CHAPTER 3921: FRATERNAL BENEFIT SOCIETIES

As used in this chapter:

(A) “Benefit contract” means an agreement, as described in division (A) of section 3921.19 of the Revised Code, under which a fraternal benefit society agrees to provide any benefit set forth in division (A) of section 3921.16 of the Revised Code.

(B) “Benefit member” means an adult member of a fraternal benefit society who is designated by the laws or rules of the society to be eligible for benefits under a benefit contract.

(C) “Certificate” means the document issued as written evidence of the benefit contract.

(D) “Laws,” unless the context indicates otherwise, means the articles of incorporation, charter, constitution, and bylaws, however designated, of a fraternal benefit society.

(E) “Lodge” means the subordinate member units of a fraternal benefit society, known as camps, courts, councils, branches, or by any other designation.

(F) “Premium” means the premiums, rates, dues, or other required contributions payable under the certificate.

(G) “Rules,” unless the context indicates otherwise, means the rules, regulations, or resolutions adopted by the supreme governing body or board of directors of a fraternal benefit society that are intended to have general application to all of the members of the society.

Effective Date: 01-01-1997

Any incorporated society, order, or supreme lodge, without capital stock, including one exempted under division (A)(2) of section 3921.37 of the Revised Code whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work, having a representative form of government, and providing benefits in accordance with this chapter, is hereby declared to be a fraternal benefit society.

Effective Date: 01-01-1997

(A) For purposes of section 3921.02 of the Revised Code, a society is operating on the lodge system if it has a supreme governing body and subordinate lodges into which members are elected, initiated, or admitted in accordance with its laws, rules, and ritual. The subordinate lodges shall be required by the laws of the society to hold regular meetings at least once in each month in furtherance of the purposes of the society.

(B) A society may organize and operate lodges for children under the minimum age for adult membership. Such children shall not be required to be members of local lodges, nor shall they be given a voice or vote in the management of the society.

Effective Date: 01-01-1997

For purposes of section 3921.02 of the Revised Code, a fraternal benefit society has a representative form of government if all of the following apply:

(A) The society has a supreme governing body constituted in either of the following ways:

(1) As an assembly composed of delegates elected directly by the members or at intermediate assemblies or conventions of members or their representatives, together with other delegates as may be prescribed by the society’s laws. A society may provide for election of delegates by mail. The elected delegates shall constitute a majority in number, and shall not have less than a majority of the votes and not less than the number of votes required to amend the society’s laws. The assembly shall be elected and shall meet at least once every four years, and shall elect a board of directors to conduct the business of the society between meetings of the assembly. Vacancies on the board occurring between elections shall be filled in the manner prescribed by the society’s laws.

(2) As a board composed of persons elected by the members, either directly or by their representatives in intermediate assemblies, and any other persons prescribed by the society’s laws. A society may provide for election of the board by mail. Persons elected to the board shall constitute a majority in number and not less than the number of votes required to amend the society’s laws. Terms of office shall not exceed four years. The board shall meet at least quarterly to conduct the business of the society.

Vacancies on the board occurring between elections shall be filled in the manner prescribed by the society’s laws. A person filling the unexpired term of an elected board member shall be considered an elected member.

(B) The officers of the society are elected by the supreme governing body or the board of directors.

(C) Only benefit members are eligible for election to the supreme governing body, the board of directors, or any intermediate assembly.

(D) Each voting member has one vote, and no vote may be cast by proxy.

Effective Date: 01-01-1997

(A) A fraternal benefit society shall operate for the benefit of its members and their beneficiaries by providing any of the benefits set forth in section 3921.16 of the Revised Code, and by operating for social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic, or religious purposes for the benefit of its members and any other persons as determined by the society. Such purposes may be carried out either directly by the society or indirectly through subsidiary corporations or affiliated organizations.

(B) A fraternal benefit society may do any of the following:

(1) Adopt laws and rules for the government of the society, the admission of its members, and the management of its affairs;

(2) Amend or otherwise alter its laws and rules;

(3) Take any other action necessary and incidental to carrying out the objectives and purposes of the society.

Effective Date: 01-01-1997

(A) A fraternal benefit society shall specify all of the following in its laws or rules:

(1) Eligibility standards for each membership class, provided that if benefits are provided on the lives of children, the minimum age for adult membership shall be set at not less than fifteen years of age and not greater than twenty-one years of age;

(2) The process for admission to membership for each membership class;

(3) The rights and privileges of each membership class, provided that only benefit members shall have the right to vote on the management of the insurance affairs of the society.

(B) A society may admit social members who have no voice or vote in the management of the insurance affairs of the society.

(C) Membership rights in a society are personal to the member and are not assignable.

Effective Date: 01-01-1997

(A) The principal office of any domestic fraternal benefit society shall be located in this state. The meetings of its supreme governing body may be held in any state, district, province, or territory in which the society has at least one subordinate lodge, or in any other location determined by the supreme governing body, and all business transacted at such meetings is as valid in all respects as if the meetings were held in this state.

(B) The minutes of the proceedings of the supreme governing body and of the board of directors shall be recorded in the English language.

(C) A society may provide in its laws for an official publication in which any notice, report, or statement required by law to be given to its members, including notice of election, may be published. Any such notice, report, or statement shall be printed conspicuously in the publication. If the records of a society show that two or more members have the same mailing address, an official publication mailed to one member is deemed to be mailed to all members that have the same address unless one of those members requests a separate copy.

(D) Not later than the first day of June of each year, each society shall either mail to each benefit member or publish in the society’s official publication a synopsis of the society’s annual statement. The synopsis shall include an explanation of the facts concerning the condition of the society as disclosed in the annual statement.

(E) A society may set forth in its laws or rules a grievance or complaint procedure for its members.

Effective Date: 01-01-1997

(A) The officers and members of the supreme governing body or any subordinate body of a fraternal benefit society are not personally liable for any benefits provided by a society.

(B)(1) A person may be indemnified and reimbursed by a society for expenses reasonably incurred by, and liabilities imposed upon, the person in connection with or arising out of any civil, criminal, administrative, or investigative action, suit, or other proceeding, or any threat of such a proceeding, in which the person is involved by reason of the fact that the person served or is serving as a director, officer, employee, or agent of the society or that the person served or is serving, at the request of the society, as a director, officer, employee, or agent of any other firm, corporation, or organization.

(2) A person shall not be indemnified or reimbursed in accordance with division (B)(1) of this section in relation to any matter as to which the person is ultimately adjudged to be or to have been civilly or criminally liable for a breach of duty as a director, officer, employee, or agent of the society or to any matter that has been made the subject of a compromise settlement, unless the person acted in good faith for a purpose the person reasonably believed to be in or not opposed to the best interests of the society and, if it is a criminal proceeding, the person had no reasonable cause to believe that the person’s conduct was unlawful.

(3) The determination as to whether a person meets the standards of conduct set forth in division (B)(2) of this section to qualify for indemnification and reimbursement shall only be made by the supreme governing body, the board of directors by a majority vote of a quorum consisting of persons who were not parties to the proceeding, or a court of competent jurisdiction. The termination of any such action, suit, or other proceeding by judgment, order, settlement, or conviction, or upon a plea of no contest, shall not, in itself, create a conclusive presumption that the person does not meet the standards of conduct required to qualify for indemnification and reimbursement.

(4) The right of indemnification and reimbursement shall not be exclusive of other rights to which a person may be entitled as a matter of law, and shall inure to the benefit of the person’s heirs, executors, and administrators.

(C) A society may purchase and maintain insurance on behalf of any person who served or is serving as a director, officer, employee, or agent of the society, or who served or is serving, at the request of the society, as a director, officer, employee, or agent of any other firm, corporation, or organization, against any liability imposed upon, or expenses incurred by, the person in that capacity or arising out of that position, whether or not the society may, under division (B) of this section, indemnify and reimburse the person for such liability or expenses.

(D) No director, officer, employee, member, or volunteer of a society, who serves without compensation, shall be liable, and no cause of action shall be brought, for damages resulting from the exercise of the person’s judgment or discretion in connection with the duties or responsibilities of the person, unless the act or omission involves willful or wanton misconduct.

Effective Date: 01-01-1997

The laws of a fraternal benefit society may provide that no subordinate body, nor any of its subordinate officers or members, shall have the power or authority to waive any of the provisions of the laws of the society. Such provision shall be binding on the society and every member and beneficiary of a member.

Effective Date: 01-01-1997

A domestic fraternal benefit society organized on or after January 1, 1997, shall be formed as follows:

(A) Seven or more citizens of the United States, a majority of whom are residents of this state, who desire to form a fraternal benefit society, may make, sign, and acknowledge before some officer competent to take acknowledgement of deeds, articles of incorporation stating all of the following:

(1) The proposed corporate name of the society, which name shall not so closely resemble the name of any society or insurance company as to be misleading or confusing;

(2) The purposes for which it is being formed and the mode in which its corporate powers are to be exercised. Such purposes shall not include more liberal powers than are granted by this chapter.

(3) The names and residences of the incorporators and the names, residences, and official titles of all the officers, trustees, directors, or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all such officers shall be elected by the supreme governing body, which election shall be held not later than one year from the date of the issuance of the permanent certificate of authority.

(B) The articles of incorporation, duly certified copies of the society’s bylaws and rules, copies of all proposed forms of certificates, applications for certificates, and circulars to be issued by the society, and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year, shall be filed with the superintendent of insurance, who may require any other information the superintendent considers necessary. The bond with sureties approved by the superintendent shall be in such amount, not less than three hundred thousand dollars nor more than one million five hundred thousand dollars, as required by the superintendent. All documents filed shall be in the English language. If the purposes of the society conform to the requirements of this chapter and all provisions of the laws of this state have been complied with, the superintendent shall so certify, retain and file the articles of incorporation, and furnish the incorporators a preliminary certificate of authority authorizing the society to solicit members as provided in this section.

(C) No preliminary certificate of authority granted under this section shall be valid after one year from its date or after such additional period, not exceeding one year, as may be authorized by the superintendent upon cause shown, unless the five hundred applicants required in division (D) of this section have been secured and the organization has been completed as provided in this section. The articles of incorporation and all other proceedings thereunder shall be void one year after the date of the preliminary certificate of authority, or at the expiration of the extended period, unless the society has completed its organization and has received a certificate of authority to do business as provided in division (E) of this section.

(D) Upon receipt of a preliminary certificate of authority from the superintendent, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates, and shall issue to each applicant a receipt for the amount so collected. No society shall incur any liability other than for the return of such advance premium, nor issue any certificate, nor pay, allow, or offer, or promise to pay or allow, any benefit to any person until all of the following apply:

(1) Actual bona fide applications for benefits have been secured aggregating at least two million five hundred thousand dollars on not less than five hundred applicants, and any necessary evidence of insurability has been furnished to and approved by the society.

(2) At least ten subordinate lodges have been established into which the five hundred applicants have been admitted.

(3) There has been submitted to the superintendent, under oath of the president or secretary, or corresponding officer of the society, a list of such applicants, giving their names, addresses, date each was admitted, name and number of the subordinate lodge of which each applicant is a member, amount of benefits to be granted, and premiums for the benefits.

(4) It has been shown to the superintendent, by sworn statement of the treasurer, or corresponding officer of the society, that at least five hundred applicants have each paid in cash at least one regular monthly premium as provided in this section, which premiums in the aggregate amount to at least one hundred fifty thousand dollars, all of which is credited to the fund or funds from which benefits are to be paid and no part of which may be used for expenses. These advance premiums shall be held in trust during the period of organization and if the society has not qualified for a certificate of authority within one year, as provided in this section, the premiums shall be returned to the applicants.

(E) The superintendent may make such examination and require such further information as the superintendent considers advisable. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, the superintendent shall issue to the society a certificate of authority to that effect and that the society is authorized to transact business pursuant to the provisions of this chapter. The certificate of authority shall be prima facie evidence of the existence of the society at the date of the certificate. The superintendent shall cause a record of the certificate of authority to be made. A certified copy of the record may be given in evidence with like effect as the original certificate of authority.

(F) An incorporated society that was organized prior to January 1, 1997, and that, as of December 31, 1996, is authorized to transact business in this state shall not be required to reincorporate, and may exercise all the rights, powers, and privileges conferred in this chapter and in the society’s articles of incorporation to the extent that the articles are consistent with this chapter.

Effective Date: 01-01-1997

(A) A domestic fraternal benefit society may amend its laws in accordance with the provisions of its laws by action of its supreme governing body at any regular or special meeting of that body or, if its laws so provide, by referendum. A referendum may be held in accordance with the provisions of its laws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members, or by the vote of local lodges. A society may provide for voting by mail. No amendment submitted for adoption by referendum shall be adopted unless, within six months after the date of submission, a majority of the members voting have signified their consent to the amendment by one of the methods specified in this section.

(B) No amendment to the laws of any domestic society shall take effect unless approved by the superintendent of insurance, who shall approve the amendment if the superintendent finds that it has been duly adopted and is not inconsistent with any requirement of the laws of this state or with the character, objects, and purposes of the society. Unless the superintendent disapproves an amendment within sixty days after its filing, the amendment shall be considered to be approved. The approval or disapproval of the superintendent shall be in writing and shall be mailed to the secretary or corresponding officer of the society at its principal office. If the superintendent disapproves the amendment, the reasons for the disapproval shall be stated in the written notice.

(C) Within ninety days after an amendment is approved by the superintendent, the amendment or a synopsis of the amendment shall be furnished to all members of the society either by mail or by publication in full in the official publication of the society. The affidavit of any officer of the society or of anyone authorized by it to mail an amendment or synopsis, stating facts that show that the amendment or synopsis has been duly addressed and mailed, is prima facie evidence that the amendment or synopsis has been furnished the addressee.

(D) Every foreign or alien society authorized to do business in this state shall file with the superintendent a duly certified copy of all amendments of, or additions to, its laws within ninety days after their enactment.

(E) Printed copies of the laws as amended, certified by the secretary or corresponding officer of the society, are prima facie evidence of their legal adoption.

Effective Date: 01-01-1997

(A) A fraternal benefit society may create, maintain, and operate charitable, benevolent, or educational institutions for the benefit of its members and their families and dependents and for the benefit of children insured by the society. For such purpose it may own, hold, or lease personal property or real property located within or without this state, with necessary buildings. The property shall be reported in every annual statement but shall not be allowed as an admitted asset of the society, unless, after excluding such asset, its assets exceed its reserves by at least ten per cent.

(B) Maintenance, treatment, and proper attendance in any institution described in division (A) of this section may be furnished free or for a reasonable charge, but an institution shall not be operated for profit. The society shall maintain a separate accounting of any income and disbursements under this section and report them in its annual statement.

(C) No society shall own or operate funeral homes or undertaking establishments.

Effective Date: 01-01-1997

(A) A domestic fraternal benefit society may, by a reinsurance agreement, cede any individual risk or risks in whole or in part to an insurer, other than another fraternal benefit society, having the power to make such reinsurance and authorized to do business in this state, or if not so authorized, one which is approved by the superintendent of insurance; however, no society may reinsure substantially all of its insurance in force without the written permission of the superintendent. It may take credit for the reserves on the ceded risks to the extent reinsured, but no credit shall be allowed as an admitted asset or as a deduction from liability, to a ceding society for reinsurance made, ceded, renewed, or otherwise becoming effective after January 1, 1997, unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding society under the contract or contracts reinsured without diminution because of the insolvency of the ceding society.

(B) Notwithstanding division (A) of this section, a society may reinsure the risks of another society in a consolidation or merger approved by the superintendent under section 3921.14 of the Revised Code.

Effective Date: 01-01-1997

(A) A domestic fraternal benefit society may consolidate or merge with any other society by complying with the provisions of this section.

(B) The society shall file all of the following with the superintendent of insurance:

(1) A certified copy of the written contract containing in full the terms and conditions of the consolidation or merger;

(2) A sworn statement by the president and secretary or corresponding officers of each society showing the society’s financial condition on a date fixed by the superintendent but not earlier than the thirty-first day of December next preceding the date of the contract;

(3) A certificate of such officers, duly verified by their respective oaths, that the consolidation or merger has been approved by a two-thirds vote of the supreme governing body of each society, which vote was conducted at a regular or special meeting of each such body or, if permitted by the society’s laws, by mail;

(4) Evidence that at least sixty days prior to the action of the supreme governing body of each society, the text of the contract has been furnished to all members of each society either by mail or by publication in full in the official publication of each society.

(C) If the superintendent finds that the contract containing the terms and conditions of the proposed consolidation or merger is in conformity with this section, that the financial statements are correct, and that the consolidation or merger is just and equitable to the members of each society, the superintendent shall approve the contract and issue a certificate to that effect.

(D) Upon approval by the superintendent under division (C) of this section, the contract shall be in full force and effect unless any society that is a party to the contract is incorporated under the laws of any other state or territory. In that event the consolidation or merger shall not become effective until it is approved as provided by the laws of that state or territory and a certificate of the approval is filed with the superintendent of insurance of this state or, if the laws of that state or territory contain no such provision, the consolidation or merger shall not become effective until it is approved by the insurance authority of that other state or territory and a certificate of the approval is filed with the superintendent of insurance of this state.

(E) Upon the consolidation or merger becoming effective as provided in this section, all the rights, franchises, and interests of the consolidated or merged societies in and to every species of property, real, personal, or mixed, and things in action belonging to that property shall be vested in the society resulting from or remaining after the consolidation or merger without any other instrument, except that conveyances of real property may be evidenced by proper deeds, and the title to or interest in any real estate that is vested under the laws of this state in any of the societies consolidated or merged, shall not revert or be in any way impaired by reason of the consolidation or merger, but shall vest absolutely in the society resulting from or remaining after the consolidation or merger.

(F) The affidavit of any officer of the society or of anyone authorized by it to mail any notice or document, stating that the notice or document has been duly addressed and mailed, is prima facie evidence that the notice or document has been furnished the addressees.

Effective Date: 01-01-1997

Any domestic fraternal benefit society may be converted and licensed as a mutual life insurance company by compliance with all the applicable requirements of Chapter 3913. of the Revised Code, if the plan of conversion has been approved by the superintendent of insurance. If the society’s supreme governing body is constituted as an assembly, the plan shall be prepared in writing by the board of directors and shall set forth in full the terms and conditions of the conversion. If the society’s supreme governing body is constituted as a board, the plan shall be prepared in writing by persons designated by the board and shall set forth in full the terms and conditions of the conversion. The plan shall be submitted to the supreme governing body of the society at any regular or special meeting, by giving a complete copy of the plan with the notice of the meeting as provided in the laws of the society . The affirmative vote of two-thirds of all members of the supreme governing body at a regular or special meeting shall be necessary for the approval of the plan. The conversion shall not take effect until approved by the superintendent, who may give approval if the superintendent finds that the proposed change is in conformity with the requirements of the law and is not prejudicial to the certificate holders of the society.

Effective Date: 01-01-1997

(A) A fraternal benefit society may provide any of the following contractual benefits in any form:

(1) Death benefits ;

(2) Endowment benefits;

(3) Annuity benefits;

(4) Temporary or permanent disability benefits;

(5) Hospital, medical, or nursing benefits;

(6) Monument or tombstone benefits to the memory of deceased members;

(7) Any other benefit that may be provided by a life insurer and that is not inconsistent with this chapter, if the provision of that benefit has received the prior approval of the superintendent of insurance.

(B) A society shall specify in its rules those persons who may be issued, or covered by, the contractual benefits set forth in division (A) of this section, consistent with providing benefits to members and their dependents. A society may, upon application of an adult member, provide benefits on the lives of children under the minimum age for adult membership.

Effective Date: 01-01-1997

(A) The owner of a benefit contract may at any time change the beneficiary in accordance with the laws or rules of the fraternal benefit society unless the owner waives this right by specifically requesting in writing that the beneficiary designation be irrevocable. A society may, through its laws or rules, limit the scope of beneficiary designations and shall provide that no revocable beneficiary shall have or obtain any vested interest in the proceeds of any certificate until the certificate has become due and payable in conformity with the provisions of the benefit contract.

(B) A society may make provision for the payment of funeral benefits to the extent of such portion of any payment under a certificate as might reasonably appear to be due to any person equitably entitled to the payment by reason of having incurred expense occasioned by the burial of the member; however, the portion paid shall not exceed ten thousand dollars.

(C) If, at the death of any person insured under a benefit contract, there is no lawful beneficiary to whom the proceeds are payable, the amount of the benefit, except to the extent that funeral benefits may be paid as provided in division (B) of this section, shall be payable to the estate of the deceased insured in the same manner as other property that is not exempt. However, if the owner of the certificate is other than the insured, the proceeds shall be payable to the owner.

Effective Date: 01-01-1997

No money or other benefit, charity, relief, or aid to be paid, provided, or rendered by any fraternal benefit society, shall be liable to attachment, garnishment, or other process, or shall be seized, taken, appropriated, or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right, either before or after payment by the society.

Effective Date: 01-01-1997

(A) Each fraternal benefit society authorized to do business in this state shall issue to each owner of a benefit contract a certificate specifying the amount of benefits provided under the contract. The certificate, together with any riders or endorsements attached to the certificate, the laws of the society, the application for membership, the application for insurance and declaration of insurability, if any, signed by the applicant, and all amendments to each such document, constitute the benefit contract, as of the date of issuance, between the society and the owner, and the certificate shall so state. A copy of the application for insurance and declaration of insurability, if any, shall be endorsed upon or attached to the certificate.

All statements made on the application are representations and not warranties. Any waiver of this provision is void.

(B) Any changes, additions, or amendments to the laws of the society duly made or enacted subsequent to the issuance of the certificate, shall bind the owner and the beneficiaries, and shall govern and control the benefit contract in all respects the same as though such changes, additions, or amendments had been made prior to and were in force at the time of the application for insurance, except that no change, addition, or amendment shall destroy or diminish benefits that the society contracted to give the owner as of the date of issuance.

(C) Any person upon whose life a benefit contract is issued prior to attaining the age of majority shall be bound by the terms of the application and certificate and by all of the laws and rules of the society to the same extent as though the age of majority had been attained at the time of application.

(D) A society shall provide in its laws that if its reserves as to all or any class of certificates become impaired its board of directors or corresponding body may require that there shall be paid by the owner to the society the amount of the owner’s equitable proportion of such deficiency as ascertained by its board, and that if the payment is not made, either of the following applies:

(1) It shall stand as an indebtedness against the certificate and draw interest not to exceed the rate specified for certificate loans under the certificates;

(2) In lieu of or in combination with division (D)(1) of this section, the owner may accept a proportionate reduction in benefits under the certificate.

The society may specify the manner of the election and which alternative is to be presumed if no election is made.

(E)(1) Certificates that are delivered or issued for delivery in this state on or after January 1, 1997, but prior to January 1, 1998, shall comply with the requirements that would have applied under the laws in effect on December 31, 1996.

(2) No certificate shall be delivered or issued for delivery in this state On or after January 1, 1998, unless a copy of the form is filed with and approved by the superintendent of insurance in accordance with the provisions of law applicable to like policies issued by life or sickness and accident insurers in this state.

(3) Each life, sickness and accident, or disability insurance certificate, and each annuity certificate, that is delivered or issued for delivery in this state on or after January 1, 1998, shall comply with the standard contract provision requirements applicable to like policies issued by life or sickness and accident insurers in this state, if those requirements are not inconsistent with this chapter. However, a society may provide in its certificates for a grace period of one full month for payment of premiums. A certificate shall also contain a provision that states the amount of premiums that is payable under the certificate and that sets forth the substance of any sections of the society’s laws or rules in force at the time of issuance of the certificate which, if violated, will result in the termination or reduction of benefits payable under the certificate. If the laws of the society provide for the expulsion or suspension of a member, the certificate shall also contain a provision stating that any member expelled or suspended, except a member expelled or suspended because of nonpayment of a premium, may maintain, other than during the contestable period for material misrepresentation in the application for membership or insurance, the certificate in force by continuing payment of the required premium.

(F) Benefit contracts issued on the lives of persons under the society’s minimum age for adult membership may provide for transfer of control of ownership to the insured at an age specified in the certificate. A society may require approval of an application for membership in order to effect this transfer, and may provide in all other respects for the regulation, government, and control of such certificates and all rights, obligations, and liabilities incident to and connected with such certificates. Ownership rights prior to such a transfer shall be specified in the certificate.

(G) A society may specify the terms and conditions on which benefit contracts may be assigned.

(H) A copy of any of the documents described in this section, if certified by the secretary or corresponding officer of the society, is prima facie evidence of the terms and conditions of the documents.

Effective Date: 01-01-1997

(A) In the case of certificates that are delivered or issued for delivery in this state on or after January 1, 1997, but prior to January 1, 1998, the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted shall comply with the requirements that would have applied under the laws in effect on December 31, 1996.

(B) In the case of certificates that are delivered or issued for delivery in this state on or after January 1, 1998, for which reserves are computed on the commissioner’s 1941 standard ordinary mortality table, the commissioner’s 1941 standard industrial table, the commissioner’s 1958 standard ordinary mortality table, the commissioner’s 1980 standard mortality table, or any more recent table made applicable to life insurers, every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted shall not be less than the corresponding amount ascertained in accordance with the laws of this state applicable to life insurers issuing policies containing like benefits based upon such tables.

Effective Date: 01-01-1997

A fraternal benefit society shall invest its funds only in such investments as are authorized by section 3907.14 of the Revised Code for the investment of assets of life insurers and subject to the limitations thereon. Any foreign or alien society permitted or seeking to do business in this state that invests its funds in accordance with the laws of the state, district, territory, country, or province in which it is incorporated, is held to meet the requirements of this section for the investment of funds.

Effective Date: 01-01-1997

(A) A fraternal benefit society shall hold, invest, and disburse all assets for the use and benefit of the society. No member or beneficiary shall have or acquire individual rights to the assets, or be entitled to any apportionment on the surrender of any part of the assets, except as provided in the benefit contract.

(B) A society may create, maintain, invest, disburse, and apply any special fund or funds necessary to carry out any purpose permitted by the laws of the society. No society shall, directly or indirectly, pay or use, or offer, consent, or agree to pay or use, any of its funds, money, or property for or in aid of any political party, campaign committee, political action committee, continuing association, or any other political organization.

(C) A society may, pursuant to resolution of its supreme governing body, establish and operate one or more separate accounts and issue contracts on a variable basis, subject to the provisions of law regulating life insurers that establish such accounts and issue such contracts. To the extent the society considers it necessary in order to comply with any applicable federal or state law, or any rule issued under that law, the society may do any of the following:

(1) Adopt special procedures for the conduct of the business and affairs of a separate account;

(2) For persons having beneficial interests in the account, provide special voting and other rights, including special rights and procedures relating to investment policy, investment advisory services, selection of certified public accountants, and selection of a committee to manage the business and affairs of the account;

(3) Issue contracts on a variable basis to which divisions (B) and (D) of section 3921.19 of the Revised Code do not apply.

Effective Date: 01-01-1997

Except as provided in this chapter, fraternal benefit societies shall be governed by this chapter and are exempt from all other provisions of the insurance laws of this state, not only in governmental relations with the state, but for every other purpose. No law shall apply to societies unless they are expressly designated in the law.

Effective Date: 01-01-1997

Every fraternal benefit society organized or licensed under this chapter is hereby declared to be a charitable and benevolent institution, and all of its funds are exempt from all state, county, district, municipal, and school taxes other than franchise taxes and taxes on real estate.

Effective Date: 01-01-1997

(A) The standards of valuation for certificates that are delivered or issued for delivery in this state on or after January 1, 1997, but prior to January 1, 1998, shall be those standards that would have applied under the laws in effect on December 31, 1996.

(B) The minimum standards of valuation for certificates of life insurance, annuity and pure endowment certificates, total and permanent disability benefit certificates, accidental death benefit certificates, and noncancelable accident and health benefit certificates, that are delivered or issued for delivery in this state on or after January 1, 1998, shall comply with the valuation methods and standards, including interest assumptions, that are applicable to life insurers that issue policies containing like benefits.

(C) The superintendent of insurance may, in the superintendent’s discretion, accept other standards for valuation if the superintendent finds that the reserves produced by such standards will not be less in the aggregate than reserves computed in accordance with the minimum valuation standards prescribed in this section. The superintendent may, in the superintendent’s discretion, vary the standards of mortality applicable to all benefit contracts on substandard lives or other extra hazardous lives by any society authorized to do business in this state.

(D) Any society, with the consent of the supervising insurance official of its state of domicile and under any conditions that the superintendent may impose, may establish and maintain reserves on its certificates in excess of the reserves required, provided that the contractual rights of any benefit member are not affected by such action.

Effective Date: 01-01-1997

(A) Each fraternal benefit society transacting business in this state shall annually file with the superintendent of insurance a true statement of its financial condition, transactions, and affairs for the preceding calendar year. The statement shall be filed on or before the first day of March. The statement shall be in general form and content as approved by the national association of insurance commissioners for fraternal benefit societies, and as supplemented by additional information required by the superintendent.

(B) As part of the annual statement required under division (A) of this section, each society shall, on or before the first day of March, file with the superintendent a valuation of its certificates in force on the immediately preceding thirty-first day of December. The superintendent may, in the superintendent’s discretion for cause shown, extend the deadline for filing the valuation for a period of not more than two calendar months. The valuation shall be prepared in accordance with the standards set forth in section 3921.25 of the Revised Code. The valuation and underlying data shall be certified by a qualified actuary or verified, at the expense of the society, by an actuary employed or appointed by the insurance regulatory authority of the society’s state of domicile.

(C) If a society fails to comply with division (A) or (B) of this section, the superintendent shall impose a fine of one hundred dollars for each day the noncompliance continues. In addition, the superintendent shall issue an order requiring the society to cease doing business in this state until the society complies with this section. Notice of the order shall be mailed by regular mail, immediately after its issuance by the superintendent, to the society subject to the order.

(D) Any fine collected pursuant to division (C) of this section shall be paid into the state treasury to the credit of the department of insurance operating fund created under section 3901.021 of the Revised Code.

Effective Date: 01-01-1997

Fraternal benefit societies that are authorized to transact business in this state on December 31, 1996, may continue such business until April 1, 1997. The authority of those societies and all societies licensed on or after January 1, 1997, may be renewed annually, but in all cases shall terminate on the first day of the succeeding April. However, a license so issued shall continue in full force and effect until a renewal of the license has been specifically refused. For each license or renewal the society shall pay the superintendent of insurance a fee of twenty-five dollars. A duly certified copy or duplicate of such license is prima facie evidence that the licensee is a fraternal benefit society within the meaning of this chapter.

Effective Date: 01-01-1997

(A)(1) Each domestic fraternal benefit society and each applicant for a certificate of incorporation as a domestic fraternal benefit society shall be subject to examination by the superintendent of insurance in accordance with section 3901.07 of the Revised Code. Section 3901.07 of the Revised Code shall govern every aspect of the examination, including the circumstances under and frequency with which it is conducted, and the authority of the superintendent and any examiner or other person appointed by the superintendent.

(2) A summary of the examination of the superintendent and any recommendations or statements of the superintendent that accompany the report, shall be read at the first meeting of the board of directors or corresponding body of the society following the receipt thereof, and if directed so to do by the superintendent, shall also be read at the first meeting of the supreme legislative or governing body of the society following the receipt thereof. A copy of the report, recommendations, and statements of the superintendent shall be furnished by the society to each member of the board of directors or other governing body.

(B) Each foreign or alien fraternal benefit society transacting or applying for admission to transact business in this state shall be subject to examination by the superintendent in accordance with section 3901.07 of the Revised Code. Section 3901.07 of the Revised Code shall govern every aspect of the examination, including the circumstances under and frequency with which it is conducted, the authority of the superintendent and any examiner or other person appointed by the superintendent, the liability for the assessment of expenses incurred in conducting the examination, and the remittance of the assessment to the superintendent’s examination fund.

Effective Date: 01-01-1997

Effective Date: 03-22-2001

No foreign or alien fraternal benefit society shall transact business in this state without a license issued by the superintendent of insurance. Any such society may be licensed to transact business in this state upon filing all of the following with the superintendent:

(A) A duly certified copy of its articles of incorporation;

(B) A copy of its bylaws certified by its secretary or corresponding officer;

(C) A power of attorney to the superintendent as prescribed in section 3921.35 of the Revised Code;

(D) A statement of its business made under oath of its president and secretary or corresponding officers in a form prescribed by the superintendent and duly verified by an examination made by the supervising insurance official of its state of domicile or of any other state, district, territory, province, or country, which examination is satisfactory to the superintendent;

(E) Certification from the proper official of its state, district, territory, province, or country of domicile that the society is legally incorporated and licensed to transact business in that state, district, territory, province, or country;

(F) Copies of its certificate forms;

(G) A description of its investments that shows that its assets are invested in accordance with this chapter;

(H) Any other information the superintendent considers necessary.

Effective Date: 01-01-1997

(A) If the superintendent of insurance finds, upon investigation, that a domestic fraternal benefit society has exceeded its powers, has failed to comply with any provision of this chapter, is not fulfilling its contracts in good faith, has a membership of less than four hundred after an existence of one year or more, or is conducting business fraudulently or in a manner hazardous to its members, creditors, the public, or the business, the superintendent shall issue a written notice to the society that sets forth the deficiency and the reasons for the superintendent’s dissatisfaction, and that requires the society to correct the deficiency within thirty days after receipt of the notice. If the society fails to correct the deficiency within that thirty-day period, the superintendent shall notify the society of its failure to correct the deficiency and shall require the society to show cause on a date named why it should not be enjoined from carrying on any business until the violation complained of has been corrected, or why an action in quo warranto should not be commenced against the society.

If on that date the society does not present good and sufficient reasons why it should not be enjoined or why such action should not be commenced, the superintendent may present the facts relating thereto to the attorney general. If the attorney general determines that the circumstances warrant, the attorney general shall commence an action to enjoin the society from transacting business or in quo warranto.

The court shall thereupon notify the officers of the society of a hearing. If after a full hearing it appears that the society should be enjoined or liquidated or a receiver appointed, the court shall enter the necessary order.

(B) A society enjoined pursuant to division (A) of this section shall not have the authority to do business until all of the following occur:

(1) The superintendent finds that the violation complained of has been corrected.

(2) The costs of the action have been paid by the society if the court finds that the society was in default as charged.

(3) The court has dissolved its injunction.

(4) The superintendent has reinstated the certificate of authority.

(C) If the court orders the society liquidated, the society shall be enjoined from carrying on any further business, whereupon the receiver of the society shall proceed at once to take possession of the books, papers, money, and other assets of the society and, under the direction of the court, shall close the affairs of the society and distribute its funds to those entitled to them.

(D) No action under this section shall be recognized in any court of this state unless brought by the attorney general upon request of the superintendent. Whenever a receiver is to be appointed for a domestic society, the court shall appoint the superintendent as the receiver.

(E) The provisions of this section relating to a hearing by the superintendent, action by the attorney general at the request of the superintendent, hearing by the court, injunction, and receivership shall apply to any society that voluntarily determines to discontinue business.

(F) Nothing in this section shall be construed as preventing the lodges and members of a society from commencing a civil action against a society for the enforcement of a contract provision or for the resolution of a dispute concerning an interpretation of the society’s laws, which action is not based on the superintendent’s exercise of authority under this section. A society shall not prohibit a lodge or member from commencing such an action against it.

Effective Date: 06-30-1997

(A) If the superintendent of insurance finds, upon investigation, that a foreign or alien fraternal benefit society transacting or applying to transact business in this state has exceeded its powers, has failed to comply with any provision of this chapter, is not fulfilling its contracts in good faith, or is conducting its business fraudulently or in a manner hazardous to its members or creditors or the public, the superintendent shall issue a written notice to the society that sets forth the deficiency and the reasons for the superintendent’s dissatisfaction, and that requires the society to correct the deficiency within thirty days after receipt of the notice. If the society fails to correct the deficiency within that thirty-day period, the superintendent shall notify the society of its failure to correct the deficiency and shall require the society to show cause on a date named why its license should not be suspended, revoked, or refused.

If on that date the society does not present good and sufficient reason why its authority to do business in this state should not be suspended, revoked, or refused, the superintendent may suspend or refuse the license of the society to do business in this state until satisfactory evidence is furnished to the superintendent that the suspension or refusal should be withdrawn, or the superintendent may revoke the authority of the society to do business in this state.

(B) Nothing in this section shall be construed as preventing any foreign or alien society from continuing in good faith all contracts made in this state during the time the society was legally authorized to transact business in this state.

Effective Date: 01-01-1997

Effective Date: 06-30-1997

(A) Agents of fraternal benefit societies shall be licensed in the manner provided for agents of insurance companies in Chapter 3905. of the Revised Code, and shall be required to complete continuing education as set forth in section 3905.481 of the Revised Code starting with the twenty-four-month period commencing on the first day of January of 1999. However, no written or other examination shall be required of any person whose application for the original issuance of a license to represent a fraternal benefit society as its agent was filed with the superintendent of insurance prior to January 1, 1997.

(B) The following persons shall not be required to be licensed in accordance with division (A) of this section:

(1) Any regularly salaried officer, employee, or member of a licensed society who devotes substantially all of the person’s services to activities other than the solicitation of fraternal insurance contracts from the public, and who receives for the solicitation of any such contracts no commission or other compensation directly dependent upon the amount of business obtained.

The officers, employees, and members described in division (B)(1) of this section also are not subject to examination by the superintendent under Chapter 3905. of the Revised Code.

(2) Any agent or representative of a society who devotes, or intends to devote, less than fifty per cent of the person’s time to the solicitation and procurement of insurance contracts for the society. For purposes of division (B)(2) of this section, any person who, in the preceding calendar year, has received a commission or other compensation for soliciting and procuring any of the following contracts on behalf of an individual society is presumed to have devoted, or to have intended to devote, fifty per cent of the person’s time to the solicitation and procurement of insurance contracts:

(a) Life insurance contracts that, in the aggregate, exceeded two hundred thousand dollars of coverage for all lives insured for the preceding calendar year;

(b) A permanent life insurance contract offering more than ten thousand dollars of coverage on an individual life;

(c) A term life insurance contract offering more than fifty thousand dollars of coverage on an individual life;

(d) Any insurance contracts other than life that the society may write and that insure the individual lives of more than twenty-five individuals;

(e) Any contract issued on a variable basis, as authorized by division (C) of section 3921.22 of the Revised Code.

Effective Date: 06-30-1998

On receipt of a notice pursuant to section 3123.43 of the Revised Code, the superintendent of insurance shall comply with sections 3123.41 to 3123.50 of the Revised Code and any applicable rules adopted under section 3123.63 of the Revised Code with respect to a license issued pursuant to this chapter.

Effective Date: 03-22-2001

Sections 3901.19 to 3901.26 of the Revised Code, and any other provision of Title XXXIX [39] of the Revised Code that prohibits life or sickness and accident insurers from engaging in any unfair and deceptive act or practice in the business of insurance, continue on and after January 1, 1997, to apply to every fraternal benefit society authorized to do business in this state. However, nothing in any of those sections or provisions shall be construed as applying to or otherwise affecting either the right of any society to determine its eligibility requirements for membership or the offering of benefits exclusively to members or persons eligible for membership in the society by a subsidiary corporation or affiliated organization of the society.

Effective Date: 01-01-1997

(A) Each fraternal benefit society authorized to do business in this state shall appoint in writing the superintendent of insurance and each successor in office to be its true and lawful attorney upon whom all lawful process in any action or proceeding against it shall be served. A society shall agree in the writing that any lawful process against it that is served on the superintendent as its attorney shall be of the same legal force and validity as if served upon the society, and that the authority shall continue in force so long as any liability remains outstanding in this state. Copies of the appointment certified by the superintendent shall be sufficient evidence of the appointment, and shall be admitted in evidence with the same force and effect as the original appointment might be admitted.

(B) Service shall only be made upon the superintendent or, if absent, upon the person in charge of the superintendent’s office. It shall be made in duplicate and shall constitute sufficient service upon the society. When legal process against a society is served upon the superintendent, the superintendent shall immediately forward one of the duplicate copies by registered or certified mail, prepaid, directed to the secretary or corresponding officer. The service shall not require a society to file its answer, pleading, or defense in less than thirty days from the date of mailing the copy of the service to the society.

(C) Legal process shall not be served upon a society except in the manner provided in this section. At the time of serving any process upon the superintendent, the plaintiff or complainant in the action shall pay to the superintendent a fee of two dollars.

Effective Date: 01-01-1997

(A) No person shall cause or permit to be made, issued, or circulated in any form any of the following:

(1) Any misrepresentation or false or misleading statement concerning the terms, benefits, or advantages of any fraternal insurance contract now issued or to be issued in this state, or the financial condition of any fraternal benefit society;

(2) Any false or misleading estimate or statement concerning the dividends or shares of surplus paid or to be paid by any society on any insurance contract;

(3) Any incomplete comparison of an insurance contract of one society with an insurance contract of another society or insurer for the purpose of inducing the lapse, forfeiture, or surrender of any insurance contract. A comparison of insurance contracts is incomplete if either of the following applies:

(a) The comparison does not compare in detail the gross rates, the gross rates less any dividend or other reduction allowed at the date of the comparison, any increase in cash values, and all the benefits provided by each contract for the possible duration of the contract as determined by the life expectancy of the insured;

(b) The comparison omits from consideration any benefit or value provided in the contract, any differences as to amount or period of rates, or any differences in limitations or conditions or other provisions that directly or indirectly affect the benefits.

In any determination of the incompleteness or misleading character of any comparison or statement, it is presumed that the insured has no knowledge of any of the contents of the contract involved.

(B) No person shall solicit membership for, or in any manner assist in procuring membership in, any society not licensed to do business in this state.

(C) No person shall purposely violate, or neglect or refuse to comply with, any provision of this chapter for which a penalty is not otherwise prescribed.

Effective Date: 01-01-1997

(A) Nothing in this chapter shall be construed as applying to or otherwise affecting any of the following:

(1) Grand or subordinate lodges of societies, orders, or associations doing business in this state that provide benefits exclusively through local or subordinate lodges;

(2) Orders, societies, or associations that admit to membership only persons engaged in one or more crafts or hazardous occupations, in the same or similar lines of business, insuring only their own members, their families and descendants of members, and the ladies’ societies or ladies’ auxiliaries to such orders, societies, or associations;

(3) Domestic societies that limit their membership to employees of a particular city or town, designated firm, business house, or corporation that provide for a death benefit of not more than four hundred dollars or disability benefits of not more than three hundred fifty dollars to any person in any one year, or both;

(4) Domestic societies or associations of a purely religious, charitable, or benevolent description, that provide for a death benefit of not more than four hundred dollars or for disability benefits of not more than three hundred fifty dollars to any one person in any one year, or both.

(B) No society that, pursuant to division (A) of this section, is exempt from the requirements of this chapter, except any society described in division (A)(2) of this section, shall give or allow, or promise to give or allow, to any person any compensation for procuring new members.

(C) Every society that provides for benefits in case of death or disability resulting solely from accident, and that does not obligate itself to pay natural death or sick benefits, shall have all of the privileges and be subject to all the applicable provisions of this chapter, except for the provisions and rules relating to medical examination, valuations of benefit certificates, and incontestability.

(D) The superintendent of insurance may require from any society or association, by examination or otherwise, such information as will enable the superintendent to determine whether the society or association is exempt from the requirements of this chapter.

(E) Societies that, pursuant to division (A) of this section, are exempt from the requirements of this chapter shall also be exempt from all other provisions of the insurance laws of this state.

Effective Date: 01-01-1997

All decisions and findings of the superintendent of insurance made under the provisions of this chapter are subject to review by the proper proceedings in any court of competent jurisdiction in this state.

Effective Date: 01-01-1997

Effective Date: 01-01-1997

Effective Date: 01-01-1997

Effective Date: 01-01-1974

Effective Date: 01-01-1997

(A) Whoever violates division (A) of section 3921.36 of the Revised Code or knowingly receives any compensation or commission by or in consequence of such violation, is guilty of a misdemeanor of the first degree, and shall in addition be liable for a civil penalty in the amount of three times the sum received by the violator as compensation or commission, which penalty may be sued for and recovered by any person or society aggrieved for the person’s or society’s own use and benefit in accordance with the provisions of civil practice.

(B) Whoever violates division (B) of section 3921.36 of the Revised Code shall be fined not less than fifty nor more than two hundred dollars.

(C) Whoever violates division (C) of section 3921.36 of the Revised Code shall be fined not more than two hundred dollars.

Effective Date: 01-01-1997