No new group, club, or class may be created and made a part
of any company or association unless the company or association applying for
such new group, club, or class first receives the approval of the State Board
of Insurance; nor shall a new group, club, or class be created unless the same
is authorized by the Insurance Code. All applications for the creation of a new
group, club, or class shall be made in writing to the State Board of Insurance,
only when first authorized by proper action taken by the board of directors of
the company or association making the application. Such application shall
contain at least the following:
(1) A
detailed plan for the creation of the proposed new group, club, or
class.
(2) A statement setting
forth the purposes for the creation of a new group, club, or class and the
advantages to result to any and all company or association members who may be
affected by the creation of the proposed new group, club, or class.
(3) If a new group, club, or class is to be
created and formed from the members, or from a part of the members, of an
existing group, club, or class, a full and complete statement and explanation
must be submitted to the State Board of Insurance to establish that any
proposed division of the mortuary fund or any proposed division of the expense
funds owned by the members of all groups, clubs and classes to be affected will
be made on a just, fair and equitable basis insofar as such proposed division
of funds will affect the rights and interests of all policyholders
concerned.
(4) If a new group,
club, or class is to be created, it must be established that the same will
inure to the best interests of each group, club, or class as may be affected,
and that it will not damage the association.
(5) Before the creation of a new group, club,
or class is approved, it must first be established:
(A) that the group, club, or class will be
able to pay its policy benefits in full within the period of time provided by
law;
(B) that the group, club, or
class will limit its policy benefits on any one policy to an amount not to
exceed $500 ($150 for burial associations) to be paid on any such policy issued
by it during the period of its organization; except that the group, club, or
class may provide for the payment of benefits up to $5,000 (not including
burial associations) if it establishes in advance that it has and will
continuously maintain adequate funds with which it can lawfully make full and
complete payment of all benefits that may become due and payable during the
period of organization;
(C) that
the group, club, or class will obtain at least 500 members within the period of
six months following the date of its organization, and will maintain at least
500 members at all times thereafter; and
(D) that adequate provision has been made to
make refunds of any and all funds collected from applicants for membership in
the event that at least 500 bona fide, premium-paying applicants for membership
in the proposed new group, club, or class are not received within the six-month
period organization.
(6)
It must be established that any group, club, or class to be created is
authorized by the bylaws of the company or association.
(7) It must be established that all policies
issued to a member of any such new group, club, or class are alike with respect
to the type of benefit or benefits afforded to every other member of the same
group, club, or class.
