSURER, SUCH 21 STATEMENT TO BE PROVIDED NO MORE THAN THIRTY (30) DAYS AFTER THE 22 DATE REQUIRED FOR FILING AN ANNUAL FINANCIAL STATEMENT IN ITS 23 DOMICILIARY JURISDICTION AND WHICH IS EITHER: 24 (I) CERTIFIED BY THE REGULATORY AUTHORITY IN THE DOMICILE OF 25 THE INSURER; OR 26 (II) CERTIFIED BY AN ACCOUNTING OR AUDITING FIRM LICENSED IN 27 THE JURISDICTION OF THE INSURER'S DOMICILE. 28 IN THE CASE OF AN INSURANCE EXCHANGE, THE STATEMENT MAY BE AN 29 AGGREGATE STATEMENT OF ALL UNDERWRITING SYNDICATES OPERATING 30 DURING THE PERIOD REPORTED. 20010H0599B4107 - 9 -
1 (B) IN ADDITION TO MEETING THE REQUIREMENTS IN SUBSECTION
2 (A), A NONADMITTED INSURER SHALL BE AN ELIGIBLE SURPLUS LINES
3 INSURER IF IT APPEARS ON THE MOST RECENT LIST OF ELIGIBLE
4 SURPLUS LINES INSURERS PUBLISHED BY THE DEPARTMENT FROM TIME TO
5 TIME BUT AT LEAST SEMIANNUALLY. NOTHING IN THIS SECTION SHALL
6 REQUIRE THE DEPARTMENT TO PLACE OR MAINTAIN THE NAME OF ANY
7 NONADMITTED INSURER ON THE LIST OF ELIGIBLE SURPLUS LINES
8 INSURERS.
9 SECTION 8. SECTIONS 1608, 1609, 1615, 1619, 1623 AND 1624 OF
10 THE ACT, ADDED DECEMBER 18, 1992 (P.L.1519, NO.178), ARE AMENDED
11 TO READ:
12 SECTION 1608. SURPLUS LINES LICENSEE'S DUTY TO NOTIFY
13 INSURED.--AT THE TIME OF PRESENTING A QUOTATION TO THE INSURED,
14 THE SURPLUS LINES LICENSEE SHALL PRESENT TO THE INSURED OR TO
15 THE PRODUCING BROKER WRITTEN NOTICE THAT THE INSURANCE OR A
16 PORTION THEREOF INVOLVES PLACEMENT WITH NONADMITTED INSURERS.
17 THE LICENSEE SHALL, EITHER DIRECTLY OR THROUGH THE PRODUCING
18 BROKER, GIVE NOTICE TO THE INSURED THAT:
19 (1) THE INSURER WITH WHICH THE LICENSEE PLACES THE INSURANCE
20 IS NOT LICENSED BY THE PENNSYLVANIA INSURANCE DEPARTMENT AND IS
21 SUBJECT TO ITS LIMITED REGULATION; AND
22 (2) IN THE EVENT OF THE INSOLVENCY OF AN ELIGIBLE SURPLUS
23 LINES INSURER, LOSSES WILL NOT BE PAID BY THE PENNSYLVANIA
24 PROPERTY AND CASUALTY INSURANCE GUARANTY ASSOCIATION.
25 SECTION 1609. DECLARATIONS.--(A) IN THE CASE OF EACH
26 PLACEMENT OF INSURANCE IN ACCORDANCE WITH THIS ARTICLE:
27 (1) WITHIN THIRTY (30) DAYS AFTER THE SURPLUS LINES LICENSEE
28 HAS PLACED INSURANCE WITH AN ELIGIBLE SURPLUS LINES INSURER, THE
29 PRODUCING BROKER MUST EXECUTE AND FORWARD TO THE SURPLUS LINES
30 LICENSEE A WRITTEN STATEMENT, IN A FORM PRESCRIBED BY THE
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1 DEPARTMENT, DECLARING THAT:
2 (I) A DILIGENT EFFORT TO PROCURE THE DESIRED COVERAGE FROM
3 ADMITTED INSURERS WAS MADE.
4 (II) THE INSURED WAS EXPRESSLY ADVISED IN WRITING PRIOR TO
5 PLACEMENT OF THE INSURANCE THAT:
6 (A) THE INSURER WITH WHOM THE INSURANCE IS TO BE PLACED IS
7 NOT ADMITTED TO TRANSACT BUSINESS IN THIS COMMONWEALTH AND IS
8 SUBJECT TO LIMITED REGULATION BY THE DEPARTMENT; AND
9 (B) IN THE EVENT OF THE INSOLVENCY OF THE INSURER, LOSSES
10 WILL NOT BE PAID BY THE PENNSYLVANIA PROPERTY AND CASUALTY
11 INSURANCE GUARANTY ASSOCIATION.
12 THIS WRITTEN DECLARATION SHALL BE OPEN TO PUBLIC INSPECTION.
13 (2) WITHIN FORTY-FIVE (45) DAYS AFTER INSURANCE HAS BEEN
14 PLACED IN AN ELIGIBLE SURPLUS LINES INSURER, THE SURPLUS LINES
15 LICENSEE SHALL FILE WITH THE DEPARTMENT A WRITTEN DECLARATION OF
16 HIS LACK OF KNOWLEDGE OF HOW THE COVERAGE COULD HAVE BEEN
17 PROCURED FROM ADMITTED INSURERS. THE SURPLUS LINES LICENSEE
18 SHALL SIMULTANEOUSLY FILE THE WRITTEN DECLARATION OF THE
19 PRODUCING BROKER, AS SET FORTH IN PARAGRAPH (1).
20 (3) IN A PARTICULAR TRANSACTION WHERE THE PRODUCING BROKER
21 AND SURPLUS LINES LICENSEE ARE ONE IN THE SAME ENTITY, HE SHALL
22 EXECUTE BOTH DECLARATIONS.
23 (B) SUBSECTION (A) SHALL NOT APPLY TO ANY INSURANCE WHICH
24 HAS BEEN PLACED CONTINUOUSLY WITH AN ELIGIBLE SURPLUS LINES
25 INSURER FOR A PERIOD OF AT LEAST THREE (3) CONSECUTIVE YEARS
26 IMMEDIATELY PRECEDING THE CURRENT PLACEMENT. HOWEVER, WITHIN
27 FORTY-FIVE (45) DAYS AFTER INSURANCE HAS BEEN PLACED WITH AN
28 ELIGIBLE SURPLUS LINES INSURER, THE SURPLUS LINES LICENSEE SHALL
29 FILE WITH THE DEPARTMENT HIS WRITTEN DECLARATION ON A FORM
30 PRESCRIBED BY THE DEPARTMENT.
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1 SECTION 1615. LICENSING OF SURPLUS LINES LICENSEE.--(A) NO
2 AGENT OR BROKER LICENSED BY THE DEPARTMENT SHALL TRANSACT
3 SURPLUS LINES INSURANCE WITH ANY NONADMITTED INSURER UNLESS SUCH
4 AGENT OR BROKER POSSESSES A VALID SURPLUS LINES AGENT'S LICENSE
5 ISSUED BY THE DEPARTMENT.
6 (B) THE DEPARTMENT SHALL ISSUE A SURPLUS LINES AGENT'S
7 LICENSE TO ANY RESIDENT OR NONRESIDENT OF THIS COMMONWEALTH WHO
8 IS A QUALIFIED HOLDER OF A CURRENT PROPERTY AND CASUALTY
9 BROKER'S LICENSE, BUT ONLY WHEN THE BROKER HAS COMPLIED WITH THE
10 FOLLOWING:
11 (1) REMITTED THE LICENSE FEE TO THE DEPARTMENT.
12 (2) SUBMITTED A PROPERLY COMPLETED LICENSE APPLICATION ON A
13 FORM SUPPLIED BY THE DEPARTMENT.
14 (3) PASSED A QUALIFYING EXAMINATION APPROVED BY THE
15 DEPARTMENT, EXCEPT THAT ALL HOLDERS OF A LICENSE PRIOR TO THE
16 EFFECTIVE DATE OF THIS ARTICLE SHALL BE DEEMED TO HAVE PASSED
17 SUCH AN EXAMINATION.
18 [(4) FILED WITH THE DEPARTMENT AND MAINTAINED CONCURRENT
19 WITH THE TERM OF THE LICENSE, IN FORCE AND UNIMPAIRED, A BOND IN
20 FAVOR OF THE COMMONWEALTH OF PENNSYLVANIA IN THE PENAL SUM OF AT
21 LEAST FIFTY THOUSAND ($50,000) DOLLARS, AGGREGATE LIABILITY,
22 WITH CORPORATE SURETIES APPROVED BY THE DEPARTMENT. THE BOND
23 SHALL BE CONDITIONED THAT THE SURPLUS LINES LICENSEE WILL
24 CONDUCT BUSINESS IN ACCORDANCE WITH THE PROVISIONS OF THIS
25 ARTICLE AND WILL PROMPTLY REMIT THE TAXES AS PROVIDED BY LAW. NO
26 BOND SHALL BE TERMINATED EXCEPT FOR NONPAYMENT OF PREMIUMS.
27 TERMINATION NOTICE SHALL BE GIVEN TO THE SURPLUS LINES LICENSEE
28 AND TO THE DEPARTMENT AT LEAST THIRTY (30) DAYS PRIOR TO THE
29 TERMINATION DATE.]
30 (C) CORPORATIONS AND PARTNERSHIPS SHALL BE ELIGIBLE TO BE
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1 RESIDENT OR NONRESIDENT SURPLUS LINES LICENSEES, UPON THE
2 FOLLOWING CONDITIONS:
3 (1) THE CORPORATION OR PARTNERSHIP LICENSEE SHALL LIST ALL
4 EMPLOYES, INCLUDING AT LEAST ONE ACTIVE OFFICER OR PARTNER, WHO
5 HAVE SATISFIED THE REQUIREMENTS OF THIS ARTICLE TO BECOME
6 SURPLUS LINES LICENSEES.
7 (2) ONLY THOSE EMPLOYES [RESIDENT IN THIS COMMONWEALTH]
8 HOLDING A CERTIFICATE OF ELIGIBILITY MAY TRANSACT SURPLUS LINES
9 INSURANCE.
10 (D) EACH SURPLUS LINES LICENSE SHALL EXPIRE ON THE LAST DAY
11 OF FEBRUARY OF EACH YEAR AND SHALL BE RENEWED BEFORE MARCH 1 OF
12 EACH YEAR UPON PAYMENT OF THE ANNUAL FEE, IN COMPLIANCE WITH
13 OTHER PROVISIONS OF THIS SECTION. ANY SURPLUS LINES LICENSEE WHO
14 FAILS TO APPLY FOR RENEWAL OF A LICENSE BEFORE EXPIRATION OF THE
15 CURRENT LICENSE SHALL PAY A PENALTY OF TWO TIMES THE LICENSE FEE
16 AND BE SUBJECT TO OTHER PENALTIES AS PROVIDED BY LAW BEFORE HIS
17 LICENSE WILL BE RENEWED.
18 SECTION 1619. RECORDS OF SURPLUS LINES LICENSEE.--(A) EACH
19 SURPLUS LINES LICENSEE SHALL KEEP IN ITS OFFICE [IN THIS
20 COMMONWEALTH] A FULL AND TRUE RECORD OF EACH SURPLUS LINES
21 INSURANCE CONTRACT PLACED BY OR THROUGH IT, INCLUDING A COPY OF
22 THE POLICY, CERTIFICATE, COVER NOTE OR OTHER EVIDENCE OF
23 INSURANCE, SHOWING SUCH OF THE FOLLOWING ITEMS AS MAY BE
24 APPLICABLE:
25 (1) AMOUNT OF THE INSURANCE AND PERILS INSURED.
26 (2) BRIEF DESCRIPTION OF THE RISK INSURED AND ITS LOCATION.
27 (3) GROSS PREMIUM CHARGED.
28 (4) ANY RETURN PREMIUM PAID.
29 (5) RATE OF PREMIUM CHARGED FOR EACH RISK INSURED.
30 (6) EFFECTIVE DATE AND TERMS OF THE CONTRACT.
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1 (7) NAME AND ADDRESS OF THE INSURED. 2 (8) NAME AND ADDRESS OF THE ELIGIBLE SURPLUS LINES INSURER 3 AND ANY NONADMITTED INSURED INVOLVED PURSUANT TO SECTION 1606. 4 (9) AMOUNT OF TAX AND OTHER SUMS TO BE COLLECTED FROM THE 5 INSURED. 6 (10) IDENTITY OF THE PRODUCING BROKER, ANY CONFIRMING 7 CORRESPONDENCE FROM THE INSURER OR ITS REPRESENTATIVE AND THE 8 APPLICATION. 9 (11) A COPY OF THE WRITTEN NOTICE REQUIRED BY SECTION 1408. 10 (B) THE RECORD OF EACH CONTRACT SHALL BE KEPT OPEN AT ALL 11 REASONABLE TIMES TO EXAMINATION BY THE DEPARTMENT WITHOUT NOTICE 12 FOR A PERIOD OF NOT LESS THAN FIVE (5) YEARS FOLLOWING 13 TERMINATION OF THE CONTRACT. 14 SECTION 1623. SUSPENSION, REVOCATION OR NONRENEWAL OF 15 SURPLUS LINES LICENSEE'S LICENSE.--THE DEPARTMENT MAY SUSPEND, 16 REVOKE OR REFUSE TO RENEW THE LICENSE OF A SURPLUS LINES 17 LICENSEE AFTER NOTICE AND A HEARING, AS PROVIDED UNDER THE 18 APPLICABLE PROVISION OF THE LAWS OF THIS COMMONWEALTH, UPON ANY 19 ONE OR MORE OF THE FOLLOWING GROUNDS: 20 [(1) REMOVAL OF THE RESIDENT SURPLUS LINES LICENSEE'S OFFICE 21 FROM THIS COMMONWEALTH. 22 (2) REMOVAL OF THE RESIDENT SURPLUS LINES LICENSEE'S 23 ACCOUNTS AND RECORDS FROM THIS COMMONWEALTH DURING THE PERIOD 24 DURING WHICH SUCH ACCOUNTS AND RECORDS ARE REQUIRED TO BE 25 MAINTAINED UNDER SECTION 1619.] 26 (3) CLOSING OF THE SURPLUS LINES LICENSEE'S OFFICE FOR A 27 PERIOD OF MORE THAN THIRTY (30) BUSINESS DAYS, UNLESS PERMISSION 28 IS GRANTED BY THE DEPARTMENT. 29 (4) FAILURE TO MAKE AND FILE REQUIRED REPORTS. 30 (5) FAILURE TO TRANSMIT REQUIRED TAX ON SURPLUS LINES 20010H0599B4107 - 14 -
1 PREMIUMS. 2 [(6) FAILURE TO MAINTAIN REQUIRED BONDS.] 3 (7) FAILURE TO REMIT PREMIUMS DUE INSURERS OR RETURN 4 PREMIUMS DUE INSUREDS IN THE NORMAL COURSE OF BUSINESS AND 5 WITHIN REASONABLE TIME LIMITS. 6 (8) VIOLATION OF ANY PROVISION OF THIS ARTICLE. 7 (9) FOR ANY OTHER CAUSE FOR WHICH AN INSURANCE AGENT'S OR 8 BROKER'S LICENSE COULD BE DENIED, REVOKED OR SUSPENDED OR 9 REFUSED UPON RENEWAL. 10 SECTION 1624. SERVICE OF PROCESS IN ACTIONS AGAINST SURPLUS 11 LINES INSURER.--(A) AN ELIGIBLE SURPLUS LINES INSURER MAY BE 12 SUED UPON ANY CAUSE OF ACTION ARISING IN THIS COMMONWEALTH UNDER 13 ANY SURPLUS LINES INSURANCE CONTRACT MADE BY IT OR EVIDENCE OF 14 INSURANCE ISSUED OR DELIVERED BY THE SURPLUS LINES LICENSEE. 15 SERVICE OF PROCESS SHALL BE MADE PURSUANT TO THE PROCEDURES 16 PROVIDED BY 42 PA.C.S. CH. 53 SUBCH. B (RELATING TO INTERSTATE 17 AND INTERNATIONAL PROCEDURE). ANY SUCH [POLICY] SURPLUS LINES 18 INSURANCE CONTRACT OR EVIDENCE OF INSURANCE DELIVERED BY THE 19 SURPLUS LINES LICENSEE SHALL CONTAIN A PROVISION STATING THE 20 SUBSTANCE OF THIS SECTION AND DESIGNATING THE PERSON TO WHOM 21 PROCESS SHALL BE MAILED. 22 (B) EACH NONADMITTED INSURER ACCEPTING SURPLUS LINES 23 INSURANCE SHALL BE DEEMED THEREBY TO HAVE SUBJECTED ITSELF TO 24 ACCEPTING SERVICE OF PROCESS UNDER 42 PA.C.S. CH. 53 SUBCH. B. 25 (C) THE SERVICE OF PROCESS PROCEDURES PROVIDED IN THIS 26 SECTION ARE IN ADDITION TO ANY OTHER METHODS PROVIDED BY LAW FOR 27 SERVICE OF PROCESS UPON INSURERS. 28 SECTION 9. THE ACT IS AMENDED BY ADDING AN ARTICLE TO READ: 29 ARTICLE XXIV 30 FRATERNAL BENEFIT SOCIETIES 20010H0599B4107 - 15 -
1 SUBARTICLE A 2 GENERAL PROVISIONS 3 SECTION 2401. SCOPE. 4 THIS ARTICLE DEALS WITH FRATERNAL BENEFIT SOCIETIES. 5 SECTION 2402. DEFINITIONS. 6 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ARTICLE 7 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE 8 CONTEXT CLEARLY INDICATES OTHERWISE: 9 "BENEFIT CONTRACT." THE AGREEMENT FOR PROVISION OF BENEFITS 10 AUTHORIZED BY SECTION 2431, AS THAT AGREEMENT IS DESCRIBED IN 11 SECTION 2434(A). 12 "BENEFIT MEMBER." AN ADULT MEMBER WHO IS DESIGNATED BY THE 13 LAWS OR RULES OF THE SOCIETY TO BE A BENEFIT MEMBER UNDER A 14 BENEFIT CONTRACT. 15 "CERTIFICATE." THE DOCUMENT ISSUED AS WRITTEN EVIDENCE OF 16 THE BENEFIT CONTRACT. 17 "COMMISSIONER." THE INSURANCE COMMISSIONER OF THE 18 COMMONWEALTH. 19 "DEPARTMENT." THE INSURANCE DEPARTMENT OF THE COMMONWEALTH. 20 "IMPAIRED." FOR A SOCIETY THAT DOES NOT WRITE VARIABLE 21 CONTRACTS, IMPAIRED MEANS WHENEVER THE SOCIETY'S ASSETS ARE LESS 22 THAN ITS TOTAL LIABILITIES. FOR A SOCIETY THAT DOES WRITE 23 VARIABLE CONTRACTS, IMPAIRED MEANS WHENEVER THE SOCIETY'S ASSETS 24 ARE LESS THAN ITS TOTAL LIABILITIES, PLUS THE REQUIRED SURPLUS 25 FOR A MUTUAL LIFE INSURER TO WRITE SUCH CONTRACTS. 26 "INSURANCE LAWS." LAWS AND REGULATIONS PERTAINING TO 27 INSURANCE COMPANIES. 28 "LAWS." THE SOCIETY'S ARTICLES OF INCORPORATION, 29 CONSTITUTION AND BYLAWS, HOWEVER DESIGNATED. 30 "LODGE." SUBORDINATE MEMBER UNITS OF THE SOCIETY, KNOWN AS 20010H0599B4107 - 16 -
1 CAMPS, COURTS, COUNCILS, BRANCHES OR BY ANY OTHER DESIGNATION. 2 "PREMIUMS." PREMIUMS, RATES, DUES OR OTHER REQUIRED 3 CONTRIBUTIONS BY WHATEVER NAME KNOWN, WHICH ARE PAYABLE UNDER 4 THE CERTIFICATE. 5 "RULES." RULES, REGULATIONS OR RESOLUTIONS ADOPTED BY THE 6 SUPREME GOVERNING BODY OR BOARD OF DIRECTORS WHICH ARE INTENDED 7 TO HAVE GENERAL APPLICATION TO THE MEMBERS OF THE SOCIETY. 8 "SOCIETY." FRATERNAL BENEFIT SOCIETY, UNLESS OTHERWISE 9 INDICATED. 10 SECTION 2403. FRATERNAL BENEFIT SOCIETIES. 11 ANY INCORPORATED SOCIETY, ORDER OR SUPREME LODGE WITHOUT 12 CAPITAL STOCK, INCLUDING ONE EXEMPTED UNDER THE PROVISIONS OF 13 SECTION 2466(A)(2) WHETHER INCORPORATED OR NOT, CONDUCTED SOLELY 14 FOR THE BENEFIT OF ITS MEMBERS AND THEIR BENEFICIARIES AND NOT 15 FOR PROFIT, OPERATED ON A LODGE SYSTEM WITH OR WITHOUT 16 RITUALISTIC FORM OF WORK, HAVING A REPRESENTATIVE FORM OF 17 GOVERNMENT AND PROVIDING BENEFITS IN ACCORDANCE WITH THIS 18 ARTICLE IS DECLARED TO BE A FRATERNAL BENEFIT SOCIETY. 19 SECTION 2404. LODGE SYSTEM. 20 (A) GENERAL RULE.--A SOCIETY IS OPERATING ON THE LODGE 21 SYSTEM IF IT HAS A SUPREME GOVERNING BODY AND SUBORDINATE LODGES 22 INTO WHICH MEMBERS ARE ELECTED, INITIATED OR ADMITTED IN 23 ACCORDANCE WITH ITS LAWS, RULES AND RITUALS. SUBORDINATE LODGES 24 SHALL BE REQUIRED BY THE LAWS OF THE SOCIETY TO HOLD REGULAR 25 MEETINGS AT LEAST ONCE IN EACH QUARTER IN FURTHERANCE OF THE 26 PURPOSES OF THE SOCIETY. 27 (B) LODGES FOR CHILDREN.--A SOCIETY MAY, AT ITS OPTION, 28 ORGANIZE AND OPERATE LODGES FOR CHILDREN UNDER THE MINIMUM AGE 29 FOR ADULT MEMBERSHIP. MEMBERSHIP AND INITIATION IN LOCAL LODGES 30 SHALL NOT BE REQUIRED OF SUCH CHILDREN NOR SHALL THEY HAVE A 20010H0599B4107 - 17 -
1 VOICE OR VOTE IN THE MANAGEMENT OF THE SOCIETY. 2 SECTION 2405. REPRESENTATIVE FORM OF GOVERNMENT. 3 A SOCIETY HAS A REPRESENTATIVE FORM OF GOVERNMENT WHEN THE 4 FOLLOWING CIRCUMSTANCES OCCUR: 5 (1) IT HAS A SUPREME GOVERNING BODY CONSTITUTED IN ONE 6 OF THE FOLLOWING WAYS: 7 (I) THE SUPREME GOVERNING BODY IS AN ASSEMBLY 8 COMPOSED OF DELEGATES ELECTED DIRECTLY BY THE MEMBERS OR 9 AT INTERMEDIATE ASSEMBLIES OR CONVENTIONS OF MEMBERS OR 10 THEIR REPRESENTATIVES, TOGETHER WITH OTHER DELEGATES AS 11 MAY BE PRESCRIBED IN THE SOCIETY'S LAWS. A SOCIETY MAY 12 PROVIDE FOR ELECTION OF DELEGATES BY MAIL. THE ELECTED 13 DELEGATES SHALL CONSTITUTE A MAJORITY IN NUMBER AND SHALL 14 NOT HAVE LESS THAN TWO-THIRDS OF THE VOTES AND NOT LESS 15 THAN THE NUMBER OF VOTES REQUIRED TO AMEND THE SOCIETY'S 16 LAWS. THE ASSEMBLY SHALL BE ELECTED AND SHALL MEET AT 17 LEAST ONCE EVERY FOUR YEARS AND SHALL ELECT A BOARD OF 18 DIRECTORS TO CONDUCT THE BUSINESS OF THE SOCIETY BETWEEN 19 MEETINGS OF THE ASSEMBLY. VACANCIES ON THE BOARD OF 20 DIRECTORS BETWEEN ELECTIONS MAY BE FILLED IN THE MANNER 21 PRESCRIBED BY THE SOCIETY'S LAWS. 22 (II) THE SUPREME GOVERNING BODY IS A BOARD COMPOSED 23 OF PERSONS ELECTED BY THE MEMBERS, EITHER DIRECTLY OR BY 24 THEIR REPRESENTATIVES IN INTERMEDIATE ASSEMBLIES, AND ANY 25 OTHER PERSONS PRESCRIBED IN THE SOCIETY'S LAWS. A SOCIETY 26 MAY PROVIDE FOR ELECTION OF THE BOARD BY MAIL. EACH TERM 27 OF A BOARD MEMBER MAY NOT EXCEED FOUR YEARS. VACANCIES ON 28 THE BOARD BETWEEN ELECTIONS MAY BE FILLED IN THE MANNER 29 PRESCRIBED BY THE SOCIETY'S LAWS. THOSE PERSONS ELECTED 30 TO THE BOARD SHALL CONSTITUTE A MAJORITY IN NUMBER AND 20010H0599B4107 - 18 -
1 NOT LESS THAN THE NUMBER OF VOTES REQUIRED TO AMEND THE 2 SOCIETY'S LAWS. A PERSON FILLING THE UNEXPIRED TERM OF AN 3 ELECTED BOARD MEMBER SHALL BE CONSIDERED TO BE AN ELECTED 4 MEMBER. THE BOARD SHALL MEET AT LEAST QUARTERLY TO 5 CONDUCT THE BUSINESS OF THE SOCIETY. 6 (2) THE OFFICERS OF THE SOCIETY ARE ELECTED EITHER BY 7 THE SUPREME GOVERNING BODY OR BY THE BOARD OF DIRECTORS. 8 (3) ONLY BENEFIT MEMBERS ARE ELIGIBLE FOR ELECTION TO 9 THE SUPREME GOVERNING BODY, THE BOARD OF DIRECTORS OR ANY 10 INTERMEDIATE ASSEMBLY. 11 (4) EACH VOTING MEMBER HAS ONE VOTE; NO VOTE MAY BE CAST 12 BY PROXY. 13 SECTION 2406. PURPOSES, POWERS AND LIMITATIONS OF SOCIETIES. 14 (A) PURPOSES.--A SOCIETY SHALL OPERATE FOR THE BENEFIT OF 15 MEMBERS AND THEIR BENEFICIARIES BY: 16 (1) PROVIDING BENEFITS AS SPECIFIED IN SECTION 2431; AND 17 (2) OPERATING FOR ONE OR MORE SOCIAL, INTELLECTUAL, 18 EDUCATIONAL, CHARITABLE, BENEVOLENT, MORAL, FRATERNAL, 19 PATRIOTIC OR RELIGIOUS PURPOSES FOR THE BENEFIT OF ITS 20 MEMBERS, WHICH MAY ALSO BE EXTENDED TO OTHERS. 21 THESE PURPOSES MAY BE CARRIED OUT DIRECTLY BY THE SOCIETY OR 22 INDIRECTLY THROUGH SUBSIDIARY CORPORATIONS OR AFFILIATED 23 ORGANIZATIONS. 24 (B) POWERS.--EVERY SOCIETY SHALL HAVE THE POWER TO ADOPT 25 LAWS AND RULES FOR THE GOVERNMENT OF THE SOCIETY, THE ADMISSION 26 OF ITS MEMBERS AND THE MANAGEMENT OF ITS AFFAIRS. THE SOCIETY 27 SHALL HAVE THE POWER TO CHANGE, ALTER, ADD TO OR AMEND SUCH LAWS 28 AND RULES AND SHALL HAVE SUCH OTHER POWERS AS ARE NECESSARY AND 29 INCIDENTAL TO CARRYING INTO EFFECT THE OBJECTS AND PURPOSES OF 30 THE SOCIETY. 20010H0599B4107 - 19 -
1 (C) LIMITATIONS.--NO SOCIETY OR SUBSIDIARY CORPORATION OR 2 AFFILIATED ORGANIZATION THROUGH WHICH A SOCIETY CARRIES OUT ITS 3 PURPOSES SHALL OWN OR OPERATE A FUNERAL HOME OR UNDERTAKING 4 ESTABLISHMENT. 5 SUBARTICLE B 6 MEMBERSHIP 7 SECTION 2411. QUALIFICATIONS FOR MEMBERSHIP. 8 (A) GENERAL RULE.--A SOCIETY SHALL SPECIFY IN ITS LAWS OR 9 RULES: 10 (1) ELIGIBILITY STANDARDS FOR EACH AND EVERY CLASS OF 11 MEMBERSHIP. IF BENEFITS ARE PROVIDED ON THE LIVES OF 12 CHILDREN, THE MINIMUM AGE FOR ADULT MEMBERSHIP SHALL BE 15 13 YEARS AND THE MAXIMUM AGE SHALL BE 21 YEARS. 14 (2) THE PROCESS FOR ADMISSION TO MEMBERSHIP FOR EACH 15 MEMBERSHIP CLASS. 16 (3) THE RIGHTS AND PRIVILEGES OF EACH MEMBERSHIP CLASS. 17 ONLY BENEFIT MEMBERS SHALL HAVE THE RIGHT TO VOTE ON THE 18 MANAGEMENT OF THE INSURANCE AFFAIRS OF THE SOCIETY. 19 (B) SOCIAL MEMBERS.--A SOCIETY MAY ALSO ADMIT SOCIAL MEMBERS 20 WHO SHALL HAVE NO VOICE OR VOTE IN THE MANAGEMENT OF THE 21 INSURANCE AFFAIRS OF THE SOCIETY. 22 (C) MEMBERSHIP IS PERSONAL.--MEMBERSHIP RIGHTS IN THE 23 SOCIETY ARE PERSONAL TO THE MEMBER AND ARE NOT ASSIGNABLE. 24 SECTION 2412. OFFICE, MEETINGS, PUBLICATIONS AND GRIEVANCE 25 PROCEDURES. 26 (A) OFFICE AND MEETINGS.--THE PRINCIPAL OFFICE OF ANY 27 DOMESTIC SOCIETY SHALL BE LOCATED IN THIS COMMONWEALTH. THE 28 MEETINGS OF THE SUPREME GOVERNING BODY OF THE SOCIETY MAY BE 29 HELD IN ANY STATE OR COUNTRY ON THE NORTH AMERICAN CONTINENT OR 30 IN ANY OTHER LOCATION DETERMINED BY THE SUPREME GOVERNING BODY. 20010H0599B4107 - 20 -
1 ALL BUSINESS TRANSACTED AT SUCH MEETINGS SHALL BE AS VALID IN 2 ALL RESPECTS AS IF THE MEETINGS WERE HELD IN THIS COMMONWEALTH. 3 THE MINUTES OF THE PROCEEDINGS OF THE SUPREME GOVERNING BODY AND 4 OF THE BOARD OF DIRECTORS SHALL BE IN THE ENGLISH LANGUAGE. 5 (B) PUBLICATIONS.-- 6 (1) A SOCIETY MAY PROVIDE IN ITS LAWS FOR AN OFFICIAL 7 PUBLICATION IN WHICH ANY NOTICE, REPORT OR STATEMENT REQUIRED 8 BY LAW TO BE GIVEN TO MEMBERS, INCLUDING NOTICE OF ELECTION, 9 MAY BE PUBLISHED. ANY REQUIRED REPORTS, NOTICES AND 10 STATEMENTS SHALL BE PRINTED CONSPICUOUSLY IN THE PUBLICATION. 11 IF THE RECORDS OF A SOCIETY SHOW THAT TWO OR MORE MEMBERS 12 HAVE THE SAME MAILING ADDRESS, AN OFFICIAL PUBLICATION MAILED 13 TO ONE MEMBER IS DEEMED TO BE MAILED TO ALL MEMBERS AT THE 14 SAME ADDRESS UNLESS A MEMBER REQUESTS A SEPARATE COPY. THIS 15 PARAGRAPH SHALL NOT APPLY TO CERTIFICATE REQUIREMENTS, 16 REPORTS OR NOTICES IN CONNECTION WITH THE ISSUANCE OF 17 CERTIFICATES. 18 (2) NOT LATER THAN JUNE 1 OF EACH YEAR, A SYNOPSIS OF 19 THE SOCIETY'S ANNUAL STATEMENT PROVIDING AN EXPLANATION OF 20 THE FACTS CONCERNING THE CONDITION OF THE SOCIETY THEREBY 21 DISCLOSED SHALL BE PRINTED AND MAILED TO EACH BENEFIT MEMBER 22 OF THE SOCIETY OR, IN LIEU THEREOF, THE SYNOPSIS MAY BE 23 PUBLISHED IN THE SOCIETY'S OFFICIAL PUBLICATION. 24 (C) GRIEVANCE PROCEDURES.--A SOCIETY MAY PROVIDE IN ITS LAWS 25 OR RULES FOR GRIEVANCE OR COMPLAINT PROCEDURES FOR MEMBERS. 26 SECTION 2413. PERSONAL LIABILITY. 27 (A) GENERAL RULE.--THE OFFICERS AND MEMBERS OF THE SUPREME 28 GOVERNING BODY OR ANY SUBORDINATE BODY OF A SOCIETY SHALL NOT BE 29 PERSONALLY LIABLE FOR ANY BENEFITS PROVIDED BY A SOCIETY. 30 (B) INDEMNIFICATION AND REIMBURSEMENT.-- 20010H0599B4107 - 21 -
1 (1) ANY PERSON MAY BE INDEMNIFIED AND REIMBURSED BY ANY 2 SOCIETY FOR EXPENSES REASONABLY INCURRED BY, AND LIABILITIES 3 IMPOSED UPON, THAT PERSON IN CONNECTION WITH OR ARISING OUT 4 OF ANY ACTION, SUIT OR PROCEEDING, WHETHER CIVIL, CRIMINAL, 5 ADMINISTRATIVE OR INVESTIGATIVE, OR THREAT THEREOF, IN WHICH 6 THAT PERSON MAY BE INVOLVED BY REASON OF THE FACT THAT THAT 7 PERSON IS OR WAS A DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF 8 THE SOCIETY OR OF ANY FIRM, CORPORATION OR ORGANIZATION WHICH 9 THE PERSON SERVED IN ANY CAPACITY AT THE REQUEST OF THE 10 SOCIETY. 11 (2) A PERSON SHALL NOT BE SO INDEMNIFIED OR REIMBURSED: 12 (I) IN RELATION TO ANY MATTER IN AN ACTION, SUIT OR 13 PROCEEDING AS TO WHICH THE PERSON SHALL FINALLY BE 14 ADJUDGED TO BE OR HAVE BEEN GUILTY OF A BREACH OF A DUTY 15 AS A DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF THE SOCIETY; 16 OR 17 (II) IN RELATION TO ANY MATTER IN AN ACTION, SUIT OR 18 PROCEEDING, OR THREAT THEREOF, WHICH HAS BEEN MADE THE 19 SUBJECT OF A COMPROMISE SETTLEMENT; 20 UNLESS, IN EITHER CASE, THE PERSON ACTED IN GOOD FAITH FOR A 21 PURPOSE THE PERSON REASONABLY BELIEVED TO BE IN OR NOT 22 OPPOSED TO THE BEST INTERESTS OF THE SOCIETY AND, IN A 23 CRIMINAL ACTION OR PROCEEDING, IN ADDITION, HAD NO REASONABLE 24 CAUSE TO BELIEVE THAT HIS CONDUCT WAS UNLAWFUL. 25 (3) THE DETERMINATION WHETHER THE CONDUCT OF SUCH PERSON 26 MET THE STANDARD REQUIRED IN ORDER TO JUSTIFY INDEMNIFICATION 27 AND REIMBURSEMENT IN RELATION TO ANY MATTER DESCRIBED IN 28 PARAGRAPH (2) MAY ONLY BE MADE BY THE SUPREME GOVERNING BODY 29 OR BOARD OF DIRECTORS BY A MAJORITY VOTE OF A QUORUM 30 CONSISTING OF PERSONS WHO WERE NOT PARTIES TO SUCH ACTION, 20010H0599B4107 - 22 -
1 SUIT OR PROCEEDING OR BY A COURT OF COMPETENT JURISDICTION. 2 THE TERMINATION OF ANY ACTION, SUIT OR PROCEEDING BY 3 JUDGMENT, ORDER, SETTLEMENT, CONVICTION OR UPON A PLEA OF NO 4 CONTEST AS TO THAT PERSON SHALL NOT IN ITSELF CREATE A 5 CONCLUSIVE PRESUMPTION THAT THE PERSON DID NOT MEET THE 6 STANDARD OF CONDUCT REQUIRED IN ORDER TO JUSTIFY 7 INDEMNIFICATION AND REIMBURSEMENT. THE FOREGOING RIGHT OF 8 INDEMNIFICATION AND REIMBURSEMENT SHALL NOT BE EXCLUSIVE OF 9 OTHER RIGHTS TO WHICH THAT PERSON MAY BE ENTITLED AS A MATTER 10 OF LAW AND SHALL INURE TO THE BENEFIT OF THAT PERSON'S HEIRS, 11 EXECUTORS AND ADMINISTRATORS. 12 (C) INSURANCE.--A SOCIETY SHALL HAVE POWER TO PURCHASE AND 13 MAINTAIN INSURANCE ON BEHALF OF ANY PERSON WHO IS OR WAS A 14 DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF THE SOCIETY OR WHO IS OR 15 WAS SERVING AT THE REQUEST OF THE SOCIETY AS A DIRECTOR, 16 OFFICER, EMPLOYEE OR AGENT OF ANY OTHER FIRM, CORPORATION OR 17 ORGANIZATION AGAINST ANY LIABILITY ASSERTED AGAINST THAT PERSON 18 AND INCURRED IN ANY SUCH CAPACITY OR ARISING OUT OF THAT 19 PERSON'S STATUS AS SUCH, WHETHER OR NOT THE SOCIETY WOULD HAVE 20 THE POWER TO INDEMNIFY THE PERSON AGAINST SUCH LIABILITY UNDER 21 THIS SECTION. 22 SECTION 2414. WAIVER. 23 THE LAWS OF THE SOCIETY MAY PROVIDE THAT NO SUBORDINATE BODY 24 NOR ANY OF ITS SUBORDINATE OFFICERS OR MEMBERS SHALL HAVE THE 25 POWER OR AUTHORITY TO WAIVE ANY OF THE PROVISIONS OF THE LAWS OF 26 THE SOCIETY. SUCH PROVISION SHALL BE BINDING ON THE SOCIETY AND 27 EVERY MEMBER AND BENEFICIARY OF A MEMBER. 28 SUBARTICLE C 29 GOVERNANCE 30 SECTION 2421. ORGANIZATION. 20010H0599B4107 - 23 -
1 (A) GENERAL RULE.--A DOMESTIC SOCIETY ORGANIZED AFTER 2 FEBRUARY 11, 1993, SHALL BE FORMED AS PROVIDED IN THIS SECTION. 3 (B) ARTICLES OF INCORPORATION.--SEVEN OR MORE CITIZENS OF 4 THE UNITED STATES, A MAJORITY OF WHOM ARE CITIZENS OF THIS 5 COMMONWEALTH, WHO DESIRE TO FORM A FRATERNAL BENEFIT SOCIETY MAY 6 MAKE, SIGN AND ACKNOWLEDGE BEFORE SOME OFFICER COMPETENT TO TAKE 7 ACKNOWLEDGMENT OF DEEDS, ARTICLES OF INCORPORATION IN WHICH 8 SHALL BE STATED: 9 (1) THE PROPOSED CORPORATE NAME OF THE SOCIETY, WHICH 10 SHALL NOT SO CLOSELY RESEMBLE THE NAME OF ANY SOCIETY OR 11 INSURANCE COMPANY AS TO BE MISLEADING OR CONFUSING. 12 (2) THE PURPOSES FOR WHICH IT IS BEING FORMED AND THE 13 MODE IN WHICH ITS CORPORATE POWERS ARE TO BE EXERCISED. SUCH 14 PURPOSES SHALL NOT INCLUDE MORE LIBERAL POWERS THAN ARE 15 GRANTED BY THIS SUBARTICLE. 16 (3) THE NAMES AND RESIDENCES OF THE INCORPORATORS AND 17 THE NAMES, RESIDENCES AND OFFICIAL TITLES OF ALL THE 18 OFFICERS, TRUSTEES, DIRECTORS OR OTHER PERSONS WHO ARE TO 19 HAVE AND EXERCISE THE GENERAL CONTROL OF THE MANAGEMENT OF 20 THE AFFAIRS AND FUNDS OF THE SOCIETY FOR THE FIRST YEAR OR 21 UNTIL THE ENSUING ELECTION AT WHICH ALL THE OFFICERS SHALL BE 22 ELECTED BY THE SUPREME GOVERNING BODY, WHICH ELECTION SHALL 23 BE HELD NOT LATER THAN ONE YEAR FROM THE DATE OF ISSUANCE OF 24 THE PERMANENT CERTIFICATE OF AUTHORITY. 25 (C) FILING.--SUCH ARTICLES OF INCORPORATION, DULY CERTIFIED 26 COPIES OF THE SOCIETY'S BYLAWS AND RULES, COPIES OF ALL PROPOSED 27 FORMS OF CERTIFICATES AND APPLICATIONS THEREFOR AND CIRCULARS TO 28 BE ISSUED BY THE SOCIETY AND A BOND CONDITIONED UPON THE RETURN 29 TO APPLICANTS OF THE ADVANCED PAYMENTS IF THE ORGANIZATION IS 30 NOT COMPLETED WITHIN ONE YEAR SHALL BE FILED WITH THE 20010H0599B4107 - 24 -
1 COMMISSIONER, WHO MAY REQUIRE SUCH FURTHER INFORMATION AS THE 2 COMMISSIONER DEEMS NECESSARY. THE BOND WITH SURETIES APPROVED BY 3 THE COMMISSIONER SHALL BE IN AN AMOUNT, NOT LESS THAN $300,000 4 NOR MORE THAN $1,500,000, AS REQUIRED BY THE COMMISSIONER. ALL 5 DOCUMENTS FILED SHALL BE IN THE ENGLISH LANGUAGE. IF THE 6 PURPOSES OF THE SOCIETY CONFORM TO THE REQUIREMENTS OF THIS 7 SUBARTICLE AND ALL PROVISIONS OF THE LAW HAVE BEEN COMPLIED 8 WITH, THE COMMISSIONER SHALL SO CERTIFY, RETAIN AND FILE THE 9 ARTICLES OF INCORPORATION AND FURNISH THE INCORPORATORS A 10 PRELIMINARY CERTIFICATE OF AUTHORITY AUTHORIZING THE SOCIETY TO 11 SOLICIT MEMBERS AS PROVIDED IN THIS SECTION. 12 (D) DURATION OF PRELIMINARY CERTIFICATE.--NO PRELIMINARY 13 CERTIFICATE OF AUTHORITY GRANTED UNDER THE PROVISIONS OF THIS 14 SECTION SHALL BE VALID AFTER ONE YEAR FROM ITS DATE OF ISSUANCE 15 OR AFTER A FURTHER PERIOD, NOT EXCEEDING ONE YEAR, AS MAY BE 16 AUTHORIZED BY THE COMMISSIONER UPON CAUSE SHOWN, UNLESS THE 500 17 APPLICANTS REQUIRED UNDER SUBSECTION (E) HAVE BEEN SECURED AND 18 THE ORGANIZATION HAS BEEN COMPLETED AS PROVIDED IN THIS SECTION. 19 THE ARTICLES OF INCORPORATION AND ALL OTHER PROCEEDINGS 20 THEREUNDER SHALL BECOME NULL AND VOID IN ONE YEAR FROM THE DATE 21 OF THE PRELIMINARY CERTIFICATE OF AUTHORITY OR AT THE EXPIRATION 22 OF THE EXTENDED PERIOD UNLESS THE SOCIETY SHALL HAVE COMPLETED 23 ITS ORGANIZATION AND RECEIVED A CERTIFICATE OF AUTHORITY TO DO 24 BUSINESS AS PROVIDED IN THIS SECTION. 25 (E) SOLICITATION OF MEMBERS.--UPON RECEIPT OF A PRELIMINARY 26 CERTIFICATE OF AUTHORITY FROM THE COMMISSIONER, THE SOCIETY MAY 27 SOLICIT MEMBERS FOR THE PURPOSE OF COMPLETING ITS ORGANIZATION, 28 SHALL COLLECT FROM EACH APPLICANT THE AMOUNT OF NOT LESS THAN 29 ONE REGULAR MONTHLY PREMIUM IN ACCORDANCE WITH ITS TABLE OF 30 RATES AND SHALL ISSUE TO EACH APPLICANT A RECEIPT FOR THE AMOUNT 20010H0599B4107 - 25 -
1 COLLECTED. NO SOCIETY SHALL INCUR ANY LIABILITY OTHER THAN FOR 2 THE RETURN OF THE ADVANCE PREMIUM NOR ISSUE ANY CERTIFICATE NOR 3 PAY OR ALLOW OR OFFER OR PROMISE TO PAY OR ALLOW ANY BENEFIT TO 4 ANY PERSON UNTIL THE FOLLOWING CONDITIONS ARE MET: 5 (1) ACTUAL BONA FIDE APPLICATIONS FOR BENEFITS 6 AGGREGATING AT LEAST $500,000 HAVE BEEN SECURED ON NOT LESS 7 THAN 500 APPLICANTS, AND ANY NECESSARY EVIDENCE OF 8 INSURABILITY HAS BEEN FURNISHED TO AND APPROVED BY THE 9 SOCIETY. 10 (2) AT LEAST TEN SUBORDINATE LODGES HAVE BEEN 11 ESTABLISHED INTO WHICH THE 500 APPLICANTS HAVE BEEN ADMITTED. 12 (3) THERE HAS BEEN SUBMITTED TO THE COMMISSIONER UNDER 13 OATH OF THE PRESIDENT OR SECRETARY OR CORRESPONDING OFFICER 14 OF THE SOCIETY A LIST OF THE APPLICANTS, GIVING THE NAME AND 15 ADDRESS OF EACH, THE DATE EACH WAS ADMITTED, THE NAME AND 16 NUMBER OF THE SUBORDINATE LODGE OF WHICH EACH APPLICANT IS A 17 MEMBER AND THE AMOUNT OF BENEFITS TO BE GRANTED AND PREMIUMS 18 FOR EACH APPLICANT. 19 (4) IT SHALL HAVE BEEN SHOWN TO THE COMMISSIONER BY 20 SWORN STATEMENT OF THE TREASURER OR CORRESPONDING OFFICER OF 21 THE SOCIETY THAT AT LEAST 500 APPLICANTS HAVE EACH PAID IN 22 CASH AT LEAST ONE REGULAR MONTHLY PREMIUM AS PROVIDED IN THIS 23 SUBSECTION, WHICH PREMIUMS IN THE AGGREGATE SHALL AMOUNT TO 24 AT LEAST $150,000. THESE ADVANCE PREMIUMS SHALL BE HELD IN 25 TRUST DURING THE PERIOD OF ORGANIZATION AND IF THE SOCIETY 26 HAS NOT QUALIFIED FOR A CERTIFICATE OF AUTHORITY WITHIN ONE 27 YEAR AS PROVIDED IN THIS SECTION THE PREMIUMS SHALL BE 28 RETURNED TO THE APPLICANTS. 29 (5) THE COMMISSIONER MAY MAKE SUCH EXAMINATION AND 30 REQUIRE SUCH FURTHER INFORMATION AS THE COMMISSIONER DEEMS 20010H0599B4107 - 26 -
1 ADVISABLE. UPON PRESENTATION OF SATISFACTORY EVIDENCE THAT 2 THE SOCIETY HAS COMPLIED WITH ALL THE PROVISIONS OF LAW, THE 3 COMMISSIONER SHALL ISSUE TO THE SOCIETY A CERTIFICATE OF 4 AUTHORITY TO THAT EFFECT AND TO THE EFFECT THAT THE SOCIETY 5 IS AUTHORIZED TO TRANSACT BUSINESS PURSUANT TO THE PROVISIONS 6 OF THIS SUBARTICLE. THE CERTIFICATE OF AUTHORITY SHALL BE 7 PRIMA FACIE EVIDENCE OF THE EXISTENCE OF THE SOCIETY AT THE 8 DATE OF THE CERTIFICATE. THE COMMISSIONER SHALL CAUSE A 9 RECORD OF THE CERTIFICATE OF AUTHORITY TO BE MADE. A 10 CERTIFIED COPY OF THE RECORD MAY BE GIVEN IN EVIDENCE WITH 11 LIKE EFFECT AS THE ORIGINAL CERTIFICATE OF AUTHORITY. 12 (F) LIMITATIONS.--THE PROVISIONS OF SUBSECTION (E) SHALL NOT 13 APPLY TO: 14 (1) ANY SOCIETY ORGANIZED PRIOR TO APRIL 6, 1893, UNDER 15 ANY STATUTE OF THIS COMMONWEALTH WHICH WAS ENGAGED IN DOING 16 BUSINESS IN THIS COMMONWEALTH ON THAT DATE. AFTER FEBRUARY 17 12, 1993, ANY SUCH SOCIETY MAY EXERCISE ALL THE RIGHTS 18 CONFERRED BY THIS ARTICLE AND ALL THE RIGHTS, POWERS, 19 PRIVILEGES AND EXEMPTIONS NOW EXERCISED OR POSSESSED BY IT 20 UNDER ITS CHARTER OR ARTICLES OF INCORPORATION OR ARTICLES OF 21 ASSOCIATION, AND NEITHER ITS EXISTENCE AS A CORPORATION NOR 22 ITS RIGHTS TO EXERCISE ANY CORPORATE RIGHTS VESTED IN IT BY 23 VIRTUE OF ITS PAST INCORPORATION SHALL BE AFFECTED BY 24 ANYTHING CONTAINED IN THIS ARTICLE. 25 (2) ANY FRATERNAL BENEFIT SOCIETY INCORPORATED UNDER THE 26 PROVISIONS OF THE ACT OF APRIL 6, 1893 (P.L.10, NO.6), THE 27 ACT OF MAY 20, 1921 (P.L.916, NO.324), THE ACT OF JULY 17, 28 1935 (P.L.1092, NO.357) OR THE ACT OF JULY 29, 1977 (P.L.105, 29 NO.38), RELATING TO FRATERNAL BENEFIT SOCIETIES. FOR THE 30 PURPOSES OF THIS ARTICLE, A CORPORATION WHICH IS EXEMPT FROM 20010H0599B4107 - 27 -
1 THE REQUIREMENTS OF THIS SECTION BY REASON OF PARAGRAPH (1) 2 SHALL BE DEEMED TO BE A HOLDER OF A CERTIFICATE OF AUTHORITY 3 ISSUED UNDER THIS ARTICLE. 4 (G) REINCORPORATION NOT REQUIRED.--ANY INCORPORATED SOCIETY 5 AUTHORIZED TO TRANSACT BUSINESS IN THIS COMMONWEALTH ON FEBRUARY 6 12, 1993, SHALL NOT BE REQUIRED TO REINCORPORATE. 7 SECTION 2422. AMENDMENTS TO LAWS. 8 (A) GENERAL RULE.--A DOMESTIC SOCIETY MAY AMEND ITS LAWS IN 9 ACCORDANCE WITH THE PROVISIONS THEREOF BY ACTION OF ITS SUPREME 10 GOVERNING BODY AT ANY REGULAR OR SPECIAL MEETING THEREOF OR, IF 11 ITS LAWS SO PROVIDE, BY REFERENDUM. THE REFERENDUM MAY BE HELD 12 IN ACCORDANCE WITH THE PROVISIONS OF ITS LAWS BY THE VOTE OF THE 13 VOTING MEMBERS OF THE SOCIETY, BY THE VOTE OF DELEGATES OR 14 REPRESENTATIVES OF VOTING MEMBERS OR BY THE VOTE OF LOCAL 15 LODGES. A SOCIETY MAY PROVIDE FOR VOTING BY MAIL. NO AMENDMENT 16 SUBMITTED FOR ADOPTION BY REFERENDUM SHALL BE ADOPTED UNLESS 17 WITHIN SIX MONTHS FROM THE DATE OF SUBMISSION THEREOF A MAJORITY 18 OF THE MEMBERS VOTING SHALL HAVE SIGNIFIED THEIR CONSENT TO THE 19 AMENDMENT BY ONE OF THE METHODS SPECIFIED IN THIS SECTION. A 20 SOCIETY HAVING A DIRECT ELECTION FORM OF ORGANIZATION AS 21 DESCRIBED IN SECTION 2405(1)(II) MAY AMEND ITS CONSTITUTION OR 22 ARTICLES OF INCORPORATION ONLY BY REFERENDUM. 23 (B) APPROVAL OF AMENDMENT.--NO AMENDMENT TO THE LAWS OF ANY 24 DOMESTIC SOCIETY SHALL TAKE EFFECT UNLESS APPROVED BY THE 25 COMMISSIONER, WHO SHALL APPROVE THE AMENDMENT IF THE 26 COMMISSIONER FINDS THAT IT HAS BEEN DULY ADOPTED AND IS NOT 27 INCONSISTENT WITH ANY REQUIREMENT OF THE LAWS OF THIS 28 COMMONWEALTH OR WITH THE CHARACTER, OBJECTS AND PURPOSES OF THE 29 SOCIETY. UNLESS THE COMMISSIONER SHALL DISAPPROVE THE AMENDMENT 30 WITHIN 60 DAYS AFTER THE FILING, THE AMENDMENT SHALL BE 20010H0599B4107 - 28 -
1 CONSIDERED APPROVED. THE APPROVAL OR DISAPPROVAL OF THE 2 COMMISSIONER SHALL BE IN WRITING AND SHALL BE MAILED TO THE 3 SECRETARY OR CORRESPONDING OFFICER OF THE SOCIETY AT ITS 4 PRINCIPAL OFFICE. IF THE COMMISSIONER DISAPPROVES THE AMENDMENT, 5 THE REASONS FOR THE DISAPPROVAL SHALL BE STATED IN THE WRITTEN 6 NOTICE. 7 (C) COPIES TO MEMBERS.--WITHIN 90 DAYS FROM THE APPROVAL 8 THEREOF BY THE COMMISSIONER, THE AMENDMENTS OR A SYNOPSIS 9 THEREOF SHALL BE FURNISHED TO ALL MEMBERS OF THE SOCIETY EITHER 10 BY MAIL OR BY PUBLICATION IN FULL IN THE OFFICIAL PUBLICATION OF 11 THE SOCIETY. THE AFFIDAVIT OF ANY OFFICER OF THE SOCIETY OR OF 12 ANYONE AUTHORIZED BY IT TO MAIL ANY AMENDMENTS OR SYNOPSIS 13 THEREOF, STATING FACTS WHICH SHOW THAT SAME HAVE BEEN DULY 14 ADDRESSED AND MAILED, SHALL BE PRIMA FACIE EVIDENCE THAT THE 15 AMENDMENTS OR SYNOPSIS THEREOF HAVE BEEN FURNISHED THE 16 ADDRESSEE. 17 (D) FILINGS OF FOREIGN SOCIETIES.--EVERY FOREIGN OR ALIEN 18 SOCIETY AUTHORIZED TO DO BUSINESS IN THIS COMMONWEALTH SHALL 19 FILE WITH THE COMMISSIONER A DULY CERTIFIED COPY OF ALL 20 AMENDMENTS OF OR ADDITIONS TO ITS LAWS WITHIN 90 DAYS AFTER 21 THEIR ENACTMENT. 22 (E) CERTIFIED COPIES AS EVIDENCE.--PRINTED COPIES OF THE 23 LAWS AS AMENDED, CERTIFIED BY THE SECRETARY OR CORRESPONDING 24 OFFICER OF THE SOCIETY, SHALL BE PRIMA FACIE EVIDENCE OF THE 25 LEGAL ADOPTION. 26 SECTION 2423. INSTITUTIONS. 27 A SOCIETY MAY CREATE, MAINTAIN AND OPERATE OR MAY ESTABLISH 28 ORGANIZATIONS TO OPERATE NOT-FOR-PROFIT INSTITUTIONS TO FURTHER 29 THE PURPOSES PERMITTED BY SECTION 2406(A)(2). THESE INSTITUTIONS 30 MAY FURNISH SERVICES FREE OR AT A REASONABLE CHARGE. ANY REAL OR 20010H0599B4107 - 29 -
1 PERSONAL PROPERTY OWNED, HELD OR LEASED BY THE SOCIETY FOR THIS 2 PURPOSE SHALL BE REPORTED IN EVERY ANNUAL STATEMENT BUT SHALL 3 NOT BE ALLOWED AS AN ADMITTED ASSET OF THE SOCIETY EXCEPT AS 4 PROVIDED IN SECTION 2441(B). 5 SECTION 2424. REINSURANCE. 6 (A) GENERAL RULE.--A DOMESTIC SOCIETY MAY, BY A REINSURANCE 7 AGREEMENT, CEDE ANY INDIVIDUAL RISK OR RISKS IN WHOLE OR IN PART 8 TO AN INSURER (OTHER THAN ANOTHER FRATERNAL BENEFIT SOCIETY) 9 HAVING THE POWER TO MAKE SUCH REINSURANCE AND AUTHORIZED TO DO 10 BUSINESS IN THIS COMMONWEALTH OR, IF NOT SO AUTHORIZED, ONE 11 WHICH IS APPROVED BY THE COMMISSIONER, BUT NO SOCIETY MAY 12 REINSURE SUBSTANTIALLY ALL OF ITS INSURANCE IN FORCE WITHOUT THE 13 WRITTEN PERMISSION OF THE COMMISSIONER. IT MAY TAKE CREDIT FOR 14 THE RESERVES ON THE CEDED RISKS TO THE EXTENT REINSURED, BUT NO 15 CREDIT SHALL BE ALLOWED AS AN ADMITTED ASSET OR AS A DEDUCTION 16 FROM LIABILITY TO A CEDING SOCIETY FOR REINSURANCE MADE, CEDED, 17 RENEWED OR OTHERWISE BECOMING EFFECTIVE AFTER FEBRUARY 12, 1993, 18 UNLESS THE REINSURANCE IS PAYABLE BY THE ASSUMING INSURER ON THE 19 BASIS OF THE LIABILITY OF THE CEDING SOCIETY UNDER THE CONTRACT 20 OR CONTRACTS REINSURED WITHOUT DIMINUTION BECAUSE OF THE 21 INSOLVENCY OF THE CEDING SOCIETY. 22 (B) REINSURANCE BY ANOTHER SOCIETY.--NOTWITHSTANDING THE 23 LIMITATION IN SUBSECTION (A), A SOCIETY MAY REINSURE THE RISKS 24 OF ANOTHER SOCIETY IN A CONSOLIDATION OR MERGER APPROVED BY THE 25 COMMISSIONER UNDER SECTION 2425. 26 SECTION 2425. CONSOLIDATIONS AND MERGERS. 27 (A) GENERAL RULE.--A DOMESTIC SOCIETY MAY CONSOLIDATE OR 28 MERGE WITH ANY OTHER SOCIETY BY COMPLYING WITH THE PROVISIONS OF 29 THIS SECTION. IT SHALL FILE WITH THE COMMISSIONER: 30 (1) A CERTIFIED COPY OF THE WRITTEN CONTRACT CONTAINING 20010H0599B4107 - 30 -
1 IN FULL THE TERMS AND CONDITIONS OF THE CONSOLIDATION OR 2 MERGER. 3 (2) A SWORN STATEMENT BY THE PRESIDENT AND SECRETARY OR 4 CORRESPONDING OFFICERS OF EACH SOCIETY SHOWING THE FINANCIAL 5 CONDITION OF THE SOCIETY ON A DATE FIXED BY THE COMMISSIONER 6 BUT NOT EARLIER THAN DECEMBER 31 NEXT PRECEDING THE DATE OF 7 THE CONTRACT. 8 (3) A CERTIFICATE OF THE OFFICERS, DULY VERIFIED BY 9 THEIR RESPECTIVE OATHS, THAT THE CONSOLIDATION OR MERGER HAS 10 BEEN APPROVED BY A TWO-THIRDS VOTE OF THE SUPREME GOVERNING 11 BODY OF EACH SOCIETY, WHICH VOTE HAD BEEN CONDUCTED AT A 12 REGULAR OR SPECIAL MEETING OF EACH BODY OR, IF THE SOCIETY'S 13 LAWS PERMIT, BY MAIL. 14 (4) EVIDENCE THAT AT LEAST 60 DAYS PRIOR TO THE ACTION 15 OF THE SUPREME GOVERNING BODY OF EACH SOCIETY, THE TEXT OF 16 THE CONTRACT WAS FURNISHED TO ALL MEMBERS OF EACH SOCIETY 17 EITHER BY MAIL OR BY PUBLICATION IN FULL IN THE OFFICIAL 18 PUBLICATION OF EACH SOCIETY. 19 (B) APPROVAL BY COMMISSIONER.--IF THE COMMISSIONER FINDS 20 THAT THE CONTRACT IS IN CONFORMITY WITH THE PROVISIONS OF THIS 21 SECTION, THAT THE FINANCIAL STATEMENTS ARE CORRECT AND THAT THE 22 CONSOLIDATION OR MERGER IS JUST AND EQUITABLE TO THE MEMBERS OF 23 EACH SOCIETY, THE COMMISSIONER SHALL APPROVE THE CONTRACT AND 24 ISSUE A CERTIFICATE TO THAT EFFECT. UPON THIS APPROVAL, THE 25 CONTRACT SHALL BE IN FULL FORCE AND EFFECT UNLESS ANY SOCIETY 26 WHICH IS A PARTY TO THE CONTRACT IS INCORPORATED UNDER THE LAWS 27 OF ANY OTHER STATE OR TERRITORY. IN SUCH EVENT THE CONSOLIDATION 28 OR MERGER SHALL NOT BECOME EFFECTIVE UNLESS AND UNTIL IT HAS 29 BEEN APPROVED AS PROVIDED BY THE LAWS OF THAT STATE OR TERRITORY 30 AND A CERTIFICATE OF THE APPROVAL FILED WITH THE COMMISSIONER OF 20010H0599B4107 - 31 -
1 THIS COMMONWEALTH, OR, IF THE LAWS OF THAT STATE OR TERRITORY 2 CONTAIN NO SUCH PROVISION, THEN THE CONSOLIDATION OR MERGER 3 SHALL NOT BECOME EFFECTIVE UNLESS AND UNTIL IT HAS BEEN APPROVED 4 BY THE COMMISSIONER OF INSURANCE OF THAT STATE OR TERRITORY AND 5 A CERTIFICATE OF THE APPROVAL FILED WITH THE COMMISSIONER OF 6 THIS COMMONWEALTH. 7 (C) VESTING OF RIGHTS AND LIABILITIES.--WHEN THE 8 CONSOLIDATION OR MERGER BECOMES EFFECTIVE AS PROVIDED IN THIS 9 SECTION, ALL THE RIGHTS, FRANCHISES AND INTERESTS OF THE 10 CONSOLIDATED OR MERGED SOCIETIES IN AND TO EVERY SPECIES OF 11 PROPERTY, REAL, PERSONAL OR MIXED, AND THINGS IN ACTION 12 THEREUNTO BELONGING SHALL BE VESTED IN THE SOCIETY RESULTING 13 FROM OR REMAINING AFTER THE CONSOLIDATION OR MERGER WITHOUT ANY 14 OTHER INSTRUMENT, EXCEPT THAT CONVEYANCES OF REAL PROPERTY MAY 15 BE EVIDENCED BY PROPER DEEDS, AND THE TITLE TO ANY REAL ESTATE 16 OR INTEREST THEREIN VESTED UNDER THE LAWS OF THIS COMMONWEALTH 17 IN ANY OF THE SOCIETIES CONSOLIDATED OR MERGED SHALL NOT REVERT 18 OR BE IN ANY WAY IMPAIRED BY REASON OF THE CONSOLIDATION OR 19 MERGER BUT SHALL VEST ABSOLUTELY IN THE SOCIETY RESULTING FROM 20 OR REMAINING AFTER THE CONSOLIDATION OR MERGER. 21 (D) EFFECT OF AFFIDAVIT.--THE AFFIDAVIT OF ANY OFFICER OF 22 THE SOCIETY OR OF ANYONE AUTHORIZED BY IT TO MAIL ANY NOTICE OR 23 DOCUMENT, STATING THAT SUCH NOTICE OR DOCUMENT HAS BEEN DULY 24 ADDRESSED AND MAILED, SHALL BE PRIMA FACIE EVIDENCE THAT THE 25 NOTICE OR DOCUMENT HAS BEEN FURNISHED THE ADDRESSEES. 26 SECTION 2426. CONVERSION OF FRATERNAL BENEFIT SOCIETY INTO 27 MUTUAL LIFE INSURANCE COMPANY. 28 ANY DOMESTIC FRATERNAL BENEFIT SOCIETY MAY BE CONVERTED AND 29 LICENSED AS A MUTUAL LIFE INSURANCE COMPANY BY COMPLIANCE WITH 30 ALL THE REQUIREMENTS OF THIS ACT IF THE PLAN OF CONVERSION HAS 20010H0599B4107 - 32 -
1 BEEN APPROVED BY THE COMMISSIONER. A PLAN OF CONVERSION SHALL BE 2 PREPARED IN WRITING BY THE BOARD OF DIRECTORS SETTING FORTH IN 3 FULL THE TERMS AND CONDITIONS OF CONVERSION. THE AFFIRMATIVE 4 VOTE OF TWO-THIRDS OF ALL MEMBERS OF THE SUPREME GOVERNING BODY 5 AT A REGULAR OR SPECIAL MEETING SHALL BE NECESSARY FOR THE 6 APPROVAL OF SUCH PLAN. NO CONVERSION SHALL TAKE EFFECT UNLESS 7 AND UNTIL APPROVED BY THE COMMISSIONER WHO MAY GIVE APPROVAL IF 8 THE COMMISSIONER FINDS THAT THE PROPOSED CHANGE IS IN CONFORMITY 9 WITH THE REQUIREMENTS OF LAW AND NOT PREJUDICIAL TO THE 10 CERTIFICATE HOLDERS OF THE SOCIETY. 11 SECTION 2427. DOMESTICATION. 12 (A) FILING REQUIREMENTS.--A FOREIGN OR ALIEN SOCIETY 13 AUTHORIZED TO DO BUSINESS IN THIS COMMONWEALTH MAY BECOME A 14 DOMESTIC SOCIETY BY FILING WITH THE COMMISSIONER IN THE ENGLISH 15 LANGUAGE: 16 (1) ARTICLES OF DOMESTICATION WHICH SHALL SET FORTH THE 17 NAME OF THE SOCIETY, THE ADDRESS, INCLUDING STREET AND 18 NUMBER, OF ITS PRINCIPAL OFFICE IN THIS COMMONWEALTH AND ANY 19 OTHER PROVISIONS OF ITS CURRENT ARTICLES OF INCORPORATION 20 THAT THE SOCIETY DESIRES TO RETAIN. 21 (2) A STATEMENT THAT UPON DOMESTICATION THE SOCIETY WILL 22 BE SUBJECT TO ALL THE LAWS OF THIS COMMONWEALTH APPLICABLE TO 23 DOMESTIC FRATERNAL BENEFIT SOCIETIES. 24 (3) A BRIEF STATEMENT OF THE PURPOSE OR PURPOSES FOR 25 WHICH IT IS TO BE DOMESTICATED, WHICH SHALL BE A PURPOSE OR 26 PURPOSES FOR WHICH A DOMESTIC SOCIETY MAY BE INCORPORATED 27 UNDER THIS SUBARTICLE. 28 (4) A CERTIFICATE OF THE PRESIDENT AND SECRETARY OF THE 29 SOCIETY DULY VERIFIED BY THEIR RESPECTIVE OATHS THAT THE 30 DOMESTICATION HAS BEEN APPROVED IN ACCORDANCE WITH THE 20010H0599B4107 - 33 -
1 CONSTITUTION AND BYLAWS OF THE SOCIETY AS REQUIRED BY 2 APPLICABLE LAWS AND REGULATIONS OF THE DOMICILIARY 3 JURISDICTION. 4 (B) APPROVAL BY COMMISSIONER.--IF THE COMMISSIONER FINDS 5 THAT THE FILING BY THE SOCIETY IS IN PROPER ORDER, THAT THE 6 SOCIETY COMPLIES WITH THE REQUIREMENTS FOR ISSUING A CERTIFICATE 7 OF AUTHORITY TO A DOMESTIC SOCIETY, THAT THE SOCIETY WILL 8 MAINTAIN ITS PRINCIPAL OFFICE IN PENNSYLVANIA AND THAT THE 9 DOMESTICATION IS IN THE BEST INTEREST OF THE MEMBERS OF THE 10 SOCIETY, THE COMMISSIONER SHALL APPROVE THE ARTICLES OF 11 DOMESTICATION AND ISSUE A CERTIFICATE TO THAT EFFECT. 12 (C) EFFECT OF DOMESTICATION.--UPON APPROVAL OF THE ARTICLES 13 OF DOMESTICATION BY THE COMMISSIONER, THE SOCIETY SHALL 14 THEREAFTER BECOME A DOMESTIC SOCIETY AND SHALL BE SUBJECT TO ALL 15 THE LAWS OF THIS COMMONWEALTH APPLICABLE TO DOMESTIC SOCIETIES. 16 SUBARTICLE D 17 CONTRACTUAL BENEFITS 18 SECTION 2431. BENEFITS. 19 (A) GENERAL RULE.--A SOCIETY AUTHORIZED TO DO BUSINESS IN 20 THIS COMMONWEALTH MAY PROVIDE THE FOLLOWING CONTRACTUAL BENEFITS 21 IN ANY FORM: 22 (1) DEATH BENEFITS. 23 (2) ENDOWMENT BENEFITS. 24 (3) ANNUITY BENEFITS. 25 (4) TEMPORARY OR PERMANENT DISABILITY BENEFITS. 26 (5) HOSPITAL, MEDICAL OR NURSING BENEFITS. 27 (6) OTHER BENEFITS WHICH ARE AUTHORIZED FOR INSURERS 28 LICENSED TO WRITE LIFE, ACCIDENT AND HEALTH INSURANCE AND 29 WHICH ARE NOT INCONSISTENT WITH THIS SUBARTICLE. 30 (B) ELIGIBLE MEMBERS.--A SOCIETY SHALL SPECIFY IN ITS RULES 20010H0599B4107 - 34 -
1 THOSE PERSONS WHO MAY BE ISSUED OR COVERED BY THE CONTRACTUAL 2 BENEFITS IN SUBSECTION (A), CONSISTENT WITH PROVIDING BENEFITS 3 TO MEMBERS AND THEIR DEPENDENTS. A SOCIETY MAY PROVIDE BENEFITS 4 ON THE LIVES OF CHILDREN UNDER THE MINIMUM AGE FOR ADULT 5 MEMBERSHIP UPON APPLICATION OF AN ADULT PERSON. 6 SECTION 2432. BENEFICIARIES. 7 (A) DESIGNATION.--THE OWNER OF A BENEFIT CONTRACT SHALL HAVE 8 THE RIGHT AT ALL TIMES TO CHANGE THE BENEFICIARY OR 9 BENEFICIARIES IN ACCORDANCE WITH THE LAWS OR RULES OF THE 10 SOCIETY UNLESS THE OWNER WAIVES THIS RIGHT BY SPECIFICALLY 11 REQUESTING IN WRITING THAT THE BENEFICIARY DESIGNATION BE 12 IRREVOCABLE. A SOCIETY MAY, THROUGH ITS LAWS OR RULES, LIMIT THE 13 SCOPE OF BENEFICIARY DESIGNATIONS AND SHALL PROVIDE THAT NO 14 REVOCABLE BENEFICIARY SHALL HAVE OR OBTAIN ANY VESTED INTEREST 15 IN THE PROCEEDS OF ANY CERTIFICATE UNTIL THE CERTIFICATE HAS 16 BECOME DUE AND PAYABLE IN CONFORMITY WITH THE PROVISIONS OF THE 17 BENEFIT CONTRACT. 18 (B) PAYMENT OF FUNERAL BENEFITS.--A SOCIETY MAY MAKE 19 PROVISION FOR THE PAYMENT OF FUNERAL BENEFITS TO THE EXTENT OF 20 THAT PORTION OF ANY PAYMENT UNDER A CERTIFICATE AS MIGHT 21 REASONABLY APPEAR TO BE DUE TO ANY PERSON EQUITABLY ENTITLED 22 THERETO BY REASON OF HAVING INCURRED EXPENSE OCCASIONED BY THE 23 BURIAL OF THE MEMBER, PROVIDED THE PORTION SO PAID SHALL NOT 24 EXCEED THE SUM OF $2,000. 25 (C) ABSENCE OF BENEFICIARY.--IF AT THE DEATH OF ANY PERSON 26 INSURED UNDER A BENEFIT CONTRACT THERE IS NO LAWFUL BENEFICIARY 27 TO WHOM THE PROCEEDS SHALL BE PAYABLE, THE AMOUNT OF THE 28 BENEFIT, EXCEPT TO THE EXTENT THAT FUNERAL BENEFITS MAY BE PAID 29 AS PROVIDED IN THIS SECTION, SHALL BE PAYABLE TO THE PERSONAL 30 REPRESENTATIVE OF THE DECEASED INSURED, OR, IF NONE, THEN 20010H0599B4107 - 35 -
1 PAYMENT MAY BE MADE IN ACCORDANCE WITH 20 PA.C.S. § 3101(D) 2 (RELATING TO PAYMENTS TO FAMILY AND FUNERAL DIRECTORS). IF THE 3 OWNER OF THE CERTIFICATE IS OTHER THAN THE INSURED, THE PROCEEDS 4 SHALL BE PAYABLE TO THE OWNER. 5 SECTION 2433. BENEFITS NOT ATTACHABLE. 6 NO MONEY OR OTHER BENEFIT, CHARITY, RELIEF OR AID TO BE PAID, 7 PROVIDED OR RENDERED BY ANY SOCIETY SHALL BE LIABLE TO 8 ATTACHMENT, GARNISHMENT OR OTHER PROCESS OR TO BE SEIZED, TAKEN, 9 APPROPRIATED OR APPLIED BY ANY LEGAL OR EQUITABLE PROCESS OR 10 OPERATION OF LAW TO PAY ANY DEBT OR LIABILITY OF A MEMBER OR 11 BENEFICIARY, OR ANY OTHER PERSON WHO MAY HAVE A RIGHT 12 THEREUNDER, EITHER BEFORE OR AFTER PAYMENT BY THE SOCIETY. 13 SECTION 2434. BENEFIT CONTRACT. 14 (A) GENERAL RULE.--EVERY SOCIETY AUTHORIZED TO DO BUSINESS 15 IN THIS COMMONWEALTH SHALL ISSUE TO EACH OWNER OF A BENEFIT 16 CONTRACT A CERTIFICATE SPECIFYING THE AMOUNT OF BENEFITS 17 PROVIDED BY THE CONTRACT. THE CERTIFICATE, TOGETHER WITH ANY 18 RIDERS OR ENDORSEMENTS ATTACHED TO IT, THE LAWS OF THE SOCIETY, 19 THE APPLICATION FOR MEMBERSHIP, THE APPLICATION FOR INSURANCE 20 AND DECLARATION OF INSURABILITY, IF ANY, SIGNED BY THE 21 APPLICANT, AND ALL AMENDMENTS TO EACH THEREOF, SHALL CONSTITUTE 22 THE BENEFIT CONTRACT AS OF THE DATE OF ISSUANCE BETWEEN THE 23 SOCIETY AND THE OWNER, AND THE CERTIFICATE SHALL SO STATE. THE 24 SOCIETY SHALL MAINTAIN A COPY OF ITS LAWS AT EACH LODGE FOR 25 INSPECTION BY THE BENEFIT MEMBER AND SHALL FURNISH A COPY TO 26 EACH BENEFIT MEMBER UPON REQUEST. A COPY OF THE APPLICATION FOR 27 INSURANCE AND DECLARATION OF INSURABILITY, IF ANY, SHALL BE 28 ENDORSED UPON OR ATTACHED TO THE CERTIFICATE. ALL STATEMENTS ON 29 THE APPLICATION SHALL BE REPRESENTATIONS AND NOT WARRANTIES. ANY 30 WAIVER OF THIS PROVISION SHALL BE VOID. 20010H0599B4107 - 36 -
1 (B) EFFECT OF SUBSEQUENT CHANGES.--ANY CHANGES, ADDITIONS OR 2 AMENDMENTS TO THE LAWS OF THE SOCIETY DULY MADE OR ENACTED 3 SUBSEQUENT TO THE ISSUANCE OF THE CERTIFICATE SHALL BIND THE 4 OWNER AND THE BENEFICIARIES AND SHALL GOVERN AND CONTROL THE 5 BENEFIT CONTRACT IN ALL RESPECTS THE SAME AS IF THE CHANGES, 6 ADDITIONS OR AMENDMENTS HAD BEEN MADE PRIOR TO AND WERE IN FORCE 7 AT THE TIME OF THE APPLICATION FOR INSURANCE, EXCEPT THAT NO 8 CHANGE, ADDITION OR AMENDMENT SHALL DESTROY OR DIMINISH BENEFITS 9 WHICH THE SOCIETY CONTRACTED TO GIVE THE OWNER AS OF THE DATE OF 10 ISSUANCE. 11 (C) EFFECT ON MINORITY.--ANY PERSON UPON WHOSE LIFE A 12 BENEFIT CONTRACT IS ISSUED PRIOR TO ATTAINING THE AGE OF 13 MAJORITY SHALL BE BOUND BY THE TERMS OF THE APPLICATION AND 14 CERTIFICATE AND BY ALL THE LAWS AND RULES OF THE SOCIETY TO THE 15 SAME EXTENT AS THOUGH THE AGE OF MAJORITY HAD BEEN ATTAINED AT 16 THE TIME OF APPLICATION. 17 (D) PAYMENT OF DEFICIENCIES.--A SOCIETY SHALL PROVIDE IN ITS 18 LAWS THAT IF ITS RESERVES AS TO ALL OR ANY CLASS OF CERTIFICATES 19 BECOME IMPAIRED, ITS BOARD OF DIRECTORS OR CORRESPONDING BODY 20 MAY REQUIRE THAT THERE SHALL BE PAID BY THE OWNER TO THE SOCIETY 21 THE AMOUNT OF THE OWNER'S EQUITABLE PROPORTION OF SUCH 22 DEFICIENCY AS ASCERTAINED BY ITS BOARD, AND IF THE PAYMENT IS 23 NOT MADE: 24 (1) IT SHALL STAND AS AN INDEBTEDNESS AGAINST THE 25 CERTIFICATE AND DRAW INTEREST NOT TO EXCEED THE RATE 26 SPECIFIED FOR CERTIFICATE LOANS UNDER THE CERTIFICATES; OR 27 (2) IN LIEU OF OR IN COMBINATION WITH PARAGRAPH (1), THE 28 OWNER MAY ACCEPT A PROPORTIONATE REDUCTION IN BENEFITS UNDER 29 THE CERTIFICATE. 30 THE SOCIETY MAY SPECIFY THE MANNER OF THE ELECTION AND WHICH 20010H0599B4107 - 37 -
1 ALTERNATIVE IS TO BE PRESUMED IF NO ELECTION IS MADE. 2 (E) CERTIFIED COPIES AS EVIDENCE.--COPIES OF ANY OF THE 3 DOCUMENTS MENTIONED IN THIS SECTION, CERTIFIED BY THE SECRETARY 4 OR CORRESPONDING OFFICER OF THE SOCIETY, SHALL BE RECEIVED IN 5 EVIDENCE OF THE TERMS AND CONDITIONS THEREOF. 6 (F) CONTENT.--NO CERTIFICATE, APPLICATION, RIDER OR 7 ENDORSEMENT USED IN CONNECTION THEREWITH SHALL BE DELIVERED OR 8 ISSUED FOR DELIVERY IN THIS COMMONWEALTH UNLESS THE FORM 9 CONTAINS PROVISIONS REQUIRED FOR LIKE FORMS ISSUED BY LIFE, 10 ACCIDENT AND HEALTH INSURERS IN THIS COMMONWEALTH AND A COPY OF 11 THE FORM HAS BEEN FILED WITH AND APPROVED BY THE COMMISSIONER IN 12 THE MANNER PROVIDED FOR LIKE POLICIES ISSUED BY LIFE, ACCIDENT 13 AND HEALTH INSURERS IN THIS COMMONWEALTH. EVERY LIFE, ACCIDENT, 14 HEALTH OR DISABILITY INSURANCE CERTIFICATE, EVERY ANNUITY 15 CERTIFICATE AND EVERY APPLICATION, RIDER OR ENDORSEMENT USED IN 16 CONNECTION THEREWITH APPROVED PRIOR TO FEBRUARY 12, 1993, SHALL 17 BE BROUGHT INTO COMPLIANCE WITH THIS SUBARTICLE BY FEBRUARY 12, 18 1994. 19 (G) PREMIUM GRACE PERIOD.--THE CERTIFICATE MAY CONTAIN A 20 PROVISION FOR A GRACE PERIOD FOR PAYMENT OF PREMIUMS OF ONE FULL 21 MONTH IN ITS CERTIFICATES. 22 (H) ADDITIONAL PROVISIONS.--THE CERTIFICATE SHALL ALSO 23 CONTAIN THE FOLLOWING: 24 (1) A PROVISION STATING THE AMOUNT OF PREMIUMS WHICH ARE 25 PAYABLE UNDER THE CERTIFICATE AND A PROVISION RECITING OR 26 SETTING FORTH THE SUBSTANCE OF ANY SECTIONS OF THE SOCIETY'S 27 LAWS OR RULES IN FORCE AT THE TIME OF ISSUANCE OF THE 28 CERTIFICATE WHICH IF VIOLATED WILL RESULT IN THE TERMINATION 29 OR REDUCTION OF BENEFITS PAYABLE UNDER THE CERTIFICATE. 30 (2) A PROVISION THAT ANY MEMBER EXPELLED OR SUSPENDED, 20010H0599B4107 - 38 -
1 EXCEPT FOR NONPAYMENT OF A PREMIUM OR WITHIN THE CONTESTABLE 2 PERIOD FOR MATERIAL MISREPRESENTATION IN THE APPLICATION FOR 3 MEMBERSHIP OR INSURANCE, SHALL HAVE THE PRIVILEGE OF 4 MAINTAINING THE CERTIFICATE IN FORCE BY CONTINUING PAYMENT OF 5 THE REQUIRED PREMIUM. 6 (3) A PROVISION THAT IN CASE THE AGE OR SEX OF THE 7 MEMBER OR OF ANY OTHER PERSON IS CONSIDERED IN DETERMINING 8 THE PREMIUM AND IT IS FOUND AT ANY TIME BEFORE FINAL 9 SETTLEMENT UNDER THE CERTIFICATE THAT THE AGE OR SEX HAS BEEN 10 MISSTATED, AND THE DISCREPANCY AND PREMIUM INVOLVED HAVE NOT 11 BEEN ADJUSTED, THE AMOUNT PAYABLE UNDER THE CERTIFICATE SHALL 12 BE SUCH AS THE PREMIUM WOULD HAVE PURCHASED AT THE CORRECT 13 AGE AND SEX. IF THE CORRECT AGE WAS NOT AN INSURABLE AGE 14 UNDER THE SOCIETY'S CHARTER OR LAWS, ONLY THE PREMIUMS PAID 15 TO THE SOCIETY, LESS ANY PAYMENTS PREVIOUSLY MADE TO THE 16 MEMBER, SHALL BE RETURNED, OR, AT THE OPTION OF THE SOCIETY, 17 THE AMOUNT PAYABLE UNDER THE CERTIFICATE SHALL BE SUCH AS THE 18 PREMIUM WOULD HAVE PURCHASED AT THE CORRECT AGE ACCORDING TO 19 THE SOCIETY'S PROMULGATED RATES AND ANY EXTENSION THEREOF 20 BASED ON ACTUARIAL PRINCIPLES. 21 (I) TRANSFER OF CONTROL OR OWNERSHIP.--BENEFIT CONTRACTS 22 ISSUED ON THE LIVES OF PERSONS BELOW THE SOCIETY'S MINIMUM AGE 23 FOR ADULT MEMBERSHIP MAY PROVIDE FOR TRANSFER OF CONTROL OR 24 OWNERSHIP TO THE INSURED AT AN AGE SPECIFIED IN THE CERTIFICATE. 25 A SOCIETY MAY REQUIRE APPROVAL OF AN APPLICATION FOR MEMBERSHIP 26 IN ORDER TO EFFECT THIS TRANSFER AND MAY PROVIDE IN ALL OTHER 27 RESPECTS FOR THE REGULATION, GOVERNMENT AND CONTROL OF THE 28 CERTIFICATES AND ALL RIGHTS, OBLIGATIONS AND LIABILITIES 29 INCIDENT THERETO AND CONNECTED THEREWITH. OWNERSHIP RIGHTS PRIOR 30 TO THE TRANSFER SHALL BE SPECIFIED IN THE CERTIFICATE. 20010H0599B4107 - 39 -
1 (J) ASSIGNMENT.--A SOCIETY MAY SPECIFY THE TERMS AND 2 CONDITIONS ON WHICH BENEFIT CONTRACTS MAY BE ASSIGNED. 3 SECTION 2435. NONFORFEITURE BENEFITS, CASH SURRENDER VALUES, 4 CERTIFICATE LOANS AND OTHER OPTIONS. 5 (A) EXISTING CERTIFICATES.--FOR CERTIFICATES ISSUED PRIOR TO 6 FEBRUARY 12, 1994, THE VALUE OF EVERY PAID-UP NONFORFEITURE 7 BENEFIT AND THE AMOUNT OF ANY CASH SURRENDER VALUE, LOAN OR 8 OTHER OPTION GRANTED SHALL COMPLY WITH THE PROVISIONS OF LAW 9 APPLICABLE IMMEDIATELY PRIOR TO FEBRUARY 12, 1993. 10 (B) NEW CERTIFICATES.--FOR LIFE CERTIFICATES ISSUED AFTER 11 FEBRUARY 11, 1994, FOR WHICH RESERVES ARE COMPUTED ON THE 12 COMMISSIONER'S 1941 STANDARD ORDINARY MORTALITY TABLE, THE 13 COMMISSIONER'S 1941 STANDARD INDUSTRIAL TABLE OR THE 14 COMMISSIONER'S 1958 STANDARD ORDINARY MORTALITY TABLE OR THE 15 COMMISSIONER'S 1980 STANDARD MORTALITY TABLE, OR ANY MORE RECENT 16 TABLE MADE APPLICABLE TO LIFE INSURERS, EVERY PAID-UP 17 NONFORFEITURE BENEFIT AND THE AMOUNT OF ANY CASH SURRENDER 18 VALUE, LOAN OR OTHER OPTION GRANTED SHALL NOT BE LESS THAN THE 19 CORRESPONDING AMOUNT ASCERTAINED IN ACCORDANCE WITH THE LAWS OF 20 THIS COMMONWEALTH APPLICABLE TO LIFE INSURERS ISSUING POLICIES 21 CONTAINING LIKE BENEFITS BASED UPON SUCH TABLES. FOR ANNUITY 22 CERTIFICATES ISSUED AFTER FEBRUARY 11, 1994, EVERY PAID-UP 23 ANNUITY BENEFIT, CASH SURRENDER VALUE OR DEATH BENEFIT SHALL NOT 24 BE LESS THAN THE CORRESPONDING AMOUNT IN ACCORDANCE WITH THE 25 LAWS OF THIS COMMONWEALTH APPLICABLE TO LIFE INSURERS ISSUING 26 POLICIES CONTAINING LIKE BENEFITS. 27 SUBARTICLE E 28 FINANCIAL 29 SECTION 2441. INVESTMENTS. 30 (A) GENERAL RULE.--A SOCIETY SHALL INVEST ITS FUNDS ONLY IN 20010H0599B4107 - 40 -
1 INVESTMENTS AUTHORIZED BY THE LAWS OF THIS COMMONWEALTH FOR THE 2 INVESTMENT OF ASSETS OF LIFE INSURERS AND SUBJECT TO THE 3 LIMITATIONS THEREON. ANY FOREIGN OR ALIEN SOCIETY PERMITTED OR 4 SEEKING TO DO BUSINESS IN THIS COMMONWEALTH WHICH INVESTS ITS 5 FUNDS IN ACCORDANCE WITH THE LAWS OF THE STATE, DISTRICT, 6 TERRITORY, COUNTRY OR PROVINCE IN WHICH IT IS INCORPORATED SHALL 7 BE HELD TO MEET THE REQUIREMENTS OF THIS SECTION FOR THE 8 INVESTMENT OF FUNDS. 9 (B) REAL ESTATE.--IN ADDITION TO THE INVESTMENT OF ASSETS AS 10 PRESCRIBED IN THIS SECTION OR ANY OTHER LAWS OF THIS 11 COMMONWEALTH, A FRATERNAL BENEFIT SOCIETY MAY PURCHASE, RECEIVE, 12 HOLD AND CONVEY REAL ESTATE OR ANY INTEREST THEREIN FOR THE 13 PURPOSE OF MAINTENANCE OR CONSTRUCTION OF CAMPS OR RECREATIONAL 14 AREAS WITH NECESSARY FACILITIES FOR ALL ITS MEMBERS. THESE 15 ASSETS SHALL BE SHOWN ON THE ANNUAL STATEMENT AT COST IN THE 16 YEAR ACQUIRED AND MAY NOT EXCEED 5% OF OTHER ADMITTED ASSETS OF 17 THE SOCIETY. 18 SECTION 2442. FUNDS. 19 (A) GENERAL RULE.--ALL ASSETS SHALL BE HELD, INVESTED AND 20 DISBURSED FOR THE USE AND BENEFIT OF THE SOCIETY, AND NO MEMBER 21 OR BENEFICIARY SHALL HAVE OR ACQUIRE INDIVIDUAL RIGHTS THEREIN 22 OR BECOME ENTITLED TO ANY APPORTIONMENT ON THE SURRENDER OF ANY 23 PART THEREOF, EXCEPT AS PROVIDED IN THE BENEFIT CONTRACT. 24 (B) SPECIAL FUNDS.--A SOCIETY MAY CREATE, MAINTAIN, INVEST, 25 DISBURSE AND APPLY ANY SPECIAL FUND OR FUNDS NECESSARY TO CARRY 26 OUT ANY PURPOSE PERMITTED BY THE LAWS OF THE SOCIETY. 27 (C) SEPARATE ACCOUNTS.--A SOCIETY MAY, PURSUANT TO 28 RESOLUTION OF ITS SUPREME GOVERNING BODY, ESTABLISH AND OPERATE 29 ONE OR MORE SEPARATE ACCOUNTS AND ISSUE CONTRACTS ON A VARIABLE 30 BASIS, SUBJECT TO THE INSURANCE LAWS REGULATING LIFE INSURERS 20010H0599B4107 - 41 -
1 ESTABLISHING THOSE ACCOUNTS AND ISSUING THOSE CONTRACTS. TO THE 2 EXTENT THE SOCIETY DEEMS IT NECESSARY IN ORDER TO COMPLY WITH 3 ANY APPLICABLE FEDERAL OR STATE LAWS OR ANY RULES ISSUED 4 THEREUNDER, THE SOCIETY MAY: 5 (1) ADOPT SPECIAL PROCEDURES FOR THE CONDUCT OF THE 6 BUSINESS AND AFFAIRS OF A SEPARATE ACCOUNT. 7 (2) FOR PERSONS HAVING BENEFICIAL INTERESTS THEREIN, 8 PROVIDE SPECIAL VOTING AND OTHER RIGHTS, INCLUDING, WITHOUT 9 LIMITATION, SPECIAL RIGHTS AND PROCEDURES RELATING TO 10 INVESTMENT POLICY, INVESTMENT ADVISORY SERVICES, SELECTION OF 11 CERTIFIED PUBLIC ACCOUNTANTS AND SELECTION OF A COMMITTEE TO 12 MANAGE THE BUSINESS AND AFFAIRS OF THE ACCOUNT. 13 (3) ISSUE CONTRACTS ON A VARIABLE BASIS TO WHICH SECTION 14 2434(B) AND (D) SHALL NOT APPLY. 15 SUBARTICLE F 16 REGULATION 17 SECTION 2451. VALUATION. 18 (A) EXISTING CERTIFICATES.--THE MINIMUM RESERVES FOR 19 CERTIFICATES ISSUED PRIOR TO FEBRUARY 12, 1994, SHALL BE THOSE 20 PROVIDED BY THE LAWS APPLICABLE IMMEDIATELY PRIOR TO FEBRUARY 21 12, 1993. 22 (B) NEW CERTIFICATES.--THE MINIMUM RESERVES FOR CERTIFICATES 23 ISSUED AFTER FEBRUARY 11, 1994, SHALL BE BASED ON THE FOLLOWING 24 TABLES: 25 (1) FOR CERTIFICATES OF LIFE INSURANCE - THE 26 COMMISSIONER'S 1941 STANDARD ORDINARY MORTALITY TABLE, THE 27 COMMISSIONER'S 1941 STANDARD INDUSTRIAL MORTALITY TABLE, THE 28 COMMISSIONER'S 1958 STANDARD ORDINARY MORTALITY TABLE, THE 29 COMMISSIONER'S 1980 STANDARD ORDINARY MORTALITY TABLE OR ANY 30 MORE RECENT TABLE MADE APPLICABLE TO LIFE INSURERS. 20010H0599B4107 - 42 -
1 (2) FOR ANNUITY AND PURE ENDOWMENT CERTIFICATES, FOR 2 TOTAL AND PERMANENT DISABILITY BENEFITS, FOR ACCIDENTAL DEATH 3 BENEFITS AND FOR ACCIDENT AND HEALTH BENEFITS - SUCH TABLES 4 AS ARE AUTHORIZED FOR USE BY LIFE INSURERS IN THIS 5 COMMONWEALTH. 6 (C) VALUATION METHODS AND STANDARDS.--ALL OF THE VALUATIONS 7 UNDER SUBSECTION (B) SHALL BE UNDER VALUATION METHODS AND 8 INTEREST STANDARDS IN ACCORDANCE WITH THE LAWS OF THIS 9 COMMONWEALTH APPLICABLE TO LIFE INSURERS ISSUING POLICIES 10 CONTAINING LIKE BENEFITS. 11 (D) OTHER VALUATION STANDARDS.--THE COMMISSIONER MAY, IN HIS 12 DISCRETION, ACCEPT OTHER STANDARDS FOR VALUATION IF THE 13 COMMISSIONER FINDS THAT THE RESERVES PRODUCED THEREBY WILL NOT 14 BE LESS IN THE AGGREGATE THAN RESERVES COMPUTED IN ACCORDANCE 15 WITH THE MINIMUM VALUATION STANDARD PRESCRIBED IN THIS SECTION. 16 THE COMMISSIONER MAY, IN HIS DISCRETION, VARY THE STANDARDS OF 17 MORTALITY APPLICABLE TO ALL BENEFIT CONTRACTS ON SUBSTANDARD 18 LIVES OR OTHER EXTRA HAZARDOUS LIVES BY ANY SOCIETY AUTHORIZED 19 TO DO BUSINESS IN THIS COMMONWEALTH. 20 (E) EXCESS RESERVES.--ANY SOCIETY, WITH THE CONSENT OF THE 21 COMMISSIONER OF INSURANCE OF THE STATE OF DOMICILE OF THE 22 SOCIETY AND UNDER SUCH CONDITIONS, IF ANY, WHICH THE 23 COMMISSIONER MAY IMPOSE, MAY ESTABLISH AND MAINTAIN RESERVES ON 24 ITS CERTIFICATES IN EXCESS OF THE RESERVES REQUIRED THEREUNDER, 25 BUT THE CONTRACTUAL RIGHTS OF ANY BENEFIT MEMBER SHALL NOT BE 26 AFFECTED THEREBY. 27 SECTION 2452. REPORTS. 28 (A) GENERAL RULE.--REPORTS SHALL BE FILED IN ACCORDANCE WITH 29 THE PROVISIONS OF THIS SECTION. 30 (B) ANNUAL STATEMENT.--EVERY SOCIETY TRANSACTING BUSINESS IN 20010H0599B4107 - 43 -
1 THIS COMMONWEALTH SHALL ANNUALLY ON OR BEFORE MARCH 1, UNLESS 2 FOR CAUSE SHOWN THE TIME HAS BEEN EXTENDED BY THE COMMISSIONER, 3 FILE WITH THE COMMISSIONER A TRUE STATEMENT OF ITS FINANCIAL 4 CONDITION, TRANSACTIONS AND AFFAIRS FOR THE PRECEDING CALENDAR 5 YEAR AND SHALL PAY THE FEE PRESCRIBED IN SECTION 2161 FOR THE 6 FILING. THE STATEMENT SHALL BE IN GENERAL FORM AND CONTEXT AS 7 APPROVED BY A NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS, 8 APPROVED BY THE INSURANCE DEPARTMENT, FOR FRATERNAL BENEFIT 9 SOCIETIES AND AS SUPPLEMENTED BY ADDITIONAL INFORMATION REQUIRED 10 BY THE COMMISSIONER. 11 (C) VALUATION OF CERTIFICATES.--AS PART OF THE ANNUAL 12 STATEMENT REQUIRED IN THIS SECTION, EACH SOCIETY SHALL ON OR 13 BEFORE MARCH 1 FILE WITH THE COMMISSIONER A VALUATION OF ITS 14 CERTIFICATES IN FORCE ON DECEMBER 31 LAST PRECEDING. THE 15 COMMISSIONER MAY IN HIS DISCRETION FOR CAUSE SHOWN EXTEND THE 16 TIME FOR FILING THE VALUATION FOR NOT MORE THAN TWO CALENDAR 17 MONTHS. THE VALUATION SHALL BE DONE IN ACCORDANCE WITH THE 18 STANDARDS SPECIFIED IN SECTION 2451. THE VALUATION AND 19 UNDERLYING DATA SHALL BE CERTIFIED BY A QUALIFIED ACTUARY. 20 (D) FAILURE TO FILE STATEMENT.--A SOCIETY NEGLECTING TO FILE 21 THE ANNUAL STATEMENT IN THE FORM AND WITHIN THE TIME PROVIDED BY 22 THIS SECTION SHALL FORFEIT $100 FOR EACH DAY DURING WHICH THAT 23 NEGLECT CONTINUES AND, UPON NOTICE BY THE COMMISSIONER TO THAT 24 EFFECT, ITS AUTHORITY TO DO BUSINESS IN THIS COMMONWEALTH SHALL 25 CEASE WHILE THE DEFAULT CONTINUES. 26 SECTION 2453. ANNUAL LICENSE. 27 SOCIETIES WHICH ARE NOW AUTHORIZED TO TRANSACT BUSINESS IN 28 THIS COMMONWEALTH MAY CONTINUE SUCH BUSINESS UNTIL APRIL 1, 29 1993. THE AUTHORITY OF SUCH SOCIETIES AND ALL SOCIETIES 30 HEREAFTER LICENSED MAY THEREAFTER BE RENEWED ANNUALLY BUT IN ALL 20010H0599B4107 - 44 -
1 CASES TO TERMINATE ON THE SUCCEEDING APRIL 1. HOWEVER, A LICENSE 2 SO ISSUED SHALL CONTINUE IN FULL FORCE AND EFFECT UNTIL THE NEW 3 LICENSE IS ISSUED OR SPECIFICALLY REFUSED. FOR EACH LICENSE OR 4 RENEWAL THE SOCIETY SHALL PAY THE COMMISSIONER THE PRESCRIBED 5 FEE. A DULY CERTIFIED COPY OR DUPLICATE OF SUCH LICENSE SHALL BE 6 PRIMA FACIE EVIDENCE THAT THE LICENSEE IS A FRATERNAL BENEFIT 7 SOCIETY WITHIN THE MEANING OF THIS ARTICLE. 8 SECTION 2454. EXAMINATION OF SOCIETIES. 9 (A) GENERAL RULE.--THE COMMISSIONER OR ANY PERSON HE MAY 10 APPOINT MAY EXAMINE ANY DOMESTIC, FOREIGN OR ALIEN SOCIETY 11 TRANSACTING OR APPLYING FOR ADMISSION TO TRANSACT BUSINESS IN 12 THIS COMMONWEALTH IN THE SAME MANNER AS AUTHORIZED FOR 13 EXAMINATION OF DOMESTIC, FOREIGN OR ALIEN INSURERS. REQUIREMENTS 14 OF NOTICE AND AN OPPORTUNITY TO RESPOND BEFORE FINDINGS ARE MADE 15 PUBLIC AS PROVIDED IN THE INSURANCE LAWS REGULATING INSURERS 16 SHALL ALSO BE APPLICABLE TO THE EXAMINATION OF SOCIETIES. 17 (B) PAYMENT OF EXPENSES.--THE EXPENSE OF EACH EXAMINATION 18 AND OF EACH VALUATION, INCLUDING COMPENSATION AND ACTUAL EXPENSE 19 OF EXAMINERS, SHALL BE PAID BY THE SOCIETY EXAMINED OR WHOSE 20 CERTIFICATES ARE VALUED UPON STATEMENTS FURNISHED BY THE 21 COMMISSIONER. 22 SECTION 2455. FOREIGN OR ALIEN SOCIETY; ADMISSION. 23 NO FOREIGN OR ALIEN SOCIETY SHALL TRANSACT BUSINESS IN THIS 24 COMMONWEALTH WITHOUT A LICENSE ISSUED BY THE COMMISSIONER. ANY 25 SUCH SOCIETY DESIRING ADMISSION TO THIS COMMONWEALTH SHALL 26 COMPLY SUBSTANTIALLY WITH THE REQUIREMENTS AND LIMITATIONS OF 27 THIS ARTICLE APPLICABLE TO DOMESTIC SOCIETIES. ANY SUCH SOCIETY 28 MAY BE LICENSED TO TRANSACT BUSINESS IN THIS COMMONWEALTH UPON 29 FILING THE FOLLOWING WITH THE COMMISSIONER AND UPON A SHOWING 30 THAT ITS ASSETS ARE INVESTED IN ACCORDANCE WITH THE PROVISIONS 20010H0599B4107 - 45 -
1 OF THIS ARTICLE: 2 (1) A DULY CERTIFIED COPY OF ITS ARTICLES OF 3 INCORPORATION. 4 (2) A COPY OF ITS BYLAWS, CERTIFIED BY ITS SECRETARY OR 5 CORRESPONDING OFFICER. 6 (3) A POWER OF ATTORNEY TO THE COMMISSIONER AS 7 PRESCRIBED IN THIS ARTICLE. 8 (4) A STATEMENT OF ITS BUSINESS UNDER OATH OF ITS 9 PRESIDENT AND SECRETARY OR CORRESPONDING OFFICERS IN A FORM 10 PRESCRIBED BY THE COMMISSIONER, DULY VERIFIED BY AN 11 EXAMINATION MADE BY THE SUPERVISING INSURANCE OFFICIAL OF ITS 12 HOME STATE OR OTHER STATE, TERRITORY, PROVINCE OR COUNTRY, 13 SATISFACTORY TO THE COMMISSIONER. 14 (5) CERTIFICATION FROM THE PROPER OFFICIAL OF ITS HOME 15 STATE, TERRITORY, PROVINCE OR COUNTRY THAT THE SOCIETY IS 16 LEGALLY INCORPORATED AND LICENSED TO TRANSACT BUSINESS 17 THEREIN. 18 (6) COPIES OF ITS CERTIFICATE FORMS. 19 (7) SUCH OTHER INFORMATION AS THE COMMISSIONER MAY DEEM 20 NECESSARY. 21 SECTION 2456. INJUNCTION, LIQUIDATION AND RECEIVERSHIP OF 22 DOMESTIC SOCIETY. 23 (A) NOTICE OF DEFICIENCIES AND SANCTIONS.--WHEN THE 24 COMMISSIONER UPON INVESTIGATION FINDS THAT A DOMESTIC SOCIETY: 25 (1) HAS EXCEEDED ITS POWERS; 26 (2) HAS FAILED TO COMPLY WITH ANY PROVISION OF THIS 27 ARTICLE; 28 (3) IS NOT FULFILLING ITS CONTRACTS IN GOOD FAITH; 29 (4) HAS A MEMBERSHIP OF LESS THAN 400 AFTER AN EXISTENCE 30 OF ONE YEAR OR MORE; 20010H0599B4107 - 46 -
1 (5) IS CONDUCTING BUSINESS FRAUDULENTLY OR IN A MANNER 2 HAZARDOUS TO ITS MEMBERS, CREDITORS, THE PUBLIC OR THE 3 BUSINESS; OR 4 (6) HAS BECOME IMPAIRED; 5 THE COMMISSIONER SHALL NOTIFY THE SOCIETY OF THE DEFICIENCY OR 6 DEFICIENCIES AND STATE IN WRITING THE REASONS FOR HIS 7 DISSATISFACTION. THE COMMISSIONER SHALL AT ONCE ISSUE A WRITTEN 8 NOTICE TO THE SOCIETY REQUIRING THAT THE DEFICIENCY OR 9 DEFICIENCIES WHICH EXIST ARE CORRECTED. AFTER THIS NOTICE THE 10 SOCIETY SHALL HAVE A 30-DAY PERIOD IN WHICH TO COMPLY WITH THE 11 COMMISSIONER'S REQUEST FOR CORRECTION, AND, IF THE SOCIETY FAILS 12 TO COMPLY, THE COMMISSIONER SHALL NOTIFY THE SOCIETY OF THE 13 FINDINGS OF NONCOMPLIANCE AND REQUIRE THE SOCIETY TO SHOW CAUSE 14 ON A DATE NAMED WHY IT SHOULD NOT BE ENJOINED FROM CARRYING ON 15 ANY BUSINESS UNTIL THE VIOLATION COMPLAINED OF SHALL HAVE BEEN 16 CORRECTED OR WHY AN ACTION IN QUO WARRANTO SHOULD NOT BE 17 COMMENCED AGAINST THE SOCIETY. 18 (B) ACTION BY ATTORNEY GENERAL.--IF ON THAT DATE THE SOCIETY 19 DOES NOT PRESENT GOOD AND SUFFICIENT REASONS WHY IT SHOULD NOT 20 BE SO ENJOINED OR WHY SUCH ACTION SHOULD NOT BE COMMENCED, THE 21 COMMISSIONER MAY PRESENT THE FACTS RELATING THERETO TO THE 22 ATTORNEY GENERAL WHO SHALL, IF HE DEEMS THE CIRCUMSTANCES 23 WARRANT, COMMENCE AN ACTION TO ENJOIN THE SOCIETY FROM 24 TRANSACTING BUSINESS OR IN QUO WARRANTO. 25 (C) HEARING AND ORDER.--THE COURT SHALL THEREUPON NOTIFY THE 26 OFFICERS OF THE SOCIETY OF A HEARING. IF AFTER A FULL HEARING IT 27 APPEARS THAT THE SOCIETY SHOULD BE SO ENJOINED OR LIQUIDATED OR 28 A RECEIVER APPOINTED, THE COURT SHALL ENTER THE NECESSARY ORDER. 29 NO SOCIETY SO ENJOINED SHALL HAVE THE AUTHORITY TO DO BUSINESS 30 UNTIL ALL OF THE FOLLOWING OCCUR: 20010H0599B4107 - 47 -
1 (1) THE COMMISSIONER FINDS THAT THE VIOLATION COMPLAINED 2 OF HAS BEEN CORRECTED. 3 (2) THE COSTS OF SUCH ACTION SHALL HAVE BEEN PAID BY THE 4 SOCIETY IF THE COURT FINDS THAT THE SOCIETY WAS IN DEFAULT AS 5 CHARGED. 6 (3) THE COURT HAS DISSOLVED ITS INJUNCTION. 7 (4) THE COMMISSIONER HAS REINSTATED THE CERTIFICATE OF 8 AUTHORITY. 9 (D) LIQUIDATION.--IF THE COURT ORDERS THE SOCIETY 10 LIQUIDATED, IT SHALL BE ENJOINED FROM CARRYING ON ANY FURTHER 11 BUSINESS, WHEREUPON THE RECEIVER OF THE SOCIETY SHALL PROCEED AT 12 ONCE TO TAKE POSSESSION OF THE BOOKS, PAPERS, MONEY AND OTHER 13 ASSETS OF THE SOCIETY AND, UNDER THE DIRECTION OF THE COURT, 14 PROCEED FORTHWITH TO CLOSE THE AFFAIRS OF THE SOCIETY AND TO 15 DISTRIBUTE ITS FUNDS TO THOSE ENTITLED THERETO. 16 (E) VALIDITY OF ACTION AND APPOINTMENT OF RECEIVER.--NO 17 ACTION UNDER THIS SECTION SHALL BE RECOGNIZED IN ANY COURT OF 18 THIS COMMONWEALTH UNLESS BROUGHT BY THE ATTORNEY GENERAL UPON 19 REQUEST OF THE COMMISSIONER. WHENEVER A RECEIVER IS TO BE 20 APPOINTED FOR A DOMESTIC SOCIETY, THE COURT SHALL APPOINT THE 21 COMMISSIONER AS THE RECEIVER. 22 (F) APPLICABILITY TO VOLUNTARY DISSOLUTION.--THE PROVISIONS 23 OF THIS SECTION RELATING TO HEARING BY THE COMMISSIONER, ACTION 24 BY THE ATTORNEY GENERAL AT THE REQUEST OF THE COMMISSIONER, 25 HEARING BY THE COURT, INJUNCTION AND RECEIVERSHIP SHALL BE 26 APPLICABLE TO A SOCIETY WHICH SHALL VOLUNTARILY DETERMINE TO 27 DISCONTINUE BUSINESS. 28 SECTION 2457. SUSPENSION, REVOCATION OR REFUSAL OF LICENSE OF 29 FOREIGN OR ALIEN SOCIETY. 30 (A) NOTICE OF DEFICIENCIES AND SANCTIONS.--WHEN THE 20010H0599B4107 - 48 -
1 COMMISSIONER UPON INVESTIGATION FINDS THAT A FOREIGN OR ALIEN 2 SOCIETY TRANSACTING OR APPLYING TO TRANSACT BUSINESS IN THIS 3 COMMONWEALTH: 4 (1) HAS EXCEEDED ITS POWERS; 5 (2) HAS FAILED TO COMPLY WITH ANY OF THE PROVISIONS OF 6 THIS ARTICLE; 7 (3) IS NOT FULFILLING ITS CONTRACTS IN GOOD FAITH; OR 8 (4) IS CONDUCTING ITS BUSINESS FRAUDULENTLY OR IN A 9 MANNER HAZARDOUS TO ITS MEMBERS OR CREDITORS OR THE PUBLIC; 10 THE COMMISSIONER SHALL NOTIFY THE SOCIETY OF SUCH DEFICIENCY OR 11 DEFICIENCIES AND STATE IN WRITING THE REASONS FOR HIS 12 DISSATISFACTION. THE COMMISSIONER SHALL AT ONCE ISSUE A WRITTEN 13 NOTICE TO THE SOCIETY REQUIRING THAT THE DEFICIENCY OR 14 DEFICIENCIES WHICH EXIST ARE CORRECTED. AFTER SUCH NOTICE THE 15 SOCIETY SHALL HAVE A 30-DAY PERIOD IN WHICH TO COMPLY WITH THE 16 COMMISSIONER'S REQUEST FOR CORRECTION, AND, IF THE SOCIETY FAILS 17 TO COMPLY, THE COMMISSIONER SHALL NOTIFY THE SOCIETY OF THE 18 FINDINGS OF NONCOMPLIANCE AND REQUIRE THE SOCIETY TO SHOW CAUSE 19 ON A DATE NAMED WHY ITS LICENSE SHOULD NOT BE SUSPENDED, REVOKED 20 OR REFUSED. IF ON THAT DATE THE SOCIETY DOES NOT PRESENT GOOD 21 AND SUFFICIENT REASON WHY ITS AUTHORITY TO DO BUSINESS IN THIS 22 COMMONWEALTH SHOULD NOT BE SUSPENDED, REVOKED OR REFUSED, THE 23 COMMISSIONER MAY SUSPEND OR REFUSE THE LICENSE OF THE SOCIETY TO 24 DO BUSINESS IN THIS COMMONWEALTH UNTIL SATISFACTORY EVIDENCE IS 25 FURNISHED TO THE COMMISSIONER THAT THE SUSPENSION OR REFUSAL 26 SHOULD BE WITHDRAWN OR THE COMMISSIONER MAY REVOKE THE AUTHORITY 27 OF THE SOCIETY TO DO BUSINESS IN THIS COMMONWEALTH. 28 (B) EXISTING CONTRACTS UNAFFECTED.--NOTHING CONTAINED IN 29 THIS SECTION SHALL BE TAKEN OR CONSTRUED AS PREVENTING ANY SUCH 30 SOCIETY FROM CONTINUING IN GOOD FAITH ALL CONTRACTS MADE IN THIS 20010H0599B4107 - 49 -
1 COMMONWEALTH DURING THE TIME THE SOCIETY WAS LEGALLY AUTHORIZED 2 TO TRANSACT BUSINESS IN THIS COMMONWEALTH. 3 SECTION 2458. INJUNCTION. 4 NO APPLICATION OR PETITION FOR INJUNCTION AGAINST ANY 5 DOMESTIC, FOREIGN OR ALIEN SOCIETY, OR LODGE THEREOF, RESPECTING 6 ANY MATTER PERTAINING TO A REGULATORY LAW ADMINISTERED BY THE 7 COMMISSIONER SHALL BE RECOGNIZED IN ANY COURT OF THIS 8 COMMONWEALTH UNLESS MADE BY THE ATTORNEY GENERAL UPON REQUEST OF 9 THE COMMISSIONER. 10 SECTION 2459. LICENSING OF AGENTS. 11 (A) GENERAL RULE.--AGENTS OF SOCIETIES SHALL BE LICENSED IN 12 ACCORDANCE WITH THE INSURANCE LAWS REGULATING THE LICENSING, 13 REVOCATION, SUSPENSION OR TERMINATION OF LICENSE OF RESIDENT AND 14 NONRESIDENT AGENTS. 15 (B) EXEMPTIONS FROM LICENSURE.--NO EXAMINATION OR LICENSE 16 SHALL BE REQUIRED OF ANY REGULAR SALARIED OFFICER, EMPLOYEE OR 17 MEMBER OF A LICENSED SOCIETY WHO DEVOTES SUBSTANTIALLY ALL OF 18 HIS SERVICES TO ACTIVITIES OTHER THAN THE SOLICITATION OF 19 FRATERNAL INSURANCE CONTRACTS FROM THE PUBLIC AND WHO RECEIVES 20 FOR THE SOLICITATION OF SUCH CONTRACTS NO COMMISSION OR OTHER 21 COMPENSATION DIRECTLY DEPENDENT UPON THE AMOUNT OF BUSINESS 22 OBTAINED. 23 (C) EXAMINATION.-- 24 (1) ANY PERSON WHO IN THE PRECEDING CALENDAR YEAR HAS 25 SOLICITED AND PROCURED LIFE INSURANCE CONTRACTS ON BEHALF OF 26 ANY SOCIETY IN AN AMOUNT OF INSURANCE IN EXCESS OF $200,000 27 OR, IN THE CASE OF ANY OTHER KIND OR KINDS OF INSURANCE WHICH 28 THE SOCIETY MIGHT WRITE, ON THE PERSONS OF MORE THAN 25 29 INDIVIDUALS AND WHO HAS RECEIVED OR WILL RECEIVE A COMMISSION 30 OR OTHER COMPENSATION THEREFOR SHALL BE REQUIRED TO TAKE AN 20010H0599B4107 - 50 -
1 EXAMINATION. NO EXAMINATION SHALL BE REQUIRED OF ANY AGENT 2 WHO WAS IN THE SERVICE OF A SOCIETY ON JANUARY 28, 1978. 3 (2) BEGINNING JULY 1, 2007, AND EVERY FIVE YEARS 4 THEREAFTER, THE COMMISSIONER SHALL REVIEW THE MONETARY LIMIT 5 CONTAINED IN THIS SUBSECTION AND MAY ADJUST THE AMOUNT. THE 6 ADJUSTMENT SHALL NOT EXCEED THE PERCENTAGE CHANGE IN THE 7 CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U) FOR THE 8 PENNSYLVANIA, NEW JERSEY, DELAWARE AND MARYLAND AREA, 9 OFFICIALLY REPORTED BY THE UNITED STATES DEPARTMENT OF LABOR, 10 BUREAU OF LABOR STATISTICS, FOR THE PERIOD SINCE THE LAST 11 ADJUSTMENT UNDER THIS SUBSECTION. ANY ADJUSTMENT TO THE 12 AMOUNT SHALL BE PUBLISHED AS A NOTICE IN THE PENNSYLVANIA 13 BULLETIN. 14 (D) LIMITATION.--NO SOCIETY DOING BUSINESS IN THIS 15 COMMONWEALTH SHALL PAY ANY COMMISSION OR OTHER COMPENSATION TO 16 ANY PERSON FOR ANY SERVICES IN OBTAINING IN THIS COMMONWEALTH 17 ANY NEW CONTRACT OF LIFE, ACCIDENT OR HEALTH INSURANCE, OR ANY 18 NEW ANNUITY CONTRACT, EXCEPT TO A LICENSED FRATERNAL INSURANCE 19 AGENT OF THAT SOCIETY. 20 SECTION 2460. UNFAIR METHODS OF COMPETITION AND UNFAIR AND 21 DECEPTIVE ACTS AND PRACTICES. 22 EVERY SOCIETY AUTHORIZED TO DO BUSINESS IN THIS COMMONWEALTH 23 SHALL BE SUBJECT TO THE PROVISIONS OF THE ACT OF JULY 22, 1974 24 (P.L.589, NO.205), KNOWN AS THE UNFAIR INSURANCE PRACTICES ACT, 25 BUT NOTHING IN THAT ACT SHALL BE CONSTRUED AS APPLYING TO OR 26 AFFECTING THE RIGHT OF ANY SOCIETY TO DETERMINE ITS ELIGIBILITY 27 REQUIREMENTS FOR MEMBERSHIP BY REASON OF COMMON BOND OR BE 28 CONSTRUED AS APPLYING TO OR AFFECTING THE OFFERING OF BENEFITS 29 EXCLUSIVELY TO MEMBERS OR PERSONS ELIGIBLE FOR MEMBERSHIP IN THE 30 SOCIETY BY A SUBSIDIARY CORPORATION OR AFFILIATED ORGANIZATION 20010H0599B4107 - 51 -
1 ORGANIZED TO CARRY OUT THE PURPOSES SET FORTH IN SECTION 2 2406(A)(2). 3 SECTION 2461. FEES. 4 THE COMMISSIONER SHALL CHARGE AND COLLECT FEES FROM FRATERNAL 5 BENEFIT SOCIETIES AS SET FORTH IN SECTION 612-A OF THE ACT OF 6 APRIL 9, 1929 (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE 7 CODE OF 1929. ALL FEES COLLECTED SHALL BE PAID DAILY INTO THE 8 STATE TREASURY. 9 SECTION 2462. TAXATION. 10 EVERY SOCIETY ORGANIZED OR LICENSED UNDER THIS ARTICLE IS 11 HEREBY DECLARED TO BE A CHARITABLE AND BENEVOLENT INSTITUTION, 12 AND ALL OF ITS FUNDS SHALL BE EXEMPT FROM ALL AND EVERY 13 COMMONWEALTH, COUNTY, DISTRICT, MUNICIPAL AND SCHOOL TAX OTHER 14 THAN TAXES ON REAL ESTATE AND OFFICE EQUIPMENT. 15 SECTION 2463. REVIEW. 16 ALL DECISIONS AND FINDINGS OF THE COMMISSIONER MADE UNDER THE 17 PROVISIONS OF THIS ARTICLE SHALL BE SUBJECT TO REVIEW BY PROPER 18 PROCEEDINGS IN ANY COURT OF COMPETENT JURISDICTION IN THIS 19 COMMONWEALTH. 20 SECTION 2464. PENALTIES. 21 (A) FALSE STATEMENTS.--IT SHALL BE PROHIBITED FOR ANY PERSON 22 TO WILLFULLY MAKE A FALSE OR FRAUDULENT STATEMENT IN OR RELATING 23 TO AN APPLICATION FOR MEMBERSHIP OR FOR THE PURPOSE OF OBTAINING 24 MONEY FROM OR A BENEFIT IN ANY SOCIETY. 25 (B) FILING OF FALSE STATEMENT.--ANY PERSON WHO WILLFULLY 26 MAKES A FALSE OR FRAUDULENT STATEMENT IN ANY VERIFIED REPORT OR 27 DECLARATION UNDER OATH REQUIRED OR AUTHORIZED BY THIS ARTICLE OR 28 OF ANY MATERIAL FACT OR THING CONTAINED IN A SWORN STATEMENT 29 CONCERNING THE DEATH OR DISABILITY OF A MEMBER FOR THE PURPOSE 30 OF PROCURING PAYMENT OF A BENEFIT NAMED IN THE CERTIFICATE 20010H0599B4107 - 52 -
1 COMMITS PERJURY AND SHALL BE SUBJECT TO THE PENALTIES THEREFOR 2 PRESCRIBED BY LAW. 3 (C) SOLICITATION BY NONLICENSED SOCIETY.--A PERSON WHO 4 SOLICITS MEMBERSHIP FOR OR IN ANY MANNER ASSISTS IN PROCURING 5 MEMBERSHIP IN ANY SOCIETY NOT LICENSED TO DO BUSINESS IN THIS 6 COMMONWEALTH COMMITS A SUMMARY OFFENSE AND SHALL, UPON 7 CONVICTION, BE SENTENCED TO PAY A FINE OF NOT LESS THAN $500 NOR 8 MORE THAN $1,000. 9 (D) PENALTY FOR OTHER VIOLATION.--A PERSON WHO WILLFULLY 10 VIOLATES, NEGLECTS OR REFUSES TO COMPLY WITH THE PROVISIONS OF 11 THIS ARTICLE FOR WHICH A PENALTY IS NOT OTHERWISE PRESCRIBED, 12 COMMITS A SUMMARY OFFENSE AND SHALL, UPON CONVICTION, BE 13 SENTENCED TO PAY A FINE OF NOT MORE THAN $500. UPON SATISFACTORY 14 EVIDENCE OF A VIOLATION OF ANY PROVISION OF THIS ARTICLE, THE 15 COMMISSIONER HAS THE DISCRETION, IN LIEU OF SEEKING CRIMINAL 16 PROSECUTION, TO PURSUE ANY ONE OR MORE OF THE FOLLOWING COURSES 17 OF ACTION: 18 (1) SUSPEND OR REVOKE OR REFUSE TO RENEW THE LICENSE OF 19 THE OFFENDING PARTY OR PARTIES. 20 (2) IMPOSE A CIVIL PENALTY OF NOT MORE THAN $5,000 FOR 21 EACH ACT IN VIOLATION OF THE PROVISIONS OF THIS ARTICLE. 22 SECTION 2465. APPLICABILITY OF INSURANCE LAWS. 23 EXCEPT AS PROVIDED IN THIS ARTICLE, SOCIETIES SHALL BE 24 GOVERNED BY THIS ARTICLE AND SHALL BE EXEMPT FROM ALL OTHER 25 PROVISIONS OF THE INSURANCE LAWS OF THIS COMMONWEALTH UNLESS 26 THEY ARE EXPRESSLY DESIGNATED THEREIN OR UNLESS IT IS 27 SPECIFICALLY MADE APPLICABLE BY THIS ARTICLE. 28 SECTION 2466. EXEMPTION OF CERTAIN SOCIETIES. 29 (A) GENERAL RULE.--NOTHING CONTAINED IN THIS ARTICLE SHALL 30 BE SO CONSTRUED AS TO AFFECT OR APPLY TO: 20010H0599B4107 - 53 -
1 (1) GRAND OR SUBORDINATE LODGES OF SOCIETIES, ORDERS OR 2 ASSOCIATIONS NOW DOING BUSINESS IN THIS COMMONWEALTH WHICH 3 PROVIDE BENEFITS EXCLUSIVELY THROUGH LOCAL OR SUBORDINATE 4 LODGES. 5 (2) ORDERS, SOCIETIES OR ASSOCIATIONS WHICH ADMIT TO 6 MEMBERSHIP ONLY PERSONS ENGAGED IN ONE OR MORE CRAFTS OR 7 HAZARDOUS OCCUPATIONS, IN THE SAME OR SIMILAR LINES OF 8 BUSINESS, INSURING ONLY THEIR OWN MEMBERS AND THEIR FAMILIES, 9 AND THE LADIES' SOCIETIES OR LADIES' AUXILIARIES TO SUCH 10 ORDERS, SOCIETIES OR ASSOCIATIONS. 11 (3) DOMESTIC SOCIETIES WHICH LIMIT THEIR MEMBERSHIP TO 12 EMPLOYEES OF A PARTICULAR CITY OR TOWN, DESIGNATED FIRM, 13 BUSINESS HOUSE OR CORPORATION WHICH PROVIDE FOR A DEATH 14 BENEFIT OF NOT MORE THAN $400 OR DISABILITY BENEFITS OF NOT 15 MORE THAN $350 TO ANY PERSON IN ANY ONE YEAR, OR BOTH. 16 (4) DOMESTIC SOCIETIES OR ASSOCIATIONS OF A PURELY 17 RELIGIOUS, CHARITABLE OR BENEVOLENT DESCRIPTION WHICH PROVIDE 18 FOR A DEATH BENEFIT OF NOT MORE THAN $400 OR FOR DISABILITY 19 BENEFITS OF NOT MORE THAN $350 TO ANY ONE PERSON IN ANY ONE 20 YEAR, OR BOTH. 21 (B) EXCLUSIONS FROM EXEMPTION.--ANY SOCIETY OR ASSOCIATION 22 DESCRIBED IN SUBSECTION (A)(3) OR (4) WHICH PROVIDES FOR DEATH 23 OR DISABILITY BENEFITS FOR WHICH BENEFIT CERTIFICATES ARE ISSUED 24 AND ANY SOCIETY OR ASSOCIATION INCLUDED IN SUBSECTION (A)(4) 25 WHICH HAS MORE THAN 1,000 MEMBERS SHALL NOT BE EXEMPTED FROM THE 26 PROVISIONS OF THIS ARTICLE BUT SHALL COMPLY WITH ALL 27 REQUIREMENTS THEREOF. 28 (C) LIMITATION OR COMPENSATION PAYMENTS.--NO SOCIETY WHICH, 29 BY THE PROVISIONS OF THIS SECTION, IS EXEMPT FROM THE 30 REQUIREMENTS OF THIS ARTICLE, EXCEPT ANY SOCIETY DESCRIBED IN 20010H0599B4107 - 54 -
1 SUBSECTION (A)(2), SHALL GIVE OR ALLOW, OR PROMISE TO GIVE OR 2 ALLOW, TO ANY PERSON ANY COMPENSATION FOR PROCURING NEW MEMBERS. 3 (D) ACCIDENTAL BENEFITS.--EVERY SOCIETY WHICH PROVIDES FOR 4 BENEFITS IN CASE OF DEATH OR DISABILITY RESULTING SOLELY FROM 5 ACCIDENT AND WHICH DOES NOT OBLIGATE ITSELF TO PAY NATURAL DEATH 6 OR SICK BENEFITS SHALL HAVE ALL OF THE PRIVILEGES AND BE SUBJECT 7 TO ALL THE APPLICABLE PROVISIONS AND REGULATIONS OF THIS 8 SUBARTICLE EXCEPT THAT THE PROVISIONS THEREOF RELATING TO 9 MEDICAL EXAMINATION, VALUATIONS OF BENEFIT CERTIFICATES AND 10 INCONTESTABILITY SHALL NOT APPLY TO SUCH SOCIETY. 11 (E) SUBMISSION OF INFORMATION.--THE COMMISSIONER MAY REQUIRE 12 FROM ANY SOCIETY OR ASSOCIATION, BY EXAMINATION OR OTHERWISE, 13 SUCH INFORMATION AS WILL ENABLE THE COMMISSIONER TO DETERMINE 14 WHETHER THE SOCIETY OR ASSOCIATION IS EXEMPT FROM THE PROVISIONS 15 OF THIS SUBARTICLE. 16 (F) EXEMPTION FROM INSURANCE LAWS.--SOCIETIES EXEMPTED UNDER 17 THE PROVISIONS OF THIS SECTION SHALL ALSO BE EXEMPT FROM ALL 18 OTHER PROVISIONS OF THE INSURANCE LAWS OF THIS COMMONWEALTH. 19 SECTION 10. THE ACT OF DECEMBER 14, 1992 (P.L.835, NO.134), 20 KNOWN AS THE FRATERNAL BENEFIT SOCIETIES CODE, IS REPEALED. 21 SECTION 11. THE ADDITION OF ARTICLE XXIV OF THE ACT IS A 22 CONTINUATION OF THE ACT OF DECEMBER 14, 1992 (P.L.835, NO.134), 23 KNOWN AS THE FRATERNAL BENEFIT SOCIETIES CODE. THE FOLLOWING 24 APPLY: 25 (1) ORDERS, REGULATIONS AND POLICIES UNDER THE FRATERNAL 26 BENEFIT SOCIETIES CODE WHICH ARE IN EFFECT ON THE EFFECTIVE 27 DATE OF SECTION (REPEAL OF FRATERNAL BENEFIT SOCIETIES CODE) 28 SHALL REMAIN IN EFFECT UNTIL REVOKED, VACATED, AMENDED OR 29 MODIFIED UNDER ARTICLE XXIV OF THE ACT. 30 (2) EXCEPT AS PROVIDED IN PARAGRAPH (3), ANY DIFFERENCE 20010H0599B4107 - 55 -
1 IN LANGUAGE BETWEEN ARTICLE XXIV OF THE ACT AND THE FRATERNAL 2 BENEFIT SOCIETIES CODE IS INTENDED ONLY TO CONFORM TO THE 3 STYLE OF THE ACT AND IS NOT INTENDED TO CHANGE OR AFFECT THE 4 LEGISLATIVE INTENT, JUDICIAL CONSTRUCTION OR ADMINISTRATION 5 AND IMPLEMENTATION OF THE FRATERNAL BENEFIT SOCIETIES CODE. 6 (3) PARAGRAPH (2) DOES NOT APPLY TO THE FOLLOWING 7 PROVISIONS: 8 (I) SECTION 2459(C) OF THE ACT. 9 (II) SECTION 2464(D) OF THE ACT. 10 SECTION 12. THIS ACT SHALL TAKE EFFECT AS FOLLOWS: 11 (1) THE FOLLOWING PROVISIONS SHALL TAKE EFFECT 12 IMMEDIATELY: 13 (I) THE AMENDMENT OF SECTION 410C OF THE ACT. 14 (II) THIS SECTION. 15 (2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT IN 60 16 DAYS. A18L40JLW/20010H0599B4107 - 56 -