Usa Nevada

USA Statutes : nevada
Title : Title 57 - INSURANCE
 As used in this
Code, “reciprocal” insurance is that resulting from an interchange among
persons, known as “subscribers,” of reciprocal agreements of indemnity,
the interchange being effectuated through an attorney-in-fact common to
all such persons.

      (Added to NRS by 1971, 1827)

      1.  All authorized reciprocal insurers shall be governed by those
sections of this chapter not expressly made applicable to domestic

      2.  After January 1, 1972, existing authorized reciprocal insurers
shall comply with the provisions of this chapter, and shall make such
amendments to their subscribers’ agreement, power of attorney, policies
and other documents and accounts and perform such other acts as may be
required for such compliance.

      (Added to NRS by 1971, 1827)

      1.  A reciprocal insurer may, upon qualifying therefor as provided
for by this Code, transact any kind or kinds of insurance defined by this
Code other than life or title insurances.

      2.  Such an insurer may purchase reinsurance upon the risk of any
subscriber, and may grant reinsurance as to any kind of insurance it is
authorized to transact directly.

      (Added to NRS by 1971, 1827)
 A reciprocal insurer may purchase,
sell, mortgage, encumber, lease or otherwise affect the title to real
property for the purposes and objects of the reciprocal insurer. All
deeds, notes, mortgages or other documents relating to the real property
may be executed in the name of the reciprocal insurer by its attorney.

      (Added to NRS by 1993, 649)
 A reciprocal insurer shall:

      1.  Have and use a business name. The name shall include the word
“reciprocal,” or “interinsurer,” or “interinsurance,” or “exchange,” or
“underwriters,” or “underwriting,” or “association.”

      2.  Sue and be sued in its own name.

      (Added to NRS by 1971, 1827)

      1.  “Attorney,” as used in this chapter, refers to the
attorney-in-fact of a reciprocal insurer. The attorney may be an
individual, firm or corporation.

      2.  The attorney of a foreign reciprocal insurer, which insurer is
duly authorized to transact insurance in this State, shall not, by virtue
of the discharge of its duties as such attorney with respect to the
insurer’s transactions in this State, be thereby deemed to be doing
business in this State within the meaning of any laws of this State
applying to foreign persons, firms or corporations.

      3.  The subscribers and the attorney-in-fact comprise a reciprocal
insurer and a single entity for the purposes of chapter 680B of NRS as to all operations under the insurer’s
certificate of authority.

      (Added to NRS by 1971, 1828)

      1.  Twenty-five or more persons domiciled in this state may
organize a domestic reciprocal insurer and make application to the
Commissioner for a certificate of authority to transact insurance.

      2.  The proposed attorney shall fulfill the requirements of and
shall execute and file with the Commissioner when applying for a
certificate of authority a declaration setting forth:

      (a) The name of the insurer;

      (b) The location of the insurer’s principal office, which shall be
the same as that of the attorney and shall be maintained within this

      (c) The kinds of insurance proposed to be transacted;

      (d) The names and addresses of the original subscribers;

      (e) The designation and appointment of the proposed attorney and a
copy of the power of attorney;

      (f) The names and addresses of the officers and directors of the
attorney, if a corporation, or its members, if a firm;

      (g) The powers of the subscribers’ advisory committee, and the
names and terms of office of the members thereof;

      (h) That all moneys paid to the reciprocal shall, after deducting
therefrom any sum payable to the attorney, be held in the name of the
insurer and for the purposes specified in the subscribers’ agreement;

      (i) A statement that each of the original subscribers has in good
faith applied for insurance of a kind proposed to be transacted, and that
the insurer has received from each such subscriber the full premium or
premium deposit required for the policy applied for, for a term of not
less than 6 months at an adequate rate theretofore filed with and
approved by the Commissioner;

      (j) A statement of the financial condition of the insurer, a
schedule of its assets, and a statement that the surplus as required by
NRS 680A.120 is on hand; and

      (k) A copy of each policy, endorsement and application form it then
proposes to issue or use.

      3.  The declaration shall be acknowledged by the attorney in the
manner required for the acknowledgment of deeds.

      (Added to NRS by 1971, 1828)

      1.  The certificate of authority of a reciprocal insurer shall be
issued to its attorney in the name of the insurer.

      2.  The Commissioner may refuse, suspend or revoke the certificate
of authority, in addition to other grounds therefor, for failure of the
attorney to comply with any applicable provision of this Code.

      (Added to NRS by 1971, 1829)

      1.  The rights and powers of the attorney of a reciprocal insurer
shall be as provided in the power of attorney given it by the subscribers.

      2.  The power of attorney must set forth:

      (a) The powers of the attorney;

      (b) If a domestic insurer, that the attorney is empowered to accept
service of process on behalf of the insurer in actions against the
insurer upon contracts exchanged;

      (c) The general services to be performed by the attorney;

      (d) The maximum amount, if any, to be deducted from advance
premiums or deposits to be paid to the attorney and the general items of
expense, if any, in addition to losses, to be paid by the insurer; and

      (e) Except as to nonassessable policies, a provision for a
contingent several liability of each subscriber in a specified amount
which amount shall be not less than one nor more than 10 times the
premium or premium deposit stated in the policy.

      3.  The power of attorney may:

      (a) Provide for the right of substitution of the attorney and
revocation of the power of attorney and rights thereunder;

      (b) Impose such restrictions upon the exercise of the power as are
agreed upon by the subscribers;

      (c) Provide for the exercise of any right reserved to the
subscribers directly or through their advisory committee; and

      (d) Contain other lawful provisions deemed advisable.

      4.  The terms of any power of attorney or agreement collateral
thereto shall be reasonable and equitable, and no such power or agreement
shall be used or be effective in this state until approved by the

      (Added to NRS by 1971, 1829)
 Modifications of the terms of the
subscribers’ agreement or of the power of attorney of a domestic
reciprocal insurer shall be made jointly by the attorney and the
subscribers’ advisory committee. No such modification shall be effective
retroactively, or as to any insurance contract issued prior thereto.

      (Added to NRS by 1971, 1829)

      1.  Concurrently with the filing of the declaration provided for in
NRS 694B.060 , the attorney of a
domestic reciprocal insurer shall file with the Commissioner a bond in
favor of this state for the benefit of all persons damaged as a result of
breach by the attorney of the conditions of this bond as set forth in
subsection 2. The bond shall be executed by the attorney and by an
authorized corporate surety, and shall be subject to the Commissioner’s

      2.  The bond shall be in the penal sum of $25,000, aggregate in
form, conditioned that the attorney will faithfully account for all
moneys and other property of the insurer coming into his hands, and that
he will not withdraw or appropriate to his own use from the funds of the
insurer any moneys or property to which he is not entitled under the
power of attorney.

      3.  The bond shall provide that it is not subject to cancellation
unless 30 days’ advance notice in writing of cancellation is given both
the attorney and the Commissioner.

      (Added to NRS by 1971, 1829)
 In lieu of the bond
required under NRS 694B.100 , the
attorney may maintain on deposit through the Commissioner, a like amount
in cash or in market value of United States Government bonds, subject to
the same conditions as the bond.

      (Added to NRS by 1971, 1830)
 An action on the attorney’s bond or
to recover against any such deposit made in lieu thereof may be brought
by one or more subscribers suffering loss through a violation of its
conditions, or by a receiver or liquidator of the insurer. Amounts
recovered on the bond shall be deposited in and become part of the
insurer’s funds. The total aggregate liability of the surety shall be
limited to the amount of the penalty of such bond.

      (Added to NRS by 1971, 1830)

      1.  Legal process shall be served upon a domestic reciprocal
insurer by serving the insurer’s attorney at his principal offices or by
serving the Commissioner as the insurer’s process agent under NRS
680A.250 and 680A.260 .

      2.  Any judgment based upon legal process so served shall be
binding upon each of the insurer’s subscribers as their respective
interests may appear, but in an amount not exceeding their respective
contingent liabilities, if any, the same as though personal service of
process was had upon each such subscriber.

      (Added to NRS by 1971, 1830)

      1.  The attorney or other parties may advance to a domestic
reciprocal insurer upon reasonable terms such funds as it may require
from time to time in its operations. Sums so advanced shall not be
treated as a liability of the insurer, and, except upon liquidation of
the insurer, shall not be withdrawn or repaid except out of the insurer’s
realized earned surplus in excess of its minimum required surplus. No
such withdrawal or repayment shall be made without the advance approval
of the Commissioner.

      2.  This section does not apply to bank loans or to other loans
made upon security.

      (Added to NRS by 1971, 1830)
determining the financial condition of a reciprocal insurer the
Commissioner shall apply the following rules:

      1.  He shall charge as liabilities the same reserves as are
required of incorporated insurers issuing nonassessable policies on a
reserve basis.

      2.  The surplus deposits of subscribers shall be allowed as assets,
except that any premium deposits delinquent for 90 days shall first be
charged against such surplus deposit.

      3.  The surplus deposits of subscribers shall not be charged as a

      4.  All premium deposits delinquent less than 90 days shall be
allowed as assets.

      5.  An assessment levied upon subscribers, and not collected, shall
not be allowed as an asset.

      6.  The contingent liability of subscribers shall not be allowed as
an asset.

      7.  The computation of reserves shall be based upon premium
deposits other than membership fees and without any deduction for
expenses and the compensation of the attorney.

      (Added to NRS by 1971, 1831)

      1.  Individuals, partnerships and corporations of this state may
make application, enter into an agreement for and hold policies or
contracts in or with and be a subscriber of any domestic, foreign or
alien reciprocal insurer. Any corporation organized under the laws of
this state before, on or after January 1, 1972, in addition to the
rights, powers and franchises specified in its articles of incorporation,
has full power and authority as a subscriber to exchange insurance
contracts through such a reciprocal insurer. The right to exchange such
contracts is hereby declared to be incidental to the purposes for which
such corporations are organized and to be as fully granted as the rights
and powers expressly conferred upon such corporations.

      2.  Government or governmental agencies, a state or political
subdivisions thereof, boards, associations, estates, trustees or
fiduciaries are authorized to exchange nonassessable reciprocal
interinsurance contracts with each other and with individuals,
partnerships and corporations to the same extent that individuals,
partnerships and corporations are authorized in this chapter to exchange
reciprocal interinsurance contracts.

      3.  Any officer, representative, trustee, receiver or legal
representative of any such subscriber must be recognized as acting for or
on its behalf for the purpose of such a contract but may not be
personally liable upon the contract by reason of acting in such a
representative capacity.

      (Added to NRS by 1971, 1831; A 1997, 1628)

      1.  The advisory committee of a domestic reciprocal insurer
exercising the subscribers’ rights shall be selected under such rules as
the subscribers adopt.

      2.  Not less than two-thirds of such committee shall be subscribers
other than the attorney, or any person employed by, representing or
having a financial interest in the attorney.

      3.  The committee shall:

      (a) Supervise the finances of the insurer;

      (b) Supervise the insurer’s operations to such extent as to assure
conformity with the subscribers’ agreement and the power of attorney;

      (c) Procure the audit of the accounts and records of the insurer
and of the attorney at the expense of the insurer; and

      (d) Have such additional powers and functions as may be conferred
by the subscribers’ agreement.

      (Added to NRS by 1971, 1832)

      1.  The liability of each subscriber, other than as to a
nonassessable policy, for the obligations of the reciprocal insurer shall
be an individual, several and proportionate liability, and not joint.

      2.  Except as to a nonassessable policy, each subscriber shall have
a contingent assessment liability, in the amount provided for in the
power of attorney or in the subscribers’ agreement, for payment of actual
losses and expenses incurred while his policy was in force. Such
contingent liability may be at the rate of not less than one nor more
than 10 times the premium or premium deposit stated in the policy, and
the maximum aggregate thereof shall be computed in the manner set forth
in NRS 694B.220 .

      3.  Each assessable policy issued by the insurer shall contain a
statement of the contingent liability, set in type of the same prominence
as the insuring clause.

      (Added to NRS by 1971, 1832)

      1.  No action shall lie against any subscriber upon any obligation
claimed against the insurer until a final judgment has been obtained
against the insurer and remains unsatisfied for 30 days.

      2.  Any such judgment shall be binding upon each subscriber only in
such proportion as his interests may appear and in an amount not
exceeding his contingent liability, if any.

      (Added to NRS by 1971, 1832)

      1.  Assessments may from time to time be levied upon subscribers of
a domestic reciprocal insurer liable therefor under the terms of their
policies by:

      (a) The attorney upon approval in advance by the subscribers’
advisory committee and the Commissioner; or

      (b) The Commissioner in liquidation of the insurer.

      2.  Each subscriber’s share of a deficiency for which an assessment
is made, but not exceeding in any event his aggregate contingent
liability as computed in accordance with NRS 694B.220 , shall be computed by applying to the
premium earned on the subscriber’s policy or policies during the period
to be covered by the assessment, the ratio of the total deficiency to the
total premiums earned during such period upon all policies subject to the

      3.  In computing the earned premiums for the purposes of this
section, the gross premium received by the insurer for the policy shall
be used as a base, deducting therefrom solely charges not recurring upon
the renewal or extension of the policy.

      4.  No subscriber shall have an offset against any assessment for
which he is liable, on account of any claim for unearned premium or
losses payable.

      (Added to NRS by 1971, 1832)
 Every subscriber of a
domestic reciprocal insurer having contingent liability shall be liable
for, and shall pay his share of any assessment, as computed and limited
in accordance with this chapter, if:

      1.  While his policy is in force or within 1 year after its
termination, he is notified by either the attorney or the Commissioner of
his intentions to levy such assessment; or

      2.  If an order to show cause why a receiver, conservator,
rehabilitator or liquidator of the insurer should not be appointed is
issued while his policy is in force or within 1 year after its

      (Added to NRS by 1971, 1833)
 No one policy or subscriber to
such policy, shall be assessed or charged with an aggregate of contingent
liability as to obligations incurred by a domestic reciprocal insurer in
any 1 calendar year, in excess of the amount provided for in the power of
attorney or in the subscribers’ agreement, computed solely upon the
premium earned on such policy during that year.

      (Added to NRS by 1971, 1833)

      1.  If a reciprocal insurer has a surplus of assets over all
liabilities at least equal to the minimum capital stock and surplus
required to be maintained by a domestic stock insurer authorized to
transact like kinds of insurance, upon application of the attorney and as
approved by the subscribers’ advisory committee the Commissioner shall
issue his certificate authorizing the insurer to extinguish the
contingent liability of subscribers under its policies then in force in
this state, and to omit provisions imposing contingent liability in all
policies delivered or issued for delivery in this state for so long as
all such surplus remains unimpaired.

      2.  Upon impairment of such surplus, the Commissioner shall
forthwith revoke the certificate. Such revocation shall not render
subject to contingent liability any policy then in force and for the
remainder of the period for which the premium has theretofore been paid;
but after such revocation no policy shall be issued or renewed without
providing for contingent assessment liability of the subscriber.

      3.  The Commissioner shall not authorize a domestic reciprocal
insurer so to extinguish the contingent liability of any of its
subscribers or in any of its policies to be issued, unless it qualifies
to and does extinguish such liability of all its subscribers and in all
such policies for all kinds of insurance transacted by it; but if
required by the laws of another state in which the insurer is transacting
insurance as an authorized insurer, the insurer may issue policies
providing for the contingent liability of such of its subscribers as may
acquire such policies in such state, and need not extinguish the
contingent liability applicable to policies theretofore in force in such

      (Added to NRS by 1971, 1833)
 Upon the liquidation
of a domestic reciprocal insurer, its assets remaining after the
discharge of its indebtedness and policy obligations, the return of any
contributions of the attorney or other persons to its surplus, and the
return of any unused premiums, savings or credits then standing on
subscribers’ accounts shall be distributed to its subscribers who were
such within the 12 months prior to the last termination of its
certificate of authority, according to such reasonable formula as the
Commissioner may approve.

      (Added to NRS by 1971, 1834)

      1.  A domestic reciprocal insurer upon the affirmative vote of not
less than two-thirds of its subscribers who vote on such merger pursuant
to due notice and the approval of the Commissioner of the terms therefor
may merge with another reciprocal insurer or be converted to a stock or
mutual insurer.

      2.  Such a stock or mutual insurer shall be subject to the same
capital or surplus requirements and shall have the same rights as a like
domestic insurer transacting like kinds of insurance.

      3.  The Commissioner shall not approve any plan for such merger or
conversion which is inequitable to subscribers, or which, if for
conversion to a stock insurer, does not give each subscriber preferential
right to acquire stock of the proposed insurer proportionate to his
interest in the reciprocal insurer as determined in accordance with NRS
694B.240 and a reasonable length of
time within which to exercise such right.

      (Added to NRS by 1971, 1834)

      1.  Subject to the limitation set forth in the power of attorney or
policy, if the assets of a domestic reciprocal insurer are at any time
insufficient to discharge its liabilities, other than any liability on
account of funds contributed by the attorney or others, and to maintain
the required surplus, its attorney shall forthwith make up the deficiency
or levy an assessment upon the subscribers for the amount needed to make
up the deficiency.

      2.  If the attorney fails to make up such deficiency or to make the
assessment within 30 days after the Commissioner orders him to do so, or
if the deficiency is not fully made up within 60 days after the date the
assessment was made, the insurer shall be deemed insolvent and shall be
proceeded against as authorized by this Code.

      3.  If liquidation of such an insurer is ordered, an assessment
shall be levied upon the subscribers for such an amount, subject to the
limits provided by this chapter, as the Commissioner determines to be
necessary to discharge all liabilities of the insurer, exclusive of any
funds contributed by the attorney or other persons, but including the
reasonable cost of the liquidation.

      (Added to NRS by 1971, 1834)

USA Statutes : nevada