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        PRIOR PRINTER'S NOS. 656, 3636               PRINTER'S NO.  4107

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

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
    20010H0599B4107                  - 8 -

     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
    20010H0599B4107                 - 10 -

     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.
    20010H0599B4107                 - 11 -

     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
    20010H0599B4107                 - 12 -

     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.
    20010H0599B4107                 - 13 -

     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.










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