§ 58-15-65. Nonassessable policies.
§58‑15‑65. Nonassessable policies.
(a) The Commissionermay issue a certificate authorizing the reciprocal to reduce or extinguish thecontingent assessment liability of subscribers under its policies then in forcein this State and to omit provisions imposing contingent assessment liabilityin all policies delivered or issued for delivery in this State for as long asall such surplus to policyholders remains unimpaired. The certificate may beissued if (i) a reciprocal has surplus to policyholders of at least two milliondollars ($2,000,000), and (ii) an application of the attorney has been approvedby the subscribers' advisory committee.
(b) The Commissionershall issue this certificate if the conditions of subsection (a) of thissection are met and if he determines that the reciprocal's surplus topolicyholders is reasonable in relation to the reciprocal's outstandingliabilities and is adequate to meet its financial needs. In making thatdetermination the following factors, among others, shall be considered:
(1) The size of thereciprocal as measured by its assets, capital and surplus, reserves, premiumwritings, insurance in force, and other appropriate criteria;
(2) The extent to whichthe reciprocal's business is diversified among different kinds of insurance;
(3) The number and sizeof risks insured in each kind of insurance;
(4) The extent of thegeographic dispersion of the reciprocal's insured risks;
(5) The nature andextent of the reciprocal's reinsurance program;
(6) The quality,diversification, and liquidity of the reciprocal's investment portfolio;
(7) The recent past andtrend in the size of the reciprocal's surplus to policyholders;
(8) The surplus topolicyholders maintained by other comparable insurers; and
(9) The adequacy of thereciprocal's reserves.
(c) Upon impairment ofthe surplus to policyholders as described in subsection (a) of this section,the Commissioner shall revoke the certificate. After revocation, thereciprocal shall not issue or renew any policy without providing for thecontingent assessment liability of subscribers.
(d) The Commissionershall not authorize a domestic reciprocal to extinguish the contingentassessment liability of any of its subscribers or in any of its policies to beissued, unless it has the required surplus to policyholders and extinguishesthe contingent assessment liability of all of its subscribers and in allpolicies to be issued for all kinds of insurance it writes. However, ifrequired by the laws of another state in which the domestic reciprocal istransacting the business of insurance as a licensed insurer, it may issuepolicies providing for the contingent assessment liability of its subscribersthat acquire policies in that state and need not extinguish the contingentassessment liability applicable to policies already in force in that state. (1989,c. 425, s. 1.)