Chapter 3939: MUTUAL PROTECTIVE INSURANCE UPON PROPERTY

3939.01 [Effective Until 9/4/2014] Organizing mutual protective associations.

(A) Any number of persons of lawful age, not less than ten in number, owning insurable property in this state, may associate themselves together for the purpose of insuring each other against the risk of direct physical loss or damage to property in this state , including theft of property in this state, except loss or damage to motor vehicles caused by collision. Any association organized under this section shall file with the department of insurance all policy forms currently in use by the association and all additions, deletions, or amendments to the policy forms at least thirty days prior to the use of the policy forms, additions, deletions, or amendments. Each filing under this division is deemed approved thirty days after the filing is received by the superintendent of insurance, unless the filing is disapproved by the superintendent during that thirty-day period.

(B) Any association organized under this section, from time to time, may assess upon and collect from its members or other responsible parties sums of money that are necessary to pay expenses and losses that occur, or are anticipated to occur, from those covered perils. The assessment and collection of those sums of money shall be regulated by the constitution of the association adopted under section 3939.06 of the Revised Code. The constitution shall require the assessments to be made directly and specifically upon the members or other responsible parties, and to be paid by them out of any funds paid to or deposited with the association in anticipation of assessments. Any association organized under this section may borrow money for the payment of losses and associated expenses, but those loans shall not be made for a period of time that extends beyond the collection of the association's next assessment.

(C) Any association organized under this section may accumulate a surplus from its assessments. That surplus and all other funds received or accumulated in the course of business shall be invested under sections 3925.05 and 3925.08 of the Revised Code. Upon prior approval of the superintendent of insurance, the association may invest that surplus and those other funds in real estate for the association's convenient accommodation in the transaction of its business. The association shall not have at any one time more than ten per cent of its admitted assets invested in real estate.

(D) Any association organized under this section may insure farm buildings, residential and detached dwellings , outbuildings, churches, township buildings, grange buildings, farm machinery, equipment, and other farm personal property, household goods and personal effects, pleasure and utility vehicles, and other similar property, except motor vehicles titled or capable of being titled for use on public roads and property used exclusively for commercial or industrial purposes.

The property described in this division may be classified only for the purpose of determining and levying assessments, and that property may be located within or without the limits of any municipal corporation.

(E) Any association organized under this section may collect a charge on each contract of insurance in accordance with its constitution adopted under section 3939.06 of the Revised Code.

(F) Any association organized under this section may make contracts of reinsurance for the kinds of insurance authorized by sections 3939.01 to 3939.11 of the Revised Code or accept reinsurance on any portion of that insurance.

Cite as R.C. § 3939.01

Effective Date: 08-26-1977; 10-12-2006

3939.01 [Effective 9/4/2014] Organizing mutual protective associations.

(A) Any number of persons of lawful age, not less than ten in number, owning insurable property in this state, may associate themselves together for the purpose of insuring each other against the risk of direct physical loss or damage to property in this state, including theft of property in this state, except loss or damage to motor vehicles caused by collision. Any association organized under this section shall file with the department of insurance all policy forms currently in use by the association and all additions, deletions, or amendments to the policy forms at least thirty days prior to the use of the policy forms, additions, deletions, or amendments. Each filing under this division is deemed approved thirty days after the filing is received by the superintendent of insurance, unless the filing is disapproved by the superintendent during that thirty-day period.

(B) Any association organized under this section, from time to time, may assess upon and collect from its members or other responsible parties sums of money that are necessary to pay expenses and losses that occur, or are anticipated to occur, from those covered perils. The assessment and collection of those sums of money shall be regulated by the constitution of the association adopted under section 3939.06 of the Revised Code. The constitution shall require the assessments to be made directly and specifically upon the members or other responsible parties, and to be paid by them out of any funds paid to or deposited with the association in anticipation of assessments. Any association organized under this section may borrow money for the payment of losses and associated expenses, but those loans shall not be made for a period of time that extends beyond the collection of the association's next assessment.

(C) Any association organized under this section may accumulate a surplus from its assessments. Except as provided in division (D) of this section, that surplus and all other funds received or accumulated in the course of business shall be invested under sections 3925.05 and 3925.08 of the Revised Code. Upon prior approval of the superintendent of insurance, the association may invest that surplus and those other funds in real estate for the association's convenient accommodation in the transaction of its business. The association shall not have at any one time more than ten per cent of its admitted assets invested in real estate.

(D) An association organized under this section may seek permission from the superintendent of insurance to invest funds under Chapter 3906. of the Revised Code and may invest funds under that chapter if such permission is granted.

(E) Any association organized under this section may insure farm buildings, residential and detached dwellings, outbuildings, churches, township buildings, grange buildings, farm machinery, equipment, and other farm personal property, household goods and personal effects, pleasure and utility vehicles, and other similar property, except motor vehicles titled or capable of being titled for use on public roads and property used exclusively for commercial or industrial purposes.

The property described in this division may be classified only for the purpose of determining and levying assessments, and that property may be located within or without the limits of any municipal corporation.

(F) Any association organized under this section may collect a charge on each contract of insurance in accordance with its constitution adopted under section 3939.06 of the Revised Code.

(G) Any association organized under this section may make contracts of reinsurance for the kinds of insurance authorized by sections 3939.01 to 3939.11 of the Revised Code or accept reinsurance on any portion of that insurance.

Cite as R.C. § 3939.01

Amended by 130th General Assembly File No. TBD, SB 140, §1, eff. 9/4/2014.

Effective Date: 08-26-1977; 10-12-2006

3939.02 Contents of certificate of incorporation.

Persons forming an association under section 3939.01 of the Revised Code shall make and subscribe a certificate setting forth therein:

(A) The name by which the association is to be known;

(B) The place which is regarded as its center or business office;

(C) The object of the association, which shall only be one or more of the objects set forth in section 3939.01 of the Revised Code, and the enforcement of any contract entered into by such persons in which the parties agree to be assessed specifically for incidental purposes and for the payment of losses which occur to its members;

(D) The kinds of property proposed to be insured and the casualties specified in section 3939.01 of the Revised Code which are proposed to be insured against.

Such certificate may be amended to change the name of the association, the place which is regarded as its center or business office, or its objects, at any meeting of members, thirty days' notice of which, and of the business to come before it, has been given by a majority of the directors in a newspaper published and of general circulation in the county where the company's center or business office is located. Such amendment, if adopted by at least three fifths vote of the members present and voting at the meeting so called, and if not inconsistent with the constitution and laws of this state and of the United States, shall be approved by the attorney general and the secretary of state, and such amendment and the certificate of approval by the attorney general shall be filed in the office of the secretary of state and shall thereupon be in effect. After recording such amendment the secretary of state shall deposit a copy thereof with the superintendent of insurance.

In event of a change of name of the association or a change of the place of the center or business office, the superintendent, immediately upon the approval by him of such change, shall certify the fact of such change to the secretary of state, who shall make note thereof on the files of his office relating to such association.

Cite as R.C. § 3939.02

Effective Date: 10-01-1953

3939.03 Filing of certificate.

The certificate required by section 3939.02 of the Revised Code shall be filed in the office of the secretary of state. A copy thereof, certified by him, shall be evidence of the existence and incorporation of the association for the purposes therein named.

Cite as R.C. § 3939.03

Effective Date: 10-01-1953

3939.04 Directors and officers.

When the certificate required by section 3939.02 of the Revised Code has been filed with the secretary of state, and a certified copy forwarded to the association, the persons named therein shall elect their directors, president, secretary, treasurer, and other officers necessary for the complete performance of all the business and objects of the association, to serve for one year. Such officers thereafter shall be chosen in the manner and at the time fixed in the constitution, but directors shall not be chosen for a longer period than three years.

Cite as R.C. § 3939.04

Effective Date: 10-01-1953

3939.05 Powers of association.

An association organized under section 3939.01 of the Revised Code shall be considered as a body corporate for all the purposes set forth in the certificate required by section 3939.02 of the Revised Code, and may sue and be sued, and plead and be impleaded, in all courts of law and equity, but in no instance shall the power to insure against losses by fire or tornadoes be exercised to other than members of such association.

Cite as R.C. § 3939.05

Effective Date: 10-01-1953

3939.06 Constitution and bylaws.

Every association organized under section 3939.01 of the Revised Code shall adopt a constitution, whether designated a constitution, constitution and bylaws , regulations, or code of regulations, that in the judgment of its members best serves its interests and purposes. The constitution may include provisions set forth in section 1702.11 of the Revised Code.

Cite as R.C. § 3939.06

Effective Date: 10-01-1953; 10-12-2006

3939.07 Information filed with superintendent of insurance.

Before granting insurance, an association organized under section 3939.01 of the Revised Code shall file with the superintendent of insurance a copy of its articles of incorporation, certified by the secretary of state, a copy of its constitution adopted under section 3939.06 of the Revised Code, and forms of certificates of membership or insurance. If the superintendent finds that the association was properly organized and has complied with the law, the superintendent shall issue to it a certificate reciting that compliance. The certificate shall be the authority of the association to commence business and grant insurance.

Cite as R.C. § 3939.07

Effective Date: 10-01-1953; 10-12-2006

3939.08 Renewal of certificate.

Upon the filing of its annual statement by an association organized under section 3939.01 of the Revised Code, the superintendent of insurance, annually, shall issue to such association a renewal of the certificate issued under section 3939.07 of the Revised Code, if he finds that such association has complied with the law. For each such certificate and renewal every association shall pay five dollars to the superintendent for the use of the state.

Cite as R.C. § 3939.08

Effective Date: 10-01-1953

3939.09 Annual statement.

The president or vice-president and the secretary of every association organized under section 3939.01 of the Revised Code, annually on the first day of January or within sixty days after the first day of January, shall prepare under oath and deposit in the office of the superintendent of insurance a statement of the condition of the association on the thirty-first day of the preceding December, exhibiting the facts enumerated in section 3929.30 of the Revised Code and applicable to associations organized under section 3939.01 of the Revised Code, and any other information necessary to reveal the financial condition of the association that the superintendent requires. That statement shall be rendered in a printed form to be supplied by the superintendent for that purpose.

Every association organized under section 3939.01 of the Revised Code that fails to make and deposit the statement described in this section, or to reply to any inquiry of the superintendent, shall be subject to a forfeiture of five hundred dollars and shall be subject to an additional forfeiture of five hundred dollars for every month that it continues to transact any business of insurance after that failure.

Cite as R.C. § 3939.09

Effective Date: 10-01-1953; 10-12-2006

3939.10 Reorganization of mutual fire insurance associations as companies.

Any mutual fire insurance association organized under section 3939.01 of the Revised Code, which is doing business and which has the number of policies and amount of insurance in force, and the amount of assets required, in order to organize a mutual fire insurance company, may reorganize as a mutual fire insurance company in the following manner:

(A) The board of trustees of such association shall give notice of its intention to reorganize, for a period of at least three consecutive weeks before application is made, by publication in a newspaper of general circulation which is published in the county where the association's principal office is situated.

(B) The board shall make application to the superintendent of insurance respecting its desire to assume the requirements of the laws governing mutual fire insurance companies organized and doing business under the laws of this state. Such application shall set forth the amount of insurance carried, the number of policies in force, and the amount of its assets and liabilities.

If by examination of the condition of such association, or otherwise, the superintendent is satisfied that it possesses the required amount of assets, and the number and amount of policies in force required to organize a mutual fire insurance company, he shall certify such fact upon a certificate of incorporation containing the requisite statements required to incorporate a mutual fire insurance company. Such certificate, properly executed, shall be delivered to the secretary of state, who shall record it and issue his certificate of incorporation as in other cases for change of name, capital, or location of an incorporated company, charging only such fees therefor as are authorized in other cases for change in capital or location of company.

Thereafter the business of such fire insurance association shall be conducted as that of a mutual fire insurance company, and shall be subject to all laws governing mutual fire insurance companies. All members of such association shall be members of such reorganized company, to the time of the expiration or cancellation of their policies, and shall be entitled to all the benefits of such, precisely as if they were original members thereof, without any exchange of policies or contracts.

After such change in the plan of insurance by such association and the organization of such mutual fire insurance company, policies thereafter issued shall be in the name and by the authority of the newly organized company, and the policies previously in force, and the bylaws, rules, and regulations of such association, if not in conflict with the laws governing mutual fire insurance companies, shall remain in full force until they have terminated or been lawfully changed by the company or its board of directors.

Cite as R.C. § 3939.10

Effective Date: 10-01-1953

3939.11 Financial capacity of mutual protective association.

In determining the financial capacity of a mutual protective association organized under section 3939.01 of the Revised Code, the superintendent of insurance may take into consideration factors that include, but are not limited to, all of the following:

(A) Any reinsurance arrangements of the association with authorized insurers in this state;

(B) The amount of contracts or policies of insurance of the association that are written and in force;

(C) Any other measure of financial capacity of the association that the superintendent considers appropriate.

Cite as R.C. § 3939.11

Effective Date: 10-12-2006