§ 10-3-123 — Assessment accident associations

Colorado § 10-3-123

• Jurisdiction: Colorado
• Title 10: Insurance
• Art.: Regulation of Insurance Companies

Text

(1) Every contract whereby a
benefit is to accrue to a party named therein, upon the accidental death or physical
disability from accident or sickness of a person, which benefit is in any degree
conditioned upon the collection of an assessment upon persons holding similar
contracts, is deemed a contract of accident or casualty insurance upon the
assessment plan, and the business involving the issuance of such contract shall be
carried on in this state only by duly authorized corporations, which are subject to
the provisions and requirements of this section and the general laws governing
insurance companies in this state, except as otherwise provided in this section; but
nothing in this section shall be construed as applicable to organizations which
conduct their business as fraternal societies, on the lodge system, or to
organizations which do not employ paid agents in soliciting business or limit their
certificate holders to a particular order or fraternity.

(2) Twenty-five or more persons who are citizens of this state may form a
corporation to carry on the business of casualty insurance on the assessment plan,
but no such corporation shall begin to do business until a guaranty fund of at least
ten thousand dollars is provided and deposited, in cash or in such securities as are
permitted by law in the case of stock companies, with the commissioner under the
conditions named in this title (except article 15) and article 14 of title 24, C.R.S.
When this is done and at least two hundred persons have subscribed in writing to be
insured, and when each has paid in at least one monthly assessment or premium,
the commissioner, if the laws have been complied with, shall issue a certificate of
authority for such corporation, which authorizes it to commence business. The word
association shall be used in the title or name of all corporations organized under
this section instead of the word company.

(3) Every policy or indemnity certificate issued by any casualty corporation
doing business in this state shall show, in plain and legible print at the top and on
the face of the same, these words: Incorporated on the assessment plan.

(4) There shall also be printed plainly and legibly in every such policy or
certificate issued the minimum and maximum limits of the contingent mutual
liability of the person to whom the policy is issued, which limits and the amount of
liability, in the case of corporations incorporated under the Colorado laws, shall be
fixed by the bylaws, and the rule shall be uniform. Such policies or certificates shall
also specify the minimum sum of money to be paid upon each contingency insured
against and the number of days after satisfactory proof of the happening of such
contingency at which such payment shall be made. Upon the occurrence of such
contingency, unless the contract has been voided by fraud or by breach of its
conditions, the association is obligated to the beneficiary for such payment at the
time and to the amount specified in the policy or certificate, and this indebtedness
shall be a lien upon all the property, effects, and bills receivable of the association
in this state, with priority over all indebtedness thereafter incurred, but the
statement of said minimum sum shall not invalidate the rights of the party insured
from receiving any further amount above such minimum sum that is based upon
membership and to which he is entitled by the provisions of his policy.

(5) Any corporation organized under the authority of any other state or
government to issue policies or certificates of casualty insurance on the
assessment plan, as a condition precedent to transacting business in this state,
shall pay such fees and comply with the same requirements as exacted of stock
casualty insurance companies of other states or countries, as provided by this title
(except article 15) and article 14 of title 24, C.R.S., and thereafter be subject to the
same general laws and penalties of this title, unless otherwise provided in this
section, and it shall deposit with the commissioner or with the proper official of
some other state, for the protection of all its policyholders, a sum not less than that
required to be deposited by domestic casualty insurance companies organized upon
the mutual assessment plan. Such corporation shall also file with the commissioner
a copy of its policies or certificates and applications therefor, for approval by the
commissioner, and a sworn statement from the proper officers of such corporation
that they have received a copy of this section, and shall be governed thereby in
issuing policies or certificates in this state. The commissioner may thereupon issue
or renew the authority of such corporation to do business in this state.

(6) The money or other benefit, charity, relief, or aid to be paid or provided or
rendered by any corporation authorized to do casualty insurance on the assessment
plan shall not be liable to attachment or other process and shall not be seized,
taken, appropriated, or applied by any legal or equitable process, nor by operation
of law, to pay any debts or liability of a policy or certificate holder, or any
beneficiary named therein.

(7) Any corporation doing a casualty insurance business in this state on April
15, 1913, that is incorporated to do business on the assessment plan may
reincorporate under the provisions of this title (except article 15) and article 14 of
title 24, C.R.S., but nothing in said references shall be construed as requiring any
such corporation to reincorporate, and any such corporation may continue to
exercise all rights, powers, and privileges conferred by said references, or its
articles of incorporation not inconsistent with this subsection (7).

Legislative History

Source: L. 13: p. 369, � 75. C.L. � 2548. CSA: C. 87, � 92. CRS 53: � 72-3-26. C.R.S. 1963: � 72-3-25. L. 92: (2), (5), and (7) amended, p. 1544, � 33, effective May 20. L. 2004: (2), (5), and (7) amended, p. 899, � 11, effective May 21. L. 2012: (2), (5), and (7) amended, (HB 12-1266), ch. 280, p. 1503, � 24, effective July 1.