11090-11112

INSURANCE CODE
SECTION 11090-11112




11090.  Subject to the annual fee provisions as provided herein,
every certificate of authority issued to a fraternal benefit society
shall be for an indefinite term and shall expire with the expiration
or termination of the corporate existence of the holder thereof
unless sooner revoked by the commissioner. The commissioner shall
require the payment of two thousand nine hundred fifty dollars
($2,950) in lawful money of the United States, in advance as a fee
for filing an application for each original certificate of authority
authorizing any fraternal benefit society to transact insurance in
this state. Each society possessing a certificate of authority of
indefinite term shall owe and pay an annual fee of one hundred
seventy-seven dollars ($177) in lawful money of the United States in
advance on account of such certificate until its final expiration or
revocation. Such fee shall be for annual periods commencing on July
1st of each year, and ending on June 30th of each year, and shall be
due on each March 1st and shall be delinquent on and after each April
1st. A duly certified copy or duplicate of such certificate of
authority shall be prima facie evidence that the holder is a
fraternal benefit society within the meaning of this chapter.



11091.  No foreign or alien society shall transact business in this
State without a certificate of authority issued by the commissioner.
Any such society may receive a certificate of authority to transact
business in this State upon a showing that its assets are invested in
accordance with the provisions of this chapter and filing with the
commissioner:
   (a) A duly certified copy of its charter or articles of
incorporation;
   (b) A copy of its constitution and laws, certified by its
secretary or corresponding officer;
   (c) A power of attorney to the commissioner as prescribed in
Section 11104;
   (d) A statement of its business under oath of its president and
secretary or corresponding officers in a form prescribed by the
commissioner, duly verified by an examination made by the supervising
insurance official of its home state or other state satisfactory to
the commissioner;
   (e) A valuation report prepared and executed in accordance with
Section 11133 of this chapter;
   (f) A certificate from the proper official of its home state,
territory, province or country that the society is legally
incorporated and licensed to transact business therein;
   (g) Copies of its certificate forms;
   (h) Such other information as the commissioner may deem necessary
to a proper exhibit of its plan of operation; and
   (i) Payment of the fee specified in Section 11090.
   Any foreign or alien society desiring admission to this State
shall have the qualifications required of domestic societies
organized under this chapter.
   If the commissioner refuses to issue such license, he shall reduce
his refusal to writing, file the same in his office and furnish a
copy thereof, together with a statement of his reason therefor, to
the secretary or corresponding officer of the society.



11092.  The commissioner shall act as prescribed in Section 11093
when upon investigation he finds that a domestic society:
   (a) Has exceeded its power;
   (b) Has failed to comply with any provision of this chapter;
   (c) Is not fulfilling its contracts in good faith;
   (d) Has a membership of less than 400 after an existence of one
year; or
   (e) Is transacting business fraudulently or in a manner hazardous
to its members, creditors, the public or the business.



11093.  If the commissioner finds that any of the conditions set
forth in Section 11092 exist in respect to a domestic society, he
shall, in an order to show cause, notify the society of his findings
and wherein such conditions exist and shall set a date after a
reasonable period of time on which it shall show cause why it should
not be enjoined from carrying on any business until the overt act or
violation complained of shall have been corrected, or why an action
in quo warranto should not be commenced against the society.
   If on such date the society does not present good and sufficient
reason why it should not be so enjoined or why such action should not
be commenced, the commissioner may present the facts relating
thereto to the Attorney General who shall, if he deems the
circumstances warrant, commence an action to enjoin the society from
transacting business or in quo warranto.
   The court shall thereupon notify the society of a hearing. If
after a full hearing it appears that the society should be so
enjoined or liquidated or a receiver appointed, the court shall enter
the necessary order.


11094.  If the court orders the society enjoined, the commissioner
shall suspend its certificate of authority. Thereafter such society
shall have no authority to do business in this State until:
   (a) The commissioner finds that the overt act or violation
complained of has been corrected;
   (b) The costs of such action, if any, have been paid by the
society;
   (c) The court has dissolved its injunction; and
   (d) The commissioner has reinstated the certificate of authority.




11095.  If the court orders the society liquidated, it 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, proceed forthwith to close the affairs of
the society and to distribute its funds to those entitled thereto.



11096.  The provisions of Sections 11093 to 11095 relating to
hearing by the commissioner, action by the Attorney General at the
request of the commissioner, hearing by the court, injunction and
receivership shall be applicable to a society which shall voluntarily
determine to discontinue business.



11097.  The commissioner shall act as prescribed in Section 11098
when upon investigation he finds that a foreign or alien society
transacting or applying to transact business in this State:
   (a) Has exceeded its powers;
   (b) Has failed to comply with any provisions of this chapter;
   (c) Is not fulfilling its contracts in good faith; or
   (d) Is conducting its business fraudulently or in a manner
hazardous to its members or creditors or the public.



11098.  If the commissioner finds that any of the conditions set
forth in Section 11097 exist in respect to a foreign or alien
society, he shall, in an order to show cause, notify the society of
his findings wherein such conditions exist and shall set a date after
a reasonable period of time on which it shall show cause why its
certificate of authority should not be suspended, revoked or refused.
If on such 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, he may suspend or refuse the
certificate of authority of the society to do business in this State
until satisfactory evidence is furnished to him that such suspension
or refusal should be withdrawn or he may revoke the authority of the
society to do business in this State. Nothing contained in this
section shall be taken or construed as preventing any such society
from continuing in good faith all contracts made in this State during
the time it was legally authorized to transact business herein.




11099.  Article 14 (commencing with Section 1010) of Chapter 1 of
Part 2 of Division 1 applies to any society, except as otherwise
provided in this chapter.


11100.  Every society operating under the provisions of this chapter
and issuing a policy or certificate of insurance may appoint agents
to represent it.


11101.  Except as otherwise provided in Sections 11102 and 11103,
such agents and such societies are subject to Chapter 5 (commencing
with Section 1621) of Part 2 of Division 1 and those agents shall be
licensed as life agents. Those agents are also subject to Sections
750, 751, and 760.5, and the terms "insurance agent" and "life agent"
as used in those sections include the agents of those societies.




11102.  Chapter 5 (commencing with Section 1621) of Part 2 of
Division 1 does not apply to any of the following, nor shall any of
the following be required to be licensed as life agents:
   (a) Any officer of a local lodge of a society, while acting as
such, if that officer (1) does not effect insurance, (2) solicits or
negotiates only as a part of, and in connection with, the business of
a fraternal agent licensed in accordance with the provisions of
Section 11101, and (3) is not remunerated on a commission basis.
   (b) Any member of a society who does not effect insurance and
whose solicitation or negotiation is incidental to the securing of
new members for the society and whose only remuneration therefor
consists of prizes in the form of merchandise or payments of a
nominal amount. This subdivision does not exempt from the provisions
of Chapter 5 nor from the license requirement of Section 11101 any
person remunerated on a regular salary or commission basis or
employed either full or part time for the purpose of soliciting or
negotiating fraternal benefit insurance.
   (c) Any person directly employed by a society at the home or a
branch office thereof who does not solicit or negotiate fraternal
benefit insurance and who receives no commissions but who may, as a
part of his or her regular employment, sign policies, certificates,
or other evidences of fraternal benefit insurance.
   (d) Any person whose employment does not include the solicitation,
negotiation, or effecting of fraternal benefit insurance contracts
and who does not sign policies, certificates, or any other evidences
of those contracts.



11103.  Insofar as his or her license to represent a fraternal
benefit society is concerned, the examination requirements of Article
7 (commencing with Section 1675) of Chapter 5 of Part 2 of Division
1 does not apply to any agent of a society who was in the service of
a society on March 1, 1945, and who is licensed to represent a
fraternal benefit society on January 1, 1952, and continuously
thereafter, nor to any agent of a society who does not devote
substantially full time to the sale of life or disability insurance,
whether that insurance is provided by insurance policies or by
fraternal benefit policies or certificates. If any person exempted
from such examination requirements by virtue of not devoting
substantially full time to the sale of life or disability insurance
as hereinabove provided, shall, after securing a license pursuant to
the provisions of this section, thereafter devote substantially full
time to the sale of such insurance, the society shall give notice
thereof to the commissioner. The commissioner thereupon shall send to
the licensee a notice specifying when the examination fee shall be
paid and when, not sooner than one month nor later than three months
the licensee must qualify by examination. Failure to pass the
examination or failure to appear pursuant to notification shall
result in a termination 45 days thereafter of all license privileges
unless within such 45-day period the licensee passes the examination.
The licensee shall not be permitted to retake the examination more
than twice within that 45-day period. Thereafter the person may be
licensed as a fraternal benefit agent only if he or she files a new
application for the license and either (a) takes and passes the
qualifying examination or (b) demonstrates affirmatively to the
commissioner that he or she will no longer devote substantially full
time to the sale of life or disability insurance.



11104.  Every society authorized to do business in this State shall
appoint in writing the commissioner 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, and shall agree in
such writing that any lawful process against it which is served on
said 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 remain outstanding in this State.
Copies of such appointment, certified by said commissioner, shall be
deemed sufficient evidence thereof and shall be admitted in evidence
with the same force and effect as the original thereof might be
admitted.



11105.  Service may be made as provided in Article 1 (commencing
with Section 12919) of Chapter 2 of Division 3.



11106.  An application for injunction against, proceedings for the
dissolution of, or the appointment of a receiver for, any domestic
society or branch thereof shall not be entertained by any court
unless made by the Attorney General.


11107.  A fraternal benefit society, its members, employees, agents,
delegates, directors, and officers by whatever name known are
subject to Section 12924.


11108.  Any domestic society may be converted into and receive a
certificate of authority as a mutual life insurance company by
compliance with all of the requirements of the laws of this State
pertaining to mutual life insurance companies, provided that the plan
for such conversion has been approved by the commissioner. Such plan
shall be prepared in writing, setting forth in full the terms and
conditions thereof. The board of directors, or other executive body
charged with the responsibility for the management of the society's
affairs, shall submit such plan to the supreme legislative and
governing body of such association or society at any regular or
special meeting thereof, by giving a full, true and correct copy of
such plan of proposed conversion with the notice of such meeting.
Such notice shall be given as provided in the laws of the society for
the convocation of such supreme legislative and governing body in
regular or special session, as the case may be. The affirmative votes
of two-thirds of all members of such supreme legislative and
governing body shall be necessary for the approval of such agreement.
Such plan shall also have been approved by the vote of the majority
of the members who vote at a meeting called for that purpose. Notice
of such meeting of members together with a full, true and correct
copy of such plan of proposed conversion shall be given by mailing
such notice from the head office of the society at least 30 days
prior to such meeting in a sealed envelope, postage prepaid,
addressed to each member at his last known post-office address. Such
members may vote either in person or by mail on ballots furnished by
the society. No such conversion shall take effect unless and until
approved by the commissioner. The commissioner may give such approval
if he finds that the proposed change is in conformity with the
requirements of law and is not prejudicial to the certificate holders
of the society. Such action in approving or disapproving shall be
subject to judicial review.



11109.  On such conversion:
   (a) Except as provided in (b) hereof all funds, assets and
liabilities of any nature which theretofore were the funds, assets or
liabilities of such society shall become the funds, assets and
liabilities of such mutual life insurance company. In determining
whether such mutual life insurance company meets the minimum capital
and surplus requirements of this code, the commissioner shall
consider such funds to be those of such mutual life insurance
company. Such conversion shall likewise extinguish the assessment
liability, if any, of the members, certificate holders or
beneficiaries of such society.
   (b) If by reason of any contract right in any member, certificate
holder or beneficiary which exists on the effective date of this
chapter, the transfer of such funds or assets would violate such
right then the assets or funds as to which such contract right
pertains shall be segregated and held to discharge the liabilities of
such mutual life insurance company to the persons entitled thereto.
In this case such separate funds shall not be considered by the
commissioner in determining if such mutual life insurance company
meets minimum capital and surplus requirements, and the assessment
liability, if any, of such member, certificate holder or beneficiary
is not extinguished.



11110.  In addition to any other ground for disapproving such
conversion, the commissioner may refuse to give such approval unless
evidence satisfactory to him is submitted that:
   (a) The reserves on all certificates theretofore issued are
sufficient to carry them to maturity either by reason of the amount
thereof or by reason of action by such society pursuant to either
subsection (c) hereof or Section 11111;
   (b) The plan of conversion will result in the availability of all
funds and assets of the mutual life insurance company to the carrying
out of the contracts of insurance whether transacted before or after
conversion; and
   (c) The society has lawfully amended all outstanding certificates
on which the member's contribution was inadequate to carry such
certificate to maturity without assessment. Such amendment shall
accomplish that purpose by either increasing the amount of
contribution or premium, by whatever name known, sufficiently or, at
the option of the certificate holder, reducing the amount of his
benefits sufficiently.



11111.  Any society may comply with subsection (a) of Section 11110
by deducting from its surplus an amount which, when added to the
reserves on certificates theretofore issued, shall be sufficient to
carry such certificates to maturity and establish and maintain after
its conversion into a mutual life insurance company a special reserve
in such an amount. The basis of such special reserve shall not be
altered without the prior written consent of the commissioner. The
commissioner shall give such consent only when he finds that such
alteration will not impair nor imperil the purpose for which such
special reserve is established. Any impairment of such reserve shall,
to the extent thereof, be deemed a deficiency of required reserves
and shall render the mutual life insurance company insolvent. No part
of such special reserve shall be deemed to be a part of the capital
paid in or of the surplus of the mutual life insurance company.



11112.  All decisions and findings of the commissioner made under
the provisions of this chapter shall be subject to review by proper
proceedings in any court of competent jurisdiction in this State.