USA Statutes : oregon
Title : TITLE 56 INSURANCE
Chapter : Chapter 748 Fraternal Benefit Societies
As used in this chapter:

(1) “Benefit contract” means the agreement for provision of
benefits authorized by ORS 748.201, as that agreement is described in ORS
748.211 (1).

(2) “Benefit member” means an adult member who is designated by the
laws or rules of the society to be a benefit member under a benefit
contract.

(3) “Certificate” means the document issued as written evidence of
the benefit contract.

(4) “Impaired” means either:

(a) For a society that does not write variable contracts, whenever
its assets are less than its total liabilities; or

(b) For a society that does write variable contracts, whenever its
assets are less than its total liabilities, plus the required surplus for
a mutual life insurer to write such contracts.

(5) “Laws” means the society’s articles of incorporation,
constitution and bylaws, however designated.

(6) “Lodge” means subordinate member units of the society, known as
camps, courts, councils, branches or by any other designation.

(7) “Premiums” means premiums, rates, dues or other required
contributions by whatever name known, which are payable under the
certificate.

(8) “Rules” means all rules, regulations or resolutions adopted by
the supreme governing body or board of directors which are intended to
have general application to the members of the society.

(9) “Society” means fraternal benefit society, unless otherwise
indicated. [1987 c.490 §2] Any corporation,
society, order, supreme lodge or voluntary association, without capital
stock, conducted solely for the benefit of its members and their
beneficiaries and not-for-profit, operated on a lodge system with
ritualistic form of work, having a representative form of government and
which provides benefits in accordance with this chapter is hereby
declared to be a fraternal benefit society. [1987 c.490 §3]” (1)
A society is operating on the lodge system if it has a supreme governing
body and subordinate lodges into which members are elected, initiated or
admitted in accordance with its laws, rules and ritual. Subordinate
lodges shall be required by the laws of the society to hold regular
meetings at least once each month in furtherance of the purposes of the
society.

(2) A society may, at its option, organize and operate lodges for
children under the minimum age for adult membership. Membership and
initiation in local lodges shall not be required of the children, nor
shall the children have a voice or vote in the management of the society.
[1987 c.490 §4] A society has a representative form of government when:

(1) It has a supreme governing body constituted as:

(a) An assembly composed of delegates elected directly by the
members or at intermediate assemblies or conventions of members or their
representatives, together with other delegates as may be prescribed in
the society’s laws. A society may provide for election of delegates by
mail. The elected delegates shall constitute a majority in number and
shall not have less than two-thirds of the votes and not less than the
number of votes required to amend the society’s laws. The assembly shall
be elected and shall meet at least once every four years and shall elect
a board of directors to conduct the business of the society between
meetings of the assembly. Vacancies on the board of directors between
elections may be filled in the manner prescribed by the society’s laws; or

(b) A board composed of persons elected by the members, either
directly or by their representatives in intermediate assemblies, and any
other persons prescribed in the society’s laws. A society may provide for
election of the board by mail. Each term of a board member may not exceed
four years. Vacancies on the board between elections may be filled in the
manner prescribed by the society’s laws. Those persons elected to the
board shall constitute a majority in number and not less than the number
of votes required to amend the society’s laws. A person filling the
unexpired term of an elected board member shall be considered to be an
elected member. The board shall meet at least quarterly to conduct the
business of the society;

(2) The officers of the society are elected either by the supreme
governing body or by the board of directors;

(3) Only benefit members are eligible for election to the supreme
governing body and the board of directors; and

(4) Each voting member has one vote. No vote may be cast by proxy.
[1987 c.490 §5]SOCIETIES GENERALLY (1) The purposes of a
society, as specified in subsection (2) of this section, may be carried
out directly by the society, or indirectly through subsidiary
corporations or affiliated organizations.

(2) A society shall operate for the benefit of members and their
beneficiaries by:

(a) Providing benefits as specified in ORS 748.201; and

(b) Operating for one or more social, intellectual, educational,
charitable, benevolent, moral, fraternal, patriotic or religious purposes
for the benefit of its members, which may also be extended to others.

(3) Every society shall have the power to adopt laws and rules for
the government of the society, the admission of its members and the
management of its affairs. It shall have the power to change, alter, add
to or amend such laws and rules and shall have such other powers as are
necessary and incidental to carrying into effect the objects and purposes
of the society. [1987 c.490 §6] (1)
A society shall specify in its laws or rules:

(a) Eligibility standards for each and every class of membership,
provided that, if benefits are provided on the lives of children, the
minimum age for adult membership shall be set at not less than 15 years
of age and not greater than 21 years of age;

(b) The process for admission to membership for each membership
class; and

(c) The rights and privileges of each membership class, provided
that only benefit members shall have the right to vote on the management
of the insurance affairs of the society.

(2) A society may also admit social members who shall have no voice
or vote in the management of the insurance affairs of the society.

(3) Membership rights in the society are personal to the member and
are not assignable. [1987 c.490 §7]ORGANIZATIONAL AND ADMINISTRATIVE PROVISIONS(1) The principal office of any domestic society shall be
located in this state. The meetings of its supreme governing body may be
held in any state, district, province or territory in which the society
has at least one lodge or in any other location as determined by the
supreme governing body, and all business transacted at the meetings shall
be as valid in all respects as if the meetings were held in this state.
The minutes of the proceedings of the supreme governing body and of the
board of directors shall be in English.

(2) A society may provide in its laws for an official publication
in which any notice, report or statement required by law to be given to
members, including notice of election, may be published. The required
notices, reports or statements shall be printed conspicuously in the
publication. If the records of a society show that two or more members
have the same mailing address, an official publication mailed to one
member is deemed to be mailed to all members at the same address unless a
member requests a separate copy.

(3) Not later than June 1 of each year, a synopsis of the society’s
annual statement providing an explanation of the facts concerning the
condition of the society thereby disclosed shall be printed and mailed to
each benefit member of the society or, in lieu thereof, the synopsis may
be published in the society’s official publication.

(4) A society may provide in its laws or rules for grievance or
complaint procedures for members. [1987 c.490 §8] A domestic society organized on or after January
1, 1988, shall be formed as follows:

(1) Seven or more citizens of the United States, a majority of whom
are citizens of this state, who desire to form a fraternal benefit
society, may make and sign articles of incorporation. The articles shall
be acknowledged before some officer competent to take acknowledgment of
deeds and shall state:

(a) The proposed corporate name of the society, which shall not so
closely resemble the name of any society or insurance company as to be
misleading or confusing;

(b) The purposes for which it is being formed and the mode in which
its corporate powers are to be exercised. The purposes shall not include
more liberal powers than are granted by this chapter;

(c) The names and residences of the incorporators and the names,
residences and official titles of all the officers, trustees, directors
or other persons who are to have and exercise the general control of the
management of the affairs and funds of the society until their successors
are elected by the supreme governing body; and

(d) A plan for the election of officers, trustees and directors by
the supreme governing body. The election shall be held not later than one
year from the date of issuance of the permanent certificate of authority.

(2) The articles of incorporation, duly certified copies of the
society’s bylaws and rules, copies of all proposed forms of certificates,
applications therefor and circulars to be issued by the society and a
bond conditioned upon the return to applicants of the advanced payments
if the organization is not completed within one year shall be filed with
the Director of the Department of Consumer and Business Services, who may
require such further information as the director deems necessary. The
bond with sureties approved by the director shall be in an amount, not
less than $300,000 nor more than $1,500,000 as required by the director.
All documents filed are to be in English. If the purposes of the society
conform to the requirements of this chapter and all provisions of the law
have been complied with, the director shall so certify, retain and file
the articles of incorporation and furnish the incorporators a preliminary
certificate of authority authorizing the society to solicit members as
provided in this chapter.

(3) No preliminary certificate of authority granted under the
provisions of this section shall be valid after one year from its date or
after any further period, not exceeding one year, as may be authorized by
the director upon cause shown, unless the 500 applicants required have
been secured and the organization has been completed as provided in this
chapter. The articles of incorporation and all other proceedings
thereunder shall become null and void in one year from the date of the
preliminary certificate of authority, or at the expiration of the
extended period, unless the society has completed its organization and
received a certificate of authority to do business as provided in this
chapter.

(4) Upon receipt of a preliminary certificate of authority from the
director, the society may solicit members for the purpose of completing
its organization, shall collect from each applicant the amount of not
less than one regular monthly premium in accordance with its tables of
rates and shall issue to each applicant a receipt for the amount
collected. No society shall incur any liability other than for the return
of the advance premium, nor issue any certificate, nor pay, allow or
offer or promise to pay or allow, any benefit to any person until:

(a) Actual bona fide applications for benefits have been secured on
not less than 500 applicants, and any necessary evidence of insurability
has been furnished to and approved by the society;

(b) At least 10 lodges have been established into which the 500
applicants have been admitted;

(c) There has been submitted to the director, under oath of the
president or secretary, or corresponding officer of the society, a list
of such applicants, giving their names, addresses, date each was
admitted, name and number of the lodge of which each applicant is a
member, amount of benefits to be granted and premiums therefor; and

(d) It has been shown to the director, by sworn statement of the
treasurer, or corresponding officer of such society, that at least 500
applicants have each paid in cash at least one regular monthly premium as
herein provided, which premiums in the aggregate amount to at least
$150,000. The advance premiums shall be held in trust during the period
of organization and if the society has not qualified for a certificate of
authority within one year, as provided in this chapter, the premiums
shall be returned to the applicants.

(5) The director may make any examination and require any further
information that the director deems advisable. Upon presentation of
satisfactory evidence that the society has complied with all the
provisions of law, the director shall issue to the society a certificate
of authority to that effect and that the society is authorized to
transact business pursuant to the provisions of this chapter. The
certificate of authority shall be prima facie evidence of the existence
of the society at the date of the certificate. The director shall cause a
record of the certificate of authority to be made. A certified copy of
the record may be given in evidence with like effect as the original
certificate of authority.

(6) An incorporated society authorized to transact business in this
state at the time this chapter becomes effective shall not be required to
reincorporate. [1987 c.490 §9](1) The officers and members of the supreme
governing body or any subordinate body of a society shall not be
personally liable for any benefits provided by a society.

(2) Any person may be indemnified and reimbursed by any society for
expenses reasonably incurred by, and liabilities imposed upon, the person
in connection with or arising out of any action, suit or proceeding,
whether civil, criminal, administrative or investigative, or threat of
any action, suit or proceeding, in which the person may be involved by
reason of the fact that the person is or was a director, officer,
employee or agent of the society or of any firm, corporation or
organization which the person served in any capacity at the request of
the society. Except as provided in subsection (3) of this section, a
person shall not be indemnified or reimbursed:

(a) In relation to any matter in such action, suit or proceeding as
to which the person shall finally be adjudged guilty of breach of a duty
as a director, officer, employee or agent of the society; or

(b) In relation to any matter in such action, suit or proceeding,
or threat of such action, suit or proceeding, which has been made the
subject of a compromise settlement.

(3) A person described in subsection (2) of this section may be
indemnified if:

(a) The person acted in good faith for a purpose the person
reasonably believed to be in or not opposed to the best interests of the
society; and

(b) In a criminal action or proceeding, the person had no
reasonable cause to believe that the conduct of the person was unlawful.

(4) The determination whether the conduct of the person met the
standard required in order to justify indemnification and reimbursement
in relation to any matter described in subsection (2) of this section may
be made only by the supreme governing body or board of directors by a
majority vote of a quorum consisting of persons who were not parties to
the action, suit or proceeding, or by a court of competent jurisdiction.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of no contest, as to the person
shall not in itself create a conclusive presumption that the person did
not meet the standard of conduct required in order to justify
indemnification and reimbursement. The right of indemnification and
reimbursement described in this section shall not be exclusive of other
rights to which the person may be entitled as a matter of law and shall
inure to the benefit of the person’s heirs, executors and administrators.

(5) A society shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the society, or who is or was serving at the request of the
society as a director, officer, employee or agent of any other firm,
corporation or organization against any liability asserted against the
person and incurred by the person in any such capacity or arising out of
the person’s status as such, whether or not the society would have the
power to indemnify the person against liability under this section. [1987
c.490 §10] The laws of the
society may provide that no subordinate body, nor any of its subordinate
officers or members shall have the power or authority to waive any of the
provisions of the laws of the society. This provision shall be binding on
the society and every member and beneficiary of a member. [1987 c.490 §11] (1) A domestic society may amend
its laws in accordance with the provisions thereof by action of its
supreme governing body at any regular or special meeting thereof or, if
its laws so provide, by referendum. The referendum may be held in
accordance with the provisions of its laws by the vote of the voting
members of the society, by the vote of delegates or representatives of
voting members or by the vote of local lodges. A society may provide for
voting by mail. No amendment submitted for adoption by referendum shall
be adopted unless, within six months from the date of submission, a
majority of the members voting have signified their consent to the
amendment by one of the methods specified in this chapter.

(2) No amendment to the laws of any domestic society shall take
effect unless approved by the Director of the Department of Consumer and
Business Services. The director shall approve the amendment if the
director finds that it has been duly adopted and is not inconsistent with
any requirement of the laws of this state or with the character, objects
and purposes of the society. Unless the director shall disapprove any
such amendment within 60 days after the filing, the amendment shall be
considered approved. The approval or disapproval of the director shall be
in writing and mailed to the secretary or corresponding officer of the
society at its principal office. In case the director disapproves the
amendment, the reasons shall be stated in the written notice.

(3) Within 90 days from the approval by the director, all such
amendments, or a synopsis thereof, shall be furnished to all members of
the society either by mail or by publication in full in the official
publication of the society. The affidavit of any officer of the society
or of anyone authorized by it to mail any amendments, or synopses
thereof, stating facts which show that the amendments have been duly
addressed and mailed, shall be prima facie evidence that the amendments,
or synopsis thereof, have been furnished to the addressee.

(4) Every foreign or alien society authorized to do business in
this state shall file with the director a duly certified copy of all
amendments of, or additions to, its laws within 90 days after the
enactment of the amendments.

(5) Printed copies of the laws as amended, certified by the
secretary or corresponding officer of the society, shall be prima facie
evidence of the legal adoption thereof. [1987 c.490 §12]
(1) A society may create, maintain and operate, or may establish
organizations to operate, not-for-profit institutions to further the
purposes permitted by ORS 748.121 (2)(b). Such institutions may furnish
services free or at a reasonable charge. Any real or personal property
owned, held or leased by the society for this purpose shall be reported
in every annual statement.

(2) No society shall own or operate funeral homes or undertaking
establishments. [1987 c.490 §13] (1) A domestic society may
consolidate or merge with any other society by complying with the
provisions of this section. It shall file with the Director of the
Department of Consumer and Business Services:

(a) A certified copy of the written contract containing in full the
terms and conditions of the consolidation or merger;

(b) A sworn statement by the president and secretary or
corresponding officers of each society showing the financial condition of
the society on a date fixed by the director but not earlier than December
31, next preceding the date of the contract;

(c) A certificate of the officers, duly verified by their
respective oaths, that the consolidation or merger has been approved by a
two-thirds vote of the supreme governing body of each society, the vote
being conducted at a regular or special meeting of each body, or, if the
society’s laws so permit, by mail; and

(d) Evidence that at least 60 days prior to the action of the
supreme governing body of each society, the text of the contract has been
furnished to all members of each society either by mail or by publication
in full in the official publication of each society.

(2) If the director finds that the contract is in conformity with
the provisions of this section, that the financial statements are correct
and that the consolidation or merger is just and equitable to the members
of each society, the director shall approve the contract and issue a
certificate to that effect. Upon approval, the contract shall be in full
force and effect unless any society which is a party to the contract is
incorporated under the laws of any other state or territory. In such
event the consolidation or merger shall not become effective unless and
until it has been approved as provided by the laws of such state or
territory and a certificate of approval filed with the director of this
state or, if the laws of such state or territory contain no such
provision, then the consolidation or merger shall not become effective
unless and until it has been approved by the director of insurance of
such state or territory and a certificate of approval filed with the
director of this state.

(3) Upon the consolidation or merger becoming effective as provided
in this chapter, all the rights, franchises and interests of the
consolidated or merged societies in and to every species of property,
real, personal or mixed, and things in action thereunto belonging shall
be vested in the society resulting from or remaining after the
consolidation or merger without any other instrument, except that
conveyances of real property may be evidenced by proper deeds, and the
title to any real estate or interest therein, vested under the laws of
this state in any of the societies consolidated or merged, shall not
revert or be in any way impaired by reason of the consolidation or
merger, but shall vest absolutely in the society resulting from or
remaining after consolidation or merger.

(4) The affidavit of any officer of the society or of anyone
authorized by it to mail any notice or document, stating that the notice
or document has been duly addressed and mailed, shall be prima facie
evidence that the notice or document has been furnished the addressees.
[1987 c.490 §15]LICENSING AND REINSURANCE (1) A fraternal benefit society
must obtain and maintain a certificate of authority in the manner
provided for insurers in the Insurance Code.

(2) A certified copy or duplicate of the certificate of authority
shall be prima facie evidence that the holder thereof is a fraternal
benefit society within the meaning of this chapter. [1987 c.490 §28; 1989
c.413 §19; 1991 c.182 §10] No
foreign or alien society shall transact business in this state without a
certificate of authority issued by the Director of the Department of
Consumer and Business Services. Any foreign or alien society desiring
admission to this state shall comply substantially with the requirements
and limitations of this chapter applicable to domestic societies. Any
foreign or alien society may be authorized to transact business in this
state upon a showing that its assets are invested in accordance with the
provisions of this chapter and upon filing with the director:

(1) A duly certified copy of its articles of incorporation;

(2) A copy of its bylaws, certified by its secretary or
corresponding officer;

(3) A power of attorney to the director as required by the director;

(4) A statement of its business under oath of its president and
secretary or corresponding officers in a form prescribed by the director,
duly verified by an examination made by the supervising insurance
official of its home state or other state, territory, province or
country, satisfactory to the director;

(5) Certification from the proper official of its home state,
territory, province or country that the society is legally incorporated
and licensed to transact business in the state, territory, province or
country;

(6) Copies of its certificate forms; and

(7) Such other information as the director may deem necessary.
[1987 c.490 §30; 1991 c.182 §11] Any
domestic fraternal benefit society may be converted and authorized as a
mutual life insurance company by compliance with all the requirements of
the insurance laws of this state for mutual life insurance companies. A
plan of conversion shall be prepared in writing by the board of directors
setting forth in full the terms and conditions of conversion. The
affirmative vote of two-thirds of all members of the supreme governing
body at a regular or special meeting shall be necessary for the approval
of the plan, or if the society is organized under the direct election
method pursuant to ORS 748.112 (1)(a), the plan of conversion shall be
submitted by mail to the benefit members. The affirmative vote of
two-thirds of the benefit members voting thereon shall be necessary for
the approval of the plan. No conversion shall take effect unless approved
by the Director of the Department of Consumer and Business Services who
may give approval if the director finds that the proposed change is in
conformity with the requirements of law and not prejudicial to the
certificate holders of the society. [1987 c.490 §16; 1991 c.182 §12] Insurance producers of
societies shall be licensed in accordance with the provisions of ORS
chapter 744 regulating the licensing, revocation, suspension or
termination of license of resident and nonresident insurance producers.
[1987 c.490 §34; 1989 c.701 §75; 2003 c.364 §168] (1) A domestic society may, by a reinsurance
agreement, cede any individual risk or risks in whole or in part to an
insurer, other than another fraternal benefit society, having the power
to make reinsurance and authorized to do business in this state, or if
not authorized, one which is approved by the Director of the Department
of Consumer and Business Services, but no society may reinsure
substantially all of its insurance in force without the written
permission of the director. The society may take credit for the reserves
on such ceded risks to the extent reinsured, but no credit shall be
allowed as an admitted asset or as a deduction from liability, to a
ceding society for reinsurance made, ceded, renewed or otherwise becoming
effective after January 1, 1988, unless the reinsurance is payable by the
assuming insurer on the basis of the liability of the ceding society
under the contract or contracts reinsured without diminution because of
the insolvency of the ceding society.

(2) Notwithstanding the limitation in subsection (1) of this
section, a society may reinsure the risks of another society in a
consolidation or merger approved by the director under ORS 748.148. [1987
c.490 §14]BENEFITS, BENEFICIARIES AND CONTRACTS GENERALLY (1) A society may provide in any form the
following contractual benefits:

(a) Death benefits;

(b) Endowment benefits;

(c) Annuity benefits;

(d) Temporary or permanent disability benefits;

(e) Hospital, medical or nursing benefits;

(f) Monument or tombstone benefits to the memory of deceased
members; and

(g) Such other benefits as authorized for life insurers and which
are not inconsistent with this chapter, upon determination by the
Director of the Department of Consumer and Business Services that the
society is in compliance with all the requirements for a mutual life
insurer to write such benefits.

(2) A society shall specify in its rules those persons who may be
issued, or covered by, the contractual benefits in subsection (1) of this
section, consistent with providing benefits to members and their
dependents. A society may provide benefits on the lives of children under
the minimum age for adult membership upon application of an adult person.
[1987 c.490 §17] (1) The owner of a benefit contract shall
have the right at all times to change the beneficiary or beneficiaries in
accordance with the laws or rules of the society unless the owner waives
this right by specifically requesting in writing that the beneficiary
designation be irrevocable. A society may, through its laws or rules,
limit the scope of beneficiary designations and shall provide that no
revocable beneficiary shall have or obtain any vested interest in the
proceeds of any certificate until the certificate has become due and
payable in conformity with the provisions of the benefit contract.

(2) A society may make provision for the payment of funeral
benefits to the extent of the portion of any payment under a certificate
as might reasonably appear to be due to any person equitably entitled
thereto by reason of having incurred expense occasioned by the burial of
the member, provided the portion paid shall not exceed $1,000.

(3) If, at the death of any person insured under a benefit
contract, there is no lawful beneficiary to whom the proceeds shall be
payable, the amount of the benefit, except to the extent that funeral
benefits may be paid as provided in this chapter, shall be payable to the
personal representative of the deceased insured, provided that if the
owner of the certificate is other than the insured the proceeds shall be
payable to that owner. [1987 c.490 §18] No money or other benefit,
charity, relief or aid to be paid, provided or rendered by any society,
shall be liable to attachment, garnishment 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 liability of a member or
beneficiary, or any other person who may have a right thereunder, either
before or after payment by the society. [1987 c.490 §19] (1) Every society authorized
to do business in this state shall issue to each owner of a benefit
contract a certificate specifying the amount of benefits provided. The
certificate, together with any riders or indorsements attached to it, the
laws of the society, the application for membership, the application for
insurance and declaration of insurability, if any, signed by the
applicant, and all amendments to each, shall constitute the benefit
contract, as of the date of issuance, between the society and the owner,
and the certificate shall so state. The laws of the society need not be
stated in full in the certificate, except as provided in this section. A
copy of the application for insurance and declaration of insurability, if
any, shall be indorsed upon or attached to the certificate. All
statements on the application shall be representations and not
warranties. Any waiver of this provision shall be void.

(2) Any changes, additions or amendments to the laws of the society
duly made or enacted subsequent to the issuance of the certificate, shall
bind the owner and the beneficiaries, and shall govern and control the
benefit contract in all respects the same as though the changes,
additions or amendments had been made prior to and were in force at the
time of the application for insurance, except that no change, addition or
amendment shall destroy or diminish benefits which the society contracted
to give the owner as of the date of issuance.

(3) Any person upon whose life a benefit contract is issued prior
to attaining the age of majority shall be bound by the terms of the
application and certificate and by all the laws and rules of the society
to the same extent as though the age of majority had been attained at the
time of application.

(4) A society shall provide in its laws that if its reserves as to
all or any class of certificates become impaired, its board of directors
or corresponding body may require that there be paid by the owner to the
society the amount of the owner’s equitable proportion of the deficiency
as ascertained by its board, and that if the payment is not made:

(a) It shall stand as an indebtedness against the certificate and
draw interest not to exceed the rate specified for certificate loans
under the certificates; or

(b) In lieu of or in combination with paragraph (a) of this
subsection, the owner may accept a proportionate reduction in benefits
under the certificate.

(5) The society may specify the manner of the election of the
alternatives specified in subsection (4) of this section and which
alternative is to be presumed if no election is made.

(6) Copies of any of the documents mentioned in this section,
certified by the secretary or corresponding officer of the society, shall
be received in evidence of the terms and conditions of the documents.

(7) No certificate shall be delivered or issued for delivery in
this state unless a copy of the form has been filed with and approved by
the Director of the Department of Consumer and Business Services, and is
subject to withdrawal of approval, in the manner provided for like
policies issued by life and health insurers in this state. Every life,
accident, health or disability insurance certificate and every annuity
certificate issued on or after one year from January 1, 1988, shall meet
the standard contract provision requirements not inconsistent with this
chapter for like policies issued by life and health insurers in this
state, except that a society may provide for a grace period for payment
of premiums of one full month in its certificates. The certificates shall
also contain a provision stating the amount of premiums which are payable
under the certificate and a provision reciting or setting forth the
substance of any sections of the society’s laws or rules in force at the
time of issuance of the certificate which, if violated, shall result in
the termination or reduction of benefits payable under the certificate.
In addition, except for contracts issued on a variable basis as
authorized by ORS 748.409, the certificate shall contain a provision
stating the substance of the society’s laws required under subsections
(4) and (5) of this section. If the laws of the society provide for
expulsion or suspension of a member, the certificate shall also contain a
provision that any member so expelled or suspended, except for nonpayment
of a premium or within the contestable period for material
misrepresentation in the application for membership or insurance, shall
have the privilege of maintaining the certificate in force by continuing
payment of the required premium.

(8) Benefit contracts issued on the lives of persons below the
society’s minimum age for adult membership may provide for transfer of
control or ownership to the insured at an age specified in the
certificate. A society may require approval of an application for
membership in order to effect this transfer, and may provide in all other
respects for the regulation, government and control of the certificates
and all rights, obligations and liabilities incident thereto and
connected therewith. Ownership rights prior to the transfer shall be
specified in the certificate.

(9) A society may specify the terms and conditions on which benefit
contracts may be assigned. [1987 c.490 §20; 1991 c.182 §13]GROUP BENEFITS A fraternal
benefit society may provide in its laws, in addition to other benefits
provided, for the issuance of group benefit certificates if on the date
when it enters upon business it has admitted assets which are greater
than the sum of its accrued liabilities and reserves under all of its
certificates when valued according to standards required for certificates
issued after June 8, 1967. [1987 c.490 §36] (1) Group benefit certificates
may provide for the payment of benefits in the event of the death, or
death and disability, of:

(a) Persons engaged in a common enterprise or employment.

(b) The employees of any employer.

(2) Group certificates may be issued with or without medical
examination and without limitation as to age.

(3) The society shall organize the persons or employees into a
lodge or lodges with officers selected in the same manner as officers of
other lodges and subject to the provisions of the laws of the society.

(4) Not less than 50 persons may be admitted to membership under
one group without medical examination. [1987 c.490 §37] If
provided in the laws of the society, other persons may become members of
a lodge organized under ORS 748.309 subsequent to its organization and
may be initiated into and hold membership in the lodge. Individual
benefit certificates may be issued to them. The lodges shall in all other
respects be subject to the laws of the society. [1987 c.490 §40] (1) The monthly or other
payments to be made to the society on or for any group benefit
certificate may be made by the employer, or by the employer and employees
jointly, or as provided in the contract.

(2) When the payments are made by the employer and the employees
jointly and the benefits under the group certificate are offered to all
eligible employees of the employer, not less than 75 percent of the
employees must be included under the group certificate. [1987 c.490 §38](1) A group
certificate, when issued in this state by any foreign or alien society,
may contain, when issued, any provision required by the laws of the state
or country under which the society is organized.

(2) Group certificates issued in other states or countries by a
domestic society may contain any provision required by the laws of the
other state or country. [1987 c.490 §39]If any group
certificate is canceled, discontinued or not renewed, or if any
individual member of a group ceases to be a member of the group, the
members of the group or any individual member who ceases to be a member
of the group may be permitted to continue membership in the society for
the same amount of protection at the required rate of monthly or other
payment and in all other respects as provided in the laws of the society.
[1987 c.490 §41]FINANCIAL PROVISIONS (1) For
certificates issued prior to January 1, 1989, the value of every paid-up
nonforfeiture benefit and the amount of any cash surrender value, loan or
other option granted shall comply with the provisions of law applicable
immediately prior to January 1, 1988.

(2) For certificates issued on or after January 1, 1989, for which
reserves are computed on the Commissioner’s 1941 Standard Ordinary
Mortality Table, the Commissioner’s 1941 Standard Industrial Table, the
Commissioner’s 1958 Standard Ordinary Mortality Table, the Commissioner’s
1980 Standard Mortality Table or any more recent table made applicable to
life insurers, every paid-up nonforfeiture benefit and the amount of any
cash surrender value, loan or other option granted may not be less than
the corresponding amount ascertained in accordance with the laws of this
state applicable to life insurers issuing policies containing like
benefits based upon the tables. [1987 c.490 §21; 2005 c.22 §498] (1) Standards of
valuation for certificates issued prior to January 1, 1989, shall be
those provided by the laws applicable immediately prior to January 1,
1988.

(2) The minimum standards of valuation for certificates issued on
or after January 1, 1989, shall be based on the following tables:

(a) For certificates of life insurance, the Commissioner’s 1941
Standard Ordinary Mortality Table, the Commissioner’s 1941 Standard
Industrial Mortality Table, the Commissioner’s 1958 Standard Ordinary
Mortality Table, the Commissioner’s 1980 Standard Ordinary Mortality
Table or any more recent table made applicable to life insurers; or

(b) For annuity and pure endowment certificates, for total and
permanent disability benefits, for accidental death benefits and for
noncancelable accident and health benefits, the tables that are
authorized for use by life insurers in this state.

(3) The tables referred to in subsection (2) of this section shall
be under valuation methods and standards, including interest assumptions,
in accordance with the laws of this state applicable to life insurers
issuing policies containing like benefits.

(4) The Director of the Department of Consumer and Business
Services may accept other standards for valuation if the director finds
that the reserves produced will not be less in the aggregate than
reserves computed in accordance with the minimum valuation standard
prescribed in subsection (2) of this section. The director may vary the
standards of mortality applicable to all benefit contracts on substandard
lives or other extra hazardous lives by any society authorized to do
business in this state.

(5) Any society, with the consent of the director of insurance of
the state of domicile of the society and under conditions the director
may impose, may establish and maintain reserves on its certificates in
excess of the reserves required, but the contractual rights of any
benefit member shall not be affected. [1987 c.490 §26; 2005 c.22 §499] (1) Every
society transacting business in this state shall annually file with the
Director of the Department of Consumer and Business Services on or before
March 1, unless the time has been extended by the director, a true
statement of its financial condition, transactions and affairs for the
preceding calendar year and shall pay the applicable fee established by
the director. The statement shall be in general form and context as
approved by the National Association of Insurance Commissioners for
fraternal benefit societies and as supplemented by additional information
required by the director.

(2) As part of the annual statement required by subsection (1) of
this section, on or before March 1, each society shall file with the
director a valuation of its certificates in force on December 31 last
preceding. The director may extend the time for filing the valuation for
not more than two calendar months. The valuation shall be done in
accordance with the standards specified in ORS 748.403. The valuation and
underlying data shall be certified by a qualified actuary or, at the
expense of the society, verified by the actuary of the department of
insurance of the state of domicile of the society. [1987 c.490 §27; 1991
c.182 §14] (1) All assets shall
be held, invested and disbursed for the use and benefit of the society
and no member or beneficiary shall have or acquire individual rights or
become entitled to any apportionment on the surrender of any part, except
as provided in the benefit contract.

(2) A society may create, maintain, invest, disburse and apply any
special fund or funds necessary to carry out any purpose permitted by the
laws of the society.

(3) Pursuant to resolution of its supreme governing body a society
may:

(a) Establish and operate one or more separate accounts and issue
contracts on a variable basis, subject to all the provisions of law
regulating life insurers establishing accounts and issuing contracts;

(b) To the extent the society deems it necessary in order to comply
with any applicable federal or state laws, adopt special procedures for
the conduct of the business and affairs of a separate account;

(c) For persons having beneficial interest therein, provide special
voting and other rights, including without limitation special rights and
procedures relating to investment policy, investment advisory services,
selection of certified public accounts and selection of a committee to
manage the business and affairs of the account; and

(d) Issue contracts on a variable basis to which ORS 748.211 (2)
and (4) shall not apply. [1987 c.490 §23] A society shall invest its funds only
in investments that are authorized by the laws of this state for the
investment of assets of life insurers and subject to the limitations
thereon. Any foreign or alien society permitted or seeking to do business
in this state which invests its funds in accordance with the laws of the
state, district, territory, country or province in which it is
incorporated, shall be held to meet the requirements of this section for
the investment of funds. [1987 c.490 §22] Every society organized or
licensed under this chapter is hereby declared to be a charitable and
benevolent institution, and all of its funds shall be exempt from all and
every state, county, district, municipal and school tax, other than taxes
on real estate and office equipment. [1987 c.490 §24]ENFORCEMENT (1) The Director of the Department of Consumer
and Business Services, or any person the director may appoint, may
examine any domestic, foreign or alien society transacting or applying
for admission to transact business in this state in the same manner as
authorized for examination of domestic, foreign or alien insurers.
Requirements of notice and an opportunity to respond before findings are
made public as provided in the laws regulating insurers shall also be
applicable to the examination of societies.

(2) The expense of each examination and of each valuation,
including compensation and actual expense of examiners, shall be paid by
the society examined or whose certificates are valued, upon statements
furnished by the director. [1987 c.490 §29](1) The Director of the Department of Consumer
and Business Services shall notify the society of any deficiency or
deficiencies, and state in writing the reasons for dissatisfaction, when
the director, upon investigation, finds that a domestic society:

(a) Has exceeded its powers;

(b) Has failed to comply with any provisions of this chapter;

(c) Is not fulfilling its contracts in good faith;

(d) Has a membership of less than 400 after an existence of one
year or more;

(e) Is conducting business fraudulently or in a manner hazardous to
its members, creditors, the public or the business; or

(f) Has become impaired.

(2) The director shall at once issue a written notice to the
society requiring that the deficiency or deficiencies be corrected. After
notice, the society shall have 30 days in which to comply with the
director’s request for correction, and if the society fails to comply,
the director shall notify the society of findings of noncompliance and
require the society to show cause on a date named why it should not be
enjoined from carrying on any business until the violation complained of
has been corrected, or why an action in quo warranto should not be
commenced against the society.

(3) If on the date named the society does not present good and
sufficient reasons why it should not be enjoined or why the action should
not be commenced, the director may present the facts relating thereto to
the Attorney General who shall, if the Attorney General deems the
circumstances warrant, commence an action to enjoin the society from
transacting business or an action in quo warranto.

(4) The court shall notify the officers of the society of a
hearing. If after a full hearing it appears that the society should be
enjoined or liquidated or a receiver appointed, the court shall enter the
necessary order. No society so enjoined shall have the authority to do
business until:

(a) The director finds that the violation complained of has been
corrected;

(b) The costs of the action have been paid by the society if the
court finds that the society was in default as charged;

(c) The court has dissolved its injunction; and

(d) The director has reinstated the certificate of authority.

(5) If the court orders the society liquidated, it shall be
enjoined from carrying on any further business, and the receiver of the
society shall proceed at once to take possession of the books, papers,
money and other assets of the society and, under the direction of the
court, proceed at once to close the affairs of the society and to
distribute its funds to those entitled to them.

(6) No action under this section shall be recognized in any court
of this state unless the action is brought by the Attorney General on
request of the director. Whenever a receiver is to be appointed for a
domestic society, the court shall appoint the director as the receiver.

(7) The provisions of this section relating to hearing by the
director, action by the Attorney General at the request of the director,
hearing by the court, injunction and receivership shall be applicable to
a society which voluntarily determines to discontinue business. [1987
c.490 §31](1) The Director of
the Department of Consumer and Business Services shall notify the society
of any deficiency or deficiencies, and state in writing the reasons for
dissatisfaction, when the director, upon investigation, finds that a
foreign or alien society transacting or applying to transact business in
this state:

(a) Has exceeded its powers;

(b) Has failed to comply with any of the provisions of this chapter;

(c) Is not fulfilling its contracts in good faith; or

(d) Is conducting its business fraudulently or in a manner
hazardous to its members, creditors or the public.

(2) The director shall at once issue a written notice to the
society requiring that the deficiency or deficiencies be corrected. After
notice, the society shall have 30 days in which to comply with the
director’s request for correction, and if the society fails to comply,
the director shall notify the society of findings of noncompliance and
require the society to show cause on a date named why its certificate of
authority should not be suspended, revoked or refused. If on the named
date the society does not present good and sufficient reason why its
certificate of authority should not be suspended, revoked or refused, the
director may suspend or refuse the certificate of authority until
satisfactory evidence is furnished to the director that the suspension or
refusal should be withdrawn or the director may revoke the certificate of
authority of the society.

(3) Nothing contained in this section shall be taken or construed
as preventing any foreign or alien society from continuing in good faith
all contracts made in this state during the time the foreign or alien
society was legally authorized to transact business as provided in this
chapter. [1987 c.490 §32; 1991 c.182 §15] No application or
petition for injunction against any domestic, foreign or alien society,
or lodge thereof, shall be recognized in any court of this state unless
made by the Attorney General upon request of the Director of the
Department of Consumer and Business Services. [1987 c.490 §33]EXEMPTIONS; RELATION TO OTHER LAW (1) Except as provided in
subsection (2) of this section, nothing contained in this chapter shall
be so construed as to affect or apply to:

(a) Grand or subordinate lodges of orders, societies or
associations doing business in this state that provide benefits
exclusively through local or subordinate lodges;

(b) Orders, societies or associations that admit to membership only
persons engaged in one or more crafts or hazardous occupations, in the
same or similar lines of business, insuring only their own members and
their families, and the ladies’ societies or ladies’ auxiliaries to such
orders, societies or associations;

(c) Domestic societies that limit their membership to employees of
a particular city or town, designated firm, business house or corporation
that provide for a death benefit of not more than $400 or disability
benefits of not more than $350 to any person in any one year, or both; or

(d) Domestic societies or associations of a purely religious,
charitable or benevolent description, that provide for a death benefit of
not more than $400 or for disability benefits of not more than $350 to
any one person in any one year, or both.

(2) No society or association described in subsection (1)(c) or (d)
of this section that provides for death or disability benefits for which
benefit certificates are issued, and no society or association included
in subsection (1)(d) of this section that has more than 1,000 members,
shall be exempted from the provisions of this chapter. Any society or
association described in this subsection shall comply with all
requirements of this chapter.

(3) No order, society or association that, by the provisions of
this section, is exempt from the requirements of this chapter, except an
order, society or association described in subsection (1)(b) of this
section, shall give or allow, or promise to give or allow to any person
any compensation for procuring new members.

(4) Every society that provides for benefits in case of death or
disability resulting solely from accident, and that does not obligate
itself to pay natural death or sick benefits, shall have all of the
privileges and be subject to all the applicable provisions and
regulations of this chapter except that the provisions relating to
medical examination, valuations of benefit certificates and
incontestability, shall not apply to the society.

(5) The Director of the Department of Consumer and Business
Services may require from any society or association, by examination or
otherwise, any information enabling the commissioner to determine whether
the society or association is exempt from the provisions of this chapter.

(6) Societies exempted under the provisions of this section are
also exempt from all other provisions of the insurance laws of this state
except as provided in ORS 731.042. [1987 c.490 §44; 1991 c.182 §16; 2003
c.802 §176] (1) Societies are
governed by this chapter and are exempt from all other provisions of the
insurance laws of this state unless expressly designated therein, or
unless specifically made applicable by this chapter.

(2) ORS 705.137, 705.139, 731.004 to 731.026, 731.036 to 731.136,
731.146 to 731.156, 731.162, 731.166, 731.170, 731.216 to 731.268,
731.296, 731.324, 731.328, 731.354, 731.356, 731.358, 731.378, 731.380,
731.381, 731.382, 731.385, 731.386, 731.390, 731.394, 731.396, 731.398,
731.402, 731.406, 731.410, 731.422 to 731.434, 731.446 to 731.454,
731.488, 731.504, 731.508, 731.509, 731.510, 731.511, 731.512, 731.592,
731.594, 731.730, 731.731, 731.735, 731.737, 731.750, 731.804, 731.844 to
731.992, 732.245, 732.250, 732.320, 732.325, 733.010 to 733.050, 733.080,
733.140 to 733.210, 733.220, 733.510, 733.652 to 733.658, 733.730 to
733.750, 735.600 to 735.650, 742.001, 742.003, 742.005, 742.007, 742.009,
742.013 to 742.021, 742.028, 742.038, 742.041, 742.046, 742.051, 742.150
to 742.162 and 744.700 to 744.740 and ORS chapters 734 and 743 shall
apply to fraternal benefit societies to the extent so applicable and not
inconsistent with the express provisions of this chapter.

(3) For the purposes of this subsection and subsection (2) of this
section, fraternal benefit societies shall be deemed insurers, and
benefit certificates issued by fraternal benefit societies shall be
deemed policies.

(4) Every society authorized to do business in this state shall be
subject to the provisions of ORS chapter 746 relating to unfair trade
practices. However, nothing in ORS chapter 746 shall be construed as
applying to or affecting the right of any society to determine its
eligibility requirements for membership, or be construed as applying to
or affecting the offering of benefits exclusively to members or persons
eligible for membership in the society by a subsidiary corporation or
affiliated organization of the society. [1987 c.490 §§25,35,45; 1987
c.739 §4a; 1987 c.838 §15a; 1989 c.255 §12; 1989 c.474 §3; 1989 c.1022
§10; 1991 c.182 §17; 1991 c.401 §32; 1991 c.673 §7; 1991 c.812 §23; 1993
c.447 §117; 1995 c.30 §12; 1995 c.638 §8; 1999 c.633 §6; 2001 c.377 §19;
2003 c.802 §177]Insurance issued or delivered by a
fraternal benefit society against the risk of economic loss assumed under
a less than fully insured employee health benefit plan is subject to ORS
742.065. Such insurance is subject to ORS 748.603 but is otherwise not
subject to the provisions of ORS chapter 748. [1993 c.649 §4]PENALTIES (1) Any person who willfully makes a false or
fraudulent statement in or relating to an application for membership, or
for the purpose of obtaining money from or a benefit in any society,
shall upon conviction be fined not less than $100 nor more than $500,
imprisoned in the county jail for not less than 30 days nor more than one
year, or both.

(2) Any person who willfully makes a false or fraudulent statement
in any verified report or declaration under oath required or authorized
by this chapter, or of any material fact or thing contained in a sworn
statement concerning the death or disability of an insured for the
purpose of procuring payment of a benefit named in the certificate, shall
be guilty of perjury and shall be subject to the penalties prescribed by
law.

(3) Any person who solicits membership for, or in any manner
assists in procuring membership in, any society not licensed to do
business in this state commits a Class C violation.

(4) Any person guilty of a willful violation of, or neglect or
refusal to comply with, the provisions of this chapter for which a
penalty is not otherwise prescribed, commits a Class C violation. [1987
c.490 §43; 1999 c.1051 §222]

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