§ 27-1-7-21 — Mutual companies; statement of maximum premium in policy; limitation of liability for single risk; reinsurance requirements

(a) The maximum premium shall be
expressed in the policy of a mutual company and shall be solely a cash
premium without contingent premium but no such company other than
a life insurance company shall issue any policy providing limits of
liability for any one (1) risk under any one (1) line of insurance in an
amount exceeding five percent (5%) of its surplus, including contingent
reserves, if any, until and unless it either possesses a surplus, including
contingent reserves, if any, of at least four hundred thousand dollars
($400,000), or has reinsured in a reinsurer (or reinsurers) admitted to
do business in this state and authorized to make such kind or kinds of
reinsurance in this state all of such liability in excess of such amount
or such greater amount as the commissioner may authorize and such
reinsurance contract or contracts shall have been submitted to and
approved by the commissioner. Such reinsurance contract or contracts
shall be in such form as to enable the insured under such policy or the
holder of a judgment against the insured for which such company is
liable under such policy to maintain an action on such reinsurance
contract or contracts against such reinsured company jointly with the
reinsurer and, upon recovering judgment, to have recovery against such
reinsurer or reinsurers for payment to the extent to which it or they may
be liable under such reinsurance contract (or contracts) and in
discharge thereof. In no event shall the unreinsured liability assumed
under this section on any one (1) risk exceed the amount otherwise
authorized by this article to be written upon any one (1) risk.
(b) Any determination of permissible limits of liability and amount
of surplus pursuant to the provisions of subsection (a) shall be made as
of December 31 immediately preceding except that in the case of a
newly formed company such determination shall be made as of the date
it receives the certificate of the department authorizing it to commence
business.
(c) Any reinsurance contract submitted to and approved by the
commissioner in accordance with the requirements of this section shall
continue in full force and effect until notice of its termination or
amendment has been filed with the commissioner, and in the case of an
amendment has been approved by the commissioner.
(d) Subsection (a) shall apply only to companies organized under
this article after July 26, 1967, except that any company in existence on
July 26, 1967, under any of the insurance statutes of this state and to
which subsection (a) would otherwise apply may, by appropriate action
of its policyholders and board of directors, elect to comply with
subsection (a).
(e) This section shall not affect nor invalidate any policy of any
mutual insurance company in existence on July 26, 1967, issued
pursuant to Acts 1935, c.162, s.98. Any such policy issued on or after
July 26, 1967, by a mutual insurance company in existence on July 26,
1967, and the rights and obligations under the policy shall continue to
be subject to the provisions of Acts 1935, c.162, s.98 until such
company has exercised the right of election provided in this section and
has complied with the provisions of this section.
Formerly: Acts 1935, c.162, s.98; Acts 1967, c.233, s.1. As
amended by P.L.252-1985, SEC.31; P.L.136-2018, SEC.150.