1Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
2act relating to insurance; amending, revising, and
3consolidating the law providing for the incorporation of
4insurance companies, and the regulation, supervision, and
5protection of home and foreign insurance companies, Lloyds
6associations, reciprocal and inter-insurance exchanges, and
7fire insurance rating bureaus, and the regulation and
8supervision of insurance carried by such companies,
9associations, and exchanges, including insurance carried by
10the State Workmen's Insurance Fund; providing penalties; and
11repealing existing laws," <-in casualty insurance, providing 
12for pharmaceutical coverage for oral anticancer medications; 
13and providing for medical professional liability reciprocal 
14exchange-to-stock conversion.

15The General Assembly of the Commonwealth of Pennsylvania
16hereby enacts as follows:

<-17Section 1. The act of May 17, 1921 (P.L.682, No.284), known
18as The Insurance Company Law of 1921, is amended by adding an
19article to read:

<-20Section 1. The act of May 17, 1921 (P.L.682, No.284), known
21as The Insurance Company Law of 1921, is amended by adding a
22section to read:

23Section 631.1. Pharmaceutical Coverage for Oral Anticancer
24Medications.--(a) Whenever an individual or group health,

1sickness or accident insurance policy or subscriber contract or
2certificate issued by any entity subject to the act of December 
329, 1972 (P.L.1701, No.364), known as the "Health Maintenance 
4Organization Act," 40 Pa.C.S. Ch. 61 (relating to hospital plan
5corporations) or 63 (relating to professional health services
6plan corporations) or this act provides pharmaceutical coverage
7that includes coverage for cancer chemotherapy or anticancer
8medications which have been approved by the United States Food
9and Drug Administration for general use in the treatment of
10cancer, the policy shall not place orally administered
11anticancer medications on a specialty tier or charge a
12coinsurance payment for orally administered anticancer
13medications. The prohibition of coinsurance payments applies to
14charging a percentage of the cost of the medication or a flat-
15fee cost that is specific to anticancer medication, but does not
16include charging the minimal copayment that is usual for covered
17prescription medications not on a specialty tier.

18(b) Nothing in this section shall serve to diminish the
19benefits of any insured or subscriber in effect on the effective
20date of this section, nor prevent the offering or acceptance of
21benefits which exceed the minimum benefits required by this
22section.

23(c) This section shall apply to those insurance policies,
24subscriber contracts or certificates issued or entered into or
25renewed on or after the effective date of this section.

26(d) As used in this section:

27"Anticancer medication" means a drug or biological product
28that is used to kill, slow or prevent the growth of cancerous
29cells.

30"Specialty tier" means a formulary category for a

1prescription drug that meets one or more of the following
2criteria:

3(1) A high-cost medication that is used to treat and is
4prescribed for a person with a complex, chronic or rare medical
5condition.

6(2) The drug is not typically available at community retail
7pharmacies.

8(3) The drug requires special handling, storage or has
9distribution or inventory limitations.

10(4) The drug has a complex dosing regimen or requires
11special administration.

12(5) The drug is considered to have limited distribution by
13the United States Food and Drug Administration.

14(6) The drug requires complex and extended patient education
15or counseling, intensive monitoring or clinical oversight.

16(7) The drug has significant side effects or risk profile.

17Section 2. The act is amended by adding an article to read:

18Article VIII-B.

19Medical Professional Liability Reciprocal

20Exchange-to-Stock Conversion

21Section 801-B. Definitions.

22The following words and phrases when used in this article
23shall have the meanings given to them in this section unless the
24context clearly indicates otherwise:

25"Attorney." The person that manages and acts as the
26attorney-in-fact for the reciprocal insurer.

27"Commissioner." The Insurance Commissioner of the
28Commonwealth.

29"Department." The Insurance Department of the Commonwealth.

30"Eligible subscriber." A subscriber of a reciprocal insurer

1whose policy is in force on at least one of the following dates:

2(1) the date the reciprocal insurer or its attorney
3adopts a plan of conversion; or

4(2) if a different date, on the record date for
5establishing subscribers eligible to vote on the plan of
6conversion.

7A person insured under a group policy that is otherwise an
8eligible subscriber also shall be an eligible subscriber. A
9person whose policy becomes effective after the adoption of the
10plan or the voting record date, if a later date, but before the
11plan's effective date is not an eligible subscriber but shall
12have the rights established under section 807-B.

13"Participating policy." A policy that grants a holder the
14right to receive dividends if, as and when declared by the
15reciprocal insurer.

16"Person." An individual, a corporation, a limited liability
17company, a partnership, an association, a joint stock company, a
18trust, an unincorporated organization, a similar entity or a
19combination of the foregoing acting in concert.

20"Plan of conversion" or "plan." A plan adopted under this
21article to convert the reciprocal insurer into a stock company
22by the subscribers' advisory committee or any equivalent
23governing body of the reciprocal insurer or, in the absence of a
24governing body, by the board of directors or governing body of
25the attorney for such reciprocal insurer.

26"Policy." An insurance policy issued by the reciprocal
27insurer.

28"Reciprocal insurer." A Pennsylvania domiciled reciprocal
29and inter-insurance exchange, as defined in Article X, that is
30authorized to write medical professional liability insurance and

1at least 50% of its direct written premium in the calendar year
2preceding adoption of the plan of conversion consisted of
3medical professional liability insurance.

4"Stock company." An insurance company that:

5(1) meets all of the requirements for admission to do
6business as a domestic Pennsylvania insurer;

7(2) is formed at the direction of the reciprocal insurer
8or the attorney; and

9(3) shall be the successor of the reciprocal insurer by
10the merger of the reciprocal insurer with and into the stock
11company or by any other means approved by the commissioner.

12Section 802-B. Adoption of plan of conversion.

13(a) Plan of conversion.--No plan of conversion may become
14effective unless the reciprocal insurer seeking to convert to a
15stock company shall have adopted, by the affirmative vote of not
16less than two-thirds of the subscribers' advisory committee or
17any equivalent governing body of the reciprocal insurer, or in
18the absence of a governing body, by the board of directors or
19governing body of the attorney for the reciprocal insurer, a
20plan of conversion consistent with the requirements of sections
21803-B and 804-B. At any time before approval of a plan by the
22commissioner, the reciprocal insurer, by the affirmative vote of
23not less than two-thirds of its subscribers' advisory committee
24or any equivalent governing body of the reciprocal insurer or,
25in the absence of a governing body, by the board of directors or
26governing body of the attorney for the reciprocal insurer, may
27amend or withdraw the plan.

28(b) Documents.--Before a reciprocal insurer's eligible
29subscribers may vote on approval of a plan, the reciprocal
30insurer or the attorney shall file all of the following

1documents with the commissioner within 90 days after adoption of
2the plan:

3(1) The plan of conversion, including the independent
4evaluation of pro forma market value required under section
5803-B(d).

6(2) The form of notice required under subsection (f).

7(3) The form of proxy to be solicited from eligible
8subscribers under subsection (g). 

9(4) The form of notice required under section 808-B to
10persons whose policies are issued after adoption of the plan,
11but before its effective date.

12(5) The proposed articles of incorporation and bylaws of
13the stock company.

14(6) The acquisition of control statement, as required
15under section 1402.

16(7) Such other information as the commissioner may
17request.

18Upon filing of the documents required under this subsection with
19the commissioner, the reciprocal insurer shall send to eligible
20subscribers a notice advising eligible subscribers of the
21adoption and filing of the plan, their ability to provide the
22commissioner and the reciprocal insurer with comments on the
23plan within 30 days of the date of the notice and the procedure
24for making comments.

25(c) Notice and approval of plan.--The commissioner shall
26immediately give written notice to the reciprocal insurer of any
27decision and, in the event of disapproval, a statement in detail
28of the reasons for the decision. The commissioner shall approve
29the plan if the commissioner finds each of the following:

30(1) The plan complies with this article.

1(2) The plan will not prejudice the interests of the
2subscribers.

3(3) The plan's method of allocating subscription rights
4is fair and equitable.

5(d) Experts.--The commissioner may retain, at the reciprocal
6insurer's expense, any qualified expert not otherwise a part of
7the commissioner's staff to assist in reviewing the plan and the
8independent evaluation of the pro forma market value required
9under section 803-B(d).

10(e) Hearing.--The commissioner may order a hearing on
11whether the terms of the plan comply with this article after
12giving written notice to the reciprocal insurer and other
13interested persons, all of whom have the right to appear at the
14hearing.

15(f) Notice of subscribers' meeting.--All eligible
16subscribers shall be sent notice of the subscribers' meeting to
17vote upon the plan. The notice shall briefly, but fairly
18describe the proposed conversion plan, shall inform the
19subscriber of his right to vote upon the plan and shall be sent
20to each subscriber's last known address, as shown on the
21reciprocal insurer's records, at least 30 days before the time
22fixed for the meeting. If the reciprocal insurer holds an annual
23meeting of subscribers and the meeting to vote upon the plan is
24held at such annual meeting, only a combined notice of meeting
25is required.

26(g) Voting.--The plan shall be voted upon by eligible
27subscribers and shall be deemed approved upon receiving the
28affirmative vote of at least two-thirds of the votes cast by
29eligible subscribers. Unless the governing documents of the
30reciprocal insurer establish a different date, the record date

1for determining subscribers eligible to vote on the plan shall
2be the date of adoption of the plan or such other date as shall
3be set forth in the plan which shall be no less than 30 nor more
4than 90 days before the date of the meeting. Eligible
5subscribers entitled to vote upon the proposed plan may vote in
6person or by proxy. Unless the governing documents of the
7reciprocal insurer provide otherwise, each eligible subscriber
8may cast one vote.

9(h) Approval of plan.--A merger of the reciprocal insurer
10with and into the stock company shall be approved at the meeting
11of the subscribers called for the purpose of approving the plan
12of conversion and shall require for approval or ratification the
13affirmative vote of at least two-thirds of the votes cast by
14eligible subscribers.

15(i) Documents to be filed following approval.--Within 30
16days after the eligible subscribers have approved the plan, the
17stock company shall file all of the following documents with the
18commissioner:

19(1) The minutes of the meeting of the eligible
20subscribers at which the plan was approved.

21(2) The articles of incorporation and bylaws of the
22stock company.

23(3) Articles of merger for the merger of the reciprocal
24insurer with and into the stock company. The plan shall be
25consummated upon the filing such articles of merger.

26Section 803-B. Contents of plan of conversion.

27(a) Contents.--The following provisions shall be included in
28a plan of conversion:

29(1) The reasons for proposed conversion.

30(2) The effect of conversion on existing policies,

1including all of the following:

2(i) A provision that all policies in force on the
3effective date of conversion continue to remain in force
4under the terms of the policies, except that the
5following rights, to the extent they existed in the
6reciprocal insurer, shall be extinguished on the
7effective date of the conversion:

8(A) Any voting rights of the subscribers
9provided under the policies.

10(B) Except as provided under subparagraph (ii),
11any right to share in the surplus of the reciprocal
12insurer provided for under the policies.

13(C) Any assessment provisions provided for under
14the policies.

15(ii) Except as provided in subparagraph (iii), a
16provision that holders of participating policies in
17effect on the date of conversion continue to have a right
18to receive dividends as provided in the participating
19policies, if any.

20(iii) A provision that upon the renewal date of a
21participating policy, the stock company may issue the
22insured a nonparticipating policy as a substitute for the
23participating policy.

24(3) The grant of subscription rights to eligible
25subscribers, including all of the following:

26(i) A provision that each eligible subscriber is to
27receive, without payment, nontransferable subscription
28rights to purchase a portion of the capital stock of the
29stock company and that, in the aggregate, all eligible
30subscribers shall have the right, prior to the right of

1any other party, to purchase 100% of the capital stock of
2the stock company, exclusive of any shares of capital
3stock required to be sold or distributed to the holders
4of surplus notes or any shares of capital stock required
5to be sold or distributed to subscribers under the
6reciprocal insurer's constituent documents, if any.

7(ii) As an alternative to subscription rights in the
8stock company, the plan may provide that each eligible
9subscriber is to receive, without payment,
10nontransferable subscription rights to purchase a portion
11of the capital stock of one of the following:

12(A) the attorney or a holding company that will
13act as the holding company for the stock company and,
14in either case, will hold all the stock of the stock
15company; or

16(B) an insurance company or other corporation
17that will purchase all the stock of or otherwise
18acquire the stock company.

19(iii) A provision that the subscription rights shall
20be allocated in whole shares among the eligible
21subscribers using a fair and equitable formula. This
22formula may, but need not, take into account how the
23different classes of policies of the eligible subscribers
24contributed to the surplus of the reciprocal insurer or
25any other factors that may be fair or equitable.

26(b) Oversubscription.--The plan shall provide a fair and
27equitable means for allocating shares of capital stock in the
28event of an oversubscription to shares by eligible subscribers
29exercising subscription rights received under subsection (a)(3).

30(c) Shares not subscribed.--The plan shall provide that any

1shares of capital stock not subscribed to by eligible
2subscribers exercising subscription rights received under
3subsection (a)(3) shall be sold in a public offering through an
4underwriter or in any other transaction approved by the
5commissioner. If the number of shares of capital stock not
6subscribed by eligible subscribers is so small in number or
7other factors exist that do not warrant the time or expense of a
8public offering, the plan of conversion may provide for sale of
9the unsubscribed shares through a private placement or other
10alternative method approved by the commissioner that is fair and
11equitable to eligible subscribers.

12(d) Market value of capital stock.--The plan shall set the 
13total price of the capital stock equal to the estimated pro 
14forma market value of the stock company as successor to the 
15reciprocal insurer based upon an independent evaluation by a 
16qualified expert. This pro forma market value may be that value 
17that is estimated to be necessary to attract full subscription 
18for the shares, as indicated by the independent evaluation and 
19may be stated as a range of pro forma market value. If the
20attorney is a party to the conversion either as the entity that
21grants subscription rights to subscribers or it is
22simultaneously acquired by the stock company in connection with
23the conversion, the incremental value of the attorney shall be
24included in the estimate of pro forma market value of the stock
25company as successor to the reciprocal insurer. The qualified
26expert shall also consider the effect on the pro forma market
27value of a right, if any, of subscribers to a return of capital
28contained in the subscriber agreement or other operative
29document of the reciprocal insurer.

30(e) Purchase price of capital stock and minimum subscription

1amount.--The plan shall set the purchase price per share of
2capital stock equal to any reasonable amount. However, the
3minimum subscription amount required of any eligible subscriber
4cannot exceed $500 dollars, but the plan may provide that the
5minimum number of shares any person may purchase pursuant to the
6plan is 25 shares.

7(f) Limitation on amount of capital stock purchase.--The
8plan shall provide that a person or group of persons acting in
9concert shall not acquire, in the public offering or pursuant to
10the exercise of subscription rights, more than 5% of the capital
11stock of the stock company or the stock of another corporation
12that is participating in the conversion plan, as provided in
13subsection (a)(3)(i), except with the approval of the
14commissioner. This limitation does not apply to any entity that
15is to purchase 100% of the capital stock of the converted
16company as part of the plan of conversion approved by the
17commissioner.

18(g) Limitation on directors and officers.--The plan shall
19provide that no director or officer or person acting in concert
20with a director or officer of the reciprocal insurer or the
21attorney shall acquire any capital stock of the stock company or
22the stock of another corporation that is participating in the
23conversion plan, as provided in subsection (a)(3)(i), for three
24years after the effective date of the plan, except through a
25broker-dealer, without the permission of the commissioner. This
26provision does not prohibit the directors and officers from
27making block purchases of 1% or more of the outstanding common
28stock:

29(1) other than through a broker-dealer if approved in
30writing by the department;

1(2) through the exercise of subscription rights received
2under the plan; or

3(3) from participation in a stock benefit plan approved
4by shareholders pursuant to section 809-B(b).

5(h) Sale of stock by directors and officers.--The plan shall
6provide that no director or officer may sell stock purchased
7pursuant to this section or section 804-B(a) within one year
8after the effective date of the conversion.

9(i) Holders of surplus notes.--The plan shall provide that
10the rights of a holder of a surplus note to participate in the
11conversion, if any, shall be governed by the terms of the
12surplus note and the rights, if any, of subscribers to a return
13of capital shall be governed by the subscriber agreement or
14other operative document of the reciprocal insurer.

15(j) Repurchase of capital stock.--The plan shall provide
16that, without the prior approval of the commissioner, no stock
17company, or any corporation participating in the conversion plan
18pursuant to subsection (a)(3)(i), may for a period of three
19years from the date of the completion of the conversion
20repurchase any of its capital stock from any person, except that
21this restriction shall not apply to either:

22(1) a repurchase on a pro rata basis pursuant to an
23offer made to all shareholders of the stock company or any
24corporation participating in the conversion plan pursuant to
25subsection (a)(3)(i); or

26(2) A purchase in the open market by a tax-qualified or
27nontax-qualified employee stock benefit plan in an amount
28reasonable and appropriate to fund the plan.

29Section 804-B. Optional provisions of plan of conversion.

30(a) Subscription rights.--The plan may provide that the

1directors and officers of the attorney and the reciprocal
2insurer shall receive, without payment, nontransferable
3subscription rights to purchase capital stock of the stock
4company or the stock of another corporation that is
5participating in the conversion plan, as provided in section
6803-B(a)(3)(ii). These subscription rights shall be allocated
7among the directors and officers by a fair and equitable formula
8and shall be subordinate to the subscription rights of eligible
9subscribers. Nothing contained in this article may require the
10subordination of subscription rights received by directors and
11officers in their capacity as eligible subscribers, if any.

12(b) Maximum share purchase by directors and officers.--The
13aggregate total number of shares that may be purchased by
14directors and officers of the attorney and the reciprocal
15insurer in their capacity under subsection (a) and in their
16capacity as eligible subscribers under section 803-B(a)(3) shall
17not exceed 35% of the total number of shares to be issued if
18total assets of the reciprocal insurer are less than $50,000,000
19or 25% of the total number of shares to be issued if total
20assets of the reciprocal insurer are more than $500,000,000. For
21reciprocal companies with total assets of or between $50,000,000
22and $500,000,000, the percentage of the total number of shares
23that may be purchased shall be interpolated.

24(c) Liquidation account.--The plan may provide for the
25creation of a liquidation account for the benefit of subscribers
26in the event of voluntary liquidation subsequent to conversion
27in an amount equal to the surplus of the reciprocal insurer,
28exclusive of the principal amount of any surplus note, on the
29last day of the quarter immediately preceding the date of
30adoption of the plan.

1Section 805-B. Alternative plan of conversion.

2A plan of conversion may be adopted that does not rely in
3whole or in part upon issuing nontransferable subscription
4rights to subscribers to purchase stock of the stock company if
5the commissioner finds that the plan does not prejudice the
6interests of the subscribers, is fair and equitable and is not
7inconsistent with the purpose and intent of this act. An
8alternative plan may:

9(1) Include the acquisition or merger of the stock
10company or any corporation participating in the conversion
11plan pursuant to section 803-B(a)(3)(ii) by or into a
12domestic or foreign stock company.

13(2) Provide for issuing stock, cash or other
14consideration to subscribers instead of subscription rights.

15(3) Set forth another plan containing any other
16provisions approved by the commissioner.

17Section 806-B. Effective date of plan.

18A plan is effective when all of the following have been
19completed:

20(1) The commissioner has approved the plan.

21(2) The eligible subscribers have approved the plan.

22(3) If the stock company becomes successor to the
23reciprocal insurer by merger, the eligible subscribers have
24approved the merger of the reciprocal insurer with and into
25the stock company and the articles of merger have been filed
26with the Secretary of State of the Commonwealth.

27Section 807-B. Rights of subscribers whose policies are issued
28after adoption of plan and before effective date.

29(a) Notice.--A subscriber shall be sent a written notice
30regarding the plan upon issuance of a policy if the subscriber's

1policy is issued after the later of:

2(1) the date the proposed plan has been adopted; or

3(2) if different, the record date for establishing
4subscribers eligible to vote on the plan.

5The notice shall be sent before the effective date of the plan.

6(b) Cancellation and refund.--A subscriber entitled to
7receive the notice provided for in subsection (a) shall be
8advised of the subscriber's right of cancellation and to a pro
9rata refund of unearned premiums.

10(c) Limitation on subscribers.--No subscriber who has made
11or filed a claim under the subscriber's insurance policy may
12receive a refund under subsection (b). No person who has
13exercised the rights provided under subsection (b) may make or
14file a claim under the subscribers insurance policy.

15Section 808-B. Corporate existence.

16On the effective date of the conversion, the corporate
17existence of the reciprocal insurer continues in the stock
18company. On the effective date of the conversion, all of the
19assets, rights, franchises and interests of the reciprocal
20insurer in and to every species of property, real, personal and
21mixed, and any accompanying things in action, are vested in the
22stock company, without any deed or other instrument of transfer
23and the stock company assumes all the obligations and
24liabilities of the reciprocal insurer.

25Section 809-B. Conflict of interest.

26(a) Compensation.--A director, officer, agent or employee of
27the attorney or reciprocal insurer shall not receive any fee,
28commission or other valuable consideration, other than his usual
29regular salary or compensation, for aiding, promoting or
30assisting in a conversion under this article except as provided

1for in the plan approved by the commissioner. This provision
2does not prohibit the payment of reasonable fees and
3compensation to counsel, accountants and actuaries for services
4performed in the independent practice of their professions, even
5if the counsel, accountant or actuary is also a director or
6officer of the attorney or the reciprocal insurer.

7(b) Stock benefit plan.--For a period of two years after the
8effective date of the conversion, no stock company may implement
9any nontax-qualified stock benefit plan unless the plan is
10approved by a majority of votes eligible to be cast at a meeting
11of shareholders held not less than six months after the
12effective date of the conversion.

13(c) Costs and expenses.--The costs and expenses connected
14with a plan of conversion shall be paid for or reimbursed by the
15reciprocal insurer or the stock company. If the plan provides
16for participation by another corporation or stock company in the
17plan pursuant to section 803-B(a)(3)(ii), the corporation or
18stock company may pay for or reimburse all or a portion of the
19costs and expenses connected with the plan.

20Section 810-B. Failure to give notice.

21If the reciprocal insurer complies substantially and in good
22faith with the notice requirements of this article, the
23reciprocal insurer's failure to send a subscriber the required
24notice does not impair the validity of any action taken under
25this article.

26Section 811-B. Limitation on actions.

27An action challenging the validity of or arising out of acts
28taken or proposed to be taken under this article shall be
29commenced no later than 30 days after the later of the approval
30of the plan by the commissioner or the deemed approval of the

1plan by a vote of the eligible subscribers.

2Section 812-B. Reciprocal insurer insolvent or in hazardous
3financial condition.

4(a) Waiver of requirements.--If a reciprocal insurer seeking
5to convert is insolvent or is in hazardous financial condition
6according to information supplied in its most recent annual or
7quarterly statement filed with the department or as determined
8by a financial examination performed by the department pursuant
9to Article IX of the act of May 17, 1921 (P.L.789, No.285),
10known as The Insurance Department Act of 1921, the requirements
11of this article, including notice to and policyholder approval
12of the plan of conversion, may be waived at the discretion of
13the commissioner, if requested by the attorney or the reciprocal
14insurer. If a waiver under this section is ordered by the
15commissioner, the reciprocal insurer shall specify all of the
16following in its plan of conversion:

17(1) The method and basis for the issuance of the stock
18company's shares of its capital stock to an independent party
19in connection with an investment by the independent party in
20an amount sufficient to restore the stock company, as
21successor to the reciprocal insurer, to a sound financial
22condition.

23(2) That the conversion shall be accomplished without
24granting subscription rights or other consideration to the
25past, present or future subscribers.

26(b) Authority of commissioner.--Nothing contained in this
27section shall alter or limit the authority of the commissioner
28under any of the provisions of law, including, but not limited
29to, Article V of The Insurance Department Act of 1921.

30Section 813-B. Rules and regulations.

1The commissioner may promulgate rules and regulations to
2administer and enforce this article.

3Section 814-B. Laws applicable to stock company.

4(a) Control of stock company.--No reciprocal insurer may
5convert under this article if as a direct result of the
6conversion a person or the person's affiliates acquire control
7of the stock company, unless that person and the person's
8affiliates comply with the provisions of section 1402. For
9purposes of this subsection, "control" shall have the meaning
10given to such term in section 1401.

11(b) Stock insurance company rules.--Except as otherwise
12specified in this article, a stock company resulting from the
13conversion of a reciprocal insurer under this article shall have
14and may exercise all the rights and privileges and shall be
15subject to all of the requirements and regulations imposed upon
16stock insurance companies formed under this act and any other
17laws of this Commonwealth relating to the regulation and
18supervision of insurance companies, but it shall exercise no
19rights or privileges which other stock insurance companies may
20not exercise.

21Section 815-B. Licensing of stock company and commencement of
22business as an insurance company.

23The commissioner may waive the minimum surplus requirement of
24a stock company in connection with the initial licensing of a
25stock company that will be the successor to a reciprocal
26insurer. The stock company may not engage in the business of
27insurance as a stock company until the completion of the merger
28with the reciprocal insurer and compliance with all provisions
29of this article.

30Section 816-B. Amendment of policies.

1A reciprocal insurer, by endorsement or rider approved by the
2commissioner and sent to the policyholder, may simultaneously
3with or at any time after the adoption of a plan of conversion
4amend an outstanding insurance policy for the purpose of
5extinguishing a right of the holder of such policy to share in
6the surplus of the reciprocal insurer. This amendment shall be
7void if the plan of conversion is not submitted to the
8commissioner or, if submitted, is disapproved by the
9commissioner or, if approved by the commissioner, is not
10approved by the eligible subscribers on or before the first
11anniversary of its approval by the commissioner.

12Section 817-B. Prohibition on acquisitions of control.

13Except as otherwise specifically provided in section 803-B, 
14from the date a plan of conversion is adopted until the 
15effective date of the plan of conversion, no person may directly 
16or indirectly offer to acquire, make an announcement to acquire 
17or acquire in any manner, including making a filing with the 
18department for acquisition under a statute or regulation of this 
19Commonwealth, the beneficial ownership of 10% or more of a class 
20of a voting security of the attorney or the stock company that 
21will be the successor of the reciprocal insurer or of a person 
22which controls the voting securities of the attorney or the 
23stock company that will be the successor of the reciprocal 
24insurer.

<-25Section 2. This act shall take effect in 60 days.

<-26Section 3. This act shall take effect as follows:

27(1) The following shall take effect immediately:

28(i) This section.

29(ii) The addition of section 631.1 of the act.

30(2) The remainder of this act shall take effect in 60

1days.