CHAPTER 2. FARM MUTUAL INSURANCE COMPANIES
IC 27-5.1-2
Chapter 2. Farm Mutual Insurance Companies
IC 27-5.1-2-1
Applicability
Sec. 1. This chapter applies to a farm mutual insurance company
regulated under this article.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-2
Farm mutual insurance companies existing on June 30, 2003
Sec. 2. (a) A farm mutual insurance company that holds a
certificate of authority to do business in Indiana on June 30, 2003, is
a standard company under this article unless the farm mutual
insurance company:
(1) elects to become an extended company under IC 27-5.1-4;
and
(2) is authorized by the commissioner to do business as an
extended company.
(b) A standard company described in subsection (a) may elect to
become an extended company at any time by:
(1) complying with IC 27-5.1-4-2(b); and
(2) submitting to an examination that may be conducted at the
discretion of the commissioner.
(c) An election made under this section is effective upon the date
the commissioner issues a new certificate of authority.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-3
Proposed farm mutual insurance companies; application for
certificate of authority
Sec. 3. (a) If a proposed farm mutual insurance company does not
hold a certificate of authority to do business in Indiana on June 30,
2003, an application may be made to the commissioner on a form
prescribed by the commissioner for a certificate of authority for the
proposed farm mutual insurance company to do business in Indiana
as a standard company.
(b) An application described in subsection (a) must include the
following concerning the proposed farm mutual insurance company:
(1) The name.
(2) The location and address of the principal office.
(3) The names and addresses of the officers and directors.
(4) Three (3) copies of the articles of incorporation.
(5) A copy of the bylaws.
(c) A standard company described in subsection (a), not earlier
than three (3) years after it is granted a certificate of authority to do
business as a standard company, may elect to obtain a certificate of
authority to do business as an extended company if the standard
company:
(1) has an annual direct written premium of more than one
million dollars ($1,000,000); and
(2) complies with IC 27-5.1-4-2.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-4
Proposed farm mutual insurance company requirements for
certificate of authority
Sec. 4. A farm mutual insurance company that is established after
June 30, 2003, must have at least:
(1) two hundred fifty (250) applications for insurance policies;
and
(2) one hundred thousand dollars ($100,000) in annual direct
written premiums;
before issuing an insurance policy.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-5
Powers and duties
Sec. 5. (a) A farm mutual insurance company has all the powers,
rights, privileges, duties, and obligations of a company organized
under IC 27-1-6 except where IC 27-1-6 is inconsistent with this
article.
(b) A farm mutual insurance company has the following:
(1) The power to borrow money.
(2) The ability to sue or be sued.
(3) The power to make contracts of insurance or indemnity
with:
(A) a person;
(B) a firm;
(C) a public corporation;
(D) a private corporation;
(E) a board;
(F) an association;
(G) an estate; or
(H) a trustee or legal representative of an estate.
(4) The power to cede or obtain reinsurance from an insurance
company legally operating in Indiana.
(5) The power to participate with a financially stable insurance
company in:
(A) a plan for reinsurance; or
(B) catastrophe protection.
(6) The power to determine the qualifications and the manner
by which to admit or withdraw policyholders.
(7) The power to use a common seal, which the farm mutual
insurance company may change or alter.
(8) The power to purchase, lease, hold, and dispose of:
(A) real property; and
(B) personal property;
in the farm mutual insurance company's name for use in
carrying out the purposes of the farm mutual insurance
company.
(9) The power to classify risks according to the hazards
involved.
(10) The power to establish rates according to the classification
of risk.
(11) The power to determine the acceptability of risk and
hazards insured.
(12) The power to determine the cost of insurance issued by the
farm mutual insurance company and the adjustment and
payment of losses.
(13) The power to determine the compensation of directors and
officers of the farm mutual insurance company.
(14) The power to require that directors and officers of the farm
mutual insurance company be bonded in the performance of the
duties of the directors and officers.
(15) The power to adopt or amend bylaws and articles of
incorporation of the farm mutual insurance company.
(16) The power to adopt or amend policy forms and application
forms used by the farm mutual insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-6
Exclusion of companies
Sec. 6. A farm mutual insurance company with an annual direct
written premium of more than ten million dollars ($10,000,000) may
not function as a farm mutual insurance company and shall be
regulated as a domestic mutual insurance company described in
IC 27-1-6-15.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-7
Exemption from Indiana insurance laws
Sec. 7. Except as provided in section 8 of this chapter, a farm
mutual insurance company that operates under this article is exempt
from any other Indiana insurance law unless the law expressly states
that the law is applicable to a farm mutual insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-8
Application of Indiana insurance laws
Sec. 8. The following provisions apply to standard companies and
extended companies:
(1) IC 27-1-3.
(2) IC 27-1-3.1.
(3) IC 27-1-5-3.
(4) IC 27-1-7-14 through IC 27-1-7-16.
(5) IC 27-1-7-21 through IC 27-1-7-23.
(6) IC 27-1-9.
(7) IC 27-1-10.
(8) IC 27-1-13-3 through IC 27-1-13-4.
(9) IC 27-1-13-6 through IC 27-1-13-9.
(10) IC 27-1-15.6.
(11) IC 27-1-18-2.
(12) IC 27-1-20-1.
(13) IC 27-1-20-4.
(14) IC 27-1-20-6.
(15) IC 27-1-20-9 through IC 27-1-20-11.
(16) IC 27-1-20-14.
(17) IC 27-1-20-19 through IC 27-1-20-21.3.
(18) IC 27-1-20-23.
(19) IC 27-1-20-30.
(20) IC 27-1-22.
(21) IC 27-4-1.
(22) Except as provided in IC 27-6-1.1-6, IC 27-6-1.1-2.
(23) IC 27-6-2.
(24) IC 27-7-2.
(25) IC 27-9.
(26) IC 34-30-17.
As added by P.L.129-2003, SEC.8. Amended by P.L.137-2006,
SEC.14 and P.L.162-2006, SEC.47.
IC 27-5.1-2-9
Location of insurance business
Sec. 9. A farm mutual insurance company may engage in the
business of insurance in any location in Indiana other than a first
class city. However, a farm mutual insurance company may continue
to insure property in a first class city in Indiana if the insurance
policy under which the property is insured was originally issued
before July 1, 2003, or if the insurance policy was originally issued
before the city became a first class city.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-10
Annual policyholder meeting
Sec. 10. (a) A farm mutual insurance company shall hold an
annual meeting of the policyholders of the farm mutual insurance
company on the date, time, and location set forth in the articles of
incorporation of the farm mutual insurance company. If the articles
of incorporation do not specify the date, time, and location of the
annual meeting, the meeting shall be held on the first Monday in
April at the registered principal office of the farm mutual insurance
company.
(b) A quorum for purposes of an annual policyholder meeting
must be defined in a farm mutual insurance company's articles of
incorporation.
(c) Each policyholder of a farm mutual insurance company is
entitled to one (1) vote on any issue voted upon at a policyholder
meeting.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-11
Board of directors
Sec. 11. (a) A farm mutual insurance company shall elect a board
of directors consisting of at least five (5) policyholders.
(b) To be elected to the board of directors of a farm mutual
insurance company, an individual must be the owner of an insurance
policy issued by the farm mutual insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-12
Election of director; term of office; election of officers; annual
board meeting
Sec. 12. (a) Unless a farm mutual insurance company's articles of
incorporation specify otherwise, a director of a farm mutual
insurance company must be elected at the farm mutual insurance
company's annual policyholder meeting by the affirmative vote of a
majority of:
(1) the policyholders present and voting; and
(2) the policyholders voting by proxy, if voting by proxy is
allowed by the farm mutual insurance company's articles of
incorporation.
(b) The term of office of a director must be at least one (1) year
but not more than five (5) years. A farm mutual insurance company's
articles of incorporation may provide for the classification of
directors into three (3) groups, and the terms of the directors may be
staggered. A vacancy on the board of directors may be filled for the
unexpired term through an appointment made by the remaining
directors.
(c) The board of directors of a farm mutual insurance company
shall, by vote of a majority of the directors, elect the officers
designated in the farm mutual insurance company's bylaws. The
directors may also elect any additional officers that the directors
determine are necessary. An officer elected under this subsection is
not required to be a director.
(d) The term of an officer elected under subsection (c) may not be
less than one (1) year or more than three (3) years. An outgoing
officer shall hold office until the officer's successor is either elected
or selected and qualified.
(e) The board of directors of a farm mutual insurance company
shall hold a separate meeting of the board of directors immediately
after the farm mutual insurance company's annual meeting.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-13
Articles of incorporation; amendment
Sec. 13. (a) Unless a farm mutual insurance company's articles of
incorporation specify otherwise, the articles of incorporation of a
farm mutual insurance company may be amended by an affirmative
vote of two-thirds (2/3) of the farm mutual insurance company's
policyholders who are voting in person or by proxy at any
policyholder meeting if the policyholders are given at least thirty
(30) days notice of:
(1) the meeting; and
(2) the subject matter of the proposed amendments.
(b) After a farm mutual insurance company has adopted an
amendment to the farm mutual insurance company's articles of
incorporation, three (3) copies of the amendment must be filed with
the commissioner.
(c) The commissioner shall determine whether to approve an
amendment specified under subsection (b) and, if the amendment is
approved, shall return a copy of the filed amendment and a certificate
of approval to the farm mutual insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-14
Bylaws; amendment
Sec. 14. (a) Bylaws of a farm mutual insurance company may be
amended by the farm mutual insurance company in accordance with
the farm mutual insurance company's articles of incorporation. All
amendments to the bylaws must be filed with the commissioner.
(b) Bylaws of a farm mutual insurance company may not be
inconsistent with this article, other applicable laws, or the farm
mutual insurance company's articles of incorporation.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-15
Commissioner filing fee
Sec. 15. The commissioner may charge a farm mutual insurance
company a reasonable fee, as provided in IC 27-1-3-15, for a filing
under this article.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-16
Form and rate filing file and use; commissioner disapproval;
judicial review
Sec. 16. (a) A farm mutual insurance company may not deliver or
issue for delivery an insurance policy or an endorsement or a rider to
an insurance policy until a copy of the form and the rates charged for
the insurance policy are filed with the commissioner.
(b) A farm mutual insurance company may use any form or rate
filed with the commissioner unless the commissioner notifies the
farm mutual insurance company in writing that the form is
disapproved not more than thirty (30) days after the commissioner's
receipt of the rate or form filing. The commissioner may disapprove
a rate or form for the following reasons:
(1) An inconsistency with this article or another applicable state
law.
(2) A provision that is:
(A) deceptive;
(B) ambiguous; or
(C) misleading.
(c) If the commissioner disapproves a rate or form under this
section, the commissioner shall notify the farm mutual insurance
company of the reason that the rate or form was disapproved. The
farm mutual insurance company may request a hearing before the
commissioner under IC 4-21.5 concerning the disapproval.
(d) A farm mutual insurance company may seek judicial review
under IC 4-21.5-5 of the commissioner's final disapproval of a rate
or form under this section.
(e) The commissioner may charge a farm mutual insurance
company a reasonable fee as provided in IC 27-1-3-15 for the filing
of a rate or form.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-17
Commissioner examination
Sec. 17. (a) The commissioner may examine the affairs of a farm
mutual insurance company under IC 27-1-3.1.
(b) The commissioner may take an action that may protect a
policyholder's interest if the commissioner determines that a farm
mutual insurance company conducts business in a manner that is:
(1) contrary to law applying to a farm mutual insurance
company; or
(2) detrimental to policyholder interests.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-18
Unsafe business practice; insufficient assets; commissioner notice;
remedies; court proceedings; injunction; liquidation
Sec. 18. (a) If the commissioner determines from:
(1) a statement filed by a farm mutual insurance company;
(2) an examination under section 17 of this chapter; or
(3) other information obtained by the commissioner;
that a farm mutual insurance company is conducting business in an
unsafe manner or that a farm mutual insurance company's assets are
insufficient to justify continuing the business, the commissioner shall
send written notice of the commissioner's concerns regarding the
farm mutual insurance company to the officers and directors of the
farm mutual insurance company.
(b) Not more than thirty (30) days after receiving a notice under
subsection (a), the farm mutual insurance company's officers and
directors shall:
(1) remedy; or
(2) establish a plan to remedy;
the commissioner's concerns.
(c) If:
(1) a farm mutual insurance company does not remedy or
establish a plan to remedy the commissioner's concerns under
subsection (b); or
(2) the commissioner determines that the continuation of a farm
mutual insurance company is not in the best interests of the
farm mutual insurance company's policyholders;
the commissioner shall institute proceedings in the Marion County
circuit court to enjoin the farm mutual insurance company from
conducting any further business transactions.
(d) If the commissioner seeks a permanent injunction against a
farm mutual insurance company under subsection (c), the
commissioner shall also institute proceedings to settle and wind up
the affairs of the farm mutual insurance company and liquidate and
dissolve the farm mutual insurance company, as provided in IC 27-9.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-19
Application for coverage; policyholder status
Sec. 19. (a) A person, including a person described in subsection
(b), that has a risk that is insurable under this article in a territory in
which a farm mutual insurance company operates may apply for
insurance coverage with the farm mutual insurance company. If the
farm mutual insurance company accepts the person as a policyholder,
the person becomes a policyholder of the farm mutual insurance
company and is entitled to all the rights and privileges of a
policyholder.
(b) Any of the following that own property within the territory of
a farm mutual insurance company may apply for insurance, enter into
an agreement for an insurance policy, and hold an insurance policy
issued by a farm mutual insurance company:
(1) A corporation.
(2) An estate.
(3) An association.
(c) An officer, a trustee, a board member, or a legal representative
of an entity described in subsection (b) may be recognized as acting
for or on behalf of the entity for the purpose of membership.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-20
Insurance producers
Sec. 20. A person that solicits or negotiates insurance on behalf
of a farm mutual insurance company must be licensed as an
insurance producer under IC 27-1-15.6.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-21
Merger; plan; policyholder notice
Sec. 21. (a) Two (2) or more farm mutual insurance companies
may merge into one (1) farm mutual insurance company upon
approval of a merger plan by the policyholders of each farm mutual
insurance company as provided in subsection (b).
(b) Before a merger described in subsection (a) may take place:
(1) the board of directors of each farm mutual insurance
company must approve a merger plan; and
(2) the merger plan must be approved by the affirmative vote of
two-thirds (2/3) of the policyholders of each farm mutual
insurance company who vote in person or by proxy.
(c) Before a meeting at which a proposed merger under this
section may be considered:
(1) the policyholders of a farm mutual insurance company for
which the merger is proposed must be provided, by first class
mail:
(A) written notice of the date, time, and location of the
meeting;
(B) written notice that a proposed merger will be discussed
and voted on at the meeting; and
(C) a copy or summary of the merger plan; and
(2) a general notice stating:
(A) the date, time, and location of the meeting; and
(B) that a proposed merger or transfer will be discussed and
voted on at the meeting;
must be published in a newspaper of general circulation in the
county in which the principal office of the farm mutual
insurance company is located.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-22
Merger files; commissioner review; notice and hearing; approval;
modification; experts; costs
Sec. 22. (a) Each farm mutual insurance company that decides to
merge under section 21 of this chapter shall file the following
documents with the commissioner:
(1) A petition for merger.
(2) The farm mutual insurance company's merger plan.
(3) Articles of merger.
(4) A copy of the minutes of a meeting at which the merger plan
was approved.
(5) Proof of compliance with section 21 of this chapter.
(b) The commissioner shall:
(1) review a filing submitted under subsection (a); and
(2) schedule a hearing under IC 4-21.5 if the commissioner
considers a hearing necessary.
The commissioner may waive a hearing under this subsection if the
commissioner determines that a proposed merger does not prejudice
the interests of policyholders of the farm mutual insurance company.
(c) If the commissioner determines under subsection (b) that a
hearing is necessary, the commissioner shall provide written notice
of the hearing to the farm mutual insurance company that filed the
petition for merger. The commissioner may require the farm mutual
insurance company to provide the farm mutual insurance company's
policyholders with written notice of the hearing, including the date,
time, and place of the hearing.
(d) If the commissioner requires a farm mutual insurance
company to provide the farm mutual insurance company's
policyholders with notice of a hearing under subsection (c), the
notice must meet the following requirements:
(1) Be published in at least two (2) daily newspapers that the
commissioner may designate.
(2) Be published in the newspapers designated under
subdivision (1):
(A) not less than one (1) time per week;
(B) for two (2) successive weeks; and
(C) on the same day of the week.
(3) The last publication of notice must appear not more than
five (5) calendar days before the date of the hearing.
(e) The commissioner may require a farm mutual insurance
company to provide more notice than is required by subsection (d)
if the commissioner determines that more notice is required under the
circumstances concerning the farm mutual insurance company.
(f) In a hearing conducted under this section, the commissioner
may examine a farm mutual insurance company's business affairs by:
(1) requiring and compelling the production of documents,
records, books, papers, contracts, or other evidence; and
(2) compelling the attendance of, and examining under oath, a
director, an officer, an agent, an employee, a solicitor, or an
attorney of the farm mutual insurance company, or another
person.
(g) A person who has an interest in a hearing conducted under this
section may appear and testify at the hearing.
(h) The commissioner shall approve and authorize a proposed
merger if the commissioner determines the following:
(1) That the interests of policyholders of the merging farm
mutual insurance companies are properly protected.
(2) That a reasonable objection to the proposed merger does not
exist.
(i) The commissioner may order a modification of the merger plan
or articles of merger for a proposed merger if the commissioner
determines that the modification is in the best interest of
policyholders.
(j) The commissioner may hire experts the commissioner
considers necessary to review a merger plan filed under this section.
(k) A farm mutual insurance company that files a petition for
merger shall pay the costs of a hearing under this section.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-23
Merger plan performance; surviving company
Sec. 23. (a) The commissioner may establish the time frame in
which a farm mutual insurance company must perform the terms of
a merger plan approved under section 22 of this chapter.
(b) After a farm mutual insurance company that is a party to a
merger under sections 21 and 22 of this chapter performs the terms
of the merger plan, the surviving farm mutual insurance company
shall file with the commissioner written notice of the surviving farm
mutual insurance company's compliance with the merger plan.
(c) The commissioner shall determine whether the terms of a
merger plan are performed adequately by a farm mutual insurance
company that is a party to a merger under sections 21 and 22 of this
chapter. If the commissioner determines that the terms of the merger
plan are met, the commissioner shall issue a certificate of merger to
the surviving farm mutual insurance company.
(d) The commissioner may charge a farm mutual insurance
company the fee set forth in IC 27-1-3-15 for a filing made under this
section.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-24
Certificate of merger
Sec. 24. Upon the commissioner's issuance of a certificate of
merger under section 23 of this chapter, the farm mutual insurance
companies that are parties to the merger plan become a single
surviving farm mutual insurance company. The separate existence of
each farm mutual insurance company that is a party to the merger
plan ceases upon the issuance of the certificate of merger.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-25
Notice of contract to manage or control; commissioner
determination; managing general agent
Sec. 25. (a) A person that intends to enter into a contract for the
exclusive or dominant right to manage or control a farm mutual
insurance company shall file notice of the contract with the
commissioner at least thirty (30) days before entering into the
contract.
(b) The commissioner may approve a contract or proposed
contract described in subsection (a) only if the contract is not
detrimental to:
(1) the policyholders of the farm mutual insurance company; or
(2) the public.
(c) If the commissioner disapproves a contract or proposed
contract described in subsection (a), the commissioner shall provide
written notice of the disapproval to the parties to the contract. A
person that entered into a contract described in subsection (a) may
not manage or control the farm mutual insurance company under the
contract after receiving notice of the commissioner's disapproval of
the contract.
(d) A person that enters into a contract for the exclusive or
dominant right to manage or control a farm mutual insurance
company is the managing general agent (as defined in IC 27-1-33-4)
of the farm mutual insurance company and shall comply with the
requirements that apply to a managing general agent under IC 27.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-26
Violations of law; commissioner orders
Sec. 26. If the commissioner determines, after notice and a
hearing under IC 4-21.5, that a farm mutual insurance company has
violated a provision of this article or a rule or order issued under this
article, the commissioner may issue an order requiring the farm
mutual insurance company to refrain from the unlawful practice or
to take an affirmative action that the commissioner considers
necessary to carry out the purposes of this article.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-27
Judicial review
Sec. 27. (a) A decision, a determination, or an order of the
commissioner under section 26 of this chapter is subject to judicial
review under IC 4-21.5-5.
(b) If a farm mutual insurance company does not seek judicial
review of the commissioner's determination to issue an order under
section 26 of this chapter less than thirty (30) days after the
commissioner notifies the farm mutual insurance company of the
commissioner's determination, the order is final.
(c) If a farm mutual insurance company seeks judicial review of
the commissioner's determination under section 26 of this chapter
and the commissioner's determination is upheld, the order is final.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-28
Willful violation; penalties
Sec. 28. If a farm mutual insurance company willfully violates a
provision of an order under section 26 of this chapter, the
commissioner may do the following:
(1) Impose a civil penalty on the farm mutual insurance
company of not more than ten thousand dollars ($10,000).
(2) Suspend or revoke the farm mutual insurance company's
certificate of authority.
(3) Institute proceedings to enjoin the farm mutual insurance
company from conducting further business.
(4) Institute proceedings to wind up the affairs of the farm
mutual insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-29
Notice of intent to waive term of policy, right, or defense
Sec. 29. (a) A farm mutual insurance company may not waive:
(1) a term of an insurance policy; or
(2) a right or defense of the farm mutual insurance company;
unless the farm mutual insurance company states in a letter or other
written or printed document to a policyholder that the farm mutual
insurance company intends to specifically waive the term, right, or
defense.
(b) A letter or other written or printed document required under
subsection (a) must include the signature of an officer or other
representative of the farm mutual insurance company who is
authorized to execute the particular type of waiver.
(c) A letter or other written or printed document under this section
is the only admissible evidence of a waiver by the farm mutual
insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-30
Premium plus assessment basis; policyholder liability
Sec. 30. (a) A policyholder of a farm mutual insurance company
operating on a premium plus assessment basis under this article is
liable for the policyholder's share of the amount necessary to:
(1) pay the losses and necessary expenses incurred by the farm
mutual insurance company; and
(2) maintain an adequate reserve or safety fund as determined
by the farm mutual insurance company's directors;
while the policyholder's insurance policy is in effect.
(b) Notwithstanding subsection (a), a farm mutual insurance
company shall limit a policyholder's contingent liability during any
one (1) year to an amount not to exceed the limitation set forth in the
farm mutual insurance company's bylaws. The limitation set forth in
the farm mutual insurance company's bylaws under this subsection
must be an amount equal to not less than three percent (3%) of the
insurance carried by the policyholder.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-31
Assessment collection; verification of loss
Sec. 31. (a) A farm mutual insurance company shall collect an
assessment from a policyholder in the manner prescribed by the farm
mutual insurance company's bylaws.
(b) After a farm mutual insurance company that operates on a
premium plus assessment basis receives:
(1) notice of a loss or damage to a policyholder's property; or
(2) a judgment against the farm mutual insurance company;
the directors of the farm mutual insurance company shall verify the
loss, damage, or judgment and shall, subject to the limitation set
forth in the farm mutual insurance company's bylaws under section
30 of this chapter, assess each policyholder an amount proportionate
to the amount of risk the policyholder has with the farm mutual
insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-32
Policyholder failure to pay assessment
Sec. 32. (a) If a policyholder is assessed and fails to pay the
assessment, the farm mutual insurance company may, upon providing
written notice of failure to pay:
(1) suspend the farm mutual insurance company's liability for
loss under the policyholder's insurance policy for the time
during which the assessment is not paid; or
(2) cancel the policyholder's insurance policy if the assessment
is not paid less than thirty (30) days after notice of the
assessment is sent to the policyholder.
The farm mutual insurance company may deduct the assessment
from the policyholder's deposit before returning the remainder of a
deposit, if any, to the policyholder.
(b) If an assessment is paid by a policyholder after a farm mutual
insurance company takes an action under subsection (a), the farm
mutual insurance company may reinstate the policyholder's insurance
policy effective beginning on the date on which the payment is
received, but a deduction or credit may not be made to an assessment
because of the suspension of the insurance policy.
(c) A farm mutual insurance company may file an action to
compel a policyholder to pay an assessment.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-33
Policyholder liability after policy termination
Sec. 33. (a) A policyholder is not liable for an assessment of
losses or expenses that are incurred by a farm mutual insurance
company after the policyholder has terminated the policyholder's
insurance policy.
(b) A former policyholder is not liable for an assessment for
obligations incurred by a farm mutual insurance company before the
policyholder terminated the insurance policy on which the
assessment is made unless the farm mutual insurance company gives
the former policyholder notice of the assessment less than one (1)
year after the date of termination of the insurance policy.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-34
Notice of premium plus assessment policy; civil actions; limitation
Sec. 34. (a) A premium plus assessment insurance policy must
expressly and prominently state on the face page of the insurance
policy that the insurance policy is a premium plus assessment
insurance policy.
(b) A suit or action for a loss under a premium plus assessment
insurance policy may not be commenced until:
(1) the loss is due in accordance with the premium plus
assessment insurance policy; or
(2) not less than sixty (60) days after proof of loss was given to
the farm mutual insurance company that issued the premium
plus assessment insurance policy.
(c) Requirements that a policyholder must meet to sustain a legal
cause of action under this section must be disclosed clearly and
prominently on the face page of the premium plus assessment
insurance policy.
(d) Notwithstanding IC 34-11-2-11, the statute of limitations for
a claim on a premium plus assessment insurance policy under this
section is two (2) years after the date of the loss.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-35
Payment of losses and judgments; insufficient funds; assessments
Sec. 35. (a) A farm mutual insurance company that operates on a
premium plus assessment basis must pay losses and judgments of the
farm mutual insurance company from premiums received or amounts
collected on promissory notes. The amount:
(1) deducted from a policyholder's premium paid; or
(2) demanded from a policyholder's promissory note;
must bear the same relationship to the total loss as the policyholder's
total premium bears to the total premiums collected in the calendar
year that the loss is incurred.
(b) If funds collected under subsection (a) are insufficient to cover
a loss or judgment, the directors of the farm mutual insurance
company may, subject to the limitation set forth in the farm mutual
insurance company's bylaws under section 30 of this chapter, assess
each policyholder in the same manner. However, a farm mutual
insurance company may not assess policyholders more than one (1)
time in a calendar year for losses incurred by the farm mutual
insurance company.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-36
Borrowing funds; assessment
Sec. 36. (a) A farm mutual insurance company may borrow money
for the payment of accrued losses and expenses.
(b) A farm mutual insurance company that borrows money under
subsection (a) shall assess policyholders the full amount necessary
to fully repay the loan in the assessment immediately following the
date the money is borrowed. Unless the commissioner authorizes a
longer period, the assessment must be levied not more than twelve
(12) months after the losses or expenses paid by the farm mutual
insurance company through the loan are incurred.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-37
Policy cancellation; notice
Sec. 37. (a) A farm mutual insurance company may cancel, in
whole or in part, a policyholder's insurance policy after giving the
policyholder written notice of the cancellation as follows:
(1) The written notice must be delivered or mailed to the
policyholder at the last known address of the policyholder.
(2) The written notice must specify the effective date of the
cancellation.
(3) Upon request of the policyholder, the written notice must be
accompanied by a written explanation of the specific reasons
for the cancellation.
(b) A farm mutual insurance company shall provide the written
notice specified in subsection (a) at least:
(1) ten (10) days before canceling the insurance policy, if the
cancellation is for nonpayment of premium;
(2) twenty (20) days before canceling the insurance policy, if
the cancellation occurs more than sixty (60) days after the date
of issuance of the policy; and
(3) ten (10) days before canceling the insurance policy, if the
cancellation occurs less than sixty-one (61) days after the date
of issuance of the policy.
(c) If the insurance policy was procured by an independent
insurance producer licensed in Indiana, the farm mutual insurance
company shall deliver or mail notice of cancellation to the insurance
producer not less than ten (10) days before the farm mutual insurance
company delivers or mails the notice to the policyholder, unless the
obligation to notify the insurance producer is waived in writing by
the insurance producer.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-38
Discontinuation of company
Sec. 38. A farm mutual insurance company may vote to
discontinue operations and settle its affairs under IC 27-1-10.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-39
Misconduct; Class C felony
Sec. 39. A director, an officer, a member, an insurance producer,
or an employee of a farm mutual insurance company who knowingly
or intentionally, directly or indirectly, uses or employs, or allows
another person to use or employ, money, funds, securities, or assets
of the farm mutual insurance company for private profit or gain
commits a Class C felony.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-40
Investment gain; policyholder surplus
Sec. 40. This article does not prohibit a farm mutual insurance
company from doing the following:
(1) Distributing underwriting or investment gain to
policyholders of a farm mutual insurance company.
(2) Accumulating a reasonable policyholder surplus for the
payment of losses or other expenses.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-41
Election to be subject to Indiana insurance law
Sec. 41. (a) A farm mutual insurance company may elect to be
subject to the provisions of IC 27-1, as provided by IC 27-1-11-1,
with the rights, privileges, and franchises provided under IC 27-1.
(b) An election under subsection (a) becomes effective on the date
of issuance of a new certificate of authority under IC 27-1-11-7.
(c) An insurance policy that is:
(1) issued or bound by a farm mutual insurance company that
makes an election under subsection (a); and
(2) in effect on the date the election becomes effective;
is not invalidated by IC 27-1, but remains in full force and effect
until expiration or termination of the insurance policy. However,
IC 27-1 applies to an insurance policy described in this subsection
beginning three (3) years after the date the election becomes
effective.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-42
Exemption from regulation
Sec. 42. A company or association organized before January 1,
1870, that provides the kind of insurance described in this article and
has not made an election under IC 27-5-1-14 (before its repeal) is not
subject to this article unless the company or association elects to
conduct the company's or association's business under this article by
a resolution:
(1) adopted by the company's or association's board of directors
or policyholders;
(2) filed with the commissioner; and
(3) approved by the commissioner.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-43
Administrative rules
Sec. 43. The commissioner may adopt rules under IC 4-22-2 to
implement this article.
As added by P.L.129-2003, SEC.8.
IC 27-5.1-2-44
Validity of rate or form filed under prior law
Sec. 44. A rate or form filed by a farm mutual insurance company
before July 1, 2003, is valid and remains in effect notwithstanding
the repeal of IC 27-5 and the addition of this article.
As added by P.L.16-2009, SEC.28.