CHAPTER VI.

Life, Health, Accident and Annuity or Endowment Insurance on the Assessment Plan.

453g. Insurance contracts gener- 453m. General provision, lapsing.

453n. Certificate fees, penalties.

ally. 453h. Reserve emergency funds. 4530. Insurance commissioner to 453i. Foreign present bill for certain expenses.

erally.

corporations gen

453j. Limitations upon right to 453p. Exemption of fraternal soissue contracts of insurcieties. ance.

453d. Every contract whereby a benefit may accrue to a party or parties therein named upon the death or physical disability of a person insured thereunder, or for the payment of any sums of money dependent in any degree upon the collection of assessments or dues from persons holding similar contracts, is deemed a contract of mutual insurance upon the assessment plan. Such contracts must show that the liabilities of the insured thereunder are not limited to fixed premiums. 1905-418.

453e. Corporations may be formed to carry on the business of mutual insurance upon the assessment plan, and are subject only to the provisions of this chapter. No such corporation which may be hereafter formed may issue contracts of insurance until at least one thousand persons have applied, in writing, to the insurance commissioner, for membership or insurance therein, and have paid to the treasurer of such corporation the sum of twenty-five thousand dollars. This sum must be invested in bonds or securities, approved by the insurance commissioner of the state, or deposited in some bank in this state where it will earn interest. Said bonds or securities, or evidences of such deposit, must be placed through the insurance commissioner of this state, with the state treasurer, and the principal sum must be held in trust for the contract holders of such corporation, with the right in the corporation to exchange said bonds, securities or evidence of bank deposit for others of like value. Such corporation must also, as a condition precedent to issuing any contracts of insurance, obtain the written certificate of the insurance commissioner that it has complied with the requirements of this chapter; and that the name of the corporation is not the same as that of any other corporation of this or other states, as indicated by the insurance department reports in his office; nor must the commissioner approve any name or title so closely resembling another as to mislead the public. No corporation formed hereunder has legal existence after one year from the date of its articles unless its organization has been completed and business commenced; nor shall any corporation or individual solicit, or cause to be solicited, any business, until such corporation has complied with the provisions of section six hundred thirty-three of the Political Code. Nothing in the chapter shall be construed to exempt any corporation from the provisions of sections two hundred ninety-six and two hundred ninety-nine of this code. 1925.

453f. Any existing corporation engaged in the business of life health, accident, or endowment insurance on the assessment plan may reincorporate under the provisions of this code and chapter, but is not obliged to do so, and may, without such reincorporation, exercise the rights, powers, and privileges conferred by this chapter. 1905-419.

453g. Every contract of insurance issued by such corporation must specify the sum or sums to be paid upon the happening of the contingency insured against, and when such payments must be made. Unless the contract is invalidated by fraud or by breach of its conditions, the corporation is obligated to pay the beneficiary the amount or amounts specified in its contract at the time or times therein named, and such indebtedness is a lien upon all the property of such corporation, with priority over all indebtedness thereafter incurred, except as hereinafter provided in case of insolvency. Failure to make such payment, within thirty days after notice, at the home office, by mail, as provided by law, of a final judgment, unless waiver is made by the beneficiary, constitutes a forfeiture of the right to do business. 1905-419.

453h. Every domestic corporation, organized to do or doing the business of insurance on the assessment plan, must accumulate a reserve or emergency fund, which must, at all times, be not less than the largest benefit contracted to be paid by it to any one person. Every corporation organized under the provisions of this chapter must accumulate such fund within a year from the date of its certificate of incorporation. Such fund to the extent of the largest amount contracted to be paid by any such corporation to any one person, must be invested and deposited, as provided in section four hundred and fifty-three e, with the right in the corporation to exchange any such securities for others of equal value. The deposit required by section four hundred and fifty-three e constitutes a part of the reserve required by this section, at the option of such corporation. When any such corporation discontinues business, this fund must be returned to such corporation or disposed of as may be determined by the superior court of the county in which is its principal place of business. 1905-419.

453i. Corporations organized under the laws of any other state or country to transact the business of mutual assessment insurance must, as a condition precedent to transacting business in this state, comply with the provisions of sections four hundred and five and four hundred and eight of this code, and deposit with the insurance commissioner of this state a certified copy of its charter or other instrument required by its home authorities; a statement under oath, of its president or secretary, of its business for the preceding year, in such form as may be required by the insurance commissioner of this state; an appointment of a general agent, service upon whom binds the corporation; a certificate that for the next preceding twelve months it has paid in full the maximum amount named in its contract of insurance; a certificate from the proper officer of its state or government that like corporations of this state are legally entitled to do business in such state or country; copies of its contracts of insurance and applications, which must show that the liabilities of its members are not limited to fixed premiums; and. evidence satisfactory to the insurance commissioner, that the corporation has accumulated a fund equal to that required of like corporations in this state, constituting a reserve or surplus fund held in trust for the benefit of its contract-holders, and so invested and held as required by the laws of the state or government under which

such corporation was organized. The insurance commissioner must thereupon issue a license to such corporation to do business in this state. This license must be renewed annually, and may be revoked whenever it is ascertained that the statements required to be made by this section are not true. Upon such revocation, notice thereof must be given by the insurance commissioner by publication in some newspaper published in the city and county of San Francisco, for two weeks, daily, and no new contracts must be made by such company in this state. When any other state or country imposes any additional license, fees, taxes, or penalties upon any corporation organized or doing business under this chapter, like license, fees, taxes, or penalties are imposed upon corporations of the same kind and their agents of such state or country doing business in this state. 1905-419.

453j. No corporation doing business under this chapter, except accident or casualty corporations, must issue a contract of insurance upon the life of any person under fifteen nor over sixty-one years of age. Every such contract of insurance must be founded upon written application therefor, and, except where the application is for health, accident or casualty insurance only, or for less than one thousand dollars life insurance, such application must be accompanied by the report of a reputable physician, containing a detailed statement of his examination of the applicant, showing the applicant to be in good health, and recommending the issuance of a contract of insurance; provided, however, that in the cases of policies issued upon the group plan, medical examination shall be discretionary with the board of directors of the association. Any solicitor, agent, employee, examining physician, or other person, making a false or fraudulent statement to any corporation doing business under this chapter, with reference to any application for insurance, or for the purpose of obtaining any money or benefit from such corporation, is guilty of a misdemeanor; and any person who makes a false statement of any material fact or thing in a sworn statement as to the death or disability of a contractholder, in any such corporation for the purpose of procuring or aiding the beneficiary or beneficiaries or contract-holder in procuring the payment of a benefit named in the contract, is guilty of a misdemeanor. 1925.

453k. The money, benefit, annuity, endowment, charity, relief, or aid to be paid as provided by the contracts issued by any corporation doing business under this chapter, is not liable to attachment or other process, nor to be seized, taken, appropriated, or applied by any legal or equitable process, nor by operation of law, to pay any debts or liability of the contract-holder or any beneficiary named thereunder. 1905-421.

453 1. Every corporation, whether domestic or foreign, doing the business of effecting insurance on the assessment plan, must annually, on or before the first day of March, file with the insurance commissioner, in such form as he may prescribe, a statement of its affairs for the year ending on the preceding thirty-first day of December. The insurance commissioner, in person, or by duly authorized deputy, has the power of examination into the affairs of any domestic corporation doing business or claiming to do business under this chapter, at any time, in his discretion, and must make such examination at least once a year. If he, after an examination of the affairs of a corporation, finds that it is not doing its business in conformity to this chapter, or that it is doing a fraudulent or unlawful business, or that it is not carrying out its terms of contract, or that it cannot, within three months from the date of notice of

default, pay its obligations, he must cite the president, secretary, manager or general agent of the corporation, or all of them, to appear before him, stating the time and place, to show cause why the authority of the corporation to do business should not be revoked, and if cause is not shown, then he must report the facts to the attorney-general of the state, who must commence proceedings in the proper court to restrain the corporation from doing any further business. 1905-421.

453m. No policy or certificate issued by any corporation or association doing business under the provisions of this chapter, lapses for the non-payment of any assessments, dues, or premiums, unless the corporation or association has first mailed to the insured under such policy or certificate at his or her last given post office address, a notice setting forth the amount to be paid, and the time the same is due and payable; and such notice must be mailed at least fifteen days before the assessment is due; provided that such corporations doing business under this chapter as collect specific amounts at specific dates, as contained in the contract, are not compelled to send such notices; and an affidavit made by the officer, book-keeper, or clerk of any such corporation having charge of the mailing of notices, setting forth the facts as they appear on the records in the office of the said corporation, showing that such notice was mailed and the date of mailing, is conclusive evidence of the mailing of such notice. 1905-421.

453n. The fees for filing statements, certificates, or other documents required by this chapter, or for any service or act of the insurance commissioner, and the penalties for any violation of this chapter, must, except as otherwise provided herein, be the same as provided in the laws of this state relating to life insurance companies, and must be disposed of as provided by such laws. 1905-422.

4530. For all lawful expenses under this chapter, or by reason of any of its provisions, in the prosecution of any suit or proceeding, or otherwise, for the enforcement of the provisions of this chapter, the insurance commissioner must present bills, duly certified by him, and accompanied with vouchers, to the state board of examiners, who may allow the same, and direct payment thereof to be made; and the state controller must draw warrants therefor on the state treasurer for the payment of the same to the insurance commissioner, out of the general fund, in addition to the ordinary contingent expense. 1905–422.

453p. The provisions of this chapter do not apply to secret or fraternal societies, lodges, or councils, which conduct their business and secure membership on the lodge system exclusively, having ritualistic work and ceremonies in their societies, lodges, or councils, nor to any mutual or benefit association organized or formed and composed of members of any such society, lodge, or council exclusively. 1905–422.

453s. Every title insurance company shall be subject to and shall comply with all the requirements of the insurance laws and the rules and regulations of the insurance department of this state, and the insurance commissioner shall have the same power and authority regarding any such corporation that he may exercise in relation to other insurance corporations organized under the laws of this state, including the right to examine and inspect the financial condition and affairs of such company relating to the insurance business of such company, and to compel compliance with the provisions of law governing any such corporation. 1913-490.

453t. Every title insurance company, before issuing any guarantee or policy of insurance, shall deposit with the state treasurer as herein provided, as a "guarantee fund" for the security and protection of the holders of, or beneficiaries under, such guarantees or policies of insurance, one hundred thousand dollars. Any such deposit may be made either in lawful money of the United States or in any of the securities specified in subdivision one, except those securities mentioned in subsection (h) thereof, of section four hundred twentyone of this code. Said money or securities shall be first approved by the insurance commissioner, and upon his written order, deposited with the state treasurer for the purpose herein specified, and said treasurer shall give his receipt therefor, and thereafter, subject to the provisions of this chapter, shall hold such deposits of money or securities for the security and protection of the holders of, or beneficiaries under, any guarantee or policy of insurance issued by such company, and the state shall be responsible for the custody and safe return of any money or securities so deposited. Said securities or money so deposited may, with the approval of the insurance commissioner, be withdrawn or exchanged from time to time for other like securities, or lawful money, receivable as aforesaid. So long as the company so depositing said money or securities shall continue solvent, it shall have the right and shall be permitted by the state treasurer to receive the interest and dividends on any securities so deposited. Said securities and money shall be subject to sale and transfer, and to the disposal of the proceeds thereof by said state treasurer only on the order of a court of competent jurisdiction and for the security and protection of the holders of such guarantees and policies of insurance. When any part of the securities so deposited with the state treasurer consists of notes or bonds secured by mortgage or deed of trust, or in loans upon real property secured by mortgage or deed of trust, such mortgages or deeds of trust shall be accompanied by evidence of title issued by a person, company, or corporation designated or approved by the insurance commissioner and authorized by law or otherwise found by the insurance commissioner to be competent to issue such evidence of title. Such evidence of title