1300-1315

INSURANCE CODE
SECTION 1300-1315




1300.  Any persons may exchange reciprocal or interinsurance
contracts with one another providing insurance, other than life,
title, mortgage, mortgage guaranty, or insolvency insurance, among
themselves against any loss which may be insured against under other
provisions of law.



1301.  Such persons are termed subscribers.



1302.  Any domestic corporation, in addition to the rights, powers
and franchises specified in its articles of incorporation, has full
power and authority to enter into insurance contracts of the kind and
character mentioned in this chapter. The right to enter into such
contracts is incidental to the purposes for which such corporations
are organized and as fully granted as the rights and powers expressly
conferred.



1303.  The organization under which such subscribers so exchange
contracts is termed a reciprocal or interinsurance exchange, and
shall be deemed the insurer while each subscriber shall be deemed an
insured.


1305.  Such contracts may be executed by an attorney-in-fact, agent
or other representative duly authorized and acting for such
subscribers under powers of attorney. Such authorized person is
termed the attorney, and may be a corporation.


1306.  The principal office of the attorney shall be maintained at a
place designated by the subscribers in the power of attorney.



1307.  The power of attorney and contracts made thereunder may:
   (a) Provide for the right of substitution of attorney and
revocation of the contract or power.
   (b) Impose such restrictions upon the exercise of the power as are
agreed upon by the subscribers.
   (c) Provide for and limit the maximum amount to be paid by
subscribers, except that contracts of exchanges writing either
liability or workmen's compensation insurance shall be subject to the
provisions of Article 6 of this chapter.
   (d) Provide for the exercise of any right reserved to the
subscribers directly or through a board or other body.



1308.  The body exercising the subscribers' rights shall be selected
under such rules as the subscribers adopt. It shall supervise the
finances of the exchange and shall supervise its operations to such
extent as to assure conformity with the subscriber's agreement and
power of attorney.



1309.  Such body shall have authority to procure the audit of the
accounts and records of the exchange and of the attorney-in-fact, at
the expense of the exchange.



1310.  Such body shall be composed of subscribers or agents of
subscribers. Not more than one-third of the members serving on such
body shall be agents, employees or shareholders of the attorney.



1310.1.  The board of a reciprocal or interinsurance exchange
operating pursuant to Section 1284 shall be composed of members of
the governing board of the hospital, the participating members of its
attending medical staff, and health care consumers.




1311.  A reciprocal or interinsurance exchange may engage in the
surety insurance business in this state only provided its surplus is
at least twice the amount required as paid-in capital of an
incorporated insurer writing the same classes of insurance by the
provisions of Section 700.01. Paid-in capital as used in this section
shall not include any of the surplus amounts required of
incorporated insurers by the provisions of Sections 700.02, 700.03
and 700.05 of this code.
   Any such reciprocal or interinsurance exchange shall be subject to
such of the provisions of Chapter 1, except Sections 12050, 12051,
and 12052, Part 4, Division 2, as can be made applicable to the
nature of a reciprocal or interinsurance exchange.




1312.  (a) Any reciprocal or interinsurance exchange, domestic or
foreign, which has obtained a certificate of capability to reinsure
or a favorable order under Section 1401.5 and whose subscribers by
such order have no liability for assessment, may accept reinsurance
of risks for all classes of insurance which it writes in California
including the class in which such reinsurance is to be accepted.
   (b) Contracts accepting such reinsurance shall be entered into
between the ceding insurer and the reinsuring reciprocal or
interinsurance exchange by its attorney in fact. The ceding insurer
need not become a member of or a subscriber to the reinsuring
reciprocal or interinsurance exchange and such contracts of
reinsurance may contain any or all of the terms and conditions
customary in reinsurances of the classes of insurance covered.



1313.  Nothing in Chapter 504 of the Statutes of 1965 shall limit or
affect the right of an admitted foreign reciprocal or interinsurance
exchange to accept reinsurance.



1314.  Any reciprocal or interinsurance exchange, domestic or
foreign, which has obtained a certificate of surplus under Section
1401, and whose subscribers by such order have no liability for
assessment, may issue a policy of insurance required under Article 4
(commencing with Section 11620) of Chapter 1 of Part 3 of Division 2
of this code without requiring such insured to become a member of or
a subscriber to such reciprocal or interinsurance exchange.
   The attorney-in-fact, agent, or other representatives duly
authorized and acting for the regular subscribers of such reciprocal
or interinsurance exchange, shall have the same power and authority
to act for any such person becoming an insured under Article 4
(commencing with Section 11620) of Chapter 1 of Part 3 of Division 2
of this code as authorized or required under any documents required
to be filed with the commissioner under Article 3 (commencing with
Section 1320) of Chapter 3 of Part 2 of Division 1 of this code.



1315.  A reciprocal exchange or interinsurance exchange may borrow
money to defray the expenses of its organization, provide it with
surplus funds, or for any purpose of its business, upon a written
agreement that the money is required to be repaid only out of the
exchange's surplus in excess of that stipulated in the agreement. The
agreement may provide for fixed or variable interest not exceeding
an amount allowed by the commissioner, which interest shall or shall
not constitute a liability of the exchange as to its funds other than
the excess that is stipulated in the agreement. Any agreement of
this type shall provide that all interest payments and principal
repayments require prior approval by the commissioner. Unless
otherwise approved by the commissioner, written agreements evidencing
this borrowed money shall not be issued in units of less than ten
thousand dollars ($10,000). Unless otherwise allowed by the
commissioner, no commission or promotion expense shall be paid in
connection with any loan of this type. An agreement to borrow money
to provide surplus funds, or for any business purpose, may be termed
a surplus note. No surplus note or other agreement may be issued
unless it conforms to the requirements set forth at the time the note
is issued in the Accounting Practices and Procedures Manual adopted
by the National Association of Insurance Commissioners for the
reporting of agreements as surplus and not as debt in the financial
statements required to be filed by an insurer with the commissioner.
No permit or other agreement shall constitute authorization or
approval for any other issuance of securities that is connected to
the note or agreement in any way.