§ 26.1-12-24 — Making premium reserve good - Assessments - Cancellation of policies - Reinsurance

Reinsurance.
When, by reason of depreciation or loss of its funds or otherwise, the cash assets of a
mutual insurance company, after providing for its other debts, are less than the required
premium reserve upon its policies, it shall make good the deficiency by assessment in the mode
provided in section 26.1-12-23. If the directors are of the opinion that the company is likely to
become insolvent, the board of directors, instead of the assessment, may make two
assessments, the first determining what each policyholder must equitably pay or receive in case

of withdrawal from the company and having the policy canceled and the second determining
what further sum each must pay in order to reinsure the unexpired term of the policy at the rate
at which the whole was insured at first. Each policyholder subject to assessment shall pay or
receive according to the first assessment, and the policy then must be canceled unless the
policyholder pays the further sum determined by the second assessment, in which case the
policy continues in force. In neither case, however, may a policyholder receive or have credited
more than the policyholder would have received on having the policy canceled by a vote of the
board of directors under the bylaws. If, within two months after the alternative assessments
have become collectible, the amount of the policies whose holders have settled for both
assessments is less than two hundred thousand dollars, the company shall stop issuing
policies. All policies the holders of which have not settled for both assessments are void, and
the company may continue only for the purpose of adjusting the deficiency or excess of
premiums among the members and settling outstanding claims. No assessment is valid against
a person who has not been notified thereof within two years after the expiration or cancellation
of the policy.