Title 3. Kinds of Insurers — Subtitle 2. Reciprocal Insurers

A reciprocal insurer may be authorized to engage in the insurance business if the reciprocal insurer meets the requirements of this section and is otherwise in compliance with the applicable provisions of this article.

To write assessable policies, a reciprocal insurer must have surplus funds of not less than:

To write nonassessable policies, a reciprocal insurer must:

Twenty-five or more persons domiciled in the State may organize a domestic reciprocal insurer and may apply to the Commissioner for a certificate of authority to engage in the insurance business as a reciprocal insurer.

The proposed attorney in fact of the reciprocal insurer shall fulfill the requirements of and shall execute, verify under oath, and file with the Commissioner when applying for a certificate of authority, a declaration that includes:

When applying for a certificate of authority, the proposed attorney in fact shall pay to the Commissioner the applicable fee required by § 2-112 of this article.

The bond shall provide that the surety insurer may not cancel the bond unless the surety insurer gives written notice of cancellation to the attorney in fact and the Commissioner at least 30 days before canceling the bond.

A certificate of authority authorizes a reciprocal insurer to engage in one kind or a combination of kinds of insurance business, except for life insurance and health insurance other than as supplementary coverage in policies of liability insurance.

A certificate of authority authorizes a reciprocal insurer to purchase reinsurance and grant reinsurance as to any kind of insurance business in which the reciprocal insurer is authorized to engage.

shall have and use a business name that includes the word “reciprocal”, “interinsurer”, “interinsurance”, “exchange”, “underwriters”, or “underwriting”; and

may sue and be sued in its own name.

be made and filed by the attorney in fact of the reciprocal insurer; and

be supplemented by any additional information required by the Commissioner about the affairs and transactions of the attorney in fact as they relate to the reciprocal insurer.

The Commissioner shall determine the financial condition of a reciprocal insurer in accordance with this section.

The computation of reserves shall be based on premium deposits other than membership fees.

At any time, the Commissioner may require the attorney in fact of a reciprocal insurer to submit an affidavit that shows the amount of annual savings, not already credited to subscribers, that are due but not paid.

The attorney in fact of a reciprocal insurer may be an individual, firm, or corporation.

The attorney in fact of a foreign or alien reciprocal insurer that is authorized to engage in the insurance business in the State is not considered to be doing business in the State within the meaning of any law of the State that applies to foreign firms or corporations merely because the attorney in fact performs its duties as attorney in fact with respect to the reciprocal insurer's transactions in the State.

The attorney in fact of a reciprocal insurer has the rights and powers provided in the power of attorney given the attorney in fact by the subscribers.

The terms of a power of attorney or agreement collateral to the power of attorney must be reasonable and equitable.

The power of attorney must state:

The power of attorney may:

For a domestic reciprocal insurer, a power of attorney or agreement collateral to the power of attorney is not effective and may not be used until approved by the Commissioner.

An individual, partnership, or corporation of the State may make application, enter into agreement for, hold policies or contracts in or with, and be a subscriber of a domestic, foreign, or alien reciprocal insurer.

Governments, governmental units, states, political subdivisions of states, boards, associations, estates, trustees, and fiduciaries may exchange reciprocal insurance contracts with each other and with individuals, partnerships, and corporations to the same extent that individuals, partnerships, and corporations may exchange reciprocal insurance contracts.

An officer, representative, trustee, receiver, or legal representative of a subscriber shall be recognized as acting for or on behalf of the subscriber for the purpose of a reciprocal insurance contract and in that capacity is not personally liable on the reciprocal insurance contract.

The advisory committee of a domestic reciprocal insurer that exercises the subscribers' rights shall be chosen under rules that the subscribers adopt.

Not less than two-thirds of the advisory committee shall be subscribers other than the attorney in fact of the reciprocal insurer or a person employed by, representing, or having a financial interest in the attorney in fact.

The advisory committee shall:

Modification of the terms of the subscribers' agreement or power of attorney of a domestic reciprocal insurer shall be made jointly by the attorney in fact of the reciprocal insurer and the subscribers' advisory committee.

A modification described in subsection (a) of this section is not effective retroactively and does not apply to an insurance contract issued before the modification.

Each assessable policy issued by a reciprocal insurer shall contain a statement of the contingent liability.

Assessments periodically may be levied on the subscribers of a domestic reciprocal insurer liable for assessments, as allowed by the terms of the subscribers’ policies, by:

A subscriber may not have an offset against an assessment for which the subscriber is liable because of a claim for an unearned premium or loss payable.

Each subscriber of a domestic reciprocal insurer with contingent liability is liable for and shall pay the subscriber’s share of an assessment as calculated and limited in accordance with this subtitle if, while the subscriber’s policy is in force or within 3 years after its termination:

One policy or a subscriber to one policy may not be assessed or charged with a total contingent liability for obligations incurred by a domestic reciprocal insurer in 1 calendar year, in excess of the amount set forth in the power of attorney or subscribers’ agreement calculated solely on the premium earned on the policy during that year.

If a reciprocal insurer has a surplus of assets over all liabilities at least equal to the minimum capital stock and surplus required of a domestic stock insurer authorized to engage in like kinds of insurance business, on application of the attorney in fact of the reciprocal insurer and as approved by the subscribers' advisory committee, the Commissioner shall issue a certificate that authorizes the reciprocal insurer to:

Each reciprocal insurer shall establish a procedure for notifying each policyholder or subscriber about savings fixed and payable under the policyholder’s or subscriber's policy or contract.

This section does not apply to bank loans or to loans for which security is given.

The attorney in fact of a domestic reciprocal insurer or another person may advance to the reciprocal insurer on reasonable terms any money that the reciprocal insurer requires periodically in its operations.

A domestic reciprocal insurer may merge with another reciprocal insurer or be converted to a stock insurer or mutual insurer if:

The Commissioner may not approve a plan for merger or conversion unless:

If a domestic reciprocal insurer converts to a stock insurer or mutual insurer, the successor stock insurer or mutual insurer is subject to the same capital or surplus requirements and has the same rights as a like domestic insurer that transacts like kinds of insurance business.

If the assets of a reciprocal insurer at any time are insufficient to maintain the required surplus and to discharge its liabilities, other than a liability on account of money contributed by the attorney in fact or another person, the attorney in fact of a reciprocal insurer immediately shall:

A reciprocal insurer is considered insolvent and shall be proceeded against as authorized by this article if:

If liquidation of a reciprocal insurer is ordered, an assessment shall be levied on the subscribers in the amount, subject to the limits provided by this subtitle, that the Commissioner determines to be necessary to discharge all liabilities of the reciprocal insurer, excluding any money contributed by the attorney in fact or another person, but including the reasonable cost of the liquidation.