As Reported by the House Insurance Committee

129th General Assembly Regular Session 2011-2012

Sub. H. B. No. 341

Representative Henne 

Cosponsors: Representatives Blair, Schuring, Stebelton, Hackett, Foley, Sears, Hottinger 

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A BILL

To amend sections 3903.81, 3921.10, 3921.13, 3921.19,

1

3921.22, 3921.28, 3921.29, 3921.30, 3921.31, and

2

3921.33, to enact new section 3921.35 and sections

3

3921.101 and 3921.191 and to repeal section

4

3921.35 of the Revised Code to make changes to the

5

law regulating fraternal benefit societies.

6

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1.  That sections 3903.81, 3921.10, 3921.13, 3921.19,	7
3921.22, 3921.28, 3921.29, 3921.30, 3921.31, and 3921.33 be	8
amended and new section 3921.35 and sections 3921.101 and 3921.191	9
of the Revised Code be enacted to read as follows:	10

Sec. 3903.81.  As used in sections 3903.81 to 3903.93 of the	11
Revised Code:	12

(A) "Adjusted RBC report" means an RBC report that has been	13
adjusted by the superintendent of insurance in accordance with	14
division (C) of section 3903.82 of the Revised Code.	15

(B) "Authorized control level RBC" means the number	16
determined under the risk-based capital formula in accordance with	17
the RBC instructions.	18

(C) "Company action level RBC" means the product of 2.0 and	19
an insurer's authorized control level RBC.	20

(D) "Corrective order" means an order issued by the	21
superintendent of insurance in accordance with division (B)(3) of	22
section 3903.84 of the Revised Code specifying corrective actions	23
that the superintendent has determined are required.	24

(E) "Domestic insurer" means any insurance company organized	25
under Chapter 3907. or 3925. of the Revised Code.	26

(F) "Foreign insurer" means any insurance company licensed	27
under section 3909.01 or 3927.01 of the Revised Code.	28

(G) "Life or health insurer" means any insurance company	29
licensed under section 3907.08 or 3909.01 of the Revised Code, or	30
a company possessing a certificate of authority pursuant to	31
section 3929.01 of the Revised Code that writes only accident and	32
health insurance, or a fraternal benefit society licensed under	33
Chapter 3921. of the Revised Code.	34

(H) "Mandatory control level RBC" means the product of .70	35
and an insurer's authorized control level RBC.	36

(I) "NAIC" means the national association of insurance	37
commissioners.	38

(J) "Negative trend" means a negative trend over a period of	39
time for a life or health insurer as determined in accordance with	40
the trend test calculation included in the RBC instructions.	41

(K) "Property and casualty insurer" means any insurance	42
company that has a certificate of authority pursuant to section	43
3929.01 of the Revised Code. "Property and casualty insurer" does	44
not include monoline mortgage guarantee insurers, financial	45
guarantee insurers, or title insurers.	46

(L) "RBC" means risk-based capital.

47

(M) "RBC instructions" means the RBC report, including	48
risk-based capital instructions, as adopted by the NAIC and as	49
amended by the NAIC from time to time in accordance with the	50
procedures adopted by the NAIC. "RBC instructions" shall also	51
include any modifications adopted by the superintendent, as the	52
superintendent considers to be necessary.	53

(N) "RBC level" means an insurer's company action level RBC,	54
regulatory action level RBC, authorized control level RBC, or	55
mandatory control level RBC.	56

(O) "RBC plan" means a comprehensive financial plan	57
containing the elements specified in division (B) of section	58
3903.83 of the Revised Code.	59

(P) "Revised RBC plan" means an RBC plan rejected by the	60
superintendent of insurance and then revised by an insurer with or	61
without incorporating the superintendent of insurance's	62
recommendation.	63

(Q) "RBC report" means the report required by section 3903.82	64
of the Revised Code.	65

(R) "Regulatory action level RBC" means the product of 1.5	66
and an insurer's authorized control level RBC.	67

(S) "Total adjusted capital" means the sum of both of the	68
following:	69

(1) An insurer's statutory capital and surplus as determined	70
in accordance with the statutory accounting applicable to the	71
annual statements prepared on a form adopted under section 3901.77	72
of the Revised Code, as required to be filed by sections 3907.19,	73
3909.06, and 3929.30 of the Revised Code;	74

(2) Such other items, if any, as the RBC instructions may	75
provide.	76

Sec. 3921.10.  A domestic fraternal benefit society organized	77
on or after January 1, 1997, shall be formed as follows:	78

(A) Seven or more citizens of the United States, a majority	79
of whom are residents of this state, who desire to form a	80
fraternal benefit society, may make, sign, and acknowledge before	81
some officer competent to take acknowledgement of deeds, articles	82
of incorporation stating all of the following:	83

(1) The proposed corporate name of the society, which name	84
shall not so closely resemble the name of any society or insurance	85
company as to be misleading or confusing;	86

(2) The purposes for which it is being formed and the mode in	87
which its corporate powers are to be exercised. Such purposes	88
shall not include more liberal powers than are granted by this	89
chapter.	90

(3) The names and residences of the incorporators and the	91
names, residences, and official titles of all the officers,	92
trustees, directors, or other persons who are to have and exercise	93
the general control of the management of the affairs and funds of	94
the society for the first year or until the ensuing election at	95
which all such officers shall be elected by the supreme governing	96
body, which election shall be held not later than one year from	97
the date of the issuance of the permanent certificate of	98
authority.	99

(B) The articles of incorporation, duly certified copies of	100
the society's bylaws and rules, copies of all proposed forms of	101
certificates, applications for certificates, and circulars to be	102
issued by the society, and a bond conditioned upon the return to	103
applicants of the advanced payments if the organization is not	104
completed within one year, shall be filed with the superintendent	105
of insurance, who may require any other information the	106
superintendent considers necessary. The bond with sureties	107
approved by the superintendent shall be in such amount, not less	108
than three hundred thousand dollars nor more than one million five	109
hundred thousand dollars, as required by the superintendent. All	110
documents filed shall be in the English language. If the purposes	111
of the society conform to the requirements of this chapter and all	112
provisions of the laws of this state have been complied with, the	113
superintendent shall so certify, retain and file the articles of	114
incorporation, and furnish the incorporators a preliminary	115
certificate of authority authorizing the society to solicit	116
members as provided in this section.	117

(C) No preliminary certificate of authority granted under	118
this section shall be valid after one year from its date or after	119
such additional period, not exceeding one year, as may be	120
authorized by the superintendent upon cause shown, unless the five	121
hundred applicants required in division (D) of this section have	122
been secured and the organization has been completed as provided	123
in this section. The articles of incorporation and all other	124
proceedings thereunder shall be void one year after the date of	125
the preliminary certificate of authority, or at the expiration of	126
the extended period, unless the society has completed its	127
organization and has received a certificate of authority to do	128
business as provided in division (E) of this section.	129

(D) Upon receipt of a preliminary certificate of authority	130
from the superintendent, the society may solicit members for the	131
purpose of completing its organization, shall collect from each	132
applicant the amount of not less than one regular monthly premium	133
in accordance with its table of rates, and shall issue to each	134
applicant a receipt for the amount so collected. No society shall	135
incur any liability other than for the return of such advance	136
premium, nor issue any certificate, nor pay, allow, or offer, or	137
promise to pay or allow, any benefit to any person until all of	138
the following apply:	139

(1) Actual bona fide applications for benefits have been	140
secured aggregating at least two million five hundred thousand	141
dollars on not less than five hundred applicants, and any	142
necessary evidence of insurability has been furnished to and	143
approved by the society.	144

(2) At least ten subordinate lodges have been established	145
into which the five hundred applicants have been admitted.	146

(3) There has been submitted to the superintendent, under	147
oath of the president or secretary, or corresponding officer of	148
the society, a list of such applicants, giving their names,	149
addresses, date each was admitted, name and number of the	150
subordinate lodge of which each applicant is a member, amount of	151
benefits to be granted, and premiums for the benefits.	152

(4) It has been shown to the superintendent, by sworn	153
statement of the treasurer, or corresponding officer of the	154
society, that at least five hundred applicants have each paid in	155
cash at least one regular monthly premium as provided in this	156
section, which premiums in the aggregate amount to at least one	157
hundred fifty thousand dollars, all of which is credited to the	158
fund or funds from which benefits are to be paid and no part of	159
which may be used for expenses. These advance premiums shall be	160
held in trust during the period of organization and if the society	161
has not qualified for a certificate of authority within one year,	162
as provided in this section, the premiums shall be returned to the	163
applicants.	164

(E) The superintendent may make such examination and require	165
such further information as the superintendent considers	166
advisable. Upon presentation of satisfactory evidence that the	167
society has complied with all the provisions of law including the	168
surplus requirements of section 3921.101 of the Revised Code, the	169
superintendent shall issue to the society a certificate of	170
authority to that effect and that the society is authorized to	171
transact business pursuant to the provisions of this chapter. The	172
certificate of authority shall be prima facie evidence of the	173
existence of the society at the date of the certificate. The	174
superintendent shall cause a record of the certificate of	175
authority to be made. A certified copy of the record may be given	176
in evidence with like effect as the original certificate of	177
authority.	178

(F) An incorporated society that was organized prior to	179
January 1, 1997, and that, as of December 31, 1996, is authorized	180
to transact business in this state shall not be required to	181
reincorporate, and may exercise all the rights, powers, and	182
privileges conferred in this chapter and in the society's articles	183
of incorporation to the extent that the articles are consistent	184
with this chapter.	185

Sec. 3921.101.  (A)(1) On and after January 1, 2016, a	186
fraternal benefit society that provides the contractual benefits	187
listed in division (A)(1) of section 3921.16 of the Revised Code	188
in this state in a benefit amount of greater than five thousand	189
dollars shall have and maintain a surplus of two million five	190
hundred thousand dollars for all lines written.	191

(2) On and after January 1, 2016, a fraternal benefit society	192
that provides the contractual benefits listed in division (A)(1)	193
of section 3921.16 of the Revised Code in this state in a benefit	194
amount of five thousand dollars or less shall have and maintain a	195
surplus of five hundred thousand dollars.	196

(B)(1) On and after January 1, 2016, a fraternal benefit	197
society that provides the contractual benefits listed in division	198
(A)(2) of section 3921.16 of the Revised Code in this state in a	199
benefit amount of greater than five thousand dollars shall have	200
and maintain a surplus of two million five hundred thousand	201
dollars for all lines written.	202

(2) On and after January 1, 2016, a fraternal benefit society	203
that provides the contractual benefits listed in division (A)(2)	204
of section 3921.16 of the Revised Code in this state in a benefit	205
amount of five thousand dollars or less shall have and maintain a	206
surplus of five hundred thousand dollars.	207

(C)(1) On and after January 1, 2016, a fraternal benefit	208
society that provides the contractual benefits listed in division	209
(A)(3) of section 3921.16 of the Revised Code in this state in a	210
benefit amount of greater than five thousand dollars shall have	211
and maintain a surplus in the aggregate of two million five	212
hundred thousand dollars for all lines written.	213

(2) On and after January 1, 2016, a fraternal benefit society	214
that provides the contractual benefits listed in division (A)(3)	215
of section 3921.16 of the Revised Code in this state in a benefit	216
amount of five thousand dollars or less shall have and maintain a	217
surplus of five hundred thousand dollars.	218

(D) On and after January 1, 2016, a fraternal benefit society	219
that provides the contractual benefits listed in division (A)(4)	220
of section 3921.16 of the Revised Code in this state shall have	221
and maintain a surplus of two million five hundred thousand	222
dollars for all lines written.	223

(E) On and after January 1, 2016, a fraternal benefit society	224
that provides the contractual benefits listed in division (A)(5)	225
of section 3921.16 of the Revised Code in this state shall have	226
and maintain a surplus of two million five hundred thousand	227
dollars for all lines written.	228

(F) On and after January 1, 2016, a fraternal benefit society	229
that provides the contractual benefits listed in division (A)(6)	230
of section 3921.16 of the Revised Code in this state shall have	231
and maintain a surplus of five hundred thousand dollars.	232

(G) On and after January 1, 2016, a fraternal benefit society	233
that provides the contractual benefits listed in division (A)(7)	234
of section 3921.16 of the Revised Code in this state shall have	235
and maintain a surplus of two million five hundred thousand	236
dollars for all lines written.	237

(H) The surplus requirements of this section are not	238
cumulative. A society with a surplus of at least two million five	239
hundred thousand dollars on and after January 1, 2016, satisfies	240
the surplus requirements of this section.	241

Sec. 3921.13.  (A) A domestic fraternal benefit society may,	242
by a reinsurance agreement, cede any individual risk or risks in	243
whole or in part to an insurer, other than another fraternal	244
benefit society, having the power to make such reinsurance and	245
authorized to do business in this state, or if not so authorized,	246
one which is approved by the superintendent of insurance; however,	247
no society may reinsure substantially all of its insurance in	248
force without the written permission of the superintendent. It may	249
take credit for the reserves on the ceded risks to the extent	250
reinsured, but no credit shall be allowed as an admitted asset or	251
as a deduction from liability, to a ceding society for reinsurance	252
made, ceded, renewed, or otherwise becoming effective after	253
January 1, 1997, unless the reinsurance is payable by the assuming	254
insurer on the basis of the liability of the ceding society under	255
the contract or contracts reinsured without diminution because of	256
the insolvency of the ceding society.	257

(B) Notwithstanding division (A) of this section, a society	258
may reinsure the risks of another society in a consolidation or	259
merger approved by the superintendent under section 3921.14 of the	260
Revised Code.	261

(C) A society with assets of less than five billion dollars	262
that provides contract benefits of major medical, medicare	263
supplemental, or long-term care pursuant to division (A)(5) of	264
section 3921.16 of the Revised Code shall reinsure not less than	265
fifty per cent of the risk arising from those contracts if the	266
society's risk based capital is less than three hundred per cent.	267

Sec. 3921.19.  (A) Each fraternal benefit society authorized	268
to do business in this state shall issue to each owner of a	269
benefit contract a certificate specifying the amount of benefits	270
provided under the contract. The certificate, together with any	271
riders or endorsements attached to the certificate, the laws of	272
the society, the application for membership, the application for	273
insurance and declaration of insurability, if any, signed by the	274
applicant, and all amendments to each such document, constitute	275
the benefit contract, as of the date of issuance, between the	276
society and the owner, and the certificate shall so state. A copy	277
of the application for insurance and declaration of insurability,	278
if any, shall be endorsed upon or attached to the certificate.	279

All statements made on the application are representations	280
and not warranties. Any waiver of this provision is void.	281

(B) Any changes, additions, or amendments to the laws of the	282
society duly made or enacted subsequent to the issuance of the	283
certificate, shall bind the owner and the beneficiaries, and shall	284
govern and control the benefit contract in all respects the same	285
as though such changes, additions, or amendments had been made	286
prior to and were in force at the time of the application for	287
insurance, except that no change, addition, or amendment shall	288
destroy or diminish benefits that the society contracted to give	289
the owner as of the date of issuance.	290

(C) Any person upon whose life a benefit contract is issued	291
prior to attaining the age of majority shall be bound by the terms	292
of the application and certificate and by all of the laws and	293
rules of the society to the same extent as though the age of	294
majority had been attained at the time of application.	295

(D) A society shall provide in its laws that if its reserves	296
as to all or any class of certificates become impaired its board	297
of directors or corresponding body may require that there shall be	298
paid by the owner to the society the amount of the owner's	299
equitable proportion of such deficiency as ascertained by its	300
board, and that if the payment is not made, either of the	301
following applies:	302

(1) It shall stand as an indebtedness against the certificate	303
and draw interest not to exceed the rate specified for certificate	304
loans under the certificates;	305

(2) In lieu of or in combination with division (D)(1) of this	306
section, the owner may accept a proportionate reduction in	307
benefits under the certificate.	308

The society may specify the manner of the election and which	309
alternative is to be presumed if no election is made.	310

(E) At least thirty days prior to imposing any indebtedness	311
upon any owner as provided in division (D) of this section, the	312
board of directors or corresponding body shall notify the	313
superintendent of insurance in writing of the board's intent to	314
require the payment and a statement of the reason that request is	315
necessary. The notice shall be confidential and not a public	316
record under section 149.43 of the Revised Code.	317

(F)(1) Certificates that are delivered or issued for delivery	318
in this state on or after January 1, 1997, but prior to January 1,	319
1998, shall comply with the requirements that would have applied	320
under the laws in effect on December 31, 1996.	321

(2) No certificate shall be delivered or issued for delivery	322
in this state on or after January 1, 1998, unless a copy of the	323
form is filed with and approved by the superintendent of insurance	324
in accordance with the provisions of law applicable to like	325
policies issued by life or sickness and accident insurers in this	326
state.	327

(3) Each life, sickness and accident, or disability insurance	328
certificate, and each annuity certificate, that is delivered or	329
issued for delivery in this state on or after January 1, 1998,	330
shall comply with the standard contract provision requirements	331
applicable to like policies issued by life or sickness and	332
accident insurers in this state, if those requirements are not	333
inconsistent with this chapter. However, a society may provide in	334
its certificates for a grace period of one full month for payment	335
of premiums. A certificate shall also contain a provision that	336
states the amount of premiums that is payable under the	337
certificate and that sets forth the substance of any sections of	338
the society's laws or rules in force at the time of issuance of	339
the certificate which, if violated, will result in the termination	340
or reduction of benefits payable under the certificate. If the	341
laws of the society provide for the expulsion or suspension of a	342
member, the certificate shall also contain a provision stating	343
that any member expelled or suspended, except a member expelled or	344
suspended because of nonpayment of a premium, may maintain, other	345
than during the contestable period for material misrepresentation	346
in the application for membership or insurance, the certificate in	347
force by continuing payment of the required premium.	348

(F)(G) Benefit contracts issued on the lives of persons under	349
the society's minimum age for adult membership may provide for	350
transfer of control of ownership to the insured at an age	351
specified in the certificate. A society may require approval of an	352
application for membership in order to effect this transfer, and	353
may provide in all other respects for the regulation, government,	354
and control of such certificates and all rights, obligations, and	355
liabilities incident to and connected with such certificates.	356
Ownership rights prior to such a transfer shall be specified in	357
the certificate.	358

(G)(H) A society may specify the terms and conditions on	359
which benefit contracts may be assigned.	360

(H)(I) A copy of any of the documents described in this	361
section, if certified by the secretary or corresponding officer of	362
the society, is prima facie evidence of the terms and conditions	363
of the documents.	364

Sec. 3921.191.  (A) A fraternal benefit society shall provide	365
an applicant for insurance a disclosure statement at the time of	366
sale substantially as follows:	367

".......... (Name of the fraternal benefit society) IS	368
LICENSED TO DO BUSINESS IN THE STATE OF OHIO. AS A ........	369
(not-for-profit, tax-exempt, self-governing, or membership	370
organization), FRATERNAL BENEFIT SOCIETIES ARE NOT INCLUDED IN THE	371
OHIO GUARANTY ASSOCIATION. THIS MEANS THAT FRATERNAL BENEFIT	372
SOCIETIES CANNOT BE ASSESSED FOR THE INSOLVENCY OF OTHER LIFE	373
INSURERS OR OTHER FRATERNAL BENEFIT SOCIETIES. BY LAW, A FRATERNAL	374
BENEFIT SOCIETY IS RESPONSIBLE FOR ITS OWN SOLVENCY. IF THERE IS	375
AN IMPAIRMENT OF RESERVES, A CERTIFICATE HOLDER MAY BE ASSESSED A	376
PROPORTIONATE SHARE OF THE IMPAIRMENT. THIS PROCESS IS DESCRIBED	377
IN THE CERTIFICATE ISSUED BY THE SOCIETY."	378

(B) The statement must be signed by the applicant and	379
maintained in the certificate or contract file by the fraternal	380
benefit society. The statement may be part of the society's	381
membership application or certificate or policy application.	382

(C) This section is applicable only to new business written	383
by a fraternal benefit society after the effective date of this	384
section.	385

Sec. 3921.22.  (A) A fraternal benefit society shall hold,	386
invest, and disburse all assets for the use and benefit of the	387
society. No member or beneficiary shall have or acquire individual	388
rights to the assets, or be entitled to any apportionment on the	389
surrender of any part of the assets, except as provided in the	390
benefit contract.	391

(B) A society may create, maintain, invest, disburse, and	392
apply any special fund or funds necessary to carry out any purpose	393
permitted by the laws of the society. No society shall, directly	394
or indirectly, pay or use, or offer, consent, or agree to pay or	395
use, any of its funds, money, or property for or in aid of any	396
political party, campaign committee, political action committee,	397
continuing association, or any other political organization.	398

(C) A society may, pursuant to resolution of its supreme	399
governing body, establish and operate one or more separate	400
accounts and issue contracts on a variable basis, subject to the	401
provisions of law regulating life insurers that establish such	402
accounts and issue such contracts including those described in	403
section 3911.011 of the Revised Code. To the extent the society	404
considers it necessary in order to comply with any applicable	405
federal or state law, or any rule issued under that law, the	406
society may do any of the following:	407

(1) Adopt special procedures for the conduct of the business	408
and affairs of a separate account;	409

(2) For persons having beneficial interests in the account,	410
provide special voting and other rights, including special rights	411
and procedures relating to investment policy, investment advisory	412
services, selection of certified public accountants, and selection	413
of a committee to manage the business and affairs of the account;	414

(3) Issue contracts on a variable basis to which divisions	415
(B) and (D) of section 3921.19 of the Revised Code do not apply.	416

Sec. 3921.28.  (A)(1) Each domestic fraternal benefit society	417
and each applicant for a certificate of incorporation as a	418
domestic fraternal benefit society shall be subject to examination	419
by the superintendent of insurance in accordance with section	420
3901.07 of the Revised Code. Section 3901.07 of the Revised Code	421
shall govern every aspect of the examination, including the	422
circumstances under and frequency with which it is conducted, and	423
the authority of the superintendent and any examiner or other	424
person appointed by the superintendent.	425

(2)(a) A domestic fraternal benefit society shall be liable	426
for the payment of any additional expense of an examination	427
resulting from unreasonable delays by the society in fulfilling a	428
request for documents or information by the examiner conducting	429
the examination. A delay is deemed unreasonable if the examiner	430
has made two separate unfulfilled requests for the same documents	431
or information. A request for records or information from an	432
examiner shall allow the fraternal benefit society a minimum of	433
ten business days to fulfill the request.	434

(b) In the event of an unreasonable delay, the examiner shall	435
notify the superintendent, who shall set a hearing, under Chapter	436
119. of the Revised Code, to determine if there has been an	437
unreasonable delay because of the fraternal benefit society's	438
response to a request for documents or information and to	439
calculate the additional expense incurred by the superintendent as	440
a result of the unreasonable delay.	441

(3) A summary of the examination of the superintendent and	442
any recommendations or statements of the superintendent that	443
accompany the report, shall be read at the first meeting of the	444
board of directors or corresponding body of the society following	445
the receipt thereof, and if directed so to do by the	446
superintendent, shall also be read at the first meeting of the	447
supreme legislative or governing body of the society following the	448
receipt thereof. A copy of the report, recommendations, and	449
statements of the superintendent shall be furnished by the society	450
to each member of the board of directors or other governing body.	451

(B) Each foreign or alien fraternal benefit society	452
transacting or applying for admission to transact business in this	453
state shall be subject to examination by the superintendent in	454
accordance with section 3901.07 of the Revised Code. Section	455
3901.07 of the Revised Code shall govern every aspect of the	456
examination, including the circumstances under and frequency with	457
which it is conducted, the authority of the superintendent and any	458
examiner or other person appointed by the superintendent, the	459
liability for the assessment of expenses incurred in conducting	460
the examination, and the remittance of the assessment to the	461
superintendent's examination fund.	462

Sec. 3921.29.  No foreign or alien fraternal benefit society	463
shall transact business in this state without a license issued by	464
the superintendent of insurance. Any such society may be licensed	465
to transact business in this state upon filing all of the	466
following with the superintendent:	467

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

468

(B) A copy of its bylaws certified by its secretary or	469
corresponding officer;	470

(C) A power of attorney to the superintendentwritten	471
appointment of an agent as prescribed in section 3921.35 of the	472
Revised Code;	473

(D) A statement of its business made under oath of its	474
president and secretary or corresponding officers in a form	475
prescribed by the superintendent and duly verified by an	476
examination made by the supervising insurance official of its	477
state of domicile or of any other state, district, territory,	478
province, or country, which examination is satisfactory to the	479
superintendent;	480

(E) Certification from the proper official of its state,	481
district, territory, province, or country of domicile that the	482
society is legally incorporated and licensed to transact business	483
in that state, district, territory, province, or country;	484

(F) Copies of its certificate forms;

485

(G) A description of its investments that shows that its	486
assets are invested in accordance with this chapter;	487

(H) Any other information the superintendent considers	488
necessary.	489

Sec. 3921.30. (A) If the superintendent of insurance finds,	490
upon investigation, that a domestic fraternal benefit society has	491
exceeded its powers, has failed to comply with any provision of	492
this chapter, is not fulfilling its contracts in good faith, has a	493
membership of less than four hundred after an existence of one	494
year or more, or is conducting business fraudulently or in a	495
manner hazardous to its members, creditors, the public, or the	496
business, the superintendent shall issue a written notice to the	497
society that sets forth the deficiency and the reasons for the	498
superintendent's dissatisfaction, and that requires the society to	499
correct the deficiency within thirty days after receipt of the	500
notice. If the society fails to correct the deficiency within that	501
thirty-day period, the superintendent shall notify the society of	502
its failure to correct the deficiency and shall require the	503
society to show cause on a date named why it should not be	504
enjoined from carrying on any business until the violation	505
complained of has been corrected, or why an action in quo warranto	506
should not be commenced against the society.	507

If on that date the society does not present good and	508
sufficient reasons why it should not be enjoined or why such	509
action should not be commenced, the superintendent may present the	510
facts relating thereto to the attorney general. If the attorney	511
general determines that the circumstances warrant, the attorney	512
general shall commence an action to enjoin the society from	513
transacting business or in quo warranto.	514

The court shall thereupon notify the officers of the society	515
of a hearing. If after a full hearing it appears that the society	516
should be enjoined or liquidated or a receiver appointed, the	517
court shall enter the necessary order.	518

(B) A society enjoined pursuant to division (A) of this	519
section shall not have the authority to do business until all of	520
the following occur:	521

(1) The superintendent finds that the violation complained of	522
has been corrected.	523

(2) The costs of the action have been paid by the society if	524
the court finds that the society was in default as charged.	525

(3) The court has dissolved its injunction.

526

(4) The superintendent has reinstated the certificate of	527
authority.	528

(C) If the court orders the society liquidated, the society	529
shall be enjoined from carrying on any further business, whereupon	530
the receiver of the society shall proceed at once to take	531
possession of the books, papers, money, and other assets of the	532
society and, under the direction of the court, shall close the	533
affairs of the society and distribute its funds to those entitled	534
to them.	535

(D) No action under this section shall be recognized in any	536
court of this state unless brought by the attorney general upon	537
request of the superintendent. Whenever a receiver is to be	538
appointed for a domestic society, the court shall appoint the	539
superintendent as the receiver.	540

(E) The provisions of this section relating to a hearing by	541
the superintendent, action by the attorney general at the request	542
of the superintendent, hearing by the court, injunction, and	543
receivership shall apply to any society that voluntarily	544
determines to discontinue business.	545

(F) Nothing in this section shall be construed as preventing	546
the lodges and members of a society from commencing a civil action	547
against a society for the enforcement of a contract provision or	548
for the resolution of a dispute concerning an interpretation of	549
the society's laws, which action is not based on the	550
superintendent's exercise of authority under this section. A	551
society shall not prohibit a lodge or member from commencing such	552
commence an action against itthe society under sections 3903.01	553
to 3903.59 of the Revised Code.	554

Sec. 3921.31. (A) If the superintendent of insurance finds,	555
upon investigation, that a foreign or alien fraternal benefit	556
society transacting or applying to transact business in this state	557
has exceeded its powers, has failed to comply with any provision	558
of this chapter, is not fulfilling its contracts in good faith, or	559
is conducting its business fraudulently or in a manner hazardous	560
to its members or creditors or the public, the superintendent	561
shall issue a written notice to the society that sets forth the	562
deficiency and the reasons for the superintendent's	563
dissatisfaction, and that requires the society to correct the	564
deficiency within thirty days after receipt of the notice. If the	565
society fails to correct the deficiency within that thirty-day	566
period, the superintendent shall notify the society of its failure	567
to correct the deficiency and shall require the society to show	568
cause on a date named why its license should not be suspended,	569
revoked, or refused.	570

If on that date the society does not present good and	571
sufficient reason why its authority to do business in this state	572
should not be suspended, revoked, or refused, the superintendent	573
may suspend or refuse the license of the society to do business in	574
this state until satisfactory evidence is furnished to the	575
superintendent that the suspension or refusal should be withdrawn,	576
or the superintendent may revoke the authority of the society to	577
do business in this state.	578

(B) Nothing in this section shall be construed as preventing	579
any foreign or alien society from continuing in good faith all	580
contracts made in this state during the time the society was	581
legally authorized to transact business in this statecommence an	582
action against the society under section 3903.71 of the Revised	583
Code.	584

Sec. 3921.33.  (A) Agents of fraternal benefit societies	585
shall be licensed in the manner provided for agents of insurance	586
companies in Chapter 3905. of the Revised Code, and shall be	587
required to complete continuing education as set forth in section	588
3905.481 of the Revised Code starting with the twenty-four-month	589
period commencing on the first day of January of 1999. However, no	590
written or other examination shall be required of any person whose	591
application for the original issuance of a license to represent a	592
fraternal benefit society as its agent was filed with the	593
superintendent of insurance prior to January 1, 1997.	594

(B) The following persons shall not be required to be	595
licensed in accordance with division (A) of this section:	596

(1) Any regularly salaried officer, employee, or member of a	597
licensed society who devotes substantially all of the person's	598
services to activities other than the solicitation of fraternal	599
insurance contracts from the public, and who receives for the	600
solicitation of any such contracts no commission or other	601
compensation directly dependent upon the amount of business	602
obtained.	603

The officers, employees, and members described in division	604
(B)(1) of this section also are not subject to examination by the	605
superintendent under Chapter 3905. of the Revised Code.	606

(2) Any agent or representative of a society who devotes, or	607
intends to devote, less than fifty per cent of the person's time	608
to the solicitation and procurement of insurance contracts for the	609
society. For purposes of division (B)(2) of this section, any	610
person who, in the preceding calendar year, has received a	611
commission or other compensation for soliciting and procuring any	612
of the following contracts on behalf of an individual society is	613
presumed to have devoted, or to have intended to devote, fifty per	614
cent of the person's time to the solicitation and procurement of	615
insurance contracts:	616

(a) Life insurance contracts that, in the aggregate, exceeded	617
two hundred thousand dollars of coverage for all lives insured for	618
the preceding calendar year;	619

(b) A permanent life insurance contract offering more than	620
ten thousand dollars of coverage on an individual life;	621

(c) A term life insurance contract offering more than fifty	622
thousand dollars of coverage on an individual life;	623

(d) Any insurance contracts other than life that the society	624
may write and that insure the individual lives of more than	625
twenty-five individuals;	626

(e) Any contract issued on a variable basis, as authorized by	627
division (C) of section 3921.22 of the Revised Code.	628

(C) Notwithstanding division (B) of this section, any person	629
selling an annuity contract under the authority of division (A)(3)	630
of section 3921.16 of the Revised Code shall be licensed pursuant	631
to Chapter 3905. of the Revised Code.	632

Sec. 3921.35.  (A) Any fraternal benefit society authorized	633
to transact business in this state shall have and maintain an	634
agent upon whom may be served any process, notice, or demand	635
required or permitted by law to be served upon a society.	636

The agent required under this section may be a natural person	637
residing in this state or a corporation holding a license under	638
the laws of this state that is authorized by its articles of	639
incorporation to act as an agent and that maintains a business	640
address in this state. A statutory agent is not required to be a	641
licensed insurance agent.	642

(B) The written appointment of an agent shall be in the form	643
the superintendent of insurance prescribes and may include a	644
consent to service of process.	645

The appointment shall set forth the name and complete address	646
of the agent. The agent shall reside or maintain a business	647
address within this state.	648

(C) The superintendent shall keep a record of the fraternal	649
benefit societies transacting business in this state and the name	650
and address of their respective agents.	651

(D)(1) If any agent dies, moves out of the state, or resigns,	652
the society immediately shall appoint another agent and file with	653
the superintendent a written appointment as described in division	654
(B) of this section.	655

(2) If an agent changes the agent's address, the society or	656
agent immediately shall notify the superintendent of the change,	657
and shall set forth the agent's new address, on a form prescribed	658
by the superintendent.	659

(E) An agent may resign by filing with the superintendent a	660
written notice signed by the agent. The agent shall send a copy of	661
the notice to the society at the current or last known address of	662
the society's principal office prior to the date the notice is	663
filed with the superintendent.	664

The notice required under this division shall set forth the	665
society's name, the current or last known address of the society,	666
the name and address of the agent, the resignation of the agent,	667
and a statement that a copy of the notice has been sent to the	668
society and the date the copy was sent.	669

The agent's authority to represent the fraternal benefit	670
society shall terminate thirty days after the notice is filed with	671
the superintendent under this division.	672

(F) A society may revoke the appointment of an agent by	673
filing with the superintendent a written appointment of another	674
agent and a statement that the appointment of the former agent is	675
revoked. The authority of the agent whose appointment has been	676
revoked shall terminate thirty days after the notice required	677
under this division is filed with the superintendent.	678

(G) Any process, notice, or demand required or permitted by	679
law to be served upon a society may be served by delivering a copy	680
of the process, notice, or demand to the agent of record at the	681
address appearing in the superintendent's records.	682

If the agent cannot be found, the agent no longer has that	683
address, or the society has failed to maintain an agent as	684
required by this section, the party desiring that the process,	685
notice, or demand be served, or its agent, may file with the	686
superintendent an affidavit stating that one of the foregoing	687
conditions exists and stating the most recent address of the	688
society that the party, after diligent search, has been able to	689
ascertain.	690

Upon the filing of the affidavit, service of process, notice,	691
or demand may be initiated upon the superintendent as the	692
society's agent by delivering two copies of the process, notice,	693
or demand to the superintendent. The superintendent shall give	694
notice to the society at its principal office as shown in the	695
superintendent's records or at the address set forth in the	696
affidavit. The superintendent shall give notice by regular mail	697
with a copy of the process, notice, or demand enclosed. After the	698
superintendent has mailed the appropriate documents, service upon	699
the society is deemed complete.	700

(H) The superintendent shall keep a record of each process,	701
notice, and demand delivered to the superintendent under division	702
(G) of this section or any other law of this state that authorizes	703
service upon the superintendent.	704

(I) This section does not limit or affect the right to serve	705
any process, notice, or demand upon a society in any other manner	706
permitted by law.	707

(J) A society shall include a fee of five dollars with any	708
change of agent appointment or change of address. This division	709
does not apply to an agent appointment filed with an original	710
application for a certificate of authority.	711

(K) If a society fails to appoint or maintain an agent or to	712
notify the superintendent of an agent's change of address, the	713
superintendent shall provide notice of that failure to the society	714
by certified mail. If the society does not remedy the society's	715
failure within thirty days after the date of the mailing of the	716
notice or within any additional time the superintendent allows,	717
the superintendent shall fine the society not less than	718
twenty-five dollars nor more than two hundred dollars per	719
violation. The superintendent also may charge a society a	720
fifty-dollar fee for each time the superintendent is required to	721
give notice to the society in accordance with division (G) of this	722
section.	723

(L) The superintendent shall pay all moneys collected by the	724
superintendent in accordance with this section into the state	725
treasury to the credit of the department of insurance operating	726
fund.	727

Section 2.  That existing sections 3903.81, 3921.10, 3921.13,	728
3921.19, 3921.22, 3921.28, 3921.29, 3921.30, 3921.31, and 3921.33	729
and section 3921.35 of the Revised Code are hereby repealed.	730

Section 3. Section 1 and 2 of this act shall take effect	731
January 1, 2013.	732