40-4003c. Continuation in force of policies; extinguishment of policyholder rights.
40-4003c
40-4003c. Continuation in force of policies; extinguishment ofpolicyholder rights.(a) All policies in force on the effective date ofconversion remain in force under the terms of the policies,except that the following rights, to the extent they existedin the mutual company, shall be extinguished on theeffective date of the conversion:
(1) Any voting rights of the policyholders in the mutualinsurance company that were provided under the policies;
(2) any assessment provisions provided for under thepolicies; and
(3) any right to share in the surplus of the mutualcompany provided for under the policies, except that:
(A) Holders of participating policies in effect on thedate of conversion continue to have a right to receivedividends as provided in the participating policies, ifany, unless the holders of such participating policiesreceive a nonparticipating policy as a substitute forthe participating policy pursuant to subparagraph (B); and
(B) upon the renewal date of a participating policy,the converted stock company may issue the insured anonparticipating policy as a substitute for theparticipating policy, except that no such substitutionsmay be issued for the mutual company's life policies,guaranteed renewable accident and health policies andguaranteed renewable, noncancelable accident and healthpolicies.
(b) Unless otherwise ordered by the commissioner ofinsurance and notwithstanding any provisions of law to thecontrary, policyholders are not required to be givenpreemptive rights, and, except as provided in the plan ofconversion and in subsection (a),policyholders shall have no other rights resulting frommembership in a mutual insurance company with respect to theinsurer.
History: L. 1997, ch. 107, § 5; July 1.