§ 1209 — Management and by-laws of mutual insurance corporations

§ 1209. Management and by-laws of mutual insurance corporations. (a)\nThe management of the business and affairs of a domestic mutual\ninsurance corporation shall be vested in a board of directors.\n (b) Such corporation shall have not less than seven directors. The\ndirectors, except as provided in section four thousand two hundred ten\nof this chapter, shall be elected at the annual meetings of the members,\nand all except four of the directors of such corporation, elected after\nthe organization of the corporation is completed and it has been\nlicensed to issue insurance policies, must be members of the corporation\nor officers of member corporations. At any time after the first annual\nmeeting, the directors may be divided into not exceeding three groups as\nnearly equal as possible, and thereafter the directors in one group only\nor their successors shall be elected annually as provided in the\nby-laws. The board of directors of such corporation shall hold regular\nmeetings at least four times in each calendar year. At least one of such\nmeetings shall be held within this state and the other meetings may be\nheld elsewhere.\n (c) The board of directors of such corporation shall elect such\nofficers as are provided for in the by-laws. At least one principal\nofficer shall be a director, but the number of officers and salaried\nemployees who are directors shall at all times be less than a quorum of\nthe board of directors, as prescribed in the charter or by-laws.\n (d) The by-laws of any such corporation organized after January first,\nnineteen hundred forty may be adopted at a directors' meeting held after\nreceipt from the superintendent of a certificate of incorporation and\nbefore the issuance of a license to do an insurance business. The\nby-laws, except as to corporations which elect their directors pursuant\nto the provisions of section four thousand two hundred ten of this\nchapter, may thereafter be made or amended only by a majority vote of\nall members present in person or by proxy at any annual meeting or other\nstated or special meeting called for such purpose, except that the board\nof directors of any mutual insurance corporation may amend its by-laws\nas to any provisions which do not impair the members' rights or enlarge\ntheir obligations under insurance policies. The by-laws of any domestic\nmutual insurance corporation which elects its directors pursuant to the\nprovisions of such section may be amended by the board of directors. No\nby-law or amendment or repeal of a by-law of any domestic mutual\ninsurance corporation shall be effective until approved by the\nsuperintendent. The superintendent may refuse such approval if he finds\nthat such by-law, amendment or repeal does not conform with the\nrequirements of law, or is not equitable to the corporation's\npolicyholders, or is inconsistent with its objects and purposes.\n (e) No domestic mutual insurance corporation, except a domestic mutual\ninsurance company organized before January first, nineteen hundred forty\nto do only marine protection and indemnity insurance, shall enter into\nany agreement under which any person, partnership or corporation agrees\nto pay all or a portion of the expenses of management of such insurance\ncorporation in consideration of an agreement to pay him either\ncommissions on premiums due the insurance corporation or any other\ncompensation for his services.\n (f) No domestic mutual insurance corporation, except a domestic mutual\ninsurance company organized before January first, nineteen hundred forty\nto do only marine protection and indemnity insurance, shall enter into\nany agreement with any of the officers or directors, or with any firm or\ncorporation in which any such officer or director is pecuniarily\ninterested directly or indirectly, whereby the insurance corporation\nagrees to pay, for the acquisition of business, any commission or other\ncompensation which under the agreement is increased or diminished by the\namount of such business or by the insurance corporation's earnings on\nsuch business. Notwithstanding the foregoing, and upon application by a\ndomestic mutual insurance corporation, the superintendent may permit the\ninsurance corporation to enter into such an agreement with a firm or\ncorporation that is a licensed insurance producer if the superintendent\ndetermines that: (1) the insurance corporation's policyholders will not\nbe adversely affected; (2) the officer or director has no pecuniary\ninterest directly in the insurance producer; and (3) any benefit to the\nofficer or director that accrues as a result of the agreement would not\nbe material in relation to the insurance corporation's overall premium\nvolume. Any such agreement approved by the superintendent shall be\nsubject to annual reviews and, where the superintendent determines such\nagreement no longer conforms to this subsection, the superintendent\nshall revoke his or her prior approval.\n