CHAPTER 80 - INSURANCE DEPARTMENT RELATING TO MUTUAL BENEFIT ASSOCIATIONS

AN ACT TO AMEND CHAPTER 20 OF THE REVISED CODE OF DELAWARE, 1935, RELATING TO THE INSURANCE DEPARTMENT BY PROVIDING FOR SICK, ACCIDENT AND/OR DEATH BENEFITS TO MEMBERS OR THEIR BENEFICIARIES.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. That Chapter 20 of the Revised Code of Delaware, 1935, be and the same is hereby amended by the addition of another Article to the said Chapter 20, to be designated as follows:

ARTICLE 10 Mutual Benefit Associations

Section 2. That Chapter 20 of the Revised Code of Delaware, 1935, be and the same is hereby further amended by the addition of the following Sections, to-wit:

567A. 107. Mutual Benefit Association Defined:--Any corporation, society, order or association, which has no capital stock, issuing beneficial certificates of protection providing for payment of benefits in case of sickness, disability by accident and/or death of its members, and which accumulates a* fund through mutual and voluntary contribution of its members at either stated or irregular intervals with which to discharge its liabilities on the aforesaid certificates and with which to pay the operating expenses, is hereby declared to be a Mutual Benefit Association; provided, however, fraternal benefit societies, as defined in Article 9, Chapter 20, Revised Code of Delaware, 1935, and fraternal organizations exempted by the provisions of Article 6, Chapter 20, Revised Code of Delaware, 1935, shall not be deemed to be a Mutual Benefit Association.

567B. 108. Requirements on Filing Certificate of Incorporation With the Secretary of State:--The Secretary of State shall not file a Certificate of Incorporation for any Mutual Benefit Association unless such certificate shall be accompanied by a certificate duly signed by the Insurance Commissioner of the State setting forth that a deposit of One Thousand Dollars ($1,000.00) has been made with him in cash or approved securities, that conformity has been made with all of the requirements of this Article, and that the Certificate of Incorporation so presented for filing is in substantial compliance with the provisions of the Insurance Laws of the State of Delaware. The aforesaid deposit shall constitute a portion of the Guaranty Fund hereafter mentioned and shall remain in trust with the aforesaid Insurance Commissioner to answer any default of such Mutual Benefit Association; provided, however, said association may collect the interest, dividends and profits upon such securities and from time to time substitute therefor others of equally good character and value to the satisfaction of the said Insurance Commissioner.

567C. 109. Requirements for Obtaining Certificate of Authority:--No Mutual Benefit Association shall directly or indirectly issue any certificate of protection whatever without first having been duly granted a Certificate of Authority by the Insurance Commissioner in conformity with the following requirements:

1. It shall file with the said Insurance Commissioner

(a) Certified copy of its Certificate of Incorporation or charter,

(b) Copy of its constitution and by-laws,

(c) Copy of all forms of certificates of protection which the association proposes to issue,

(d) Certified statement that such association has a membership of at least two hundred and fifty persons, or that it has at least two hundred and fifty bona fide applications for membership accompanied by the initial payments.

2. It shall furnish such other information respecting its business or affairs as may be required of it by the said Insurance Commissioner.

567D. 110. Guaranty Fund, How Constituted:--All existing Mutual Benefit Associations having a total membership of one thousand (1,000) or more persons, shall, and are hereby directed to, deposit with the Insurance Commissioner of the State of Delaware the sum of One Thousand Dollars ($1,000.00) in cash or approved securities upon receipt of a Certificate of Authority, and all such associations having a total membership of less than one thousand (1,000) persons shall and are hereby directed to deposit the sum of Five Hundred Dollars ($500.00) in cash or approved securities upon receipt of such Certificate of Authority.

With the filing of each annual statement, every Mutual Benefit Association issuing certificates of membership, shall make an additional deposit with the Insurance Commissioner of One Dollar ($1.00) for each then existing membership above the total membership shown by its last annual statement, and such annual deposits shall continue until there shall be deposited with the said Insurance Commissioner a fund not in excess of Five Thousand Dollars ($5,000.00); provided, however, said association may collect the interest, dividends and profits upon such securities and from time to time substitute therefor others of equally good character and value to the satisfaction of the Insurance Commissioner.

The aforesaid deposits shall constitute a Guaranty Fund and shall not be withdrawn by any association, as herein defined, except, and it is hereby provided, that the said Insurance Commissioner may withdraw any part or all of such Guaranty Fund upon the order of any Court of Record of the State of Delaware, issued on a final judgment to pay any claim reduced to final judgment by such Court in an action by any member or beneficiary based on the certificate of membership. In the event of such withdrawal, such association making such deposit shall replace the amount withdrawn within six months from the date of withdrawal.

Whenever a Mutual Benefit Association discontinues or ceases doing business, it shall make written application to the Insurance Commissioner of this State of its desire to withdraw its Guaranty Fund. Within three months of receipt of such application, the Insurance Commissioner may, in his discretion, make, or cause to be made, an examination of the books and records of such association, and if finding them to be in proper order and all liabilities paid, he shall cancel the Certificate of Authority previously granted to such association, and deliver to such association or its assigns any monies or securities deposited in the Guaranty Fund to the credit of such association.

567E. 111. Benefit Fund, How Created, Uses Of:--Every Mutual Benefit Association shall deposit in a bank or trust company, approved by the Insurance Commissioner of the State of Delaware, a sum not less than fifty per cent. (505) of all contributions received from whatsoever source as a benefit fund for the payment of claims arising under the certificates of memberships, for the payments to the Guaranty Fund maintained with the Insurance Commissioner and for the payment of legal expenses incurred in adjusting and defending claims, for these purposes and no other.

567. 112. Certificates of Membership, Approved by Insurance Commissioner, Conditions Thereto:--No certificate of membership providing for sick, accident and/or death benefits to members or their beneficiaries, as hereinafter provided, shall be issued by any Mutual Benefit Association, as hereinbefore defined, unless the same shall first be approved by the Insurance Commissioner of the State of Delaware.

A certificate of membership, among other conditions not contrary to the provisions of this Article, may specify the diseases for which limited benefits may be paid in sickness or death, and may also specify the causes of personal injuries or death therefrom for which no benefits will be paid.

A certificate of membership may also restrict the payment of any benefit for sickness, accident and/or death that occurs within a specified time after the issuance of such certificate to the refund of all contributions made by the members or their beneficiaries, less the expense of carrying the same on the books of the association, and the payment of such refund shall fully liquidate all claims of a member against the association by reason of such certificate of membership.

A certificate of membership may also limit the time which shall elapse before any benefits are payable and may fix and determine the minimum and maximum benefits to be paid within limitations approved by the Insurance Commissioner.

567G. 113. Schedule of Benefits:--No certificate of membership issued by any Mutual Benefit Association shall provide for death benefits in excess of One Thousand Dollars ($1,000.00), and no such certificate shall provide sickness or accident disability benefits in excess of Twenty-five Dollars 025.00) per week nor shall such benefits be payable for a period of more than thirteen weeks in any twelve month period. No association shall issue more than one of each of the above type of certificate of membership to any one person. All approved claims for the benefits herein set forth shall be paid by the association within three months after satisfactory proofs of such claims have been filed.

567H. 114. Doing Business in and Outside State:--Any Mutual Benefit Association organized under the General Corporation Laws of the State of Delaware with its principal office situate in this State shall be regarded as doing business in the State of Delaware regardless of whether or not its membership is acquired from residents of this State, other States, District of Columbia or Territories of the United States, and shall make the reports required by the Insurance Commissioner and pay all of the fees herein prescribed.

No domestic Mutual Benefit Association shall issue any certificate of membership in any State or Territory of the United States, District of Columbia or foreign country unless it holds a valid and unrevoked Certificate from the Insurance Commissioner of the State of Delaware.

567I. 115. Agreement, How Constituted:--The Certificate of Membership, the Certificate of Incorporation, and any amendments thereto, the by-laws of the association and the provisions of this Article shall constitute an agreement between the association as a whole or the membership thereof, and the members, and binding on their respective beneficiaries.

567J. 116. Examination by Insurance Commissioner: --The Insurance Commissioner of this State shall have the power and authority, whenever he deems the same expedient, to make or cause to be made an examination of the condition and affairs of every Mutual Benefit Association issuing certificates of membership in this State. For the purpose of such examination, the said Insurance Commissioner may employ such person or persons to conduct or to assist therein as he may deem advisable. All proper charges and expenses incurred in such examination shall be paid by the association. The expense of such examination shall be fixed by the Insurance Commissioner, but shall not exceed the sum of Twenty-five Dollars ($25.00) for a day of 24 hours, plus traveling expenses incurred.

567K. 117. Annual Statement:--Every Mutual Benefit Association organized in or transacting business in the State of Delaware shall annually, on or before the first day of March, file with the Insurance Commissioner a statement subscribed and sworn to by its President and Secretary, or in their absence by two of its principal officers, showing its financial condition at the close of business on the thirty-first day of December of the year last preceding also showing the total membership at such date, and the record as to fifty per cent. (505) of all contributions being in deposit in the benefit fund. Such statement shall be in such form as the Insurance Commissioner shall prescribe.

567L. 118. Fees, Paid to Whom, When:--Every Mutual Benefit Association, for the purposes of organization, shall be issued a Certificate of Authority by the Insurance Commissioner, which shall be valid until the first day of March following its issuance, and thereafter such association shall be issued such Certificate of Authority annually on the said date to operate the year following. A fee of Twenty-five Dollars ($25.00) shall be paid by every Mutual Benefit Association to the Insurance Commissioner at the time of issuance of such Certificate of Authority.

Upon the filing of the annual statement by every Mutual Benefit Association the Insurance Commissioner shall be paid a fee of twenty-five Dollars ($25.00) to cover cost of filing.

The above fees shall be for the use of the State and shall be in lieu of all other takes except tax on real property.

567. 119. Investments, How Made:--Each Mutual Benefit Association may invest its funds in any form of investment sanctioned in Section 31 of the Insurance Laws of the State of Delaware relating to Investments of Funds by Domestic Companies.

567L. 120. Mergers, How Effected:--Every Mutual Benefit Association, as herein defined, may merge, insure, reinsure, or accept the transfer of membership or funds with any other like Mutual Benefit Association under such rules and regulations as the Insurance Commissioner shall prescribe.

567O. 121. Continuance of Existing Associations:--Within six months after the approval of this Act any Mutual Benefit Association existing and operating under a Certificate of Incorporation granted by the State of Delaware, desiring to continue its operation may do so by complying with the provisions of this Article.

567P. 122. Violations and Penalties: - All Mutual

shall have been granted Certificates of Incorporation by the State of Delaware, must secure a Certificate of Authority from the Insurance Commissioner within ninety days after this Act shall take effect. The Secretary of State or the Attorney General shall have authority and are directed to institute such proceedings as shall be necessary to revoke the Certificate of Incorporation of any such association failing to secure such Certificate of Authority.

Any Mutual Benefit Association or any officer or employee thereof, refusing or neglecting to secure a Certificate of Authority within ninety days after this Act shall take effect shall be deemed to have committed a misdemeanor, and upon conviction thereof, shall be subject to a fine of not more than One Thousand Dollars ($1,000.00), or imprisonment for not more than one year, or both, in the discretion of the Court.

Any Mutual Benefit Association, or any officer or employee thereof, neglecting or refusing to comply with, or violating any of the provisions of this Article, the penalty for which neglect, refusal or violation is not otherwise specified, shall be subject to a fine not exceeding Two Hundred Dollars ($200.00) upon conviction thereof.

567Q. 123. Saving Clause:--If any clause, sentence, paragraph or part of this Act shall, for any reason, be adjudged by any Court of competent jurisdiction, to be invalid, such judgment shall not affect, impair or invalidate the remainder of this Act, but shall be confined in its operation to the clause, sentence, paragraph or any part thereof directly involved in the controversy in which such judgment has been rendered.

Approved May 20, 1937.