HB 410: Insurance, Department of; efficiency in the practices; provide

House Bill 410 (AS PASSED HOUSE AND SENATE)

By: Representatives DeLoach of the 167th, Lumsden of the 12th, and Williamson of the 112th

A BILL TO BE ENTITLED

AN ACT

To amend Title 33 of the Official Code of Georgia Annotated, relating to insurance, so as to provide for efficiency in the practices of the Department of Insurance; to revise the statutory deposit requirement for foreign insurers; to remove fees for branch licensees; to revise application requirements for a domestic stock and mutual insurer; to remove the publication requirement for application, amendments, and surrenders for such insurer; to remove such publication requirement for charters, consolidations, and mergers of fraternal benefit societies; to revise application requirements for farmers' mutual fire insurance companies; to remove the licensure requirement for agency branches; to provide for biennial renewals for agency licenses to be based on the origination month of the agency; to require a license to state the legal name of the licensee; to provide for related matters; to provide for an effective date; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Title 33 of the Official Code of Georgia Annotated, relating to insurance, is amended in Chapter 3, relating to authorization and general requirements for transaction of insurance, by revising subsection (b) of Code Section 33-3-8, relating to requirements as to deposit of securities generally, as follows:

"(b)(1) Except as otherwise provided in this subsection, the amount of the deposit required under this Code section for a certificate to transact any one class of insurance shall be $100,000.00; to transact each additional class of insurance, the amount of deposit shall be $25,000.00, subject to the limitation that not more than $200,000.00 total deposit shall be required for any combination of classes.

(2) As to any foreign insurer, in lieu of such deposit or part of such deposit in this state, the Commissioner shall accept the current certificate in proper form of the public official having supervision over insurers in any other state to the effect that a like deposit or part of like deposit by such insurer is being maintained in public custody in such state in trust for the purpose, among other reasonable purposes, of protection of policyholders and creditors or of the protection of all the insurer's policyholders or of all of its policyholders and obligees.

(3) As to any alien insurer, other than a title insurer, which has entered through and the United States branch of which is licensed to transact insurance in another state, in lieu of such deposit or part thereof in this state, the Commissioner shall accept the certificate of the official having supervision over insurance of such other state in the United States, given under his or her hand and seal, that the insurer maintains within the United States by way of deposits with public depositories, or in trust institutions within the United States approved by such official, assets available for discharge of its United States insurance obligations, which assets shall be in an amount not less than the outstanding liabilities of the insurer arising out of its insurance transactions in the United States together with the larger of the following sums: the largest deposit required by this title to be made in this state by any type of domestic insurer transacting like kinds of insurance or $300,000.00.

(4) As to any alien insurer entering through this state to transact insurance in the United States through a United States branch, such insurer shall deposit in accordance with Chapter 12 of this title assets available for discharge of its United States insurance obligations, which assets shall be in an amount not less than the outstanding liabilities of the insurer arising out of its insurance transactions in the United States together with the larger of the following sums: the largest deposit required by this title to be made in this state by any type of domestic insurer transacting like kinds of insurance or $300,000.00."

SECTION 2.

Said title is further amended in Chapter 8, relating to fees and taxes, by repealing subparagraphs (B.1) and (B.2) of paragraph (1) of Code Section 33-8-1, relating to fees and charges generally.

SECTION 3.

Said title is further amended in Chapter 14, relating to domestic stock and mutual insurers, by revising Code Section 33-14-5, relating to filing of application for charter, fee, certification and publication of application, and approval or disapproval of charter, as follows:

"33-14-5.

(a) The application for charter with any and all exhibits that may be included with the application shall be filed in triplicate in the office of the Commissioner of Insurance and a fee of $100.00 shall be paid to the Commissioner to be paid by him or her into the state treasury. The Commissioner shall not receive the application until the fee shall be is paid.

(b) Reserved. Immediately upon receipt of the triplicate copies of the application, with any and all exhibits included with the application, the Commissioner shall certify one of the copies of the application and deliver the same to the applicants and the same shall be published by the applicants once a week for four weeks in the newspaper in which is published the legal advertisements of the county where the principal office of the company is to be located. When the application with any and all exhibits attached to it shall have been published once a week for four weeks, the applicants may apply to the judge of the probate court of the county to certify the fact of such publication, which certificate shall be filed by the applicants in the office of the Commissioner of Insurance.

(c) The Commissioner shall approve or disapprove the application within 45 days of the date the application is received by the Commissioner.

(d) The Commissioner shall examine the application to determine whether the charter, if granted, will enable the insurer to comply with the applicable insurance laws of this state; and, if the Commissioner finds that the charter, if granted, will enable the insurer to comply with the applicable provisions of law for carrying on the business for which incorporation is sought, the Commissioner shall issue under his or her hand and official seal a certificate approving the granting of the charter for such insurer and shall transmit a copy of the certificate of approval to the Secretary of State.

(e) If the Commissioner finds that the proposed application for a charter does not comply with the law, or that the corporation, if organized, could not meet the requirements for a certificate of authority as set forth in this chapter or any other provision of this title, the Commissioner shall refuse to approve the application for charter and shall notify the incorporators in writing, as to his or her reasons for such failure to approve; and the Commissioner shall issue under his or her hand and official seal a certificate disapproving the granting of the charter for such insurer."

SECTION 4.

Said title is further amended in said chapter by revising Code Section 33-14-6, relating to grant of corporate powers and privileges, issuance of certificate of incorporation, recordation of documents, and appointment of attorney for acceptance of service of process, as follows:

"33-14-6.

(a) All corporate powers and privileges to insurance companies shall be issued and granted by the Secretary of State upon the terms, liabilities, and restrictions of and subject to this title and the laws and Constitution of this state. If from any cause the Secretary of State should be is disqualified from issuing and granting said powers, the duties required by this title to be performed by the Secretary of State shall be performed by the Commissioner of Insurance.

(b) When the certificate of the judge of the probate court as to the fact of publication of the application for charter and the certificate of the Commissioner as to his or her approval of the application for charter shall have been is received in the office of the Secretary of State, the Secretary of State shall issue to the corporation under the seal of the state a certificate of incorporation. The corporation shall not transact business as an insurer until it has applied for and received from the Commissioner a certificate of authority as provided by this title.

(c) The Secretary of State shall record the application for charter, the certificate of approval of the Commissioner, the certificate of the judge of the probate court as to publication, and the certificate of incorporation.

(d) No corporation shall directly or indirectly take risks or transact any business of insurance in this state by any agent or agents in this state until it shall have has appointed an attorney in this state on whom process of law can be served and filed in the office of the Commissioner a written instrument duly signed and sealed certifying such appointment which shall continue until another attorney shall be is substituted. Any process issued by any court of record in this state and served upon the attorney by the proper officer of the county in which the attorney may reside or may be found shall be deemed a sufficient service of process upon the company, but service of process upon the company may also be made in any other manner provided by law. Any violation of this subsection shall subject the party violating this subsection to a penalty of not less than $100.00 nor more than $500.00."

SECTION 5.

Said title is further amended in said chapter by revising Code Section 33-14-8, relating to procedures for amendment or renewal of charter, as follows:

"33-14-8.

(a) A domestic insurer may amend its charter for any lawful purpose by written authorization by the holders of a majority of the voting power of its outstanding capital stock, by members if a mutual insurer, or by affirmative vote of such a majority voting at a lawful meeting of stockholders or members of which the notice given to stockholders or members included prior notice of not less than ten days of the proposal to amend.

(b) Upon authorization of such an amendment, the insurer shall file in the office of the Commissioner of Insurance an application asking that its charter be so amended and a fee of $50.00 shall be paid to the Commissioner to be transmitted by him or her into the state treasury; and the Commissioner shall not receive said application until said fee shall be is paid. The application with any and all exhibits that may be included shall be filed in triplicate, and signed with the corporate name and under the corporate seal, and shall state:

(1) The name and character of the corporation, and the city or town, and county in this state in which is located its principal place of business;

(2) The date of its original charter and any and all amendments to the charter, and the date or dates of renewal of the charter; and

(3)(A) That it desires an amendment to its charter and the purpose of said amendment;.

(B) There shall be annexed to the application a certificate in triplicate under the corporate seal of the insurer and executed by the insurer's president or vice-president vice president and attested to by the secretary or assistant secretary under the seal of the corporation, setting forth that the amendment has been authorized in writing by the holders of a majority of the voting power of the outstanding capital stock, by members if a mutual insurer, or by affirmative vote of such a majority voting at a lawful meeting of stockholders or members of which the notice given to stockholders or members included prior notice of not less than ten days of the proposal to amend.

(c) Immediately upon receipt of the triplicate copies of the application, with any and all exhibits included with the application, the Commissioner shall certify one of the copies of the application and deliver the same to the applicants and the same shall be published by the applicants once a week for four weeks in the newspaper in which is published the legal advertisements of the county where the principal office of said company is to be located. When the application, with any and all exhibits attached to it, shall have been published once a week for four weeks, the applicants may apply to the judge of the probate court of the county to certify the fact of such publication, which certificate shall be filed by the applicants in the office of the Commissioner. The Commissioner shall approve or disapprove the application within 45 days of the date the application is received by him or her.

(d) No amendment shall be granted which will reduce authorized capital of a stock insurer below the amount required by this title for the kinds of insurance thereafter to be transacted; and no amendment shall reduce the surplus of a mutual insurer below the amount required by this title for the kinds of insurance thereafter to be transacted.

(e) If an amendment of the charter would reduce the authorized capital stock of a stock insurer below the amount then outstanding, the Commissioner shall not approve the amendment if he or she has reason to believe that the interest of policyholders or creditors of the insurer would be materially prejudiced by such reduction. If any reduction of capital stock is effectuated, the insurer may require return of the original certificates of stock held by each stockholder in exchange for new certificates for such number of shares as the stockholder is then entitled in the proportion that the reduced capital bears to the amount of capital stock outstanding as of immediately prior to the effective date of the reduction.

(f) When the certificate of the judge of the probate court as to the fact of publication of the application for amendment to the charter and the certificate of the Commissioner as to his or her approval of the application for amendment shall have been is received in the office of the Secretary of State, the Secretary of State shall issue to the corporation under the great seal of the state a certificate of amendment. The Secretary of State shall record the application for amendment to the charter, the certificate of approval of the Commissioner, the certificate of the judge of the probate court as to publication, and the certificate of amendment in a book to be kept by him or her for that purpose.

(g) A petition for renewal of the charter shall follow the procedure set forth in subsections (b) through (f) of this Code section, except that the fee for filing a petition for renewal of the charter shall be $100.00."

SECTION 6.

Said title is further amended in said chapter by revising subsection (b) of Code Section 33-14-24, relating to procedure for voluntary dissolution generally, effective date of dissolution, and conditions precedent to effectuation of dissolution, as follows: "(b) If, at the special meeting or any adjournment thereof, the holders of record of stock entitled to exercise two-thirds of all the voting power on such proposal or if a mutual insurer, two-thirds of the insurer's members present or represented by proxy at the meeting shall by resolution consent that the dissolution shall take place, a copy of the resolution together with a list of the names and residences of the directors and officers certified by the president or a vice-president vice president and the secretary or an assistant secretary or the treasurer or an assistant treasurer of the insurer shall be filed in triplicate with the application to surrender the charter required in Code Section 33-14-25 and one a copy shall be filed for record in the office of the clerk of the superior court of the county in which the office or principal place of business of the insurer is located in this state."

SECTION 7.

Said title is further amended in said chapter by revising Code Section 33-14-25, relating to procedure for surrender of charter, as follows:

"33-14-25.

(a) Any insurance corporation chartered by the Secretary of State may surrender its charter upon the company filing in the office of the Commissioner of Insurance an application in triplicate, signed with its corporate name and under its corporate seal, stating:

(1) The name of the company and the location of its principal place of business in this state;

(2) The date of its charter and all amendments thereto and the date or dates of renewal or renewals of its charter;

(3) That it desires to surrender its charter and franchise to the state;

(4) A certificate attested to by two officers of the company that the procedure required by Code Section 33-14-24 has been carried out; and

(5) Any other information deemed necessary by the Commissioner of Insurance.

(b) Upon receipt thereof, the Commissioner shall take such action to investigate the proposed surrender to determine if the rights of policyholders, creditors, stockholders or members, and third party claimants under liability policies of the insurer have been paid or properly provided for in a fair and equitable manner. The Commissioner shall after making his or her determination issue under his or her hand and official seal a certificate approving or disapproving the application for surrender of the charter and shall transmit a copy of such certificate of approval to the Secretary of State. If the Commissioner does not approve the application, the Commissioner shall notify the insurer in writing of his or her reasons for not approving the application for surrender of the charter.

(c) The fee and publication other requirements set out in subsections (a) through (c) of Code Section 33-14-5 shall be applicable to a surrender of charter under this Code section.

(d) Upon receipt of the certificate of the judge of the probate court as to the publication of the application and the certificate of approval of the surrender from the Commissioner, the Secretary of State shall issue under the seal of the state a certificate dissolving the insurer; and the Secretary of State shall record the application, the certificate of the judge of the probate court, the certificate of approval of the Commissioner, and the certificate dissolving the insurer."

SECTION 8.

Said title is further amended in Chapter 15, relating to fraternal benefit societies, by revising subsection (b) of Code Section 33-15-40, relating to formation of society, petition for charter, preliminary certificate of authority, advance premiums, and certificate of authority, as follows:

"(b) The petition for a charter, duly certified copies of the society's bylaws and rules, copies of all proposed forms of certificates, applications therefor, circulars to be issued by the society, and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year shall be filed with the Secretary of State, who may require such further information which is deemed necessary. The bond with sureties approved by the Commissioner shall be in such amount, not less than $300,000.00 nor more than $1.5 million, as required by the Commissioner. All documents filed are to shall be in the English language. The Secretary of State shall transmit immediately one copy of the petition to the Commissioner and shall return one copy to the petitioner. The petition for a charter, with any and all exhibits attached thereto, shall be published in the manner provided in subsection (b) of Code Section 33-14-5. If the purposes of the society conform to the requirements of this chapter and all provisions of the law have been complied with, the Commissioner shall so certify in writing to the Secretary of State and shall furnish the incorporators a preliminary certificate of authority authorizing the society to solicit members as hereinafter provided, but only after the granting of the certificate of incorporation by the Secretary of State."

SECTION 9.

Said title is further amended in said chapter by revising subsection (a) of Code Section 33-15-41, relating to amendment of laws, referendum, and approval of Commissioner, as follows:

"(a) A domestic society may amend its laws in accordance with the provisions thereof by action of its supreme governing body at any regular or special meeting thereof or, if its laws so provide, by referendum. Such referendum may be held in accordance with the provisions of its laws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members, or by the vote of local lodges. A society may provide for voting by mail. No amendment submitted for adoption by referendum shall be adopted unless, within six months from the date of submission thereof, a majority of the members voting shall have signified their consent to such amendment by one of the methods specified in this Code section. Charter amendments shall be filed in triplicate with the Commissioner, published, and approved only under the procedure established in Code Section 33-14-8."

SECTION 10.

Said title is further amended in said chapter by revising subsections (a) and (e) of Code Section 33-15-44, relating to consolidations or mergers, as follows: "(a) A domestic society may consolidate or merge with any other society by complying with the provisions of this Code section. The filing of application, fee, and publication other requirements of subsections (a) through (c) of Code Section 33-14-5 shall be applicable to a consolidation or merger under this chapter." "(e) Upon receipt of the certificate as to the publication of the application and the certificate of approval of the Commissioner, the Secretary of State shall issue, under the great seal of the state, a certificate of merger, which certificate shall be the charter of the consolidated or merged society. The Secretary of State shall record the application, the contract of merger and the other documents required to be filed, the certificate of the judge of the probate court, the certificate of the Commissioner, and the certificate of merger in a book to be kept by him for that purpose."

SECTION 11.

Said title is further amended in Chapter 16, relating to farmer's mutual fire insurance companies, by revising subsection (a) of Code Section 33-16-3, relating to procedure for incorporation of companies generally, filing and contents of application for charter, and granting of charter by Secretary of State, as follows:

"(a) Twenty or more persons a majority of whom are citizens of this state may become a body corporate for the purpose of transacting insurance upon the farmers' mutual fire insurance plan as defined in Code Section 33-16-2 by making an application for a charter signed by the persons applying for the charter or their counsel in triplicate specifying:

(1) The name of the proposed corporation. The name shall contain the words 'Farmers' Mutual' and shall not be so similar to any name already used by any other corporation authorized to transact business in this state as to be confusing or misleading;

(2) The purpose for which the corporation is formed;

(3) The name of the county in this state in which the corporation will have its principal office and the names of any other counties in which it proposes to operate;

(4) The name and address of each incorporator;

(5) The names and addresses of those composing the board of directors of the corporation in which the management shall be vested until the first meeting of the members; and

(6) Any other provisions not inconsistent with this chapter or other applicable laws as are deemed desirable by the incorporators or as may be required by the Commissioner."

SECTION 12.

Said title is further amended in Chapter 23, relating to licensing, by revising subsection (a) of Code Section 33-23-3, relating to agency licensing and biennial renewals and ownership restrictions, as follows:

"(a) Each principal office and each branch office of an agency as defined in paragraph (2) of subsection (a) of Code Section 33-23-1 must of an agency shall obtain an agency license prior to commencement of operations and renew such license biennially and prior to December 31 prior to the last day of the origination month of such agency by filing application forms prescribed by the Commissioner."

SECTION 13.

Said title is further amended in said chapter by revising subsection (b) of Code Section 33-23-11, relating to issuance and contents of license and display certificate of licensure, as follows:

"(b) The license shall state the legal name and address of the licensee, the date of issue, the general conditions relative to expiration or termination, the kind or kinds of insurance covered if not an insurance agency license, and the other conditions of licensing."

SECTION 14.

This Act shall become effective upon its approval by the Governor or upon its becoming law without such approval.

SECTION 15.

All laws and parts of laws in conflict with this Act are repealed.