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| Home > Statutes > USA Massachusetts |
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USA Statutes : massachusetts
Title : PART I. ADMINISTRATION OF THE GOVERNMENT
Chapter : TITLE XXII. CORPORATIONS
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Chapter 175: Section 113C. Companies authorized to issue policies; notice to registrar; mandatory offer of additional coverage; limits Section 113C. The commissioner shall forthwith notify the registrar of motor vehicles of the names of all companies as they become or cease to be authorized to issue motor vehicle liability policies or to act as surety upon motor vehicle liability bonds, both as defined in section thirty-four A of chapter ninety.
Except for coverages which insurers may refuse to offer under the provisions of paragraph (A) of section one hundred and thirteen H, no company shall issue such motor vehicle liability policies or act as surety upon such motor vehicle liability bonds unless it makes a mandatory offer to issue to any person purchasing such policy or bond, at his option, additional coverage, beyond that required by section thirty-four A of chapter ninety, of at least fifteen thousand dollars on account of injury to or death of one person and at least forty thousand dollars on account of any one accident resulting in injury to or death of more than one person, and of the combination of bodily injury liability off the ways of the commonwealth and liability for guest occupants on and off the ways of the commonwealth, of medical coverage, so-called, to a limit of at least five thousand dollars, or fire and theft coverage and comprehensive coverage as limited by section one hundred and thirteen O, and of uninsured motor vehicle coverage, additional coverage beyond that required by section one hundred and thirteen L of at least fifteen thousand dollars on account of injury to or death of one person and forty thousand dollars on account of any one accident resulting in injury to or death of more than one person, provided that such additional amount of uninsured motor vehicle coverage chosen shall not exceed the amount of additional bodily injury coverage chosen under this section.
Chapter 175: Section 113D. Policies; cancellation; proceedings; review Section 113D. Any person aggrieved by the issue by any company, or an agent thereof on its behalf, of a written notice purporting to cancel a motor vehicle liability policy or bond, both as defined in section thirty-four A of chapter ninety, except a notice of cancellation for non-payment of premium on such policy or bond insuring a motor vehicle registered as a taxicab or for public livery use, or by the refusal of any company, or an agent thereof on its behalf, to issue such a policy or to execute such a bond as surety, may, at any time prior to the intended effective date of cancellation expressed in such notice, or within ten days after such a refusal, file a written complaint with the commissioner, unless he has secured a certificate, as defined in said section thirty-four A, from another company. The complaint shall be in such form and contain such information, including the address of the complainant, as the commissioner may prescribe. The complaint, if it relates to the issue of a notice of cancellation, shall specify the registration number of the motor vehicle or trailer covered by the policy or bond and the said intended effective date of cancellation or, if it relates to a refusal as aforesaid, the date thereof. The board of appeal on motor vehicle liability policies and bonds, hereinafter called the board, may allow such complaint to be amended.
The commissioner shall cause the other members of the board to be notified of the complaint and written notice to be given to the parties of the time and place of the hearing thereon, which time shall be not less than five days from the filing of the complaint, unless the parties agree in writing that the hearing may be held sooner.
If the complaint relates to the cancellation of such a policy or bond, the filing of the complaint shall operate to continue the policy or bond in full force and effect, but not beyond its date of expiration in any case, pending the finding and order of the board, and pending the decree of the superior court or a justice thereof if an appeal from such finding and order is taken as hereinafter provided; and the commissioner shall cause a copy of such complaint, attested in such manner as he may prescribe, forthwith to be sent to the company.
A complaint may allege that a cancellation is invalid, or improper and unreasonable, or both, or that a refusal to issue or execute such a policy or bond is improper and unreasonable. The board shall after due hearing forthwith make a finding in respect to the issue or issues raised by the complaint, and it may also, in any case, make a finding as to whether or not the complainant is a proper and suitable person to whom to issue such a policy or on behalf of whom to execute such a bond as surety. The board shall in all cases enter, in such form as it may prescribe, an appropriate order. If the board finds in favor of the company in the case of such a cancellation, the order shall, unless the policy or bond has expired, affirm the cancellation and specify the date, which shall be ten days from the date of the filing of a memorandum of the finding and order in the office of the commissioner as hereinafter provided, on which the cancellation shall be effective; or if the complaint is withdrawn on or subsequent to the cancellation date shown in the insurance company cancellation notice, the order shall dismiss the said complaint and specify the effective date of cancellation, which shall be ten days from the date of the filing of the memorandum of the finding and order in the office of the commissioner of insurance; but, if the policy or bond will expire on or before the termination of a period of ten days from said date of filing, the order shall specify a date prior to such expiration, or the board may dispense with such a specification.
The commissioner, as soon as may be after the rendition thereof, shall cause a written memorandum of all findings and the orders entered thereon signed by the assenting members of the board to be filed in his office as a public record, and he shall on the date of said filing cause a copy of the finding and order, duly attested by the board or a member of the secretary thereof, with the date of said filing endorsed thereon, to be sent to each of the parties.
Any person or company aggrieved by any finding or order of the board, other than a finding that the complainant is or is not a suitable and proper person to whom to issue such a policy or on behalf of whom to execute such a bond as surety, may, within ten days after the filing of the memorandum thereof in the office of the commissioner, unless the policy or bond has expired or will expire prior to the expiration of said period, and any person or company aggrieved by any finding of the board that a complainant is or is not a suitable and proper person as aforesaid may, in any case, within said period, appeal therefrom to the superior court or any justice thereof, in any county in case of an appeal by any complainant, and in the county in which the complainant resides in case of an appeal by the company. The appellant shall file with his appeal a duly certified copy of the complaint and of the finding and order thereon, and, if the appeal is taken from a finding and order of the board in respect to a cancellation, the clerk of the court shall forthwith upon the filing of such an appeal, give written notice of the filing thereof to the appellee. The court or justice shall, after such notice to the parties as it or he deems reasonable, give a summary hearing on such appeal and shall have jurisdiction in equity to review all questions of fact and law, and to affirm or reverse such finding or order and may make any appropriate decree. The court or justice may allow such complaint, finding or order to be amended. The decision of the court or justice shall be final. If the court or justice finds in favor of the company in the case of such a cancellation, the decree shall, unless the policy or bond has expired, affirm the cancellation and specify a date not earlier than five days from the entry thereof, on which the cancellation shall become effective; but, if the policy or bond will expire on or before the termination of a period of five days from such entry, the decree shall specify a date prior to such expiration, or the court or justice may dispense with such a specification. The clerk shall, within two days after the entry thereof, send an attested copy of the decree to each of the parties and the commissioner. The court or justice may make such order as to costs as it or he deems equitable. The superior court may make reasonable rules to secure prompt hearings on such appeals and a speedy disposition thereof.
The attested copy of a complaint, a finding and order of the board or a decree of the superior court, or a justice thereof, may be sent to the complainant, to the company and to said registrar by registered mail, postage prepaid, and any notice required by this section may be sent by mail, postage prepaid, addressed, in the case of the complainant, to his address specified in the complaint and, in the case of the company, to its last home office address appearing on the records of the commissioner, or, in the case of a company of a foreign country, to its resident manager in the United States, at the last address appearing on said records, or to such other person as may previously have been designated by the company by a written notice filed in the office of the commissioner.
If a company, within ten days after receipt of an attested copy of a finding and order of the board in favor of the complainant in case of a refusal to issue such a policy or to execute such a bond as surety, if no appeal therefrom has been taken as hereinbefore provided, or, if such an appeal has been taken, within five days after the entry of a decree of the superior court, or a justice thereof, affirming such a finding and order, fails to comply with said order or decree, or, if a company after receipt of an attested copy of a finding and order of the board in favor of the complainant in case of a cancellation of such a policy or bond, if no appeal therefrom has been taken as hereinbefore provided, or, if such an appeal has been taken, after the entry of a decree of the superior court, or a justice thereof, affirming such a finding and order, refuses to abide by such order or decree, the commissioner, after such inquiry as he may deem expedient, shall, in the case of a foreign company, revoke or suspend the license issued to it under section one hundred and fifty-one and the licenses issued to all of its agents under section one hundred and sixty-three, as provided in and subject to all the provisions of section five, until it shall comply with such order or decree and, in case of a domestic company, he shall apply to the supreme judicial court for an injunction, and such court shall have jurisdiction to restrain such company from the further transaction of its business until it shall comply with such order or decree.
Any person aggrieved by the cancellation of such a policy or bond may file a written complaint with the commissioner within ten days thereafter, unless he has secured a certificate, as defined in section thirty-four A of chapter ninety, from another company. Such complaint, and all proceedings, findings and orders thereon, appeals therefrom and decrees on such appeals shall, except as hereinafter provided, be subject to all the foregoing provisions of this section which are applicable in case a person is aggrieved by the issue of a notice of cancellation. The filing of such a complaint shall not affect the operation of the cancellation. The commissioner shall not transmit an attested copy of such a complaint to the registrar of motor vehicles. If the board finds in favor of the complainant on such a complaint, the order shall, unless the policy or bond will sooner expire, effect the reinstatement of the policy or bond on a date to be specified in such order which shall not be earlier than the date on which the written memorandum of the finding and order is filed in the office of the commissioner, and the policy or bond shall again be in full force and effect from the date so specified, but not beyond its date of expiration in any case, pending the decree of the superior court or a justice thereof if the company takes an appeal from such a finding and order. Such a decree reversing a finding and order of the board in favor of the company on such a complaint shall order that the policy or bond be reinstated, and such a decree reversing a finding and order in favor of the complainant shall order that the policy or bond be cancelled; and such a decree of reinstatement or cancellation shall, unless the policy or bond has expired or will sooner expire, specify a date not earlier than five days from the entry thereof, upon which the reinstatement or cancellation shall be effective.
The municipal court of the city of Boston, and the justices thereof, shall have original jurisdiction, concurrently with the superior court, and the justices thereof, of all proceedings under this section relating to appeals from decisions of the board of appeal on motor vehicle liability policies and bonds, and for such purpose the municipal court of the city of Boston shall have the same power and authority as the superior court; provided, however, that in case of any appeal by the insurance company from the finding or order of the board to the municipal court of the city of Boston, said appeal may, if the complainant does not reside in Suffolk county, upon motion of the complainant, be transferred to and heard by the superior court in the county in which the complainant resides.
Chapter 175: Section 113E. Deposit premiums Section 113E. Nothing in this chapter shall be construed to prohibit an insurance company, its agent or any broker, from requiring a deposit premium before issuance of a policy or execution of a bond, providing the per vehicle deposit does not exceed thirty per cent of the annual premium or the full short term premium for the insurance requested, whichever is less, unless the applicant has been in default in the payment of any premium for automobile insurance during the preceding twenty-four months.
Chapter 175: Section 113F. Policies or bonds; renewals Section 113F. Any company which does not intend to issue, extend or renew a motor vehicle liability policy or to execute or act as surety on a motor vehicle liability bond, both as defined in section thirty-four A of chapter ninety, in favor of the insured or the principal named in an existing policy or bond issued or executed by it shall, if said policy or bond is in full force and effect forty-five days prior to the termination date of the policy, give written notice of its said intent on or before the aforesaid forty-fifth day as hereinafter provided. Such notice shall, except as hereinafter provided, be sent to the registrar of motor vehicles, and it shall be irrefutably presumed to be the notice of cancellation, and such notice shall also be sent either to said insured or principal or to the insurance agent of the company or insurance broker who negotiated the issue of the policy or the execution of the bond. If the certificate, as defined in said section thirty-four A, in respect to such policy or bond was executed by or on behalf of an insurance agent of the company, such notice shall be sent to said insurance agent. If when said notice is to be sent any such insurance agent is not then so licensed, the company shall send such notice to said insured or principal. Such notice shall be in a standard form prescribed by the commissioner and shall include the following statement: “This notice shall not be deemed a refusal under section one hundred and thirteen D of chapter one hundred and seventy-five of the General Laws of the commonwealth of Massachusetts to issue a motor vehicle liability policy or to execute a motor vehicle liability bond as surety.
”Every such insurance agent or broker receiving such a notice from a company shall, within fifteen days of its receipt, send a copy of such notice to the insured or the principal, unless another company has executed a certificate, as defined in said section thirty-four A, evidencing the issue or the execution of a policy or bond covering the motor vehicle or vehicles specified in the existing policy or bond.
If the commissioner is satisfied that an insurance agent or broker has failed to send a copy of the notice as hereinbefore provided he may revoke any license issued to such agent or broker under section one hundred and sixty-three and section one hundred and sixty-six.
The insured or principal shall be advised in any such notice that, in accordance with the provisions of the plan established by section one hundred and thirteen H, he shall be eligible for nonrenewed coverages if he is unable to obtain such coverages by the method which insurance is voluntarily made available. Any company failing to send notice as hereinbefore provided, or which sends such notice and subsequently renews such policy or bond, shall, upon request of such insured or principal, issue a new policy or execute a new bond as surety to at least the amount of coverages provided by the expiring policy covering said insured or principal and the same or replacement motor vehicle or vehicles and shall recognize the agent or broker designated by the insured in the same manner as provided by any contract, custom, or usage then in effect between such agent or broker and such company.
Nothing in this section shall be construed to affect any of the provisions of said section one hundred and thirteen D.
Chapter 175: Section 113G. Officers, directors and employees; financial interest in companies or agencies; restrictions Section 113G. No officer, director or employee of a domestic company formed under section forty-eight A after November first, nineteen hundred and thirty-nine which obtains a certificate under section thirty-two and commences to issue motor vehicle liability policies, as defined in section thirty-four A of chapter ninety, or to execute motor vehicle liability bonds, as defined in said section thirty-four A, shall be or act as insurance agent of such company, or be an officer, director, stockholder or employee of, or be directly or indirectly financially interested in, or directly or indirectly receive any financial benefit from, any insurance agency of such company or any concern, except a bank or trust company under the supervision of the commissioner of banks or a national banking association, whose business includes the financing of payment of premiums on such policies or bonds issued or executed by such company; provided, that nothing herein shall prohibit an insurance agent of any such company from financing the payment of premiums on any such policy or bond issued or executed by such company, or prevent any such company from carrying on the business authorized by section one hundred and ninety-three B or prohibit any officer, director or employee of such company from participating in the carrying on of such business by such company in accordance with said section.
Chapter 175: Section 113H. Assigned risk plans Section 113H. (A) Insurance companies undertaking to issue motor vehicle liability policies or bonds, both as defined in section thirty-four A of chapter ninety, shall cooperate in the preparation and submission of a plan which shall provide motor vehicle insurance to applicants who have been unable to obtain insurance through the method by which insurance is voluntarily made available; except that the plan shall provide that no insurance company shall be required to issue such policy or execute such bond if:(1) The applicant or any person who usually drives the motor vehicle has failed to pay an insurance company any motor vehicle insurance premiums due or contracted during the preceding twelve months; or(2) Any person who usually drives the motor vehicle does not hold or is not eligible to obtain an operator’s license.
Such a plan shall provide for the fair and equitable apportionment among such insurance companies of premiums, losses or expenses, or any combination thereof.
Such a plan shall provide that at least the following coverages be made available at the option of the applicant:(1) bodily injury liability and property damage liability coverage in at least the minimum amounts required by law;(2) personal injury protection;(3) medical payments coverage, to a limit of at least five thousand dollars;(4) increased limits of bodily injury liability coverage in an amount to bring the total bodily injury liability coverage available for any one accident to two hundred and fifty thousand dollars per person and five hundred thousand dollars per accident;(5) increased property damage liability limits in an amount to bring the total property damage liability coverage available for any one accident to fifty thousand dollars;(6) uninsured motorist limits in an amount up to the bodily injury liability limits of the policy;(7) physical damage insurance, which shall mean: (a) collision coverage or limited collision coverage, (b) fire and theft coverage, or (c) comprehensive coverage, so-called, as those coverages are defined in sections thirty-four A and thirty-four O of chapter ninety and section one hundred and thirteen O. The plan shall permit the refusal of collision, fire, theft or comprehensive coverage or the charging of rates at the discretion of the insurer, under the following circumstances:(i) comprehensive, fire and theft or collision coverage on a vehicle customarily driven by or owned by persons convicted within the most recent five year period of any category of vehicular homicide, auto insurance related fraud, or motor vehicle theft;(ii) comprehensive, fire and theft or collision coverage on a vehicle customarily driven by or owned by persons who have, within the most recent five year period, made an intentional and material misrepresentation in making claim under such coverages;(iii) collision coverage on a vehicle customarily driven by or owned by persons who have been involved in four or more accidents in which such person has been deemed to be at fault in excess of fifty per cent within the three years immediately preceding the effective date of the policy,(iv) comprehensive or fire and theft coverages on a vehicle customarily driven by or owned by persons who have had two or more total theft or fire claims after January first, nineteen hundred and eighty-four and within the three years immediately preceding the effective date of the policy;(v) comprehensive, fire and theft or collision coverage on a vehicle customarily driven, or owned by persons convicted one time within the most recent three year period of any category of driving while under the influence of alcohol or drugs;(vi) comprehensive, fire and theft or collision coverage on any motor vehicle for which a salvage title has been issued by the registrar of motor vehicles unless a new certificate of title has been issued pursuant to section twenty D of chapter ninety D; or(vii) comprehensive, fire and theft or collision coverage on a high-theft vehicle which does not have at least a minimum anti-theft or auto recovery device as prescribed by the commissioner of insurance. The commissioner may designate as a “high-theft vehicle” any vehicle, classified according to make, model and year of manufacture, which has both above-average incidence of theft and above-average original sales price, and may prescribe appropriate anti-theft or auto recovery devices for such vehicles.
(B) Such a plan shall be prepared and administered by a governing committee appointed by the commissioner for terms of six years, consisting of six members from insurance companies participating in the plan and one additional representative from a domestic insurer in the commonwealth whose annual motor vehicle policy premiums amount to twenty million dollars or less and unaffiliated with any other insurance company and six members from associations of insurance producers. Effective as of July first, nineteen hundred and eighty-two, the governing committee shall consist of three members from insurance companies participating in the plan and two members from associations of insurance producers appointed for terms of six years, two members from insurance companies participating in the plan, two members from associations of insurance producers appointed for terms of four years, two members from insurance companies participating in the plan and two members from the associations of insurance producers appointed for terms of two years. The provisions of this section shall not be construed so as to alter or amend the terms of the present governing members. As of July first, nineteen hundred and eighty-four, one of the producer representatives shall be a producer who writes private passenger automobile insurance exclusively through a servicing carrier assigned pursuant to the provisions of the plan approved under this section. The governing committee shall be responsible for the hiring of the employees of the plan.
In the event that a company represented on the committee decreases its book of automobile business in the commonwealth by more than ten per cent from the previous calendar year, as determined by the commissioner, the member representing such company shall cease to be a member of the committee and a new company and a member thereof shall be appointed as prescribed herein. Not more than one insurer in a group under the same management shall serve on the committee at the same time.
(C) The plan shall provide that every licensed agent or broker shall be assigned to at least one servicing carrier; except that the governing committee shall not be required to make any such assignment if subject, to reasonable standards adopted by the governing committee:(i) the agent or broker has been convicted of a dishonest act related to his occupation as an insurance agent or broker;(ii) the broker’s license to engage as an insurance broker has been revoked;(iii) there has been a material and substantial breach of a contract between a servicing carrier and a producer by a broker or agent; or(iv) the broker or agent has an uncured default in remittance of any premiums due the servicing carrier.
The plan shall require the appointment and participation at all times of no fewer than twenty servicing carriers and the plan shall establish reasonable eligibility requirements for appointment as a servicing carrier, including but not limited to, the maintenance of a specific investigative unit to investigate suspicious or questionable motor vehicle insurance claims for the purpose of eliminating fraud. Not more than one insurer in a group under the same management shall serve as a servicing carrier at the same time. There shall be provided within the plan a specific investigative unit to monitor the effectiveness of servicing carrier fraud control efforts. No domestic insurance company shall be denied participation as a servicing carrier based solely upon its share of the Massachusetts motor vehicle insurance market.
The governing committee shall on or before March thirty-first, nineteen hundred and eighty-nine and thereafter not later than two years after such standards were most recently approved, prepare performance standards for the handling and payment of claims by the servicing carriers. Such standards shall be designed to ensure the speedy settlement of valid claims at the lowest reasonable cost and the denial of fraudulent or otherwise invalid claims. Such performance standards shall be submitted to the commissioner of insurance who, after a public hearing, shall approve or modify such performance standards. The plan shall collect and maintain data on compliance with the performance standards by servicing carriers. Such information shall be reported annually to the commissioner of insurance and may be the basis for adjustments to premiums.
No insurer acting as servicing carrier of the plan, or their employees or agents, no member company, employee or agent, or any employee of the plan or any official or officer of any law enforcement agency, shall be subject to civil or criminal liability in a cause of action of any kind for furnishing any evidence or information to any specific investigative unit created pursuant to this section, its employees or any law enforcement agency or any other insurer relating to an investigation conducted involving losses under liability or physical damage coverages for motor vehicles.
In order to insure an orderly transition from the existing plan, the plan shall provide for assignment of licensed agents and brokers, as far as is practicable, to a servicing carrier through whom such agent or broker is currently writing a substantial portion of his private passenger automobile insurance business and such carrier shall service such agent or broker under substantially the same contractual terms and conditions governing their normal agency relationship and may not endorse or declare that the policy is underwritten by the plan.
Changes of assignment of servicing carriers, for reasonable business purposes, may be make upon application to and approval by the governing committee, provided there is not significant disruption of the marketplace and no unfair or inequitable apportionment of premiums, losses or expenses.
The plan shall include guidelines for installment payment plans to be provided by servicing carriers.
To control the size of the population of the plan, the plan shall annually provide for territorial and classification credits for those companies voluntarily writing private passenger automobile insurance within those territories and classifications that would otherwise be disproportionately represented in the plan. The size of the credits shall be such as to enhance the prospects that no classification or territory is disproportionately represented in the plan.
(D) The plan shall provide for the payment of a commission to independent insurance agents or brokers on business insured through the plan which shall be stated in the filing of rates as a percentage equal to the average percentage commission paid for risks not insured through the plan to agents by companies which do business through independent insurance agents pursuant to the so-called American Agency System.
The plan shall provide that the allocation of premiums, losses and expenses among companies for all policies issued during the first year of operation of the plan shall be based on the total number of risks written by each company during the calendar year nineteen hundred and eighty-two, excluding risks written through designated producers. Adjustment and consideration may be given to those companies that, due to percentage of business ceded during the base year, fall at either extreme as a result of this method of allocating premiums, losses and expenses under this plan. For policy years thereafter, the allocation shall be based on a method so that no company materially or substantially reduces its percentage of participation by reducing its writings, nor shall any company have their participation materially or substantially increased because of the action of other companies.
All policies insured through the plan shall be rated in accordance with the manual of classifications, rules and rates, and rating plans filed by or on behalf of the plan under the provisions of chapter one hundred and seventy-five A. The statistical data previously and hereafter recorded under this section for risks insured through the plan shall be given due consideration in developing the rates for such risks.
Each risk insured through the plan shall be subject to the provisions of the safe driver insurance plan established by the commissioner pursuant to the provisions of section one hundred and thirteen B in the same manner as risks who are not insured in the plan.
The premium charges filed by or on behalf of the plan shall provide that such premium charges for all vehicles rated in accordance with the Massachusetts Private Passenger Automobile Insurance Manual and all other nonfleet private passenger vehicles shall not exceed the premium charges which would be used by each risk’s servicing carrier for that risk if such risk were not insured in the plan. The premium charges filed by or on behalf of the plan may provide that such premium charges for any risk insured in the plan, other than vehicles rated in accordance with the Massachusetts Private Passenger Automobile Insurance Manual and all other nonfleet private passenger vehicles will exceed the premium charges that would be used by each risk’s servicing carrier for that risk if such risk were not insured in the plan, provided, however, that such a filing shall go into effect only if approved by the commissioner and may be disapproved by the commissioner if he determines that it would produce rates or classifications that would be unfair or inconsistent with sound public policy.
(E) Meetings of the governing committee of the plan shall be conducted in accordance with the provisions of section eleven A1/2 of chapter thirty A.
Before becoming effective and upon any written request of the commissioner on a new plan thereafter, any such plan shall be filed with the commissioner, who shall conduct a public hearing within thirty days to determine whether such plan is consistent with public policy and meets the requirements of this section. At such hearing, insurance companies and any other party having a direct interest shall have an opportunity to be heard. Unless sooner approved or disapproved in writing by the commissioner, such plan shall be deemed to meet the requirements of this section within thirty days after the public hearing.
Amendments to such plan shall be prepared and filed in the same manner as herein provided with respect to the original plan. Such amendments, unless sooner approved or disapproved in writing by the commissioner, shall be deemed to meet the requirements of this section in thirty days from the date of filing. The commissioner shall, prior to the disapproval of any such amendments, issue a notice specifying in what respects the amendments do not meet the requirements of this section and fixing a date for a public hearing thereon, at which insurance companies and any other parties having a direct interest shall have an opportunity to be heard.
If the commissioner shall have requested the submission of a new plan or amendments to the plan, and no such plan or amendments have been filed with and approved by the commissioner within sixty days after such request, the commissioner may, if he deems it necessary to carry out the purposes of this section, prepare and publish proposed amendments or a proposed plan that in his opinion would carry out the purposes of this section. He shall submit a copy of such proposed amendments or proposed plan to the joint committee on insurance at the time of publication, and shall schedule a public hearing thereon not less than ten days after the publication thereof. After such hearing the commissioner may promulgate such plan or amendments thereto as he finds will best carry out the purposes of this section.
When such plan or amendment has been approved or promulgated, no insurer may thereafter issue a motor vehicle policy or bond unless such insurer shall participate in such an approved or promulgated plan.
Any insurer and any other party affected may appeal to the commissioner from any ruling or decision with reference to the operation of such plan.
The rules for such plan shall require that separate statistical data be recorded for risks insured in the plan and may provide incentives and penalties to prevent abuse of such plan. The rules for such plan shall also include a provision giving the commissioner authority, after due hearing and investigation, to order that any company he finds using practices which have the effect of distributing risks or expenses or losses of risks unfairly and inequitably on other companies or agents or brokers be assigned a share of the expenses and losses of said risks to insure a fair and equitable distribution. The commissioner may relieve any insurer of a part or all of its obligations under the plan, if he finds that continuation of such obligations would threaten the solvency of such insurer.
In appointing a statistical agent, the commissioner shall require, in addition to all other duties and responsibilities, that the statistical agent oversee and conduct a closed claim study so-called. In addition to any other information that the commissioner may require, said study shall include the following: the number of claims filed in a particular year, the average property damage liability coverage claim for said year, the average collision claim for said year, the number of lawsuits filed in said year, the number and average dollar amount granted in court tried cases in said year, the number and average dollar amount agreed upon in out of court settlements in said year, the average payment arising out of property damage in an out of court settlement and through a judicial decision, the number of multiple claims filed under the same vehicle over a three year period, the number of claims closed in said year, the number of claims closed without payment in said year and overall motor vehicle accident severity and frequency. Said study shall also include a report of the profits and losses, generated as the result of writing a private passenger motor vehicle insurance in the commonwealth, of each property and casualty company writing said coverage in the commonwealth.
Any insurer or group of insurers participating in such plan and other person aggrieved shall be authorized to bring a complaint to the commissioner alleging unfair or unreasonable or improper practices by any insurer, agent, or broker. The commissioner shall, in all such cases, cause a proper hearing on such complaint to be held and shall issue such orders as he then deems appropriate.
If the commissioner finds that, after due hearing and investigation, that any activities or practices of any insurer, agent or broker in connection with the submission or operation of such plan is unfair or unreasonable or inconsistent with the provisions of this section, he may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or inconsistent with the provisions of this section, and requiring the discontinuance of such activity or practice.
Any ruling, order or decision of the commissioner under authority of this section shall be subject to review by appeal to the superior court department of the trial court of Suffolk county at the instance of any party in interest, which appeal shall be on the basis of the record of the proceeding before the commissioner. Said court shall have jurisdiction to modify, amend, annul, review or affirm such action, order, finding or decision, shall review all questions of fact and of law involved therein, and may make any other appropriate order or decree. Said court shall determine whether the filing of the appeal shall operate as a stay of any such order or decision of the commissioner.
The plan shall adopt performance standards for claims handling and anti-fraud efforts, including but not limited to programs to control costs and expenses as described in section one hundred and thirteen B, for risks insured or reinsured by the plan. All insurers issuing policies insured or reinsured by the plan shall comply with said performance standards. The plan shall develop pre- and post-payment screening systems designed to identify claims overpayments, possible fraudulent claims, and inefficient claims handling practices. The plan shall provide for periodic audits of all members of the plan as required by the commissioner. The audit shall include policies not insured or reinsured by the plan in order to determine whether there is a difference in claims handling between policies insured voluntarily and those insured or reinsured by the plan. Noncompliance with said performance standards and audit requirements shall constitute a violation of the provisions of this chapter. The plan shall propose and the commissioner shall establish rules concerning the submission of data by insurers. Such rules shall include penalties for the late submission of data, the submission of faulty data, and the failure of insurers to comply with the express terms of audit requests. In addition, the plan shall provide for appropriate adjustments in the allocation of premiums, losses and expenses among companies for companies which do not meet such performance standards or which do not comply with said audit requirements. Such adjustments shall reflect excessive claims payments which result from said noncompliance.
Chapter 175: Section 113I. Freedom of contract between insurers and agents or brokers; manner of issuing policies Section 113I. Nothing in this chapter shall be construed to abridge or restrict the freedom of contract between insurers and agents or brokers nor to require an insurer to issue policies in any way other than through its ordinary and usual method of marketing except that insurers shall, pursuant to the plan approved under section one hundred and thirteen H, be required to recognize and to permit immediate certification of insurance by and to pay a fair and reasonable commission to any licensed broker or agent designated as the producers of record by applicants for insurance or renewal thereof. Nothing in this chapter shall be construed to restrict the application of section one hundred and sixty-three.
Chapter 175: Section 113J. Medical reports Section 113J. Any company issuing or executing a motor vehicle liability policy or bond, both as defined in section thirty-four A of chapter ninety, which requests and makes a medical examination of a person injured in an accident involving a motor vehicle, shall, upon request of the injured party or his attorney, furnish said party or attorney with copies of reports of all medical examinations made by said insurer; provided, that such injured party shall, upon request of said insurer, furnish it with copies of reports of all medical examinations and treatment made by his attending physician or physicians.
Chapter 175: Section 113K. Minors; contracts for motor vehicle liability insurance Section 113K. Any minor sixteen years of age or over shall be deemed competent to contract for a motor vehicle liability policy or bond, both as defined in section thirty-four A of chapter ninety, or for a policy of motor vehicle liability insurance issued pursuant to the requirements of section one hundred and thirteen H, to the same extent and to the same effect as though he had attained his full age.
Chapter 175: Section 113L. Uninsured motorists; insufficient liability limits; coverage Section 113L. (1) No policy shall be issued or delivered in the commonwealth with respect to a motor vehicle, trailer or semitrailer registered in this state unless such policy provides coverage in amounts or limits prescribed for bodily injury or death for a liability policy under this chapter, under provisions approved by the insurance commissioner, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles, trailers or semitrailers and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom; and, subject to the terms and conditions of such coverage, such coverage shall include an insured motor vehicle where the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified therein because of insolvency.
(2) For the purpose of said coverage, if the policyholder or obligor elects to purchase the coverage described in this paragraph, the term “uninsured motor vehicle” shall also include protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of insured motor vehicles, trailers or semitrailers, to which a bodily injury liability bond or policy applies at the time of the accident and its bodily injury liability bond amount or policy limit is less than the policy limit for uninsured motor vehicle coverage and is insufficient to satisfy the damages of persons insured thereunder and only to the extent that the uninsured motor vehicle coverage limits exceed said limits of bodily injury liability subject to the terms of the policy. The amounts recoverable hereunder shall not be affected by any statutory limits of liability applicable to the tortfeasor, including, but not limited to, amounts recoverable under section fifteen of chapter eighty-four, sections eighty-five G and eighty-five K of chapter two hundred and thirty-one, and section two of chapter two hundred and fifty-eight. The policyholder or obligor shall be notified that he may elect to purchase the said coverage, and such notification shall be at such times and in a manner prescribed by the commissioner of insurance.
(3) An insurer’s extension of coverage as provided in paragraph (2) shall be applicable only to accidents occurring during a policy period in which its insured’s uninsured motor vehicle coverage is in effect and where the liability insurer of the tort-feasor has been declared to be insolvent by a court of competent jurisdiction as of the accident date, or has been declared to be insolvent by a court of competent jurisdiction within one year after the accident date. Nothing herein contained shall be construed to prevent any insurer from extending coverage under the terms and conditions more favorable to its insured than is provided hereunder.
(4) In the event of payment to any person under the coverage provided by this section and subject to the terms and conditions of such coverage, the insurer making such payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury for which such payment is made, including the proceeds recoverable from the assets of the insolvent insurer; provided, however, that, subject to the definitions and limitations of uninsured motor vehicle coverage set forth in paragraphs (1) and (2), the insurer shall not be entitled to any such proceeds unless and until the person insured under the coverage required or elected to be purchased under this section has received full compensation for his injuries, including death resulting therefrom; and provided, further, that with respect to payments made by reason of the extension of coverage described in paragraphs (2) and (3), the insurer making such payment shall not be entitled to any right of recovery against such tort-feasor in excess of the proceeds recovered from such insolvent insurer of said tort-feasor.
(5) Uninsured motorists coverage shall provide that regardless of the number of vehicles involved, whether insured or not, persons covered, claims made, premiums paid or the number of premiums shown on the policy, in no event shall the limit of liability for two or more vehicles or two or more policies be added together combined or stacked to determine the limits of insurance coverage available to injured persons. An insured who is not a named insured on any policy providing uninsured motorist coverage may recover only from the policy of a resident relative providing the highest limits of such coverage whether or not such vehicle was involved in the accident; provided, however, if there are two or more such policies which provide such coverage at the same limits a pro rata contribution will be made. Any injured occupants who are not named insureds on a policy and who are not insured on a resident relative’s policy may obtain uninsured motorist coverage from the named insured’s policy covering the vehicle they occupy when injured. A person who is a named insured and who suffers bodily injury or death:(a) while occupying a nonowned motor vehicle registered for highway use may recover only from the policy providing the highest limits of uninsured motorist coverage on which such person is the named insured, provided, however, if there are two or more such policies which provide such coverage at the same limits a pro rata contribution will be made;(b) while occupying an owned motor vehicle registered for highway use and which had in effect the coverage required by this section shall recover uninsured motorist coverage only from the policy covering such occupied vehicle, provided, however, if there are two or more such policies, a pro rata contribution will be made. An insured who suffers bodily injury or death while occupying a motor vehicle owned by that insured which is registered for highway use and does not have in effect the coverage required by section thirty-four A of chapter ninety may not recover uninsured motorist coverage from any policy. No uninsured motorist coverage shall apply from any policy if a named insured suffers bodily injury or death while occupying an owned motor vehicle registered for highway use being used at the time as a public or livery conveyance and which is not insured for uninsured motorist coverage.
Chapter 175: Section 113M. Repealed, 1981, 775, Sec. 3 Chapter 175: Section 113N. Medical examination of applicants prohibited Section 113N. No company issuing or executing a motor vehicle liability policy or bond, as defined in section thirty-four A of chapter ninety shall require a medical examination of the applicant therefor.
Chapter 175: Section 113O. Fire, theft, or comprehensive coverage; payments for loss or damage; statements to police; claim forms; actions for nonpayment Section 113O. All policies providing fire and theft coverage or comprehensive coverage, so-called, shall pay for loss or damage to the insured vehicle under the terms of the policy up to a limit equal to the actual cash value of the vehicle, less a deductible of five hundred dollars. Insurers shall also make available additional coverage whereby the deductible of five hundred dollars is reduced to three hundred dollars, except that an insurer may refuse to issue such optional additional coverage on the basis of claims paid, provided that no insurer may refuse to issue such optional additional coverage because of age, sex, race, occupation or principal place of garaging of the vehicle. The charge for said additional coverage shall not exceed the actuarial cost of reducing the deductible from five hundred dollars to three hundred dollars. Notwithstanding the foregoing, insurers shall also make available, at the option of the policyholder, a one hundred dollar deductible applicable to damage to glass of any motor vehicle covered under the comprehensive coverage. Insurers shall also make available additional coverage to provide that, in determining actual cash value, no deduction for depreciation shall be allowed to reduce the value of the vehicle to less than an agreed value for that particular vehicle, provided the insurer is permitted to inspect the vehicle at the time of application for such additional coverage. No payment shall be made by the insurer of loss or damage to the insured vehicle on a claim for theft coverage, so-called, until the insured received notice from the appropriate police authority that a statement in conformity with the provisions of section twenty-nine of chapter two hundred and sixty-six has been filed. No payment shall be made by the insurer of loss or damage to the insured vehicle on a claim for fire coverage, so-called, until the insured has filed a statement in conformity with the provisions of section twenty-nine B of said chapter two hundred and sixty-six and the insurer has, within a reasonable time, reviewed said statement with the appropriate fire authority and determined no fraud was involved. If said insurer denies said fire coverage claim, then said insurer shall provide appropriate notice within a reasonable time of the denial of coverage to all lien holders, if any, of the insured vehicle.
No insurer shall make any payments to the insured under a policy providing fire and theft coverage or comprehensive coverage, so called, unless it has received a claim form from the insured stating that the repair work described in an appraisal made pursuant to regulations promulgated by the auto damage appraiser licensing board has been completed, except for payments made in accordance with a plan filed and approved pursuant to the following paragraph. In any case, where the insurer fails to make payment within seven days of receipt of the above claim form, the insured may commence a civil action for payments claimed to be due. If the court determines that the insurer was unreasonable in refusing to pay said insured’s claim, the claimant shall be entitled to recover double the amount of damage plus costs and reasonable attorneys’ fees fixed by the court. If such claim form is not received by the insurer, the insurer shall pay to the insured only the decrease in actual value of the insured vehicle less any deductible. If the insured elects not to repair the vehicle, or if the insurer does not receive a claim form from the insured stating that the repair work has been completed, the insurer shall decrease the actual cash value of the insured vehicle by the amount of damage sustained.
Notwithstanding the second paragraph or any other general or special law to the contrary, an insurer may file a plan for approval by the commissioner providing for direct payment by the insurer to the insured for the loss of or damage to the insured motor vehicle under fire and theft coverage or comprehensive coverage, so called, prior to receipt by the insurer of a claim form from the insured stating that the repair work described in an appraisal made pursuant to regulations promulgated by the auto damage appraisers licensing board has been completed. Such plan shall not be approved unless it: (a) provides for a procedure acceptable to the commissioner to resolve any dispute between the insured and the insurer as to the adequacy of the payment; (b) provides for adequate disclosure to the insured of his or her rights hereunder; and (c) contains such other terms and conditions as the commissioner shall prescribe. The commissioner may revoke approval for such a plan if he determines that the insurer is not complying with its terms or that the plan does not carry out the purposes of this section. If an insured under fire and theft coverage or comprehensive coverage, so called, elects not to repair an insured vehicle for which a claim payment has been made under one of said coverage or if the insurer does not receive a claim form from the insured certifying that the repair work has been done in accordance with an appraisal made pursuant to regulations promulgated by the auto damage appraisers licensing board, then the insurer and any successor insurer shall decrease the actual cash value of the insured vehicle by the amount of the claim payment plus any applicable deductible until such time as the insurer or any successor insurer receives a claim form with the certification described above; provided, however, that for at least seventy-five per cent of those claims where the appraisal indicates that the cost of repairs will exceed four thousand dollars and at least twenty-five per cent of those claims where the appraisal indicates that the cost of repairs will be four thousand dollars or less, a licensed auto damage appraiser shall reinspect the vehicle following completion of repairs and shall certify on the claim form that the work has been completed in accordance with an appraisal made pursuant to said regulations. The commissioner shall hold a hearing prior to approval of any such plan or plans. The commissioner may promulgate such rules and regulations as he deems necessary for the implementation of this paragraph.
The commissioner may require any plan filed pursuant to the preceding paragraph to provide (a) that the insured will be given a list of at least five repair shops, geographically convenient for the insured, from which the insured may at his or her option select a shop which will without undue delay complete the repair work for the amount of the payment to the insured, plus any applicable deductible, that the insurer will guarantee the quality of the materials and workmanship used in making repairs if the repairs are performed at one of the repair shops so listed.
(b) that in no event shall the selection of vehicles for reinspection be based on the age or sex of the policyholder or of the customary operators of the vehicle, or on the principal place of garaging the vehicle; and(c) that no insurer or appraiser shall require that repairs to any motor vehicle be made at any specific repair shop, or list of repair shops; and(d) that in determining which repair shops will be listed as described above, the insurer shall consider only the quality and cost of repairs at a particular shop, the quality of the service given the customer, the responsiveness of the shop to customers’ needs, the ability of the shop to perform repairs without undue delay, the geographic convenience of the shop for the insured, cooperation of the shop with pre- and post-repair inspections, and the shop’s compliance with applicable laws and regulations. A repair shop shall be included on the list prepared by the insurer if the shop agrees in writing to comply in full with the plan filed by the insurer and approved by the commissioner. An insurer may strike a shop from the list provided it files a statement with the commissioner specifying the nature of the shop’s failure to comply with the plan. Such plan shall include a fair and adequate procedure for relief for repair shops improperly stricken from such list; and(e) no employee or agent of an insurer with responsibility for creating, managing or maintaining a list of repair shops as described above shall receive or ask for any payment, gift or other thing of value from any repair shop included, or seeking to be included, in the said list of repair shops, and no repair shop, or employee or owner thereof, shall give, pay or offer to give or pay any money or thing of value to any employee or agent of an insurer with responsibility for creating, managing or maintaining a list of repair shops. No repair shop, or employee, owner or agent thereof, shall give or pay, or offer to give or pay, any thing of value to any person in exchange for being included, or as an inducement to be included, on such a list of repair shops. For purposes of this paragraph, the words “employee”, “owner” and “agent” shall also include any spouse or child of an employee, owner or agent. Violation of the provision of this paragraph may be grounds for revocation or suspension of any certificate of registration or license held pursuant to chapter one hundred A or this chapter.
Insurers shall report the theft or misappropriation of a motor vehicle, including the vehicle identification number and such other information as may be required, to a central organization engaged in motor vehicle loss prevention, as designated by the commissioner, and the National Automobile Theft Bureau or its successor organization, in accordance with the regulations promulgated by the commissioner. Said organization shall, in cooperation with the division of insurance, establish a central index file of all reported motor vehicle thefts or misappropriations. All costs of administration and operation shall be borne by said insurers pursuant to regulations promulgated by the commissioner. The central organization designated by the commissioner and each insurer authorized to issue motor vehicle comprehensive insurance policies in the commonwealth shall, upon request of any appropriate law enforcement agency or other insurer, release information in its possession resulting from an investigation conducted by it pertaining to such comprehensive loss, including information as such agency or insurer deems related to its investigation. Whenever a central organization or the insurer has reasonable cause to believe that the loss was caused by any criminal or fraudulent act of any person, it shall notify the appropriate law enforcement agency or central organization engaged in motor vehicle loss prevention of that belief.
Any information or evidence, whether oral or written, furnished pursuant to this section shall not be subject to public inspection for so long a period as the commissioner deems reasonably necessary to complete an investigation, to protect the person investigated from unwarranted injury, or to serve the public interest. Such evidence or information shall not be subject to subpoena or subpoena duces tecum until returned for public inspection by the commissioner, unless the commissioner otherwise consents or, after notice to the commissioner and a hearing, the superior court determines that the public interest and any ongoing investigation by the commissioner would not be unnecessarily jeopardized by obeyance of such a subpoena or subpoena duces tecum.
No insurer or the central organization designated by the commissioner pursuant to this section, or their employees or agents, and no commissioner or employees of the commissioner, and no official or officer of any law enforcement agency, shall be subject to civil or criminal liability in a cause of action of any kind for furnishing any evidence or information to the commissioner, his employees or any law enforcement agency or any other insurer relating to an investigation conducted involving losses for motor vehicles.
Nothing contained in this section shall relieve an insurer of its duty to report suspected violations of the law to appropriate law enforcement agencies.
In the event of an insured fire or theft loss which would result in the payment of the total value of the insured vehicle, less salvage, the fire or theft coverage on any replacement vehicle may be suspended, and if suspended, shall not apply unless the insured has made the replacement vehicle reasonably available to the insurer, his agent or his representative for inspection by five o’clock post meridian of the second registry of motor vehicles’ business day following the day of acquisition. The insurer may also require that in lieu of the deductible otherwise available, a deductible of ten per cent of the actual cash value of such replacement vehicle, but in no event less than three hundred dollars, shall apply unless the insured installs an approved anti-theft device in such replacement vehicle.
Chapter 175: Section 113P. Appeals from application of safe driver insurance plan Section 113P. Any insured aggrieved by any determination of an insurer as to the application of any provision of the safe driver insurance plan established by the commissioner pursuant to the provisions of section one hundred and thirteen B may, within thirty days thereafter, file a written complaint with the board of appeals on motor vehicle policies and bonds, hereinafter called the board. Such complaint shall be accompanied by a filing fee to be determined by the board. The board may deny such appeal without a hearing on the basis of the standards of fault to be promulgated by the board. In the notice of its decision to deny the complaint by the insured, the board shall notify the insured that he has a right to a hearing on the application of the safe driver insurance plan.
The board shall provide the insurer and the insured with at least ten days notice of any hearing held under this section. If, after a hearing, the board finds that the application of the safe driver insurance plan was in accordance with the standards promulgated by the board and the provisions of the safe driver insurance plan established by the commissioner, it shall deny the appeal. If the board finds that the insurer’s application of the safe driver insurance plan was not in accordance with said standards and provisions, it shall order the insurer to make the appropriate premium adjustment. The board may designate a person to act as a hearing officer pursuant to this section. The hearing officer shall file a memorandum of his findings or order in the office of the board, and shall send a copy to the insurer and the insured.
Any person or company aggrieved by any finding or order of the board may appeal therefrom to the superior court department of the trial court, pursuant to the provisions of section fourteen of chapter thirty A. The appellant shall file with his appeal a duly certified copy of the complaint and of the finding and order thereon, and, if the appeal is taken from a finding and order of the board in respect to a cancellation, the clerk of such court shall forthwith, upon the filing of such an appeal, give written notice of the filing thereof to the registrar of motor vehicles and to the appellee. Said court shall, after such notice to the parties as it deems reasonable, give a summary hearing on such appeal and shall have such jurisdiction in equity to review all questions of fact and law, and to affirm or reverse such finding or order and may make any appropriate decree. Said court or justice may allow such appeal, finding or order to be amended. The decision of the court or justice shall be final. The clerk of such court shall, within two days after entry thereof, send an attested copy of the decree to each of the parties and the commissioner and to said registrar, or his office. Said court or justice may make such order as to costs as it or he deems equitable. Said court may make reasonable rules to secure prompt hearings on such appeals and a speedy disposition thereof.
Chapter 175: Section 113Q. Automobile club memberships; automobile insurance prohibited Section 113Q. No automobile club membership shall be made part of any automobile insurance policy, nor shall any automobile club membership fee be included in any automobile insurance policy declarations form or billing.
Chapter 175: Section 113R. Interest on refunds of overpayments Section 113R. Every insurer offering motor vehicle liability insurance and related coverages shall pay interest on refunds of overpayments to those insured paying premiums in full based on an estimated premium. Such interest shall include interest in the amount charged policyholders for overdue payments.
Chapter 175: Section 113S. Inspection of vehicles prior to coverage Section 113S. (a) For purposes of this section, “existing customer” shall mean an applicant for a motor vehicle liability policy who has been insured for three years or longer without interruption under a motor vehicle liability policy or policies issued by the insurer to which the applicant’s application is submitted.
(b) A motor vehicle liability policy shall not provide fire and theft coverage or comprehensive coverage, so-called, or collision or limited collision coverage for a private passenger motor vehicle prior to an inspection of that motor vehicle by the insurer, unless:(1) the motor vehicle is new;(2) the applicant for such coverage is an existing customer of the insurer;(3) the motor vehicle is already insured for such coverages with the insurer by the applicant; or(4) as provided in paragraph (2) of subsection (c).
(c) The commissioner shall promulgate regulations which shall:(1) provide that insurers shall offer inspection at locations and at times reasonably convenient to the insured. Where an inspection is required pursuant to this section, it shall be conducted by the insurer or its authorized representative and shall be recorded on a form prescribed by the commissioner. Such form shall be retained by the insurer with its policy records for the insured and a copy of such form shall be made available to the insured upon request.
(2) provide that the inspections required in this section shall be waived under circumstances specified in the regulation. Such circumstances may include, but are not limited to:(i) When requiring an inspection would cause a serious hardship to the insurer, the insured or an applicant for insurance;(ii) When the insurer has no inspection facility or authorized representative either in the city or town in which the motor vehicle is principally garaged or within five miles of the said city or town.
(3) provide that such inspections shall include at least the following:(i) taking a physical imprint of the vehicle identification number of the vehicle or otherwise record the vehicle identification number in a manner satisfactory to the commissioner;(ii) taking two color photographs of the car at angles which show the front, back and side of the vehicle;(iii) recording the presence of such accessories as the commissioner shall designate; and(iv) recording the location of and a description of existing damage to the vehicle.
(d) A motor vehicle liability policy shall not provide fire and theft coverage or comprehensive coverage, so-called, or collision or limited collision coverage for any motor vehicle for which a salvage certificate has been issued by the registrar of motor vehicles, unless a new certificate of title has been issued pursuant to section twenty D of chapter ninety D. Notwithstanding the foregoing, any insurer, authorized to issue motor vehicle liability policies may, but shall not be compelled to, issue a special policy or endorsement providing fire and theft coverage and/or comprehensive coverage, so-called, or collision or limited collision coverage for any motor vehicle having a salvage title, on such terms and conditions and subject to such inspections as the insurer shall require.
Chapter 175: Section 113T. Repair shop coverage Section 113T. Notwithstanding the provisions of section eight G of chapter twenty-six, a motor vehicle liability policy may, upon approval by the commissioner and by endorsement prescribed by the commissioner, include coverage, at the insured’s option, pursuant to which the insurer will repair damage to insured motor vehicles, in accordance with collision or limited collision coverage provided under section thirty-four O of chapter ninety or comprehensive coverage provided under sections one hundred and thirteen C and one hundred and thirteen O of this chapter, at participating repair shops. One or more registered automobile damage repair shops may contract with an insurer or insurers as a participating repair shop to repair damage to insured motor vehicles covered under a participating repair shop endorsement. An insurance company offering a participating repair shop endorsement shall provide an appropriate reduction in the premium charges for such coverages, which shall be subject to approval by the commissioner, and such company shall provide any information in support of its reduction as may be required by the commissioner. The commissioner shall have authority to promulgate such rules and regulations as he deems necessary for the implementation of this section. Such rules and regulations may include, but need not be limited to, procedures for approval of such coverages, and standards to ensure that the endorsement will be offered in a nondiscriminatory manner, that the service will be convenient to insureds, and that the repairs will be of comparable quality to those made by non-participating repair shops. Nothing in this section shall be deemed to compel an insurer to offer participating repair shop coverage.
The commissioner shall file said plan as well as such rules as he deems necessary for implementation of the plan with the clerk of the house of representatives on or before September first, nineteen hundred and eighty-nine. The clerk of the house of representatives, with the approval of the president of the senate and the speaker of the house of representatives, shall refer such regulations to the joint committee on insurance within thirty days of such referral, said committee may hold a public hearing on the regulations and shall issue a report to the commissioner. Said commissioner shall review said report and shall adopt final regulations as deemed appropriate in view of said report and said regulations shall take effect as of the first of January, nineteen hundred and ninety.
Chapter 175: Section 113U. Antique motor car policies Section 113U. Insurance companies undertaking to issue motor vehicle liability policies or motor vehicle liability bonds, as defined in section 34A of chapter 90, may issue and deliver policies insuring antique motor cars, as defined in section 1 of said chapter 90. Said antique motor car insurance policies shall be exempt from the provisions of sections 113B and 113H.
Chapter 175: Section 113V. Overutilization of practice or fraud involving automobile insurance claims; medical licensing boards; investigations Section 113V. (a) For purposes of this section, the following words shall have the following meaning:—“Automobile Insurers Bureau of Massachusetts”, the rating organization licensed by the commissioner under section 8 of chapter 175A, or its successor.
“Commissioner”, the commissioner of insurance.
“Insurance fraud bureau”, a bureau authorized by chapter 338 of the acts of 1990, or its successor.
“Medical licensing boards”, the board of registration in medicine and those boards of registration and examination in the division of professional licensure which relate to medical or health care providers.
(b) At least annually, the medical licensing boards that receive funding pursuant to paragraph (3) of subsection (d) shall review the data made available to them by the Automobile Insurers Bureau of Massachusetts for indication of overutilization of practice or fraud involving automobile insurance claims by individual practitioners or by provider groups. Where overutilization of practice or fraud involving automobile insurance claims by 1 or more licensees is suspected, the board shall conduct an investigation. If the investigation results in evidence that a pattern of fraud, overutilization of practice, or professional misconduct exists, the medical licensing boards shall initiate professional disciplinary proceedings to determine whether that practitioner’s or provider group’s license should be suspended, revoked, or be subjected to some other appropriate penalty.
(c) If a licensee subject to the jurisdiction of the medical licensing boards has been convicted of insurance fraud, the medical licensing boards shall immediately initiate professional disciplinary proceedings to determine whether the applicable license should be suspended, revoked, or subjected to some other appropriate remedy.
(d)(1) The costs of this program shall be paid by the Automobile Insurers Bureau of Massachusetts and not passed on to holders of automobile insurance policies in the commonwealth. Each insurer licensed in the commonwealth to write a motor vehicle liability policy as defined in section 34A of chapter 90 shall pay the Automobile Insurers Bureau of Massachusetts an amount equal to 10 cents for each private passenger motor vehicle liability policy written as of December 31 of the preceding year, according to the records of the Automobile Insurers Bureau of Massachusetts. On or before March 1 of each year, the Automobile Insurers Bureau of Massachusetts shall remit the total amount paid under this subsection to the commissioner. An insurer shall not include the assessment paid under this section in any data used to fix and establish rates under section 113B of chapter 175.
(2) On or before March 1 of each year, the commissioner shall consult with an advisory group consisting of the attorney general or his designee, a district attorney or his designee to be appointed by the attorney general, a representative of the insurance fraud bureau, and 2 members of the public to be appointed by the governor on how the funds paid under subsection (1) should be distributed. Within 60 days of the receipt of said moneys, the commissioner shall allocate and distribute moneys to the medical licensing boards on an analysis of the likelihood of overutilization of practice or fraud relating to automobile related injuries by practitioners under each medical licensing board’s jurisdiction and the needs of each applicable board for the use of the funds after disbursement.
(3) The funds collected pursuant to paragraph (1) shall be used solely by the health care fraud unit of the division of professional licensure, the disciplinary unit of the board of registration in medicine and other medical licensing boards for the investigation of overutilization of practice or fraud involving automobile insurance claims. Any funds not expended by the various medical licensing boards within 12 months of their receipt shall be returned to the commissioner who shall keep the funds in a separate account. These funds shall be made available to the medical licensing boards during the next calendar year in accordance with this subsection.
(e) Any data made available to or received by the medical licensing boards from the Automobile Insurers Bureau of Massachusetts pursuant to this act shall not be considered a “public record” as defined in clause Twenty-sixth of section 7 of chapter 4.
(f) In the absence of fraud or bad faith, an insurer or employee or agent thereof, member of said insurance fraud bureau or an employee or an agent thereof, member of said medical licensing boards or an employee or agent thereof, member of said Automobile Insurers Bureau of Massachusetts or an employee or agent thereof, or other person subject to this section, shall not be subject to criminal or civil liability, and no civil cause of action of any nature shall arise against such person for any information relating to suspected over-treatment or fraudulent insurance transactions furnished to medical provider licensing boards or the insurance fraud bureau, their agents and employees pursuant to this section. Nothing herein is intended to abrogate or modify in any way common law privilege of immunity heretofore enjoyed by any person.
Chapter 175: Section 114. Domestic companies; non-applicability of certain provisions of this chapter Section 114. A company organized under the eleventh clause of section forty-seven or under earlier laws relating to such companies shall not be subject to this chapter, except this section and sections three A, four, six, fifteen, sixteen, seventeen, eighteen, nineteen A, twenty-two, twenty-five, twenty-six, thirty, thirty-two, thirty-three, forty-four, forty-seven to forty-nine, inclusive, fifty-seven to sixty-one, inclusive, sixty-nine to seventy-two, inclusive, one hundred and sixteen, one hundred and seventy-eight to one hundred and eighty A, inclusive, one hundred and eighty-nine, one hundred and ninety-three A and one hundred and ninety-four, and the first paragraph, so far as applicable to the title guaranty fund, and the third paragraph, of section sixty-two. Such company may transact all the kinds of business specified in said eleventh clause.
Chapter 175: Section 115. Repealed, 1924, 406, Sec. 17 Chapter 175: Section 116. Title guaranty fund Section 116. Every such company shall set apart an amount not less than two fifths of its capital, and not less than one hundred thousand dollars in any case, as a title guaranty fund, and shall invest it subject to the limitations imposed by this chapter upon the investment of the capital of other domestic insurance companies, and shall issue no title policy and make no contract of title guaranty or title insurance until such amount is so set apart and invested.
The principal of such title guaranty fund shall be a trust for the protection of title policyholders, and shall be applied only to the payment of losses and expenses incurred by reason of the title guaranty or title insurance contracts of the company. Whenever the company shall increase its capital, two fifths or a sufficient part of the increase shall be set apart and duly invested and added to the title guaranty fund so that such fund shall always be not less in amount than two fifths of the entire capital.
If by reason of losses or other cause the title guaranty fund becomes less than the minimum amount required by this section, the company shall forthwith give written notice thereof to the commissioner, and shall make no further contract of title guaranty or title insurance until the said fund has been restored nor until it has received a certificate from the commissioner to that effect and authorizing it to make such contracts.
Chapter 175: Section 116A. Foreign companies; non-applicability of certain provisions of this chapter Section 116A. A foreign company admitted to transact business under the eleventh clause of section forty-seven shall not be subject to this chapter except this section and sections three A, four, five, fifteen, sixteen, eighteen, nineteen A, twenty-two, twenty-five, twenty-six, one hundred and fifty, one hundred and fifty-one, except subdivision (5) of clause Second, one hundred and fifty-four, one hundred and fifty-five, one hundred and fifty-six, one hundred and fifty-eight, one hundred and fifty-nine, one hundred and eighty-nine, one hundred and ninety-three A and one hundred and ninety-four; provided, however, that nothing contained in section one hundred and fifty or one hundred and fifty-one shall be construed to require any person acting as an insurance agent of such a company to be licensed under section one hundred and sixty-three. Such company may transact all the kinds of business specified in said eleventh clause.
Chapter 175: Section 117. Policies; term; exception Section 117. No company shall issue a policy of insurance on a steam boiler for a longer period than three years. This provision shall not apply to policies issued under authority of section twenty-two A which, as part of the coverage thereof, insure real or personal property against loss or damage by fire at residential locations or which, as part of the coverage thereof, insure the output of a manufacturer against such loss or damage by fire only at locations other than his manufacturing premises.
Chapter 175: Section 117A. Combination policies; contents; commissioner’s approval Section 117A. Two or more stock or two or more mutual fire companies authorized to transact business under the second clause of section forty-seven or under the eighth clause thereof may issue a single policy of insurance against loss or damage caused by any or all of the hazards specified in said second clause or in said eighth clause, as the case may be, on property or interests in the commonwealth on which each company shall be severally liable for a specified percentage of any loss or claim. Such policy shall be executed by the duly authorized officers of each company subject to the provisions of section thirty-three in the case of a domestic company.
No such policy shall be issued or delivered until a copy of the form thereof has been on file for thirty days with the commissioner, unless before the expiration of said thirty days he shall approve the form of the policy in writing; nor if the commissioner notifies the company in writing within thirty days that in his opinion the form of the policy does not comply with the laws of the commonwealth, specifying his reasons therefor, provided, that such action of the commissioner shall be subject to review by the supreme judicial court; nor unless it is headed by the corporate name of each company, nor unless it contains in substance the provisions numbered (1), (3), (4) and (5) in section one hundred and two A and a provision that any notice, sworn statement or proof of loss, which may be required by the provisions of said policy may be rendered, made or given to any one of such companies or to a duly authorized agent of any one of such companies, and that such notice, sworn statement or proof of loss so rendered, made or given shall be valid and binding as to all of such companies.
The provisions of sections seventy-six, eighty, eighty-one, eighty-three and ninety-eight applicable to policies issued by mutual fire companies, persons insured under such policies and dividends and assessments thereunder shall apply to each policy issued under this section by mutual companies, to persons insured thereunder and to dividends and assessments thereunder, except as hereinafter provided.
The person insured under such a policy issued as aforesaid by mutual companies shall be deemed to be a member of each such company while the policy is in force and entitled to one vote at the meetings of each company.
The notice, endorsement and statement required by said sections seventy-six, eighty and eighty-one, respectively, shall be in such form and in such place on the policy as the commissioner shall prescribe.
The dividend under said section eighty and the contingent mutual liability of the insured fixed by said sections eighty-one and eighty-three in respect to each such company shall be computed or based on such proportion of the total premium for the policy as the amount insured by such company bears to the full amount insured under the policy.
The notice to policyholders required by said section eighty shall be sent by each such company to the insured. The provisions of said section ninety-eight shall apply to the application, if any, of the insured to each such company and to their by-laws.
Nothing in this section shall be construed as affecting, except as provided herein, any provision of law relative to the rights, powers, duties and liabilities of mutual fire companies and persons insured thereby.
Chapter 175: Section 117B. Combination policies; contents; commissioner’s approval Section 117B. Two or more companies authorized to transact business under clause Tenth of section forty-seven may issue a single policy of insurance against loss or damage on account of the hazards specified in such clause on which each company shall be severally liable for a specified percentage of any loss or claim. Such policy shall be executed on behalf of the companies by a duly authorized person and need not be countersigned by a resident agent of more than one of such companies in the commonwealth.
No such policy shall be issued or delivered until a copy of the form thereof has been on file for thirty days with the commissioner, unless before the expiration of said thirty days he shall approve the form of the policy in writing; nor if the commissioner notifies the companies in writing within said thirty days that in his opinion the form of the policy does not comply with the laws of the commonwealth specifying his reasons therefor, provided, that such action of the commissioner shall be subject to review by the supreme judicial court; nor unless the corporate names of all the companies are affixed thereto; nor unless such policy contains in substance the following:—(1) A provision specifying the percentage of loss or claim for which each such company shall be liable.
(2) A provision that any notice, sworn statement, or proof of loss which may be required by the provisions of the policy may be rendered, made, or given to any one of such companies or to the agent named in the policy as the duly authorized agent of the companies, and that such notice, sworn statement, or proof of loss so rendered, made, or given shall be valid and binding as to all such companies.
(3) A provision that, in any action or suit under the policy, service of process may be made on any one of such companies and that such service shall be deemed valid and binding service upon all such companies.
Policies issued under this section which are subscribed by one or more mutual companies and persons insured under such policies and dividends and assessments thereunder shall, as to such companies, be subject to the provisions of the second, third, fourth and fifth paragraphs of section one hundred and two B and, except as otherwise provided in said paragraphs, sections seventy-six, eighty so far as applicable, eighty-one and eighty-three, relative to policies issued by mutual fire companies, persons insured under such policies, and dividends and assessments thereunder. Nothing in this section shall be construed as affecting, except as provided herein, any provision of law relative to the rights, powers, duties and liabilities of mutual companies and persons insured thereby.
Chapter 175: Section 117C. Premium rates; determination; filing; reports Section 117C. (a) The following method of determination of premium rates with respect to credit life insurance and credit accident and health insurance is required only for such insurance written in connection with obligations, other than loans secured by first liens on real property, which are subject to section twelve G of chapter two hundred and fifty-five, section ten of chapter two hundred and fifty-five B, section fourteen A of chapter two hundred and fifty-five C, or subsection C of section twenty-six of chapter two hundred and fifty-five D, for which an identifiable charge is paid by insured persons.
(b) The following are the procedures for determining the maximum premium rates permitted to be charged any account: A. Rate Review.
(1) Minimum loss ratio test: Benefits will be considered reasonable in relation to the premium charged if the loss ratio equals or exceeds or is reasonably expected to equal or exceed the minimum loss ratio standard specified below. The minimum loss ratio standard is:(i) for credit life insurance, fifty per cent and(ii) for credit accident and health insurance, fifty-five per cent.
In applying the minimum loss ratio test, the commissioner shall make appropriate adjustment to account for differences in loss ratios that may be expected on single premium credit life insurance plans resulting from changes in the benefit structure.
(2) When deviated rates are in use: If an insurer has deviated rates approved under clauses (1) and (2) of paragraph C, the reasonableness of rates for those accounts will be determined by paragraph C.
(3) Frequency of rate review:(i) The rate review will be made each year for all classes of business except for motor vehicle dealers.
(ii) The rate review will be made every three years for the motor vehicle dealers class of business. B. Use of Nominal Rates.
An insurer that has filed rates which are equal to or lower than the nominal rates may retain on file and use those rates without further proof of their reasonableness while the experience of the insurer in this commonwealth for the accounts to which they are applied continues to satisfy the minimum loss ratio test specified in paragraph A. C. Use of deviated rates.
(1) Use of rates higher than nominal rates:If the minimum loss ratio test produces a loss ratio that exceeds the minimum loss ratio standard, the insurer may file for approval and use rates that are higher than the nominal rates computed on a basis equivalent to that in clause (2) of paragraph D.
(2) Use of rates lower than nominal rates:If the minimum loss ratio test produces a loss ratio that is lower than the minimum loss ratio standard, the insurer shall file adjusted rates that can be expected to produce a loss ratio that will satisfy the minimum loss ratio test or that are computed on a basis equivalent to that in clause (2) of paragraph D.
(3) Determination of deviated rates for all classes of business except for motor vehicle dealers:If deviated rates are to be filed under clauses (1) or (2), the insurer may file rates for approval that will be:(i) Applied uniformly to all accounts of the insurer;(ii) Applied on an equitable basis approved by the commissioner to only one or more accounts of the insurer for which the experience has been more favorable or less favorable than expected; or(iii) Applied according to a case rating procedure on file with the commissioner. An insurer electing to file a case rating procedure may either file its own plan for the approval of the commissioner or may use the standard case rating procedure specified herein by notice to him.
(4) Determination of deviated rates for the motor vehicle dealers class of business:(i) The motor vehicle dealers class of business case rate for each plan of insurance shall be the nominal rates until the effective date of the appropriate deviated case rate for each plan of insurance as provided for in subclause (ii).
(ii) The commissioner shall on or before October first, nineteen hundred and eighty-nine, aggregate the combined experience of all insurers for the motor vehicle dealers class of business for the three preceding calendar years, compute the appropriate deviated case rate according to paragraph D, for each plan of insurance for said class of business for all said insurers combined, according to subclause (ii) of clause (1) of said paragraph D. The commissioner shall send by first class mail, mailed on the same day, written notice to all insurers of said appropriate deviated case rate for each plan of insurance that shall apply to said class of business from ninety days after the date of the mailing of said written notice, but not later than January first, nineteen hundred and ninety, until midnight December thirty-first, nineteen hundred and ninety-two.
(iii) The commissioner shall on or before October first, nineteen hundred and ninety-two, and each three years thereafter on or before October first, aggregate the combined experience of all insurers for the motor vehicle dealer class of business for the three preceding calendar years, compute the appropriate deviated case rate, according to said paragraph D, for each plan of insurance for said class of business for all said insurers combined according to subclause (ii) of clause (1) of said paragraph D and shall send by first class mail written notice to all insurers of said appropriate deviated case rate for each plan of insurance that shall apply to said class of business for the succeeding three calendar years beginning January first, nineteen hundred and ninety-three, and each three years thereafter on January first.
The rate for each account which has been deviated must be redetermined on the same basis thereafter or until the rate for the account is no longer deviated. D. Use of rates determined by standard case rating procedure.
An insurer, by written notice to the commissioner of its election to do so, may file and use premium rates determined by this standard case rating procedure. If elected, the procedure will be used by the insurer to rate all of its credit insurance in this commonwealth. Once elected, the procedure will remain in effect for the insurer until a different procedure has been filed with the commissioner and approved by him.
(1) Determination of case rate:An insurer may use a rate for an account not greater than the case rate for that account as follows:(i) Single account cases and multiple account cases:If the account is within the definition of a single account case or of a multiple account case as filed by the insurer, the case rate for the account or for each account comprising a multiple account case will be determined by the formula set forth in clause (2).
(ii) Pooled account cases:If the account is in a pooled account case, the case rate for each account comprising the case will be the case rate for that pooled account case as determined by the formula set forth in said clause (2).
(iii) New accounts without experience:If a new account of an insurer has no experience in this commonwealth, the case rate for the account will be the nominal rate shown in clause (14) of paragraph G unless a different case rate is approved for the account by the commissioner.
(2) Calculation of case rate:(i) Symbols and DefinitionsNR = Nominal RateALR = Actual Loss Ratio for case at Nominal Rate BasisELR = Minimum Loss Ratio Standard of clause (1) of paragraph A.
Z = Credibility Factor for CaseCLR = Credibility Adjusted Case Loss Ratio at Nominal Rate Basis= (Z × ALR) + ((1 - Z) × ELR)E = Expense Loading in nominal rate= (1 - ELR) × NRNCR = New Case Rate(ii) New Case RateFor credit accident and health insurance where CLR is greater than ELR:NCR = NR 1 + 1.
1 (CLR - ELR))For all other credit accident and health insurance and for all credit life insurance:NCR = (NR × CLR) + E(3) Minimum changes:If the new case rate does not differ by more than five per cent from the current case rate, the new case rate will be the current case rate.
(4) Case rate period:A case rate will be in effect for a period of time not longer than the experience period used to establish the case rate, i.
e. one year, two years or three years. An insurer may file for a new case rate before the end of a case rate period, but not more often than once during any twelve month period. A case rate for motor vehicle dealers will be in effect for a period of time not less than three years.
(5) Change of insurers:If a creditor changes insurers, the case rate in effect for his account on the date of the change will continue to be in effect for the account with the succeeding insurer for the remainder of the case rate period or until a new case rate for his account is established if sooner. E. Filing of Rates.
An insurer who has elected to file higher rates under clause (1) of paragraph C or who is required to file reduced rates under clause (2) of said paragraph C, or who has elected the standard case rating procedure, shall also file a new schedule of rates as determined by said clauses (1) and (2) of said paragraph C. If the commissioner does not disapprove the new schedule of rates within thirty days after receipt of the filing, rates not higher than the new rates shall be placed in effect not later than the first day of the fifth month next following the end of the experience period unless a different effective date has been approved by the commissioner. In no event, however, may a rate increase be placed in effect earlier than the date rate decreases are expected to be placed in effect. An insurer may at any time charge a rate lower than its filed rate without notice to the commissioner. F. Reports of Experience:(1) Each insurer writing said life insurance and accident and health insurance shall report to the commissioner its claims experience and loss ratio data on said insurance separately for the motor vehicle dealers class of business and for all classes of business combined on the credit insurance supplement forms as specified by the National Association of Insurance Commissioners for inclusion in the annual statement blanks filed pursuant to section twenty-five.
(2) The commissioner shall summarize said insurance claims experience and loss ratio data from said credit insurance supplement forms and submit such summary experience and loss ratio data to the clerk of the house of representatives who shall forward the same to the joint committee on insurance not later than the thirtieth day of September of each year.
(3) Each insurer writing said life insurance and accident and health insurance for the motor vehicle dealers class of business shall report to the commissioner its claims experience and loss ratio data on said insurance for motor vehicle dealers on said credit insurance supplement forms for the calendar years nineteen hundred and eighty-five, nineteen hundred and eighty-six, nineteen hundred and eighty-seven and nineteen hundred and eighty-eight, by a date and in a manner to be set by the commissioner, but not later than July first, nineteen hundred and eighty-nine.
For the purpose of the reporting in this paragraph, for nineteen hundred and eighty-five, nineteen hundred and eighty-six and nineteen hundred and eighty-seven, the term “prima facie rate” shall be construed to mean the statutory maximum rates in effect during those years, and for subsequent years shall be construed to mean the nominal rates set out in clause (14) of paragraph G. G. As used in this section the following terms, unless the context clearly requires otherwise, shall have the following meanings:(1) “Account”, the aggregate credit life insurance or credit accident and health insurance coverage for a single plan of insurance and for single class of business written through a single creditor by the insurer. With the approval of the commissioner, the account may also mean the credit life insurance or the credit accident and health insurance of two or more plans of insurance or two or more classes of business of a single creditor.
(2) “Average Number of Life Years”, the average number of group certificates in force during the experience period, without regard to multiple coverage, times the number of years in the experience period, or some equivalent calculation, which shall be made separately for credit life insurance and for credit accident and health insurance.
(3) “Case” a “Single Account Case”, a “Multiple Account Case” or a “Pooled Account Case” as follows:(i) “Single Account Case”, an account that is at least as credible as the minimum level of credibility elected by the insurer for defining a single account case excluding all of these accounts which have been included in multiple account cases.
An insurer may make this election by notice to the commissioner, in writing, of the minimum credibility factor it will use to define a “Single Account Case”. Once notified, the minimum credibility factor will remain in effect for the insurer until a different factor has been filed by the insurer and approved by the commissioner. If an insurer makes no written election, its minimum credibility factor will be one hundred per cent.
(ii) “Multiple account case”, with the approval of the commissioner, two or more accounts of the same insurer having similar underwriting characteristics which are combined by the insurer for premium rating purposes, excluding all cases defined in (i) and which, when combined, are at least as credible as the minimum level of credibility elected in (i).
(iii) “Pooled account case”, a combination of all the insurer’s accounts of the same plan of insurance and class of business which combination has experience in this commonwealth, excluding all defined in (i) and (ii).
(4) “Class of business”, a grouping of the classes of business listed below:(i) credit unions;(ii) commercial, cooperative & savings banks;(iii) finance companies;(iv) motor vehicle dealers;(v) other sales finance;(vi) production credit associations;(vii) bank—agricultural loans;(viii) all others(5) “Credibility factor”, the extent to which the past experience of a case can be expected to recur in the future. For the standard case rating procedure, the credibility factor may be based on either the number of claims incurred or on the “average number of life years” for the case during the experience period using the credibility table. The insurer shall notify the commissioner in advance which method it will use to measure the credibility of all its cases in this commonwealth and may not change its method without the prior approval of the commissioner. If “claim count” or “life year” data are not available, reasonable methods of approximation approved by the commissioner may be used until such data are developed.
(6) “Credibility table”, for purposes of the standard case rating procedure means the following table: The above integral numbers represent the lower end of the bracket for each “Z” factor. The upper is 1 less than the lower end for the next higher “Z” factor.
(7) “Earned premiums at rates in use”, actual earned premiums, that is, the premiums earned at the premium rates actually charged for coverage in force during the experience period.
(8) “Earned premiums at the nominal rates”, the actual earned premiums adjusted to the amount which would have been earned had the premium rate charged for coverage in force during the experience period been equal to the nominal rate. Reasonable methods of approximation approved by the commissioner may be used.
(9) “Experience”, earned premiums, incurred claims, incurred claim count, number of life years insured, and average amount of insurance during the experience period.
(10) “Experience period”, the most recent period of time for which experience is reported, but not a period longer than three full years. Experience period for the motor vehicle dealer pooled account case means the most recent three calendar years for which experience is reported.
(i) If a case develops one hundred per cent credibility in less than three years, the experience period for that case will be the number of full years needed to develop one hundred per cent credibility.
(ii) If a case develops the minimum credibility elected by the insurer in less than three years, the experience period for that case, at the option of the insurer, will be the number of full years needed to develop minimum credibility or three full years.
(iii) New accounts with experience:If a new account of an insurer has experience in this commonwealth with a prior insurer, the new insurer must use the most recent experience of the account with the prior insurer to the extent necessary to fill out an experience period.
(iv) Accounts with multi-state experience:If an account has experience in more than this commonwealth, an insurer may use only the experience of the account in this commonwealth to rate the case or, with the approval of the commissioner, may use the multi-state experience of the account for this purpose applied on an equitable basis.
The provisions of subclause (i), (ii), (iii) and (iv) shall not apply to motor vehicle dealers.
(11) “Incurred claims”, total claims paid during the experience period, adjusted for the change in the claim reserve.
(12) “Incurred claim count”, the number of claims incurred for the case during the experience period. This means the total number of claims reported during the experience period, whether paid or in the process of payment, plus any incurred but not reported at the end of the experience period, less the number of claims incurred but not reported at the beginning of the experience period. If a debtor has been issued more than one certificate for the same plan of insurance, only one claim is counted. If a debtor receives disability benefits, only the initial claim payment for that period of disability is counted.
(13) “Loss Ratio”, the ratio of incurred claims to earned premiums at the nominal rate.
(14) “Nominal rates”, the premium rates shown below for credit life insurance and credit accident and health insurance.
(i) For credit life insurance the nominal rates per one thousand dollars of insurance in force per month shall be sixty-nine cents for single life insurance, and one hundred and sixty per cent of said single life insurance rate for joint life insurance.
(ii) For credit accident and health insurance, single premium rates for each one hundred dollars of initial insured indebtedness shall be seventy cents per annum for each of the first four years of the term of coverage, fifty cents per annum for each of the next three years of the term of coverage and twenty-five cents per annum for each year of the term of coverage thereafter. The initial insured indebtedness is the total of all monthly insurance benefits provided.
A monthly rate of one dollar and twenty cents for each one thousand dollars of remaining insured indebtedness each month, reduced by three cents for each year by which the initial scheduled duration of the insurance exceeds sixty months, shall be considered the equivalent of the above single premium rates. The “remaining insured indebtedness each month”, as used in the preceding sentence, is the total of the monthly insurance benefits remaining.
For credit accident and health insurance in connection with interest bearing indebtedness, other than pre-computed indebtedness, a monthly premium rate of one dollar and fifty cents for each one thousand dollars of the remaining principal indebtedness, exclusive of finance charges, shall be considered the equivalent of the above single premium rates.
(15) “Plan of insurance” unless otherwise filed and approved means(i) credit life insurance on a flat rated basis other than revolving accounts, e.
g. including joint and single life coverage, decreasing and level insurance,(ii) credit life insurance on a revolving account basis,(iii) credit life insurance on an age-graded basis,(iv) credit accident and health insurance other than on revolving accounts combining outstanding balance and single premium,(v) credit accident and health insurance on a revolving account basis.
Chapter 175: Section 117D. Credit involuntary unemployment insurance Section 117D. (a) A licensed property and casualty insurance company may, notwithstanding any law or regulation to the contrary, issue a general or blanket policy of insurance to a bank, association, financial or other institution, vendor, or to a parent holding company, or to the trustee, trustees or agent designated by one or more banks, associations, financial or other institutions, or vendors under which debtors, guarantors or purchasers are insured against loss of employment resulting from involuntary unemployment, in an amount with respect to each obligation not to exceed the total of the scheduled payments on the obligation; provided, further, that where the coverage is for less than the full amount of said obligation, the periodic benefit payment shall cover either the full amount of each periodic payment on said obligation or the maximum periodic benefit set forth in said policy until the maximum aggregate benefit of said policy is reached.
(b) The following method of determination of premium rates with respect to credit involuntary unemployment insurance contained in clause (c) is required only for such insurance written in connection with consumer credit transactions which are subject to section twelve G of chapter two hundred and fifty-five, section ten of chapter two hundred and fifty-five B, section fourteen A of chapter two hundred and fifty-five C, or subsection C of section twenty-six of chapter two hundred and fifty-five D, for which an identifiable charge is paid by insured persons.
(c) The following are the procedures for determining the maximum premium rates permitted to be charged any account:(A) The premium rates charged for credit involuntary unemployment insurance policies shall be reasonable in relation to the benefits provided as indicated by a minimum annual loss ratio of sixty percent. All credit involuntary unemployment insurance premium rates and applicable policies in connection therewith shall be filed for approval with the commissioner of insurance. The commissioner shall approve such rates and policies if such rates are reasonable in relation to benefits provided.
(B) Each insurer writing said involuntary unemployment insurance shall file with the commissioner of insurance annually supporting rate documentation as specified by the commissioner.
(C) After submission of such experience, the commissioner of insurance may review said insurance claims experience and loss ratio data from said credit insurance supplement forms and determine whether the rates in effect comply with the standards set forth in paragraph (A). If the commissioner determines the rates generating such loss ratios do not comply with the standards set forth in said paragraph (A), the commissioner may require any insurer to file rates that will meet such standards or submit reasons acceptable to the commissioner why it should not be required to do so.
Chapter 175: Section 118. Definition Section 118. All companies doing business in the commonwealth under any charter, compact, agreement or statute of this or any other state, involving the payment of money or other thing of value to families or representatives of policy and certificate holders or members, conditioned upon the continuance or cessation of human life, or involving an insurance, guaranty, contract or pledge for the payment of endowments or annuities, shall be deemed to be life companies, and shall not make any such insurance, guaranty, contract or pledge in the commonwealth, or to or with any resident thereof, which does not distinctly state the amount of benefits payable, the manner of payment and the consideration therefor, nor any such insurance, guaranty, contract or pledge the performance of which is contingent upon the payment of assessments made upon survivors; provided that corporations incorporated for any educational, charitable, benevolent or religious purpose shall not be deemed life companies and shall not be subject to this chapter. Nothing herein relating to the consideration for the policy shall apply to any extra compensation which may be charged by a company to the insured for engaging in military or naval service in time of war.
All life insurance hereafter transacted by the corporations which formerly issued policies on the assessment plan under chapter four hundred and twenty-one of the acts of eighteen hundred and ninety and acts in amendment thereof shall be carried on in accordance with this chapter; but such corporations may carry out in good faith their assessment contracts made with their members prior to July first, eighteen hundred and ninety-nine.
Any domestic stock company organized to make contracts for the payment of variable annuities shall be deemed to be a life company with power to transact any one or more of the categories of business set forth in the sixteenth clause of section forty-seven, and the assets of any such company set aside for such variable annuity contracts shall be deemed to be one or more separate investment accounts, established under and meeting the requirements of section one hundred and thirty-two G, and all policies and contracts issued and insurance business transacted by any such company shall be in accordance with the provisions of this chapter applicable to life companies; but such provisions to the contrary notwithstanding, any such company may retain its corporate name. The provisions of this paragraph shall apply notwithstanding any inconsistent provision in the agreement of association or charter of any such domestic stock company.
Chapter 175: Section 119. Domestic companies; power to grant annuities Section 119. Domestic life companies may make pure endowment contracts, and grant, purchase and dispose of annuities.
Chapter 175: Section 119A. Insurance benefits; protection of beneficiaries Section 119A. If, under the terms of any annuity contract or policy of life insurance, or under any written agreement supplemental thereto, issued by any life company, the proceeds are retained by such company at maturity or otherwise, no person entitled to any part of such proceeds, or any instalment of interest due or to become due thereon, shall be permitted to commute, anticipate, encumber, alienate or assign the same, or any part thereof, if such permission is expressly withheld by the terms of such contract, policy or supplemental agreement; and if such contract, policy or supplemental agreement so provides, no payments of interest or of principal shall be in any way subject to such person’s debts, contracts or engagements, nor to any judicial processes to levy upon or attach the same for payment thereof. No such company shall be required to segregate such funds but may hold them as a part of its general corporate funds.
Chapter 175: Section 119B. Refund of prepaid premiums upon death of insured Section 119B. Upon the death of an insured, the proceeds payable under any policy of individual life insurance, other than a single-premium life insurance policy, delivered or issued for delivery in the commonwealth which is in force on a premium-paying basis on the date of death, shall include premiums paid for any period beyond the end of the policy month in which death occurred, unless such refund of premiums is due some other person pursuant to contract provisions.
Chapter 175: Section 119C. Interest on proceeds payable upon death of insured Section 119C. Upon the death of an insured, the proceeds payable under any policy of individual life insurance which is in force on the date of death shall include the payment of interest at the rate for proceeds left on deposit with the insurer beginning thirty days after the death of the insured and shall not be payable until receipt by the insurer of proof of the insured’s death. In the event the insurer does not pay interest on proceeds left on deposit with the insurer, the rate of interest shall be six per cent. If the beneficiary brings an action to enforce such payments and prevails, the court shall award interest in accordance with the provisions of section six C of chapter two hundred and thirty-one, in lieu of any interest payment contained in this section.
Chapter 175: Section 11A. Valuation of investments Section 11A. Investments shall be valued in accordance with the published valuation standards of the National Association of Insurance Commissioners and in accordance with accounting practices and procedures prescribed or allowed by the commissioner. The commissioner shall require that the value of the investments be computed in accordance with the Accounting Practices and Procedures Manual and the Purposes and Procedures Manual of the Securities Valuation Office of the National Association of Insurance Commissioners, unless modified by the commissioner as the commissioner considers appropriate.
Chapter 175: Section 12. Computation of reserves; liability companies Section 12. The commissioner shall each year compute the reserve required of liability companies for outstanding losses under insurance against loss or damage from accident to or injuries suffered by an employee or other person, for which the insured is liable, in accordance with accounting practices and procedures prescribed or allowed by the commissioner. The commissioner shall require that value of the reserves be computed in accordance with the Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners, unless modified by the commissioner as the commissioner considers appropriate.
Chapter 175: Section 120. Discrimination; prohibition Section 120. No life company and no officer or agent thereof shall make or permit any distinction or discrimination in favor of individuals between insurants of the same class and equal expectation of life in the amount or payment of premiums or rates charged for policies of life or endowment insurance, or annuity or pure endowment contracts, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes.
Chapter 175: Section 120A. Mentally retarded persons as insureds Section 120A. No insurer authorized to issue policies upon the lives of persons in the commonwealth may refuse, for the sole reason of mental retardation, to issue a policy of individual life insurance on the life of any person residing in the commonwealth who has reached the age of three years, if there is no other insurance in force or pending consideration on the life of such person. Insurer as used in this section shall include every life insurance company as defined in section one hundred and eighteen and every fraternal benefit society as defined in section one of chapter one hundred and seventy-six.
Chapter 175: Section 120B. Blind persons as insured Section 120B. No insurer authorized to issue policies on the lives of persons in the commonwealth may refuse, for the sole reason of blindness, to issue a policy of individual life insurance on the life of any such person residing in the commonwealth.
Chapter 175: Section 120C. Diethylstilbestrol exposure; discrimination Section 120C. No insurer, agent or broker authorized to issue policies on the lives of persons in the commonwealth shall cancel, refuse to issue or renew, charge any excessive rates or restrict any length of coverage or in any way practice discrimination against persons primarily because the insured person has had a suspected, alleged or confirmed exposure to the potential hazards and afflictions of diethylstilbestrol or compounds commonly referred to as DES. The practices prohibited under this section shall include not only those overtly discriminatory but also practices and devices which are fair in form but discriminatory in practice.
Chapter 175: Section 120D. Discrimination against abuse victims in terms of life insurance or endowment insurance Section 120D. No company, and no officer or agent thereof, and no insurance broker, shall cancel, refuse to issue or renew, or in any way make or permit any distinction or discrimination in the amount or payment of premiums or rates charged, in the length of coverage, or in any other of the terms and conditions of a policy of life insurance or endowment insurance on the life of any person residing in the commonwealth, who has applied for or consented in writing to the purchase of such coverage, based on information that such person has been a victim of abuse, as defined by section one of chapter two hundred and nine A. No company, and no officer or agent thereof, and no insurance broker shall seek information that such person has been a victim of abuse as defined by said section one of said chapter two hundred and nine A. The practices prohibited under this section shall include not only those overtly discriminatory but also practices and devices which are fair in form but discriminatory in practice. Nothing in this section shall be construed as creating a special class of insureds who have been victims of abuse as defined by said section one of said chapter two hundred and nine A. Any violation of this section shall constitute an unfair method of competition or an unfair or deceptive act or practice in violation of chapters ninety-three A and one hundred and seventy-six D.
Chapter 175: Section 120E. Life insurance policies; genetic tests; discrimination based on genetic information [Text of section effective until January 1, 2006. Repealed by 2000, 254, Sec. 25A. See 2000, 254, Sec. 31.
] Section 120E. For the purposes of this section the following words shall have the following meanings:—“Genetic information”, a written recorded individually identifiable result of a genetic test as defined by this section or explanation of such a result. For the purpose of this section, the term genetic information shall not include information pertaining to the abuse of drugs or alcohol which is derived from tests given for the exclusive purpose of determining the abuse of drugs or alcohol.
“Genetic test”, a test of human DNA, RNA, mitochondrial DNA, chromosomes or proteins for the purpose of identifying genes, inherited or acquired genetic abnormalities, or the presence or absence of inherited or acquired characteristics in genetic material, which are associated with a predisposition to disease, illness, impairment or other disease processes. For the purpose of this section, the term genetic test shall not include tests given for drugs, alcohol, cholesterol, or HIV; any test for the purpose of diagnosing or detecting an existing disease process; any test performed due to the presence of symptoms, signs or other manifestation of a disease, illness, impairment; or other disease process or any test, that is taken as a biopsy, autopsy, or clinical specimen solely for the purpose of conducting an immediate clinical or diagnostic test that is not a test of DNA, RNA, mitochondrial DNA, chromosomes or proteins.
No insurer, agent or broker authorized to issue policies on the lives of persons in the commonwealth shall practice unfair discrimination against persons because of the results of a genetic test or the provision of genetic information, as defined in this section. For purposes of this section unfair discrimination means cancellation, refusing to issue or renew, charging any increased rate, restricting any length of coverage or in any way practicing discrimination against persons unless such action is taken pursuant to reliable information relating to the insured’s mortality or morbidity, based on sound actuarial principles or actual or reasonably anticipated claim experience.
No insurer, agent or broker authorized to issue policies on the lives of persons in the commonwealth shall require an applicant to undergo a genetic test as a condition of the issuance or renewal of a policy on the lives of persons in the commonwealth. Any violation of this section shall constitute an unfair method of competition or unfair or deceptive act or practice in violation of chapters 93A and 176D.
In the provision of insurance on the lives of persons in the commonwealth, a company, or officer or agent thereof, or an insurance broker may ask on an application for such coverage whether or not the applicant has taken a genetic test as defined in this section. The applicant is not required to answer any questions concerning genetic testing. Any application requesting this information must contain or be accompanied by language informing the applicant that the applicant is not required to answer any questions in connection with genetic testing or information as defined in this section and language informing the applicant that the failure to do so may result in an increased rate or denial of coverage. If the applicant chooses to submit genetic information then the insurer is authorized to use that information to set the terms of a policy provided that such information is reliable information relating to the insured’s mortality or morbidity, based on sound actuarial principles, or actual or reasonably anticipated experience. If the commissioner of insurance has reason to believe that such unfair discrimination as defined in this section has occurred, and that a proceeding by the commissioner would be in the interest of the public, the commissioner shall, in accordance with the provisions of chapter 176D, issue and serve upon the insurer a statement of the charges and a notice of hearing thereon. Upon a determination that the practice or act of the insurer is in conflict with the provisions of this section, the commissioner shall issue an order requiring the insurers to cease and desist from engaging in the practice or act and may order payment of a penalty pursuant to the provisions of chapter 176D.
Upon such determination, the commissioner, in consultation with the department of public health, shall hold a public hearing under chapter 30A and may, by order, determine, based on sound actuarial principles or actual or reasonably anticipated claim experience, that the genetic test which is the subject of the cease and desist order provides no reliable information relating to the insured’s mortality or morbidity and that its use would constitute unfair discrimination. At least annually, the commissioner shall review any such order to assure that any such determination remains current and shall amend or rescind the order to reflect any change in the determination. The commissioner, in consultation with the department of public health after a public hearing under chapter 30A, may issue an advisory opinion on whether a genetic test provides no reliable information relating to the insured’s mortality or morbidity, based on sound actuarial principles or actual or reasonably anticipated claim experience. The commissioner may promulgate rules and regulation pursuant to this section.
Chapter 175: Section 121. Certain agreements; prohibition Section 121. No life company and no officer or agent thereof and no insurance broker shall make any contract of life or endowment insurance or any annuity or pure endowment contract or any agreement as to such contract other than as plainly expressed in the policy issued thereon; or give, sell or purchase, or offer to give, sell or purchase, as inducement to placing or negotiating any such contract or the continuance or renewal thereof or in connection therewith, any stocks, bonds or other securities of any company or other corporation, association or partnership, or any dividends or profits accrued thereon.
Chapter 175: Section 122. Discrimination on account of color; penalty Section 122. No life company shall make any distinction or discrimination between white persons and colored persons wholly or partly of African descent as to the premiums or rates charged for policies upon the lives of such persons; nor shall any such company demand or require greater premiums from such colored persons than are at that time required by such company from white persons of the same age, sex, general condition of health and prospect of longevity; nor shall any such company make or require any rebate, diminution or discount upon the amount to be paid on such policy in case of the death of such colored person insured, nor insert in the policy any condition, nor make any stipulation whereby such person insured shall bind himself or his heirs, executors, administrators and assigns to accept any amount less than the full value or amount of such policy in case of a claim accruing thereon, by reason of the death of such person insured, other than such as are imposed upon white persons in similar cases; and any such stipulation or condition so made or inserted shall be void.
Any such company which shall refuse the application of any such colored person for insurance upon such person’s life shall furnish such person, on his request therefor, with the certificate of a regular examining physician of such company who made the examination, stating that such refusal was not because such applicant is a person of color, but solely upon such grounds of the general health and prospect of longevity of such person as would be applicable to white persons of the same age and sex.
A company or an officer or agent thereof who violates any provision hereof shall be punished by a fine of not more than one hundred dollars.
Chapter 175: Section 123. Certain policies; issuance; restrictions; penalty Section 123. No life company shall issue any policy of life or endowment insurance in this commonwealth except upon a written application therefor signed or assented to in writing by the person to be insured; provided, that such a company may issue a policy on the life of a minor under the age of fifteen on an application signed by the parent, guardian or other person having legal custody of such minor; and provided, further, that such a company may issue a single policy on the lives of any two or more members of a family on an application signed by either parent, a step-parent, or by a husband or wife. For the purposes of this paragraph members of a family shall mean husband, wife, children, adopted children, or step-children.
No life insurance company shall accept or take action on any written request to change the designation of beneficiary under any policy of life or endowment insurance unless the signature of the person requesting the change is witnessed by a disinterested person. For purposes of this section, a disinterested person is one who is over eighteen years of age and not designated as a beneficiary in the requested change. Upon receipt and acceptance of the change of designation of beneficiary, the insurance company shall provide written notice of the change to the insured at the owner’s last known address.
This section shall not apply to contracts based upon the continuance of life, such as annuity or pure endowment contracts, whether or not they embody an agreement to refund, upon the death of the holder, to his estate or to a specified payee, any sum not exceeding the premiums paid thereon with compound interest, nor shall it apply to contracts of group life insurance.
Any company violating this section, or any officer, agent or other person soliciting or effecting, or attempting to effect, a contract of insurance contrary to the provisions hereof, shall be punished by a fine of not more than one hundred dollars.
Chapter 175: Section 123A. Insurable interests of corporations Section 123A. (1) A corporation, foreign or domestic shall be deemed to have an insurable interest, including without limitation, in the life or physical or mental ability of: (i) any of its directors, officers, or employees or the directors, officers, or employees of any of its subsidiaries; (ii) any other person whose death or physical or mental disability might cause financial loss to the corporation; (iii) a shareholder pursuant to any contractual arrangement with said shareholder concerning the reacquisition of shares owned by him at the time of his death or disability or (iv) the principal obligor pursuant to a contract obligating the corporation as part of compensation arrangements or pursuant to a contract obligating the corporation as guarantor or surety. The trustee of a trust established by a corporation for the sole benefit of the corporation shall have the same insurable interest in the life or physical or mental ability of any person as does the corporation. The trustee of a trust established by a corporation providing life, health, disability, retirement, or similar benefits to employees of the corporation or its subsidiaries and acting in a fiduciary capacity with respect to such employees, retired employees or their dependents or beneficiaries shall have an insurable interest in the lives of employees or retired employees for whom such benefits are to be provided.
(2) A charitable institution as defined under section 501 (c)(3), (c)(6), (c)(8), and (c)(9) of the Internal Revenue Code shall be deemed to have an insurable interest, without limitation, in the life of any donor.
Chapter 175: Section 124. Statements concerning age or health; binding effect on company Section 124. In any claim arising under a policy issued in the commonwealth by any life company, without previous medical examination, or without the knowledge and consent of the insured, or, if said insured is a minor, without the consent of the parent, guardian or other person having legal custody of said minor, the statements made in the application as to the age, physical condition and family history of the insured shall be held to be valid and binding on the company; but the company shall not be debarred from proving as a defense to such claim that said statements were wilfully false, fraudulent or misleading.
Chapter 175: Section 125. Creditors or beneficiaries; rights Section 125. If a policy of life or endowment insurance is effected by any person on his own life or on another life, in favor of a person other than himself having an insurable interest therein, the lawful beneficiary thereof, other than himself or his legal representatives, shall be entitled to its proceeds against the creditors and representatives of the person effecting the same, whether or not the right to change the named beneficiary is reserved by or permitted to such person; provided, that, subject to the statute of limitations, the amount of any premiums for said insurance paid in fraud of creditors, with interest thereon, shall enure to their benefit from the proceeds of the policy; but the company issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms, unless before such payment the company shall have written notice, by or on behalf of a creditor, of a claim to recover for certain premiums paid in fraud of creditors, with specification of the amount claimed. No court, and no trustee or assignee for the benefit of creditors, shall elect for the person effecting such insurance to exercise such right to change the named beneficiary.
Any person to whom a policy of life or endowment insurance, issued subsequent to April eleventh, eighteen hundred and ninety-four, is made payable may maintain an action thereon in his own name.
Chapter 175: Section 126. Married woman; beneficiary under insurance contract Section 126. Every policy of life or endowment insurance made payable to or for the benefit of a married woman, or after its issue assigned, transferred or in any way made payable to a married woman, or to any person in trust for her or for her benefit, whether procured by herself, her husband or by any other person, and whether the assignment or transfer is made by her husband or by any other person, and whether or not the right to change the named beneficiary is reserved by or permitted to the person effecting such insurance, shall enure to her separate use and benefit, and to that of her children, subject to the provisions of section one hundred and twenty-five relative to premiums paid in fraud of creditors and to sections one hundred and forty-four to one hundred and forty-six, inclusive. No court, and no trustee or assignee for the benefit of creditors, shall elect for the person effecting such insurance to exercise such right to change the named beneficiary.
Chapter 175: Section 127. False statements; penalties Section 127. An insurance agent, examining physician or other person who knowingly or wilfully makes a false or fraudulent statement or representation in or relative to any application for life or endowment insurance, or who makes any such statement for the purpose of obtaining a fee, commission or money, or benefit in a company transacting such business under this chapter, shall be punished by a fine of not less than one hundred nor more than five hundred dollars or by imprisonment for not less than one month nor more than one year, or both; and a person who wilfully makes a false statement of any material fact or thing in a sworn statement as to the death or disability of a policyholder in any such company, for the purpose of procuring payment of a benefit named in the policy, shall be guilty of perjury.
Chapter 175: Section 128. Infants; avoidance of certain contracts; prohibition Section 128. Any minor resident in this commonwealth who shall have attained the age of fifteen years shall be deemed competent to contract for life or endowment insurance upon his life, for his own benefit or for the benefit of the husband, wife, children, father, mother, brother, sister or grandparent of such minor, and to exercise and enjoy every right, privilege and benefit provided by any life or endowment insurance contract on the life of such minor, subject to the foregoing limitations as to designation of beneficiary.
Chapter 175: Section 128A. Repealed, 1975, 111, Sec. 1 Chapter 175: Section 129. Policies; description Section 129. No life company and no officer or agent thereof shall issue a policy of life or endowment insurance or an annuity or pure endowment policy to a resident of the commonwealth not bearing in bold letters upon its face a plain description of the policy, so fully defining its character, including dividend periods and other peculiarities, that the holder thereof shall not be likely to mistake the nature or scope of the contract.
Chapter 175: Section 12A. Repealed, 2004, 123, Sec. 11 Chapter 175: Section 13. Repealed, 1923, 39, Sec. 3 Chapter 175: Section 130. Policies; incorrect dating; prohibition Section 130. No policy of life or endowment insurance shall be issued or delivered in the commonwealth if it shall purport to be issued or to take effect as of a date more than six months before the date of the original written application, if thereby the applicant would rate at an age younger than his age at nearest birthday on the date when the application was made, and no annuity or pure endowment contract shall be so issued or delivered if it shall purport to be issued or to take effect at an age higher than the age of the applicant at his nearest birthday at the time of the original written application.
Chapter 175: Section 131. Copy of application; attachment to policy Section 131. Unless a correct copy of the application is endorsed upon or attached to a policy of life or endowment insurance, when issued, the application shall not be considered a part of the policy or received in evidence for any purpose. Every such policy which contains a reference to the application, either as a part of the policy or as having any bearing thereon, shall have endorsed thereon or attached thereto, when issued, a correct copy of the application.
Chapter 175: Section 132. Policies; commissioner’s approval; contents Section 132. No policy of life or endowment insurance and no annuity, survivorship annuity or pure endowment contract shall be issued or delivered in the commonwealth until a copy of the form thereof has been on file for thirty days with the commissioner, unless before the expiration of said thirty days he shall have approved the form of the policy or contract in writing; nor if the commissioner notifies the company in writing, within said thirty days, that in his opinion the form of the policy or contract does not comply with the laws of the commonwealth, specifying his reasons therefor, provided that such action of the commissioner shall be subject to review by the supreme judicial court; nor shall any such policy or contract, except as hereinafter provided, and except annuity or pure endowment contracts, whether or not they embody an agreement to refund to the estate of the holder upon his death or to a specified payee any sum not exceeding the premiums paid thereon with compound interest, and except survivorship annuity contracts, be so issued or delivered unless it contains in substance the following:1. A provision that the insured is entitled to thirty days of grace within which the payment of any premium after the first year may be made, subject at the option of the company to an interest charge not in excess of six per cent per annum for the number of days of grace elapsing before the payment of the premium, during which period of grace the policy shall continue in full force; but if the policy becomes a claim during the said period of grace before the overdue premium or the deferred premiums of the current policy year, if any, are paid, the amount of such premiums, with interest on any overdue premium, may be taken from the face of the policy in settlement.
2. A provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue except for non-payment of premiums or violation of the conditions of the policy relating to military or naval service in time of war and except, if the company so elects, for the purpose of contesting claims for total and permanent disability benefits or additional benefits specifically granted in case of death by accident.
3. A provision that the policy and the application therefor shall constitute the entire contract between the parties, and that no statement made by the insured or on his behalf shall be used in defence to a claim under the policy unless it is contained in a written application, and a copy of such application is endorsed upon or attached to the policy when issued.
4. A provision that if the age of the insured has been misstated the amount payable under the policy shall be such as the premium would have purchased at the correct age.
5. A provision that the policy shall participate in the surplus of the company annually, beginning not later than the end of the third policy year.
6. A provision specifying the nonforfeiture benefits to which the holder of the policy is entitled under section one hundred and forty-four, together with a provision stating the mortality table and interest rate used in computing said benefits, the manner in which the said benefits are altered by the existence of any paid-up additions to the policy or any indebtedness to the company on the policy or secured thereby, and the method used in computing such of said benefits as are not shown in the table required by provision eight.
7. A provision that the holder of the policy shall be entitled to a loan thereon from the company, as provided in and subject to the provisions of section one hundred and forty-two.
8. A table showing in figures the loan values, if any, and the amounts of the cash surrender values and the paid-up nonforfeiture benefits, if any, available under the policy on each anniversary thereof during the first twenty years of the policy.
9. A provision that the company may defer the granting of any loan other than to pay premiums on policies in the company, and the payment of any cash surrender value, for six months from the date of the written application, in the case of a loan, and from the date of the written election thereof with surrender of the policy, in the case of a cash surrender value.
10. In case the proceeds of a policy are payable in instalments or as an annuity, a table showing the amounts of instalments and annuity payments. If a policy contains a table or tables of payments with respect to two or more alternative annuities involving life contingencies, this provision shall not preclude an additional or supplementary optional annuity or annuities involving life contingencies without such a table, or without a complete table, if the policy contains a provision that the amounts of the payments under such additional or supplementary annuity or annuities may be obtained upon application to the company at any time that such amounts are determinable under the terms of the policy.
11. A provision that the holder of a policy shall be entitled to have the policy reinstated at any time within three years from the date of default, unless the cash surrender value has been duly paid or the extension period has expired, upon the production of evidence of insurability satisfactory to the company and the payment of all overdue premiums and any other indebtedness to the company upon said policy, with interest at the rate of not exceeding six per cent per annum or, at the option of the company, with interest as aforesaid compounded semi-annually.
12. The term “insured” as used in provision 4 hereof shall include any other person whose age is considered in determining the amount of any premium under a policy. The term “evidence of insurability satisfactory to the company” as used in provision 11 hereof shall include evidence of insurability of any person upon whose death a benefit may accrue or become payable under the policy.
None of the foregoing provisions, except provisions numbered 6, 8 and 9, shall be required to be contained in industrial life insurance policies, but such portions of said provisions numbered 8 and 9 as relate to loans and loan values shall not be required to be contained therein. The foregoing provision numbered 8 shall also not apply to policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums or which provide an option for changes in benefits or premiums other than a change to a new policy.
Any of the foregoing provisions or portions thereof not applicable to single premium or non-participating or term policies shall to that extent not be incorporated therein.
This section shall not apply to policies of group life insurance issued or delivered in the commonwealth after June thirtieth, nineteen hundred and eighteen.
A policy shall be deemed to contain any such provision in substance when in the opinion of the commissioner the provision is stated in terms more favorable to the insured or his beneficiary than are herein set forth.
None of the foregoing provisions shall apply to any policy of life or endowment insurance which is a contract on a variable basis, except that any such policy delivered or issued for delivery in this commonwealth shall contain such grace, reinstatement, nonforfeiture and other provisions as may be appropriate to such policy.
Chapter 175: Section 132A1/2. Requirements for other group annuity contracts Section 132A1/2. A group annuity offered to a resident of the commonwealth under a group annuity contract issued to a group other than one described in section 132A shall be subject to the following requirements:(a) A group annuity contract shall not be delivered in the commonwealth unless the commissioner finds that:(1) the issuance of the group annuity contract is not contrary to the best interests of the public;(2) the issuance of the group annuity contract would result in economies of acquisition or administration; and(3) the benefits are reasonable in relation to the premiums charged.
(b) The premium for the annuity contract shall be paid either from the contract holder’s funds or from funds contributed by the covered persons, or from both.
Chapter 175: Section 132A. Group annuity contract; definitions Section 132A. A group annuity contract is hereby defined to be a contract issued by a company(a) to a person, firm or corporation, as employer, and providing for the payment of annuities on all of his or its employees or any specified class or classes thereof, and which requires that the considerations or stipulated payments shall be paid by the employer or by the employer and the employees jointly; provided, however, that this clause shall not apply to any group annuity plan to which the provisions of section 403(b) of the Internal Revenue Code apply; or(b) to an employers’ association, and providing for the payment of annuities on all of the employees of any or all the members of such association or of any specified class or classes of such employees, and which requires that the considerations or stipulated payments shall be paid either wholly by each employer with respect to his or its employees, or jointly by the employer and his or its employees, or with gifts or other voluntary contributions received by such employers’ association; or(c) to a trade union or other association of wage workers described in section twenty-nine, and providing for the payment of annuities on all of the members of such union or association or of any specified class or classes thereof, and which requires that the considerations or stipulated payments shall be paid wholly with funds contributed by such union or association, the employer or employers of the persons covered under the contract, or both, or partly with such funds and partly with funds contributed by the persons covered under the contract; or(d) to the trustee or trustees of a fund established by one or more employers, or by one or more trade unions or other associations of wage workers described in section twenty-nine, or by one or more employers and one or more such unions or associations, and providing for the payment of annuities on all of the employees of the employers or all of the members of the unions or associations, or all of any class or classes thereof, and which requires that the considerations or stipulated payments shall not be paid wholly with funds contributed specifically for such coverage by the persons covered thereunder except in the case of coverage of a partner or an individual proprietor.
The word “employees”, as used in this section, shall include the individual proprietor or partners if an employer is an individual proprietor or partnership, and, in the case of a corporation, the employees of its subsidiary or affiliated corporations, and the individual proprietors, partners and employees of affiliated individuals and firms controlled by the holder or by a member of an employers’ association through stock ownership, contract or otherwise, and retired employees and officers and managers of any employer, and the widows and dependent children of deceased employees. The words “members of a trade union or other association of wage workers described in section twenty-nine” shall include employees of such union or association, retired members and the widows and dependent children of deceased members.
The word “annuitant”, as used in this section and sections one hundred and thirty-two B and one hundred and thirty-two C, shall mean any person on whose life an annuity is payable under a group annuity contract.
The word “holder”, as used in this section and sections one hundred and thirty-two B and one hundred and thirty-two D, shall mean the person, firm, association, corporation, trustee or trustees, or trade union or other association of wage workers described in section twenty-nine, to whom or to which a group annuity contract is issued.
Chapter 175: Section 132B. Group annuity contract; issuance; form; commissioner’s approval; review; contents Section 132B. No group annuity contract shall be issued or delivered in the commonwealth, except as provided in section one hundred and thirty-two A, nor until a copy of the form thereof has been on file for thirty days with the commissioner unless before the expiration of such thirty days he shall have approved in writing the form of the contract; nor if the commissioner notifies the company in writing within said thirty days that in his opinion the form of the contract does not comply with the laws of the commonwealth, specifying his reasons therefor; provided, that such action of the commissioner shall be subject to review by the supreme judicial court; nor shall any such contract be so issued or delivered unless it contains in substance the following provisions:—1. That the holder is entitled to thirty days of grace within which the payment of any considerations or stipulated payments falling due on the contract after one year from its date of issue may be made, subject, at the option of the company, to an interest charge at a rate, to be specified in the contract, not exceeding six per cent per annum for the number of days of grace elapsing before payment of the considerations or stipulated payments.
2. That (1) the contract, or (2) a provision that the contract and the application of the holder, a copy of which shall be attached thereto, or (3) a provision that the contract and the application of the holder, a copy of which shall be attached thereto, and the individual applications of the annuitants filed with the company and referred to in the contract, shall constitute the entire agreement between the parties.
3. That if the sex, age, service, salary or any other fact affecting the amount of any considerations or stipulated payments payable to the company or the amount or the date or dates of payment of any benefits with respect to any annuitant has been misstated, the considerations or stipulated payments, or the benefits, or both, shall be the amount which would have been payable if such fact or facts had not been misstated, and that, in no case, shall the company be liable to pay any greater benefit with respect to any annuitant than that which would be payable on the basis of the true facts and the actual considerations or stipulated payments received by the company.
4. That in case of the termination, otherwise than by death, of the employment of an annuitant or the discontinuance of the payment of considerations or stipulated payments under the contract, an annuitant who contributes to such considerations or payments shall be entitled to a paid-up annuity, payable commencing on a fixed date, based upon the same mortality table, rate of interest and loading formula used by the company in computing such considerations or payments; that such annuity shall be for an amount at least equal to that purchased by the contributions of the annuitant, determined as of the respective dates of payment of his several contributions, as shown by a schedule which shall be included in the contract; that, if the amount of such paid-up annuity is less than sixty dollars annually, the company may, at its option, in lieu of such paid-up annuity, pay as a cash surrender value an amount at least equal to ninety-six per cent of the aggregate amount of the annuitant’s contributions, without interest, and that such value may be paid either in a single sum or in equal instalments over a period of not more than twelve months; and that, in case of the death of the annuitant prior to the commencement date of the annuity, the company shall pay a death benefit at least equal to the aggregate amount of the annuitant’s contributions, without interest, but not exceeding the aggregate amount of the considerations or stipulated payments made to the company on account of the annuitant, with interest. A group annuity contract which is a contract on a variable basis need not comply with the foregoing requirements provided that such contract specifies, in a manner satisfactory to the commissioner, the nature and the basis of the ascertainment of benefits to be paid to or in respect of an annuitant who has contributed to the considerations or payments under such a contract.
5. That the company will issue to the holder of the contract, for delivery to each annuitant who contributes to the considerations or stipulated payments thereunder, an individual certificate setting forth a summary of the benefits to which he is entitled under the contract.
6. That, in the case of a participating contract, any dividend or dividends apportioned thereunder by the company shall be paid in cash to the holder for his or its own benefit; or a provision that any such dividend or dividends shall be applied in reduction of the considerations or stipulated payments, or portion thereof, paid or payable by the holder; or a provision that any such dividend or dividends may be paid in cash or applied, as aforesaid.
7. That, in case of a non-participating contract that provides for experience rating credits, any such credit or credits which may be allowed by the company shall be paid in cash to the holder of the contract for his or its own benefit; or a provision that any such credit or credits shall be applied in reduction of the considerations or stipulated payments, or portion thereof, paid by the holder; or a provision that any such credit or credits may be paid in cash or applied, as aforesaid.
Any such contract may, at the option of the company, provide that, in case of the termination, otherwise than by death, of the employment of an annuitant or the discontinuance of the payment of considerations or stipulated payments thereunder, benefits shall be payable to the holder, and, in such a case, the contract shall specify the nature and the basis of the ascertainment of any such benefits.
Any such contract may, by mutual agreement of the company and the holder, contain any provision which is required or authorized by, or is necessary to conform the contract to, or to give the holder the benefit of, any federal statute or any rule or regulation of the United States Treasury Department.
Provisions numbered 3 and 4, and no other such provision, shall be required to be contained in substance in the certificate mentioned in provision numbered 5.
A group annuity contract, and any certificate issued thereunder, shall be deemed to contain in substance any provision required by this section when in the opinion of the commissioner the provision is stated in terms more favorable to the annuitants or not less favorable to the annuitants and more favorable to the holder.
Chapter 175: Section 132C. Group annuity contract; exemption from process; exception Section 132C. No group annuity contract, nor the proceeds or benefits thereof, shall be liable, either before or after payment, to be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liabilities of the annuitant or his beneficiary or any other person having any right thereunder; nor shall the benefits or proceeds upon the death of an annuitant, when not made payable to a beneficiary, constitute a part of the estate of the annuitant for the payment of his debts.
Nothing in this section shall prevent an annuitant’s benefits from being seized, taken, appropriated, assigned, or applied by any legal or equitable process or operation of law to satisfy a support order under chapter two hundred and eight, two hundred and nine, or two hundred and seventy-three.
Chapter 175: Section 132D. Group annuity contracts; members Section 132D. Under any group annuity contract issued by a domestic mutual life company, the holder only shall be a member of the company, and entitled to one vote by virtue of such contract at the meetings of the company.
Chapter 175: Section 132E. Group annuity contract; construction Section 132E. The term “annuity” or “annuity contract” when used in this chapter, except in sections one hundred and twenty-nine, one hundred and thirty and one hundred and thirty-two, shall include a group annuity contract unless the context otherwise requires or a different meaning is specifically prescribed.
Chapter 175: Section 132F. Pension contracts; funding agreements; separate accounts Section 132F. Any life company may, by written agreements, hereinafter called “funding agreements”, with the holders of “pension contracts”, as hereinafter defined, assign, wholly or in part, such contracts and the funds received thereunder, to one or more separate investment accounts, independent of its general investment account, for the purposes of allocating investment returns and asset gains and losses. Within each separate investment account, hereinafter called “separate account”, such classes of investments may be established as the life company may determine.
“Pension contracts” for the purpose of this section shall mean life policies and annuity contracts or any other policies or contracts, whether on the group or individual basis, and any supplementary agreements relating thereto, issued in connection with a pension, profit-sharing, or retirement plan; and shall include such contracts assigned wholly or in part to any separate account after their dates of issue, and agreements reinsuring pension contracts issued by other insurers or reinsuring retirement systems established by law.
Pension contracts shall provide for the payment of a periodic retirement benefit payable in fixed or variable amounts, or both. In the case of any pension contract providing for retirement benefits payable in variable amounts, such benefits may vary in amount in direct proportion to the investment results of any or all investments in any separate account to which such pension contract has been assigned in whole or in part or, with the approval of the commissioner, such benefits may vary on some other basis fixed by the contract. Any pension contract delivered in this commonwealth providing for the payment of a retirement benefit in variable amounts shall contain a statement of the essential features of the procedure to be followed by a life company in determining the amount of such variable benefits. Any such pension contract, including a group contract and any certificate issued thereunder, shall state that the amount of such variable benefits may decrease or increase and shall contain on its first page, in a prominent position, a statement that the benefits thereunder are on a variable basis. If and to the extent so provided under the applicable contracts, that portion of the assets of a separate account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the life company may conduct.
Amounts payable to the life company under a funding agreement with the holder of a pension contract may, with the consent of the life company, be paid by transferring to the life company investments then held under a pension, profit-sharing, or retirement plan which meets the requirements for the tax treatment specified in the second paragraph of this section.
The life company’s reserve liability under a pension contract with respect to benefits payable in fixed and guaranteed amounts and with respect to funds guaranteed as to principal amount or stated rate of interest may be maintained in a separate account (i) if the portion of the assets of such separate account which is allocated to the funding agreement with respect to such pension contract shall be invested in accordance with the requirements applicable to the life company’s general investment account; provided, however, that such guaranteed separate account need not comply with the requirement of paragraph 14A of section sixty-three, to the effect that not more than one-half of the reserve of any domestic stock or mutual life company shall be invested in corporate obligations authorized under said paragraph 14A, and shall be valued and computed as provided in section twenty-five, or (ii) if the insurer shall annually prepare, an actuarial opinion that, after taking into account any risk charge payable from the assets of such separate account with respect to such guarantee, the assets in such separate account make good and sufficient provision for the fixed and guaranteed obligations of the insurer under such pension contract, and such opinion shall be accompanied by a memorandum of the actuary providing the opinion describing the calculations made in support of such opinion and the assumptions used in the calculations. Such actuarial opinion and accompanying memorandum shall be maintained in the insurer’s home office and be available for examination. To the extent that a pension contract provides for the payment of benefits in variable amounts, the life company’s reserve liability for such benefits shall be in accordance with actuarial procedures which recognize the variable nature of the benefits to be provided.
Except as required by clause (i) of the preceding paragraph, the life company’s assets relating to separate accounts shall be valued at their market value at the date as of which valued in accordance with the terms of the applicable agreements, or if there is no readily available market, then in accordance with the terms of such agreements.
The life company’s assets and liabilities relating to separate accounts shall be included in its other assets and liabilities in the annual statement required by section twenty-five.
No domestic life company, and no other life company admitted to transact business in this commonwealth, shall be authorized to issue or deliver within this commonwealth any pension contract providing benefits in variable amounts until such company has satisfied the commissioner that its condition and methods of operation in connection with the issuance of such contracts will not be such as would render its operation hazardous to the public or its policyholders in this commonwealth. In determining the qualification of a company requesting authority to issue or deliver such contracts within this commonwealth, the commissioner shall consider, among other things, (1) the history and financial condition of the company; (2) the character, responsibility and general fitness of the officers and directors of the company; and (3) in the case of a company other than a domestic company, whether the regulation provided by its domiciliary jurisdiction provides a degree of protection to policyholders and the public which is substantially equal to that provided by this section and by the rules and regulations issued thereunder.
The commissioner may issue such rules and regulations as may be necessary to carry out the provisions of this section. The provisions of chapter thirty A shall not be applicable to such rules and regulations.
Chapter 175: Section 132G. Variable annuity contracts; issuance; contents; separate investment accounts; reserve liability; approval; rules and regulations Section 132G. “Contract on a variable basis” for the purpose of this section shall mean any life policy or contract, annuity contract or any other policy or contract, whether on the group or individual basis, and any supplementary agreements relating thereto, issued by a life company providing for the amount of benefits or other contractual payments or values thereunder to vary, in whole or in part, so as to reflect the investment results of a separate investment account or accounts established under this section in which amounts received in connection with any such contract have been placed or, with the approval of the commissioner, to vary, in whole or in part, on some other basis fixed by the contract. No “pension contract” as defined in section one hundred and thirty-two F shall be subject to this section unless assigned by the life company to a separate investment account established under this section.
Any life company may issue contracts on a variable basis and, in connection with such contracts or in connection with contracts payable in whole or in part in fixed amounts or variable amounts, or a combination thereof, or for which the accumulation in whole or in part is guaranteed as to principal amount or stated rate of interest, may establish one or more separate investment accounts, hereinafter called “separate accounts,” independent of its general investment account. All amounts received by the life company which are required by a contract on a variable basis to be applied to provide variable benefits, payments or values thereunder shall be placed in the appropriate separate account or accounts. If, and to the extent so provided under the applicable, variable, fixed or guaranteed contracts, that portion of the assets of the separate account equal to the reserves and other contract liabilities with respect to the account shall not be chargeable with liabilities arising out of any other business the life company may conduct. The income, if any, and gains or losses, realized or unrealized, on each such separate account shall be credited to or charged against the amounts placed in such account without regard to the other income, gains or losses of the company. Amounts payable to the life company under any such variable, fixed or guaranteed contract may, with the consent of the life company, be paid by transferring investments to the life company.
Except as otherwise provided in clause (i) of following paragraph, assets in any separate account shall be valued at their market value at the date as of which valued in accordance with the terms of the applicable contracts, or if there is no readily available market, then in accordance with the terms of such contracts. Separate account assets and liabilities shall be included in the annual statement required by section twenty-five.
The life company’s reserve liability for contracts on a variable basis shall be in accordance with actuarial procedures which recognize the variable nature of the benefits, payments or values to be provided. A contract on a variable basis may provide for benefits payable in fixed amounts and for values or funds guaranteed as to principal amount or stated rate of interest; provided, that to the extent, that the life company’s reserve liability with respect to guaranteed benefits, values or funds is maintained in any separate account, either (i) a portion of the assets of such separate account at least equal to such reserve liability shall be invested in accordance with the requirements applicable to the life company’s general investment account; provided, however, that such guaranteed separate account need not comply with the requirement of paragraph 14A of section sixty-three to the effect that not more than one-half of the reserve of any domestic stock or mutual life company shall be invested in corporate obligations authorized under said paragraph 14A, and shall be valued and computed as provided in section twenty-five or (ii) the insurer shall annually prepare an actuarial opinion that, after taking into account any risk charge payable from the assets of such separate account with respect to such guarantee, the assets in such separate account make good and sufficient provision for the fixed and guaranteed obligations of the insurer under any contract funded by such separate account, and such opinion shall be accompanied by a memorandum of the actuary providing the opinion describing the calculations made in support of such opinion and the assumptions used in the calculations. Such actuarial opinion and accompanying memorandum shall be maintained in the insurer’s home office and be available for examination.
Any contract on a variable basis delivered or issued for delivery in this commonwealth shall contain a statement of the essential features of the procedure to be followed by the life company in determining the amount of variable benefits, payments or values thereunder. Any such contract, including a group contract and any certificate issued thereunder, shall state that the amount of variable benefits, payments or values thereunder may decrease or increase according to such procedure, and shall contain on its first page, in a prominent position, a statement that the benefits, payments or values thereunder are on a variable basis. Any such contract containing such statements shall be deemed to contain a distinct statement of the amount of benefits payable as required by section one hundred and eighteen.
No contract on a variable basis shall be issued or delivered in the commonwealth until a copy of the form thereof, including, in the case of a contract on a group basis, the form of any certificate evidencing variable benefits issued pursuant thereto, and any form of application for such contract, has been on file for thirty days with the commissioner unless before the expiration of such thirty days he shall have approved in writing the form of the contract; nor if the commissioner notifies the company in writing within said thirty days that in his opinion the form of the contract does not comply with the laws of the commonwealth, specifying his reasons therefor; provided that such action of the commissioner shall be subject to review by the supreme judicial court. The provisions of sections one hundred and ninety-three F, one hundred and ninety-three G and one hundred and ninety-three H shall apply to forms of contracts on a variable basis.
Notwithstanding any other provision of law, any domestic life company which establishes one or more separate accounts in connection with contracts on a variable basis may provide to the holders of interests in any such separate account voting rights with respect to the management of such separate account and the investment of assets therein, may establish for such separate account a committee, board or other body the members of which (1) may be elected solely by holders having such voting rights and (2) may or may not be otherwise affiliated with such life company, and may provide for compliance with any applicable state and federal law, in order that contracts on a variable basis may be lawfully sold or offered for sale.
Notwithstanding any other provision of law, any domestic life company may, with respect to any separate account it establishes and registers with the Securities and Exchange Commission as a unit investment trust, exercise voting rights in connection with any securities of a regulated investment company registered under the Federal Investment Company Act of 1940 in accordance with instructions from persons having interests in such account ratably as determined by the company.
No domestic life company, and no other life company admitted to transact business in this commonwealth, shall be authorized to issue or deliver within this commonwealth any contract on a variable basis until such company has satisfied the commissioner that its condition and methods of operation in connection with the issuance of such contracts will not be such as would render its operation hazardous to the public or its policyholders in this commonwealth. In determining the qualification of a company requesting authority to deliver such contracts within this commonwealth, the commissioner shall consider, among other things:(1) The history and financial condition of the company;(2) The character, responsibility and general fitness of the officers and directors of the company; and(3) In the case of a company other than a domestic company, whether the regulation provided by its domiciliary jurisdiction provides a degree of protection to policyholders and the public which is substantially equal to that provided by this section and the rules and regulations issued thereunder.
Notwithstanding any other provisions of law, if the company is a subsidiary of an admitted life insurance company, or affiliated with such company through common management or ownership, it may be deemed by the commissioner to have satisfied the provisions of the preceding paragraph, and that part of section one hundred and fifty-three requiring that the company has been issuing life insurance policies or annuity contracts during each of at least the preceding three years, if either it or such admitted life company satisfies the aforementioned provisions; provided, however, that such admitted life company has a satisfactory record of doing business in this commonwealth for a period of at least three years.
The commissioner may issue such rules and regulations as may be necessary to carry out the provisions of this section. The provisions of chapter thirty A shall not be applicable to such rules and regulations.
Chapter 175: Section 132H. Variable annuity contracts; investment of assets; limitations; rules and regulations Section 132H. Assets in any separate account established under section one hundred and thirty-two F or one hundred and thirty-two G shall not be deemed to be part of the reserve mentioned in section sixty-three and may be invested and reinvested, except as otherwise provided in said sections one hundred and thirty-two F and one hundred and thirty-two G, wholly or partly, in common stocks and other securities, including the shares of any investment company registered under the Federal Investment Company Act of 1940, as amended, and investments of any other kind permitted by this chapter; provided, however, that not more than ten per cent of all such separate account assets of a life company shall be invested in the capital stock, certificates of participation or shares of any one corporation, association or trust, other than one or more of such investment companies which are open-end, diversified management companies as defined in said Federal Investment Company Act of 1940, if at the time the investment is made all such separate account assets exceed one million dollars. The provisions of section sixty-six placing limitations on the percentage of its capital and surplus which shall be invested by a life company in the capital stock, certificates of participation or shares of any one corporation, association or trust shall not be applicable to investments of assets in such separate accounts, nor shall assets in such separate accounts be taken into consideration in applying such limitations to investment of assets in the life company’s general investment account. The provisions of section sixty-six placing limitations on the percentage of the capital stock, certificates of participation or shares of any one corporation, association or trust which a life company shall invest in, acquire or hold, shall not be applicable to purchases for any such separate account. Except as provided in this section, the investment limitations based on percentages of the life company’s assets or percentages of capital and surplus, other than that contained in the second sentence in the third paragraph of section sixty-four, shall not apply, either in whole or in part, to any investments of assets by a life company allocated to any separate accounts. Assets allocated by a life company to separate accounts shall be wholly disregarded and shall not be taken into consideration in applying such investment limitations to investment of assets in a life company’s general investment account.
The commissioner may issue such rules and regulations as may be necessary to carry out the provisions of this section. The provisions of chapter thirty A shall not be applicable to such rules and regulations.
Chapter 175: Section 132I. Funding agreements Section 132I. Any insurer authorized to issue annuity contracts in the commonwealth may issue one or more funding agreements, in fixed or variable amounts or in both, to fund (i) benefits under any employee benefit plan as defined in the federal Employee Retirement Income Security Act of 1974, 29 U.
S.
C. section 1002; (ii) the activities of any organization exempt from taxation under section 501(c) of the Internal Revenue Code or any similar organization in any foreign country; (iii) any program of the government of the United States, the government of any state, foreign country or political subdivision thereof; (iv) any agreement providing for periodic payments in satisfaction of a claim; or (v) any program of any individual or entity which has assets in excess of $25,000,000. Amounts paid to the insurer under such funding agreements may be allocated by the insurer to its general account or to one or more separate accounts pursuant to section 132F or section 132G. The issuance of a funding agreement in the commonwealth shall constitute doing an insurance business herein. For purposes of section 180F, funding agreements shall be treated as insurance contracts, and the holders thereof shall be entitled to the same priority of distribution as policyholders.
Chapter 175: Section 133. Group life insurance defined Section 133. Group life insurance is hereby defined to be that form of life insurance covering (a) not less than ten employees at date of issue, with or without medical examination, written under a policy issued to the employer, or to the trustees of a fund established by the employer, the premium on which is to be paid by the policyholder, either wholly from the employer’s funds or funds contributed by him, or partly from such funds and partly from funds contributed by the insured employees, and insuring only all of the employees of the employer, or all of any class or classes thereof determined by conditions pertaining to their employment, or by duration of service in which case no employee shall be excluded if he has been for one year or more in the employ of the employer, or for such period longer than one year as may be required by any pension plan under or in connection with which the policy is taken out, for amounts of insurance based upon some plan precluding individual selection, and for the benefit of persons other than the employer, provided, that when part of the premium is to be derived from funds contributed by the insured employees and the benefits of the policy are offered to all eligible employees, not less than seventy-five per cent of such employees may be so insured, or not less than forty per cent if each employee belonging to the insured group has been medically examined and found acceptable for ordinary insurance by an individual policy; or (b) the members of any trade union or other association of wage workers described in section twenty-nine, with or without medical examination, written under a policy issued to such union or association, the premium on which is to be paid by the union or association or by the union or association and the members thereof jointly, and insuring all of the members of such union or association, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in such union or association, or to both, for amounts of insurance based upon some plan which will preclude individual selection, and for the benefit of persons other than the union or association or any officers thereof, provided, that when the premium is to be paid by the union or association and its members jointly and the benefits of the policy are offered to all eligible members, not less than seventy-five per cent of such members may be so insured, and provided further that any member or members insured under the policy may apply for amounts of insurance additional to those granted by said policy, in which case any percentage of the members may be insured for additional amounts if they pass satisfactory medical examinations; or (c) a group of persons who at any time are debtors of a bank, association, financial or other institution, including its subsidiary or affiliated institutions, if any, for a loan, or of the vendor of any property for its purchase price, or who are co-debtors or guarantors of said obligation, under an agreement to pay said obligation, or who at any time have been granted a policy loan pursuant to a policy provision therefor, written under a policy issued, with or without requirement of evidence of individual insurability, to said bank, association, financial or other institution or vendor, or to a parent holding company, or to the trustee, trustees or agent designated by one or more said banks, associations, financial or other institutions or vendors, or to the insurance company granting said policy loan, and made payable to said creditor or to the assignee of said obligation, or to said insurance company granting said policy loan, including the insurance company which issues said policy, and insuring the life of each debtor, co-debtor, guarantor or the person granted said policy loan, for an amount, with respect to each said obligation or policy loan, not exceeding his individual obligation exclusive of unearned finance charges, or policy loan with interest, and not exceeding $125,000; provided, however, that where joint life insurance is afforded, not more than two persons may be insured in connection with any one credit transaction; provided, however, that no such debtor shall be insured in such a group for a period of more than fifteen years on account of a debt arising out of said loan or policy loan or obligation for said purchase price, and provided, further, that said $125,000 amount limitation and said fifteen year period limitation contained in this clause shall not apply to said insurance for which no identifiable charge is made to the debtor, co-debtor or guarantor; or (d) the members of any association of state, county or municipal employees, who are regularly and permanently employed by the commonwealth, a county or a municipality and, if employed by the commonwealth or the city of Boston, are paid by a common paymaster and are eligible for membership in the retirement association for the employees of the commonwealth or of the city of Boston, or the members of any association of employees of two or more municipalities within one county who are regularly and permanently employed by one or more such municipalities, with or without medical examination, written under a policy issued to the association, the premium on which is to be paid by its members and insuring not less than fifty members at date of issue and seventy-five per cent of all persons eligible for membership therein, for amounts of insurance based upon some plan which will preclude individual selection, and for the benefit of persons other than the association or any officers thereof; provided, that any member or members insured under such policy may apply for amounts of insurance additional to those granted by said policy, in which case any percentage of the members may be insured for additional amounts if they pass satisfactory medical examinations; and provided, further, that no person shall be eligible for coverage under such a policy as a member of more than one such association; or (e) all the employees of two or more employers in the same industry, or the members of one or more trade unions or associations of wage workers described in section twenty-nine, or the employees of one or more employers in the same industry and the members of one or more such trade unions or such associations, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the union or unions or association or associations, or to both, with or without medical examination, written under a policy issued to the trustees of a fund established by two or more employers in the same industry or by one or more such trade unions or such associations, or by one or more employers and one or more such trade unions or associations, which trustees shall be deemed to be the policyholder, the premium on which is to be paid by the trustees, either wholly from funds contributed by the employer or employers of the insured persons, or by the union or association or unions or associations, or by both, or partly from such funds contributed by the employer or employers of the insured persons, or by the union or association or unions or associations, or by both, and partly from such funds contributed by the insured persons specifically for their insurance, or, with respect to a policy issued to the trustees of a fund established by one or more employers and one or more such trade unions or associations, partly from such funds contributed by the employers, unions or associations, or both, and partly from funds contributed by the insured persons specifically for their insurance, for amounts of insurance based upon some plan precluding individual selection either by the insured persons or by the policyholder, or employers, or union or unions or association or associations, and for the benefit of persons other than the employer or employers, or the union or unions or association or associations or any officers thereof, provided that when part of the premium is to be contributed by the insured persons specifically for their insurance and the benefits of the policy are offered to all eligible persons, not less than seventy-five per cent of such eligible employees of the employer or employers or of such eligible members of the union or unions or association or associations, who remit funds for premium payments to the trustees may be so insured; provided that the policy shall, at date of its issue, cover at least one hundred persons; or (f) the members in good standing, or all of any class or classes thereof determined by conditions pertaining to membership, of any charitable or religious association which meets the requirements of chapter one hundred and eighty and which has been in existence for at least one year and not formed for the exclusive purpose of procuring insurance, written under a policy issued to the association, the premium on which is to be paid by the association or the insured members, or by both jointly, for amounts of insurance based upon some plan precluding individual selection, for the benefit of the association or of persons named by the insured members for the purpose of carrying out the duly stated objectives of the association; provided, that when part of the premium is to be contributed by the insured persons specifically for their insurance and the benefits of the policy are offered to all eligible persons, not less than seventy-five per cent of such eligible members may be so insured; provided, that the policy shall, at date of its issue, cover at least one hundred persons.
Notwithstanding the provisions of clause (c) of this section, insurance on educational credit transaction commitments may be written under said clause (c) for the amount of such commitment that has not been advanced by the creditor; provided, that the amount of such insurance shall not exceed ten thousand dollars with respect to each student.
The term “common paymaster”, as used in clause (d) of this section, shall mean any officer or employee of the commonwealth or the city of Boston or any board, department, or commission thereof, whose duties include the payment of salaries or wages to employees of the commonwealth, said city or any board, department or commission thereof.
Any group life insurance policy issued under the provisions of this section, except a policy insuring the lives of debtors in accordance with clause (c) may also insure the dependents of employees or members or other persons insured thereunder, and the employees or members or other persons may contribute part or all of the premium for such insurance. Notwithstanding provision 4 of section one hundred and thirty-four, only one certificate need be issued for delivery to an insured person if a statement concerning any dependents’ coverage is included in such certificate. Upon termination of the insurance with respect to the spouse of any employee by reason of the employee’s termination of employment or death, the spouse insured pursuant to this section shall have the same conversion rights as to the insurance on his or her life as is provided for the employee under provision 4 of said section one hundred and thirty-four.
Chapter 175: Section 133A. Requirements for other group life insurance policies Section 133A. Group life insurance offered to a resident of the commonwealth under a group life insurance policy issued to a group other than one described in section 133 shall be subject to the following requirements:-(a) A group life insurance policy shall not be delivered in the commonwealth unless the commissioner finds that:(1) the issuance of the group policy is not contrary to the best interests of the public;(2) the issuance of the group policy would result in economies of acquisition or administration; and(3) the benefits are reasonable in relation to the premiums charged.
(b) The premium for the policy shall be paid either from the policyholder’s funds or from funds contributed by the covered persons, or from both.
(c) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.
Chapter 175: Section 134. Group life policies; commissioner’s approval; contents Section 134. No policy of group life insurance shall be issued or delivered in the commonwealth until a copy of the form thereof has been on file for thirty days with the commissioner, unless, before the expiration of said thirty days, he shall have approved the policy in writing; nor if the commissioner notifies the company in writing, within said thirty days, that in his opinion the form of the policy does not comply with the laws of the commonwealth, specifying his reasons therefor, provided, that this action of the commissioner shall be subject to review by the supreme judicial court; nor shall any such policy be so issued or delivered unless it contains in substance the following provisions:1. That the policy shall be incontestable after two years from its date of issue except for non-payment of premiums; and that the insurance on any person insured under the policy shall be incontestable after it has been in force for a period of two years during such person’s lifetime except for violation of the conditions of the policy relating to military or naval service in time of war.
2. That the policy, the application of the employer and the individual applications, if any, of the employees insured shall constitute the entire contract between the parties, and that no statement made by the employer or any employee or on their behalf shall be used in defence to a claim under the policy unless contained in a written application.
3. That the premium or the amount of insurance payable in the event of a misstatement of the age of an employee shall be equitably adjusted.
4. Except in the case of a policy issued under clause (c) or (f) of section one hundred and thirty-three, that the company will issue to the employer, for delivery to each employee whose life is insured under the policy, an individual certificate specifying his insurance coverage under the policy, the amount thereof and to whom payable, together with a provision to the effect that if his insurance, or any portion of it, ceases because of (1) termination of employment or of membership in the class or classes eligible for coverage under the policy, or (2) termination of the policy or amendment of the policy to terminate the insurance or any part thereof on the class of insured persons to which he then belongs after he has been insured thereunder for five or more years immediately preceding any such termination date, the employee shall continue to be insured thereafter for a period of thirty-one days, for the amount of life insurance which he is entitled to have issued to him under an individual policy in accordance with the provisions which follow; and that he shall be entitled to have issued to him by the company, without evidence of insurability, upon written application in a form satisfactory to the company and upon the payment of the premium applicable to the class of risk to which he belongs and to the form and amount of the policy at his then attained age, both within said period of thirty-one days, an individual policy of life insurance without disability or other supplementary benefits, effective at the expiration of said period, in any one of the forms of life policies then customarily issued by the company, except a term policy, for an amount not in excess of the amount of the insurance which ceases because of any such termination, or, at the option of the company, in the case of any termination described in clause (2), an amount which shall in no event exceed the lesser of (i) the amount of such employee’s insurance ceasing because of such a termination less any amount of life insurance for which he may be or may become eligible under any group policy issued by the same or another company within thirty-one days after such a termination and (ii) two thousand dollars; provided, that any amount of insurance which shall have matured on or before the date of any termination described in clause (1) or (2), as an endowment payable to him, whether in one sum or in instalments or in the form of an annuity, shall not, for the purposes of this provision, be included in the amount which is considered to cease because of any such termination; and, for the purposes of this provision, the date of termination of the policy in case of its expiration by its own terms shall be the effective date of such expiration irrespective of any grace period specified in the policy for the payment of any premium falling due on such date.
4A. In the case of a policy issued to a creditor to insure debtors of such creditor, a provision that the insurer will furnish to the policyholder for delivery to each debtor insured under the policy a form which will contain a statement that the life of the debtor is insured under the policy or in the case of a policy issued to an insurance company to insure persons granted policy loans, a provision that the policyholder will deliver to each person insured under the policy a form which will contain a statement that the life of the person granted the loan is insured, and that any death benefit paid thereunder by reason of his death shall be applied to reduce or extinguish the indebtedness or policy loan.
5. That to the group or class thereof originally insured shall be added from time to time all new employees of the employer eligible to insurance in such group or class.
6. That the employer is entitled to a grace period of thirty-one days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the employer shall have given the company written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy and, at the option of the company, a provision that the employer shall be liable to the company for the payment of a pro rata premium for the time the policy was in force during such grace period.
7. Except in the case of a policy issued under clause (c) or (f) of section one hundred and thirty-three, that any sum becoming due by reason of the death of the employee insured shall be payable to the beneficiary designated by the employee insured, that in the event no designated beneficiary as to all or any part of such sum is living at the death of the employee insured, any such sum shall be paid to the executors or administrators of the employee, and, that the company may, at its option, pay such sum to any one or more of the following surviving relatives: wife, husband, mother, father, child or children, brothers or sisters, and may pay a part of such sum not exceeding two hundred and fifty dollars to any person appearing to the company to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the employee insured.
A policy shall be deemed to contain any such provision in substance when, in the opinion of the commissioner, the provision is stated in terms more favorable to the employee, or at least as favorable to the employee and more favorable to the employer, than are herein set forth.
The word “employer” as used in this section, section one hundred and thirty-four A and section one hundred and thirty-seven shall include the trustees of a fund established as provided in clause (a) of section one hundred and thirty-three, a trade union or association of wage workers, a financial or other institution including subsidiary or affiliated institutions, a vendor of any property, an assignee of the indebtedness, an association of state, county or municipal employees, and the trustees of a fund established as provided in clause (e) of section one hundred and thirty-three, in the case of a policy issued under clause (a), (b), (c), (d) or (e), respectively, of section one hundred and thirty-three, and a charitable or religious association which meets the requirements of chapter one hundred and eighty. The word “employee”, as used in this section and section one hundred and thirty-five, shall include a member of such a trade union or other association of wage workers or of such an association of state, county or municipal employees or of a charitable or religious association which meets the requirements of chapter one hundred and eighty, and, as used in this section, shall include a borrower from such a financial or other institution including subsidiary or affiliated institutions, and a purchaser from such a vendor.
In any policy issued under subdivision (a) of section one hundred and thirty-three, the word “employees” may include the officers, managers and employees of subsidiary or affiliated corporations and the individual proprietors, partners and employees of affiliated individuals and firms, if the business of the employer and of such subsidiary or affiliated corporations, firms or individuals is under common control, through stock ownership, contract or otherwise.
Any policy issued under section one hundred and thirty-three may provide that the term “employee” shall include retired employees, and the partners or individual proprietors if an employer is a partnership or an individual proprietor, if such partners or proprietors are actively engaged in and devote a substantial part of their time to the conduct of the business of the proprietor or partnership, and if, in the case of a policy issued under subdivision (e) of section one hundred and thirty-three, the policy insures not less than an average of five persons, other than the partners or individual proprietors, per employer unit; provided, however, that so much of this paragraph as provides that a policy issued under said subdivision (e) of said section one hundred and thirty-three insure not less than an average of five persons, exclusive of partners or individual proprietors, per employer unit shall not be applicable in the case of any policy so issued covering employees of persons engaged in the business of conducting recreational or instructional summer camps for children.
Chapter 175: Section 134A. Conversion; right of certificate-holder; notice Section 134A. If any individual insured under a group life insurance policy hereafter issued becomes entitled under the terms of such policy to convert to another type of life insurance within a specified time after the happening of an event, such certificate-holder shall be notified of such privilege and its duration within fifteen days after the happening of the event; provided, that if such notice be given more than fifteen days, but less than ninety days after the happening of such event, the time allowed for the exercise of such privilege of conversion shall be extended for fifteen days after the giving of such notice. If such notice be not given within ninety days after the happening of the event, the time allowed for the exercise of such conversion privilege shall expire at the end of such ninety days. Written notice by the employer given to the certificate-holder or mailed to the certificate-holder at his last known address, or written notice by the insurer mailed to the certificate-holder at the last address furnished to the insurer by the employer, shall be deemed full compliance with the provisions of this subdivision for the giving of notice.
Chapter 175: Section 134B. Repealed, 1968, 391, Sec. 19 Chapter 175: Section 134C. Assignment incidents of ownership Section 134C. Subject to the terms of the policy relating to assignment of incidents of ownership thereunder, a person whose life is insured under a policy of group life insurance may assign any or all incidents of ownership granted him under such policy or under any provision of this chapter, including but not limited to any right to designate a beneficiary, to have an individual policy issued to him and to pay premiums.
Chapter 175: Section 135. Group life policies; exemption from attachment; exception Section 135. No such policy, or the proceeds thereof when paid to any employee or employees thereunder, or to their beneficiaries, shall be liable to attachment, trustee process or other process, or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liabilities of such employee or his beneficiary or any other person having right thereunder either before or after payment; nor shall the proceeds thereof, when not made payable to any beneficiary, constitute a part of the estate of the employee for the payment of his debts.
Nothing in this section shall prevent an employee’s benefits from being attached, seized, taken, appropriated, assigned, or applied by any legal or equitable process or operation of law to satisfy a support order under chapter two hundred and eight, two hundred and nine, or two hundred and seventy-three.
Chapter 175: Section 136. Group life policies; exemption from loan provision Section 136. Such policies shall be exempt from any loan provision or requirement. Any equity of the insured in a group life insurance policy at the time of default in the payment of a premium, whether that equity exists by reason of the terms of the policy or by law, shall be applied to purchase extended or paid-up insurance for each of the insured at attained age on the basis of the mortality table and rate of interest used in computing the premium for the group.
Chapter 175: Section 137. Group policies; members Section 137. Under any group policy issued by a domestic mutual life company, the employer only shall be a member of the company, and entitled to one vote by virtue of such policy at the meetings of the company.
Chapter 175: Section 138. Construction Section 138. So much of this chapter as is inconsistent with sections one hundred and thirty-three to one hundred and thirty-seven, inclusive, shall not apply to policies issued under said sections.
Chapter 175: Section 138A. Group life policies; pay-roll deductions of state and local employees Section 138A. Deductions on pay-roll schedules may be made from the salary of any state, county or municipal employee of any amount which such employee may specify in writing to any state, county or municipal officer, or the head of the state, county, or municipal department, board or commission, by whom or which he is employed, for the payment of premiums on a group life policy issued under section one hundred and thirty-three to an association of state, county or municipal employees and insuring such employee as a member thereof. Any such authorization may be withdrawn by the employee by giving at least sixty days’ notice in writing of such withdrawal to the state, county or municipal officer, or the head of the state, county or municipal department, board or commission, by whom or which he is then employed and by filing a copy thereof with the treasurer of the association.
The state treasurer, the common paymaster, as defined in said section one hundred and thirty-three, or the treasurer of the county or municipality by which such employee is employed, shall deduct from the salary of such employee such amount of insurance premiums as may be certified to him on the pay-roll, and transmit the sum so deducted to the treasurer of said association for transmittal to the company, which issued the policy; provided, that the state treasurer, the state comptroller or the county or municipal treasurer, as the case may be, is satisfied by such evidence as he may require that the treasurer of such association has given to said association a bond, in a form approved by the commissioner, for the faithful performance of his duties, in a sum and with such surety or sureties as are satisfactory to the state treasurer or comptroller or county or municipal treasurer.
Chapter 175: Section 139. Life; endowment or annuity contracts; conversion; alteration; exchange; construction Section 139. Any life company may, at the request of the holder thereof, exchange, alter or convert any policy of life or endowment insurance or annuity contract issued by it or a company that is admitted and authorized under this chapter and is an affiliate of it, as defined in section two hundred and six, hereinafter called the original policy, for or into any policy of life or endowment insurance, hereinafter called the rewritten policy, as of the date of the most recently issued original policy or as of the current date, or as of any intermediate date, conforming with the laws in force as of the date of issue which the rewritten policy bears; provided, that, if the rewritten policy bears a date prior to the date of application for exchange, alteration or conversion, the amount of insurance under the rewritten policy shall not exceed the greater of (a) the amount of insurance under the original policy or policies if of life or endowment insurance, or (b) the amount of insurance which the premium paid for the original policy or policies would have purchased if the rewritten policy had been originally issued as of the date of issue it bears. Nothing in section one hundred and twenty shall be construed to prohibit the exchange, alteration or conversion of a policy of life or endowment insurance or annuity contract under this section, and sections one hundred and twenty-three and one hundred and thirty shall not apply to a rewritten policy issued under the authority of this section, except that section one hundred and twenty-three shall apply if the original policy is an annuity contract. Nothing in section one hundred and thirty-one or section one hundred and thirty-two shall be construed to prohibit making the application for the original policy, if one of life or endowment insurance, or the application for the rewritten policy issued under authority of this section, or both such applications, a part of the rewritten policy, by endorsing thereon or attaching thereto a copy of either or both such applications. Nothing in said section one hundred and thirty-two shall be construed to prohibit the incorporation, by a rider or endorsement or otherwise, in a rewritten policy issued under authority of this section and bearing a then current date or an intermediate date of a stipulation making the incontestable provision required by said section one hundred and thirty-two operative from the date of issue of the most recently issued original policy, if one of life or endowment insurance.
Chapter 175: Section 14. Charges and fees Section 14. He shall collect from the applicant and pay to the commonwealth charges and fees to be determined annually by the commissioner of administration under the provision of section three B of chapter seven for the following:For each examination prior to granting a license or a certificate of authority to issue policies of insurance or annuity or pure endowment contracts as provided in sections four and thirty-two;For the valuation of life policies of a domestic company as provided in section nine;For each certificate issued under section sixteen; provided, that such certificates shall be issued without charge for the use of the commonwealth;For each certificate under section thirty-two;For the valuation of each outstanding group annuity contract issued by a domestic company including all annuity benefits evidenced by certificates issued thereunder, and a like sum for the valuation of each annuity contract other than a group annuity contract;For each special license under clause (g) of section fifty-one or section fifty-four;For each certificate issued by the commissioner under section seventy or section seventy-one;For filing copy of charter or deed of settlement of each foreign company under section one hundred and fifty-one;For filing copy of charter, amendment, or amended charter or deed of settlement of each foreign company;For filing financial statement with the application for admission of a foreign company under section one hundred and fifty-one, and for filing each annual statement of a foreign company under section twenty-five, and for the auditing of each financial statement of an unadmitted foreign company filed for the purpose of qualifying as a reinsurer under clause (b) of section twenty;For each service of legal process upon him as attorney for a foreign company under section one hundred and fifty-one and section one hundred and fifty-four; provided that such fee shall not be required for the service of process in any criminal proceeding;For each license or renewal thereof to an insurance agent of any company under section one hundred and sixty-three;For each license or renewal thereof to an insurance producer under sections 162M and 162N.
For each license or renewal thereof to a reinsurance intermediary broker under section one hundred and seventy-seven L;For each license or renewal thereof to an adjuster of fire losses under section one hundred and seventy-two;For each license or renewal thereof to an insurance adviser under section one hundred and seventy-seven B;For each license or renewal thereof to a voluntary association under section one hundred and seventy-two A, to a partnership under section one hundred and seventy-three or to a corporation under section one hundred and seventy-four, the fees hereinbefore prescribed for like licenses issued to individuals under section 162M, 162N, one hundred and sixty-eight or one hundred and seventy-two, for each trustee, partner or officer to be covered by the license;For each certificate of the valuation of life policies or annuity contracts, or both, of any life company issued under section nine for each certificate of the examination, condition, or qualification of a company;For each copy of any paper on file in the office of the commissioner and for copies of tabulations and for certifying the same;For each policy form submitted for approval, including endorsements, applications and riders filed therewith;For each certificate endorsement, application or rider filed for approval separate from a policy form;For each license issued or renewed in accordance with the provisions of the fourth clause of section one hundred and fifty-one;For each duplicate of a license issued under any section of this chapter.
For each insurance agent appointment or renewal thereof under section 162S;All other fees and charges due the commonwealth for any official act of service of the commissioner.
Chapter 175: Section 140. Annual dividends Section 140. Except as provided in this section, every domestic life company heretofore or hereafter organized, anything in its charter or its certificate of incorporation or special act to the contrary notwithstanding, shall provide in every participating policy of life or endowment insurance hereafter issued that the proportion of the divisible surplus of the company contributed by said policy shall be ascertained and distributed annually, and not otherwise, except as hereinafter provided, beginning not later than the end of the third policy year; but such distribution shall not be made contingent upon the payment of any further premium except that if dividends are allowed on an anniversary of the policy preceding the third, such dividends may be made subject to the payment of the succeeding year’s premium. Every such company shall on December thirty-first of each year or as soon thereafter as practicable, after providing from the funds attributable to its participating business for the reserve required by sections nine and eleven and all other liabilities attributable to such business, including dividends declared upon the capital stock, if any, and such sum as may be held on account of existing deferred dividend policies, and providing also for a contingency reserve not in excess of the limit prescribed in the following section, apportion its remaining funds attributable to such business upon the contribution to surplus plan, as dividends, to all other policies entitled to share therein. Each such dividend shall annually, at the option of the holder of the policy, (a) be payable in cash, or (b) applied in reduction of premiums, or (c) to the purchase of a paid-up addition, or (d) be left with the company to accumulate to the credit of the policy and be payable at the maturity thereof, or be withdrawable in cash on demand by the holder of the policy, or applied as hereinafter set forth; but if no election is made by the holder of the policy prior to any anniversary thereof, the dividend for that anniversary shall be applied under option (c) or held under option (d), whichever option is designated by the terms of the policy; and if any premium on the policy is not paid at the expiration of the days of grace and dividends have been applied under option (c) or held under option (d), the company may keep the policy in force by applying the cash value of any paid-up additions or any dividend accumulations to the payment due on the policy if the cash value of such additions or the amount of such accumulations is sufficient to make said payment in full, and shall forthwith mail a notice to the holder thereof at his last known address, stating the amount of such cash values or of such accumulations which have been so applied, and the amount, if any, of paid-up additions and the cash value thereof remaining or, in the case of dividend accumulations the balance, if any, remaining to the credit of the policy; notwithstanding anything herein provided, the share of the surplus so apportioned to a term policy shall not be available for the purchase of a paid-up addition, and nothing herein contained shall operate to continue a policy in force beyond the period which the cash value of any paid-up addition or any dividend accumulation so applied would carry the policy under its full premium rate, nor beyond the term for which the policy was originally issued, and that the affidavit of any officer, clerk or agent of the company, or of any one authorized to mail such notice, that the notice required by this section has been duly mailed by the company, shall be prima facie evidence that such notice was duly given.
On industrial and debit life insurance policies the annual surplus distribution shall begin not later than the end of the fifth policy year, and shall annually, at the option of the owner, be (a) payable in cash, or (b) applied in reduction of premiums, or (c) left on deposit with the company to accumulate at interest, or (d) used to purchase paid up additions to the policy.
This section shall not apply to contracts on a variable basis, annuity, survivorship annuity or pure endowment contracts nor to any domestic stock life company issuing only nonparticipating policies. A foreign life company which does not provide in every participating policy hereafter issued or delivered in the commonwealth that the proportion of the surplus accruing upon said policy shall be ascertained and distributed annually and not otherwise, except as hereinafter provided, either by payment in cash of the amount apportioned to a policy, or by its application to the payment of premiums or to the purchase of paid-up additions, or for the accumulation of the amounts from time to time apportioned, said accumulations to be subject to withdrawal by the policyholder, shall not be permitted to do new business within the commonwealth.
Nothing in this section shall be construed to prohibit the payment upon or after the death of the insured of a dividend for the current policy year.
Chapter 175: Section 141. Safety fund Section 141. Any domestic life company may from its surplus funds or profits attributable to its participating business accumulate and hold, or hold if already accumulated, as a safety fund, an amount not in excess of twelve per cent of its reserve for such business or one hundred thousand dollars, whichever is greater, and, in addition thereto, any surplus that may have been contributed by the holders of the guaranty stock of the company, or which has been accumulated for the retirement of said guaranty stock and the margin of the market value of its securities over their book value, provided that in cases where the existing surplus or safety fund, exclusive of all accumulations held on account of existing deferred dividend policies, exceeds the limit above designated, the company shall be entitled to retain said surplus or safety fund, but shall not be entitled to add thereto so long as it exceeds said limit, and provided that for cause shown, the commissioner may at any time and from time to time permit any company to accumulate and maintain a safety fund in excess of the limit above mentioned, for such period as the commissioner may prescribe in any one permission, by filing in his office his reasons therefor and causing the same to be published in his next annual report. This safety fund shall be in addition to any safety fund accumulated from a mutual domestic life company’s surplus funds attributable to its nonparticipating business, which funds may be appointed equitably, in the discretion of the company, as part of any annual dividend on participating business.
This section shall not apply to any company issuing only nonparticipating policies.
Chapter 175: Section 142. Loans; interest rates; loan value; definitions Section 142. (1) For the purpose of this section, “Published monthly average” shall mean: (a) the monthly average of the composite yield on seasoned corporate bonds as published by Moody’s Investors Service, Inc. or any successor thereto; or (b), in the event that the monthly average of the composite yield on seasoned corporate bonds is no longer published, a substantially similar average, established by regulations promulgated by the commissioner.
(2) After premiums have been paid for at least three full years on any policy of life insurance issued or delivered in the commonwealth by any life company, the holder thereof, upon written application therefor to the company at its home office and upon an assignment of the policy to the company, in a form satisfactory to it, shall be entitled to a loan from the company of a sum not exceeding its loan value, on the sole security of the policy.
(3) Such policy shall contain a provision permitting (a), an interest rate on such loan of not more than eight per cent per annum; or (b) a provision permitting an adjustable maximum interest rate on such loan established from time to time by the insurer in accordance with the provisions of subsection (4).
(4) The rate of interest charged on a policy loan made under clause (b) of subsection (3) shall not exceed the higher of either: (a) the published monthly average for the calendar month ending two months before the date on which the rate is determined; or (b) the rate used to compute the cash surrender values under the policy during the applicable period plus one per cent per annum.
(5) If the maximum rate of interest is determined pursuant to the provisions of clause (b) of subsection (3), the policy shall contain a provision setting forth the frequency at which the rate is to be determined for such policy.
(6) The maximum rate for each policy must be determined at regular intervals at least once every twelve months, but not more frequently than once in any three month period. At the intervals specified in the policy, the rate being charged: (a), may be increased whenever such increase as determined under subsection (4) would increase the rate by one-half per cent or more per annum; and (b), must be reduced whenever such reduction as determined under subsection (4) would decrease that rate by one-half per cent or more per annum.
(7) The life insurer shall:(a) notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;(b) notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan; provided, however, that notice need not be given to the policyholder when a further premium loan is added, except as provided in clause (c);(c) send to policyholders with loans reasonable advance notice of any increase in the rate; and(d) include in the notices required in clauses (a), (b) and (c) the substance of the pertinent provisions of subsections (3) and (5).
(8) The loan value shall be an amount which, together with interest as aforesaid to the end of the current policy year, shall equal the cash surrender value available at the end of the said policy year under the policy, including the cash surrender value of any existing paid-up additions thereto, if the policy is then free from indebtedness. The company shall deduct from such loan value any existing indebtedness, including accrued interest thereon, and may also deduct any unpaid portion of the premium for the then current policy year. Failure to repay any loan under the policy or to pay interest thereon shall not avoid the policy until the total indebtedness, including accrued interest thereon, is equal to or exceeds the loan value, nor until thirty days after notice has been mailed by the company to the last known address of the holder. The affidavit of any officer, clerk or agent of the company or of any one authorized to mail such notice, that the notice required by this section has been duly mailed by the company, shall be prima facie evidence that such notice was duly given. Nothing in this section shall require any company to make a loan upon any policy for less than twenty-five dollars.
(9) No life insurer shall terminate a policy in a policy year as the sole result of a change in the interest rate during such policy year, and the life insurer shall maintain coverage during such policy year until the time at which it would otherwise have terminated if there had been no change during such policy year.
(10) The substance of the pertinent provisions of subsections (3) and (5) shall be set forth in the policies to which they apply.
(11) For purposes of this section:(a) The rate of interest on policy loans permitted under this section includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of policy.
(b) The term “policy loan” includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as they fell due.
(c) The term “policyholder” includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer.
(d) The term “policy” includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans.
(12) No other provision of law shall apply to policy loan interest rates unless made specifically applicable to such rates.
(13) This section shall not apply to term policies nor to those in force as extended term insurance nor to industrial life insurance policies nor to life insurance policies or contracts which are contracts on a variable basis.
Chapter 175: Section 143. Forfeitures; applicability of earlier laws to certain policies Section 143. All policies of life insurance and deferred annuity contracts shall be subject to the laws limiting forfeiture applicable and in force at the date of their issue.
Chapter 175: Section 144. Cash surrender value; terms defined; paid-up annuities after three years Section 144. 1. In the event of default in the payment of any premium on any policy of life insurance issued or delivered in the commonwealth by any life company, the holder thereof may elect by a writing filed with the company at its home office within sixty days after the due date of the defaulted premium and prior to the death of the insured, to (a) surrender the policy and receive its value in cash, provided that, except as provided in section one hundred and forty-six, premiums have been paid for at least three full years, or (b) take a specified paid-up nonforfeiture benefit effective from the due date of the premium in default. In lieu of such specified paid-up nonforfeiture benefit, the company may substitute, upon proper request not later than sixty days after the due date of the premium in default, an actuarially equivalent alternative paid-up benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits.
The policy shall provide that a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the holder thereof elects another available option prior to the death of the insured and not later than sixty days after the due date of the premium in default.
2. Any cash surrender value available under the policy in the case of a default in the payment of a premium due on any anniversary of the policy shall be an amount not less than the excess, if any, of the present value, on such anniversary of the future guaranteed benefits which would have been payable if there had been no default, including any existing paid-up additions, over the sum of (a) the then present value of the adjusted premiums as defined in subdivisions 5 and 6A, corresponding to the premiums which would have fallen due on and after such anniversary, and (b) the amount of any existing indebtedness to the company on the policy or secured thereby; provided, however, that for any policy issued on or after the operative date of subdivision 6A as defined therein, which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value referred to in the first paragraph of this subdivision shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such rider or supplemental paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision; provided, further that for any family policy issued on or after the operative date of subdivision 6A as defined therein, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse’s age seventy-one, the cash surrender value referred to in the first paragraph of this subdivision shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such term insurance on the life of the spouse and the cash surrender value as defined in such paragraph for a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse.
3. Any paid-up nonforfeiture benefit available under the policy upon default in the payment of a premium due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if none is provided for, that cash surrender value which would have been required by this section in the absence of the provision therein that premiums shall have been paid for at least a specified period.
4. Any cash surrender value or other nonforfeiture benefit available upon default in the payment of a premium due at any time other than on an anniversary of the policy shall be consistent with the values provisions of, subdivision 2, with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding anniversary.
The cash surrender value of any paid-up additions, other than paid-up term additions, shall be not less than the amounts used to purchase them.
Any paid-up nonforfeiture benefit under any policy on which the premiums, except as provided in section one hundred and forty-six, were paid for at least three full years, and every policy which by its terms has become fully paid-up, shall have a cash surrender value payable upon written application and surrender of the policy to the company at its home office within thirty days after any anniversary of the policy. Any cash surrender value available under any paid-up insurance or under any paid-up nonforfeiture benefit, whether or not such cash surrender value is required by this paragraph, shall be an amount not less than the present value on said anniversary of the future guaranteed benefits provided for by the policy, including any paid-up additions thereto, less any indebtedness to the company on the policy or secured thereby.
5. This subdivision shall not apply to policies issued on or after the operative date of subdivision 6A as defined therein. Except as provided in the third paragraph of this subdivision, the term “adjusted premiums”, as used in this section shall mean such uniform percentage of the respective premiums specified in the policy for each policy year, excluding any extra premiums charged because of impairments or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of (1) the then present value of the future guaranteed benefits provided for by the policy; (2) two per cent of the amount of insurance, if the insurance be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with duration of the policy; (3) forty per cent of the adjusted premium for the first policy year; (4) twenty-five per cent of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance whichever is less; provided, that in applying the percentages specified in clauses (3) and (4), no adjusted premium shall be deemed to exceed four per cent of the amount of insurance or uniform amount equivalent thereto. The adjusted premium shall be computed on an annual basis. The date of issue of a policy for the purpose of this section shall be the date as of which the rated age of the insured is determined.
The term “equivalent uniform amount”, as used in this section, shall be deemed to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with the duration and the benefits under which have the same present value at the date of issue as the benefits under the policy; provided, however, that in the case of a policy providing a varying amount of insurance issued on the life of a child under age ten, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age ten were the amount provided by such policy at age ten.
The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to (a) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during the period for which premiums for such term insurance benefits are payable, by (b) the adjusted premiums for such term insurance, the foregoing items (a) and (b) being calculated separately and as specified in the first two paragraphs of this subdivision except that, for the purposes of clauses (2), (3) and (4), the amount of insurance or equivalent uniform amount of insurance used in the computation of the adjusted premiums referred to in (b) shall be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in (a).
6. (a) This paragraph shall not apply to ordinary policies issued on or after the operative date of subdivision 6A as defined therein. All adjusted premiums and present values referred to in this section, except as otherwise provided in paragraph (b) and as provided in section one hundred and forty-six, shall be computed on the basis of the “Commissioners 1941 Standard Ordinary Mortality Table”, and at the rate of interest, not exceeding three and one-half per cent per annum, specified in the policy for the computation of the cash surrender values and other nonforfeiture benefits; provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be computed according to an age not more than three years younger than the actual age of the insured; and provided, that in calculating the present value of any extended term insurance with accompanying pure endowment, if any, the rates of mortality assumed may be not more than one hundred and thirty per cent of the rates according to such applicable table of mortality; and provided, further that in the case of any policy issued on a substandard basis, any such adjusted premiums and present values may be computed on such other table of mortality as the company may specify with the approval of the commissioner.
(b) This paragraph shall not apply to ordinary policies issued on or after the operative date of subdivision 6A as defined therein. In the case of policies or ordinary insurance issued on or after January first, nineteen hundred and sixty-six, all adjusted premiums and present values referred to in this section shall be computed on the basis of the “Commissioners 1958 Standard Ordinary Mortality Table”, and the rate of interest specified in the policy for the computation or the cash surrender values and other nonforfeiture benefits provided that such rate of interest shall not exceed three and one-half per cent per annum for policies issued prior to March sixth, nineteen hundred and seventy-four, shall not exceed four per cent per annum but policies issued on or after March sixth, nineteen hundred and seventy-four and prior to December first, nineteen hundred and seventy-nine and shall not exceed five and one-half per cent per annum for policies issued on or after December first, nineteen hundred and seventy-nine, provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six years younger than the actual age of the insured; and provided, further, that in computing the present value of any extended term insurance with accompanying pure endowment, if any, the rates of mortality assumed may not be more than those shown in the “Commissioners 1958 Extended Term Insurance Tables”; and provided, further, that in the case of any policy issued on a substandard basis any such adjusted premiums and present values may be computed on such other table of mortality as the company may specify with the approval of the commissioner.
(c) All values referred to in this section may be computed on the assumption that any death benefit is payable at the end of the policy year in which death occurs.
6A. (a) This subdivision shall apply to all policies issued on or after the operative date of this subdivision 6A as defined herein. Except as provided in paragraph (g) of this subdivision, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of (i) the then present value of the future guaranteed benefits provided for by the policy; (ii) one per cent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and (iii) one hundred and twenty-five per cent of the nonforfeiture net level premium as hereinafter defined; provided, however, that in applying the percentage specified in clause (iii) no nonforfeiture net level premium shall be deemed to exceed four per cent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years. The date of issue of a policy for the purpose of this subdivision shall be the date as of which the rated age of the insured is determined.
(b) The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one per annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due.
(c) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums the future adjusted premiums, nonforfeiture net level premiums and present values shall be recalculated on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change.
(d) Except as otherwise provided in paragraph (g) the recalculated future adjusted premiums for any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits or premiums, of all such future adjusted premiums shall be equal to the excess of (A) the sum of (i) the then present value of the then future guaranteed benefits provided for by the policy and (ii) the additional expense allowance, if any, over (B) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.
(e) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum of (i) one per cent of the excess, if positive, of the average amount of insurance at the end of each of the first ten policy years subsequent to the change at the beginning of each of the first ten policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and (ii) one hundred and twenty-five per cent of the increase, if positive, in the nonforfeiture net level premium.
(f) The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (A) by (B) where (A) equals the sum of (i) the nonforfeiture net level premium applicable prior to the change times the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred, and (ii) the present value of the increase in future guaranteed benefits provided for by the policy; and (B) equals the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due.
(g) Notwithstanding any other provisions of this subdivision to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that, in each policy year, such policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform amounts of insurance on the standard basis.
(h) All adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of (i) the Commissioner 1980 Standard Ordinary Mortality Table of (ii) at the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors and shall for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this subdivision for policies issued in that calendar year; provided, however, that:(1) At the option of the company, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this subdivision, for policies issued in the immediately preceding calendar year.
(2) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by subdivision 1, shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any.
(3) A company may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.
(4) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1980 Extended Term Insurance Table for policies of ordinary insurance.
(5) For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on appropriate modifications of the aforementioned tables.
(6) Any ordinary mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table.
(i) The nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to one hundred and twenty-five per cent of the calendar year statutory valuation interest rate for such policy as defined in the standard Valuation Law, rounded to the nearer one quarter of one per cent.
(j) Notwithstanding any other provision in this code to the contrary, any refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form.
(k) After the effective date of this subdivision, any company may file with the commissioner a written notice of its election to comply, with respect to any plan of insurance, with the provisions of this subdivision after a specified date before January first, nineteen hundred and eighty-nine, which shall be the operative date of this subdivision for that plan of insurance for such company. If a company makes no such election, the operative date of this subdivision for that plan of insurance for such company shall be January first, nineteen hundred and eighty-nine.
6B. In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance which is of such a nature that minimum values cannot be determined by the methods described in subdivisions 1, 2, 3, 4, 5, 6 and 6A, then:(a) the commissioner must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by subdivisions 1 to 6A, inclusive;(b) the commissioner must be satisfied that the benefits and the pattern of premiums of that plan are not such as to mislead prospective policyholders or insureds;(c) the cash surrender values and paid-up nonforfeiture benefits provided by such plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this Standard Nonforfeiture Law for Life Insurance, as determined by regulations promulgated by the commissioner.
7. Any additional benefits payable (i) under accidental death or total and permanent disability benefit provisions incorporated in, or supplementary to a policy of life insurance of (ii) as reversionary annuity or deferred reversionary annuity benefits under a policy of life insurance, or (iii) as term insurance benefits provided by a rider or supplemental policy provision, to which provision this section would not apply if it were evidenced by a separate policy, or (iv) as term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child’s age is twenty-six, is uniform in amount after the child’s age is one, and has not become paid-up by reason of the death of a parent of the child, and (v) any other benefits additional to life insurance and endowment benefits, and premiums for all such additional benefits, hereinbefore described, shall be disregarded in computing adjusted premiums and cash surrender values and other nonforfeiture benefits under this section, and no such additional benefits shall be required to be granted in connection with any nonforfeiture benefits.
7A. This subdivision, in addition to all other applicable subdivisions of this law, shall apply to all policies issued on or after January first, nineteen hundred and eighty-six. The cash surrender values available under such policies shall be essentially in compliance with this subdivision. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be in an amount which does not differ by more than two-tenths of one per cent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years, from the sum (a) the greater of zero and the basic cash value hereinafter specified and (b) the present value of any existing paid-up additions less the amount of any indebtedness to the company under the policy.
The basic cash value shall be equal to the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the company, if there had been no default, less the then present value of the nonforfeiture factors, as hereinafter defined, corresponding to premiums which would have fallen due on and after such anniversary; provided, however, that the effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in subdivision 2 or 5, whichever is applicable, shall be the same as are the effects specified in subdivision 2 or 5, whichever is applicable on the cash surrender values defined in that subdivision.
The nonforfeiture factor for each policy year shall be an amount equal to a percentage of the adjusted premium for the policy year, as defined in subdivision 5 or 6A, whichever is applicable. Except as is required by the next succeeding sentence of this paragraph, such percentage:(a) must be the same percentage for each policy year between the second policy anniversary and the later of (i) the fifth policy anniversary and (ii) the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least two-tenths of one per cent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and(b) must be such that no percentage after the later of the two policy anniversaries specified in the preceding item (a) may apply to fewer than five consecutive policy years.
Provided, that no basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in subdivision 5 or 6A, whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value.
All adjusted premiums and present values referred to in this subdivision shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the policy’s compliance with the other subdivisions of this section. The cash surrender values referred to in this subdivision shall include any endowment benefits provided for by the policy.
Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment shall be determined in manners consistent with the manners specified for determining the analogous minimum amounts in subdivisions 1, 2, 3, 6A and 7. The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed as items (i) to (v), inclusive, in subdivision 7 shall conform with the principles of this subdivision.
8. Except as provided in subdivision 9, this section shall not apply to any of the following:(a) contracts of reinsurance,(b) policies of group life insurance; or(c) annuity or pure endowment contracts of any kind with or without return of premiums or premiums and interest, whether simple or compound, or to survivorship annuity contracts;(d) any term policy of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, or renewal thereof, of twenty years or less expiring before age seventy-one, for which uniform premiums are payable during its entire term,(e) term policy providing for a decreasing amount of insurance, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium computed as in this section, is less than the adjusted premium, so computed, on a term policy of uniform amount, or renewal thereof, which provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance and for a term of twenty years or less expiring before age seventy-one, for which uniform premiums are payable during the entire term of the policy.
(f) policy, which provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in subdivisions 2 to 6A, inclusive, exceeds two and one-half per cent of the amount of insurance at the beginning of the same policy year.
For purposes of determining the applicability of this section, the age at expiry for a joint term life insurance policy shall be the age at expiry of the oldest life.
9. Every deferred annuity contract, other than a single premium contract, issued and delivered in the commonwealth by a domestic life company shall provide that, in the event of the nonpayment of any premium after three full years’ premiums have been paid, the annuity shall, without any further act or stipulation, be converted into a paid-up annuity for such proportion of the original annuity as the number of completed years’ premiums paid bears to the total number of premiums required under the contract; provided, however that this subdivision shall not apply to any annuity contract subject to the provisions of section one hundred and forty-four A.
10. Nothing in this section shall be construed to prohibit the inclusion of a provision in a policy that any cash surrender value shall be payable with the written assent of the person to whom the policy is payable.
11. Nothing in this section shall apply to group annuity contracts as defined in section one hundred and thirty-two A or to individual contracts on a variable basis; provided, that such individual contracts specify, in a manner satisfactory to the commissioner, the nature and the basis of the ascertainment of the rights of the holder, in the event of the nonpayment of any premium or consideration.
Chapter 175: Section 144A1/2. Annuity contracts; required provisions Section 144A1/2. (a) In the case of contracts issued on or after the effective date of this section, no contract of annuity, except as set forth in section 13, shall be delivered or issued for delivery in the commonwealth unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the commissioner are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract:(1) That upon cessation of payment of considerations under a contract, or upon the written consent of the contract owner the company shall grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in subsections (d), (e), (f), (g) and (i).
(2) If a contract provides for a lump sum settlement at maturity, or at any other time, that upon surrender of the contract at or prior to the commencement of any annuity payments, the company shall pay in lieu of any paid-up annuity benefit a cash surrender benefit of such amount as is specified in subsections (d), (e), (f), (g) and (i). The company may reserve the right to defer the payment of such cash surrender benefit for a period not to exceed 6 months after demand therefor with surrender of the contract after making written request and receiving written approval of the commissioner. The request shall address the necessity and equitability to all policyholders of the deferral.
(3) A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the contract, together with sufficient information to determine the amount of such benefits.
(4) A statement that any paid-up annuity, cash surrender or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the commonwealth in which the contract is delivered and an explanation of the manner in which such benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract or any prior withdrawals from or partial surrenders of the contract.
Notwithstanding the requirements of this section, any deferred annuity contract may provide that if no considerations have been received under a contract for a period of 2 full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to such period would be less than $20 monthly, the company may at its option terminate such contract by payment in cash of the then present value of such portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by such payment shall be relieved of any further obligation under such contract.
(b) The minimum values as specified in subsections (d), (e), (f), (g) and (i) of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon the following nonforfeiture amounts:(1) The minimum nonforfeiture amount at any time at or before the commencement of any annuity payments shall be equal to an accumulation up to such time at a rate of interest as indicated in subsection (c) of the net considerations, as hereinafter defined, paid prior to such time, decreased by the sum of:(i) any prior withdrawals from or partial surrenders of the contract accumulated at rates of interest as indicated in said subsection (c);(ii) an annual contract charge of $50, accumulated at rates of interest as indicated in said subsection (c);(iii) any premium tax paid by the company for the contract, accumulated at rates of interest as indicated in said subsection (c); and(iv) the amount of any indebtedness to the company on the contract, including interest due and accrued.
(2) The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to 87 1/2 per cent of the gross considerations credited to the contract during that contract year.
(c) The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of 3 per cent per annum and the following, which shall be specified in the contract if the interest rate will be reset:—(1) the 5 year constant maturity treasury rate reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest 1/20th of 1 per cent, specified in the contract no longer than 15 months prior to the contract issue date or redetermination date under clause (4);(2) reduced by 125 basis points;(3) where the resulting interest guarantee is not less than 1 per cent; and(4) the interest rate shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis and period, if any, shall be stated in the contract. The basis is the date or average over a period that produces the value of the 5 year constant maturity treasury rate to be used at each redetermination date.
Notwithstanding subsections (b) and (c), during the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in clause (2) by up to an additional 100 basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction shall not exceed the market value of the benefit. The commissioner may require a demonstration that the present value of the reduction does not exceed the market value of the benefit. Lacking such a demonstration that is acceptable to the commissioner, the commissioner may disallow or limit the additional reduction.
The commissioner may adopt regulations to implement the preceding paragraph and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts that the commissioner determines adjustments are justified.
(d) Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. The present value shall be computed using the mortality table, if any, and the interest rates specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract.
(e) For contracts which provide cash surrender benefits, such cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit which would be provided under the contract at maturity arising from considerations paid before the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, the present value being calculated on the basis of an interest rate not more than 1 per cent higher than the interest rate specified in the contract for accumulating the net considerations to determine the maturity value, decreased by the amount of indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the contract. In no event shall the cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under the contracts shall be at least equal to the cash surrender benefit.
(f) For contracts which do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time before maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid before the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, the present value being calculated for the period before the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine the maturity value, and increased by any existing additional amounts credited by the company to the contract. For contracts which do not provide any death benefits before commencement of any annuity payments, the present values shall be calculated on the basis of the interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit; but, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.
(g) For the purpose of determining the benefits calculated under subsections (e) and (f), in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be considered to be the latest date for which election shall be permitted by the contract, but shall not be considered to be later than the anniversary of the contract next following the annuitant’s 70th birthday or the tenth anniversary of the contract, whichever is later.
(h) Any contract which does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount before the commencement of any annuity payments shall include a statement in a prominent place in the contract that the benefits are not provided.
(i) Any paid-up annuity, cash surrender or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs.
(j) For any contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding subsections (d), (e), (f), (g) and (i), additional benefits payable: (1) in the event of total and permanent disability, (2) as reversionary annuity or deferred revisionary annuity benefits or (3) as other policy benefits additional to life insurance, endowment and annuity benefits and considerations for all the additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits that may be required by this section. The inclusion of the additional benefits shall not be required in any paid-up benefits, unless the additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits.
(k) The commissioner may adopt regulations to implement this section.
(l) Notwithstanding subsection (a), upon the effective date of this section, a company may elect to: (1) apply this section to annuity contracts on a contract form-by-contract form basis or (2) comply with section 144A.
(m) This section shall not apply to any reinsurance, group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside the commonwealth through an agent or other representative of the company issuing the contract.
Chapter 175: Section 144A. Annuity contracts; required provisions [Text of section effective until June 1, 2005. Repealed by 2004, 59, Sec. 2. See 2004, 59, Sec. 3.
] Section 144A. 1. In the case of contracts issued on or after December first, nineteen hundred and eighty-one, no contract of annuity, except as stated in subdivision 10, shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the commission are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract.
(a) That upon cessation of payment of considerations under a contract, the company will grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in subdivisions 3, 4, 5, 6 and 8.
(b) If a contract provides for a lump sum settlement at maturity, or at any other time, that upon surrender of the contract at or prior to the commencement of any annuity payments, the company will pay in lieu of any paid-up annuity benefit a cash surrender benefit of such amount as is specified in subdivisions 3, 4, 6 and 8. The company shall reserve the right to defer the payment of such cash surrender benefit for a period of six months after demand therefor with surrender of the contract.
(c) A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of such benefits.
(d) A statement that any paid-up annuity, cash surrender or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which such benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract or any prior withdrawals from or partial surrenders of the contract.
Notwithstanding the requirements of this section, any deferred annuity contract may provide that if no considerations have been received under a contract for a period of two full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to such period would be less than twenty dollars monthly, the company may at its option terminate such contract by payment in cash of the then present value of such portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by such payment shall be relieved of any further obligation under such contract.
2. The minimum values as specified in subdivisions 3, 4, 5, 6 and 8 of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon the following nonforfeiture amounts:(a) With respect to contracts providing for flexible considerations, the minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at a rate of interest of three per cent per annum of percentages of the net considerations, as hereinafter defined, paid prior to such time, decreased by the sum of(i) any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest of three per cent per annum; and(ii) the amount of any indebtedness to the company on the contract, including interest due and accrued; and increased by any existing additional amounts credited by the company to the contract.
The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount not less than zero and shall be equal to the corresponding gross considerations credited to the contract during that contract year less an annual contract charge of thirty dollars and less a collection charge of one dollar and twenty-five cents per consideration credited to the contract during that contract year. The percentages of net considerations shall be sixty-five per cent of the net consideration for the first contract year and eighty-seven and one-half per cent of the net considerations for the second and later contract years. Notwithstanding the provisions of the preceding sentence, the percentage shall be sixty-five per cent of the portion of the total net consideration for any renewal contract year which exceeds by not more than two times the sum of those portions of the net considerations in all prior contract years for which the percentage was sixty-five per cent.
(b) With respect to contracts providing for fixed scheduled considerations, minimum nonforfeiture amounts shall be calculated on the assumption that considerations are paid annually in advance and shall be defined as for contracts with flexible considerations which are paid annually with the two following exceptions:(1) The portion of the net consideration for the first contract year to be accumulated shall be the sum of sixty-five per cent of the net consideration for the first contract year plus twenty-two and one-half per cent of the excess of the net consideration for the first contract year over the lesser of the net considerations for the second and third contract years.
(2) The annual contract charge shall be the lesser of (i) thirty dollars or (ii) ten per cent of the gross annual considerations.
(c) With respect to contracts providing for a single consideration, minimum nonforfeiture amounts shall be defined as for contracts with flexible considerations except that the percentage of net consideration used to determine the minimum nonforfeiture amount shall be equal to ninety per cent and the net consideration shall be the gross consideration less a contract charge of seventy-five dollars.
3. Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. Such present value shall be computed using the mortality table, if any, and the interest rates specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract.
4. For contracts which provide cash surrender benefits, such cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit which would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, such present value being calculated on the basis of an interest rate not more than one per cent higher than the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, decreased by the amount of indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under such contracts shall be at least equal to the cash surrender benefit.
5. For contracts which do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, of changed to, a deferred paid-up annuity, such present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, and increased by any existing additional amounts credited by the company to the contract. For contracts which do not provide any death benefits prior to commencement of any annuity payments, such present values shall be calculated on the basis of such interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.
6. For the purpose of determining the benefits calculated under subdivisions 4 and 5, in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant’s seventieth birthday or the tenth anniversary of the contract, whichever is later.
7. Any contract which does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that such benefits are not provided.
8. Any paid-up annuity, cash surrender or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs.
9. For any contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of subdivisions 3, 4, 5, 6 and 8, additional benefits payable (a) in the event of total and permanent disability, (b) as reversionary annuity or deferred reversionary annuity benefits, or (c) as other policy benefits additional to life insurance, endowment and annuity benefits and considerations for all such additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits that may be required by this section. The inclusion of such additional benefits shall not be required in any paid-up benefits, unless such additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits.
10. This section shall not apply to any reinsurance, group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside this state through an agent or other representative of the company issuing the contract.
Chapter 175: Section 145. Cash surrender value; industrial policies issued at certain time Section 145. On policies of industrial insurance issued on or before December thirty-first, nineteen hundred and eleven, by a domestic life company on which premiums are paid weekly and are not more than fifty cents each, the surrender value shall in all cases be payable in cash, which shall be a legal claim for not more than two years from the date of lapse, and be payable within sixty days after the demand therefor. Within ninety days after the lapse of any policy which has a surrender value and upon which a settlement has not been made, the company shall send a notice thereof to the last known address of the holder of said policy, which shall state the amount of the surrender value of said policy. The affidavit of any officer, clerk or agent of the company, or any one authorized to mail such notice, that the notice required herein has been duly mailed by the company, shall be prima facie evidence that such notice was duly given.
Chapter 175: Section 146. Cash surrender value; industrial policies; applicability of Sec. 144 Section 146. The provisions of section one hundred and forty-four shall, except as hereinafter provided, apply to any policy of industrial life insurance issued or delivered in the commonwealth by any life company.
The provisions of said section one hundred and forty-four relative to cash surrender values shall be applicable to industrial life insurance policies only after the premiums thereon have been paid for five full years.
All adjusted premiums for and the present values of any such policy issued on a standard basis prior to January first, nineteen hundred and sixty-eight shall be computed on the basis of the “1941 Standard Industrial Mortality Table”. In the case of such policies issued on or after January first, nineteen hundred and sixty-eight, all such adjusted premiums and present values shall be computed on the basis of the “Commissioners 1961 Standard Industrial Mortality Table”, and in computing the present value of any extended term insurance with accompanying pure endowment, if any, the rates of mortality assumed may be not more than those shown in the “Commissioners 1961 Industrial Extended Term Insurance Table”.
Chapter 175: Section 146A. Industrial policies; default in payment of premiums; notice of non-forfeiture benefits Section 146A. In case of any default in the payment of a premium on any policy of industrial life insurance issued or delivered in the commonwealth by any life company occurring after premiums have been paid thereon for three full years, the company, within six months from the due date of the defaulted premium, shall send by mail to the holder thereof, at his last known address, a notice setting forth any non-forfeiture benefit, other than one elected by the holder, in force under such policy when the notice is mailed. An affidavit of any officer, clerk or agent of the company, or anyone authorized by the company to mail the notice required by this section, that such a notice has been duly mailed on behalf of the company shall be prima facie evidence that such notice was duly mailed. The provisions of this section shall not apply to such a policy on the life of a person who, on the due date of the defaulted premium, is not a resident of the commonwealth, unless the premium on the policy prior to the defaulted premium was paid within the commonwealth to the insurer or its agent.
Chapter 175: Section 146B. Massachusetts Life and Health Insurance Guaranty Association Law Section 146B. (1) This section may be referred to and cited as the “Massachusetts Life and Health Insurance Guaranty Association Law”.
(2) As used in this section the following words shall, unless the context otherwise requires, have the following meanings:—“Account”, any of the three accounts created under subsection (6).
“Association”, the Massachusetts Life and Health Insurance Guaranty Association created under subsection (6).
“Contractual obligation”, any obligation under a policy or contract or portion thereof for which coverage is provided under subsection (4).
“Covered policy or contract”, any policy, contract or group certificate within the scope of this section as provided in subsection (4).
“Impaired insurer”, a member insurer which, is not an insolvent insurer, and (a) is deemed by the commissioner to be potentially unable to meet its obligations, or (b) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.
“Insolvent insurer”, a member insurer which is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.
“Member insurer”, any insurer licensed or which holds a certificate of authority to transact in the commonwealth any kind of insurance for which coverage is provided under subsection (4) and any insurer whose license or certificate of authority to transact in the commonwealth such insurance may have been suspended, revoked, not renewed, or voluntarily withdrawn after the effective date of this section, other than a (a) fraternal benefit society, (b) mutual protective association, (c) mutual assessment company or other entity that operates on an assessment basis, (d) medical service corporation, (e) hospital service corporation, (f) health maintenance organization, (g) dental service corporation, (h) optometric service corporation, (i) mandatory state pooling plan, (j) insurance exchange, or (k) any other entity similar to any of the above.
“NAIC”, the National Association of Insurance Commissioners or its successor organization.
“Person”, any individual, corporation, partnership, association or voluntary organization.
“Premiums”, amounts received on covered policies or contracts, less premiums, considerations and deposits returned thereon, and less dividends and experience credits thereon. Premiums does not include any amount received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under paragraph (B) of subsection (4), except for subclause (d) of clause (2) of said paragraph (B) and clause (3) of paragraph (B).
“Published monthly average”, the monthly average of the composite yield on seasoned corporate bonds as:-(a) published by Moody’s Investors Service, Inc.
, or any successor thereto, or (b) established by regulation promulgated by the commissioner setting forth a substantially similar average in the event that such monthly average is no longer so published.
“Resident”, any person who resides in the commonwealth at the time a member insurer is determined to be an impaired or insolvent insurer and to whom a contractual obligation is owed. A person may be a resident of only one state, which in the case of a person, other than a natural person, shall be its principal place of business.
“Supplemental contract”, any agreement entered into for the distribution of policy or contract proceeds.
(3) The purpose of this section is to protect, subject to certain limitations, the persons specified in paragraph (A) of subsection (4), against failure in the performance of contractual obligations, under life and health insurance policies and annuity contracts specified in paragraph (B) of said subsection (4), because of the impairment or insolvency of the member insurer that issued the policies or contracts. To provide such protection, an association of insurers, the members of which are subject to assessment, is hereby created to pay benefits and to continue coverages, as limited herein.
(4)(A) This section shall provide coverage for the policies and contracts specified in paragraph (B) of this subsection:-(1) To persons who, regardless of where they reside except for nonresident certificate holders under group policies or contracts, are the beneficiaries, assignees or payees of the persons covered under clause (2), and(2) To persons who are owners of such policies or contracts, or are insureds or annuitants under such policies or contracts, and who (a) are residents, or (b) are not residents, but only under all of the following conditions: (i) the insurers which issued such policies or contracts are domiciled in the commonwealth, (ii) such insurers never held a license or certificate of authority in the states in which such persons reside, (iii) such states have a life and health insurance guaranty association, and (iv) such persons are not eligible for coverage by such guaranty association.
(B)(1) This section shall provide coverage to the persons specified in paragraph (A) of this subsection for direct, nongroup life, health, annuity, and supplemental policies or contracts, and for certificates under direct group life and health insurance policies or annuity or supplemental contracts issued by member insurers, except as otherwise limited in this section.
(2) This section shall not provide coverage under:-(a) any portion of a policy or contract not guaranteed by the insurer, or under which the risk is borne by the policy or contract holder;(b) any policy or contract of reinsurance, other than reinsurance for which assumption certificates have been issued;(c) any annuity contract or group annuity certificate that is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by the insurer under any such contract or certificate;(d) any portion of a policy or contract to the extent that the rate of interest on which it is based, (i) averaged over the period of four years prior to the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting two percentage points from the published monthly average as averaged for the same four year period, and (ii) on and after the date on which the association becomes obligated with respect to such policy or contract, exceeds the rate of interest determined by subtracting three percentage points from the published monthly average as most recently available on the date on which the association becomes obligated with respect to such policy or contract;(e) any plan or program of an employer, association or similar entity to provide life, health, or annuity benefits to its employees or members to the extent that such plan or program is self-funded or uninsured, including but not limited to benefits payable by an employer, association or similar entity under (i) a Multiple Employer Welfare Arrangement as defined in Section 514 of the Employee Retirement Income Security Act of 1974, as amended; (ii) a minimum premium group insurance plan; (iii) a stop-loss group insurance plan; or (iv) an administrative services only contract;(f) any portion of a policy or contract to the extent that it provides dividends or experience rating credits, or provides that any fees or allowances be paid to any person, including the policy or contract holder, in connection with the service to or administration of such policy or contract; and(g) any policy or contract issued in the commonwealth by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue such policy or contract in the commonwealth.
(3) The benefits for which the association may become liable shall in no event exceed the lesser of:(a) the contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer, or(b) with respect to any one life: (i) three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values under life insurance policies; (ii) one hundred thousand dollars in health insurance benefits, including any net cash surrender and net cash withdrawal values; (iii) one hundred thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; but in no event shall the association’s liability exceed three hundred thousand dollars in the aggregate for all life insurance, health insurance and annuity benefits, including net cash surrender and net cash withdrawal values.
(C) The protection provided by this section shall not apply where any guaranty protection is provided, independent of this section, to residents of the commonwealth by laws of the domiciliary state or jurisdiction of an impaired or insolvent insurer.
(5) This section shall be liberally construed to effect the purpose under subsection (3) which shall constitute an aid and guide to interpretation.
(6)(A) There is created a nonprofit, legal entity to be known as the Massachusetts Life and Health Insurance Guaranty Association. All member insurers shall be and remain members of the association as a condition of their authority to transact insurance in the commonwealth. The association shall perform its functions under the plan of operation established and approved under subsection (10) and shall exercise its powers through a board of directors established under subsection (7). For purposes of administration and assessment, the association shall maintain three accounts:(1) the health insurance account;(2) the life insurance account; and(3) the annuity account.
(B) The association shall be under the immediate supervision of the commissioner.
(7)(A) The board of directors of the association shall consist of not less than five nor more than nine member insurers serving terms as established in the plan of operation. The members of the board of directors shall be selected by member insurers subject to the approval of the commissioner. Vacancies on the board of directors shall be filled for the remaining period of the term by a majority vote of the remaining board members, subject to the approval of the commissioner. To select the initial board of directors, and initially organize the association, the commissioner shall give notice to all member insurers of the time and place of the organizational meeting. In determining voting rights at the organizational meeting each member shall be entitled to one vote in person or by proxy. If the board of directors is not selected within sixty days after notice of the organizational meeting, the commissioner may appoint the initial members.
(B) In approving selections or in appointing members to the board of directors, the commissioner shall consider, among other things, whether member insurers are fairly represented.
(C) Members of the board of directors may be reimbursed from the assets of the association for expenses incurred by them as members of the board of directors but shall not otherwise be compensated by the association for their services.
(8)(A) If a member insurer is an impaired domestic insurer, the association may, in its discretion, and subject to any conditions imposed by the association that (i) do not defeat the reasonable expectations of the policyholder or contractholder as to the benefits afforded under a policy or contract, (ii) that are approved by the commissioner, and (iii) that are, except in cases of court ordered conservation or rehabilitation, also approved by the impaired insurer:-(1) guarantee, assume or reinsure, or cause to be guaranteed, assumed, or reinsured, any or all of the policies or contracts of the impaired insurer;(2) provide such monies, pledges, notes, guarantees, or other means as are proper to effectuate subsection (1) and assure payment of the contractual obligations of the impaired insurer pending action pursuant thereto; or(3) loan money to the impaired insurer.
(B)(1) If a member insurer is an impaired insurer, whether domestic, foreign or alien, and the insurer is not paying claims in a timely fashion, then subject to the preconditions specified in clause (2) of this paragraph the association shall, in its discretion, either (a) take any of the actions specified in paragraph (A), subject to the conditions therein, or (b) provide substitute benefits, with respect to covered policies or contracts, in lieu of the contractual obligations of the impaired insurer, solely for: health claims and death benefits, pursuant to paragraph (D); periodic annuity benefit payments; supplemental benefits; and cash withdrawals for policy or contract owners who petition therefor under claims of emergency or hardship in accordance with standards proposed by the association and approved by the commissioner.
(2) The association shall be subject to the requirements of clause (1) only if: (a)(i) in the case of an impaired domestic insurer, an order instituting a rehabilitation proceeding has been entered pursuant to section one hundred and eighty B of chapter one hundred and seventy-five; or (ii) in the case of an impaired foreign or alien insurer a petition for rehabilitation or liquidation of the impaired insurer has been filed in a court of competent jurisdiction in its state of domicile by the commissioner of that state;(b) the laws of the impaired insurer’s state of domicile provide that until all payments of or on account of the impaired insurer’s contractual obligations by all guaranty associations, along with all expenses thereof and interest on all such payments and expenses, shall have been repaid to the guaranty associations or a plan of repayment by the impaired insurer shall have been approved by the guaranty associations (i) the delinquency proceedings shall not be dismissed; (ii) neither the impaired insurer nor its assets shall be returned to the control of its shareholders or private management; and (iii) it shall not be permitted to solicit or accept new business or have any suspended or revoked license restored.
(c) in the event the impaired insurer is a foreign or alien insurer, (i) it has been prohibited from soliciting or accepting new business in the commonwealth, and (ii) its certificate of authority has been suspended or revoked.
(C) If a member insurer is an insolvent insurer, the association shall, in its discretion, either:(1)(a) Guaranty, assume or reinsure, or cause to be guaranteed, assumed or reinsured, the covered policies or contracts of the insolvent insurer; or(b) assure payment of the contractual obligations of the insolvent insurer; and(c) provide such monies, pledges, guarantees, or other means as are reasonably necessary to discharge such duties; or(2) With respect only to life and health insurance policies provide benefits and coverages in accordance with paragraph (D).
(D)(1) When proceeding under subclause (b) of clause (1) of paragraph (B) or clause (2) of paragraph (C), the association shall, with respect to only life and health insurance policies:(a) assure payment of benefits for premiums identical to the premiums and benefits, except for terms of conversion and renewability, that would have been payable under the group policies of the insurer for claims incurred not later than the earlier of the next renewal date under such policies or contracts or forty-five days, but in no event for a claim incurred less than thirty days after the date on which the association becomes obligated with respect to such policies. Notwithstanding the foregoing, the association may, if it finds the premium rate under a group policy to be inadequate, increase such premium rate in an amount approved by the commissioner.
(b)(i) with respect to individual policies, assure payment of benefits for premiums identical to the premiums and benefits, except for terms of conversion and renewability, that would have been payable under such policies of the insurer, for claims incurred not later than the earlier of the next renewal date, if any, under such policies, or one year from the date on which the association becomes obligated with respect to such policies, but in any event for claims incurred not later than the thirtieth day after the association becomes obligated with respect to such policies; and (ii) make diligent efforts to provide all known insureds, or owners, if other than the insureds, and group policyholders with respect to group policies, thirty days notice of the termination of the benefits provided; and (iii) with respect to individual policies, make available to each known insured, or owner if other than the insured, and with respect to an individual formerly insured under a group policy who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with the provisions of clause (2) of paragraph (D), if such insured or owner had a right under law or under the terminated policy to convert coverage to individual coverage or to continue an individual policy in force until a specified age or for a specified time, during which the insurer had no right unilaterally to make changes in any provision of the policy or had a right only to make changes in premium by class.
(2) In providing the substitute coverage required under paragraph (D), the association may offer either to reissue the terminated coverage or to issue an alternative policy. Alternative or reissued policies shall be offered without requiring evidence of insurability, and shall not provide for any waiting period or exclusion that would not have applied under the terminated policy. Any alternative or reissued policy may be reinsured by the association.
(3)(a) Alternative policies adopted by the association shall be subject to the approval of the commissioner. The association may adopt alternative policies of various types for future issuance without regard to any particular impairment or insolvency.
(b) Alternative policies shall contain at least the minimum statutory provisions required in the commonwealth and provide benefits that shall not be unreasonable in relation to the premium charged. The association shall set the premium in accordance with the table of rates which it shall adopt. The premium shall reflect the amount of insurance to be provided and the age and class of risk of each insured, but shall not reflect any changes in the health of the insured after the original policy was last underwritten.
(c) Any alternative policy issued by the association shall provide coverage of a type similar to that of the policy issued by the impaired or insolvent insurer, as determined by the association.
(4) If the association elects to reissue the insured’s terminated coverage at a premium rate different from that charged under the terminated policy, the premium shall be set by the association in accordance with the amount of insurance provided and the age and class of risk of the insured, and shall be subject to approval by a court of competent jurisdiction.
(5) The association’s obligations with respect to coverage under any policy of the impaired or insolvent insurer or under any reissued or alternative policy shall cease on the date such coverage or policy is replaced by another similar policy by the policyholder, the insured, or the association.
(E) Nonpayment of premiums within thirty-one days after the date required under the terms of any guaranteed, assumed, alternative or reissued policy or contract or substitute coverage shall terminate the association’s obligations under such policy or coverage under this section with respect to such policy or coverage, except with respect to any claims incurred or any net cash surrender value which may be due in accordance with the provisions of this section.
(F) Premiums due after entry of an order of liquidation of an insolvent insurer shall belong to, and be payable at the direction of the association, and the association shall be liable for unearned premiums due to policy or contract owners arising after the entry of such order.
(G) In carrying out its duties under paragraphs (B) and (C) of this subsection, the association may, subject to approval by the court:(1) impose permanent policy or contract liens in connection with any guarantee, assumption or reinsurance agreement, if the association finds that the amounts which can be assessed under this section are less than the amounts needed to assure full and prompt performance of the association’s duties under this section, or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of such permanent policy or contract liens, to be in the public interest;(2) impose temporary moratoriums or liens on payments of cash values and policy loans, or any other right to withdraw funds held in conjunction with policies or contracts, in addition to any contractual provisions for deferral of cash or policy loan value.
(H) If the association fails to act within a reasonable period of time as provided in paragraphs (B), (C), and (D), the commissioner shall have the powers and duties of the association under this section with respect to impaired or insolvent insurers.
(I) The association may render assistance and advice to the commissioner, upon his request, concerning any insurer which is insolvent, impaired or potentially impaired, or concerning the rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of any impaired or insolvent insurer.
(J) The association, shall have standing to appear before any court in the commonwealth with jurisdiction over an impaired or insolvent insurer concerning which the association is or may become obligated under this section. Such rights shall extend to all matters germane to the powers and duties of the association, including, but not limited to, proposals for reinsuring, modifying or guaranteeing the covered policies or contracts of the impaired or insolvent insurer and the determination of the covered policies or contracts and contractual obligations. The association shall also have the right to appear or intervene before a court in the commonwealth or in another state with jurisdiction over an impaired or insolvent insurer for which the association is or may become obligated or with jurisdiction over a third party against whom the association may have rights through subrogation of the insurer’s policyholders.
(K)(1) Any person receiving benefits under this section shall be deemed to have assigned the rights under, and any causes of action relating to, the covered policy or contract to the association to the extent of the benefits received because of this section, whether the benefits are payments of or on account of contractual obligations, continuation of coverage or provision of substitute or alternative coverages. The association may require an assignment to it of such rights and causes of action by any payee, policy or contract owner, beneficiary, insured or annuitant, as a condition precedent to the receipt of any rights or benefits conferred by this section upon such person. The association also shall be subrogated to these rights and causes of action against the assets of any impaired or insolvent insurer, or any other person.
(2) The subrogation rights of the association under this subsection shall have the same priority against the assets of the impaired or insolvent insurer as that possessed by the person entitled to receive benefits under this section.
(3) In addition to clauses (1) and (2) above, the association shall have all common law rights of subrogation and any other equitable or legal remedy which would have been available to the impaired or insolvent insurer or holder of a policy or contract with respect to such policy or contracts.
(L) The association may: (i) enter into such contracts as are necessary or proper to carry out the provisions and purposes of this section; (ii) sue or be sued, including taking any legal actions necessary or proper for recovery of any unpaid assessments under subsection (9); (iii) borrow money to effect the purposes of this section, such notes or other evidence of indebtedness of the association not in default being legal investments for domestic insurers which may be carried as admitted assets; (iv) employ or retain such persons as are necessary to handle the financial transactions of the association, and to perform such other functions as become necessary or proper under this section; (v) take such legal action as may be necessary to avoid payment of improper claims; (vi) exercise, for the purposes of this section and to the extent approved by the commissioner, the powers of a domestic life or health insurer, but in no case may the association issue insurance policies or annuity contracts other than those issued to perform its obligations under this section; (vii) join an organization of one or more other state associations of similar purposes, to further the purposes and administer the powers and duties of this association; (viii) enter into agreements with other state associations of similar purposes to determine the residence of persons for purposes of this section.
(9)(A) For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board of directors shall assess the member insurers, separately for each account, at such time and for such amounts as the board of directors finds necessary. Assessments shall be due not less than thirty days after prior written notice to the member insurers and shall accrue interest at ten per cent per annum on and after the due date.
(B) There shall be two classes of assessments, as follows:(1) Class A assessments shall be made for the purpose of meeting administrative costs and other expenses and examinations conducted under the authority of paragraph (E) of subsection (12), which assessments may be made whether or not related to a particular impaired or insolvent insurer.
(2) Class B assessments shall be made to the extent necessary to carry out the powers and duties of the association under paragraph (A), (B) or (C) of subsection (8).
(C)(1) The amount of any Class A assessment shall be determined by the board of directors and may be made on a pro rata or non-pro rata basis. If made on a pro rata basis, the board of directors may provide that it be credited against future Class B assessments. If it is made on a non-pro rata basis, such assessment shall not exceed one hundred and fifty dollars per member insurer in any one calendar year. The amount of any Class B assessments shall be allocated for assessment purposes among the accounts pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or on any other standard deemed by the board of directors in its sole discretion as being fair and reasonable under the circumstances.
(2) Class B assessments against member insurers for each account shall be in the proportion that the premiums received on business in the commonwealth by each assessed member insurer on policies or contracts covered by each account for the most recent three calendar years for which information is available preceding the year in which the insurer became impaired or insolvent, as the case may be, bears to such premiums received on business in the commonwealth for such calendar years by all assessed member insurers.
(3) Assessments for funds to meet the requirements of the association with respect to an impaired or insolvent insurer shall not be made until necessary to implement the purposes of this section. Classification of assessments and computation of assessments under this subsection shall be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible.
(D) The association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board of directors, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is abated, or deferred in whole or in part, the amount by which such assessment is abated or deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments set forth in this subsection.
(E) The total of all assessments upon a member insurer for each account shall not in any one calendar year exceed two per cent of such insurer’s average premiums received in the commonwealth on the policies covered by the account during the three calendar years preceding the year in which the insurer became an impaired or insolvent insurer. If the maximum assessment, together with the other assets of the association in any account, does not provide in any one year in any account an amount sufficient to carry out the responsibilities of the association, the necessary additional funds shall be assessed as soon thereafter as permitted by this section.
(F) The board of directors may, by an equitable method as established in the plan of operation, refund to member insurers, in proportion to the contribution of each insurer to that account, the amount by which the assets of the account exceed the amount the board of directors finds is necessary to carry out during the coming year the obligations of the association with regard to that account, including assets accruing from assignment, subrogation, net realized gains and income from investments. A reasonable amount may be retained in any account to provide funds for the continuing expenses of the association and for future losses.
(G) It shall be proper for any member insurer, in determining its premium rates and policyowner dividends as to any kind of insurance within the scope of this section, to consider the amount reasonably necessary to meet its assessment obligations under this section.
(H) The association shall issue to an insurer paying an assessment under this section, other than a Class A assessment, a certificate of contribution, in a form approved by the commissioner, for the amount of the assessment so paid. All outstanding certificates shall be of equal dignity and priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the insurer in its financial statements as an asset in such form and for such amount, if any, and for such period of time as the commissioner may approve.
(10)(A)(1) The association shall submit to the commissioner a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments thereto shall become effective upon the commissioner’s written approval or unless the commissioner has not disapproved it within thirty days.
(2) If the association fails to submit a suitable plan of operation within one hundred twenty days following the effective date of this section, or if at any time thereafter the association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate the provisions of this section. Such rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner.
(B) All member insurers shall comply with the plan of operation.
(C) The plan of operation shall, in addition to requirements enumerated elsewhere in this section:(1) establish procedures for handling the assets of the association;(2) establish the amount and method of reimbursing members of the board of directors under subsection (7);(3) establish regular places and times for meetings, including telephone conference calls, of the board of directors;(4) establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors;(5) establish the procedures whereby selections for the board of directors will be made and submitted to the commissioner;(6) establish any additional procedures for assessments under subsection (9); and(7) contain additional provisions necessary or proper for the execution of the powers and duties of the association.
(D) The plan of operation may provide that any or all powers and duties of the association, except those under clause (3) of paragraph (K) of subsection (8) and of subsection (9), are delegated to a corporation, association, or other organization which performs or will perform functions similar to those of this association, or its equivalent, in two or more states. Such corporation, association, or organization shall be reimbursed for any payments made on behalf of the association and shall be paid for its performance of any function of the association. A delegation under this paragraph shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association, or organization which extends protection not substantially less favorable and effective than that provided by this section.
(11) In addition to the duties and powers enumerated elsewhere in this section:(A) The commissioner shall:(1) upon request of the board of directors, provide the association with a statement of the premiums in this and any other appropriate state for each member insurer;(2) when an impairment is declared and the amount of the impairment is determined, serve a demand upon the impaired insurer to make good the impairment within a reasonable time; notice to the impaired insurer constituting notice to its shareholders, if any, and failure of the impaired insurer to promptly comply with such demand not excusing the association from the performance of its powers and duties under this section;(3) in any liquidation or rehabilitation proceeding involving a domestic insurer, be appointed as the receiver;(4) in any liquidation proceeding involving a foreign or alien member insurer in such insurer’s domiciliary jurisdiction or state of entry, be appointed as conservator.
(B) The commissioner may suspend or revoke, after notice and hearing, the certificate of authority to transact insurance in the commonwealth of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the commissioner may levy a forfeiture on any member insurer which fails to pay an assessment when due. Such forfeiture shall not exceed five per cent of the unpaid assessment per month, but no forfeiture shall be less than one hundred dollars per month.
(C) Any action of the board of directors or the association may be appealed to the commissioner by any member insurer if such appeal is taken within sixty days of the action being appealed. If a member company is appealing an assessment, the amount assessed shall be paid to the association and available to meet association obligations during the pendency of an appeal. If the appeal on the assessment is upheld, the amount paid in error or excess shall be returned to the member company. Any final action or order of the commissioner shall be subject to judicial review in a court of competent jurisdiction.
(D) The receiver, liquidator, rehabilitator, or conservator of any impaired or insolvent insurer may notify all interested persons of the effect of this section.
(12) To aid in the detection and prevention of insurer insolvencies or impairments:(A) It shall be the duty of the commissioner:(1) To notify the commissioners of all the other states, territories of the United States and the District of Columbia when he takes any of the following actions against a member insurer:(a) revocation of license;(b) suspension of license;(c) makes any formal order that such company restrict its premium writing, obtain additional contributions to surplus, withdraw from the state, reinsure all or any part of its business, or increase capital, surplus, or any other account for the security of policyholders or creditors. Such notice shall be mailed to all insurance commissioners within thirty days following the action taken or the date on which such action occurs.
(2) To report to the board of directors when he has taken any of the actions set forth in paragraph (A), subsection (1) or has received a report from any other insurance commissioner indicating that any such action has been taken in another state. Such report to the board of directors shall contain all significant details of the action taken or the report received from another commissioner.
(3) To report to the board of directors when he has reasonable cause to believe from any examination, whether completed or in process, of any member company that such company may be an impaired or insolvent insurer.
(4) To furnish to the board of directors the NAIC Insurance Regulatory Information System tests and listings of companies not included in the tests developed by the NAIC, for the use of the board of directors in carrying out its duties and responsibilities under this subsection. Such report and the information contained therein shall be kept confidential by the board of directors until such time as made public by the commissioner or other lawful authority.
(B) The commissioner may seek the advice and recommendation of the board of directors concerning any matter affecting his duties and responsibilities regarding the financial condition of member insurers and companies seeking admission to transact insurance business in the commonwealth.
(C) The board of directors may, upon majority vote, make reports and recommendations to the commissioner upon any matter germane to the solvency, rehabilitation, conservation, or liquidation of any member insurer or germane to the solvency of any company seeking to do an insurance business in the commonwealth. Such reports and recommendations shall not be considered public documents.
(D) It shall be the duty of the board of directors, upon majority vote, to notify the commissioner of any information the board of directors possesses which indicates any member insurer may be an impaired or insolvent insurer.
(E) The board of directors may, upon majority vote, request that the commissioner order an examination of any member insurer which the board in good faith believes may be an impaired or insolvent insurer. Within thirty days of the receipt of such request, the commissioner shall begin such examination. The examination may be conducted as an NAIC examination or may be conducted by such persons as the commissioner designates. The cost of such examination shall be paid by the association and the examination report shall be treated as are other examination reports. In no event shall such examination report be released to the board of directors of the association prior to its release to the public, but this shall not preclude the commissioner from complying with paragraph (A). The commissioner shall notify the board of directors when the examination is completed. The request for an examination shall be kept on file by the commissioner but it shall not be open to public inspection prior to the release of the examination report to the public.
(F) The board of directors may, upon majority vote, make recommendations to the commissioner for the detection and prevention of insurer insolvencies.
(G) The board of directors may, at the conclusion of any insurer insolvency in which the association was obligated to pay covered claims, prepare a report to the commissioner containing such information as it may have in its possession bearing on the history and causes of such insolvency. The board shall cooperate with the boards of directors of guaranty associations in other states in preparing a report on the history and causes of insolvency of a particular insurer, and may adopt by reference any report prepared by such other associations.
(13)(A) Assessments described in paragraph (H) of subsection (9), paragraph (H) may be applied as an offset to the premium, excise, franchise, or income tax liability of member insurers to the commonwealth, to the extent of ten per cent of the amount of such assessments for each of the five calendar years following the year in which such assessments are paid. If the sum of the offsets, so determined, for all member insurers for a calendar year exceeds three million dollars, the excess shall be carried forward and shall be allowed as an offset in calendar years in which, and to the extent that the sum of member insurer’s offsets are less than three million dollars. In the event that the total of the offsets reported by all member insurers on their premium, excise, franchise or income tax returns exceeds three million dollars for a calendar year, the commissioner of revenue shall assess each member insurer with an additional tax equal to the amount offset for the calendar year which is in excess of such member insurer’s pro rata share of three million dollars. Each member insurer’s pro rata share of three million dollars shall be determined by dividing three million dollars by the total of all member insurer offsets reported in such calendar year and multiplying the result by the offset taken by each such member insurer.
(B) Any sums which are acquired by refund, pursuant to paragraph (F) of subsection (9), from the association by member insurers, and which have theretofore been offset against premium, excise, income or franchise taxes as provided in paragraph (A), shall be paid by such insurers to the commonwealth in such manner as the department of revenue may require. The association shall notify the commissioner that such refunds have been made.
(14)(A) Nothing in this section shall be construed to reduce the liability for unpaid assessments of the insureds of an impaired or insolvent insurer operating under a plan with assessment liability.
(B) Records shall be kept of all negotiations and meetings in which the association or its representatives are involved to discuss the activities of the association in carrying out its powers and duties under subsection (8). Records of such negotiations or meetings shall be made public only upon the termination of a liquidation, rehabilitation, or conservation proceeding involving the impaired or insolvent insurer, upon the termination of the impairment of insolvency of the insurer, or upon the order of a court of competent jurisdiction. Nothing in this subsection shall limit the duty of the association to render a report of its activities under subsection (15).
(C) For the purpose of carrying out its obligations under this section, the association shall be deemed to be a creditor of the impaired or insolvent insurer to the extent of assets attributable to covered policies reduced by any amounts to which the association is entitled as subrogee pursuant to paragraph (K) of subsection (8). Assets of the impaired or insolvent insurer attributable to covered policies shall be used to continue all covered policies and pay all contractual obligations of the impaired or insolvent insurer as required by this section. Assets attributable to covered policies, as used in this subsection, are that proportion of the assets which the reserves that should have been established for such policies bear to the reserves that should have been established for all policies of insurance written by the impaired or insolvent insurer.
(D)(1) Prior to the termination of any liquidation, rehabilitation or conservation proceeding, the court may take into consideration the contributions of the respective parties, including the association, the shareholders and policyowners of the insolvent insurer, and any other party with a bona fide interest, in making an equitable distribution of the ownership rights of such insolvent insurer. In such determination, consideration shall be given to the welfare of the policyholders of the continuing or successor insurer.
(2) No distribution to stockholders, if any, of an impaired or insolvent insurer shall be made until and unless the total amount of valid claims of the association with interest thereon for funds expended in carrying out its powers and duties under subdivision (8) with respect to such insurer have been fully recovered by the association.
(E)(1) If an order for rehabilitation or liquidation of an insurer domiciled in the commonwealth has been entered, the receiver appointed under such order shall have a right to recover on behalf of the insurer, from any affiliate that controlled it, the amount of distributions, other than stock dividends paid by the insurer on its capital stock, made at any time during the five years preceding the petition for liquidation or rehabilitation subject to the limitations of clauses (2) and (4) of this paragraph.
(2) No such distribution shall be recoverable if the insurer shows that when paid the distribution was lawful and reasonable, and that the insurer did not know and could not reasonably have known that the distribution might adversely and materially affect the ability of the insurer to fulfill its contractual obligations.
(3) Any person who was an affiliate that controlled the insurer at the time the distributions were paid shall be liable up to the amount of distributions he received. Any person who was an affiliate that controlled the insurer at the time the distributions were declared, shall be liable up to the amount of distributions he would have received if they had been paid immediately. If two or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.
(4) The maximum amount recoverable under this subsection shall be the amount needed in excess of all other available assets of the insolvent insurer to pay the contractual obligations of the insurer.
(5) If any person liable under paragraph (3) of this paragraph is insolvent, all its affiliates that controlled it at the time the distribution was paid, shall be jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.
(15) The association shall be subject to examination and regulation by the commissioner. The board of directors annually shall submit to the commissioner, not later than five months after the end of the association’s prior fiscal year, a financial report for the preceding fiscal year in a form approved by the commissioner and a report of its activities during the preceding fiscal year.
(16) The association shall be exempt from payment of all fees and all taxes levied by the commonwealth or any of its subdivisions, except taxes levied on real property.
(17) There shall be no liability on the part of and no cause of action of any nature shall arise against any member insurer or its agents or employees, the association or its agents or employees, the board of directors or any member thereof, or the commissioner or his representatives, for any action or omission by them pursuant to the purposes and provisions of this section or in the performance of their powers and duties under this section. Such immunity shall extend to the participation in any organization of one or more other state associations of similar purposes as provided in subclause (vii) of paragraph (L) subsection (8), and to any such organization and its agents and employees.
(18) All proceedings in which the insolvent insurer is a party in any court in the commonwealth shall be stayed sixty days from the date an order of rehabilitation or liquidation is final to permit proper legal action by the association on any matters germane to its powers or duties. As to judgment under any decision, order, verdict, or finding based on default the association may apply to have such judgment set aside by the same court that made such judgment and shall be permitted to defend against such suit on the merits.
(19) No person, including an insurer, agent or affiliate of an insurer shall make, publish, disseminate, circulate, or place before the public, or cause directly, to be made, published, disseminated, circulated or placed before the public, in any newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station or television station, or in any other way, any advertisement, announcement or statement, written or oral, which uses the existence of the Massachusetts Life and Health Insurance Guaranty Association for the purposes of sales, solicitation, or inducement to purchase any form of insurance covered by this section; provided, however, that this section shall not apply to the Massachusetts Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance.
(20) This section shall not apply to any insurer which was insolvent or unable to fulfill its contractual obligations as of April third, nineteen hundred and eighty-six.
Chapter 175: Section 147 to 147B. Repealed, 1943, 227, Sec. 10 Chapter 175: Section 148. Repealed, 1928, 148, Sec. 2 Chapter 175: Section 149. Participating and nonparticipating policies Section 149. A domestic life company is authorized to issue both participating and nonparticipating policies of life, endowment and accident and sickness insurance, and annuity and pure endowment contracts, but no such company shall issue any such participating policies or contracts which do not by their terms give to the holders thereof full right to participate in the accumulations of said company attributable to such business as provided in section one hundred and forty.
Every domestic mutual and stock life company issuing both participating and nonparticipating policies or contracts shall file with the commissioner each year together with its annual statement for the year a separate calculation of its annual analysis of operations by line of business.
A domestic life company issuing policies or contracts on the nonparticipating plan may provide therein that, in addition to the rate of interest guaranteed by the company to be paid on deferred payments of the proceeds, excess interest may be paid thereon at such rate as the company may annually declare; and the inclusion in any nonparticipating policy or contract of such provision shall not be construed to make the policy or contract participating.
The provisions of sections ninety-four, one hundred and ten, one hundred and thirty-two D and one hundred and thirty-seven relative to membership and voting rights shall not apply to nonparticipating policies and contracts issued by a domestic mutual life company under this section, unless the domestic mutual life company elects to provide membership and voting rights in the policy or contract.
The provisions of this section shall not apply to policies of reinsurance.
Chapter 175: Section 149A. Unclaimed funds defined Section 149A. “Unclaimed funds” within the meaning of this section and sections one hundred and forty-nine B to one hundred and forty-nine D, inclusive, shall mean and include all monies held and owing by any life insurance company doing business in this commonwealth which shall have remained unclaimed and unpaid for seven years or more after it is established from the records of such company that such monies became due and payable under any life or endowment insurance policy or annuity contract which has matured or terminated and which monies are payable to a person whose last known address is within this commonwealth, provided, that if a person other than the insured or annuitant be entitled to such funds and no address of such person be known to such company or if it be not definite and certain from the records of such company what person is entitled to such funds, then in either event it shall be presumed for the purposes of this section that the last known address of the person entitled to such funds is the same as the last known address of the insured or annuitant according to the records of such company. A life insurance policy not matured by actual proof of the prior death of the insured shall be deemed to be matured and the proceeds thereof shall be deemed to be “due and payable” within the meaning of this section if such policy is in force when the insured shall have attained the limiting age under the mortality table on which the reserve is based. Monies otherwise admittedly due and payable shall be deemed to be “held and owing” within the meaning of this section although the policy or contract shall not have been surrendered as required. This section shall not apply to amounts which have been paid to another state or jurisdiction prior to its effective date.
Chapter 175: Section 149B. Unclaimed funds; reports by companies Section 149B. In addition to all other reports required by law, every life company shall, on or before the first day of April of each year, make a report in writing to the state treasurer of all unclaimed funds as defined in section one hundred and forty-nine A held or owing by it on the thirty-first day of December next preceding. The state treasurer may, for cause shown, extend the filing date of said report, for not more than sixty days beyond April first in said year. Such report shall be signed and sworn to by an officer of such insurer and shall set forth with respect to each policy under which such unclaimed funds are due, owing and payable (1) in alphabetical order, the full name of the insured, his last post office address, his policy number and his policy age; (2) the amount of unclaimed funds due, owing and payable under the policy; (3) the full name of each beneficiary named in the policy or appearing in the records of the insurer and the last known address of such beneficiary; and (4) the date on which such unclaimed funds became payable.
Chapter 175: Section 149C. Unclaimed funds; payment to state treasurer Section 149C. On or before the first day of September in each year, each life company shall pay over to the state treasurer all unclaimed funds set forth in the report required by section one hundred and forty-nine B, excepting any funds which since the date of such report have ceased to be unclaimed. Each such payment shall be accompanied by a duplicate of the report made under section one hundred and forty-nine B, together with a statement with respect to any funds which since the date of such report have ceased to be unclaimed.
Chapter 175: Section 149D. Unclaimed funds; custody; claims; proceedings; judgment and satisfaction Section 149D. Upon the payment of such unclaimed funds to the state treasurer, the commonwealth shall assume, for the benefit of those entitled to receive the same and for the safety of the moneys so paid, the custody of such unclaimed funds, and the insurer making such payment shall immediately and thereafter be relieved of and held harmless by the commonwealth from any and all liability for any claim or claims which exist at such time with reference to such unclaimed funds or which may thereafter be made or may come into existence on account of or in respect to any such unclaimed funds. All money paid into the state treasury shall be credited to the General Fund. Any person may, however, establish his claim for money paid to the state treasurer under the provisions of sections one hundred and forty-nine A to one hundred and forty-nine D, inclusive, and any claim so established to the satisfaction of the attorney general shall be paid from funds appropriated for the purpose. In the event legal proceedings are instituted against the insurance company by another state with respect to the unclaimed funds paid to the state treasurer, the insurance company shall notify the attorney general of the commonwealth of such proceedings and the attorney general may, in his discretion, intervene therein. If after the insurance company has actively defended, a judgment in such proceedings is entered against the insurance company for any amount paid to the state treasurer hereunder, the state treasurer shall, upon being furnished with proof of payment in satisfaction of said judgment, immediately reimburse the insurance company the amount so paid to the state treasurer.
Chapter 175: Section 149E. Examination of records; withholding or failing to report funds Section 149E. The state treasurer may at any reasonable time following reasonable notice examine the records of any life company to determine if said company has complied with the provisions of this chapter. In the event any life company refuses to permit the state treasurer to examine such records, the state treasurer shall petition the superior court for an order to allow the state treasurer or his agents to examine all appropriate business records of such person.
If the state treasurer believes that any life company has violated the provisions of section one hundred and forty-nine B by withholding or failing to report funds specified therein, the state treasurer shall petition the superior court for an order to require the holder thereof to surrender such unclaimed funds to him.
Chapter 175: Section 149F. Definitions Section 149F. As used in this section, the following words shall have the following meanings:“Home warranty contract”, a contract or agreement whereby a person, other than a builder, seller, or lessor, agrees for a fee and for a specified period of time, to repair or replace all or any part of any structural component, appliance, or utility system of residential property necessitated by wear and tear, malfunction, deterioration, or inherent defect. A home warranty contract shall not include any service contract, maintenance contract, performance guarantee or warranty sold, offered for sale or issued by any manufacturer, seller, builder or installer of any structural components, appliances or utility systems for residential property.
“Home warranty company”, any person who is not otherwise licensed as an insurance company who issues, or offers to issue, a home warranty contract. Except as otherwise provided herein, a home warranty company shall not be considered to be an insurance company or insurer for purposes of this chapter.
Chapter 175: Section 149G. Certificates of authority; marketing contracts through agents or brokers Section 149G. (a) No person shall establish or operate a home warranty company in the commonwealth, or issue home warranty contracts, or sell, offer to sell, or solicit offers to purchase or receive advance or periodic consideration in conjunction with a home warranty contract unless the person has obtained and maintains a certificate of authority pursuant to section one hundred and forty-nine H.
(b) Every home warranty company that is established and operating in the commonwealth on the effective date of this section shall, within forty-five days after such effective date, submit an application for a certificate of authority pursuant to section one hundred and forty-nine H.
(c) A home warranty company may market home warranty contracts through insurance brokers or appointed agents licensed pursuant to this chapter or through real estate brokers or salespeople duly licensed in the commonwealth.
Chapter 175: Section 149H. Certificates of authority; applications; contents; approval; grounds for denial Section 149H. (a) Any person, including but not limited to a foreign corporation licensed to transact business in this state, may apply to the commissioner of insurance for a certificate of authority to offer home warranty contracts in compliance with this section.
(b) Each application for a certificate of authority under this section shall be certified by the applicant or by an officer or authorized representative of the applicant. The application shall be accompanied by all of the following:(1) a copy of all basic organizational documents of the applicant, if any, including but not limited to the articles of incorporation, articles of association, or other applicable documents, and all amendments to such articles and documents;(2) a copy of all by-laws, rules, or other similar documents, if any, that regulate the conduct of the internal affairs of the applicant and all amendments to such by-laws, rules and documents;(3) a list of the names, addresses, and official positions of persons who are responsible for the conduct of the affairs of the applicant, including all members of its governing board and principal officers;(4) a description of the applicant, including, but not limited to, a current financial statement showing the applicant’s assets, liabilities, income, other sources of financial support and expenses;(5) a copy of each type of home warranty contract that is to be issued to prospective subscribers;(6) a copy of the schedule of contract fees for each home warranty contract;(7) administrative proceedings or investigations conducted concerning the applicant by regulatory authorities in any state or by any federal authority;(8) the name and address of a resident of this state who is an agent for service of process and upon whom notices or orders of the commissioner of insurance or process issued at his discretion may be served;(9) an application fee as established pursuant to section fourteen.
(c) The commissioner shall examine the application and make such further investigation as he deems appropriate.
(d) A certificate of authority shall be issued if the commissioner is satisfied that the applicant meets the requirements of clauses (1) to (9), inclusive, paragraph (b). An application for a certificate of authority shall be considered approved unless disapproved within sixty days of submittal; provided, however, that the commissioner may postpone such action for such further time, not to exceed thirty days, as he may deem necessary for proper consideration.
(e) The commissioner shall not issue a certificate of authority to any home warranty company unless the commissioner finds all of the following:(1) The company’s management is competent and trustworthy and can reasonably be expected to successfully manage the affairs of the company in compliance with law;(2) The company has a minimum net worth of fifty thousand dollars, based upon a current financial statement prepared in accordance with generally accepted accounting principles and certified by an independent certified public accountant;(3) The company has furnished a surety bond as required under section one hundred and forty-nine I.
Chapter 175: Section 149I. Surety bond Section 149I. To assure the faithful performance of obligations under home warranty contracts issued and outstanding in the commonwealth, a home warranty company shall, prior to the issuance of a certificate of authority, file with the commissioner a surety bond in the amount of twenty-five thousand dollars, which bond has been issued by an authorized surety company and approved by the commissioner as to issuer, form and contents. The bond shall not be canceled or be subject to cancellation unless thirty days advance notice in writing is filed with the commissioner. Notwithstanding the foregoing, if a bond is canceled for any reason and a new bond in the required amount is not received by the commissioner on or before the effective date of cancellation, the certificate of authority of the home warranty company shall be automatically revoked as of the date the bond ceases to be in effect. A home warranty company whose certificate of authority is revoked under this section may file an application for a new home warranty pursuant to section one hundred and forty-nine H.
The bond posted by a home warranty pursuant to this section shall be for the benefit of, and subject to recovery thereon, by any home warranty contract holder sustaining injury due to failure of the home warranty company to faithfully perform its obligations under a home warranty contract because of insolvency of the home warranty company.
If a home warranty company ceases to do business in the commonwealth and furnishes to the commissioner satisfactory proof that it has discharged all obligations to contract holders, the surety bond shall be released.
Chapter 175: Section 149J. Reports; financial statement; filing Section 149J. (a) A home warranty company shall report to the commissioner within ten days any amendments to or changes in the documents and supplements or revisions to information submitted pursuant to section one hundred and forty-nine H.
(b) A home warranty company shall file with the commissioner within one hundred and twenty days of the close of its fiscal year the following:(1) a current financial statement including a balance sheet and statement of operations prepared in accordance with generally accepted accounting principles and certified by an independent certified public accountant;(2) with respect to home warranty contracts issued by the home warranty company within the commonwealth, a report showing the number of home warranty contracts issued during the preceding fiscal year, the number canceled or expired during that year, the number in effect at year end and the amount of home warranty contract fees received during the year;(3) any other information relating to the performance and solvency of the home warranty company required by the commissioner.
The commissioner may, upon thirty days written notice, suspend or revoke the certificate of authority of any home warranty company which fails to file the foregoing information within the time provided by this section.
Chapter 175: Section 149K. Unfair trade practices Section 149K. The provisions of chapter one hundred and seventy-six D shall be applicable to all home warranty companies.
Chapter 175: Section 149L. Conflicting provisions Section 149L. To the extent that any provisions of sections one hundred and forty-nine F to one hundred and forty-nine K, inclusive, conflict with any other provisions of this chapter, the provisions of said sections one hundred and forty F to one hundred and forty-nine K, inclusive, shall govern.
Chapter 175: Section 14A. Committee on Valuation of Securities of National Association of Insurance Commissioners; assessment of expenses Section 14A. If, in the valuation of securities held by a domestic life company, it becomes necessary or expedient for the commissioner to contribute to the expenses of the Committee on Valuation of Securities of the National Association of Insurance Commissioners, in order to make use of the analyses, reports, and information developed by said committee for the valuation of such securities and the determination of their amortizability, the commissioner shall periodically obtain from said committee a verified budget estimate of the receipts and of the expenses to be incurred by said committee for a stated period, not exceeding one year, with appropriate explanations of the estimates therein contained.
If the commissioner shall be satisfied as to the reasonableness of such budget estimate, he shall determine the portion of the funds therein prescribed to be assessed in any one year as hereinafter provided, by deducting from such budget estimate, or from the sum of two hundred and fifty thousand dollars, whichever is less, any amount receivable by said committee from other states whose laws do not substantially conform to the method of assessment herein provided, and applying to the remainder the proportion which the total investments in securities of domestic life companies bears to the total investments in securities of life companies domiciled in this and other states whose laws authorize and require assessments on substantially the same basis as herein provided. The commissioner shall annually thereafter, by notice stating the method of computation thereof, assess the amount to be paid on account of such expenses pro rata upon all domestic life companies in the proportion which the total investments in securities of each such company bears to the total investments in securities of all such companies. The total investments in securities of any life company for purposes of this section shall be the total value of stocks and bonds reported as admitted assets in its annual statement last filed prior to such assessment with the commissioner or other supervisory official of its state of domicile. Upon receipt of such notice, each domestic life company shall within thirty days pay said assessment to the commissioner. The commissioner shall deposit all moneys collected by him pursuant to this section in an account, entitled “Commissioner of Insurance: Securities Valuation Expense Account”, in a bank or a trust company in the city of Boston designated by the state treasurer. Such moneys shall be paid by the commissioner to the Committee on Valuation of Securities of the National Association of Insurance Commissioners after audit by the state treasurer.
The commissioner shall require annually and at such other times as he may deem it necessary or advisable a duly authorized audit of receipts and disbursements and statement of assets and liabilities, showing the details of the financial operations of said committee.
Chapter 175: Section 15. Repealed, 1993, 226, Sec. 14 Chapter 175: Section 150. Admission Section 150. Foreign companies, upon complying with the conditions herein set forth applicable to such companies, may be admitted to transact in the commonwealth any kinds of business authorized by this chapter, subject to all general laws now or hereafter in force relative to insurance companies, and subject to all laws applicable to the transaction of such business by foreign companies and their agents; except that no foreign stock company may issue participating policies unless specifically authorized to do so by its charter or by the laws of its state or government; provided, that no provision of law which by its terms applies specifically to domestic life companies shall thereby become applicable to foreign life companies; and provided, further, that the provisions of section eighty-one relative to the contingent mutual liability of members shall not apply to any foreign mutual fire company which had been admitted to transact business in the commonwealth prior to January first, nineteen hundred and twenty-one and was then actually transacting business therein without complying with said provisions.
Chapter 175: Section 151. Conditions of admission; general provisions Section 151. No foreign company shall be admitted and authorized to do business until—First, It has deposited with the commissioner a certified copy of its charter or deed of settlement and a statement of its financial condition and business, in the form prescribed by section twenty-five, and signed and sworn to as provided in said section, and has paid for the filing of such copy and statement the fees prescribed by section fourteen.
Second, It has satisfied the commissioner that (1) it is fully and legally organized under the laws of its state or government to do the business it proposes to transact; (2) it has the combined amounts of capital and surplus required or prescribed by the commissioner under section forty-eight for the classes of business it proposes to transact; (3) it has made a deposit with the state treasurer or with the proper board or officer of some other state in exclusive trust for the benefit and security of all its policyholders in the United States in an amount satisfactory to the commissioner; (4) it has made a deposit with the state treasurer in exclusive trust for the benefit and security of its policyholders in the commonwealth in an amount satisfactory to the commissioner; that (5) any capital, surplus, guaranty fund or guaranty capital and assets, other than contingent, are well invested and available for the payment of losses in the commonwealth, that the company is in a sound financial condition and that business policies, methods and management are sound and proper; and (6) that it insures in a single risk wherever located an amount no larger than ten percent of its surplus to policyholders except as provided in section twenty-one.
Third, It has filed with the commissioner a power of attorney constituting and appointing the commissioner or his successor its true and lawful attorney, upon whom all lawful processes in any action or legal proceeding against it may be served, and therein shall agree that any lawful process against it which may be served upon its said attorney shall be of the same force and validity as if served on the company, and that the authority thereof shall continue in force irrevocable so long as any liability of the company remains outstanding in the commonwealth. The power of attorney shall be executed by the president and secretary of the company, or other officers duly authorized thereto, under its corporate seal, and shall be accompanied by a certified copy of the resolution of the board of directors of the company making said appointment and authorizing the execution of said power of attorney which shall be in a form prescribed by the commissioner. The service of such process shall be made by leaving the same in duplicate in the hands or office of the commissioner. One of the duplicates of such process, certified by the commissioner as having been served upon him, shall be deemed sufficient evidence thereof, and service upon such attorney shall be deemed service upon the principal.
Fourth, It has obtained from the commissioner a license stating that it has complied with the laws of the commonwealth and specifying the kinds of business it is authorized to transact, which the commissioner may refuse to issue if he is of the opinion that such refusal will be in the public interest. Every such license shall expire on June thirtieth of each year, unless sooner revoked or suspended as provided in section five, but may be renewed by the commissioner on or before said date upon written application of the company, subject to all the provisions of this chapter excepting the provisions of the first and third clauses of this section, applicable to the issue of a new license.
Chapter 175: Section 152. Classes of business; permissive combinations Section 152. No foreign company shall transact in this commonwealth any kind of business not specified in its charter and in its license. Any foreign stock company, or any company described in section one hundred and fifty-five, admitted to the commonwealth, may, if its charter permits, be licensed to transact the kinds of business permitted to domestic stock companies under section fifty-one, subject to the provisions of clause (d) of said section fifty-one and of subdivision (2) of the second clause of section one hundred and fifty-one and of the first clause of said section one hundred and fifty-five. Any foreign mutual company admitted to the commonwealth may, if its charter permits, be licensed to transact the classes of business permitted to domestic mutual companies under section fifty-four, subject to the provisions of clause (c) of said section fifty-four and of subdivision (3) of the second clause of said section one hundred and fifty-one. Any foreign life company admitted to the commonwealth may, if its charter permits, be licensed to transact the kinds of business permitted to domestic life companies under section one hundred and nineteen and, subject to all the conditions which the commissioner may prescribe, under section fifty-four G.
Chapter 175: Section 152A. Non-assessable policies; power to issue; conditions Section 152A. Any mutual fire company admitted before or after this section takes effect to transact business in this commonwealth may issue non-assessable policies in compliance with the requirements of section eighty-five A and any such mutual company, or any company specified in the first paragraph of section ninety, may issue non-assessable policies in compliance with the requirements of section ninety-three F, except that the deposit required in either case may be made in the home state of such admitted company in cash or securities legal for investments by such companies in such home state. Any deposit required for the purposes specified in either of said sections shall be inclusive of, and not in addition to, any deposit required by any other state to be made for the benefit of all policyholders in the United States. This section shall not apply to any company unless such company or its predecessor or predecessors, if any, prior to merger or consolidation shall have been actively engaged in the insurance business in one or more states of the United States continuously for ten or more years; provided, that any foreign mutual company hereinbefore referred to which has not itself or through its predecessor or predecessors been so engaged in the insurance business continuously for ten or more years may issue non-assessable policies if it has and maintains a surplus to policyholders of not less than one million dollars. A company issuing a non-assessable policy under authority of this section may state therein, or on the filing back thereof, or in both such places, that such policy is non-assessable.
Chapter 175: Section 153. Conditions of admission; foreign life companies Section 153. A company organized under the laws of any other state of the United States for the transaction of life insurance may, subject to all provisions of section one hundred and fifty-one so far as applicable to a life company, be admitted and authorized to do business in this commonwealth if it has been issuing life insurance policies or annuity contracts during each of at least the preceding three years; provided, however, that if it is a stock company it shall comply with the financial requirements specified in sections forty-eight and fifty-one; and provided further, that if it is a mutual company it shall comply with the financial requirements specified in sections fifty-four and ninety-three E.
Notwithstanding any other provisions of law to the contrary, if the company is a majority-owned subsidiary of a domestic or an admitted life company, it shall be deemed to have satisfied the three years’ policy issuance requirement contained in the first paragraph; provided, however, that the domestic or admitted life company satisfies the provisions of the first paragraph; and, provided further, that the commissioner determines that such domestic or admitted life company has a satisfactory record of doing business in the commonwealth during the preceding three years. For purposes of this section, a company shall be a majority-owned subsidiary of a domestic or an admitted life company only if a majority of the total issued and outstanding voting stock of such company is owned either directly by the domestic or admitted life company or indirectly by the domestic or admitted life company through one or more companies, the majority of the issued and outstanding voting stock of each of which is owned by its immediate parent.
Any such company organized under the laws of a state or government other than one of the United States may be so admitted and authorized, subject to all the provisions of section one hundred and fifty-one as aforesaid, if, in addition to fulfilling all the requirements of this section, it complies with section one hundred and fifty-five, and if it shall have and keep on deposit as provided in section one hundred and fifty-five or in the hands of trustees as provided in section one hundred and fifty-six, in exclusive trust for the security of its contracts with policyholders in the United States, funds of an amount equal to the net value of all its policies in the United States, less all indebtedness thereon, and not less than four hundred thousand dollars.
Chapter 175: Section 154. Service of process; duty of commissioner; fees Section 154. When legal process is served upon the commissioner as attorney for a foreign company under the third clause of section one hundred and fifty-one, he shall forthwith forward by mail, postage prepaid, one of the duplicate copies of the process served on him, addressed to the company at its last home office address appearing on his records, or, in the case of a company of a foreign country, to its resident manager in the United States, addressed to him at the last address appearing on said records, or to such other person as may previously have been designated by the company by written notice filed in the office of the commissioner. As a condition of valid and effectual service and of the duty of the commissioner in the premises, there shall be paid to him, except as provided in section fourteen, at the time of service thereof the fee prescribed by said section, which the plaintiff shall recover as taxable costs if he prevails in his suit. The commissioner shall keep a record of all legal processes showing the day and hour of service.
Chapter 175: Section 155. Conditions of admission; companies of foreign countries Section 155. A foreign company, if formed under the laws of any government or state other than the United States or one of the United States, shall not be admitted and authorized to do business until, besides complying with the conditions of section one hundred and fifty-one—First, It has satisfied the commissioner that it has made a deposit with the state treasurer or with the proper board or officer of some other state of the United States, in exclusive trust for the benefit and security of all its policyholders and creditors in the United States, of an amount not less than the amount of capital required of domestic stock companies by sections forty-eight and fifty-one, which, if so on deposit in this commonwealth, shall not be returned to the company, until it has ceased to transact business in the commonwealth, nor until the commissioner is satisfied that the company is under no obligation to policyholders or other persons in this commonwealth or in any other state of the United States for whose benefit such deposit was made, nor until he has given his written consent to such return; provided, that the commissioner may, in any case, authorize in writing the return to the company of any excess of any such deposit over the amount required by this clause, if he is satisfied that such return will not be prejudicial to the interests of its policyholders or creditors. Such deposit may be made in the securities and subject to the limitations specified in sections sixty-three and sixty-six, or in cash or such other securities as the commissioner may approve; provided, that bonds need not be accepted by the state treasurer unless in registered form and of denominations satisfactory to him. An amount of such deposit equal to the amount of capital required of domestic stock companies by said sections forty-eight and fifty-one shall be regarded as the deposit capital in the company’s annual statement under section twenty-five, and the excess of any such deposit over the amount required as aforesaid shall not be charged to the company as a liability for deposit capital.
Second, It has appointed, as its resident manager in the United States, a citizen or corporation of the United States approved by the commissioner, and has filed with him a certified copy of the record of the appointment of such manager by the directors of the company and a duplicate original of the power of attorney to the United States manager which shall be in a form satisfactory to the commissioner.
Third, It has filed with the commissioner, in such form and detail as he may require, a statement of its trustees appointed under section one hundred and fifty-six showing the funds held by such trustees, signed and sworn to by them, or if the trustee is a corporation, signed and sworn to by its president and secretary or other duly authorized officers.
The documents required by this section and sections one hundred and fifty-one and one hundred and fifty-six shall be executed and authenticated in a manner satisfactory to the commissioner.
Chapter 175: Section 156. Company of foreign country; appointment of trustees Section 156. Any such company may appoint trustees, who are citizens or corporations of the United States and approved by the commissioner, to hold funds in trust for the benefit of its policyholders and creditors in the United States. Said trustees shall be named by the directors of the company, and a certified copy of the record of the appointment of such trustees and a duplicate original of the deed of trust on a form approved by him shall be filed with the commissioner, who may examine such trustees and the assets in trust and all books and papers relative thereto in the same manner as he may examine the officers, agents, assets and affairs of companies. The funds so held by such trustees, and all assets held by or for such company within the United States for the benefit of its policyholders and creditors in the United States, so far as the same are in securities, money or credits admissible as sound assets in the financial accounts of companies, shall, with its deposits made in accordance with the preceding section, constitute the assets of such company for the purpose of making its annual statements to the commissioner. Such company shall file with the annual statement required by section twenty-five a statement of the trustees executed as prescribed in the preceding section, in such form and detail as the commissioner requires, showing the funds held by them.
Chapter 175: Section 156A. Capital or assets; impairment; issuance of policies; penalty Section 156A. Every foreign company, other than a life company, whose capital stock or guaranty or deposit capital is reduced below the amounts required by section one hundred and fifty-one, one hundred and fifty-two or one hundred and fifty-five, or is impaired on the basis fixed by sections ten to twelve, inclusive, or whose net cash assets, computed on said basis, or whose contingent assets, required by said section one hundred and fifty-one or one hundred and fifty-two, become at any time from any cause less than the amounts required as aforesaid, and every foreign company whose license has been revoked or suspended as provided in section five, shall forthwith cease to issue policies and to make contracts of insurance in the commonwealth until such capital stock, guaranty or deposit capital or assets have been restored to the amounts required as aforesaid, or said license has been restored by the commissioner, as the case may be. Any company or any officer or agent thereof, issuing any policy or making any contract of insurance contrary to this section shall be punished by a fine of not less than one hundred nor more than one thousand dollars.
Chapter 175: Section 157. Repealed, 2000, 96, Sec. 3 Chapter 175: Section 158. Policies; effect of war Section 158. No policy of insurance and no annuity or pure endowment contract issued to a resident of the commonwealth by an authorized company organized under the laws of a foreign country shall be invalidated by war between such foreign country and the United States.
Chapter 175: Section 159. Reciprocity Section 159. If by the laws of any other state any taxes, fines, penalties, licenses, fees, deposits or other obligations or prohibitions, additional to or in excess of those imposed by the laws of this commonwealth upon foreign companies and their agents, are imposed on domestic companies and their agents doing business in such state, like obligations and prohibitions shall be imposed upon all companies of such state and their agents doing business in this commonwealth so long as such laws remain in force.
Chapter 175: Section 16. Record of proceedings; certified copies Section 16. He shall preserve in a permanent form a record of his proceedings, including a concise statement of the result of official examinations of companies.
He shall furnish, upon payment of the fee prescribed by section fourteen, when required for evidence in court, certificates, under seal of the division of insurance, relative to the authority of an insurance agent, broker or company, or an adjuster of fire losses, or an insurance adviser, or a fraternal benefit society, to transact business in the commonwealth on any particular date or for any specified period, and such certificates shall be received by the courts in lieu of the testimony of the commissioner or his representative.
Chapter 175: Section 160. Unlicensed companies; issuance of policies; exceptions; marine insurers Section 160. Whoever, for a person other than himself, acts or aids in any manner in the negotiation, continuation, or renewal of a policy of insurance or an annuity or pure endowment contract with a foreign company not lawfully admitted to issue such policies or contracts in this commonwealth shall, except as provided in section one hundred and sixty-eight, be punished by a fine of not less than one hundred nor more than five hundred dollars; but this section shall not apply to a duly licensed special insurance broker acting under said section one hundred and sixty-eight, nor to any act of a duly licensed insurance broker in negotiating, continuing or renewing policies of insurance on transportation, inland navigation and ocean and coastwise marine risks, nor to any insurance appertaining thereto which cannot, to the advantage of the insured, be placed in authorized companies; provided, however, no duly licensed insurance broker or special insurance broker shall act in negotiating, continuing or renewing policies of insurance on transportation, inland navigation and ocean and coastwise marine risks with a foreign company not authorized to transact business in the commonwealth unless such company is possessed of net cash assets of at least one million dollars computed on the basis fixed by sections ten to twelve, inclusive, and meets all the requirements of section one hundred and sixty-eight relating to foreign companies not authorized to transact business in the commonwealth.
No insurance broker or special insurance broker shall negotiate, continue or renew any such policies in any company, whether licensed, authorized to transact business in the commonwealth by section one hundred and sixty-eight, or authorized by this section, if the primary obligation to meet the actual risk assumed under any such policy is reinsured or otherwise transferred by such a company to a company that is not licensed or possessed of net cash assets as prescribed by this section or authorized to transact business by this section or section one hundred and sixty-eight.
The commissioner may, after an appropriate hearing authorize a company that does not have net assets as prescribed or a deposit in the amount required by section one hundred and sixty-eight to be used by insurance brokers and special insurance brokers to issue coverage on transportation, inland navigation and ocean and coastwise marine risks if he finds on the basis of the evidence presented at such a hearing that necessary coverage is not available to such risks from companies meeting the aforesaid requirements so long as he is satisfied that its officers and directors are of good repute and that the management of the company is carrying out its insurance contracts in good faith and that it shall file with the commissioner the reports required of companies authorized to transact business in the commonwealth pursuant to section one hundred and sixty-eight. Any such finding shall be reduced to writing and the authorization so given may at any time be revoked by the commissioner.
A person, other than the commissioner or his deputy, upon whose complaint a conviction is had for violation of this section, shall be entitled to one half of the fine recovered upon sentence therefor.
Chapter 175: Section 160A. Unlicensed companies; advertisement; penalty; exception Section 160A. No person shall print or publish, or cause to be printed or published, in any newspaper, magazine, pamphlet or other periodical any advertisement for or on behalf of any foreign company or fraternal benefit society not licensed to transact business in this commonwealth, wherein such company or society solicits, or which is designed or intended to solicit or induce, residents of the commonwealth to take out policies of insurance, annuity or pure endowment contracts or benefit certificates issued or made by such company or society, or to act in any manner in the solicitation of applications for, or to negotiate or act or aid in the negotiation of, such policies, contracts or certificates, or to collect premiums thereon, and no person shall transmit or publish any such advertisement for or on behalf of any such company or society from any radio broadcasting station located in the commonwealth. Violation of this section shall be punished by a fine of not less than fifty nor more than five hundred dollars. This section shall not apply to newspapers, magazines, pamphlets or other periodicals printed or published outside the commonwealth.
Chapter 175: Section 160B. Unlicensed companies; notice by commissioner Section 160B. The commissioner may, if it appears to him that any foreign company or fraternal benefit society not duly licensed to transact business in this commonwealth is issuing policies of insurance, annuity or pure endowment contracts or benefit certificates to residents thereof, or is seeking to induce such residents by advertisements printed, published or distributed therein through the mails or otherwise, or by any other means, to take out its policies, contracts or certificates, or to solicit or act in the solicitation of applications for, or to negotiate, effect or procure, or act or aid in the negotiation, effecting or procurement of, such policies, contracts or certificates or to collect premiums thereon, cause notice to be published in such manner and form as he may deem proper, setting forth the name of the company or society, the location, if known, of its home or principal office, the fact that such company or society is not licensed to transact business in the commonwealth and is not amenable to suit in the courts of this commonwealth to enforce claims under its policies, contracts or certificates, together with any other pertinent facts of which he may be cognizant or information that he may possess relative to the financial standing or stability, business policies, methods, operations, management or reliability of the company or society.
Chapter 175: Section 160C. Automobile insurance; company as agent for insurers doing business in Mexico; separate accounts; payment of percentage of gross premiums Section 160C. Notwithstanding the provisions of sections one hundred and sixty and one hundred and sixty-three an insurance company authorized to write automobile liability and physical damage insurance in this commonwealth may act as agent for one or more insurers authorized to do business in Mexico, but only as respects automobile liability and physical damage insurance applying to the use of automobiles in Mexico by policyholders to whom it has issued such coverages in the United States.
Each company acting pursuant to this section shall keep a separate account of the business written under the authority of this section and shall annually, in January, file with the state treasurer a sworn statement of the gross premiums charged for such insurance and the gross return premiums on such insurance during the year ending on December thirty-first next preceding and, at the time of filing such statement, shall pay the commonwealth an amount equal to four per cent of such gross premiums less such return premiums so reported.
Chapter 175: Section 160D. Agent or broker securing automobile coverage with Mexican companies; separate accounts; payment of percentage of gross premiums Section 160D. Section one hundred and sixty shall not apply to a duly licensed insurance agent or broker who negotiates, continues or renews automobile insurance policies for residents of the United States in a Mexican insurance company providing liability or physical damage coverages applying to the use of automobiles in Mexico.
Each duly licensed insurance agent or broker acting pursuant to this section shall keep a separate account of the business written under the authority of this section and shall annually, in January, file with the state treasurer a sworn statement of the gross premiums charged for such insurance and the gross return premiums on such insurance during the year ending on December thirty-first next preceding, and, at the time of filing such statement, shall pay the commonwealth an amount equal to four per cent of such gross premiums less such return premiums so reported.
Chapter 175: Section 161. Repealed, 1929, 6, Sec. 1 Chapter 175: Section 161A. Definitions Section 161A. In this section and in sections one hundred and sixty-one B to one hundred and sixty-one E, inclusive, the following words shall, unless the context requires otherwise, have the following meanings:—“Alien insurer”, any insurer incorporated or organized under the laws of any country or state other than the United States or one of the United States.
“Domestication”, the reorganization of the United States branch of an alien insurer as the result of which a domestic insurer shall succeed to all the business and assets and assume all the liabilities of the United States branch of the alien insurer.
“United States branch”, the business unit through which business is transacted within the United States by an alien insurer, and the assets and liabilities of such insurer within the United States pertaining to such business.
“Domestic insurer”, a stock insurance company incorporated under the laws of the commonwealth.
Chapter 175: Section 161B. Domestication agreement Section 161B. Any alien insurer now or hereafter licensed to do business in the commonwealth which owns beneficially, directly or indirectly, all of the outstanding capital stock of a domestic insurer may, with the prior written approval of the commissioner and subject to the final approval of the commissioner, domesticate its United States branch, if its principal office in the United States is located in the commonwealth, by entering into an agreement in writing with said domestic insurer providing for the acquisition by said domestic insurer of the business and assets of said United States branch and the assumption by said domestic insurer of all the liabilities of said United States branch for no consideration other than the assumption of such liabilities, except that the agreement may further provide for additional consideration payable by the issuance by the acquiring domestic insurer of shares of its capital stock. For the purposes of this section and sections one hundred and sixty-one C to one hundred and sixty-one E, inclusive, shares of capital stock of the acquiring domestic insurer or voting trust certificates representing said shares, which are held among the trusteed assets of the United States branch of the alien insurer or which are held in a trust created by the alien insurer and of which the alien insurer is a beneficiary, shall be deemed to be shares held beneficially, but indirectly, by an alien insurer. The acquisition of the assets and the assumption of liabilities of the United States branch by the domestic insurer shall be effected by filing with the commissioner an instrument of transfer and assumption which shall be in form satisfactory to the commissioner and shall be executed by the alien insurer and the domestic insurer. A domestic insurer may either be licensed to engage in the insurance business in the commonwealth prior to entering into such domestication agreement, or may, if the commissioner so approves, be licensed effective with the consummation of the domestication agreement. Nothing in this section or in sections one hundred and sixty-one C to one hundred and sixty-one E, inclusive, shall be construed to authorize any insurance company to do any kind of insurance business not authorized by its charter or to authorize any foreign or alien insurance company to do any kind of insurance business in the commonwealth not authorized by its license or certificate of authority to do business in the commonwealth.
Chapter 175: Section 161C. Approval of agreement by alien and domestic insurers Section 161C. Said domestication agreement shall be authorized, adopted, approved, signed and acknowledged by the alien insurer in accordance with the laws of the country under which it is organized. In the case of a domestic insurer the domestication agreement shall be approved, adopted and authorized by its board of directors and executed by its president or any vice president and attested by its secretary or assistant secretary under its corporate seal.
Chapter 175: Section 161D. Approval of agreement by commissioner Section 161D. An executed counterpart of the domestication agreement, together with certified copies of the corporate proceedings of the domestic insurer and the alien insurer, approving, adopting and authorizing the execution of said domestication agreement, shall be submitted to the commissioner for his approval. The commissioner shall thereupon consider said agreement and if he is satisfied that the same is in accordance with the provisions of sections one hundred and sixty-one B to one hundred and sixty-one E, inclusive, and if he finds that the interest of policyholders and creditors of the United States branch of the alien insurer are not materially adversely affected, he may approve such domestication agreement and authorize the consummation thereof in compliance with the provisions of section one hundred and sixty-one E.
Chapter 175: Section 161E. Instrument of transfer and assumption; effect of filing Section 161E. Upon the filing with the commissioner of a certified copy of the instrument of transfer and assumption pursuant to which a domestic insurer succeeds to the business and assets of the United States branch of an alien insurer and assumes all its liabilities, as provided by sections one hundred and sixty-one B to one hundred and sixty-one D, inclusive, the domestication of the United States branch shall be deemed to be effective, and thereupon all the rights, franchises and interests of said United States branch in and to every species of property, real, personal and mixed, and things in action thereunto belonging shall be deemed as transferred to and vested in said domestic insurer and simultaneously therewith said domestic insurer shall be deemed to have assumed all of the liabilities of said United States branch; all deposits of the United States branch held by the state officers or other state regulatory agencies pursuant to requirements of state laws shall be deemed to be held as security that said domestic insurer will fully perform its assumption as direct liabilities of all the liabilities to policyholders and creditors within the United States of said United States branch and such deposits shall be deemed to be admitted assets of the domestic insurer and shall be reported as such in the annual financial statements and other reports which said domestic insurer may be required to file and upon the ultimate release by any said state officer or agency of any such deposits, the securities and cash constituting such released deposit shall be delivered and paid over to said domestic insurer as the lawful successor in interest to said United States branch; and contemporaneously with the consummation of the domestication of the United States branch, the state treasurer shall transfer to said domestic insurer the securities deposited by said United States branch in compliance with the provisions of sections one hundred and fifty-five and one hundred and eighty-five, and the commissioner shall consent that the trustee of the trusteed assets deposited by said United States branch in compliance with the provisions of said sections one hundred and fifty-five and one hundred and eighty-five shall withdraw from the trusteed assets all assets held by such trustee and transfer and deliver the same to said domestic insurer.
Chapter 175: Section 162. Definitions Section 162. Solicitation or negotiation of policies of insurance that takes place off the premises of an insurance broker, agent or company shall be by a duly licensed broker or agent. Solicitation or negotiation of policies of insurance performed on the premises of an insurance broker, agent or company, may be done by an employee insofar as such solicitation or negotiation is under the immediate direction and general supervision of a duly licensed broker or agent. All binders of insurance and insurance policies shall be signed by a licensed individual or by such person acting under a power of attorney; provided, however, that the provisions of this paragraph shall apply only to the solicitation or negotiation of property or casualty policies of insurance.
Whoever, for compensation, not being an attorney at law acting in the usual course of his profession, directly or indirectly solicits from an insured or the representative of the insured, or performs services pursuant to an agreement, engagement or undertaking to represent the insured in connection with the assessment of damages, negotiation, settlement, appraisal or reference of a loss under a fire insurance policy, homeowners insurance policy, commercial multi-peril insurance policy, business interruption insurance policy, fidelity bond or crime insurance policy, inland or ocean marine insurance policy, or other property damage insurance coverage of any sort, shall be a public insurance adjuster.
Chapter 175: Section 162A. Repealed, 2002, 106, Sec. 4 Chapter 175: Section 162B. Agents and brokers; power to accept installment premiums Section 162B. Insurance agents and brokers may accept payment of insurance premiums in installments to be evidenced by notes or other appropriate instruments running from the insured to the agent or broker; provided, however, that payment of insurance premiums in installments to be evidenced by notes or other appropriate instruments running from the insured to the agent or broker on contracts of insurance, which contracts are primarily for personal, family or household purposes, shall be made under rates, charges and regulations established after public hearing, as equitable and nondiscriminatory, by a board consisting of the attorney general, the insurance commissioner and the commissioner of banks or their respective designees.
For purposes of financing insurance premiums and the subsequent sale or other negotiation of any such note or instrument to a third party, insurance agents and brokers shall be considered to be sellers of insurance.
Chapter 175: Section 162C. Direct billing; mandatory agreements prohibited Section 162C. No insurer issuing or delivering in the commonwealth either motor vehicle policies as defined in sections thirty-four A and thirty-four O of chapter ninety or homeowner insurance policies insuring individuals against risks of loss to personal dwellings or the contents thereof or the personal liability pertaining thereto, shall demand or make mandatory upon any agent licensed in the commonwealth any system of direct billing to the insured by the insurer with respect to such policies unless such system shall be approved, accepted and endorsed by any such agent in writing on a form prescribed by the commissioner.
No insurer issuing or delivering in the commonwealth either motor vehicle policies as defined in sections thirty-four A and thirty-four O of chapter ninety or homeowner insurance policies insuring individuals against risks of loss to personal dwellings or the contents thereof or the personal liability pertaining thereto shall, with respect to such policies, cancel an agent’s book of business with such insurer in its entirety or in part following decision by said agent not to accept a direct billing proposal advanced by such insurer, if such cancellation is attributable to said decision not to accept a system of direct billing to the insured.
Chapter 175: Section 162D. Expense premium commissions; payment to insurance agents; additional compensation Section 162D. Any insurer issuing or delivering in the commonwealth either motor vehicle policies or bonds, as defined in section thirty-four A and thirty-four O of chapter ninety, which do business in the commonwealth through independent licensed insurance agents pursuant to the so-called American Agency System or any other system, other than that of an employer to employee relationship and designated producers, under the plan for equitable apportionment among companies of premiums, losses or expenses, or any combination thereof, as provided under section one hundred and thirteen H, shall pay each agent the indicated expense premium commission as established by the commissioner in his opinion, findings and decision on automobile insurance rates as commission only, and no portion of the indicated expense premium commission shall be considered as profit sharing or expense reimbursement. The insurer shall be allowed a variation in the commission paid to each agent of not more than plus or minus ten per cent of the dollar commission established in the commissioner’s findings; provided, however, the insurer shall be required to pay to its agents all of the commission dollars allowed in the rates as commissions. Nothing in this act shall prevent any insurer from paying any additional compensation in the form of commission overrides, bonuses, profit sharing benefits and expense reimbursements.
Chapter 175: Section 162E. Motor vehicle insurance made by insurer pursuant to American agency system; insurer commission arrangements Section 162E. Any filing of rates for insurance to which chapter one hundred and seventy-five E is applicable which is made by an insurer doing business in this commonwealth through independent licensed insurance agents pursuant to the so-called American Agency System other than that of any employer to employee relationship and designated producers, shall specify the amount which such insurer shall pay to such agents as fair and reasonable expense premium commission for policies and bonds subject to such rates. Such insurer’s commission arrangements shall guarantee that the total amount paid to all such agents under all such policies and bonds placed with the insurer during the period such rates are in effect shall, in the aggregate, total the amounts of commission applicable to all such policies and bonds. No portion of the expense premium commission shall be considered as profit sharing or expense reimbursement. The commissioner may require appropriate reports from such insurers in order to insure compliance with requirement. Nothing in this act shall prevent any insurer from paying compensation to its agents above that specified in its filing.
For private passenger automobile insurance policies and bonds effective during the four-year period commencing on the first day that rates for such insurance are regulated under chapter one hundred and seventy-five E following the effective date of this act, the amount paid in compliance with the requirements of the first paragraph of this section shall not be less than the dollars produced by utilization of the percentage of expense premium commission established by the commissioner in his opinion, findings and decision on private passenger automobile insurance rates to be charged immediately prior to such day. An insurer may vary the amount of commission paid to any agent by not more than plus or minus ten per cent provided the proper total dollars are paid.
Chapter 175: Section 162F. Property or casualty insurance information; proprietary rights of agents and brokers Section 162F. A duly licensed agent or a duly licensed broker doing business pursuant to the so-called American agency system, other than that of an employer to employee relationship, shall own and have an exclusive right to use certain insurance information contained in insurance policies, certificates of insurance or a written memorandum of a preliminary contract of insurance issued by said agent or broker, embodying the records of an insurance agency which shall include but not be limited to the policy inception date, the amount of insurance coverage, the policy number, the name of the insurance company, the name of the insured, the amount of insurance premiums and the terms of insurance. Any bank, lending institution, mortgage company, or mortgagee, whether acting under state or federal authority, including but not limited to those banks as defined in section one of chapter one hundred and sixty-seven, or any loss payee who obtains said insurance information as evidence or proof of insurance shall be prohibited from using, selling, or transferring said insurance information to any third party for the purpose of marketing, underwriting, or soliciting insurance. The provisions of this section shall apply only to property and casualty insurance.
Chapter 175: Section 162G. Licensing of insurance producers; Secs. 162H through 162X govern qualifications and procedures Section 162G. Sections 162H to 162X, inclusive, shall govern the qualifications and procedures for the licensing of insurance producers.
Sections 162H to 162X, inclusive, do not apply to special insurance brokers licensed pursuant to section 168, except as provided in section 162N and subsection B of section 162U.
Chapter 175: Section 162X. Invalid provisions Section 162X. If any provisions of sections 162G to 162X, inclusive, or the application of a provision to any person or circumstances, shall be held invalid, the remainder of said sections 162G to 162X, inclusive, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected.
Chapter 175: Section 163. Agents; licensing; cancellation, modification, revocation, or expiration of contract; referees; decision; review Section 163. No company shall cancel the authority of any independent insurance agent for fire or casualty insurance, or both, if said agent is not an employee of said company and no company shall modify a contract with such an agent unless the company gives written notice of its intent to cancel such agent or its intent to modify such contract at least one hundred and eighty days before the proposed effective date of any such cancellation or modification. No company shall allow the license of any such agent to expire unless the company gives written notice of its intent to do so at least one hundred and eighty days before the proposed effective date of any such expiration. Except as otherwise provided herein, any agent receiving notice of such cancellation, modification or expiration may, within fifteen days after receipt thereof, make a written demand for reference to three referees of the question as to whether or not such cancellation, modification or expiration will so affect the renewal, continuation or replacement of any policies placed with the company through the efforts of the agent, or the services needed by any policyholder doing business with the company as a result of the efforts of the agent, as to justify renewal or continuation of any policies then in effect having been placed with such company by such agent. In the event the referees shall find that such cancellation, modification or expiration will so affect the renewal, continuation or replacement of any policies placed with the company through the efforts of the agent, or the services needed by any policyholders doing business with the company as a result of the efforts of the agent, then the referees shall order continuance or renewal of any policies expiring within a period of thirteen months of the issuance of such notice, at a rate of compensation to such agent equal to that as provided in the agency agreement expiring or being so cancelled or modified, for one additional policy period equal in length to the most recent policy period of such expiring policy, but in no event for more than one year; provided that with respect to motor vehicle insurance policies expiring within the aforesaid thirteen-month period, such policies shall be renewed for policy periods not to exceed one year. Such one year renewals of all motor vehicle insurance policies shall be provided at each expiration of such policies during the aforementioned thirteen-month period; provided, however, that the referees shall not order a continuance or renewal of such policies if they find that the reason for the cancellation or expiration of the agency agreement by the company was legitimately based upon one of the following grounds:(a) the agent was convicted of a dishonest act related to his occupation as an insurance agent;(b) the agent’s license to engage as an insurance broker was revoked;(c) the company surrendered its license to do business in the commonwealth.
An agent making a written demand for such reference shall accompany said written demand with the names and addresses of three persons, whereupon the company shall within fifteen days thereof notify the agent of its choice of one of the said persons to act as one of the referees and at the same time submit the names and addresses of three persons to the agent, who shall within fifteen days after receiving such names, notify the company in writing of his choice of one of such persons to act as a second referee. At the same time the agent shall notify the commissioner, such notice to be on a form prescribed by the commissioner, that both the company and agent have chosen referees. Within ten days of the receipt of such notice the commissioner shall appoint a person to serve as third referee, and shall notify such person, the agent and the company in writing of such appointment. Each person nominated or appointed as a referee shall be a disinterested person, shall be a resident of the commonwealth and shall be willing to act as such referee. Within ten working days of the appointment of the third referee, who shall serve as chairman, the three referees shall meet, hear evidence, reduce their decisions to writing, and sign it, and shall deliver a copy thereof to the agent, to the company and to the commissioner. In the event any company receiving such a written demand for such a reference fails to comply with the provisions of this paragraph, then such agent shall have the authority to renew or continue any policies placed with such company through the efforts of such agent expiring within a period of thirteen months from the date of the notice of cancellation, modification or expiration of the agency agreement, at a rate of compensation to such agent equal to that as provided in the agency agreement expiring or being so cancelled or modified, for one additional policy period equal in length to the most recent policy period of such expiring policy, but in no event for more than one year; provided that, with respect to motor vehicle insurance policies expiring within the aforesaid thirteen-month period, such policies shall be renewed for policy periods not to exceed one year. Such one year renewals of all motor vehicle insurance policies shall be provided at each expiration of such policies during the aforesaid thirteen-month period.
Any insurance company and any insurance agent may by written contract agree to modify the provisions of the preceding two paragraphs, other than the requirement of a one-hundred-eighty-day notice in the event of a cancellation or modification of a contract or of intent to allow the expiration of a license, by provisions presented to and approved by the commissioner which he finds after due hearing and investigation will adequately protect both the right of a policyholder to a continuance of insurance and the services of any agent of his own choosing and the right of an agent to fair compensation for the insurance placed with a company as a result of his efforts. The commissioner may make reasonable rules of general application regarding such modified provisions.
The decision of the referees may provide for the renewal or continuance of any or all policies expiring within a period of thirteen months of the issuance of any such notice, at a rate of compensation to such agent equal to that as provided in the agency agreement expiring or being so cancelled or modified, for one additional policy period equal in length to the most recent policy period of such expiring policy, but in no event for more than one year; provided that, with respect to motor vehicle insurance policies expiring within the aforesaid thirteen-month period, such policies shall be renewed for policy periods not to exceed one year. Such one year renewals of all motor vehicle insurance policies shall be provided at each expiration of such policies during the aforementioned thirteen-month period. The decision of the referees may also provide for the continuance of such previous contractual provisions, if the referees, or a majority of them, find that such decision will best protect the right of a policyholder to a continuance of insurance and the services of an agent of his own choosing and the right of any agent to compensation for the insurance placed with a company as a result of his efforts giving due consideration to the possibility the affected agent has of obtaining similar coverage for policyholders affected from other companies at reasonable compensation. The decisions rendered in accordance with the provisions of this section providing for reference shall be binding on all companies and agents affected thereby. If such a decision orders the renewal or continuance of any policies, policyholders and the affected agent shall be entitled in all respects to the same services and practices as were in effect prior to reference insofar as amounts and types of coverage, credit terms and agency services are also continued. The referees, or a majority of them, shall fix a fair compensation for the agent affected whenever they order such a renewal or continuance of policies.
All policies expiring within thirteen months of the notice may be renewed for the policy periods as aforesaid but no agent or company relying on this section shall again refer the same issue to referees. Where other provisions of the general laws require notice to policyholders before nonrenewal of any coverages, the company shall at the request of the agent who is unable to replace any such policy which has been renewed for one or more policy periods in accordance with this section comply with those provisions of law.
An agent initiating reference under this section and the company receiving written demand shall each be liable for the payment of the reasonable charges and expenses of his nominee for referee and one half of the compensation for the reasonable charges and expenses of the third referee. The third referee shall forthwith upon the execution of the decision furnish the agent and the company with a written statement specifying in detail his charges for compensation and expenses. The agent or the company, if aggrieved by said charges, may petition the commissioner for review. The petition shall set forth with particularity the specific item or charges in dispute. The commissioner shall, within ten days of receipt of the petition, notify the interested parties of the date established for a hearing on said petition, and, after said hearing the commissioner shall approve or disapprove said charges in whole or in part. His findings and decisions shall be final and conclusive.
No company shall require of any independent insurance agent or broker for fire or casualty insurance, or both, if said insurance agent or broker is not an employee of said company, payment for any policy of insurance or of accounts current earlier than fifty days of the close of the month in which such fire or casualty policies are delivered to the agent or fifty days of the close of the month in which the policy becomes effective, whichever is later.
Chapter 175: Section 163A. Repealed, 2002, 106, Sec. 7 Chapter 175: Section 164. Collectors of premiums Section 164. A collector of premiums who does not solicit applications for or the renewal or continuance of insurance contracts, or act or aid in negotiating such contracts or the continuance or renewal thereof, may carry on such business without a license therefor, provided that the collection fee does not exceed five per cent of any amount collected.
Chapter 175: Section 164A. Lapsed industrial life policies; effect on agents’ commissions Section 164A. If a policy of industrial life insurance upon which premiums have been paid for three years or more lapses for non-payment of a premium and is surrendered to the company for a cash surrender value or continues in force as paid-up or extended term insurance, the company shall not charge any of its agents with a decrease for or on account of the premium on said policy nor make any deduction from his commission or salary for or on account of the lapse of said policy.
Nothing in this section shall prohibit a life company from contracting to pay any of its agents additional compensation for the conservation of insurance, based upon the relation of the lapse rate of premiums on one or more classes of industrial life insurance policies or combined industrial and monthly premium debit insurance policies under his supervision to the lapse rate of premiums on insurance policies of the same class or classes in the entire company; nor shall anything in this section prohibit a company, which has contracted to pay its agents in this commonwealth such additional compensation for the conservation of insurance, from also contracting with any such agent that he shall not be paid first-year commissions on any new policy issued on an application procured by him on the life of a person or a dependent sharing the home with such person who has terminated a policy issued by the company on his life or that of such a dependent not more than three months before, or who terminates such a policy within three months after, application for such new policy is made.
Chapter 175: Section 165. Repealed, 2002, 106, Sec. 8 Chapter 175: Section 166. Repealed, 2002, 106, Sec. 9 Chapter 175: Section 166A. Repealed, 2002, 106, Sec. 10 Chapter 175: Section 166B. Revocation of license; disposition of interest as proprietor, employee, etc. of insurance producer; appointment of receiver; injunction Section 166B. Whenever the commissioner revokes a license in accordance with the provisions of section 162R, he may also order the person whose license has been revoked to dispose of any interest as proprietor, partner, stockholder, officer or employee of any licensed insurance producer. All terms and conditions relating to said disposition of any such interest shall be subject to the approval of the commissioner. No person whose license as an insurance producer has been revoked shall be allowed to thereafter own, manage, direct or be an employee of any insurance producer without the prior approval of the commissioner. The license of any insurance producer employing such a person or permitting such a person to own or manage or serve as a partner, stockholder or officer of his agency or brokerage without the prior approval of the commissioner shall be subject to revocation or suspension.
Whenever the commissioner revokes a license of an insurance producer, or, if he is satisfied that the continued transaction of business by an insurance producer would be hazardous to the public, his customers or creditors, he may apply to the supreme judicial court for an injunction restraining the insurance producer from further proceeding with his business and for the appointment of a receiver. The court may issue a temporary injunction and appoint one or more temporary receivers forthwith, and it may after a hearing issue a permanent injunction and appoint one or more permanent receivers to take possession of the business property and effects of the insurance producer, to settle its affairs and to distribute its assets, subject to such rules and orders as the court may prescribe. The provisions of sections one hundred and seventy-eight to one hundred and eighty, inclusive, shall, so far as applicable, apply to receivers appointed pursuant hereto.
Chapter 175: Section 167. Repealed, 2002, 106, Sec. 15 Chapter 175: Section 167A. Producers’ licenses; fees; exemption of certain persons Section 167A. No fee for an insurance producer’s license issued under section 162M shall be required of or on account of any veteran resident in this commonwealth, or of or on account of any blind person, if he presents to the commissioner satisfactory evidence of his identity; or of or on account of his widow if he held such a license immediately prior to his death.
Chapter 175: Section 168. Special brokers; licensing; contracts for unauthorized companies; penalty Section 168. The commissioner may, upon the payment of the fee prescribed by section fourteen, issue to any suitable person of full age, a license to act as a special insurance broker to negotiate, continue or renew contracts of insurance against any of the hazards specified in any of the clauses of section forty-seven excepting the fifteenth clause thereof, and except accident and health, workers’ compensation, compulsory motor vehicle liability and life insurance on property or interests in this commonwealth in foreign companies not authorized to transact such business therein, upon the following conditions: The applicant for the license shall file with the commissioner a written application as prescribed by section 162L, which shall be executed on oath by the applicant and kept on file by the commissioner. If the commissioner is satisfied that the applicant is trustworthy and competent, he shall issue the license, subject to suspension or revocation at the pleasure of the commissioner, which shall expire in one year from its date, unless sooner suspended or revoked as aforesaid. The license may, in the discretion of the commissioner, be renewed for each succeeding year, upon the payment of the fee prescribed by section fourteen, without requiring anew the detailed information specified by section 162L. Whenever the person named in such license shall procure any insurance in such companies on any such property or interest, he shall in every case execute, and within twenty days thereafter, file with the commissioner an affidavit stating that the full amount of insurance required to protect said property or interest is not procurable, after a diligent effort has been made to do so, from among companies admitted to transact insurance in the commonwealth against the hazard or hazards involved, and that the amount of insurance procured in foreign companies not authorized to transact such business in the commonwealth is only the excess over the amount so procurable from such admitted companies. Said affidavit shall have force and effect for one year only from the date thereof or expiration of policy, whichever comes later. The affidavit shall not be required in connection with a transaction with an exempt commercial risk or policyholder as defined in section 224, if the commercial risk or policyholder acknowledges in writing its understanding, that: (1) the company from which insurance is procured is not admitted to transact insurance in the commonwealth; and (2) in the event of the insolvency of the company, a loss shall not be paid by the Massachusetts Insurers Insolvency Fund under chapter 175D. Each licensed special insurance broker shall maintain a copy of the acknowledgement for inspection by the commissioner with respect to all policies of insurance so procured by the licensee for exempt commercial risks or policyholders. Such licensed person shall not be required to file such affidavit if one relative to the same property or interests has been filed within the preceding twelve months by any broker licensed under this section, nor to offer any portion of such insurance to any company not possessed of net cash assets of at least two hundred thousand dollars, nor to one which has within the preceding twelve months been in an impaired condition, nor shall such licensed person procure any such insurance on said property or interests from any foreign company not authorized to transact business in the commonwealth unless (a) such company is possessed of net cash assets of at least three hundred thousand dollars computed on the basis fixed by sections ten to twelve, inclusive, and on the form prescribed by section twenty-five, and has satisfied the commissioner that its officers and directors are of good repute and competent to manage an insurance company and that the management of the company is carrying out its insurance contracts in good faith and has filed with the commissioner an examination report of the affairs of the company completed within the previous three years and made by the proper supervisory official of its home state, and has made a deposit of not less than four hundred thousand dollars with the state treasurer or with the proper board or officer of some other state of the United States in accordance with the terms and conditions hereinafter specified, or (b) such company has filed a financial statement on a form satisfactory to the commissioner and conforms to and maintains the financial requirements specified in subparagraph (i) of paragraph (D) of subsection (1) of section 20A. Such deposit shall be made in exclusive trust for the benefit and security of all its policyholders in the United States including obligees of bonds executed by such company as surety, and when made with the state treasurer may be made in the securities and subject to the limitations specified in sections sixty-three and sixty-six, or in cash or in such other securities as the commissioner may approve, provided that bonds need not be accepted by the state treasurer unless in registered form and of denominations satisfactory to him, and shall not be returned to the company until it has ceased to transact business in the commonwealth nor until the commissioner is satisfied that the company is under no obligation to such policyholders or obligees in the United States for whose benefit such deposit was made, nor until he has given his written consent to such return; provided, that the commissioner may, in any case, authorize in writing the return to the company of any excess of any deposit made under this section over the amount required thereby, if he is satisfied that such return will not be prejudicial to the interests of such policyholders or obligees. Each person so licensed shall keep a separate account of the business done under the license, a certified copy of which account he shall forthwith file with the commissioner, showing the exact amount of such insurance placed for each person, the gross premium charged thereon, the companies in which the same is placed, the date of the policies and the term thereof, and also a report in the same detail of all such policies cancelled, with the gross return premiums thereon, and will annually, in January, file with the state treasurer a sworn statement of the gross premiums charged for insurance procured or placed and the gross return premiums on such insurance cancelled under such license during the year ending on December thirty-first last preceding, and at the time of filing such statement will pay to the commonwealth an amount equal to four per cent of such gross premiums, less such return premiums so reported.
A person licensed under this section who negotiates, continues or renews any such contracts of insurance in any unauthorized foreign company, and who neglects to make and file the affidavit and statements required by this section, or who wilfully makes a false affidavit or statement, or who negotiates, continues or renews any such contracts of insurance after the revocation or during the suspension of his license, shall forfeit his license if not previously revoked and be punished by a fine of not less than one hundred nor more than five hundred dollars or by imprisonment for not more than one year, or both.
Nothing in this section shall be deemed to amend or modify any of the provisions of, or any of the exemptions specified in, section one hundred and sixty.
A license to act as a special insurance broker may, upon the payment of the fees prescribed by section 14, be issued to any voluntary organization, as defined in section 1 of chapter 182, for the purpose of acting as a special insurance broker, subject to the conditions specified in section 172A.
The commissioner may, upon the payment of the fees prescribed by section 14, issue to a partnership, a license to act as a special insurance broker subject to the conditions specified in section 173.
A license to act as a special insurance broker may, upon the payment of the fees prescribed by section 14, be issued to any corporation, subject to the conditions specified in section 174.
Chapter 175: Section 169. Effect of payment to agent or broker Section 169. An insurance agent or broker acting for a person other than himself in negotiating, continuing or renewing any policy of insurance or any annuity or pure endowment contract shall, for the purpose of receiving any premium therefor, be held to be the agent of the company, whatever conditions or stipulations may be inserted in the policy or contract.
Chapter 175: Section 17. Annual report Section 17. He shall annually, and as early as is consistent with full and accurate preparation, make a report to the general court of his official transactions, and shall include therein a report of the condition of the receiverships of insolvent companies; an exhibit of the financial condition and business transactions of the several companies as disclosed by official examinations of the same or by their annual statements, abstracts of which statements, with his valuation of life policies, shall appear therein; and such other information and comments relative to insurance and the public interest therein as he thinks proper.
The annual report of the commissioner on fire, marine and casualty insurance matters shall contain the laws enacted on those subjects in the year of the report, and his annual report on life and related insurance matters shall contain the laws enacted on those subjects in the year of the report.
Chapter 175: Section 170. Agent or broker; fraud; penalty Section 170. An insurance agent or broker who knowingly procures by fraudulent representations payment or the obligation for the payment of any premium on any policy of insurance or any annuity or pure endowment contract shall be punished by a fine of not less than one hundred nor more than one thousand dollars or by imprisonment for not more than one year.
Chapter 175: Section 171. Illegal insurance contracts; liability of agent Section 171. An insurance agent shall be personally liable on all contracts of insurance unlawfully made by or through him, directly or indirectly, for or in behalf of any company not authorized to do business in the commonwealth.
Chapter 175: Section 172. Adjusters of fire losses; licensing; penalty; examination for applicants Section 172. The commissioner may, upon the payment of the fee prescribed by section 14 and after successful completion of a written examination, issue to any suitable person of 21 years of age or more a license to act as a public insurance adjuster in the commonwealth, if such person files with the commissioner a written application for such license executed on oath by the applicant. Included with the application shall be 2 passport sized photographs taken within 60 days of the date of the application together with a certified copy of a criminal background check. A licensee shall be a resident of the commonwealth or a bona fide resident of a state or country which permits residents of this commonwealth to act as adjusters in such other state or country.
The applications shall be kept on file by the commissioner. No application shall be filed unless and until the applicant shall demonstrate that he has 2 years experience performing services in connection with adjusting of property losses.
If the commissioner is satisfied that the applicant is trustworthy and competent, he shall issue the license which shall expire in 3 years from its date, unless sooner revoked or suspended as provided herein.
Upon the payment of the fee prescribed by section 14, the license may be renewed for any succeeding 3 year period without requiring an additional written examination.
A person renewing a public insurance adjuster’s license shall be certified by the division of insurance as having completed before the renewal of said license a total of 15 hours of continuing education instruction as approved by the commissioner or by any other state or country which requires continuing education instruction as a condition for obtaining a public insurance adjuster’s license. The commissioner may at any time, for cause shown and after a hearing, revoke the license or suspend it for a period not exceeding the unexpired term thereof, and may, for cause shown and after a hearing, revoke the license while so suspended, and shall notify the licensee in writing of such revocation or suspension.
Contracts for a public insurance adjuster to represent an insured in connection with the assessment of damages, negotiation, settlement, appraisal, or reference of a loss occurring in the commonwealth and arising under a fire insurance policy, home owners insurance policy, commercial multi-peril policy, business interruption insurance policy, fidelity bond or crime insurance policy, inland or ocean marine insurance policy, or other property damage insurance coverage of any sort shall be in writing in a form approved by the commissioner. No such contract shall be made by a public insurance adjuster until a copy of the form of such contract has been on file for 30 days with the commissioner, unless before the expiration of that period the commissioner shall have approved the form in writing; nor if the commissioner notifies the public insurance adjuster in writing within the 30 day period that the form of such contract has been disapproved by the commissioner, specifying the reasons therefor; but the action of the commissioner shall be subject to review by the superior court.
To be enforceable by a public insurance adjuster, such contract shall be signed by a named insured specified in each policy covering the loss to which the public insurance adjuster’s services relate, or by an authorized designee of such named insured, and a copy thereof shall be delivered by the public insurance adjuster to such named insured or his designee. If said policy contains a mortgagee clause or names a mortgagee, any mortgagee making claim for payment under the policy shall be a beneficiary of the public insurance adjuster’s contract with the named insureds; but nothing herein shall prohibit a mortgagee from engaging a public insurance adjuster to represent its interests directly.
A contract by which a public insurance adjuster agrees, engages and undertakes to represent an insured shall provide clearly and conspicuously in writing that such contract may be canceled without recourse within 3 calendar days after the date of receipt of a copy of the written contract by the named insured or his designee. The contract shall also provide that it may be revoked by the insured who signed it or his designee at any time after the 3 calendar days, subject to the public insurance adjuster’s assertion of a lien for his agreed percentage fee upon insurance proceeds offered or secured through his efforts as the insured’s representative. A contract shall contain the following written notice in at least 10-point bold type:YOU MAY CANCEL THIS CONTRACT WITHOUT ANY PENALTY OR FURTHER OBLIGATION BY CAUSING A WRITTEN NOTICE OF YOUR CANCELLATION TO BE DELIVERED IN PERSON, BY TELEGRAM OR FACSIMILE TRANSMISSION, BY OVERNIGHT EXPRESS DELIVERY OR BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS OF THE PUBLIC INSURANCE ADJUSTER SPECIFIED IN THIS CONTRACT, WITHIN 3 CALENDAR DAYS OF THE DATE THAT YOU RECEIVE THIS CONTRACT. THIS CONTRACT THEREAFTER MAY BE REVOKED BY THE INSURED WHO SIGNED IT, OR HIS DESIGNEE, AT ANY TIME, SUBJECT TO THE PUBLIC INSURANCE ADJUSTER’S ASSERTION OF A FEE LIEN UPON INSURANCE PROCEEDS OFFERED OR SECURED THROUGH HIS EFFORTS AS THE INSURED’S REPRESENTATIVE. IF YOU CANCEL THIS AGREEMENT YOU SHALL REMAIN LIABLE FOR REASONABLE AND NECESSARY EMERGENCY OUT-OF-POCKET EXPENSES OR SERVICES WHICH WERE PAID FOR OR INCURRED BY THE PUBLIC INSURANCE ADJUSTER DURING THE 3-DAY PERIOD TO PROTECT THE INTERESTS OF THE INSURED.
Whoever acts in the commonwealth as a public insurance adjuster, as defined in section 162 without a license or during a suspension of his license, or in violation of this section, shall be punished by a fine of not more than $10,000 or by imprisonment for not more than 6 months.
The commissioner shall require that an applicant for a license as a public insurance adjuster take a written examination prepared and administered by the commissioner or an independent testing service designated by the commissioner under the direction of the commissioner, who shall fix a passing grade which in his judgment indicates the applicant’s ability to perform in a satisfactory manner the duties of a public insurance adjuster. The test shall examine an applicant’s knowledge of building construction techniques and materials, as well as knowledge of relevant insurance principles and coverage. The commissioner shall determine or approve the charges to be paid by applicants for the services of any independent testing service designated by the commissioner. A written examination shall not be required in order to renew said license.
A license to act as a public insurance adjuster may, upon the payment of the fees prescribed by section 14, be issued to any voluntary organization, as defined in section 1 of chapter 182, which is organized exclusively for the purpose of acting as a public insurance adjuster, subject to the conditions specified in section 172A.
The commissioner may, upon the payment of the fees prescribed by section 14, issue to a partnership a license to act as a public insurance adjuster subject to the conditions specified in section 173. The partnership may include nonresident insurance producers if a majority of the partners are residents of the commonwealth, and if the partnership agreement contains a statement which in substance states that the partnership agreement is a Massachusetts contract and shall be governed by, and construed and enforced in accordance with, the laws of the commonwealth, and that with respect to any legal action arising out of the transactions or activities of the partnership affairs, service of process made on any 1 of the partners shall be deemed valid and binding service upon all partners who are not residents of the commonwealth.
A license to act as a public insurance adjuster may, upon the payment of the fees prescribed by section 14, be issued to any corporation which is incorporated exclusively for the purpose of acting as a public insurance adjuster, subject to the conditions specified in section 174. The majority of officers and directors to be named in the license shall have been so licensed as individuals for 3 years. Each license shall specify the officers and directors who may act thereunder in the name and on behalf of the corporation, the number of such officers and directors to be determined in the discretion of the commissioner in each case.
Chapter 175: Section 172A. Voluntary association licenses Section 172A. The licenses described in sections 162M, 162N, one hundred and sixty-eight and one hundred and seventy-two may, upon payment of the fees prescribed by section fourteen, be issued to any voluntary association, as defined in section one of chapter one hundred and eighty-two, which is organized exclusively for the purpose of acting as insurance producer, or public insurance adjuster and which, in case of an association organized to act as an insurance producer, by its written instrument or declaration of trust limits the holding and ownership of shares or certificates of participation therein to resident insurance producers. All the trustees shall be residents of the commonwealth. Such association and the trustees thereof shall be subject to section six of said chapter one hundred and eighty-two. Such licenses, together with the association and the trustees thereof named in the license, shall be subject to the sections of this chapter hereinbefore mentioned, except as otherwise provided herein. Each license shall specify the trustees, not exceeding five, who may act thereunder in the name and on the behalf of the association. Each trustee shall file the statement or application required by law. A duplicate original of the written instrument or declaration of trust creating the association and a certified copy of the by-laws thereof, if any, shall be filed with said statements or applications. The license may be revoked or suspended as to the association or as to any trustee named therein. The trustees shall file with the commissioner within thirty days after the adoption thereof, duplicate originals of all amendments to the written instrument or declaration of trust and certified copies of all amendments to the by-laws, if any. The trustees shall at once notify the commissioner in writing in case of the termination of the association, and upon receipt of such notice the commissioner shall forthwith revoke the license of the association without a hearing. Each trustee specified in the license shall be personally liable to the penalties of the insurance laws for any violation thereof, although the act of violation is done in the name or in the behalf of the association, and shall be personally liable for all of the debts and obligations of the association, notwithstanding any provision in the written instrument or declaration of trust of such association limiting the liability of the trustees thereunder, and such provision, if any, shall be deemed to have been waived by the trustees by their filing the aforesaid statements or applications. The commissioner may at any time require such information as he deems necessary in respect to the association, its trustees, agents or affairs, and may make such examination of its books, records and affairs as he deems necessary and for the aforesaid purposes shall have all the powers conferred by section four. Whoever, being a trustee of an association licensed under this section, fails to file with the commissioner copies of all amendments to the written instrument or declaration of trust, or to the by-laws, if any, or fails to notify the commissioner of the termination of such association, or whoever knowingly or wilfully files with the commissioner false copies of the written instrument or declaration of trust or amendments thereof, or of the by-laws, if any, or amendments thereof, or whoever, being specified in the license of such association as a trustee thereof, acts under said license after the termination of such association, shall be punished by a fine of not less than twenty nor more than five hundred dollars. Sections one hundred and seventy-four A and one hundred and seventy-four B shall apply to licenses issued under this section.
Chapter 175: Section 173. Partnership licenses Section 173. The licenses described in sections 162M, 162N, one hundred and sixty-eight and one hundred and seventy-two may, upon payment of the fees prescribed by section fourteen, be issued to partnerships on the conditions specified in and subject to said sections, except as otherwise provided herein. Each license shall specify by name the partners authorized to act thereunder in the name and on behalf of the partnership, which shall include all the partners except as provided below. Executors, administrators and trustees of the estates of deceased partners who were members of the partnership to be licensed or any predecessor partnership which conducted a business to which the partnership to be licensed has directly or indirectly succeeded and partners or former partners who have retired from active participation in such partnership or any such predecessor partnership or their legal representatives may be partners in the partnership for periods not exceeding in the case of such executors, administrators or trustees ten years from the death of such partner, for the sole purpose of protecting and enforcing any rights of such deceased or retired partner. Such partners shall not be specified in the license and shall not be authorized to act in the name or on behalf of the partnership in respect to any matter requiring a license under any of said sections; provided, that any such nonspecified partner may request the continuance with the partnership of the account of any one who was a customer of such partnership or predecessor partnership at the date of such death or retirement. Each partner so to be specified shall file the statement or application required by law, including a written request that the license be issued in the partnership name, and a list of the partners to be specified in the license; partners not to be specified shall not be required to file such statement or application, but there shall be furnished with respect to them such information as the commissioner shall request. Together with said statements or applications, there shall be filed a duplicate original of the written partnership agreement signed by all the partners. The license shall be issued in the partnership name, and may be revoked or suspended as to one or all specified members of the partnership. Minors who are parties to the written articles of partnership may be included in the partnership license, provided that there is one adult member of the firm who is a specified partner. If the partnership is terminated prior to the expiration of the license, the partners shall forthwith give notice thereof to the commissioner, who shall thereupon without a hearing revoke the license. Each specified partner shall be personally liable to the penalties of the insurance laws for any violation thereof, although the act of violation is done in the name of or on behalf of the partnership. Whoever, being licensed as a specified partner under this section, fails to give notice as required herein of the termination of the partnership, or after the partnership is terminated acts under such license, shall be punished by a fine of not less than twenty nor more than five hundred dollars.
Chapter 175: Section 174. Corporation licenses Section 174. The licenses described in sections 162M, 162N, one hundred and sixty-eight and one hundred and seventy-two may, upon payment of the fees prescribed by section fourteen, be issued to any corporation. Every such license, together with the corporation and officers or directors of the corporation named in the license, shall be subject to said sections, except as otherwise provided herein. Minors may be designated as such officers or directors in the license. Each officer or director to be specified in the license shall file the statement or application required by law. A certified copy of the articles of organization and of the certificate of incorporation shall be filed with the said statements or applications. The license may be revoked or suspended as to the corporation or as to any officer or director specified therein. Every officer or director specified in the license shall be personally liable to the penalties of the insurance laws for any violation thereof, although the act of violation is done in the name and in behalf of the corporation. The corporation shall be liable for any such violation, the responsibility for which cannot be placed on any individual officer or director.
The commissioner may at any time require such information as he deems necessary in respect to the corporation, its officers, directors or affairs, and may make such examination of its books and affairs as he deems necessary, and for this purpose shall have the powers conferred by section four. Any officer, director, agent or employee of any such corporation, who fails or refuses to furnish the commissioner any such information within ten days after written request therefor, and in such form as he may require, or who refuses to submit to such examination, or who obstructs the commissioner or any of his deputies or examiners in the making of such examination, shall be punished by the penalty provided in section four.
The clerk or other corresponding officer shall file with the commissioner, within thirty days after the adoption thereof, certified copies of all amendments to the articles of organization and shall at once notify the commissioner in writing in case of the dissolution of the corporation. Upon receipt of such notice, the commissioner shall forthwith revoke its license without a hearing. Whoever, being clerk or corresponding officer of a corporation licensed under this section, fails to file with the commissioner duly certified copies of all amendments to the articles of organization of such corporation as provided herein, or fails to notify the commissioner of the dissolution of the corporation, or whoever, being specified in the license of such corporation as an officer or director, acts under said license after the dissolution of such corporation, shall be punished by a fine of not less than twenty nor more than five hundred dollars.
No corporation licensed under this section, and no officer, director, agent or employee thereof, shall directly or indirectly issue, place or negotiate, or negotiate the continuance or renewal of, or offer to issue, place or negotiate, or offer to negotiate the continuance or renewal of, any policy of insurance insuring or in favor of any stockholder in such corporation, except an officer or director thereof specified in its license, except that a stockholder of such corporation may be a purchaser of insurance, the premiums for which do not exceed two per cent of the total premiums written by said corporation; and no stockholder thereof, except as aforesaid, shall directly or indirectly place or procure through, or accept from, such corporation or any officer, director, agent or employee thereof, any policy of insurance, or any continuance or renewal thereof, insuring or in favor of such stockholder. No such corporation, and no officer, director, agent or employee thereof, shall directly or indirectly issue, sell or give, or assent to, or record the transfer of, or offer to issue, sell, give or transfer, and no stockholder of such corporation shall directly or indirectly sell, give or transfer, or offer to sell, give or transfer, any of the shares of its capital stock to any person except an officer or director of such corporation specified as aforesaid, if there is in effect a policy of insurance issued, placed or negotiated, or the continuance or renewal whereof was negotiated, by or on behalf of such corporation insuring such person or in his favor, and no person, except an officer or director of such corporation specified as aforesaid, shall directly or indirectly accept or hold any of the shares of such capital stock if there is in effect any such insurance policy insuring him or in his favor. A corporation violating any of the provisions of this paragraph shall be punished by a fine of not less than two hundred nor more than one thousand dollars. Any individual violating any of said provisions shall be punished by a fine of not less than one hundred nor more than one thousand dollars or by imprisonment for not more than thirty days, or both.
Chapter 175: Section 174A. Hearings, revocation or suspension of licenses; notices Section 174A. Notices of hearings required by section 162R, one hundred and seventy-two, one hundred and seventy-three or one hundred and seventy-four or of the revocation or suspension of any license issued under any of said sections shall be deemed sufficient when sent postpaid by registered mail to the last business or residence address of the licensee appearing on the records of the commissioner. The affidavit of the commissioner or of any person authorized by him to send such notice that such notice has been sent in accordance with this section shall be prima facie evidence that such notice was duly given.
Chapter 175: Section 174B. Revoked licenses; surrender; renewal certificates; penalty Section 174B. A person licensed under section 162M, 162N, one hundred and sixty-eight or one hundred and seventy-two shall, upon the revocation of his license and upon written demand therefor, and a partnership licensed under section one hundred and seventy-three or a corporation licensed under section one hundred and seventy-four shall, upon the revocation of its license as to all the members of the firm or as to the corporation and upon such demand, forthwith surrender his or its license or the renewal certificate thereof to the commissioner. Such partnership or corporation shall, upon the revocation of its license as to less than all of its members or officers and upon such demand, forthwith surrender its license or renewal certificate to the commissioner, and he shall thereupon cancel it, and issue an amended license or renewal certificate covering the remaining partners or other officers of the corporation and running for the unexpired term of the surrendered license or renewal certificate. Demands hereunder may be served as provided in section one hundred and seventy-four A. If the license or renewal certificate has been lost, stolen or destroyed, an affidavit to that effect shall be filed with the commissioner in such form as he may require. Whoever neglects or refuses to comply with this section or knowingly and wilfully makes a false affidavit hereunder shall be punished by a fine of not less than one hundred nor more than five hundred dollars.
Chapter 175: Section 174C. Repealed, 2002, 106, Sec. 33 Chapter 175: Section 174D. Repealed, 2002, 106, Sec. 34 Chapter 175: Section 174E. Repealed, 1998, 129, Sec. 3 Chapter 175: Section 174F. Business Transacted With Broker-Controlled Insurer Act Section 174F. Sections one hundred and seventy-four F to one hundred and seventy-four K, inclusive, shall be known and may be cited as the Business Transacted with Broker-Controlled Insurer Act.
Chapter 175: Section 174G. Definitions Section 174G. As used in sections one hundred and seventy-four F to one hundred and seventy-four K, inclusive, the following words shall, unless the context clearly requires otherwise, have the following meanings:—“Accredited state”, a state in which the insurance department or regulatory agency has qualified as meeting the minimum financial regulatory standards promulgated and established from time to time by the National Association of Insurance Commissioners.
“Control or controlled”, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of official position or positions with or corporate office or offices held by, the person or persons. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds, with the present power to vote, or holds proxies representing, more than ten percent of the voting stock of any other person. Such presumption may be rebutted by a showing made to the satisfaction of the commissioner that control does not exist in fact. The commissioner may determine after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.
“Controlled insurer”, an insurer which is controlled, directly or indirectly, by a broker or group of brokers.
“Controlling broker”, a broker or group of brokers who, directly or indirectly, controls an insurer.
“Insurer”, any person, firm, association or corporation duly licensed or approved to transact a property or casualty insurance business in this commonwealth. The following are not insurers for the purposes of this section:(a) All risk retention groups as defined in the Superfund Amendments Reauthorization Act of 1986 (Public Law No. 99-499, 100 Stat 1613), and the Risk Retention Act (15 USC Section 3901 et seq.
) and chapter one hundred and seventy-six I;(b) All residual market pools and joint underwriting authorities or associations; and(c) All captive insurers, for the purposes of these sections one hundred and seventy-four F to one hundred and seventy-four K, inclusive, captive insurers are insurance companies owned by another organization whose exclusive purpose is to insure risks of the parent organization and affiliated companies or, in the case of groups and associations, insurance organizations, owned by the insureds, whose exclusive purpose is to insure risks to member organizations and group members and their affiliates.
“Broker”, an insurance broker or brokers or any other person, firm, association or corporation when, for any compensation, commission or other thing of value, such person, firm, association or corporation acts or aids in any manner in soliciting, negotiating or procuring the making of any insurance contract on behalf of an insured other than the person, firm, association or corporation.
Chapter 175: Section 174H. Applicability of Secs. 174F to 174K Section 174H. Sections one hundred and seventy-four F to one hundred and seventy-four K, inclusive, shall apply to insurers as defined in section one hundred and seventy-four G either domiciled in the commonwealth or domiciled in a state other than an accredited state which has in effect a substantially similar law. All provisions of sections two hundred and six to two hundred and six D, inclusive, to the extent they are not superseded by sections one hundred and seventy-four I to one hundred and seventy-four K, inclusive, shall continue to apply to all parties within holding company systems subject to sections one hundred and seventy-four F to one hundred and seventy-four K, inclusive.
Chapter 175: Section 174I. Written contract between controlling broker and insurer required Section 174I. (A)(1) The provisions of section one hundred and seventy-four I shall apply if, in any calendar year, the aggregate amount of gross written premium on business placed with a controlled insurer by controlling broker is equal to or greater than five percent of the admitted assets of the controlled insurer, as reported in the controlled insurers’ quarterly statement filed as of September thirtieth of the prior year.
(2) Notwithstanding paragraph (1) the provisions of subsection A shall not apply if:(a) the controlling broker:(i) places insurance only with the controlled insurer, or only with the controlled insurer and a member or members of the controlled insurer’s holding company system, or the controlled insurer’s parent, affiliate or subsidiary and receives no compensation based upon the amount of premiums written in connection with such insurance; and (ii) accepts insurance placements only from non-affiliated subproducers, and not directly from insureds; and(b) the controlled insurer, except for insurance business written through a residual market facility such as the Massachusetts Property Insurers Underwriting Association, accepts insurance business only from a controlling broker, a broker controlled by the controlled insurer, or a broker that is a subsidiary of the controlled insurer.
(B) A controlled insurer shall not accept business from a controlling broker and a controlling broker shall not place business with a controlled insurer unless there is a written contract between the controlling broker and the insurer which specifies the responsibilities of each party, and has been approved by the board of directors of the insurer. The contract shall contain the following minimum provisions:(1) the controlled insurer may terminate the contract for cause, upon written notice to the controlling broker. The controlled insurer shall suspend the authority of the controlling broker to write business during the pendency of any dispute regarding the cause for the termination;(2) the controlling broker shall render accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges and other fees received by, or owing to, the controlling broker;(3) the controlling broker shall remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis. The due date shall be fixed so that premiums or installments thereof collected shall be remitted no later than ninety days after the effective date of any policy placed with the controlled insurer under this contract;(4) all funds collected for the controlled insurer’s account shall be held by the controlling broker in a fiduciary capacity, in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System. Funds of a controlling broker not required to be licensed in the commonwealth shall be maintained in compliance with the requirements of the controlling broker’s domiciliary jurisdiction;(5) the controlling broker shall maintain separate identifiable records of business written for the controlled insurer;(6) the contract shall not be assigned in whole or in part by the controlling broker;(7) the controlled insurer shall provide the controlling broker with its underwriting standards, rules and procedures, manuals setting forth the rates to be charged, and the conditions for the acceptance or rejection of risks. The controlling broker shall adhere to the standards, rules, procedures, rates and conditions. The standards, rules, procedures, rates and conditions shall be the same as those applicable to comparable business placed with the controlled insurer by a broker other than the controlling broker;(8) the contract shall establish the rates and terms of the controlling broker’s commissions, charges or other fees and the purposes for those charges or fees. The rates of the commissions, charges and other fees shall be no greater than those applicable to comparable business placed with the controlled insurer by brokers other than controlling brokers. For purposes of clauses (7) and (8), examples of comparable business include the same lines of insurance, same kinds of insurance, similar risks, similar policy limits, and similar quality of business;(9) if the contract provides that the controlling broker, on insurance business placed with the insurer, is to be compensated contingent upon the insurer’s profits on that business, then such compensations shall not be determined and paid until at least five years after the premiums on liability insurance are earned and at least one year after the premiums are earned on any other insurance. In no event shall the commissions be paid until the adequacy of the controlled insurer’s reserves on remaining claims has been independently verified pursuant to paragraph (1) of subsection D;(10) the contract shall establish a limit on the controlling broker’s writings in relation to the controlled insurer’s surplus and total writings. The insurer may establish a different limit for each line or sub-line of business. The controlled insurer shall notify the controlling broker when the applicable limit is approached and shall not accept business from the controlling broker if the limit is reached. The controlling broker shall not market or place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been reached; and(11) the contract shall provide that the controlling broker may negotiate but shall not bind reinsurance on behalf of the controlled insurer on business the controlling broker places with the controlled insurer, except that the controlling broker may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the controlled insurer contains underwriting guidelines including, for both reinsurance assumed and
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