Chapter 3931: RECIPROCAL OR INTERINSURANCE CONTRACTS

3931.01 Exchange of reciprocal or interinsurance contracts - execution of contracts.

Individuals, partnerships, and corporations of this state, designated in sections 3931.01 to 3931.12 of the Revised Code, as "subscribers," may exchange reciprocal or interinsurance contracts with each other, and with individuals, partnerships, and corporations of other states, districts, provinces, and countries, providing indemnity among themselves from any loss which may be legally insured against by any fire or casualty insurance company or association provided that contracts of indemnity against property damage and bodily injury arising out of the ownership, maintenance or use of a singly owned private passenger automobile principally used for nonbusiness purposes may not be exchanged through a reciprocal insurer which maintains a surplus over all liabilities of less than two and one-half million dollars and provided that this exception shall not prohibit the exchanging of contracts of indemnity against any form of liability otherwise authorized and arising out of any business or commercial enterprise. Such contracts and the exchange thereof and such subscribers, their attorneys, and representatives shall be regulated by such sections, and no law enacted after July 4, 1917, shall apply to them, unless they are expressly designated therein.

Such a contract may be executed by an attorney or other representative designated "attorney," in sections 3931.01 to 3931.12 of the Revised Code, authorized by and acting for such subscribers under powers of attorney. Such attorney may be a corporation. The principal office of such attorney shall be maintained at the place designated by the subscribers in the powers of attorney.

Except for such limitations on assessability as are approved by the superintendent of insurance, every reciprocal or interinsurance contract written pursuant to this chapter for medical malpractice insurance shall be fully assessable and shall contain a statement, in boldface capital letters and in type more prominent than that of the balance of the contract, setting forth such terms of assessability. As used in this section, "medical malpractice insurance" means insurance coverage against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of the death, disease, or injury of any person as the result of negligence or malpractice in rendering professional service by any licensed physician, podiatrist, or hospital, as those terms are defined in section 2305.113 of the Revised Code.

Effective Date: 05-17-1984; 12-30-2004; 06-27-2005

3931.011 Reciprocal exchange - real estate powers.

(A)

(1) Every reciprocal exchange subject to this chapter may, in its own name, do any of the following for the purposes of the exchange as described in division (A)(2) of this section:

(a) Manage real estate;

(b) By deed or other instrument, purchase or otherwise acquire, sell or otherwise convey, own, hold, or lease real estate;

(c) Mortgage, pledge, or otherwise encumber real estate.

(2) The purposes of the exchange include, but are not limited to, investment for the production of income or for the convenient transaction of its business.

(3) A reciprocal exchange may engage in the activities described in division (A)(1)(b) and (c) of this section only to the extent permitted by the laws regulating the investments of insurance companies.

(B) The attorney may execute any contract, deed, lease, mortgage, deed of trust, purchase or sale agreement, or any other contract or instrument to carry out the authority conferred upon the reciprocal exchange under division (A) of this section.

Effective Date: 03-17-1989

3931.02 Schedule of fees.

Every attorney under section 3931.01 of the Revised Code shall pay to the superintendent of insurance for the use of the state the following fees:

(A) For filing declaration, twenty-five dollars;

(B) For filing each financial statement required by sections 3931.01 to 3931.13 , inclusive, of the Revised Code, twenty dollars;

(C) For filing each certificate of license, and certified copy thereof, two dollars;

(D) For each copy of a paper filed in the superintendent's office, twenty cents per folio;

(E) For affixing the seal of office and certifying any paper, one dollar.

Effective Date: 10-01-1953

3931.03 Declaration under oath filed with superintendent of insurance.

The attorney under section 3931.01 of the Revised Code shall file with the superintendent of insurance a declaration, verified by his oath, or, when the attorney is a corporation, by the oath of its authorized officers, setting forth:

(A) The name of the attorney and the name or designation under which such contracts are issued, which name or designation shall not be so similar to any other name or designation previously adopted by an attorney, or by any insurance organization in the United States, prior to the adoption of such name or designation by the attorney, as to confuse or deceive, unless such other attorney or organization consents thereto in writing;

(B) The location of the principal office;

(C) The kind of insurance to be effected;

(D) A copy of each form of policy, contract, or agreement under or by which such insurance is to be effected;

(E) A copy of the form of power of attorney under which such insurance is to be effected;

(F) The fact that applications have been made for indemnity upon at least seventy-five separate risks, aggregating not less than one and one-half million dollars, represented by executed contracts or bona fide applications to become concurrently effective;

(G) The fact that there is in the possession of such attorney net assets of not less than three hundred thousand dollars, available for the payment of losses;

(H) A financial statement in the form prescribed for the annual statement;

(I) The instrument authorizing service of process as provided for in section 3931.04 of the Revised Code;

(J) A certificate showing compliance with the deposit requirements, if any, applicable to a mutual insurance company authorized to do the kind or kinds of insurance to be effected;

(K) A copy of all bylaws, codes of regulations, any other document wherein the relationships between subscribers and between the subscribers and the attorney are set forth, and any amendments to any of the foregoing. Any filing made pursuant to this division shall become effective thirty days from the date of filing, unless disapproved by the superintendent. Any action taken by the superintendent under this division may be appealed pursuant to Chapter 119. of the Revised Code.

This division does not apply to filings required pursuant to Chapters 3935. and 3937. of the Revised Code.

Effective Date: 05-21-1976

3931.04 Action brought against attorney.

Action on any contract of indemnity made by an attorney under section 3931.01 of the Revised Code, actions to recover taxes, and all other actions, may be brought against the attorney in the county in which the cause of action arises, or in which the claimant resides. In any such action against such attorney summons and process shall be served on the superintendent of insurance and must be made in duplicate; when so made such summons and process have the same effect as if it had been served on such attorney and his subscribers personally, and judgment shall be rendered accordingly. By receipt of his license, every such attorney appoints the superintendent the agent and attorney for himself and for his subscribers to accept service of such summons and process, and such attorney shall continue so long as any liability remains outstanding in this state against the attorney or his subscribers on any such contracts of indemnity issued by any such attorney or his subscribers. Upon filing his declaration, the attorney shall deliver to the superintendent an instrument executed by him for all his subscribers, stipulating the authority in this section relating to actions and process. When any such summons or other process is served on the superintendent, he shall forthwith forward by registered mail prepaid one of the duplicate copies, directed to the attorney at his principal office as designated in his declaration or amendment thereof. The party commencing such action shall, at the time of such service, pay to the superintendent for the use of the state a fee of two dollars, which shall be refunded to such party as part of the taxable costs if he prevails in the action.

Effective Date: 10-01-1953

3931.05 Maintenance of reserve fund.

Every attorney under section 3931.01 of the Revised Code shall create and maintain a reserve fund equal to fifty per cent of the amount of advance premiums or deposits received and receivable on unexpired contracts of indemnity running one year or less from date of issue, and a pro rata amount of premiums or deposits received or receivable on unexpired contracts of indemnity running more than one year from date of issue. If it appears to the superintendent of insurance that the assets, invested as permitted by the laws regulating the investments of insurance companies, and moneys accumulated by any such attorney, after deducting therefrom a reserve fund computed as provided in this section, are less than the liabilities incurred and unpaid, such reserve fund shall be restored within thirty days from the service of a requisition for that purpose by the superintendent upon the attorney. If any such attorney or other person makes any advancements to restore any such impairment, the claim for said advancements against his subscribers shall be deferred to claims for losses. If such reserve fund is not restored as required, the superintendent may revoke the license of the attorney.

Effective Date: 10-01-1953

3931.06 Annual financial statement of attorney.

Every attorney under section 3931.01 of the Revised Code shall file with the superintendent of insurance, on or before the first day of March of each year, a financial statement for the year ending on the thirty-first day of the preceding December, on a form furnished by the superintendent, which shall conform as nearly as may be to the form of statement adopted by the National Convention of Insurance Commissioners, and shall contain such exhibits of the condition and transactions of the attorney as the superintendent, in such form and otherwise, reasonably prescribes. Such statement shall be verified by the oath of the attorney, or, if the attorney is a corporation, by the oath of its principal officer. Such attorney need not furnish lists of names and addresses of subscribers, except in case of an unpaid final judgment.

Effective Date: 10-01-1953

3931.07 Contents of annual statement - payment of tax on premiums.

In the annual statement provided in section 3931.06 of the Revised Code the attorney shall set forth the gross amount of premiums or deposits received during the preceding calendar year on contracts of indemnity covering risks within the state. The attorney shall also set forth therein, in separate items, premiums paid for cancellations, premiums or deposits returned and credited ratably to subscribers, and considerations both received and paid for reinsurance during such year.

The superintendent shall compute a tax at the rate of one and four-tenths per cent, and in case of fire insurance an additional three-quarters of one per cent fire marshal tax, on the balance of such gross amount of premiums or deposits, after deducting premiums and deposits returned and credited and considerations received for reinsurances. Such tax of one and four-tenths per cent and, in the case of fire insurance, such additional tax of three-quarters of one per cent, shall be paid at the time provided in sections 5729.04 and 5729.05 of the Revised Code. Where insurance against fire is included with insurance against other perils at an undivided premium, a reasonable allocation from such entire premium shall be made for the fire portion of the coverage in such manner as the superintendent of insurance may direct. No further taxes shall be imposed upon such attorney or the attorney's subscribers or their representatives for the privilege of transacting business in the state.

If an attorney ceases doing business in the state, the attorney shall thereupon make a report to the superintendent of the premiums or deposits subject to taxation, not previously reported, and forthwith pay to the superintendent a tax thereon computed according to law. If such attorney fails to make any report for taxation, or fails to pay any tax as required by this section, the attorney's subscribers shall be liable to the state for such unpaid taxes, and a penalty of not more than twenty-five per cent per annum after demand therefor. Service of process in any action to recover such tax or penalty shall be made according to the law relating to actions against the attorney and the attorney's subscribers.

Effective Date: 10-05-1961; 2006 HB699 03-29-2007

3931.08 Examination of financial affairs by superintendent.

Each attorney designated under section 3931.01 of the Revised Code and each applicant for a license under section 3931.10 of the Revised Code 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, 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.

As used in this section "expenses" means those items included under division (M) of section 3901.07 of the Revised Code.

Effective Date: 08-08-1991

3931.09 Right to exchange contracts.

Any corporation may, in addition to the rights, powers, and franchises specified in its articles of incorporation, exchange as subscriber insurance contracts of the kind mentioned in section 3931.01 of the Revised Code. The right to exchange such contracts is incidental to the purposes for which such a corporation is organized, and as fully granted as the rights and powers expressly conferred upon the corporation.

Effective Date: 10-01-1953

3931.10 License to attorneys - revocation.

Upon compliance with sections 3931.01 to 3931.12 , inclusive, of the Revised Code, the superintendent of insurance shall issue a license to the attorney, authorizing him to make contracts of indemnity mentioned in section 3931.01 of the Revised Code, which license shall specify the kinds of insurance and shall contain the name of the attorney, the location of his principal office, and the name or designation under which such contracts of indemnity are issued. So long as such attorney complies with such sections, the superintendent annually, upon application of the attorney, shall renew the license. The superintendent may revoke or suspend the license of any attorney when such attorney is not in possession of three hundred thousand dollars of assets, invested as permitted by the laws regulating the investments of insurance companies and the money accumulated by such attorney, or when said attorney breaches any of the conditions imposed by such sections, upon reasonable notice in writing to the attorney so that he may appear and show cause why such license should not be revoked or suspended.

Effective Date: 11-09-1959

3931.101 Employees primarily performing inspection underwriting, loss prevention engineering and claim services.

The provisions of Chapter 3905. of the Revised Code, relating to the appointment, licensing, qualification and regulation of insurance agents, brokers, and solicitors shall apply to all persons authorized to solicit powers of attorney or applications for contracts of indemnity for any reciprocal exchange, insurance exchange or attorney in fact as provided for in Chapter 3931. of the Revised Code, except a traveling full time salaried non-commission employee of an attorney whose duties as such employee are primarily the performance of inspection underwriting, loss prevention engineering and claim services shall be exempt from this section and shall be regulated solely by section 3931.11 of the Revised Code.

Effective Date: 09-01-2002

3931.102 Rules requiring minimum assets.

(A) Notwithstanding any other section of the Revised Code with regard to issuing the initial license, or the renewal of such a license, to an attorney pursuant to this chapter after May 21, 1976, the superintendent of insurance may adopt rules in accordance with Chapter 119. of the Revised Code to require the attorney to have assets in excess of the amount set out in the Revised Code but not in excess of two million five hundred thousand dollars. The rules may be adopted by the superintendent regardless of whether the reciprocal or interinsurance contracts to be written are subject to section 3955.05 of the Revised Code. As used in this division, "assets" means total assets, including such sums as are maintained in the reserve fund pursuant to section 3931.05 of the Revised Code, minus liabilities incurred and unpaid.

(B) Any rules adopted by the superintendent pursuant to division (A) of this section shall specify those factors, including the kinds of direct insurance or contracts of indemnity to be written and other factors reasonably related to financial soundness of the exchange of reciprocal or interinsurance contracts, that the superintendent will use in making a determination relative to the aggregate amounts of assets that the superintendent will require in order for an attorney to be licensed under this chapter to do business in this state. The rules do not apply to any permit or renewal of any license that was initially issued prior to May 21, 1976, except for all of the following:

(1) Any renewal for an attorney initially licensed under this chapter on or after July 28, 1975, who shall have two years and forty-five days from the effective date of any rule adopted pursuant to this section to comply with it;

(2) Any license issued to an attorney under this chapter on or after May 21, 1976, if the attorney has obtained a permit pursuant to section 3931.12 of the Revised Code on or after July 28, 1975, but prior to May 21, 1976, in which case the attorney shall have two years and forty-five days from the effective date of any rule adopted pursuant to this section to comply with it;

(3) Any renewal for an attorney seeking additional authority to make contracts for types of professional liability coverage that the attorney was not previously licensed to make if the superintendent determines that the granting of the additional authority would result in unsound assumptions of risk.

(C) Any determination made by the superintendent pursuant to the rules adopted under this section is subject to Chapter 119. of the Revised Code.

Effective Date: 08-08-1991

3931.11 List of persons authorized to solicit - revocation of authority.

Every attorney shall certify to the superintendent of insurance the names and addresses of the attorney's traveling full time salaried non-commission employees, primarily engaged in performing underwriting, loss prevention engineering and claim services, authorized by the attorney to solicit powers of attorney or applications for contracts of indemnity specified in section 3931.01 of the Revised Code. The authority of such persons shall continue until the first day of the next April, unless it is cancelled by the attorney and the certificate of such cancellation is filed with the superintendent, or unless the license of the attorney or authority of such person is revoked or suspended by the superintendent. Expiring certificates of authority of such persons may be renewed in like manner to continue until the first day of the next April. The superintendent shall record the names and addresses of such persons so that their names may conveniently be inspected and shall thereupon certify and deliver to the attorney a list of the names of all persons so recorded.

If the superintendent finds that any such person has willfully violated, or failed to comply with, sections 3931.01 to 3931.12 of the Revised Code, or has been convicted of a felony in the United States, or in this or any state, or has been guilty of any act or acts that if performed by an agent licensed under Chapter 3905. of the Revised Code would constitute statutory grounds for the revocation of the agent's license, the superintendent may refuse or revoke the authority of the person and cancel the person's name on the superintendent's records, and the superintendent shall thereupon notify the person and the attorney of the revocation. Thereafter the person shall not act as representative of any attorney until a new certificate of authority by the attorney thereafter appointing the person is filed with and approved by the superintendent.

No such person shall act for any attorney in placing insurance or making such contracts of indemnity, unless the attorney has the license required by section 3931.10 of the Revised Code, nor unless the unexpired, unrevoked, and unsuspended certificate of the person's authority is filed with the superintendent. Any such person shall be individually liable on any contract of indemnity made, issued, or accepted through that person as representing any attorney who is not licensed by the superintendent to make such contracts of indemnity.

Effective Date: 09-01-2002

3931.12 Contracts solicited without license during organization.

For the purposes of organization and upon the issuance of a permit by the superintendent of insurance, powers of attorney and applications for contracts of indemnity may be solicited without the license required by section 3931.10 of the Revised Code, but no attorney or other person shall make any such contracts of indemnity until he complies with sections 3931.01 to 3931.12, inclusive, of the Revised Code. No such attorney shall make any contracts of reinsurance on risks located in this state with any company, association, or person not authorized to transact business within the state, except contracts of ocean marine reinsurance, and no such attorney shall reinsure all the risks undertaken by him without the consent of the superintendent.

Effective Date: 08-13-1969

3931.13 Effect of child support default on license.

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

3931.99 Penalty.

(A) Whoever violates sections 3931.01 to 3931.12 , inclusive, of the Revised Code, or fails to comply with any duty imposed upon him by such sections, for which violation or failure no penalty is otherwise provided by law, shall be fined not more than five hundred dollars.

Effective Date: 10-01-1953