Insurance laws of the State of Georgia, 1955

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FOREWORD
This volume contains the laws of the State of Georgia enacted up to and including the year 1953, relating to insurance, insurance companies, insurance agents, fraternal benefit societies, non-profit hospital service associations and non-profit medical service associations as they appear in the combined edition of Title 56 of the Code of Georgia Annotated published by Harrison Publishing Company. This volume also contains an appendix in which is published selected sections relating to insurance companies, their agents and adjusters, and to insurance generally, not published in Title 56 but taken from other parts of Harrison's Annotated Code. Recognition and appreciation is extended to Harrison Publishing Company for the privilege of printing herein its editorial notes to the yarious sections.
As a supplement to the foregoing this work also contains the general acts relating to insurance enacted at the January-February (1955) session of the legislature of Georgia.

TITLE 56.

INSURANCE.

Chap.

56- 1. Insurance Department

_

Sec.

_.._

_ 56-101

56- 2. Incorporation, powers, duties, etc., of insurance companies in

general

_

_

56-201

56- 3. Deposits by companies doing business in State

56-301

56- 4. License to do business

56-401

56- 4A. Unfair trade practices 56- 5. Agents and solicitors 56- 5A. Excess fire or casualty insurance agents

56-401a

_ _ _ 56-501

__ _

_ 56-501a

56- 5B. Licensing of life, health, and accident insUl'ance agents _ _._ 56-501b

56- 6. Actions against insUl'ance companies

_ _ _ 56-601

56- 6A. Unauthorized Insurers Process Act. _ _

_ __._._

56-601a

56- 7. Amount of recovery and damages _ _._..__ _ _ _ _ _ 56-701

56- 8. Fire insurance

_ _ _ _ _._ _

_._ _ _.._ _._ _ 56-801

56- 9. Life insurance

_ _.._ _ _ _ _._.._ _ _ _ _ __._ _56-901

56-10. Accident liability and casualty insurance_._

_ _.. _ 56-1001

56-11. Fidelity insurance

_ _ 56-1101

56-12. Marine insurance

_.._ _ 56-1201

56-13. Industrial life, accident, and health insurance

_

56-1301

56-14. Mutual or cooperative insurance. Burglary and robbery insurance 56-1401

56-15. Assessment insurance companies

56-1501

56-16. Fraternal benefit societies

56-1601

56-16A. Conversion of fraternal benefit societies into stock of

mutual companies

56-1601a

56-17. Fraternal beneficiary orders

_

_

(Repealed)

56-18. Cooperative insurance exchanges _

__

56-1801

56-19. Title insurance

_ _ _ __ __. ..56-1901

56-20. Regulation of rate making for casualty, fidelity, and

motor vehicle insurance _

__.._.._ _ __

_ 56-2001

56-21. Regulation of rate making for fire, marine, and

inland marine insurance

__

_ __ _ _ __.._ 56-2101

56-22. Uniform Insurers Liquidation AcL

_ __

_ _..__.._ _.._.56-2201

56-23. Group insurance of public employees _ _

_ _ 56-2301

56-99. Crimes _

_.._ _ _ _

_ _._ 56-9901

APPENDIX

Page

Constitutional Provisions Pertaining to Insurance Companies __.__ _ _.._.. 184

Securities Eligible for Deposit With State Treasurer and Investment by

Insurance Companies

_

_ _ _.__.._.__._.__._ 185

School Bus Insurance

_

_

_ _._._._ _ _.._._.

.._ 187

Service Upon Non-Resident Motor Common Carrier _

__.__.._

_ 188

Taxation of Insurance Companies, Agents and Adjusters __ __.__..__ 189

Extracts from Motor Vehicle Safety Responsibility Law. .__

. 191

Hospital Service Non-Profit Corporations

.__._.__ __ 192

on-Profit Medical Service Corporations _ _ _ _ _

_

.

196

Extracts from Workmen's Compensation Law

_ _._._ __.,,_._ 204

CROSS-REFERENCES.

Burning goods to defraud insurer: See Title 26, Crimes and Punishment, 26-2210.

Constitutional provisions: See Title 2, Constitution of the State of Georgia,

2-2901 through 2-2905.

Incorporation of companies in general: See Title 22, Corporations.

Securities, sale of, etc:.: See Title 97, Securities.

State-owned buildings, insurance of: See Title 91, Public Property, 91-403,

91-404.

.

Workmen's compensation: See Title 114, Workmen's Compensation, Chapter 114-6.

Sec. 56-101.

CHAPTER 56-1. INSURANCE DEPARTMENT.

Sec.

Officers of Department. Comp- 56-102. Compensation of deputy.

troller General as Insurance 56-103. Collection and disposition of

Commissioner; deputy; seal;

fees and taxes.

records; reports.

56101

INSURA CE DEPARTMENT

2

Sec. 56-104.
56-105. 56-106. 56-107. 56-108.

Examination of insurance companies doing business as assessment, fraternal, industrial, or charitable companies; appointment of and
reports by examiners; hearings; expenses.
Investigation of affairs of companies by Commissioner; expenses.
Duty of Insurance Commissioner in case of insolvency, fraud, or insufficiency of as-
sets. Orders, how enforced; testing
validity of. Blank forms for reports by
companies.

Sec. 56-109. 56-110. 56-111. 56-112. 56-113. 56-114.
56-115. 56-116.

Additional rules and regulations, authority to prescribe.
Supervision of companies before organization.
State fire inspector and assistant; appointment, etc.
Investigations by State fire inspector or assistant; reports.
Authority of State fire inspector to go upon premises.
Compensation of State fire inspector for making investigations; liability of insur-
ance companies for expenses. Commissioner and inspectors
may administer oaths. Appointment of investigators.

Cross-reference.-For provisions of Act of 1949 substituted for 56-111 to

56-113, see Chapter 92A-7.

56-101. Officers of Department. Comptroller General as Insurance Commissioner; deputy; seal; records; reports.-There is hereby established in the office of the Comph'oller General a department which shall be called the Insurance Department of the State of Georgia, and which shall be charged with the enforcement of the laws relating to insurance. Its chief officer shall be the Comptroller General, who shall be styled "Insurance Commissioner." The Insurance Commissioner shall exercise the powers and perform the duties confelTed and imposed upon him by law. He may appoint a deputy insurance commissioner to assist him in the discharge and performance of his duties, and in the event of a vacancy in the office of Insurance Commissioner, or in his absence or disability for any reason, the deputy shall perform all the duties required of the Insurance Commissioner. The said deputy shall execute a bond with proper security in the sum of $5,000, said bond to be approved by the Insurance Commissioner and conditioned upon the faithful performance of his duties. The said deputy shall be removable at the pleasure of the Commissioner. The Commissioner shall have an official seal of such device as he shall, with the approval of the Governor, select. Every certificate and other document or paper executed by such Insurance Commissioner in pursuance of any authority conferred upon him by law, and sealed with the seal of his office, and all copies of papers certified by him and authenticated by said seal, shall in all cases be evidenced equally and in like manner as the original thereof and shall have the same force and effect as the original would have in any suit or proceeding in any court in this State. The office of the Insurance Commissioner shall be deemed a public office and the records, books and papers thereof, on file therein, shall be deemed public records of the State, except as may be provided otherwise herein. The Commissioner shall publish and report annually to the legislature his official transactions, and shall include in such report abstracts of the annual statements of the several insul"ance companies and bonding and fidelity companies, and an exhibit of the financial condition and business transactions of the said companies as disclosed by official examinations of the same, or their annual statements. He shall include therein a statement of receipts and expenditures of the Department for the preceding year, and such other information and recommendations relative to insurance and the insurance laws of the State as he shall deem proper. (Acts 1912, p. 119.)

3

INSURANCE DEPARTMENT

56104

Cross-reference.-Reports to State Librarian, see 101-217.
Editorial .ote.-The provision of the above section as it appears in the original Act which authorized the Insurance Commissioner to appoint a clerk, has been cut out' as superseded by Const., Art. V, Sec. II, Par. II ( 2-3102) authorizing the General Assembly to provide help and expenses necessary for the operation of the Comptroller General's department, and by Acts 1931, Extra. Sess., pp. 94, 96, creating the Budget Bureau, under which law appropriations are made in lump sums to the several departments. See 40-403. The effect of these laws was to abolish such special clerkships and to authorize the heads of the several departments to employ assistants at such salaries as they think proper, within the limits of their respective appropriations.

56-102. Compensation of Deputy.-The salary of the Deputy Insurance Commissioner of the State of Georgia shall be in an amount fixed by the Insurance Commissioner of the State of Georgia, payable monthly, and he shall not receive any other fees or compensation whatsoever by virtue of his office as Deputy Insurance Commissioner: Provided, however, that the amount so fixed shall not exceed the sum of $5499 per year. (Acts 1949, p. 999.)
Cross-reference.-Salary of Comptroller General, see 40-1404. Editorial Note.-See editorial note under preceding section.

56-103. Collection and disposition of fees and taxes.-The Insurance Commissioner shall collect the charges, fees, dues and taxes imposed on insurance companies as provided by law and give proper receipts therefor, and at the end of every calendar month, or oftener, in the discretion of the Commissioner, shall pay into the State treasury, all amounts collected by him. (Acts 1912, pp. 119, 121, 128.)
Cross-reference.-Occupation taxes on insurance companies, agents, and adjustment bureaus, see Title 92, Public Revenue, Chapter 92-25.

56104. Examination of insurance companies doing busines as assessment, fraternal, industrial, or charitable companies; appointment of and reports by examiners; hearings; expenses.-The Insurance Commissioner may at any time examine into the affairs of any insurance company doing business in this State as an assessment, fraternal, industrial or charitable company or otherwise, and into the affairs of any company organized under the laws of any other State, having an office in this State, which company is engaged in or is claiming or advertising that it is engaged in organizing or receiving subscriptions for or disposing of stock of, or in any manner aiding or taking part in the formation or business of, an insurance company or companies, or which is holding capital stock of one or more insurance companies for the purpose of controlling the management thereof or as voting trustee or otherwise. For such purpose the Commissioner may appoint as examiners one or more competent persons, not officers of, or connected with or interested in any insurance company, other than as policyholders, and upon such examination, he, his deputy or any examiner authorized by him, may examine under oath the officers and agents of such company and all persons deemed to have material information regarding the company's property or business. Every such company, its officers and agents, shall produce at the office of the company where the same are kept, its books and all papers in its possession relating to its business, and any other person may be required to produce any book or paper in his custody relevant to the examination, for the inspection of the Commissioner, his deputies or

56-105

INSURANCE DEPARTMENT

4

examiners whenever required; and the officers and agents of such company shall facilitate such examination and aid the examiners in making the same so far as it is in their power to do so. Every such examiner shall make a full and true report of every examination made by him, verified by his oath, which shall comprise only facts appearing upon the books, papers, records or documents of such company or ascertained from the sworn testimony of its officers or agents or other persons examined under oath concerning its affairs, and said report so verified shall be presumptive evidence in any action or proceeding against the company, its officers or agents, as to the facts therein stated. The Insurance Commissioner shall grant a hearing to the company examined before filing any such report and may withhold any such report from public inspection for such time, not to exceed 60 days, as he may deem proper, and may after so filing, if he deems it for the interest of the public to do so, publish any such report or the result of any such examination in one or more newspapers. It shall be the duty of the Insurance Commissioner to examine every domestic insurance company at least once in five years. The expense of all examinations of insurance companies shall be paid by the companies so examined. (Acts 1912, pp. 119, 121; 1945, p. 443.)
Cross-references.-Investigation by Commissioner, see 56-105. Powers of Insurance Commissioner or deputy, see 56-1312. Examination of domestic fraternal benefit societies, see 56-1636. Examination of foreign fraternal benefit societies, see 56-1638. Examinations by Commissioner of rate making organizations, etc., under Chapter 56-20, subject to provisions of this section, see 56-2012. Penalty on agents of unauthorized companies, see 56-9905. Neglect of summons or obstructing examination, penalty, see 56-9901.

56-105. (2433) Investigation of affairs of companies by Commissioner; expenses.-It shall be the duty of the Insurance Commissioner, whenever he shall deem it expedient so to do, and he is hereby empowered, either in person or by an expert examiner by him appointed, to investigate the affairs of any insurance company doing business in this State; to require free access to all books and papers of any company or of the agents thereof; to summon and examine under oath any person in this State relative to the affairs and conditions of said company; for probable cause, to visit at its principal office, wherever it may be, any insurance company not of the State, in which the substantial requirements of this law, as to valuations of policies of life and accident insurance companies, and calculations for the reinsurance reserve of fire, marine, and inland insurance companies, are not in force, for the purpose of investigating its affairs and condition; and to revoke its authority to do business, if said company shall refuse to permit the examination. All expense incurred in the investigation of said companies shall be paid by the companies so examined. (Acts 1887, p. 118.)
Cross-references.-Examination of assessment, industrial, etc., companies, see 56-104. Domestic fraternal benefit societies, see 56-1636. Foreign fraternal benefit societies, see 56-1638.
Editorial ote.-Acts 1952, p. 492, requested the Insurance Commissioner to conduct an investigation as to rates being charged in the individual counties of this State for crop and hail insurance and determine whether such rates are excessive, unfair or discriminatory.

56-106. (2442) Duty of Insurance Commissioner in case of insolvency, fraud, or insufficiency of assets.-Whenever the Insurance

5

INSURANCE DEPARTMENT

56-113

Commissioner shall have reason to believe that any insurance company is insolvent or fraudulently conducted, or that its assets are not sufficient for conducting the business of the company, or during any noncompliance with the provisions of this law, he shall proceed as prescribed in section 56-832. (Acts 1887, p. 121.)
56-107. Orders, how enforced; testing validity of.-The insurance Commissioner may invoke the aid of any court of competent jurisdiction through injunction or other proceedings, mandatory or otherwise, to enforce any order made or action taken in pursuance of the law, and nothing contained in the insurance laws of this State shall be so construed as to prevent any company or person affected by any order or action of the Insurance Commissioner from testing the validity of same in any court of competent jurisdiction. (Acts 1912, pp. 119, 126.)
56-108. Blank forms for reports by companies.-The Insurance Commissioner shall annually in the month of December furnish to each of the insurance companies authorized to do business in this State and required to make annual statements to the Department, two or more blanks in form approved by him and adopted for such statements. (Acts 1912, pp: 119, 125.)
56-109. Additional rules and regulations, authority to prescribe.-
The Insurance-Commissioner shall have full power and authority to prescribe such additional reasonable rules and regulations as he may deem proper for the control and government of all insurance companies mentioned in this law. It shall be the duty of such companies to comply fully with such rules and regulations before they shall procure any business in this State, either directly or indirectly, or continue to do business in this State. (Acts 1912, pp. 119, 126.)
56-110. Supervision of companies before organization.-Immediately upon the granting of the charter to any insurance company, and before it shall offer for sale any of its capital stock, such company so receiving a charter in this State or being chartered in any other State and offering its stock for sale in this State, before it has been organized and has procured a license to do business in this State, shall come under the supervision of the Insurance Commissioner, and shall collect, hold and disburse its funds under such rules and regulations as the Insurance Commissioner may prescribe. The Insurance Commissioner shall give directions as to all use of funds so collected until same shall be invested as the law directs and the company fully organized and licensed to do business in this State, thereby becoming subject to the rules and regulations herein provided. (Acts 1912, pp, 19, 136.)
56-111. State fire inspector and assistant; appointment, etc.-(Repealed by Acts 1949, pp. 1057, 1068.)
Cross-reference. For provisions of Act of 1949 substituted for 56-111 through 56-113, see Chapter 92A-7.
56-112. Investigators by State fire inspector or assistant; reports.(Repealed by Acts 1949, pp. 1057, 1068.)
56-113. Authority of State fire inspector to go upon premises.(Repealed by Acts 1949, pp. 1057, 1068.)

56-114

I CORPORATION, POWERS, ETC.

6

56-114. Compensation of State fire inspector for making investigations; liability of insurance companies for expenses.-;-(Repealed by Acts 1951, pp. 157, 174.)

56-115. (2464) Commissioner and inspectors may administer oaths. -The Insurance Commissioner and such person or persons as may be appointed by him to make inspections are hereby authorized to administer any and all oaths to parties and witnesses, as required under the provisions of this law. (Acts 1887, p. 127.)

56-116. Appointment of investigators.-The Insurance Commissioner is authorized to appoint such investigators as in his discretion he may determine to be necessary to effectively investigate the activities and business of all insurance companies of every kind doing business within the State of Georgia. Such investigators shall be continued in office for such term and at such compensation as the exigencies of the Department may, in the discretion of the Commissioner, warrant and require. (Acts 1937, p. 702.)

CHAPTER 56-2. INCORPORATION, POWERS, DUTIES, ETC., OF INSURANCE COMPANIES IN GENERAL.

Sec. 56-201.
56-202. 56-203. 56-204. 56-205. 56-206.
56-207.
56-208. 56-209. 56-210.
56-211. 56-212.
56-213.
56-214. 56-215. 56-216. 56-217.

Charters to insurance companies; authority of Secretary of State and Comptroller General.
Formation of company; petition; affidavit; filing; record.
Form of certificate to be issued to company.
Corporate existence and name; powers and privileges.
Fee required to be paid. Certificate prima facie evi-
dence of corporation's existence.
Capital stock; subscription to, before commencing business; investment in bonds.
Organization; meeting; notice; board of directors.
Amount of capital required before beginning business.
Subscriptions to stock; payments in installments; foro. feitures for nonpayment.
Stock deemed personalty. Termination of powers, etc.,
on failure to organize and commence business within two years. Contracts of insurance to be evidenced by policy; signatures to policy. Dividends, declaration of. Stock dividends in lieu of money dividends. Participation by policyholders in net profits. Powers of live-stock insurance companies.

Sec.

56-218. Rebates and discriminatory

policies or contracts prohib-

ited.

56-219. Arrangements by companies or

agents preventing or lessen-

ing competition; revocation

of licen e to do business.

56-220. Same; complaints by citizens;

citation.

56-221. Same; practice as to testi-

mony, etc., on hearing of

complaints.

56-222. Same; place of hearing of

complaints; costs and fees;

execution.

56-223. Method of putting companies

in hands of receivers.

56-224. Authorized investments by in-

surance companies.

56-225. Approval of Insurance Com-

missioner, when required for

investment.

56-226. Investment in more than 10

per cent. of securities of a

single company or individual

not allowed.

56-227. Required investments.

56-228. Authority to sell and buy prop-

erty or securities in which

money has been invested.

56-228.1. Investments in real estate; au-

thority to make; terms and

conditions.

.

56-228.2. Same; time when to be treated

as investment; effect if les-

see a corporation whose secu-

rities are legal investments.

7

INCORPORATION, POWERS, ETC.

56-203

~~
56-228.3. Same; treatment as admitted
assets. 56-228.4. Same; limitation of amount. 56-229. Reinsurance and reserve. 56-230. Extent of liability of stock-
holderii. 56-231. Law applicable to individual3. 56-232. Annual report of business;
forms; verification; publica-
tion.

S~
56-233. 56-234. 56-235.

Fees to be paid; annual report; tax on gross receipts.
Failure to make such report or pay tax.
Exemption of fraternal, secret, and industrial societies from operation of law.

56-201. (2388) Charters to insurance companies; authority of Secretary of State and Comptroller General.-Al1 corporate powers and privileges to insurance companies shall be issued and granted by the Secretary of State, upon the terms, liabilities, restrictions, and subject to all the provisions of this Chapter and the laws and Constitution of this State. If from any cause the Secretary of State should be disqualified from issuing and granting said powers, the duties required by this Chapter to be performed by the Secretary of State shall be performed by the Comptroller General. (Acts 1893, p. 73.)

Cross-references.-Tax on premiums of insurance companies, see 92-2509. Corporate powers, how granted, see Const., Art. III, Sec. VII, Par. XVII ( 2-1917). Fee of State Treasurer, see 56-205. Organization of fraternal benefit
societies, see 56-1614 et seq. Penalty on agents of unauthorized companies, see 56-9905. To what extent provisions of this Chapter applicable to mutual insurance companies, see 56-1402.

Editorial Note.-The Act of 1893 was passed to carry into effect Art. III, Sec. VII, Par. XVII of the Constitution ( 2-1917), in so far as the same relates to issuing and granting corporate powers and privileges to insurance companies.

56-202. (2389) Formation of company; petition; affidavit; filing; record.-Any number of persons not less than five may form a company, but, before receiving a certificate of incorporation under this Chapter, shall first file a petition, addressed to the Secretary of State, in which shall be stated: the name and residence of each of the persons desiring to form said corporation; the name of the company; the kind or kinds of insurance they propose to carryon; the amount of the proposed capital stock; the number of shares each of the petitioners agrees to take; that petitioners in good faith intend to go forward without delay to raise the capital stock and organize said company; a request to be incorporated under the laws of this State; that they have given 30 days' notice of their intention to apply for said charter by the publication of said petition in the newspaper publishing the legal advertisements of the county where the principal office of said company is to be located, once a week for four weeks before the filing of said petition. There shall be annexed to said petition an affidavit made by at least two of the persons forming said company, that the names subscribed are the genuine signatures of the persons named therein and that the facts stated in the petition are true. Said petition thus sworn to shall be filed in the office of the Secretary of State, who shall indorse thereon the date of the filing and record the same in a book to be kept by him for that purpose. (Acts 1893, p. 73.)

Cross-reference.-Incorporation of Masonic and other secret societies, see 22-412.

56-203. (2390) Form of certificate to be issued to company.-When
said petition shall have been filed in the office of the Secretary of State,
he shall issue to said company under the great seal of the State the following form of certificate, to wit:

56204

INCORPORATION, POWERS, ETC.

8

To all to whom these presents may come-Greeting:

Whereas, in pursuance of an Act of the General Assembly of the

State of Georgia, approved December 18, 1893, and (naming the

persons who signed the petition) having filed in the office of Secretary

of State a certain petition seeking the formation of a c'lrporation to be

known as (insert name), with a capital stock of $

, for the pur-

pose of organizing and running a (kind or kinds) insurance company,

and having complied with the statutes in such cases made and provid-

ed; therefore, the State of Georgia hereby grants unto the above-

named persons, their successors and assigns, full authority, by and

under the said name of (insert name), to exercise the powers and

privileges of a corporation for the purposes above stated, subject to

the provisions of the Constitution of this State, and all the laws, rules,

and regulations governing insurance companies of force at the date of

this certificate, or that may hereafter become of force either by con-

stitutional or statute law, or by any rules or regulations of the In-

surance Commissioner of this State or otherwise, which govern insur-

ance companies in this State.

In witness whereof, these presents have been signed by the Secre-

tary of State (or when he is disqualified, by the Comptroller Genera!),

and to which is annexed the great seal of the State, at Atlanta, Geor-

gia, this--day of

, 19-. (Acts 1893, p. 74.)

56-204. (2391) Corporate existence and name; powers and privileges. -Thereafter the persons who signed said petition, and all persons who
shall become stockholders in said company, shall be a corporation by
the name specified in said certificate, and shall possess the powers and
privileges and be subject to the provisions contained in this Chapter. (Acts 1893, p. 74.)

56-205. (2392) Fee required to be paid.-Before the Secretary of State shall issue said certificate, the petitioners shall pay to the State Treasurer a fee of $100. (Acts 1893, p. 74.)
Cross-referenees.-Corporate powers, how granted, see Const., Art. III, Sec. VII, Par. XVII ( 2-1917). Charters to insurance companies, see 56-201.

56-206. (2393) Certificate prima facie evidence of corporation's existence.-Any certificate or a duplicate thereof, issued under this Chapter, shall be prima facie evidence of the existence of such corporation. (Acts 1893, p. 74. )

56-207. (2394) Capital stock; subscription to, before commencing business; investment in bonds.-When such certificate shall have been issued, the persons named therein, in case they have not taken the whole capital stock, may open books of subscription to obtain the full capital stock of the company, and, after giving such notice as they may deem expedient, may from time to time receive subscriptions until the whole capital stock shall be subscribed. The capital stock of said company shall be divided into shares of $10 each, and shall not be less than $100,000 for each class of insurance to be engaged in, and no insurance company chartered under this Chapter shall commence the insurance business until at least this amount for each class of insurance to be

9

INCORPORATION, POWERS, ETC.

56-209

engaged in shall have been paid in cash, or invested in bonds of the United states, of this State, or of the cities or counties of this State, estimated at their cash market value, or in mortgages on real estate worth twice the amount for which the same is mortgaged, which investment shall be approved by the Secretary of State, or, when he is disqualified, by the Comptroller General. When the investment shall be in bonds of the cities or counties of this State, the Secretary of State, or Comptroller General, as the case may be, shall require an opinion from the Attorney General that the bonds are good, legal, and valid bonds, before approving the investment. (Acts 1893, pp. 74, 75; 1937, p. 459.)
Cross-reference.~Insurance companies may invest in bonds of drainage districts, see 23-2567.
Editorial Note.-The Act of 1937 amended this section by changing the par value of shares of stock from $100 to $10.
56-208. (2395) Organization; meeting; notice; board of directors.When the amount of the capital stock shall have been subscribed, the person named in said certificate may call a meeting of the stockholders for the purpose of organization, of which meeting every subscribing stockholder shall have 10 days' notice personally, or by notice deposited in the post office, postage paid, directed to him at the post office nearest his usual place of residence. At said meeting there shall be elected a board of directors of not less than five, and as many additional as may be provided by the bylaws of such companies, to manage the affairs of said company, said directors to be chosen by a majority vote of the stockholders, each share of stock being entitled to one vote; said election to be governed by such bylaws as said company may adopt; the persons elected as directors to continue in office until others shall be elected to fill their places. No person shall be elected a director unless he shall be a stockholder, owning stock in his own name, or as trustee, or personal representative and qualified to vote at the election at which he is chosen. If for any reason the election shall not be held at the time appointed, the same may be held at any time thereafter on 10 days' notice to all stockholders; but at any meeting of the stockholders or their legal representatives, the notice may be waived, and an election held at once. The directors, shall elect a president, vice president or vice presidents, secretary and treasurer, and such other officers and agents as they may deem necessary. The regular elections for directors shall be held annually, at such time and place as may be prescribed in the bylaws of said company. All meetings of directors of said company shall be held in this State. A majority of said directors shall be bona fide residents of Georgia. (Acts 1893, p. 75; 1945, pp. 459, 461; 1947, p. 1498.)
Cross-reference.-Number of directors of life insurance companies, see 56-907.
56-209. (2396, 2418) Amount of capital required. before beginning business.-No insurance company of whatever class, except Masonic, O~d Fellows, religious and mutual aid societies, and cooperative or assessment life insurance companies, shall be allowed to transact any business of insurance in this State, unless possessed of at least $100,000 of actual cash capital paid up, or assets and invested bonds or stocks, estimated at their actual market value at the date of the statement required by section 56-402, or in mortgages on real estate worth double the amount for which the same is mortgaged. (Acts 1887, p. 113; 1893, p. 80.)

56-210

I CORPORATION, POWERS, ETC.

10

Editorial ote.-The Act of 1950, pp. 10, 11, repealed former 56-1307, and raised the amount of paid-in capital stock necessary for the formation of stock companies for the purpose of doing an industrial life, health, or accident insurance business from $25,000 to $100,000. The Act further provided that such a company incorporated under the old law could continue to operate until January 1, 1954, \vithout increasing its capital stock, but after that date the capital stock would have to be increased to $100,000 paid in, or the company must cease to operate.
It was provided in the same Act that when such a company had increased its paid-in capital stock to $100,000, and had complied with all applicable laws, it might then write ordinary life insurance policies and other policies ordinarily written by regular life insurance companies.
56-210. (2396) Subscriptions to stock; payments in installments; forfeitures for nonpayment.-The directors may require the subscriber to pay the amounts subscribed in such installments as they may deem proper, which sums they may lend until the company shall be ready to engage regularly in business. If any subscriber shall neglect to pay any installment required by resolution of the directors, the said board shall declare his stock and all previous payments thereon forfeited to the use of the company; but they shall not declare it forfeited until they shall have served a notice in writing on him personally, or by depositing said notice in the post office, postage paid, directed to him at the post office nearest his usual place of residence, stating he is required to make such payment at the time and place expressed in such notice, and if he shall fail to make the same, his stock and all previous payments thereon will be forfeited for the use of the company; which notice must be served at least 60 days previous to the day on which such payment shall be required to be made. (Acts 1893, p. 75.)

56-211. (2398) Stock deemed personalty.-The stock in an insurance company shall be deemed personalty and shall be transferable in the manner prescribed by the bylaws of the company; and no share shall be transferable until all previous calls thereon shall have been fully paid in. (Acts 1893, p. "76.)
Cross-references.-What is personalty, see 85-1701. Transfer of shares, when complete, see 22-706.
56-212 (2399) Termination of powers, etc., on failure to organize and commence business within two years.-All the powers and privileges and the certificates of incorporation of insurance companies shall cease and terminate at the expiration of two years from the date of said certificate, if, at the expiration of said two years, said companies shall not have organized and commenced business. (Acts 1893, p. 76; 1902, p. 52.)
/
56-213. (2404) Contracts of insurance to be evidenced by policy; signatures to policy.-Contracts of insurance to be entered into by any company organized under this Chapter shall not be binding unless evidenced by a policy of insurance in writing or print or both, and the liability of said company in case of loss sustained by any policyholder shall be governed by the terms, stipulations, and conditions appearing upon the face of the policy. No policy or other contract of said corporation shall be binding unless it shall be signed by the president or vice president and secretary or assistant secretary of the company. (Acts 1893, p. 77.)
Cross-references.-Contract of fire insurance, see 56-801. Standard form of policy, see 56-810.

11

INCORPORATION, POWERS, ETC.

56-219

56-214. (2405) Dividends, declaration of.-The board of directors of any company organiz~d under t~is Chapt~r may d~cl.are dividends out of the earnings of saId corporatIOn: ProvIded, no dIvIdend shall be declared until the earnings shall be sufficient to pay the same, after deducting all expenses and losses, and after providing for such reserve
as may be required by law. (Acts 1893, p. 77.)

56-215. (2406) Stock dividends in lieu of money dividends.Corporations formed under this Chapter may issue stock dividends in lieu of cash dividends if the board of directors shall so decide, and thereby add to the capital stock, not to exceed the highest limit of the capital stock fixed by their charters. (Acts 1893, p. 77.)

56-216. (2407) Participation by policyholders in net profits.-The board of directors, after providing for such reserve as may be required by law, by a majority vote, may give the holders of policies of any company organized under this Chapter on any particular line or class of insurance the right to participate in the net profits of such company to such an extent, in such manner, and upon such terms as the board of directors may agree, the same to be plainly stated on the face of the policy; and unless it be stated on the face of the policy that the policyholder has the right to participate, such policyholder shall not participate in any of the profits of such company. This pri~iple shall apply to all participating policies issued by any companY' organized under this Chapter, whether such company is a mutual or stock company. (Acts 1893, p. 77; 1949, p. 959; 1950, pp. 121, 122.)
Editorial ote.-The Act of 1949 struck the original section in its entirety and substituted the above. The Act of 1950 also struck the original section as it appears in the original and substituted the above, the language being identical with that of the Act of 1949.

56-217. (2403) Powers of live-stock insurance companies.-Livestock insurance companies organized under this law may insure against loss arising from the death of or injury to domestic animals, and shall have all powers incident to the live-stock insurance business which are not in conflict with the laws and Constitution of this State or of the United States. (Acts 1893, p. 77.)

56-218. Rebates and discriminatory policies or contracts prohibited.-No insurance company or insurance agent doing business in this State shall enter into any contract to rebate any insurance premium or any part thereof of any insured or other person. No person shall sell or offer for sale in this State, and no insurance company shall do business in this State which sells or offers for sale to the public, any "special contract," "board contract," or any other form of policy or contract whereby any discrimination in any form or character is allowed to any particular person or persons. Any insurance company violating the provisions of this section may have its license revoked as provided in section 56-407. (Acts 1912, pp. 119, 129.)
~ross-~eferenc:es.-Punishment for violation, see 56-9903. Inapplicability of thIS sectIon to kmds of insurance to which Chapter 56-20 applies, see 56-2016.

56-219. (2466) Arrangements by companies or agents preventing
or lessening competition; revocation of license to do business.-No insurance company authorized to do business in this State, or the

56-220

12

agent thereof, shall make, maintain, or enter into any contract, agreement, pool, or other arrangement with any other insurance company or companies, licensed to do business in this State, or the agent or agents thereof, for the purpose of, or that may have the tendency or effect of, preventing or lessening competition in the business of insurance transacted in this State. When it shall be made to appear to the Commissioner of Insurance that any company or agent has entered into any such contract, agreement, pool, or other arrangement, said Commissioner shall revoke the license issued to such company and the same shall not be reissued until the president or chief officer of such company shall file an affidavit with said Commissioner, stating that such contracts, agreements, pools, or other arrangements have been annulled and made void: Provided, that nothing in this Chapter shall be so construed as to prevent any insurance company, legally authorized to transact business in this State, from separately surveying, inspecting, or examining the premises to be insured, by and with the consent of the owner, for the purpose of bringing about improvements in fire protection, so as to lessen the cost of insurance by reducing rates. (Acts 1890-1, p. 206.)
Cross-references.-Definition of insurance agent, see 56-501. Inapplicability of this section to workmen's compensation insurance and the kinds of insurance to which Chapter 56-20 applies, see 56-2019. Provisions of Constitution as to restricting competition, see 2-2701.

56-220. (2467) Same; complaints by citizens; citation.-Any citizen of this State whose rates of insurance have been increased, or who has been refused insurance at reasonable rates, may file a written complaint under oath, to the best of his knowledge and belief, with the Insurance Commissioner, charging any company or companies authorized to do business in this State with a violation of the preceding section, and there upon it shall be the duty of said Insurance Commissioner to issue a citation, addressed to the company or companies against whom said complaint shall be made, requiring it or them to be and appear before said Insurance Commissioner at a time and place to be fixed by said Insurance Commissioner, not less than 20 nor more than 40 days from the date of the filing of the complaint, and show cause why their licenses should not be revoked as provided by the preceding section. Said citation shall be served npt less than 10 days from the date of filing said complaint by the sheriffs or constables of the State in the same manner as provided by law for the service of process upon insurance companies. (Acts 1890-1, p. 206.)
Cross-references.-Investigation of complaint, see 56-807, 56-1003. Service on nonresident companies, see 56-603. Suits against insurance companies, see 56-601. Service on nonresident, assessment, etc., insurance companies, see 56-602 through 56-604. Inapplicability of this section to workmen's compensation insurance and the kinds of insurance to which Chapter 56-20 applies, see 56-2019.
56-221. (2468) Same; practice as to testimony, etc., on hearing of complaints.-For the purposes of the provisions of this Chapter, the Insurance Commissioner may administer oaths, issue subpoenas for witnesses, hear testimony, and issue commissions for taking testimony by interrogatories; and the party or parties complaining, and the company or companies defending, may serve notice for the production of books and papers, under the rules provided by law for civil actions in the superior courts. (Acts 1890-1, p. 206.)
Cross-reference.-Inapplicability of this section to workmen's compensation in-

13

INCORPORATION, POWERS, ETC.

56-224

surance and the kinds of insurance to which Chapter 56-20 applies, see 56-2019.

56-222. (2469) Same; place of hearing of complaints; costs and fees execution.-The Insurance Commissioner shall fix the place of hear'ing or trial. The costs and fees for the sheriff or constable, witnesses and the commissioners taking interrogatories shall be the same ~ now provided by law for similar service in the superior courts, the same to be taxed against and paid by the party or parties cast in said suit, and against whom said Insurance Commissioner shall find; for which costs said Insurance Commissioner is hereby authorized to issue execution to be levied and collected as executions from the courts. (Acts 1890-1, p. 206.)
Cross-~ference.-Inapplicability of this section to workmen's compensation insurance and the kinds of insurance to which Chapter 56-20 applies, see 56-2019.

56-223. Method of putting companies in hands of receivers.-

Before any insurance company chartered under the laws of this State

or doing business in this State shall hereafter be put in the hands of

a receiver by any court of equity, upon any claim or demand not in

judgment, it must first appear that the cause of complaint and the

matters and grounds upon which the receivership is sought have been

submitted by the complainant to the Insurance Commissioner, and

that such complaint and the matters charged against such insurance

company have been passed upon by the Insurance Commissioner sit-

ting in connection with the Governor and the Attorney General in the

manner hereinafter provided, to wit: The Insurance Commissioner,

the Governor, and the Attorney General, sitting as a board as provided

in section 56-407, shall, upon such matters and complaint as referred

to previously in this section being filed with the Insurance Commis-

sioner, proceed to hear the same after giving both the complainant

and the insurance company in question opportunity to be heard, ample

and legal time, however, being given for the production of such

evidence as either party may deem necessary. During the pendency

of such proceedings, the Insurance Commissioner shall order the com-

pany and its officers to maintain the assets in statu quo. Upon hearing

same, said commissioner, or a majority of them, shall render a decision

and judgment recommending or declining to recommend that the

Commissioner make application, in accordance with section 56-921

et seq., for an order directing the company to show cause why the

Commissioner should not take possession of its property and conduct

its business. No receiver for an insurance company shall be appointed

on the petition of any person other than the Insurance Commissioner,

unless it be made to appear to the court to which application for such

appointment is made, that the Insurance Commissioner has failed or

refused to comply and proceed with the findings of said board. (A~ts

1914, p. 135.)

.

Cross-references.-Examination of domestic fraternal benefit societies, see 56-1636. Application for receiver for fraternal benefit society, see 56-1636.

56-224. (2408) Authorized investments by insurance companies. -Every insurance company organized and doing business by virtue of the laws of this State shall have authority to invest its money and assets in the following securities, to wit:
(a) Any and all bonds or securities issued by the United States of America, the District of Columbia, or any State of the United States,

56-224

I CORPORATION, POWERS, ETC.

14

or any county or city therein; bonds of any township or school district

therein; bonds issued by the Federal Land Banks under provisions

of the Act of Congress of July 17, 1916, its amendments and supple-

ments.

.

(b) Loans secured by any of the classes of securities specified in (a) hereof.

(c) Loans secured by first liens on improved real estate in any of the States, not exceeding 66% per cent. of the value of said property.

(d) Loans on policies issued by the insurance company, not exceeding the reserve on such policies.

(e) A building for horne office purposes and buildings for office purposes, and uses: Provided, that no company shall hereafter invest in such horne office building or buildings for office purposes and uses, unless its assets shall exceed $100,000, and that said company shall not invest more than 25 per cent. of its assets in such buildings: Provided, further, that any such investment in a building for home office use shall first be approved by the Insurance Commissioner. (Acts 1949, p. 1127.)

(f) Evidences of indebtedness which may be purchased or discounted by Federal Reserve Banks.

(g) Investment securities, that is, marketable bonds, notes, and/or debentures, evidencing indebtedness of solvent persons or corporations, which, under the regulations of the Comptroller of the Currency of the United States, national banks may buy and in which they may deal.

(h) Bonds and debentures of any solvent railroad, street railway, or other public utility corporation, or industrial corporation, on which
no default of interest has occuned, when and if secured by a mortgage or deed of trust covering physical assets or securities of ample value to exceed the indebtedness secured.

(i) Preferred stocks of solvent corporations, where at the time of acquisition the equity of all preferred stock outstanding in the assets of the issuing corporation, including the issue in which the investment is made, is more than twice the amount of such preferred stock, and the earnings applicable to dividends on such preferred stock have, for two consecutive years prior to the date of acquisition, exceeded twice the dividend requirements.

(j) Common stocks of solvent railroads, street railways, and other utility corporations and industrial corporations which are listed on an established stock exchange, where, prior to the date of acquisition of the stock, the company" issuing such stock has maintained and paid dividends thereon for three consecutive years, and the current earnings of such company issuing such stock have been sufficient in each of such three consecutive years to fully pay the dividends.

(k) Promissory notes amply secured by pledges of securities in which the company is authorized to invest its funds.

(1) Securities insured by the Federal Housing Administrator, or debentures issued by such Administrator.

(m) All insurance companies now or hereafter authorized to do

15

INCORPORATION, POWERS, ETC.

56-226

business within the State of Georgia under the supervision of the Insurance Department of the State of Georgia, as set out in Chapter 56-1 of the Code of Georgia of 1933 are hereby authorized to invest trust funds held by them in fiduciary capacity in any bonds which have been or may be issued by school districts for the purposes of building and/or equipping schoolhouses under Chapter 32-14, and which have been validated and confirmed as required under Chapter 87-3, providing for the validation and confirmation of county, municipaloI' other political division bonds, upon the same terms and conditions as they are now authorized to invest trust funds in State, county and municipal bonds and securities.
(n) Deposits of funds at interest in any chartered State or national bank or trust company, located in this State, and which is insured by the Federal Deposit Insurance Corporation, shall be deemed investments, and such deposits are authorized as legal investments, to the extent that said deposits are insured by the said Federal Deposit Insurance Corporation, without any order or authority from ~ny court. (Acts 1912, pp. 119, 137; 1918, pp. 119, 122; 1925, p. 92; 1929, p. 274; 1937, pp. 462, 463; 1939, p. 366; 1945, p. 211; 1949, p. 1127; 1953, pp. 108, 109.)
Cross-references.-Penalty for violation, see 56-9904. Insurance companies may invest in drainage district bonds, see 23-2567. State Park Authority revenue refunding bonds as legal investments, see 43-629.
Editorial 'ote.-Subsection (1) was added by Acts 1937, p. 462. The Act of 1939 added paragraph (m).
Acts 1939, p. 399, declared Western & Atlantic Railroad warrants to be legal investments and eligible to secure deposits in banks.
The Act of 1945 changed the loan limit in subsection (c) from 50 per cent. to 66% per cent.
Acts 1949, p. 1127, substituted a new subsection (e), and (n) was added by the Act of 1953, pp. 108, 109.
56-225. Approval of Insurance Commissioner, when required for investment.-Investments in the classes of securities defined in the preceding section, except as to a building for home office purposes, may be made by insurance companies without the approval of the Insurance Commissioner, and all other investments of funds by insurance companies in classes of securities other than those specified in the preceding section shall be made only when the approval of the Insurance Commissioner shall have been obtained. (Acts 1929, p. 275.)

56-226. Investment in more than 10 per cent. of securities in a single company or individual not allowed.-No insurance company organized and doing business by virtue of the laws of this State shall acquire or hold more than 10 per cent. of the securities of any single corporation; nor shall more than 10 per cent. of the assets of any insurance company be invested in the securities of any single company or in securities issued by any single individual: Provided, however, nothing in this section shall prevent the acquisition and ownership by any such insurance company of more than 10 per cent. of the securities of any insurance company incorporated or licensed under the laws of the State of Georgia, upon approval by the Insurance Commissioner. (Acts 1929, p. 276; 1951, p. 278; 1952, pp. 287, 288.)
Cross-reference.-Insurance companies may invp.st in drainage district bonds, Bee 23-2567.

56227

INCORPORATION, POWERS, ETC.

16

Editorial Note.-The proviso was added by Acts 1951, p. 278. The Act of 1952 inserted the words "or licensed" in the proviso.

56-227. Required investments.-Every insurance company organized and doing business by virtue of the laws of this State shall, to the extent of the paid-in outstanding capital stock of such insurance company, if it shall be a stock corporation, keep its funds and assets invested in the classes of securities defined and described in subparagraphs (a), (b), (c), (d), (e), (f), and (h) of section 56-224.
(Acts 1929, p. 276.)

56-228. Authority to sell and buy property or securities in which money has been invested.-Insurance companies organized and doing business by virtue of the laws of this State may sell, assign, transfer, and convey, either with or without warranty, or either with or without recourse upon it, as it may prefer, any real estate, personal property, bond, note, mortgage, deed of trust, deed to secure debt, or other form of property or securities in which it may have invested its money or its assets or on which it may have made loans as allowed by law, and may also buy and sell any realty that may be necessary for the protection of any loan such insurance company may lawfully make. (Acts 1929, p. 276.)

56-228.1. Investments in real estate; authority to make; terms and conditions.-Every insurance company organized and doing business by virtue of the laws of this State shall have authority, in addition to all other investments authorized by law, to invest assets in real estate acquired for the purpose of leasing the same to any person for a period of not less than 20 years, or in real estate already leased for an unexpired period of not less than 15 years of an original period of not less than 20 years, under the following terms and conditions:
(1) that the lessee shall at his own cost erect, or that there has already been erected, thereon free of liens a building or other improvements costing an amount at least equal to the value of the said real estate exclusive of improvements; but if the lease be entered into simultaneously with the purchase of the real estate, the lessor may agree to erect such improvements on such real estate; (2) that the said improvements shall remain on the said property during the period of the lease, with provision when such improvements are put upon the said property at the cost of the lessee that at the termination of the lease the ownership of such improvements free of liens shall vest in the owner of the real estate; (3) that the lessee shall during the term of the lease, or the unexpired period of the lease if the property be bought subject to the lease, pay to the owner of the real estate rent in such amount as will enable the owner to amortize the said investment according to a standard amortization table then in use at or before the end of 40 years should the lease, or the unexpired period of the lease, be for a longer period than 40 years; and (4) that during the term of the lease the tenant shall pay all taxes and assessments levied on or against the said real estate, including improvements, shall keep and maintain the said improvements in good repair and shall provide and maintain for the benefit of the lessor fire insurance on such improvements at least equal to the insurable value of the improvements, or at least equal to the amount invested by the lessor in such real estate, whichever is less. (Acts 1947, p. 1496.)

17

INCORPORATION, POWERS, ETC.

56-232

56-228.2. Same; time when to be treated as investment; effect if lessee a corporation whose securities are legal investments.-Real estate acquired pursuant to the provisions of this law [ 56-228.1 to 56-228.4] shall not be treated as an investment hereunder unless and until the improvements herein required shall have been constructed and the lease agreement entered into in accordance with the terms of this law [ 56-228.1 to 56-22'8.4] ; but if the lessee be a corporation the bonds, debentures, notes or preferred stock of which are eligible as investments under the law of Georgia, the requirements of this law [ 56-228.1 to 56-228.4] as to the erection of improvements by the lessee, the cost of such improvements and the vesting of ownership of such improvements in the owner of the real estate shall not be
applicable. (Acts 1947, pp. 1496, 1497.)

56-228.3. Same; treatment as admitted asset.-Real estate acquired under authority of this law [ 56-228.1 to 56-228.4] shall not be treated as an admitted asset in an amount in excess of the actual investment reduced each year by decrements out of the income from said property sufficient to write off completely, based on standard amortization tables in general use, the investment at the normal termination of the lease or at the end of 40 years should the term of the lease, or the unexpired period of the lease, be for 'a longer period
than 40 years. (Acts 1947, pp. 1496, 1498.)

56-228.4. Same; limitation of amount.-The total investment of any company under this law [ 56-228.1 to 56-228.4] shall not exceed five per centum of its assets. No investment shall be made by any company pursuant to this law [ 56-228.1 to 56-228.4] which will cause such company's investment in all real property owned by it to exceed 25 per centum of its assets or when all real property owned by such company equals or exceeds 25 per centum of its assets, (Acts 1947, pp. 1496. 1498.)

56-229. (2410) Reinsurance and reserve.-Any company organized under this Chapter may reinsure ~ny or all its risks; and every company incorporated under this Chapter shall provide for such reserve as may be required by law. (Acts 1893, p. 78.)
Cross-reference.-Cooperative insurance exchanges, see 56-1811.

56-230. (2411) Extent of liability of stockholders.-Stockholders in corporations organized under this Chapter shall be individually liable to creditors of the corporation to the extent of their unpaid subscription to the capital stock and for no greater amount. (Acts 1893, p. 78.)

56-231. (2465) Law applicable to individuals.-Alllaws regulating. th~ ~usiness of insurance in this State by companies shall apply to mdividuals, associations, and corporations in like business. (Acts 1893, p. 81.)

56-232. (2458) Annual report of business; forms; verification; publication.-Every corporation or association shall, on or before the
first day of March in each year after it shall have commenced to do business, make and file with the Insurance Commissioner a report of

56-233

DEPOSITS BY COMPA IES

18

its affairs and operations during the year ending the 31st day of December next preceding. Such annual reports shall be made upon blank forms to be provided and furnished by the Insurance Commissioner, and shall be verified under the oath of the president or secretary or other like officers, and shall be published, or the substance thereof, in the annual report of said Insurance Commissioner. (Acts 1887, p. 126.)
Cross-references.-Retum.s of corporations, see 22-1703. Annual report of fraternal benefit societies, see 56-1631, 56-1632.
56-233. (2459) Fees to be paid; annual report; tax on gross receipts.-(Repealed by Acts 1950, pp. 12, 13.)
56-234. (2460) Failure to make such report or pay tax.-If such corporation or association shall at any time fail or refuse to make the annual report or to pay the tax on the gross amount received, as hereinbefore provided, the Insurance Commissioner shall forthwith suspend or revoke all authority to such corporation or association and all its agents to do business, and shall publish such revocation in some newspaper published in this State, and may proceed to collect whatever sum of money may be due or owing on account of such tax by suit or action, in the name of the State, against such corporation or association. (Acts 1887, p. 126.)
56-235. (2461) Exemption of fraternal, secret, and industrial societies from operation of law.-Nothing in the insurance law shall be constl"ued to require any fraternal, secret, or industrial societies or other associations exempt by law, now organized or to be organized in this State, to pay any license fee or tax, or to make or file reports with the Insurance Commissioner, or to prevent the same from doing business, when the money, benefit, charity, or relief is payable by the grand or supreme body of the same, and is derived from assessments on subordinate lodges, councils, or other bodies or therr members. (Acts 1887, p. 126.)
Cross-references.-Annual report of fraternal benefit societies, see 56-1631. Exemptions of fraternal benefit societies, see 56-1604. Exemption of certain societies, see 56-1641.

CHAPTER 56-3 DEPOSITS BY COMPANIES DOING BUSINESS IN STATE.

Sec. 56-301.
56-302. 56-303.
56-304. 56-305.

Fire, marine, life, casualty, indemnity, and inland insurance companies of other States or Countries.
When notice of loss given, bonds to be retained; appointment of receiver.
Bond to be given by receiver. Delivery of bonds to receiver; sale of bonds; disposition of proceeds and residue.
Conflicting claims to bonds; affidavit; interpleader.
Additional deposit when amount reduced below amount required; revocation of license on failure to make.

Sec. 56-306.
56-307. 56-308. 56-309. 56-310. 56-311.

Life insurance companies doing business on legal reserve plan; measure of required deposit; renewal of deposit annually.
Same; certificate to be issued to companies; expiration of certificate.
Same; failure to make deposit; notice; revocation of license.
Same; changes of securities deposited.
Same; approval of securities
offered for deposit and of substitution of secul'ities. Fidelity insurance companies.

19

DEPOSITS BY COMPANIES

56-301

Sec. 56-312.
56-313.
56-314. 56-315.
56-316. 56-317. 56-318.
56-319. 56-320.
56-321. 56-322.

Mutual, cooperative or assessment fire insurance companies; what companies ex-
cepted. Same; amount of assets re-
quired; emergency clause in policies; deposit for exemp-
tion. Same; receipt of deposits by
State Treasurer authorized. Deposits by foreign companies
or agents when amount required of companies of this State by foreign State greater than imposed by this
State. Foreign life and accident in-
surance companies. Domestic life and accident in-
surance companies. Mutual or stock-plan life in-
surance companies; amount of deposit; nonresident companies. Same; annual increases until deposit aggregates required amount. Life, accident, or casualty insurance companies; what securities may be deposited; valuation. Industrial life, accident or health insurance companies. Life indemnity or insurance

Sec.
56-323.
56-324. 56-325.
56-326.
56-327.
56-328. 56-329. 56-330.
56-331. 56-332. 56-333.
56-334. 56-335.

companies doing business upon assessment plan. Withdrawal by company from State, return of bonds deposited. Policies required to be satisfied before withdrawal. Withdrawal of fire insurance companies or associations; reinsurance of policies. Voluntary deposit of bonds in addition to those required or permitted. Same; registration; assignment; levy by judgment
creditor or other claimant. Same; exchange for other
bonds. Same; income from bonds. Same; retention of bonds in
case of loss by insured; appointment of receiver to take charge. Same; procedure by receiver; sale of bonds. Same; conflicting claims; bill of interpleader. Same; issuance of certificates by Insurance Commissioner and State Treasurer. Same; withdrawal of deposit by insurance company. Same; effect as to other laws regulating deposits.

56-301. (2419) Fire, marine, life, casualty, indemnity, and inland insurance companies of other States or Countries.-All fire, marine, and life, casualty, indemnity and inland insurance companies, chartered by other States or foreign Governments, shall deposit with the State Treasurer bonds of the United States, or bonds of this State which according to the Acts and resolutions of the General Assembly are valid, or bonds of any county or municipality in this State which have been validated under the laws of this State, of the first value of $10,000: Provided, that fire, marine, and life, casualty, indemnity, and inland insurance companies chartered by other States or foreign Governments, which have a paid up or issued capital stock in excess of $500,000 shall deposit said bonds in an amount equal to two per centum of the gross annual premiums derived from business written on Georgia property, but in no case shall such amount be less than $10,000 nor more than $25,000; which bonds shall be receipted for by the Treasurer and specially deposited in the treasury; and whenever such company shall cease to do business in this State, and shall have settled all claims against it, said bonds shall be delivered to the proper party on presentation of the Treasurer's receipt. While said bonds are so deposited the owner shall, subj ect to the notices hereinafter provided for or given, be entitled to collect the interest thereon. For the bonds so deposited the faith of the State is pledged that they shall be returned or disposed of as hereinafter provided. All bonds deposited by insurance companies under this or any other section of this Title shall be registered bonds: Provided, that in all cases where a domestic or nonresident life insurance company is being liquidated under re-

56-302

DEPOSITS BY COMPANIES

20

ceivership, or otherwise, that policy holding claimants shall have preference over any common or unsecured claim, or claims in the disbursements of the assets through liquidation: Provided, that no casualty company, now or hereafter doing business in this State, who as a condition precedent to, or in connection with the writing or offering to write other forms or kinds of insurance, other than casualty, has deposited with the State Treasurer, bonds in amount equal to the requirements of this Chapter, shall be required to make no further or additional deposit hereunder: and Provided, further, that such deposits heretofore or hereafter made shall be subject to any judgment rendered against such company or companies. (Acts 1887, p. 116; 1899, p. 45; 1900, p. 77; 1905, p. 75; 1935, p. 149; 1937, pp. 705,706.)
Cross-references.-Provisions of Constitution as to requirements of nonresident companies, see 2-2901. State Treasurer ex-officio Bond Commissioner, see 40-1201. Bonds of counties or municipalities, how validated, see 87-301. When amount deposited reduced below amount required, see 56-305. Annual report of business, see 56-232. Deposits by domestic mutual fire insurance companies, see 56-312.
Editorial Note.-The title of the Act of 1937 purports to amend the Act of 1935 by inserting "life, casualty and indemnity" companies so as to make the Act apply to these companies as well as to fire, marine, and inland insurance companies, as provided in the original Act. The title also states the purpose to be "to provide that in all cases where a domestic or nonresident life insurance company is being liquidated under receivership, or otherwise, the policyholding claimants shall have preference over any common or unsecured claims." These changes are indicated in the recitation of the section as it shall read, as amended. In reciting how the section as amended shall read, "face value" in the eighth line is written "first value" and in the twelfth line after the words "two per centum," there is omitted "of said capital stock, but not more than $25,000 in amount, and Provided, further, that other fire, marine, and life, casualty, indemnity and inland insurance companies chartered by other States or foreign Governments shall deposit said bonds in an amount equal to 15 per centum." The Act as it appears in the published Georgia Laws for 1937 has been compared with the enrolled Act in the office of the Secretary of State and is found to be accurate, the errors occurring in the enrolled Act. These are evidently clerical errors, as there is nothing either in the title or the enacting clause to indicate an intention of making such changes. The enrollpq Act follows the original bill as introduced.
There is also an additional section marked I-A from which the last two provisos in the above section are taken, relating to casualty insurance. These changes do not seem to be covered by the title unless they can be included in the ph~ase "and for other purposes," nor is there anything in the enacting clause of section 1 to indicate that there is an intention to add these provisions. Section I-A has no introduction; it begins with the first of these provisos. It was offered as an amendment to the original bill but through oversight the title of the Act was not amended so as to include a reference to this new provision.
The section, before the amendment of 1935, required a deposit of bonds of the face value of $25,000 regardless of the amount of capital or the business done in this State.

56-302. (2420) When notice of loss given, bonds to be retained;
appointment of receiver.-Whenever any loss insured against shall occur th~ insured, in order to secure his recovery, may give notice to the State Treasurer of the occurrence of said loss and of the amount claimed, after which notice the State Treasurer shall be bound to
retain, subject to the order of the court trying any suit that may be
brought for the recovery of such loss, a sufficient amount to pay the judgment in said case in the event of recovery; and if the amount
for which said company is liable shall not be paid within 10 days, said
plaintiff may file an application with the judge of the superior court

21

DEPOSITS BY COMPANIES

56305

of the county where the case was tried, for a receiver to take charge of as many bonds as shall be necessary to satisfy the aforesaid judgment. (Acts 1887, p. 116.)
Cross-reference.-Proceedings when loss occurs, see 56-1109.

56-303. (2421) Bond to be given by receiver. Delivery of bonds to receiver; sale of bonds; disposition of proceeds and residue.-When said receiver shall be appointed by the judge, he shall always require bond and security of him for the faithful performance of his duty. The State Treasurer, on application by the receiver, shall deliver to him bonds of sufficient market value, if in his custody, to satisfy said judgment. The receiver's receipt shall be a complete discharge to said Treasurer and the State. The receiver shall apply to the judge of the superior court for an order of sale, and, in pursuance of said order, shall sell said bonds. Mter deducting such expenses and commissions as shall be allowed by the judge, he shall pay over to the plaintiff or his attorney a sufficient amount to satisfy the judgment; and if there shall remain any residue in the hands of such receiver, he shall pay over the same to the agent of the company, taking his receipt for the same, which shall be filed and recorded with the other papers in the case. (Acts 1887, p. 116.)
Cross-references.-Receiver not subject to garnishment, see 55-311. Proceedings when loss occurs; receiver, see 56-1109.

56304. (2422) Conflicting claims to bonds; affidavit; interpleader.-If there shall be conflicting claims, the State Treasurer shall deliver over to the receivers, in the order of their application, the aforesaid bonds; and if there shall be any contest between creditors, which cannot be settled in this mode, the party not receiving sufficient bonds through the receiver appointed in his behalf may become a party to the other case, and make known his claim to the other receiver by making affidavit of the claim and filing the same with him, and the receiver shall report such claim to the judge of the superior court appointing him, who shall, by order, provide for a bill of interpleader, as in cases in equity. (Acts 1887, p. 117.)
Cross-references.-Proceedings when loss occurs; receiver, see 56-1109. Interpleader, see 37-1503.

56-305. (2424) Additional deposit when amount reduced below amount required; revocation of license on failure to make.-Whenever, by means of the provisions of this law, the amount of bonds so deposited shall be reduced, the Treasurer of this State shall at once notify the Insurance Commissioner in writing, who shall give notice to the company depositing, and require more bonds to be deposited, so as always to maintain the original amount; and if the company so notified by the Insurance Commissioner shall fail to comply within 30 days, the license to do business in this State shall be revoked, and said Insurance Commissioner shall at the same time give notice, by publication in a newspaper published at the State capital, of the fact of such failure and revocation of license; the cost of which publication shall be paid by the company failing to comply with the provisions of this law. (Acts 1887, p. 117.)
Cross-references.-Deposit by companies of other States, see' 56-301. When excess of bonds of fidelity companies shall be returned, see 56-1110. Amount of bonds of fidelity companies must be maintained, see 56-1115.

56-306

DEPOSITS BY CO IPANIES

22

56-306. (2428, 2429) Life insurance companies doing business on legal reserve plan; measure of required deposit; renewal of deposit annuaUy.-The Insurance Commissioner shall, as soon as practicable after the filing of the annual statement of any life insurance company organized and doing business on the legal reserve plan under the laws of this State, proceed to ascertain the net reserve value of each policy in force on the 31st day of December immediately preceding, upon the basis of calculation fixed by existing laws; and should any such company issue policies based upon a higher standard, such policy shall be valued according to such higher standard. For the purpose of making such valuation the Insurance Commissioner may employ a competent actuary, who shall be paid by the company for which the services shall be rendered; but nothing in this section shall prevent any company from making said valuation, which may be received by the Insurance Commissioner upon such proof as he may determine. The expense of procuring such proof shall be paid by the company. Upon ascertaining, in the manner above provided, the net reserve value of all policies in force issued by any such life insurance company desiring to operate under the provisions of this section, the Insurance Commissioner shall notify such company of the amount thereof, and within 60 days after the date of such notification the officers of such company shall have the right to deposit with the Treasurer of this State, for the security and benefit of all its policyholders, securities to an amount which, together with the sum already deposited with said Treasurer, and such sums as may be deposited by said company with other States and Governments, by requirements of the laws of such other States or Governments in which said company is doing business, shall not be less than the amount of such ascertained valuation of all policies in force. In case the deposits made with other States and Governments shall be by the laws of such States and Governments held as security first for the policyholders of such States and Governments, said policyholders in such other States shall not participate in the securities held in this State until due allowance or credit shall have been given for the securities held by their own States of Governments, so that all policyholders of the company shall stand on equal terms. The securities shall be such as are described in section 56-224, or certificates of deposit in any solvent bank or trust company, or satisfactory evidences of ownership or unincumbered improved real estate as may be acquired by such company under the provisions of law, at such value as may be determined upon by two disinterested appraisers residing in the county in which the real estate shall be situated, such appraisers to be appointed by the Insurance Commissioner. Such real estate shall not be sold or incumbered unless securities of equal value as herein required shall be deposited with the Treasurer of this State in lieu thereof. The deposit herein provided for shall be renewed annually. (Acts 1906, p. 107.)
Cross-reference.-Calculation of net value of life policies, see 56-912.
56-307. (2429) Same; certificate to be issued to companies; expiration of certificate.-Upon the deposit being made by any company as provided in the foregoing section, the Insurance Commissioner shall issue a certificate setting forth the corporate name of the company, its principal office, that it has fully complied with the provisions of this law, stating the amount deposited and the net reserve value of outstanding policies, and the table upon which the same is computed, and that it is authorized to transact the business of life insurance in this

23

DEPOSITS BY COMPANIES

56-310

State: Provided, that any such certificate shall expire on the 30th day

of May in the year following its issue. If requested by such company,

the Insurance Commissioner shall furnish such company with a

certificate over his signature, to be attached to or printed on policies

issued by such company, in substance as follows: State of Georgia,

Insurance Department, State Capital, Atlanta, Ga.

,19-. The

net reserve value of policies issued by

life insurance company

of

, Georgia, is secured by a deposit of acceptable securities in

accordance with the compulsory reserve deposit laws of this State,

enacted in the year 1906.

, Insurance Commissioner. (Acts

1906, pp. 107, 109.)

56-308. (2430) Same; failure to make deposit; notice; revocation of license.-Upon the failul'e of any company having once exercised the privilege of coming under the provisions of this law to make the deposit in the time provided in section 56-306, the Insurance Commissioner shall notify such company to issue no new policies in this State until there shall have been compliance with said requirements. The Insurance Commissioner shall revoke the license of any company issuing policies after such notice and before compliance with said requirements. (Acts 1906, pp. 107, 109.)
Cross-reference.-Licenses are revocable, see 20-117.

56-309. (2431) Same; changes of securities deposited.-All companies coming within the provisions of this law may at any time change their securities on deposit by substituting for those withdrawn a like amount in other securities of the character provided for, and whenever the net reserve value of policies outstanding and in force against any company shall be less than the amount of securities then on deposit with the Treasurer of this State, said company may withdraw such excess; but at least $100,000 shall remain on deposit. Companies having on deposit stocks or bonds as security may collect the dividends and interest accruing on such deposits; but upon default by such company to deposit additional security as called for by the Insurance Commissioner, the State Treasurer shall collect the interest on such stocks or bonds as it becomes due, and add the same to the securities in his hands belonging to such company: Provided, however, that any credit loan and insurance company engaged exclusively in insuring loans or other evidences of indebtedness may deposit or reduce their deposits to a sum of not less than $50,000. (Acts 1906, p. 107,110; 1937, pp. 461, 462.)
Cross-reference.-Provisions of Constitution as to requirements of resident companies, see 2-2903.
Editorial ote.-Acts 1937 added the proviso to this section.

56310. (2432) Same; approval of securities offered for deposit and of substitution of securities.-Securities offered for deposit under the preceding section shall be passed upon by the Insurance Commis-
sioner and approved by him before being deposited with the State
Treasurer, and before the withdrawal of any securities from the Treasurer by the company the Insurance Commissioner shall first
approve such withdrawal and the substitution of securities therefor. (Acts 1906, pp. 107, 110.)

56311

DEPOSITS BY COMPA rES

24

56-311. Fidelity insurance companies.-Before any surety or bonding company shall write any bonds in this State, it shall be required to deposit the sum of $25,000 with the State Treasurer, conditioned as is provided by law for the deposits required of such companies in writing bonds of public officials of this State: Provided, that whenever any such company shall have already deposited $25,000 as provided by law for writing bonds of public officials it shall not be required to deposit an additional sum. (Acts 1912, pp. 119, 133.)

56-312. Mutual, cooperative, or assessment fire insurance companies; what companies excepted.-All insurance companies chartered under the laws of this State to do a fire insurance business upon the mutual, cooperative or assessment plan, shall, before receiving a license from the Insurance Commissioner, deposit with the State Treasurer registered bonds of the United States or this State, or county or municipal bonds of this State, registered and validated, in the sum of $10,000. Said deposit shall be made under the same conditions that deposits of nonresident fire insurance companies are made with the State Treasurer: Provided, that this section shall not apply to such companies as operate in not more than four counties in a division of this State, or to farmers' cooperative companies doing fire insurance business in this State on the assessment plan where their policies stipulate that all the property, real and personal, of the policyholders is pledged for the payment of the policy. (Acts 1912, pp. 119,
142.)

Cross-references.-Bonds of county or municipality, how validated, see 87-301 et seq. Deposits by companies of other States, see 56-301.

56-313. Same; amount of assets required; emergency clause in policies; deposit for exemption.-Companies chartered under the laws of this State to do a fire insurance business upon the mutual, cooperative or assessment plan shall always have in good assets an amount equal to the unearned premium liability of the company, required of
all classes of fire insurance companies by the laws of this State. All policies issued by such companies shall embrace what is termed an emergency clause, whereby the company reserves the right to call for extra assessments from its policyholders whenever the contingency shall arise. Samples of all policy contracts to be used by such companies shall, before issuance, be submitted to the Insurance Commissioner for his approval: Pl'ovided, that nothing in this law shall require any mutual fire insurance company chartered under the laws of this State to embrace in its policies said emergency clause when such company shall have deposited with the Treasurer of the State registered securities in the amount of $100,000, consisting of bonds of the United States, bonds of the State, bonds of municipalities or counties of the State, which have been duly validated, or such other securities as the Insurance Commissioner shall deem adequate, nor shall the policyholders of any such company that shall make said deposit be liable for any assessments, except for unpaid premiums, to meet any losses or liabilities that may be incurred by any such company; which deposit shall be in lieu of any other deposit required by this law, and the amount of said deposit shall always be maintained as a surplus in excess of the reinsurance reserve required under the law. (Acts 1912, pp. 119, 143; 1922, p. 122.)

25

DEPOSITS BY COMPANIES

56-318

56-314. Same; receipt of deposits by State Treasurer authorized.The Treasurer of this State is hereby authorized and directed to
receive deposits of bonds or other securities as provided in sections 56-312 and 56-313 when the deposit of the same is approved by the Insurance Commissioner, and hold the same subject to the provisions of the laws of this State relating to deposits by fire insurance com-
panies. (Acts 1922, pp. 122, 124.)

56-315. (2449) Deposits by foreign companies or agents when amount required of companies of this State by foreign State greater than imposed by this State.-(Repealed by Acts 1945, pp. 419, 42'1.)
Editorial Note.-The repealer of this section is part of an Act which revises the law relating to the tax on insurance premiums and which is codified in 92-2509 and 92-2509.1 to 92-2509.3.

56-316. (2426) Foreign life and accident insurance companies.All life and accident insurance companies chartered by other States or foreign Governments shall show, by a certificate from the officer having supervision of the insurance department in the State in which they are chartered or elect to make their deposit, that they have deposited not less than $100,000 in such securities as may be deemed by such officer as equivalent to cash, subject to his order, as a guaranty fund for the security of policy holders of said companies. (Acts 1887, p. 118.)
Cross-reference.-Provisions of Constitution as to requirements of nonresident companies, see 2-2901.

56-317. (2427) Domestic life and accident insurance companies. -All such companies chartered by this State shall, before doing business, deposit with the Treasurer of this State $100,000, in such securities as may be deemed by the Insurance Commissioner equivalent to cash, to be subject to his order, as a guaranty fund for the security of the policy holders of the company making such deposit. All interest and dividends arising from such securities shall be paid when due to the company so depositing them. Any such securities as may be needed by the company may be taken from the Treasurer at any time by replacing them with other securities equally acceptable to the Insurance Commissioner. The Treasurer's certificate for the same shall be furnished to the company. (Acts 1887, p. 118; 1905, p. 76.)

56-318. Mutual or stock-plan life insurance companies; amount of deposit; nonresident companies.-No life insurance company, including industrial life insurance companies, chartered, or which may hereafter be chartered, by this State, whether organized on the mutual or the stock plan, and which is not now authorized to transact business in this State, shall be so authorized or licensed until such company shall have deposited with the Treasurer of this State securities, deemed by the Insurance Commissioner to be the equivalent of cash, in an amount of not less than $100,000, as a guaranty fund for its policyholders; and no such company organized, or which may hereafter be organized, under the laws of any State of the Union or foreign State, and not now authorized to do business in this State, shall be authorized or licensed to transact the business of insurance in this State until it.sh.all have produced evidence satisfactory to the Insurance CommISSIoner, that it has on deposit in the State in which it is chartered

56319

DEPOSITS BY COMPANIES

26

or organized, with the proper officer thereof, $100,000 in such securities as may be deemed by such officer equivalent to cash, subject to his order, as a guaranty fund for the security of policyholders: Provided, however, that such nonresident insurance company may make deposit with the Treasurer of this State instead of in the State of its organization, should it elect to do so. (Acts 1920, pp. 212, 213.)
Cross-references.-Insurance companies may invest in and deposit as securities, drainage district bonds, see 23-2567.
56-319. Same; annual increases until deposit aggregates required amount.-(Repealed by Acts 1950, pp. 12, 13.)
56-320. Life, accident, or casualty insurance companies; what securities may be deposited; valuation.-All deposits of bonds, collateral, or assets required under the law of any life, accident, or casualty insurance company incorporated under the laws of this State as a condition to its being authorized to do business, may be made in bonds of the United States, bonds of this State which according to the Acts and resolutions of the General Assembly are valid, or bonds of any county or municipality in this State which have been validated under the laws of this State. The said bonds shall be accepted by the appropriate officer for such deposit to the extent of the face value thereof, but in no event in excess of such face value; however, if the actual market value of said bonds shall be less than their face value, they shall be so accepted at only their said market value at the time they shall be so offered. (Acts 1924, p. 121.)
Cross-reference.-Validation of county and municipal bonds, see 87-301 et seq.

56-321. Industrial life, accident, or health insurance companies.(Repealed by Acts 1950, pp. 12, 13.)

56-322. (2450) Life indemnity or insurance companies doing business upon assessment plan.-All life indemnity or insurance corporations or associations, organized under the laws of this or any other State or Country, to do business upon the assessment plan, shall deposit with the Treasurer of this State stock or bonds approved by that officer in an amount equal to $20,000 par value, and of not less than $20,000 market value: Provided, however, that industrial associations or assessment life insurance companies doing business on the industrial or weekly payment plan, and issuing no policjes for an amount greater than '$500, shall be required to deposit a sum equal to $1,000 for each $1,000,000 in force, and thereafter such industrial associations or assessment life insurance companies doing business upon the industrial or weekly payment plan, and issuing a policy for no greater amount than $500, shall be required to deposit a sum not less than $1,000 in each $1,000,000 of insurance in force on the last day of the last calendar year, as shown by its annual statement, until the sum so deposited shall be equal to $100,000. The security so deposited shall be held in trust for the benefit and protection of, and as security for, the policyholders of such corporation or association, their legal representatives, and beneficiaries. A corporation or association organized under the laws of other States or Countries shall not be required to make such deposit, if the corporation or association shall make it appear to the satisfaction of said Insurance Commissioner that it has on deposit with the proper State official in the State or Country of

27

DEPOSITS BY COMPANIES

56-325

its incorporation a like amount of securities as is required under the terms of this section, and which are held by said authority in trust for the benefit and protection of, and as security for, the policyholders of such corporations or associations, their legal representatives, or beneficiaries. Said securities shall so remain on deposit until it has made to appear to the satisfaction of said Insurance Commissioner of this State that all the debts and obligations of said company or association due the citizens of this State have been discharged, or, in case of nonresident companies, that, after making deposit, or after similar deposit has been made with the proper State officials in the State or Country of its incorporation, said securities shall be subject to the debts due policyholders and beneficiaries under the same rules and regulations as govern the deposits required to be made by fire insurance companies under the laws of this State, in so far as the same may be applicable. (Acts 1887, p. 124; 1900, pp. 47, 74; 1901, p. 33;
1905, p. 77.)

56-323. (2423) Withdrawal by company from State, return of bonds deposited.-When any company shall desire to withdraw from the State, and will satisfy the Insurance Commissioner that all suits pending against such company, and of which no notice has been given, have been fully satisfied, or whenever no notice of claim shall have been given, and when rights under existing policies shall have been satisfied and released as the provisions of this law require, the Treasurer shall return to said company the bonds so deposited, upon order from the Commissioner. (Acts 1887, p. 117.)
Cross-references.-Withdrawal of fidelity company, see 56-1111. Satisfaction of policies before withdrawal, see 56-324.

56-324. (2425) Policies required to be satisfied before withdrawaI.-When any company, having made the deposit required by this law, has existing policies on property of citizens of this State on which no losses have accrued, and the company wishes to withdraw its deposits, before being allowed so to do said company shall take up and satisfy said policies, and give notice of its intention to withdraw from the State, and of the fact that it has satisfied all losses and the claims of policyholders above designated, which notice shall be published once a week for two months in a newspaper to be designated by the Insurance Commissioner of the State, and at the expense of said company. Any claims of the citizens of this State for losses, or on existing policies where no losses have occurred, must be fully settled before said deposits shall be withdrawn. (Acts 1887, p. 117.)
Cross-references.-Withdrawal by company from the State, see 56-323. Withdrawal of fidelity company, see 56-1111.

56-325. Withdrawal of fire insurance companies or associations; reinsurance of policies.-Any foreign fire insurance company or association doing business in this State and desiring to retire from this State before the maturity or expiration of its policies or contracts, upon filing with the Insurance Commissioner a written notice of such intention to withdraw, together with a sworn statement of its outstanding liabilities or obligations under all such policies or contracts, and of any and all securities on deposit with the State official designated by law for the protection of the beneficiaries of such policies or contracts, may so retire or withdraw: Provided, that such company or

56-326

DEPOSITS BY COMPANIES

28

companies, as a condition precedent to such withdrawal, shall reins~re all such policies or contracts in some other company or compames authorized to do business in this State and shall file with said Insurance Commissioner a list showing the name or names of such company or companies in which such outstanding policies, contracts or obliga-
tions have been so reinsured: and Provided further, that the securities on deposit as aforesaid shall not be so withdrawn from the custody, control and possession of said State official until after such proof as may be required by said Commissioner shall have been furnished him that there are, at the time of such withdrawal, no unsettled claims or losses outstanding against said company so desiring to withdraw: and Provided further, that said reinsurance shall be approved by the In-
surance Commissioner. (Acts 1913, p. 86.)

56-326. Voluntary deposit of bonds in addition to those required or permitted.-All fire, marine and life, casualty, indemnity and inland insurance companies chartered by the State of Georgia or other States or foreign Governments and doing business in the State of Georgia, in addition to all deposits of bonds now permitted by, or required of, such companies under the provisions of section 56-301, may deposit with the State Treasurer of Georgia, for the purpose of enabling any such company to qualify to do business in any other State or States, bonds, for the benefit and security of all policy obligations of such depositing company in the United States, according to the terms of this law. Such bonds so deposited shall be bonds of the United States, or bonds of this State which according to the Acts and Resolutions of the General Assembly are valid, or bonds of any county or municipality of this
State which have been validated under the laws of this State, and, upon the request of the company desiring to make a deposit of bonds under the provisions of this law, and State Treasurer shall receive, subject to the conditions of this law, said bonds from the company and shall issue a receipt therefor and shall specially deposit said bonds in the State treasUl.y, and, whenever such company shall desire to withdraw such deposit and the Insurance Commissioner of Georgia shall certify to the State Treasurer, as is hereinafter provided, that such deposit is no longer required, in whole or in part, in order to comply with the laws of this or any other State, said deposited bonds, or so many thereof as are not so required, shall be delivered to the depositing company on presentation of the State Treasurer's receipt therefor. While said bonds are so deposited, the owner shall, subject to the notices and conditions hereinafter provided for or given, be entitled to collect the interest thereon. For the bonds so deposited the faith of the State is pledged that they shall be returned or disposed of as thereinafter provided. All bonds deposited by insurance companies under this or any other section of this Title shall be registered bonds. (Acts 1941, p. 456.)

56-327. Same; registration; assignment; levy by judgment creditor or other ciaimant.-All such bonds shall be transferred to and registered under the official title of the State Treasurer of Georgia, in trust for the benefit and security of all policy obligations of such depositing company in the United States, without preference or priority for or on account of any cause or causes whatever, except as otherwise provided for in this law. The term "policy obligations of such depositing company in the United States" shall be deemed to include any and all persons having a legal or equitable right against the de-

29

DEPOSITS BY COMPANIES

56331

positing company arising in the United States out of a contract of insurance. No depositing company shall assign or otherwise transfer all or any part of its interest in any such deposit without the approval in writing of the State Treasurer of Georgia and of the Insurance Commissioner of Georgia. No judgment creditor or other claimant, whether or not a person included in the classes of beneficiaries of such deposit, may levy upon or seize or otherwise obtain any deposit or any part thereof or income therefrom in whole or partial satisfaction of such claim. Beneficiary claimants against such deposit may only subject
said deposit to their claims in the procedure provided for in this law. (Acts 1941, p. 457.)

56-328. Same; exchange for other bonds.-The depositing company may from time to time exchange for the deposited bonds, or any of
them, other bonds eligible for deposit under the provisions of this law.
(Acts 1941, p. 458.)

56-329. Same; income from bonds.-8o long as the depositing company shall continue solvent and shall comply with the laws of this State applicable to such depositing company, provided there is no claim
pending against said deposited bonds of which notice has been given to the State Treasurer, as is provided in this law, said depositing com-
pany shall be permitted by the State Treasurer to collect and dispose
of the income from the deposited bonds. (Acts 1941, p. 458.)

56-330. Same; retention of bonds in case of loss by insured; appointment of receiver to take charge.-Whenever any loss insured
against shall occur, the insured, in order to secure his recovery, may give notice to the State Treasurer of the occurrence of said loss and of the amount claimed, after which notice the State Treasurer shall be
bound to retain, subject to the order of the Georgia court of competent jurisdiction trying any suit that may be brought for the recovery of
such loss, or any suit which may be brought upon any judgment ob-
tained in the courts of another State, including the courts of the United States, on account of such loss, a sufficient amount to pay the
judgment in said case in event of recovery; and, if the amount for
which said depositing company is liable shall not be paid within 10 days, said plaintiff may file an application with the judge of the
superior court of the county where the case was tried for a receiver
to take charge of as many bonds as shall be necessary to satisfy the aforesaid judgment. (Acts 1941, p. 458.)

56-331. Same; procedure by receiver; sale of bonds.-When said receiver shall be appointed by the judge, he shall always require bond and security of him for the faithful performance of his duty. The State Treasurer, on application by the receiver, shall deliver to him bonds of sufficient market value, if in his custody, to satisfy said judgment. The receiver's receipt shall be a complete discharge to said Treasurer and the State. The receiver shall apply to the judge of the superior court for an order of sale, and, in pursuance of said order, shall sell said bonds. After deducting such expenses and commissions as shall be allowed by the judge, he shall pay over to the plaintiff or his attorney a sufficient amount to satisfy the judgment; and, if there shall remain any residue in the hands of such receiver, he shall pay over the same to the agent of the depositing company taking his re-

56332

DEPOSITS BY COMPANIES

30

ceipt for the same, which shall be filed and recorded with the other papers in the case. (Acts 1941, p. 459.)

56-332. Same; conflicting claims; bill of interpleader.-If there shall be conflicting claims, the State Treasurer shall deliver over to the receivers, in the order of their application, the aforesaid bonds; and, if there shall be any contest between creditors which cannot be settled in this mode, the party not receiving sufficient bonds through the receiver appointed in his behalf may become a party to the other case and make known his claim to the other receiver by making affidavit of the claim and filing the same with him, and the receiver shall report such claim to the judge of the superior court appointing him, who shall, by order, provide for a bill of interpleader as in cases of equity. (Acts 1941, p. 459.)

56-333. Same; issuance of certificates by Insurance Commissioner and State Treasurer.-Upon the deposit being made by any depositing
company, as provided in the foregoing sections, the Insurance Commissioner shall issue a certificate setting forth the corporate name of the depositing company, its principal office, that it has fully complied with the provisions of this law, and stating the amount deposited: Provided, however, whenever so desired the depositing company may request of, and shall receive from, the State Treasurer a certificate setting forth the corporate name of the depositing company, its principal office, that it has fully complied with the provisions of this law, and stating the amount deposited. (Acts 1941, p. 460.)

56-334. Same; withdrawal of deposit by insurance company.When any depositing company shall desire to withdraw any deposit made with the State Treasurer hereunder, and the Insurance Commissioner of Georgia shall find that such deposit is no longer required, in whole or in part, in order to comply with the laws of this or any other State, he may to such extent release such deposit, and his certificate to that effect shall authorize the State Treasurer to return the bonds so released to the depositing company. A certificate from the Insurance Commissioner (or other official authorized to administer the insurance laws) of any other State or States, that the depositing company has fully satisfied or made provision for the full payment and satisfaction of all policy obligations therein, or that such policy obligations therein have been otherwise adequately provided for, shall be sufficient evidence that the deposit is no longer required by the laws of such other State or States: Provided, however, that any notice of loss theretofore given in conformity with this law shall remain effective, and the State Treasurer shall nevertheless retain bonds in an amount sufficient to meet the requirements of sections 56-330 and 56-331 and as provided by such sections. (Acts 1941, p. 460.)

56-335. Same; effect as to other laws regulating deposits.-This law shall not be interpreted as amending, changing or modifying in any respect any provision of the laws of Georgia now or hereafter in force or effect regarding deposits required to be made by any fire, marine, life, casualty, indemnity or inland insurance companies, chartered by the State of Georgia or other States or foreign Governments and doing business in the State of Georgia. (Acts 1941, p. 461.)

31

LICE SE TO Do BUSINESS

56402

CHAPTER 56-4. LICENSE TO DO BUSINESS.

Sec. 56-401. Companies required to be li-
censed.
56-401.1. License fees. 56-402. How license obtained; state-
ment required to be filed.
56-403. Issuance of license; renewal; further statements required.
56-404. Fidelity insurance companies. 56-405. Same; applicability of require-
ments relating to life insurance companies.
56-406. Issuance of license. 56-407. Revocation of license. 56-408. Revocation of license of com-
pany removing cause to Federal court. 56-409. Renewal of license forfeited under preceding section.
56-410. Failure to pay judgment as ground for revoking license.
56-411. Hearing in proceeding to revoke license for failure to pay judgment; order of revocation.
56-412. Renewal of license revoked for failure to pay judgment.
56-413. Revocation of licenses when companies are insolvent or fraudulently conducted; reinstatement of companies.

Sec. 56-414.
56-415. 56-416. 56-417. 56-418. 56-419. 56-420. 56-421.
56-422.
56-423. 56-424.
56-425.

Insurance companies, domestk and foreign, and fraternal benefit societies required to
secure license. Expiration date of licenses. Application for license; con-
tents; financial statement. Additional information in dis-
cretion of Commissioner. Consideration of application;
issuance of license. Application for renewal of li-
cense. Consideration of renewal ap-
plication; renewal of license. Continuation of business pend-
ing consideration of renewal application; hearings. Hearings on intended denial of renewal application; notice of final action. License fee. Renewal applications to which law applicable; additional information in discretion of Commissioner; court review. Existing law as to application for licenses superseded.

56-401. (2414) Companies required to be licensed.-No insurance company chartered by this State, or by another State or a foreign Government, shall transact any business of insurance in this State without first procuring a license from the Insurance Commissioner. (Acts 1887, p. 114.)
Cro s-references.-Domestic and foreign companies and fraternal benefit societies included, see 56-414. Issuing license, see 56-406. Penalty on agents of unauthorized companies, see 56-9905.

56401.1 License fees.-Each and every insurance company, domestic or foreign, carrying on an insurance business in Georgia shall pay to the Insurance Commissioner, annually in advance, on or before July 1st, a license fee in the sum of $300, which payments shall be in lieu of all other license fees of said companies and of their agents collectible by the Insurance Commissioner. Foreign companies entering the State and domestic companies beginning business at any time during the license year as herein fixed, shall pay said license fee in full for the remaining portion of that license year: Provided, that local fire insurance companies known as farmers county mutuals, doing business on the assessment plan and operating in independent divisions of not more than four counties to a division, shall pay an annual fee of $25. (Acts 1950, pp. 122, 123; 1951, pp. 664, 666.)
56402. (2415) How license obtained; statement required to be filed.-Before the Insurance Commissioner shall issue a license to an insurance company, the company shall fully comply with all of the provisions of this Title, and shall file with said Insurance Commissioner a statement under oath of its president and secretary, specifying-

56402

LICENSE TO Do BUSINESS

32

First. The name and locality of the company.
Second. The condition of such company on the thirty-first day of December then next preceding, if such company was engaged in business on said date; and if not so engaged on said date, then on the date when said company began to dO'business, exhibiting the following facts and items in the following form, namely:
1. The amount of the capital stock of the company, and what part of the same has been paid in cash, and what part is in notes of the stockholders, and how such notes are secured.
2. The property or assets held by the company, specifying(1) The value, as near as may be, of the real estate held by such company; if incumbered, to what amount. (2) The amount of cash on hand and deposited in banks to the credit of the company. (3) The amount of cash in the hands of agents and in the course of transmission. (4) The amount of loans secured by bonds and mortgages on real estate. (5) The amount of other loans, and how secured. (6) The amount of bonds of this State, of other States in the United States, and of any stocks owned by the company, specifying the amount, number of shares, and par and market value of each kind of stock. (7) The amount of interest actually due and unpaid. (8) The amount of premium notes on hand upon which policies have been issued. (9) The amount of all other assets, real and personal, not included hereinbefore.
Third. The liabilities of the company, specifying-
1. The amount of losses due and yet unpaid.
2. The amount of claims for losses resisted by the company.
3. The amount of losses not yet due, including those reported to the company on which no action has yet been taken.
4. The amount of dividends declared and due and remaining unpaid.
5. The amount of dividends declared but not yet due.
6. The amount of money borrowed.
7. The amount of all other claims against the company.
8. The amount of reserve for reinsurance.
Fourth. The income of the company during the preceding year, specifying-
1. The amount of the cash premiums received.
2. The amount of notes received for premiums.
3. The amount of interest money received.
4. The amount of income received from other sources.
Fifth. The expenditures during the preceding year, specifying-
1. The amount of losses paid during the year.
2. The amount of dividends paid during the year.
3. The amount of expense paid during the year, including fees and commissions to agents and officers of the company.

33

LICE SE TO Do BUSINESS

56404

4. The amount paid in taxes. 5. The amount of all other payments and expenditures.

Sixth. The greatest amount insured in anyone risk, and the total amount of insurance outstanding.
Seventh. The charter or act of incorporation, unless the company applying for a license is unincorporated. (Acts 1887, p. 114; 1929, pp. 162,163.)
Cross-references.-Applications, see 56-416. The Insurance Commission may require additional information, see 56-417. Punishment for false statements, see 56-9902.
56-403. Issuance of license; renewal; further statement required.Upon filing such annual statement the Insurance Commissioner, when satisfied it is conect, that the company has fully complied with the laws regulating the business of insurance, and is of the opinion that the company's financial condition and affairs are sound and such that its transaction of business will not be hazardous to its policyholders, creditors, and public, shall issue a license to said company to transact business in this State. All licenses shall be renewed annually on July 1st, and any company desiring to renew its license shall file the aforesaid statement not later than March 1st of any year. Licenses heretofore issued by the Insurance Commissioner to expire on J anual-Y 1, 1951, or within 60 days thel'eafter are hereby extended to and including June 30, 1951, and will expire on that date. All licenses issued after the effective date of this section shall expire on June 30th next following the date of issuance. The issuance or renewal of a license, or the refusal thereof, shall be based on the financial condition of the company as shown by its annual statement filed as of the preceding December 31st, and on such further information as the Insurance Commissioner shall require or learn regarding the company's financial condition or manner of conducting its operations. Should any company when once licensed fail or refuse to make and file its annual statement as herein required, it shall, by such failure or refusal forfeit its right to do business in this State until and including June 30th the next year, and on such failure or refusal the Insurance Commissioner shall recall and cancel the license of such delinquent company. At the time of filing such statement with the Insurance Commissioner, each company shall publish at its own expense in a newspaper of general circulation published in this State a copy of the statement in short form showing income, assets, expenditures, and liabilities in gross, as of December 31st preceding, to be sworn to by the officer or agent making the same. (Acts 1887, p. 115; 1893, p. 80; 1947, p. 1622; 1951, pp. 664, 665.)
Cross.references.-Provisions of Constitution as to requirements of insurance companies before doing business, see 2-2901 to 2-2903. As to their reports, see ~ 2-2905. Life insurance on assessment plan, see 56-917 through 56-920. PunIshment for false statements, see 56-9902. Insurance companies may deposit drainage district bonds as security, see 23-2567. Renewal procedure, see 56-419 through 56-422.
Editorial Note.-The Act from which this section is codified was approved February 21, 1951.

56-404. (2553) Fidelity insurance companies.-Fidelity insurance companies or other corporations or companies doing a fidelity insurance

56-405

LICENSE TO Do BUSINESS

34

business, before beginning business in this State or signing any bond, shall obtain a license from the Insurance Commissioner, which license shall be revoked if said companies shall begin in a United States court, or remove or cause to be removed thereto, any suit as to any bond signed or business done in this State. (Acts 1887, p. 108.)
Editorial ote.-See 257 U. S. 529 (42 Sup. Ct. Rep. 188, 66 L. Ed. 352), a to constitutionality of this section.

56-405. (2462) Same; applicability of requirements relating to life insurance companies.-Any corporation organized under the laws of this State for the purpose of transacting the business of fidelity insurance shall be licensed to transact business upon compliance with all the requirements in this law prescribed with reference to life insurance companies organized under the laws of this State, so far as the same may be applicable to such fidelity insurance company; any fidelity insurance company incorporated and organized under the laws of any other State or foreign Government, and which has a paid-up capital of not less than $250,000, may be licensed to transact business in this State upon compliance with all the requirements prescribed by law, as far as the same may be applicable, for license to foreign life insurance companies to transact business in this State. (Acts 1887, p. 127.)

56-406. Issuance of license.-It shall be the duty of the Insurance Commissioner to issue licenses to the insurance companies and agents when they shall have complied with the requirements of the laws of this State and the rules and regulations prescribed by the Commissioner so as to entitle them to do business. In each case, license shall be issued under the seal of the Commissioner, authorizing and empowering the person, firm, association or company to transact the kind of business specified in the license. Before an insurance company shall be licensed to transact business, the Insurance Commissioner shall be satisfied by such examination as he may make or such evidence as he may require that such company is duly qualified under the laws of this State to transact business herein. (Acts 1912, pp. 119, 123.)
Cross-references.-Annual license of fraternal benefit societies, see 56-1622, 56-1640. Organization of fraternal benefit societies, see 56-1614 through 56-1617. Penalty on agents of unauthorized companies, see 56-9905.
56-407. Revocation of license.-Whenever it shall appear to the Insurance Commissioner that a license granted to an insurance company should be revoked, the Insurance Commissioner shall, by first giving the company 10 days' notice, require the company to show cause befOl'e a board to be composed of the Insurance Commissioner, the Attorney General and the Governor why said license should not be revoked. Upon the hearing of the said cause, the said board may in its discretion revoke the license of any such insurance company or prescribe the conditions upon which the company may be allowed to continue business in this State. (Acts 1912, pp. 119, 123.)
Cross-references.-Revocation of license of fraternal benefit society, see 56-1640, of company failing to make required deposit, see 56-30 . Method of putting companies in hands of receivers, see 56-223.
56-408. (2416) Revocation of license of company removing cause to Federal court.-<Repealerl hy Acts 1950. pp. 12. 14),

35

LICE SE TO Do BUSINESS

56413

56-409. (2417) Renewal of license forfeited under preceding section.-(Repealed by Acts 1950, pp. 12, 14.)

56-410. Failure to pay judgment as ground for revoking license.If any insurance company, domestic or foreign, insuring against loss
or damage to the insured by reason of liability assessed on account of accident to, injuries to, or the death of any other person, or injuries or damage to the property of others, shall fail or refuse to payoff and discharge any judgment rendered against such insured for liability covered by such insurance written by said company in this State, within 30 days after such judgment shall have become final by reason of having been affirmed, or by reason of the time within which proceedings to appeal from the same having expired, shall not be permitted or licensed to do business in this State: Provided, that this sectio:Q, shall not apply when the amount of the judgment shall exceed the amount of the insurance, and the company has paid so much of said judgment as equals the amount stated in its contract of insurance. The failure of any such company to payoff the amount of said judgment or the amount stated in its contract of insurance, as the case may be, shall be ground for the revocation of any license granted to it to do business in this State, and for the refusal to grant or renew such license as long as said company shall fail to make such payment. The provisions of this law shall be cumulative of other provisions of the laws of this State as to revoking the license of such companies. (Acts
1922, p. 125.)

56-411. Hearing in proceeding to revoke license for failure to pay judgment; order of revocation.-Whenever it shall be brought to the attention of the Insurance Commissioner that any company has failed to pay a judgment under the circumstances stated in the preceding section, it shall be the duty of the said Insurance Commissioner to notify the said company to show cause before him in not less than five days why its license to do business should not be revoked. Upon said hearing if it shall be made to appear to the Insurance Commissioner that the said company has failed to pay a judgment, or so much thereof as is required by this law, under the circumstances provided in the preceding section, it shall be the duty of the Insurance Commissioner to declare the said company's license to do business revoked, and after such declaration the company shall no longer be authorized to transact business in this State, except that it shall be authorized to take such proper steps as may be necessary to liquidate its existing business in this State. (Acts 1922, p. 126.)
56-412. Renewal of license revoked for failure to pay judgment.After a company's license shall have been revoked under this law, the same may be renewed and reinstated by the Insurance Commissioner whenever it shall be made to appear to him that the judgment or judgments of the kind provided in this law, or so much thereof as is required by this law, have been paid, but no company, the license of whIch may hereafter be revoked under the terms of this law, shall have its license reinstated or renewed, or a new license granted to it as long as the judgment or judgments, because of which its licens~ was revoked, shall remain unpaid. (Acts 1922, p. 126.)

56-413. (2437) Revocation of licenses when companies are insolvent or fraudulently conducted; reinstatement of companies.-

56-414

LICENSE TO Do BUSINESS

36

Whenever the Insurance Commissioner shall have reason to believe, from an examination into the affairs of a company, that any insurance company is insolvent or fraudulently conducted or that its assets are not sufficient for carrying on business, as contemplated by law, he shall revoke the license of such company and require said company to cease to do business, giving public notice of such revocation of authority. Any insurance company which has been suspended or which has had its license revoked may be reinstated upon showing that its condition is such as to authorize it to do business, and the Insurance Commissioner may reinstate such company whenever it makes such showing. (Acts 1887, p. 119; 1899, p. 45.)
Cross-reference.-Proceedings in case of insolvency, see 56-106, 56-915,' 56-921 et seq.
56-414. Insurance companies, domestic and foreign, and fraternal benefit societies required to secure license.-No insurance company chartered by this State or by another State or a foreign government, and no fraternal benefit society, shall transact any business of insurance in this State without first procuring a license from the Insurance Commissioner of Georgia, and no such insuranse company or fraternal benefit society shall continue in the business of insurance in this State, or to transact any such business in this State after the expiration of its license, without renewing the same. (Acts 1952, p. ~44.)

56-415. Expiration date of licenses.-All original and renewal licenses shall expire on June 30th following the date of their issuance. (Acts 1952, pp. 144, 145.)

56-416. Application for license; contents; financial statement.Every insurance company chartered by this State or by another State or a foreign government, and every fraternal benefit society, which may desire to begin the transaction of the business of insurance of this State, shall file with the Insurance Commissioner an application for license in such form as the Insurance Commissioner may require. Such application shall set forth the names and addresses of all general officers of the company, with the number of shares of capital stock of the company held by or for each such general officer, or by others for his benefit, and the percentage of the total capital stock of the company held by each such general officer. The application shall also set forth the date on which the company began to do business, and list the States in which it is admitted to do business. The application shall set forth such further facts as the Insurance Commissioner may deem necessary and proper for consideration in passing upon the company's application for license. The application shall be accompanied by the financial statement and other facts required by section 56-402, on forms prescribed by the Insurance Commissioner. (Acts 1952, pp. 144, 145.)

56-417. Additional information in discretion of Commissioner.The Insurance Commissioner may require such additional information as in his discretion he may deem necessary in considering the application of the company for a Georgia license. (Acts 1952, pp. 144, 145.)

56-418. Consideration of application; issuance of license.-The Insurance Commissioner shall consider the application, and if, upon con-

37

LICE SE TO Do BusI ESS

56-421

sideration of the facts set forth in the application, the financial statement of the company and such other evidence as he may require, he shall determine that the company has fully complied with the laws of Georgia regulating the business of in.surance, and is ~a~isfied.tha~ ~he financial statement of the company IS correct, that It IS mamtammg proper reserves, is solvent, and has invested its reserves in sound assets, and if he is of the opinion that the company's financial condition and affairs are sound and such that its transaction of business will not be hazardous to its policyholders, its creditors or the public, he shall issue a license to the company to transact business in this state. Such license shall expire on June 30th following the date of its issue. In determining whether the company has complied with the laws of Georgia, the Insurance Commissioner may consider whether or not it has violated any statute of the State regulating the business of insurance or engaged in any unfair trade practices prohibited by the laws of Georgia, whether or not it has been found guilty of any such violation. (Acts 1952, pp. 144, 145.)

56-419. Application for renewal of license.-Any such insurance company chartered by the laws of this State or by another State or any foreign government, and any fraternal benefit society, which may desire to continue in business in this State after the expiration of its original license, shall file its application to renew its license on or before the first day of March preceding the expiration of such license. Such application for renewal shall be on such form as may be prescribed by the Insurance Commissioner, and he may, in his discretion, require any company applying for a renewal license to furnish to him in a supplementary form attached to the application for renewal all of the things required by this law to be set forth in the original application, and such other information as he may deem advisable to consider the application for renewal of such company's license. It shall be accompanied by the statement and other facts required by section 56-402 showing the financial condition of the company on the 31st day of December then next preceding, on forms prescribed by the Insurance Commissioner. (Acts 1952, pp. 144, 146.)

56-420. Consideration of renewal application; renewal of license.When such application for renewal of its license has been filed by any
such insurance company or fraternal benefit society, the Commissioner
shall consider the same, and if he is satisfied, upon consideration of all the facts and of the matters and things required by this law to be con-
sidered in passing upon an application for an original license, that the
license of such company shall be renewed, he shall renew the same. (Acts 1952, pp. 144, 146.)

56-421. Continuation of business pending consideration of renewal application; hearing.-Every application for a renewal license shall be considered by the Commissioner as promptly as possible, and he shall notify the applicant on or before the 30th day of June following the filing of the application, or as soon thereafter as may be practicable, of his action on the application: Provided, however, that pending consideration of the application after June 30th, and notice from the Commissioner of his action thereon, the applicant may continue its business until notified that its application for renewal of its license has been denied. The Commissioner may conduct such hearings as he may deem necessary in passing upon any application for an original

56-422

LICE SE TO Do BUSINESS

38

license or for the renewal of any annual license. In so doing, he may summon witnesses, administer oaths, and receive parole and documentary evidence. He may conduct such hearings within or without the State, in person or by his duly authorized deputy or agent. (Acts 1952, pp. 144, 147.)

56-422. Hearings on intended denial of renewal application; notice of final action.-When the Commissioner shall tentatively determine that any application for a renewal license should be denied, he shall before finally denying such application notify the applicant of his tentative conclusion and his reasons therefor, and the applicant shall be entitled to a hearing before the Commissioner upon written request therefor, filed within 10 days after notice of the Commissioner's tentative conclusion. Such hearing shall be held within 30 days from such request for a hearing. The Commissioner shall hear such relevant evidence as the applicant may submit, whether parol or documentary, and shall summon witness on behalf of the applicant to testify. He may hold such hearing within or without the State, in person, or by his authorized agent or deputy. He shall consider all the evidence advanced on said hearing in passing upon the application. He shall, within 10 days after the hearing is concluded, notify the applicant of his final action on the application for a renewal license. (Acts 1952, pp. 144, 147.)
56-423. License fee.-Every original and renewed application shall
be accompanied by the fee required by law, which shall be returned to
the applicant if the application is finally denied. (Acts 1952, pp. 144,
148.)
56-424. Renewal applications to which law applicable; additional information in discretion of Commissioner; court review.-This law shall apply to all applications for renewal of licenses heretofore filed by such insurance companies or fraternal benefit societies which are pending before the Insurance Commissioner: Provided, however, that no pending application shall be deemed insufficient because it is not made on the form authorized by this law to be prescribed by the Insurance Commissioner, but the filing of the annual statement by such company shall be deemed an application for the renewal of its license: Provided, further, that the Insurance Commissioner may, in his discretion, require the company to furnish such information as would be disclosed by the form of application prescribed by him, and such additional information as he may deem necessary for a proper consideration of the pending application: Provided, however, nothing contained in this law shall be construed to deny to any applicant for a license any existing right to review by the courts of Commissioner's action as now provided by law. (Acts 1952, pp. 144, 148.)

56-425. Existing law as to applications for licenses superseded.This law shall supersede the existing provisions of law insofar as they relate to the filing of applications for original and renewal licenses by insurance companies and fraternal benefit societies. (Acts 1952, pp. 144, 148.)

39

U FAIR TRADE PRACTICES

56404a

CHAPTER 56-4A. UNFAIR TRADE PRACTICES.

Sec. 56-401a. Declaration of purpose of
Chapter.
56-402a. Definitions. 56-403a. Unfair methods of competition
or unfair and receptive acts or practices prohibited.
56-404a. Unfair methods of competition and unfair or deceptive acts or practices defined.
56-405a. Power of Commissioner. 56-406a. Hearings, witnesses, appear-
ances, production of books and service of process. 56-407a. Cease and desist orders and modification thereof.

Sec. 56-408a. Procedure as to unfair meth-
ods of competition and unfair or deceptive acts or practices other than those defined in section 56-404a.
56-409a. Judicial review of orders of the Commissioner.
56-410a. Same; certiorari by intervenor. 56-411a. Penalty for violation of cease
and de ist order. 56-412a. Provisions of Chapter addi-
tional to existing order. 56-413a. Appointment of staff member
to conduct hearing.

56-401a. Declaration of purpose of Chapter.-The purpose of this Chapter is to regulate trade practices in the business of insurance in accordance with the intent of Congress as expressed in the Act of Congress of March 9, 1945 (Public Law 15, 79th Congress), by defining, or providing for the determination of, all such practices in this State which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined. (Acts 1950, p. 326.)

56402a. Definitions.-When used in this Chapter:
(a) "Person" shall mean any individual, corporation, association, partnership, reciprocal exchange, enter-insurer, Lloyds insurer, fraternal benefit society, and any other legal entity engaged in the business of insurance, including agents, brokers, and adjusters.
(b) "Commissioner" shall mean the Insurance Commissioner of this State. (Acts 1950, p. 326.)

56-403a. Unfair methods of competition or unfair and deceptive acts or practices prohibited.-N0 person shall be engaged in this State
in any trade practice which is defined in this Chapter as, or determined
pursuant to this Chapter to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance. (Acts 1950, pp. 326, 327.)

56-404a. Unfair methods of competition and unfair or deceptive acts or practices defined.-The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:
(1) Misrepresentations and false advertising of policy contracts.Making, issuing, circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby or the dividends or share of the surplus to be received thereon, or making any false or misleading statement as to the dividends or share of surplus previously paid on similar policies or making any misleading representation or any misrepresentatio~ as to the financial conditions of any insurer, or as to the legal reserve system upon which any life insurer operates, or using any name or

56-404a

UNFAIR TRADE PRACTICES

40

title of any policy or class of policies misrepresenting the true nature thereof, or making any misrepresentation to any policyholder insured in any company for the purpose of inducing or tending to induce such policyholder to lapse, forfeit, or surrender his insurance.
(2) False information and advertising generally.-Making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station, or in any other way, an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading.
(3) Defamation.-Making, publishing, disseminating or circulating directly or indirectly, or aiding, abetting or encouraging the making, publishing, disseminating or circulating of any oral or written statement or any pamphlet, circular, article or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, and which is calculated to injure any person engaged in the business of insurance.
(4) Boycott, coercion and intimidation.-Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business or insurance.
(5) False financial statements.-Filing with any supervisory or other public official, or making, publishing, disseminating, circulating or delivering to any person, or placing before the public, or causing directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false statement of financial condition of an insurer with the intent to deceive.
Making any false entry in any book, report or statement of any inSUl"er with intent to deceive any agent or examiner lawfully appointed to examine into its condition or into any of its affairs, or any public official to whom such insurer is required by law to report, or who has authority by law to examine into its condition or into any of its affairs, or with like intent, wilfully omitting to make a true entry of any material fact pertaining to the business of such insurer in any book, report or statement of such insurer.
(6) Stock operations and advisory board contracts.-Issuing or delivering or permitting agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities or any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance.
(7) Unfair discrimination.-(a) Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract.
(b) Making or permitting any unfair discrimination between in-

41

UNFAIR TRADE PRACTICES

56-404a

dividuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of accident or health insurance or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever.
(8) Rebates.-(a) Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any contract of life insurance, life annuity or accident and health insurance, or agreement as to such contract other than as plainly expressed in the contract issued thereon, or paying or allowing, or giving or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance, or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; or giving, t>r selling, or purchasing or offering to give, sell, or purchase as inducement to such insurance or annuity or in connection therewith, any stock, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the contract.
(b) Nothing in subsection 7 or paragraph (a) of this subsection shall be construed as including within the definition of discrimination or rebates any of the following practices: (i) in the case of any contract of life insurance or life annuity, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, provided that any such bonuses or abatement of premiums shall be fair and equitable to policyholders and for the best interests of the company and its policyholders; (ii) in the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expense; (iii) readjustment of the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year.
(9) Failing to properly. instruct and require that agents shall in the solicitation of insurance and the filling out of applications of insurance on behalf of policyholders, incorporate therein all material facts relevant to the risk being written known to the agent, or which could have been known by proper diligence. Tacitly or indirectly encouraging agents to accept applications either with or without intentional fraud of the policyholder, which contain material misrepresentations or conceal material information which, if stated in the application, would prevent the issuance of the policy, thus collecting premiums under circumstances which void a policy from its inception according to its terms, whel'eby the company illegally and unjustly receives and retains funds as to policies on which no claims are presented or, if claims are presented, the company intends to rely and does rely on the parol evidence rule and other technicalities of the law to protect it from liability.
(10) Requiring or imposing as a condition to the sale of real or personal property or to the financing of the same, or as a condition

56405a

UNFAIR TRADE PRACTICES

42

to the granting of or an extension of a loan which is to be secured by the title to or a lien of any kind on real or personal property, or to the performance of any other act in connection with such sale, financing, or lending whether such person thus acts for himself or for anyone else, whatever, that the insurance or any renewal thereof to be issued on said property as collateral to said sale or loan, shall be written through any particular insurance company or agent: Provided, that thiS' section shall not apply to a policy purchased by the seller, financier, or lender from his or its own funds and is not charged to the purchaser or borrower in the sale price of the property or the amount of the loan or required to be paid for out of his personal funds: Provided, further, that such seller, financier, or lender may disapprove for reasons affecting solvency or other sensible and sufficient reasons, the insurance company selected by the buyer or borrower. (Acts 1950, pp. 326, 327.)
56405a. Power of Commissioner.-The Commissioner shall have power to examine and investigate into the affairs of every person engaged in the business of insurance in this State in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by section 56-403a. (Acts 1950, pp, 326, 330.)

56406a. Hearings, witnesses, appearances, production of books and service of process.-(a) Whenever the Commissioner shall have reason to believe that any such person has been engaged or is engaging in this State in any unfair method of competition, or any unfair or deceptive act or practice defined in section 56-404a, and that a proceeding by him in respect thereto would be to the interest of the public, he shall issue and serve upon such person a statement of the charges in that respect and a notice of a hearing thereon to be held at a time and place fixed in the notice, which shall not be less than 15 days after the date of the service thereof.
(b) At the time and place fixed for such hearing, such person shall have an opportunity to be heard and to show cause why an order should not be made by the Commissioner requiring such person to cease and desist from the acts, methods or practices so complained of. Upon good cause shown, the Commissioner shall permit any person to intervene, appear and be heard at such hearing by counselor in person.
(c) Nothing contained in this Chapter shall require the observance at any such hearing of formal rules of pleading or evidence.
(d) The Commissioner, upon such hearing, may administer oaths, examine and cross-examine witnesses, receive oral and documentary evidence, and shall have the power to subpoena witnesses, compel their attendance, and require the production of books, papers, records, correspondence, or other documents which he deems relevant to the inquiry. The Commissioner, upon such hearing, may, and upon the request of any party shall, cause to be made a stenographic record of all the evidence and all the proceedings had at such hearing. In case of a refusal of any person to comply with any subpoena issued hereunder or to testify with respect to any matter concerning which he may be lawfully interrogated, the superior court of Fulton county, or the county where such party resides, on application of the Commissioner, may

43

U FAIR TRADE PRACTICES

56-408a

issue an order requiring such person to comply with such subpoena and to testify; and any failure to obey any such order of the court may be punished by the court as a contempt thereof.
(e) Statements of charges, notices, orders, and other processes of the Commissioner under this Chapter may be served by anyone duly authorized by the Commissioner, either in the manner provided by law for service of process in civil actions, or by registering and mailing a copy thereof to the person affected by such statement, notice, order, or other process at his or its residence or principal office or place of business. The verified return by the person so serving such statement, notice, order, or other process, setting forth the manner of such service, shall be proof of the same, and the return postcard receipt for such statement, notice, order, or other process, registered and mailed as aforesaid, shall be proof of the service of the same. (Acts 1950, pp. 326, 331.)
56-407a. Cease and desist orders and modifications thereof.-(a) If, after such hearing, the Commissioner shall determine that the method of competition or the act or practice in question is defined in section 56-404a, and that the person complained of has engaged in such method of competition, act or practice in violation of this Chapter, he shall reduce his findings to writing and shall issue and cause to be served upon the person charged with the violation, an order requiring such person to cease and desist from engaging in such method of competition, act or practice.
(b) The Commissioner may at any time before the serving of a writ of certiorari upon him (as hereinafter provided for), or after the expiration of the time allowed by law for the serving of such writ, if no such writ has been thus served, amend or set aside in whole or in part any order issued by him under this section, whenever in his opinion the facts and circumstances surrounding the case have so changed as to require such action, or if the public interest shall so require. No change of an order in a manner unfavorable to the person charged, or to the parties at interest, shall be made except after notice and opportunity for hearing. The date of the Commissioner's last order shall be the point of time from which it may be reviewed by' writ of certiorari. (Acts 1950, pp. 326, 332.)

56-408a. Procedure as to unfair methods of competition and unfair or deceptive acts or practices other than those defined in section 56-404a.-(a) Whenever the Commissioner shall have reason to be-
lieve that any person engaged in the business of insurance is engaging in this State in any method of competition or in any act 01' practice in
the conduct of such business which is not defined in section 56-404a, that such method of competition is unfair or that such act or practice
is unfair or deceptive and that a proceeding by him in respect thereto would be to the interest of the public, he may issue and serve upon
such person a statement of the charges in that respect and a notice of a hearing thereon to be held at a time and place fixed in the notice, which shall not be less than 15 days after the date of the service thereof. Each such hearing shall be conducted in the same manner as the hearings provided for in section 56-406a. The Commissioner shall, after
such hearing, make a report in writing in which he shall state his findings as to the facts, and he shall serve a copy thereof upon such person.

56-409a

UNFAIR TRADE PRACTICES

44

(b) If such report charges a violation of this Chapter and if such method of competition, act or practice has not been discontinued, the Commissioner may, through the Attorney General of this State, at any time after 15 days after the service of such report, cause a petition to be filed in the superior court of this State within the county wherein the person resides, or has his principal place of business, to enjoin and restrain such person from engaging in such method, act or practice. The court shall have jurisdiction of the proceeding and shall have power to make and enter appropriate orders in connection the}'ewith and to issue such writs as are ancillary to its jurisdiction or are necessary in its judgment to prevent injury to the public pendente lite.
(c) A transcript of the proceedings before the Commissioner and of his findings shall be filed with such petition. The court may, in its discretion, order additional evidence to be taken before the Commissioner, and to be.adduced upon the hearing, in such manner and upon such terms and conditions as to the court may seem proper. The Commissioner may modify his findings of fact or make new findings by reason of the additional evidence so taken, and he shall file such modified or new findings with the return of such additional evidence.
(d) If the court finds that the method of competition complained of is unfair or that the act or practice complained of is unfair or deceptive, it shall so rule. Having so found, if it further finds that the findings of the Commissioner are supported by evidence it shall issue its order enjoining and restraining the continuance of such method of competition, act, or practice. (Acts 1950, pp. 326, 332.)

56-409a. Judicial review of orders of the Commissioner.-(a) Any order, decision, or the imposition of any penalty by the Commissioner shall be subject to review by writ of certiorari as now provided by law. The Commissioner's findings, upon questions of facts shall be final if sustained by evidence.
(b) To the extent that the order of the Commissioner is affinned, the court shall thereupon issue its own order commanding obedience to the terms of such order of the Commissioner.
(c) Cease and desist orders issued by the Commissioner under section 56-407a shall become final: (1) upon the expiration of the time allowed by law for the filing of a petition for the writ of certiorari, if no such petition has been filed within such time, except that the Commissioner may thereafter modify or set aside his order to the extent provided in section 56-407a, subsection (b) ; or (2) upon the final decision of the court, if the court directs that the order of the commissioner be affinned or the writ dismissed. (Acts 1950, pp. 326, 334.)

56-410a. Same; certiorari by intervenor.-If the report of the Commissioner does not charge a violation of this Chapter, then any inter-
venor in the proceedings may cause a review of such decision by certiorari to the superior court of Fulton county as provided in section
56-409a. Upon such a review, the court shall have authority to issue appropriate orders and decrees in connection therewith, including, if
the court finds that it is to the interest of the public, orders enjoining and restraining the continuance of any method of competition, act
or practice which it finds, notwithstanding such report of the Commis-

45

AGENTS AND SOLICITORS

56501

sioner, constitutes a violation of this Chapter. (Acts 1950, pp. 326, 334.)

56-411a. Penalty for violation of cease and desist order.-Any per-
son who violates a cease and desist order of the Commissioner under section 56-407a, after it has become final and while such order is in
effect, shall, upon proof thereof to the satisfaction of the court, forfeit
and pay to the State of Georgia a sum of not less than $50 and not
exceeding $1,000, which may be recovered in a civil action. (Acts
1950, pp. 326, 334.)

56412a. Provisions of Chapter additional to existing law.-The powers vested in the Commissioner by this Chapter, shall be additional to any other powers to enforce any penalties, fines, or forfeitures authorized by law with respect to the methods, acts and practices hereby declared to be unfair or deceptive.
Nothing contained in this Chapter shall be construed as repealing
or amending the power of the Commissioner to revoke the license of
any insurer or agent thereof, when he is commanded or authorized to do so by existing laws, or on account of a violation of this Chapter. (Acts 1950, pp. 326, 335.)

56-413a. Appointment of staff member to conduct hearing.-Where under the terms of this Chapter the Commissioner is required to hold
a hearing, he is-authorized to appoint a member of his official staff to
conduct it, who shall report to the Commissioner in writing all the
testimony taken and the proceedings had at the hearing, together with
his findings of fact for the Commissioner's action thereon. (Acts 1950, pp. 326, 335.)

CHAPTER 56-5. AGENTS AND SOLICITORS.

Sec. 56-50l. 56-502. 56-503. 56-504. 56-505.
56-506.
56-507.
56-508. 56-509. 56-510. 56-511. 56-512.
56-513.

Definition of insurance agent. Civil liability of agents of un-
authorized companies. License and occupation tax. Prerequisites to obtaining li-
cense. Statement by managing agent
of company showing agents, etc. Acting as agent of company not complying with law; fees; reports.
Fire and casualty insurance agents; liabilities; definitions.
Same; license of agents by Insurance Commissioner.
Same; nonresident's license; application for; term; fee.
Same; license of corporation. Same; where to place busi-
ness; revocation of license. Same; investigation of agents;
revocation or suspension of licenses. Same; inquiry into immoral or

Sec.
56-514. 56-515. 56-516. 56517. 56-518. 56-519. 56-520. 56-521. 56-522.

improper conduct of nonresident agents; suspension or revocation.
Same; sections 56-503 and 56-504 superseded to certain extent.
Same; sections 56-1408 to 56-1425 and 569910 saved.
Licenses to agents of assessment life insurance companies.
Industrial life, accident, or health insurance companies, etc. Agents.
Corporations soliciting or writing life insurance.
False or fraudulent representations.
Nonresident solicitors of life insurance.
Agencies of foreign mutual insurance companies to be licensed.
Commissions on sale of stock, life' insurance policies, or agency contracts.

56-413a

AGENTS AND SOLICITORS

46

Sec. 56-523. 56-524.
56-525. 56-526. 56-527. 56-528.
56-529.

Examination by Commissioner. Who may be appointed as
agent. Temporary license. Renewal of licenses. Agency associations. Unlicensed company forbidden
to do business; penalty. Report and payment of license

Sec.
56-530.
56-531.
56-532. 56-533.

fee and premium tax.
Penalty for failure to report and pay tax.
Assessment of penalty by Insurance Commissioner.
Notice and hearing; appeal. Provisions as to penalty, cu-
mulative.

56501. (2443) Definition of insurance agent.-Any person who shall solicit in behalf of any insurance company, or agent of the same, incorporated by the laws of this or any other State or foreign Government, or who shall take or transmit, other than for himself, any application for insurance or any policy of insurance to or from such company or agent of the same, or who shall advertise or otherwise give notice that he will receive or transmit the same, or who shall receive or deliver a policy of insurance of any such company, or who shall examine or inspect any risk at any time, or receive or collect or transmit any premium of insurance, or make or forward any diagram of any building or buildings, or do or perform any other act or thing in the making or consummating of any contract of insurance for or with any such insurance company, other than for himself, or who shall examine into or adjust or aid in adjusting any loss for or in behalf of any such company, whether any of such acts shall be done at the instance or request or by the employment of such insurance company, or of, or by, any broker or other person, shall be held"to be the agent of the company for which the act shall be done or the risk shall be taken. (Acts 1887, p. 121.)
Cross-referenees.-Licenses to agents of assessment life insurance companies, see 56-516. Unlawful for companies to make contracts affecting competition, see 56-219. Regulating business of fire and casualty insurance companies, see 56-805, 56-1001. Penalty on agents of unauthorized companies, see 56-9905. Excess fire and casualty agents, see Ch. 56-5A. Licensing of life, health, and accident agents, see Ch. 56-5B.

56502. (2445) Civil liability of agents of unauthorized companies.-Any person who shall do any of the acts mentioned in section 56-501 without such insurance company's having obtained from the Insurance Commissioner a certificate of authority as required by law, shall also be personally liable to the holder of any policy of insurance, in respect of which such act was done, for any loss covered by the same: Provided, that the penalties provided for shall not apply to adjusters or inspectors of authorized insurance companies from whom the citizens of this State have pUl'chased insurance for themselves, as provided for in this section, whenever the person or persons purchasing said insurance shall immediately notify the Insurance Commissioner, giving the name and locality of said company in which they have policies, and at the same time pay to said Insurance Commissioner the same licenses, fees, and taxes for each company as are now or may hereafter be required of :fire insurance companies authorized to do business by the laws of this State; and when the license fees for any company have been paid in anyone year by any person or persons who have purchased insurance from said company, no person or persons purchasing insurance from said company thereafter shall be liable for the license -fees of said company during the said year, but only for such taxes on premiums as may be required from time to

47

AGENTS AND SOLICITORS

56-507

time of insurance companies authorized to do business: Provided, further, that said inspectors shall not solicit business for their companies. (Acts 1890-1, p. 205.)
Cross-references.-Unlawful for companies to make contracts affecting competition, see 56-219. Criminal liability, see 56-9905.

56-503. License and occupation tax.-Each local insurance agent, solicitor or subagent, or general, special, traveling, state or district agent, manager or assistant manager, superintendent or assistant superintendent, by whatever name designated, of any insurance company doing business in Georgia, shall pay annually to the Insurance Commissioner in advance and on or before March 1st of each calendar year, an occupation tax of $10 for that calendar year which shall be the full amount of said annual occupation tax payable to the Insurance Commissioner by said persons regardless of the number of counties or extent of territory in which he shall pursue said occupation. (Acts 1950, pp. 122, 123.)
Cross-references.-Licenses to agents of assessment life insurance companies, see 56-516. Agent or solicitor required to procure license, see 56-517. See editorial note following 56-514.
Editorial ote.-Acts 1950, pp. 122, 123, specificially repealed the former subjectmatter of this section, and enacted the above provision which has been codified in its place. The same Act also repealed 56-506 as to agents of companies not complying with the law, and 92-2501 to 92-2504, prescribing fees for various types of insurance agents.

56504. Prerequisites to obtaining license.-All agents soliciting insurance shall, before procuring the license from the Insurance Commissioner, make application to the Commissioner, and before the Commissioner shall issue such license, he shall satisfy himself that such agent is authorized by some reputable insurance company to do business, and the Commissioner shall be advised and convinced as to the moral character and integrity of such applicant for license. (Acts 1912, pp. 119, 124; 151 Ga. 609 (1) (107 S. E. 857).)
Cross-reference.-This section partly superseded, see 56-514.

56-505. Statement by managing agent of company showing agents, etc.-The managing agent of each insurance company shall, on the first day of each quarter of the calendar year, file with the Insurance Commissioner a statement showing the agents of his company, the amount paid for the license of each agent, and the date of its payment, which statement shall be verified by such managing agent. (Acts 1912, pp. 119, 128.)

56-506. (2448) Acting as agent of company not complying with law; fees; reports.-(Repealed by Acts 1950, pp. 122, 124.)

56-507. Fire and casualty insurance agents; liabilities; definitions. -For the purpose of section 56-507 to 56-515, an "insurance agent" is hereby defined to be an individual or a corporation, or any member of a pa~ership or association, or any officer or agent of a corporation, autho~zed by any insurance company lawfully qualified to transact busmess, to solicit, negotiate or effect contracts of insurance on behalf of any insurance company. All such agents shall thereby become liable to all the duties, requirements, liabilities and penalties herein provided.

56-508

AGENTS AND SOLICITORS

48

but this law shall not apply to any executive or traveling salaried employee of any such insurance company. The phrase "company" or "insurance company" shall include only insurance companies writing fire or casualty insurance or both. (Acts 1925, pp. 211, 212.)
Cross-references.-As to effect of this and the following sections on prior law, see 56-514, 56-515.
56-508. Same; license of agents by Insurance Commissioner.-No licensed fire or casualty insurance company or company writing fidelity or surety bonds, shall write or issue any policy or indemnity contract on any risk in this State except through a resident agent licensed by the Insurance Commissioner: Provided, that no contract bond shall be issued by any company, except through an agent, resident of the county in which the work under contract is located, if the company has an agent, resident in the county in question. The full commission thereon, (meaning thereby the commission paid for the production of business by hfm) shall be paid to such resident agent: Provided, however, that such resident agent may pay a commission on business placed with him by another duly licensed resident agent, and, provided further, that such resident agent may pay a commission not exceeding 50 per centum of the regular commission allowed resident agents upon the issuance of such policies or contracts, to a duly licensed nonresident on any business originated by such nonresident. This section shall not apply to policies covering property in transit while in the custody of any common carrier or to rolling stock of any common carrier, nor to cotton insurance issued under a per bale reporting form of coverage. The words "resident agent" as used in this section are deemed to mean resident agents engaged in the solicitation of such business from the public generally and shall not include any salaried employee of any insurance company doing business in this State; but shall include any agents of mutual insurance companies however compensated. Nothing in this section, however, shall be construed to relieve from license requirements any State or special agent, or traveling and/or salaried employee, who performs any of the acts, services or things mentioned in section 56-501, in behalf of any insurer or agent of the same. Such resident agent shall keep a true record of all policies and /01' bonds thus issued through him on business originated by such licensed nonresident and shall furnish, if requested by the Insurance Commissioner, a verified statement showing the risk covered, amount of insurance and premium involved, and such other information as may be required to aid the said Commissioner in the collection of all premium taxes due in this State and the enforcement of the provisions of this Chapter as amended. No person except as hereinafter provided shall be licensed as an insurance agent except upon the application of a company authorized to do business in this State, which said application shall be accompanied by a certificate signed by an executive officer of such company and certifying that after inquiring into the facts to the best knowledge, judgment and belief of such company, such person is of ,good character, is now a bona fide resident of the State of Georgia, and in good faith intends to remain as such resident for a period of 12 months or more from the date of the filing of said application, and is or expects to become bona fide engaged in the business of an insurance agent (as defined in this Chapter), that he has such moral and financial standing as to make it probable that he can carryon such an agency without detriment to the public, that he expects bona fide to solicit'and serve the public generally and not to pro-

49

AGENTS AND SOLICITORS

56-512

cure the license chiefly for the purpose of getting a rebate or commission on insurance written for himself or his family or some partnership or corporation in which he is interested or with which he is connected, and that he has such knowledge of the business and of the law and practices governing and relating to the same as will enable him to carryon the business in a competent manner and without deteriment to the public. (Acts 1935, p. 140.)
Cross-references.-Examination of applicants for license, see 56-523. Who may be appointed agent, see 56-524. Temporary license, see 56-525. Renewal of license, see 56-526. Agency associations, see 56-527.
Editorial Note.-This is a new section superseding original section 56-508. Following this section and purporting to be part of it are five additional sectiOlls relating to the licensing of insurance agents, numbered 56-508(a), 56-508(b), 56-508 (c), 56-508 (d), and 56-508 (e). Instead of breaking into the numerical arrangement of the Code by inserting these lettered sections, they have been placed at the end of the Chapter and renumbered 56-523, 56-524, 56-525, 56-526, and 56-527.

56-509. Same; nonresident's license; application for; term; fee.-A license to be known as a "nonresident's license" shall be granted by the Insurance Commissioner to any nonresident of this State upon the written application of such nonresident certifying that he is regularly licensed by the department of insurance of the State in which he resides, and that he will not negotiate nor effect any contract of insurance on property in this State in whole or in part in any company not qualified to do business in this State, and upon payment to the Insurance Commissioner of a fee of $10. The license shall be good for one year from date of its issuance. (Acts 1925, p. 213.)

56-510. Same; license of corporations.-N0 corporation shall be licensed as an insurance agent unless its charter expressly authorizes it
to engage in that business and unless the company such corporation represents or is to represent certifies in the manner provided for in
section 56-508 that some officer of said corporation is qualified to act as insurance agent; the name of such officer shall be stated in the
license of such corporation and such license shall automatically expire
if and when such officer so certified ceases to hold active connection with said corporation, but may be revived upon the substitution of
some other officer of said corporation, duly certified to and licensed as provided in section 56-508. (Acts 1925, p. 213.)

56-511. Same; where to place business; revocation of license.-No
agent or nonresident shall solicit or be instrumental in placing insurance upon any risk except in a company or companies admitted to do
business in this State; and the violation of this provision shall be sufficient cause for the revocation of such agent's or nonresident's license. (Acts 1925, p. 213.)

. 56-512. Same; investigation of agents; revocation or suspension of licenses.-The Insurance Commissioner may, upon his own motion,
and shall, upon a written complaint signed by a citizen of this State ~nd filed with the Commissioner, inquire into any alleged illegal or ~proper conduct of any licensed insurance agent, and any agent's li<:en~e may be revoked or may be suspended by the Insurance CommISSIOner after giving such agent notice and opportunity to be heard, ~pon satisfactory proof that the agent has been guilty of immoral or Illegal conduct or such practices as to render him unfit to carryon

56-513

AGENTS AND SOLICITORS

50

the business or to make his continuance therein deterimental to the public interests, or that he is no longer bona fide carrying on the business of an insurance agent, but holds his license chiefly for the purpose of securing rebates or commissions on insurance written for himself or his family or some partnership or corpomtion in which he is interested or with which he is connected, or that the license was improperly or improvidently granted. Notice to such agent shall be sufficient if given personally or by registered mail to the last known address of such agent, or, if the agent's address shall be unknown, by posting in the public office of the Insurance Commissioner in the State capitol for 10 days prior to the date of such inquiry. In connection with such inquiry, the Insurance Commissioner shall have the power to summon witnesses against any agent, and shall, upon the application of such agent, summon his witnesses for the purpose of testifying at such inquiry. (Acts 1925, p. 214.)

56-513. Same; inquiry into immoral or improper conduct of non-
l'esident agents; suspension or revocation of licenses.-The Insurance Commissioner may, upon his own motion, and shall, upon a written
complaint signed by a citizen of this State and filed with the Com-
missioner, inquire into any alleged illegal or improper conduct of any
licensed nonresident insurance agent, and any nonresident's license may be revoked or may be suspended by the Insurance Commissioner
after giving such nonresident notice an opportunity to be heard, upon
satisfactory proof that the nonresident has been guilty of immoral or
illegal conduct or such practices as to render him unfit to carryon the business or to make his continuance therein detrimental to the public interests, or that the license was improperly or improvidently granted. Notice to such nonresident shall be sufficient if given personally or by registered mail to the last known address of such nonresident or if the
nonresident's address be unknown by posting in the public office of the Insurance Commissioner in the State capitol for 10 days prior to the
date of such inquiry. In connection with such inquiry, the Insurance Commissioner may summon witnesses against any agent, and shall,
upon the application of such non-resident, summon his witnesses for the purpose of testifying at such inquiry. (Acts 1925, p. 214.)

56-514. Same; sections 56-503 and 56-504 superseded to certain extent.--Sections 56-507 to 56-513 shall supersede the provisions of sections 56-503 and 56-504, as far as they relate to the business of fire and casualty insurance, except to the extent that the agent shall first be designated by some company authorized to do business in this State as its agent before a license other than a nonresident license shall be issued to him. (Acts 1925, p. 215.)
Editorial Note.-While this section provides that sections 56-507 to 56-513 shall partially supersede sections 56-503 and 56-504, this provision relates to these latter two sections as they appear in the Code of 1933. It should be noted that section 56-503 was repealed in its entirety by Acts 1950, pp. 122, 123, and that the present section 56-503 was codified from this same Act. Since present section 56-503 is now later in date, it would seem that the provisions of this section no longer apply insofar as that section is concerned.

56-515. Same; sections 56-1408 to 56-1425 and 56-9910 saved.Nothing in sections 56-507 to 56-514 contained shall be construed as repealing or affecting the provisions of sections 56-1408 to 56-1425 or
56-9910, relating to the organization of, or the regulation and taxation

51

AGE 'TS AXD SOLICIT9RS

56520

of incorporated mutual cooperative fire insurance companies; nor shall the provisions of said ~ections apply to .said compa~ies or to their agents in the transacbo?- of ~heir busme~~: ProvIded,. also, that mutual insurance compames whlCh Issue po!lcies upon whlCh no compensation is paid to a local agent in this State, licensed to do business in this State, may have their agents licensed on the application for
the license and the payment of the license fee, and the requirements
of section 56-508 as to the qualifications for agents to obtain license
shall not apply in such instances. (Acts 1925, p. 215.)

56-516. (2456) Licenses to agents of assessment life insurance companies.-Mter authorizing a life indemnity or insurance corporation or association to do business upon the assessment plan as provided in sections 56-322 and 56-1501, the Insurance Commissioner shall issue licenses to agents thereof, to be designated by the corporation or association, or a general agent thereof, authorizing them to act as such agents during the year for which said company is licensed; but such licenses must be renewed annually. (Acts 1887, p. 125.)
Cross-references.-Regulating business of fire and casualty insurance companies, see 56-805, 56-1001. Agent's license, see 56-503. Penalty on agents of unauthorized companies, see 56-9905.
56-517. Industrial life, accident, or health insurance companies, etc. Agents.-No person shall act as agent or solicitor for any insurance company, benefit association, or fraternal organization issuing industrial life, accident, or health policies, membership, or beneficial certificates without first having procured a license therefor from the Insurance Department as required by law. (Acts 1913, pp. 98, 99.)

56518. Corporations soliciting or writing life insurance.-Any company incorporated for the purpose of soliciting or writing life insurance or for the purpose of offering stock in said company for sale to the public, before procuring a license for such corporation, shall comply with such reasonable rules and regulations as the Insurance Commissioner may in his discretion prescribe. (Acts 1912, pp. 119, 130.)

56-519. False or fraudulent representations.-It shall be unlawful for any person, firm or corporation to make or cause to be made any fraudulent or false representations as to the form, nature and character of the policy offered for sale, and no person shall sell a different form or character of policy from that which he represents himself as selling, or make any other material misrepresentation as to the benefits accuring under any policy which he sells or offers for sale. Any note or other evidence of debt given in consideration of said policy shall be null and void and any premiums paid on such policy may be recovered by such policyholder in any court having jurisdiction thereof. (Acts 1912, pp. 119, 124.)
Cross-reference.-Punishment for violation, see 56-9906.

56520. Nonresident solicitors of life insurance.-Residents of other States which permit residents of this State to be licensed to
solicit life insurance in such States may reciprocally be authorized to solicit life insurance in this State, upon procuring a certificate of
authority from the Insurance Commissioner, and upon paying the fee

56521

ACE 'T AND SOLICITORS

52

required by law for issuing licenses to resident agents: Provided, application shall be made for such certificate by a life insurance company, duly authorized to do business in this State. (Acts 1933, p. 180.)

56-521. (2534) Agencies of foreign mutual insurance companies to be licensed.-Agents of all foreign insurance companies shall obtain a license before taking insurance in this State, under the penalties and in accordance with the provisions of this Code.
Cross-references.-Definition of insurance agent, see 56-501. Licenses to agents of assessment companies, see 56-516.
56-522. Commissions on sale of stock, life insurance policies, or agency contracts.-No officer, agent or other person selling or negotiating stock in any insurance company shall receive either directly or indirectly more than 10 per cent. of the sales of any of said stock. No president, vice president, secretary, treasUler, or director or any other executive officer of any insurance company shall participate in the commissions received by any person selling or negotiating the sale of any stock of any insurance company either directly or indirectly, nor shall any salaried officer of any insurance company participate in the commissions arising from the sale of life insurance policies or agency contracts of such companies. (Acts 1912, pp. 119, 129.)
56-523. Examination by Commissioner.-After receipt of application for such agent's license in due form (and if said application is from a first time applicant for license, it shall be accompanied by an examination fee of $10, to be paid by agent), it shall be the duty of the Insurance Commissioner, or his deputy or any person he may designate to represent him, within a reasonable time and in a place reasonably accessible to the applicant, in order to determine the trustworthiness and competency of an applicant, for a license, to subject each first-time applicant for license, if he deems necessary, any applicant for renewal of license, to a personal written examination as to his or her competency to act as such agent in the community which he intends to serve. When it is shown from such application and examination that the applicant is intending in good faith to act as an insurance agent or solicitor and to be principally engaged in the insurance business and is of good character, is now a bona fide resident of the State of Georgia, and in good faith intends to remain as such resident for a period of 12 months or more from the date of the filing of said application, and is or expects to become bona fide engaged in the business of an insurance agent (as defined in this Chapter), that he has such moral and financial standing as to make it probable that he can carryon such an agency without detriment to the public, that he expects bona fide to solicit and serve the public generally and not to procure the license chiefly for the purpose of getting a rebate or commission on insurance written for himself or his family or some partnership or corporation in which he is interested or with which he is connected, and that he has such knowledge of the business and of the law and practices governing and relating to the same as will enable him to carryon the business in a competent manner and without deteriment to the public, and is worthy of a license, the Insurance Commissioner shall issue to the applicant a license to transact business in this State as an insurance agent or solicitor. Such license shall "expire annually on the first day of March unless sooner revoked for cause by the Insurance Commissioner: Provided, that no agent holding a license

53

ACE TS AND SOLICITORS

56528

at the time of the enactment of this law shall be deemed a first-time applicant. (Acts 1935, p. 141.)
Cross_references.-Insurance agent defined, see 56-501. License of agents, see 56-508.
Editorial Note.-This is a new section, numbered 56-508(a) in the Act. The Act was approved March 28, 1935.

56-524. Who may be appointed as agent.-Any company lawfully authorized to transact business in this State may contract with and appoint as its representative in this State any person as its agent who holds an unexpired agent's license issued under the provisions of this Chapter by filing with the Insurance Commissioner a certificate showing the ~ame and address of such appointee and by paying such fee as is provided by law. (Acts 1935, p. 142.)
Editorial Note.-This new section is numbered 56-508(b) in the Act.

56-525. Temporary license.-In the event of the death or the inability further to act, of an agent holding a certificate of authority from any company, where no other agent in the copartnership, association or corporation is authorized to represent such company, the Insurance Commissioner may issue a temporary license to another person enabling such other person to represent any such company upon an application being made in conformity with section 56-523 and the additional information required by this section. Such temporary license shall continue only until the licensee is afforded an opportunity of taking the examination provided in section 56-523. (Acts 1935, p.
143.)
Editorial Note.-This new section is numbered 56-508(c) in the Act.

56-526. Renewal of licenses.-Renewal of all expiring licenses shall be upon application in writing, subject to the conditions of examination of such applicants as set forth in section 56-523 for renewal of license, and upon payment of the annual insurance agent's occupational tax: Provided, that should the Commissioner require an examination for renewal of such license, no examination fee shall be required. (Acts 1935, p. 143.)
Editorial Note.-This new section is numbered 56-508(d) in the Act.

56-527. Agency associations.-Associations may be formed or maintained by all or any class of the regularly licensed insurance agents referred to in this Chapter for the purpose of maintaining the ethics of the profession and forwarding their aims. It shall be lawful for such associations to make and enforce bylaws deemed by such associations needful to carry out such purposes. (Acts 1935, p. 143.)
Editorial Note.-This new section and the four preceding sections follow new 56-508 in the Act of 1935, being numbered 56-508(a), 56-508(b), 56-508(c), 56-508(d), and 56-508(e). In order to preserve the numerical arrangement of the Code these five sections have been placed in their present position and numbered 56-523, 56-524, 56-525, 56-526, and 56-527.

56-528. Unlicensed company forbidden to do business; penalty.-
No corporation, individual, firm or association not licensed in Georgia to tt:ansact the business of fire and casualty insurance, or the writing and Issue of fidelity and surety bonds, shall so engage in such business

56-529

ACE TS A 'D SOLICITORS

within the limits of this State; nor shall any person act as agent for any company, individual, firm, or association engaged in the writing of such business, unless such person has himself first received a license from the Insurance Department to represent a company duly authorized in the State. Penalty for the violation of this provision on the part of the corporation, individual, firm or association illegally engaged in the writing of business in this State as herein provided shall be $1,000 for the first offense and $2,000 for each additional offense. (Acts 1935, p. 144.)
Cross-reference.-Penalty for acting as agent for unlicensed company, see 56-9919.
Editorial ote.-This section as it appears in the published laws for 1935 in the second and third lines reads "the business of a fh'e and casualty insurance." This appears to be a clerical error. It should be as above, or "company" should follow "insurance."

56-529. Report and payment of license fee and premium tax.-No individual, firm, corporation, or association residing or doing business in this State shall accept a policy of fire or casualty insurance, or fidelity or surety bond issued by a nonadmitted company, individual, firm or association in violation of section 56-528, unless such individual, firm, corporation, or association shall immediately report the fact to the Insurance Commissioner, giving the name of the company issuing the policy or contract stating its amount and the premium paid thereon, and shall thereupon pay to the Insurance Commissioner the license fee properly chal'geable against such company if it were admitted to the State, and the premium tax chargeable under section 92-2509 upon the amount of premium so paid. (Acts 1935, p. 144.)
Editorial ote.-Section 92-2509 was repealed by Acts 1945, pp. 419, 421.

56-530. Penalty for failure to report and pay tax.-Failure so to report and pay the license fee and premium tax mentioned in section 56-529 shall subject such individual, firm, corporation or association to a penalty of 10 per cent. of any such sum as may be paid as indemnity by such insurer to the assured in the event of a loss. Such penalty may be collected upon the establishment of such fact in a civil suit by any informer in any court having jurisdiction thereof, one-half of the amount of such recovery to go to the informer and the other half to be paid to the Insurance Commissioner to be placed by him in the general funds of the State; or the same may likewise be recovered upon the establishment of such fact in a civil suit brought in the name of the State of Georgia by the solicitor general of the circuit where such act may have been done, in which event the solicitor general shall be paid 10 per cent. of the amount received. (Acts 1935, p. 144.)

56-531. Assessment of penalty by Insurance Commissioner.-If any licensed company shall violate any of the provisions of this Chapter as amended, the Insurance Commissioner may, upon his own motion, and shall upon sworn information in writing signed by a citizen of this State and filed with the Commissioner, make due inquiry, in the form and manner hereinafter provided, into any such . alleged violation of the provisions of this Chapter, and upon proof being presented, the sufficiency of which shall be determined by him, the Commissioner shall assess a penalty of $100 for each offense. (Acts 1935, p. 145.)

55

EXCESS FIRE, ETC.

56-501a

56-532. Notice and hearing; appeal.-No penalty as provided in section 56-531 shall be imposed upon such alleged violator until a written copy of such charges, together with a citation, requiring appearance before the Insurance Commissioner at the State capitol on a day certain to be fixed by the Insurance Commissioner, at a time not less than 20 days after the service of such citation and copy of charges then and there to show cause in writing why such penalties should ~ot be inflicted. Service of such citation and copy of charges shall be made upon its attorney in fact designated to acknowledge or receive service in the manner provided by law for such service.
For the purpose of such inquiry the Insurance Commissioner is hereby empowered to summon witnesses, so as to enable him to make a determination of the merits. Any order of the Insurance Commissioner suspending or revoking any license shall be subject to an appeal on the same terms and in the same manner and form as is now provided by law for appeals from the decisions of the courts of ordinary of this State. (Acts 1935, p. 145.)

56-533. Provisions as to penalty, cumulative.-Any penalty or penalties provided for in sections 56-528 to 56-532, inclusive, shall be in addition to and cumulative to any other penalty or penalties heretofore provided for by law. (Acts 1935, p. 145.)
Editorial ote.-Acts 1935, p. 139, is codified as sections 56-508, 56-523 to 56-533, inclusive. Section 3 of the Act provides: "That it is specifically declared to be the intention of the General Assembly to enact each and every one of the ections herein contained separately and independently of each other; and therefore, in the event that any section of this Act shall be declared to be void or unconstitutional by any court of competent jurisdiction, such decision shall not affect the remainder of this Act or any other section hereof."

CHAPTER 56-5A. EXCESS FIRE OR CASUALTY INSURANCE AGENTS.

ec. 56-SOla. Certificate of ~uthority to
place excess Insurance in companies not admitted to do business in State. 56-502a. Definition of "casualty insur-
ance." 56-503a. Application for licen e; con-
tents. 56-504a. Terms of license. 56-505a. Procedure after policy of in-

Sec. surance procured.
56-506a. Accounts and records to be kept by licensee.
56-507a. Specifications as to policy of insurance.
56-508a. Surety bond of agent; con-
tents; tax. 56-509a. Recovery of tax.
!", f, I 1t;'1 f{ult.. ~ 'lnf~ rc:4!tl!~tl1 r.~
56-511a. Revocation of license.

56-50la. Certificate of authority to place excess insurance in companies not admitted to do business in this State.-The Insurance Commissioner, upon payment of an annual license fee of $200, may issue to an agent who is already regularly licensed to represent one or more companies writing fire and allied lines of insurance or casualty insurance authorized to do business in this State, a certificate of authority authorizing him to place excess lines of fire or casualty insurance in companies or with insurers not admitted to do business in this State, by complying with the conditions stated in this law. (Acts 1949, p. 1201.)
56-502a. Definition of "casualty insurance."-"Casualty insurance," as herein used, shall not include insurance against sickness,

56-503a

EXCESS FIRE, ETC.

56

disease or accidental death, or against medical, surgical or hospital expense, or similar insurance customarily insured under personal accident-and-health policies, but shall include bodily injury liability
and property damage liability insurance. The agent so licensed shall have the general character of an insurance broker and shall be liable to the insured in such capacity. (Acts 1949, pp. 1201, 1202.)

56503a. Application for license; contents.-Before any such license shall be issued or renewed by the InsUlance Commissioner, there shall be filed in his office a written application by the person desiring such license in such form or forms, and supplements thereto, and containing such information as the Commissioner may prescribe. (Acts 1949, pp. 1201, 1202.)
56504a. Terms of license.-Every such license shall be issued for a term expiring on the first day of March next following the date of its issuance, and may be renewed annually upon the filing of an application in conformity with this section and paying the fee prescribed by section 56-501a. (Acts 1949, pp. 1201, 1202.)

56-505a. Procedure after policy of insurance procured.-When any policy of insurance is procured under the authority of such license, there shall be executed, both by the licensee and by the insured, affidavits setting forth facts showing that such insured and such licensee were unable after diligent effort to procure, from any authorized insurer or insurers, the full amount or kind of insurance required to protect the property or the risk insured, and further showing that the amount of insurance procured from an unauthorized insurer or insurers is only the excess over the amount, if any, so procurable from authorized insurers. Such affidavits shall be filed by such licensee with the Insurance Commissioner within 30 days after such policies have been procured. (Acts 1949, pp. 1201, 1202.)
56-506a. Accounts and records to be kept by licensee.-Each person so licensed shall keep a separate account of each policy written or renewed, open for inspection at all times, without notice, by the Insurance Commissioner or his representative, showing the exact amount of insurance placed, the name and post office address of the insured, the name and home address of the insurance company or insurer, the location of the insured property, the gross premium charged therefore, the nature of the risk, the number, date and term of the policy and such other information as may be required by the Insurance Commissioner. (Acts 1949, pp. 1201, 12'02.)
56-507a. Specifications as to policy of insurance.-Each policy shall have written or printed on the outside of it the name of the licensed agent who obtained the same and introduced it into the State, and after his name shall appear the words "licensed excess insurance agent," followed by his post office address. The licensee shall also stamp or write upon the filing face and the first page of each policy so issued the words "this company is not licensed to do business in Georgia." (Acts 1949, pp. 1201, 1203.)
56-508a. Surety bond of agent; contents; tax.-Before receiving such license or any renewal thereof, such person shall execute and

57

LICE sINe OF LIFE ETC.

56-SUa

deliver to the Insurance Commissioner a bond, to be aI?pl:oved by t~e Commissioner, made payable to the Insurance CommIsSIOner or hIs successors in office, executed by such person as principal and by a surety company authorized to do business in this State, as surety, in the penal sum of $5,000, conditioned that the licensee shall faithfully comply with all requirements of this law and will file with the said Commissioner before March 1 of each year a sworn statement showing the gross premiums charged for insurance procured or placed in such unauthorized companies and the gross premiums returned on canceled policies during the year ending the 31st day of December next preceding, and that at the time of filing such statement will pay to the Insurance Commissioner a sum equal to three per cent. of such gross premiums less premiums returned on account of canceied policies so reported. It shall be the duty of the licensee to file such report a}ld to pay said tax, as herein provided. (Acts 1949,
pp. 1201, 1203.)

56-509a. Recovery of tax.-Such tax if not paid shall be recoverable in a suit brought by the Insurance Commissioner against the licensee and his surety. (Acts 1949, pp. 1201, 1203.)

56-510a. Rules and regulations.-The Insurance Commissioner is authorized to prescribe any rules and regulations which shall Pl'()mote the enforcement of this law. (Acts 1949, pp. 1201, 1203.)

56-511a. Revocation of license.-The license provided for in this law may be revoked or the renewal thereof refused for the failure of the agent to pay the tax or to file the affidavits specified herein, or if the agent procures excess line policies or contracts without exercising diligent effort to secure the required business in duly authorized and licensed companies, or if the agent procures excess line policies or contracts from companies having standards of solvency and management which do not meet the requirements necessary for the protection of the policyholders, or for his failure to comply with any other provisions of this or other laws regulating the licensing of insurance agents. (Acts 1949, pp. 1201, 1203.)

CHAPTER 56-5B. LICENSING OF LIFE, HEALTH AND ACCIDENT INSURANCE AGENTS.

Sec. 56-501b. Definitions. 56-502b. Representing unauthorized in-
surers prohibited; personal liability of agent. 56-503b. Necessity for license; doing
business with unlicensed agent prohibited. 56-504b. Application for license; certificate of insurer; examination fee. 56-505b. Examination of applicants. 56-506b. Rules and regulations of Com-
missioner as to classification of applicants; type and conduct of examinations; advisory board. 56-507b. Notice as to results of exami-

Sec:
nation; issuance of license; types of licenses.
56-508b. Licenses to nonresidents; reciprocal agreements; requirements.
56-509b. Additional licenses; placement of excess or rejected risks.
56-510b. Expiration and renewal of
licenses; requests for renewal. 56-511b. Temporary licenses.
56-512b. License revoked upon termination of appointment of agent; relative information
as privileged communication.

5650lb

LICE- SING OF LIFE, ETC.

58

Sec.
56-513b. Refusal, suspension, or revocation of license; notice; hearing; revocation as bar to
issuance of new license. 56-514b. Notice of change of address
by licensee.
56-515b. Rules and regulations estab-

Sec. lished by Commissioner.
56-516b. Inquisitorial powers in con duct of hearings; evidence adduced as privileged.
56-517b. License without examination of persons presently acting as agents.

Editorial Note.-This Chapter was approved March 4, 1953, and was to become
effective 90 days thereafter. The budget authority was authorized and required to set aside funds for its administration. (See Acts 1953, pp. 497, 612.)

56501b. Definitions.-Wherever used in this Chapter certain terms shall be defined as follows:
A. The term "agent" shall mean any authorized or acknowledged agent of an insurer and any subagent of such agent who acts as such in the solicitation of, negotiation for, or procurement or making of a contract of life, health or accident insurance, or making of an annuity contract; except that the term "agent" shall not include any regula salaried officer or employee of a licensed insurer or of a licensed insurance agent who does not solicit or accept from the public appli cations for any such contract. The term "agent" shall not include an representative of a nonprofit hospital service corporation as define and regulated in Chapter 99-10, or the representative of a nonprofi medical service corporation as defined and regulated in Chapte 99-10A, or the representative of any fraternal benefit society defined and regulated in Chapter 56-16. A regular salaried officer 0 employee of an insurer authorized to do business in this State shall not be deemed to be an "agent" by reason of rendering assistance to or on behalf of a licensed insurance agent, provided that such salaried officer or employee devotes substantially all of his time to activities other than the solicitation of applications for life, health or accident insurance or annuity contracts, and receives no commission or other compensation diTectly dependent upon the amount of business obtained: Provided, however, that under a group insurance plan a person who serves the master-policyholder of group insurance in administering the details of such insurance for the employees or debtors of such person, or of a firm or corporation by which he is employed, and who does not receive insurance commissions for such services, shall not be deemed to be an agent.
B. The term "subagent" shall mean any person (except as provided in paragraph A of this section) who acts for or on behalf 0 a licensed agent in the solicitation of, negotiation for, or procuremen or making of a life, health or accident insurance contract or annuit contract, whether or not he be designated by such agent as subagent or a solicitor or by any other title including the members of a partnership and the officers, directors, stockholders or employees of a corporation. Each subagent shall be deemed to be an agent as defined
in paragraph A of this section and wherever in succeeding sections of
this Chapter the term "agent" is used, it shall include subagents whether or not they are specifically mentioned. Each such person shall individually file an application for license and submit to a
written examination as hereafter provided for applicants for an
agent's license.

59

56-503b

C The term "insurance contract" for the purposes of this Chapter shail mean any contract or policy effecting life insurance as defined in section 56-901, or health or accident insurance or any annuity contract on behalf of any company or insurer engaged in the business of writing life, health or accident insurance or annuity contracts.
D. The term "excess risk" shall mean all or any portion of a life, health or accident insurance risk or contract of annuity for which application is made to an agent, and which exceeds the amount of insurance or annuity which shall be provided by the insurer for which uch agent is licensed.
E. The term "rejected risk" shall mean a life, health or accident insurance risk or annuity contract for which application has been made to an agent and which insurance or annuity contract is declined by the insurer for which such agent is licensed.
F. The term "agency" shall mean any person, partnership or corporation engaged in business as an agent as defined in pamgraph A of this section: Provided that if the agency shall be a partnership or corporation, all partners, officers, directors, stockholders and employees who shall act as agents shall be licensed in lieu of the partnership or corporation, and no license shall be issued to or in the name of the partnership or corporation.
G. The term "Commissioner" shall mean the Commissioner of Insurance of the State of Georgia.
H. The terms "company" and "insurer" shall mean a corporation, association, order, or society, subject to the insurance laws of this State, writing life, health and accident insurance, or annuity contracts, but shall not include fraternal benefit societies as defined and regulated by Chapter 56-16, nonprofit hospital service corporations as defined and regulated by Chapter 99-10, or nonprofit medical service corporations as defined and regulated by Chapter 99-10A. (Acts 1953, pp. 497,498.)
Cross-referenee.-Penalty for violation of Chapter, see 56-9935.

56502b. Representing unauthorized insurers prohibited; personal liability of agent.-No person, partnership or corporation shall, within this State, solicit, procure, receive or forward applications for life, health or accident insurance or annuities or issue or deliver poIrcies for or in any manner secure, help or aid in the plaeing of any contract of life, health or accident insurance or annuity fOl" any person other than himself, directly or indirectly, with any insurer not authorized to do business in this State. Any person, partnership or corporation shall be liable for the full amount of any loss sustained on any contract of life, health or accident insurance or annuity made by or through him or it, directly or indirectly, with any insurer not auth~rized to do business in this State, and, in addition for any prenuum taxes which may become due under any law of this State by reason of such contract. (Acts 1953, pp. 497, 500.)

56503b. Necessity for license; doing business with unlicensed agent prohibited.-A. No person shall act as an agent within this S~te until he shall have first procured a license from the CommissIoner.

56504b

LICE 51 G OF LIFE, ETC.

60

B. No insurer or agent doing business in this State shall pay, di. rectly or indirectly, any commission or any other valuable consideration to any person for services as an agent within this State, unless such person shall hold a currently valid license to act as an agent as required by the laws of this State; nor shall any person, partnership or corporation, other than a 'duly licensed agent or an agency as herein defined, accept any such commission or' other valuable consideration: Provided, however, that the provisions of this section shall not prevent the payment or receipt of renewal or other deferred commissions to or by any person solely because such person has ceased to hold a license to act as an agent; and Provided, further, that the provisions of this section shall not prevent the payment or receipt of any commission or any other valuable consideration to or by a person who has applied for a temporary license pursuant to section 56-51lb, paragraph (C) pending issuance of such temporary license.
(Acts 1953, pp. 497, 500.)

56-504b.-Application for license; certificate of insurer; examina tion fee.-A. Each applicant for a license to act as an agent within this State shall file with the Commissioner his written application on forms furnished by the Commissioner. The application shall be signed and verified by oath of the applicant. The prescribed form shall require the applicant to state his full name, residence, age, occupation and place of business for five years preceding date of the application; whether applicant has ever held a license to solicit insurance contracts in any State, and if so, what State; whether he has been refused, or has had suspended or revoked, a license to solicit insurance contracts in any State; what insurance experience, if any, he has had; what instruction in insurance and in the insurance laws of this State he has had or expects to have; whether any insurer or general agent claims that the applicant is indebted under an agency contracted or otherwise, and if so, the name of the claimant, the nature of the claim, and the applicant's defense thereto; whether applicant has had an agency contract cancelled, if so, when, by what company or general agent and the reason therefor; whether applicant will devote all or part of his efforts to acting as an insurance agent, and if part only, how much time he expects to devote to such work and in what other business or businesses he is engaged or employed; whether, if applicant is a married person, the husband or wife has ever applied for or held a license to solicit life or any other insurance in any State, and whether such license has been refused, suspended, or revoked; and such other information as the Commissioner, in his discretion, may require.
B. The application shall be accompanied by a certificate on forms furnished by the Commissioner and signed by an officer or properly authorized representative of an insurer stating that the insurer has investigated the character and background of the applicant and is satisfied that he is trustworthy and qualified to act as its agent and to hold himself out in good faith to the general public as an agent and that the insurer desires that the applicant be licensed as an agent to represent it in this State.
C. If an applicant shall be required to take an examination, as hereinafter prescribed, his application shall be accompanied by an examination fee in the amount of $5, which shall not be refunded. This fee shall be charged for the privilege of taking only the first

61

LICENSING OF LIFE, ETC.

56506b

examination, or combination thereof, as set forth in section 56-506b, paragraph (B) (4) and (5), and the fee for the privilege of taking any subsequent examination, or combination thereof, shall be $3.
(Acts 1953, pp. 497, 501.)

56-505b. Examination of applicants.-Each applicant for a license to act as an agent within this State shall submit to a personal written examination to determine his competence to act as an agent and his familiarity with the pertinent provisions of the insurance laws of this State, and shall pass the same to the satisfaction of the Commissioner; except that no such written examination shall be required :
A. Of an applicant for a renewal license, unless the Commissioner determines that such an examination is necessary to establish the competency of the applicant; or unless a license had not been effective as to such applicant within two years preceding the date of filing the application.
B. Of an applicant who is a ticket-selling agent of a railroad or steamship company, carrier by air or public bus carrier who shall act as agent or solicitor in the sale of accident insurance tickets to individuals.
C. In the discretion of the Commissioner of an applicant who shall be licensed to act only as an agent with respect to group life, health and accident insurance on borrowers or debtors commonly known as group credit life, health and accident insurance.
D. In the discretion of the Commissioner of an applicant whose license to do business or act as an agent in this State was suspended less than one year prior to the date of application. (Acts 1953, pp. 497, 502.)

56-506b. Rules and regulations of Commissioner as to classification of applicants; type and conduct of examination; advisory board. -A. The Commissioner may establish rules and regulations with respect to:
(1) The classification of applicants according to the type of insurance contracts to be effected by them if licensed as agents.
(2) The scope, type and conduct of written examinations to be given pursuant to this section, and the times and places within this State for the holding of such examinations: Provided, however, that an applicant shall be permitted to take an examination once in each two weeks in the principal office of the Commissioner: and Provided further that an examination shall be held at least as often as once in each two months, in each Congressional District.
.B. Such rules and regulations, when established, shall classify applIcants for purposes of this section as follows:
(1) Those desiring to write life insurance.
(2) Those desiring to write accident and health insurance other than weekly premium accident and health insurance.
. (3) Those desiring to write weekly premium accident and health Insurance.
(4) Those desiring to write any combination of two or more of the above classifications, and

56507b

LICENSING OF LIFE, ETC.

62

(5) Such other classifications as, in the opinion of the Commissioner, are necessary or appropriate.
C. Examinations shall be prepared and given in those subjects only which pertain to the classification or classifications which the applicant desires to write, and no applicant shall be required to take an examination on a subject or subjects pertaining to any other classification.
D. The rules and regulations of the Commissioner, when established, shall designate textbooks, manuals and other materials to be studied by the applicants in preparation for examinations in each classification designated by the Commissioner pursuant to this section. Such textbooks, manuals or other materials may consist of matter available to applicants by purchase from the publisher or may consist of matter prepared at the direction of the Commissioner and distributed to applicants upon request therefor, and payment of reasonable costs thereof. When textbooks, manuals or other materials shall have been designated or prepared by the Commissioner pursuant to this section, all examination questions shall be prepared from the contents of such textbooks, manuals or other materials.
E. No person who shall have taken and failed to pass two examinations given pursuant to this section with respect to a particular class or classes of insurance shall be entitled to take any further examination with respect to such class or classes until after the expiration of six months from the date of the last examination in which he failed. If such person shall thereafter fail to pass two or more such examinations. he shall not be eligible to take any further examination until after the expiration of one year from the date of his last unsuccessful examination. An examination fee shall be paid for each and every examination: Provided, however, that an applicant shall be permitted to take a single examination covering all classes of insurance contracts as defined in paragraph (C), section 56-501b.
F. The Commissioner may appoint an advisory board of five or more persons to make recommendation to him with respect to the scope, type, and conduct of written examinations and the times and places in the State where they shall be held. This advisory board, if appointed, shall consist of individuals experienced in the life, annuity, health and accident insurance business, and may include officers and employees, general agents and managers and licensed agents of companies engaged in such business. The members of the advisory board shall serve without pay, but upon the authorization of the Commissioner, shall be reimbursed for their reasonable expenses in attending meetings of the advisory board. (Acts 1953, pp. 497, 503.)
Cross-reference.-General authority of Commissioner to promulgate rules and regulations for administration of Chapter, see 56-515b.
56-507b. Notice as to results of examination; issuance of license; types of licenses.-A. If the Commissioner is satisfied that the applicant is trustworthy and competent and the applicant, if required, has passed a written examination, the Commissioner shall forthwith issue a license limited to the insurer and class or classes of insurance for which the agent is to be appointed. If the applicant has not passed his written examination or for any of the reasons set forth in

63

LICE SINe OF LJFE, ETC.

565l0b

section 56-513b, the Commissioner shall notify the applicant and the insurer, in writing, that a license will not be issued to him.
B. In any case where a license is applied for to represent an insurer authorized in this State to transact an accident and health. as well as a life insurance business, the Commissioner may, on request of the applicant, issue a single license authorizing the applicant to represent the insurer with respect to both types of business, provided that the applicant, in addition to qualifying under this Chapter, has ~tisfied the Commissioner as required by the laws of this State and the regulations of the Commissioner, if any, that he is competent to represent such insurer with respect to the types of accident and health insurance issued by it. (Acts 1953, pp. 497, 505.)

56-508b. Licenses to nonresidents; reciprocal agreements; requirements.-A. A person not resident in this State may be licensed as an agent upon compliance with the provisions of this Chapter: Provided that the State in which such person resides will accord the same privilege to a citizen of this State.
B. The Commissioner is further authorized to enter into reciprocal agreement with the appropriate official of any other State waiving the written examination of any applicant resident in such other State: Provided:
(1) That a written examination is required of applicants for an agent's license in such other State;
(2) That the appropriate official of such other State certifies that the applicant holds a currently valid license as an agent in such other State and either passed such written examination or was the holder of an agent's license prior to the time such written examination was required;
(3) That the applicant has no place of business within this State nor is an officer, director, stockholder, or partner in any corporation or partnership doing business in this State as an insurance agency;
(4) That in such other State, a resident of this State is privileged to procure an agent's license upon the foregoing conditions and without discrimina,tion as to fees or otherwise in favor of the residents of such other State. (Acts 1953, pp. 497, 506.)

56-509b. Additional licenses ; placement of excess or rejected risks. -A. Additional licenses shall be issued to any agent when requested by an official or duly authorized representative of an insurer: Provided such additional license shall be limited to the class or classes for which the agent holds a license.
. B. Any agent licensed in this State may place excess or rejected nsks with any insurer lawfully doing business in this State, other than an insurer that such agent is licensed to represent, and an agent ~o placing excess or rejected risks shall not be required to hold a license to represent the insurer accepting such excess or rejected risks. (Acts 1953, pp. 497, 506.)

56-SlOb. Expiration and renewal of licenses; requests for renewal.
:-A. Each license issued to an agent shall expire on March 1 followlDg the date of issue, unless prior thereto it is revoked or suspended

56-SUb

LICE SING OF LIFE, ETC.

64

by the Commissioner of Insurance or the authority of the agent to act for the insurer is terminated.
B. In the absence of a contrary ruling by the Commissioner, license renewals may be issued from year to year upon request of the insurer, without further action on the part of the agent.
C. Each request for renewal of license shall show whether the agent devotes all or part of his efforts to acting as an agent, and, if part only, how much time he devotes to such work and in what other business or businesses he is engaged or employed.
D. Upon the filing of a request for renewal of license, the current license shall continue in force until the renewal license is issued by the Commissioner or until the Commissioner has refused for cause to issue such renewal license, as provided in section 56-513b, and has given notice of such refusal in writing to the insurer and the agent. (Acts 1953, pp. 497, 507.)

56-5Ub. Temporary licenses.-Any other provision of this Chapter to the contrary notwithstanding, the Commissioner, if satisfied with the trustworthiness of the applicant, may, without requiring a written examination, issue a temporary license:
A. To the executor or administrator of the estate of a deceased person who at the time of his death was a licensed agent, or to the person or persons assisting an agent who is totally disabled;
B. To a surviving next of kin of such a deceased person if no administrator or executor has been appointed or qualified, but any license issued under this subsection shall be revoked upon issuance of a license to an administrator or executor under subsection A. of this section;
C. To any person who has been appointed or who is being considered for appointment as an agent by an insurer immediately upon receipt by the Commissioner of an application executed by such person in the form required by section 56-504b, (A), together with a certificate signed by an officer or properly authorized representative of such insurer stating:
(1) That such insurer has investigated the character and background of such person and is satisfied that he is trustworthy;
(2) That such person has been appointed or is being considered for appointment by such insurer as its agent; and
(3) That such insurer desires that such person be issued a temporary license: Provided, however, that if such temporary license shall not have been received from the Commissioner within seven days from the date on which the application and certificate were delivered to or mailed to the Commissioner. the insurer may assume that such temporary license will be issued in due course and may continue such person in its employment;
D. To an applicant for license pending completion of the examination herein provided: Provided, that a temporary license issued under this section shall be effective for 90 days unless sooner terminated for cause pursuant to the provisions of this Chapter. (Acts 1953, pp. 494, 507.)

65

LICENSING OF LIFE, ETC.

56513b

56.5l2b. License rev.oked up?n. termination ~f ~ppointment of

r:seunrt~rreslhaatlilv, e

information as prIvileged upon termination of the

communlcatIon.-A. appointment of any

Every agent,

immediately file with the Commissioner a statement of the facts

relative to the termination of the appointment and the date and cause

thereof. The Commissioner shall thereupon terminate the license of

such agent to represent such insurer in this State.

B. Any information, docume.nt,. record or statement. requi~ed to be made or disclosed to the COmmISSIOner pursuant to this sectIon shall be deemed a privilege? communicat~on and shall not be used as evidence in any court actIon or proceedmg. (Acts 1953, pp. 497, 509.)

Cross.reference.-Privileged communications generally, see 38-418 et seq. Evidence adduced at hearings before Commissioner as privileged, see 56516b.

56-513b. Refusal, suspension, or revocation of license; notice; hearing; revocation as bar to issuance of new license.-A. A license may be refused, or a license duly issued may be suspended or revoked or the renewal thereof refused by the Commissioner if, after notice and hearing as hereafter provided, he finds that the applicant for, or holder of such license:
(1) Has wilfully violated any provision of the insurance laws of this State; or
(2) Has intentionally made material misstatement in the application for such license; or
(3) Has obtained, or attempted to obtain, such license by fraud or misrepresentation; or
(4) Has misappropriated or converted to his own use or illegally withheld money belonging to an insurer or an insured or beneficiary; or
(5) Has otherwise demonstrated lack of trustworthiness or competence to act as an agent; or
(6) Has been guilty of fraudulent or dishonest practices; or
(7) Has materially misrepresented the terms and conditions of insurance policies or contracts; or
(8) Has made or issued, or caused to be made or issued, any statement misrepresenting or making incomplete comparisons regarding the terms or conditions of any insurance or annuity contract legally ~sued by any insurer, for the purpose of inducing or attempting to mduce the owner of such contract to forfeit or surrender such cont~ct or allow it to lapse for the purpose of replacing such contract WIth another; or
(9) Has obtained, or attempted to obtain such license, not for the pU!pos~ of holding himself out to the general public as an agent, but pnmarily for the purpose of soliciting, negotiating or procuring insurance or annuity contracts covering himself or members of his family, or the o~cers, directors, stockholders, partners, employees, of a phis~ner~~, association, or corporation of which he or a member of
fanuly IS an officer, director, stockholder, partner or employee.
B. Before any license shall be suspended or revoked or the renewal

56-5l4b

LICENSING OF LIFE, ETC.

66

thereof refused hereunder, the Commissioner shall give notice of his intention so to do, by registered mail, to the applicant for, or holder of such license and the insurer whom he represents or who desires that he be licensed, and shall set a date not less than 20 days from the date of mailing such notice when the applicant or licensee and a duly authorized representative of the insurer may appear to be heard and produce evidence. In the conduct of such hearing, the Commissioner or any deputy Commissioner specially designated by him for such purpose shall have power to administer oaths, to require the appearance of, and examine any person under oath, and to require the production of books, records, or papers relevant to the inquiry upon his own initiative or upon request of the applicant or licensee. Upon termination of such hearing, findings shall be reduced to writing and, upon approval by the Commissioner, shall be filed in his office and notice of the findings sent by registered mail to the applicant or licensee and the insurer concerned.
C. No licensee whose license has been revoked hereunder shall be entitled to file another application for a license as an agent within one year from the effective date of such revocation or, if judicial review of such revocation is sought within one year from the date of final court order or decree affirming such revocation. Such application when filed, may be refused by the Commissioner unless the applicant shows good cause why the revocation of his license shall not be deemed a bar to the issuance of a new license.
D. Any applicant whose application for a license has been rejected (except for failure to pass a required written examination) shall, upon request therefor in writing within 10 days after notice of such rejection, be entitled to a hearing as provided for by this section and the procedure set forth by this section shall apply to the same. (Acts 1953, pp. 497, 509.)

56-514b. Notice of change of address by licensee.-Every licensed agent shall inform the Commissioner promptly in writing of a change of his principal business address. (Acts 1953, pp. 497, 511.)
56-515b. Rules and regulations established by Cornrnissioner.-The Commissioner is hereby authorized to establish such rules and regulations as shall be necessary for the administration of this Chapter. (Acts 1953, pp. 497, 511.)
Cross-reference.-Rules and regulations as to classification of applicants and examinations, see 56-506b.

56-516b. Inquisitorial powers in conduct of hearings; evidence adduced as privileged.-For the purpose of making such investigations
as he may deem necessary for the proper administration of this Chapter, the Commissioner and his deputy specially designated by him for the pm'pose of conducting a hearing or an investigation shall have inquisitorial powers and shall be empowered to subpoena witnesses and examine them under oath: Provided, that all testimony, documents and other evidence required to be submitted to the Commissioner, pursuant to this Chapter, shall be privileged and shall not be admissible as evidence in any other proceeding. (Acts 1953, pp. 497, 511.)

67

56-603

Cross_references.-Privileged c0J.Tl~unications generally, see 38-418 et seq. Report of discharge of agent as prIvIleged, see 56-512b.

56-517b. License without examination of persons presently acting as agents.-Agents holding licenses authorizing them to transact business in the State of Georgia. on the effective date of this qhapter shall continue to be so authorized to the same extent as if such agents had been examined pursuant to this Chapter and duly licensed. (Acts 1953, pp. 497, 512.)
Editorial ote.-This Chapter was to become effective 90 days after its approval date. It was approved March 4, 1953.

CHAPTER 56.6. ACTIONS AGAINST INSURANCE COMPANIES.

See. 56-601. 56-602. 56-603. 56-604.

Venue. Service of process. Same; nonresident companies. Same; nonresident cooperative
or assessment life insurance companies.

Sec. 56-605.
56-606.

Same; attorney appointed by
Insurance Commission to receive service, when.
Same; appointment of agent by title insurance company.

56-601. (2563) Venue.-Whenever any person shall have any claim
or demand upon any insurance company having agencies or more than one place of doing business, such person may institute suit against the company in the county where the principal office of the company is located, or in any county where the company shall have an agent or place of doing business, or in any county where such agent or place of doing business was located at the time the cause of action accrued or the contract was made, out of which said cause of action arose. (Acts 1861, pp. 58, 59; 1862-3, p. 161; 1878-9, p. 54;
1902, p. 53.)

56-602. (2564) Service of process.-In all such suits service shall be perfected upon such insurance company by leaving a copy of the petition or writ with the agent of the company, if any. (Acts 1861, p. 58; 1890-1, p. 75.)
Cr08s-referenees.-Service on nonresident companies, see 56-603. Service on corporations, how perfected, see 22-1101. Where suits on contracts or for torts may be brought against corporations, see 22-1102. Power of attorney, and service of process on fraternal benefit societies, see 56-1624.
Editorial Note.-The second sentence of the above section as it appears in the Code of 1910 has been omitted because it was declared unconstitutional in 140/637 (2) (79 S. E. 467). That sentence provided: "If no agent should be in the county, then !it the agency or place of doing business, or where the same was located at the time such cause of action OCCUlTed, or the contract made out of which the same arose."

56-603. (2446) Same; nonresident companies.-Any insurance
company not organized under the laws of this State, desiring to t~ansact business in this State, shall file with the Insurance Commisloner a w~tten instrument or power of attorney, duly signed and sealed, appolllting and authorizing some person, who shall be a resident .of this State, to acknowledge or accept service of process for
and III !:>ehalf of such company, and upon whom process may be
rve<!, III all proceedings that may be instituted against such company III any court of this State or any court of the United States in

56604

ACTIONS AGAINST, ETC.

68

this State, and consenting that service of process upon any agent or attorney appointed under the provisions of this section shall be taken and held to be as valid as if served upon the company; and such instrument shall further provide that the authority of such attorney shall continue until revocation of his appointment is made by such company by filing a similar instrument with said Insurance Commissioner, whereby another person shall be appointed as such attorney: Provided, however, that the provisions of this section shall not be construed to alter or amend the laws relative to bringing suits and serving process on foreign corporations doing business in this State. (Acts 1887, p. 123.)
Cross-references.-Service on corporations, how perfected, see 22-1101. Service on appointed attorney of mutual company, and otherwise, see 56-1433. Suits against insurance companies, see 56-601.
56-604. (2564) Same; nonresident cooperative or assessment life insurance companies.-In suits upon any certificate or policy issued by a nonresident religious or mutual aid society, cooperative or assessment life insurance company or society, service upon the chief executive officer, or the person acting officially for or as such chief executive officer of a local lodge, shall be sufficient service upon such society or company-officers of local lodges being hereby declared agents of such nonresident societies or companies, and such local lodges agencies of said companies or societies. (Acts 1890-1, p. 75.)
Cross-references.-Service on appointed attorney of mutual company, and otherwise, see 56-1433. See also first three references under 56-602.
56-605. (2447) Same; attorney appointed by Insurance Commissioner to receive service, when.-If any attorney appointed as provided in section 56-603 shall absent himself from this State or his usual place of business or abode, or shall secrete himself, so that process may not be served upon him, or shall have become disqualified from any cause whatever, or shall die, the Insurance Commissioner shall immediately appoint an attorney for service for such company, of which appointment notice in writing shall immediately be given by said Insurance Commissioner to such appointee and also be sent to the company or to its general agent or manager by mail, which appointment shall be as valid as if made by the company, and shall continue in force until such absent agent or attorney shall return and give to said Insurance Commissioner written notice thereof, or until the company shall have made another appointment in the manner above prescribed. Service of pI'ocess as aforesaid, issued by any such court, upon any such attorney appointed by the company, or by the Insurance Commissioner, shall be valid and binding and be deemed personal service upon such company so long as it shall have any obligations or liabilities outstanding, although such company may have withdrawn, been excluded from, or ceased to do business in this State. If any company shall fail, neglect, or refuse to appoint and maintain within this State such attorney or agent, it shall forfeit the right to do or continue business, (Acts 1887, p. 123,)
Cross-reference.-Power of attorney, and service of process on fraternal benefit societies, see 56-1624.
56-606. Same; appointment of agent by title insurance company.Any title insurance company not organized under the laws of this

69

UNAUTHOIUZED, ETC.

5660;}3

State desiring to transact business in this State, shall appoint an agent resident of this State, to accept service of process for and in its behalf and such company shall thereupon be subject to suit and service of process in the. sam~ manner as is p~ovide~ by l~w wi~h reference to other nonresIdent msurance compames domg busmess m
this State. (Acts 1943, pp. 602, 607.)

CHAPTER 566A. UNAUTHORIZED INSURERS PROCESS ACT.

oSee.

S56ec-6. 01a. Short tI.tIe.

.

56-602a. purpose of Chapter; rehance

procedure. 56-606a. Default judgment; necessity

upon Federal Stat';1te.

.

for affidavit of compliance.

56-603a. Acts by insurer which constI- 56-607a. Chapter cumulative of other

tute appointment of Insur-

modes of service.

ance Commissioner as agent 56-608a. Conditions precedent to filing

for service.

of defenses.

56-604a. Service upon ~ommiss~oner; 56-609a. Recovery of attorneys' fees by

number of copIes; duties of

plaintiff; effect of failure to

Commissioner; affidavit of

defend.

compliance by plaintiff.

56-610a. Instances where Chapter inap-

56-605a. Service upon solicitor, collec-

plicable.

tor or other agent of insurer;

Editorial ote.-In 1950 the General Assembly passed two bills designated
"Unauthorized Insurers Process Act." The first of these (House Bill No. 311) was approved January 26, 1950, and appears in Acts 1950, p. 58 et seq. The second (House Bill No. 1041) was approved February 17, 1950, and appears on p. 347 et
seq. of the Acts of 1950. The second bill, being later in date, is here codified, as it apparently supersedes the earlier Act. However, the second Act differs from the first only by adding the provisio in section 56-608a, and by adding section 56-610a.

56.60la. Short title.-This Chapter may be cited as the "Unauthorized Insurers Process Act." (Acts 1950. pp. 347, 352.)

56602a. Purpose of Chapter; reliance upon Federal statute.-The purpose of this Chapter is to subject certain insurers to the jurisdiction of courts of this State in suits by or on behalf of insureds or beneficiaries under insurance contracts. The legislature declares that it is a subject of concern that many residents of this State hold policies of insurance issued or delivered in this State by insurers while not authorized to do business in this State, thus presenting to such residents the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under such policies. In furtherance of such State interest, the legislature herein provides a method of substituted service of process upon such insurers and declares that in so doing it exercises its power to protect its residents and to define, for the purpose of this statute, what constitutes doing business in this State, and also exercises power and privileges availabl~ to the State by virtue of Public Law 15, 79th Congress of the Umted States, Chapter 20, 1st Sess., s. 340, as amended, which decl~s that the business of insurance and every person engaged therem shall be subject to the laws of the several States. (Acts 1950, pp. 347, 348.)

56-60380 . A~ts by insurer which constitute appointment of Insur ~nce .COnmussloner as agent for service.-Any of the following acts m th~s S~ate, effected by mail or otherwise, by an unauthorized foreign or alien msurer: (a) the issuance or delivery of contracts of insurance

56-604a

UNA THORIZED, ETC.

70

to residents of this State or to corporations authorized to do business therein, (b) the solicitation of applications for said contracts, (c) the collection of premiums, membership fees, assessments or other con-
siderations for such contracts, or (d) any other transaction of business is equivalent to and shall constitute an appointment by such insurer
of the Insurance Commissioner and his successor or successors in office, to be its true and lawful attorney, upon whom may be served
all lawful process in any action, suit, or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such contracts of insurance, and any such act shall be signification of this agreement that such service of process is of the same legal force and validity as personal service of process in this State upon such an insurer. (Acts 1950, pp. 347, 348.)

56-604a. Service upon Commissioner; number of copies; duties of Commissioner; affidavit of compliance by plaintiff.-Service shall be made- by delivery to and leaving with the Insurance Commissioner or some person in apparent charge of his office two copies of the suit and process. The Insmance Commissioner shall forthwith mail by registered mail one of the copies of such suit and process to the defendant at its last known principal place of business, and shall keep a record of all process so served upon him. Such service is sufficient, provided notice of such service and a copy of the suit and process are sent within 10 days thereafter by registered mail by plaintiff or plaintiff's attorney to the defendant at its last known principal place of business, and the defendant's receipt, or receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff or plaintiff's attorney showing a compliance herewith, are filed with the clerk of the court in which such action is pending on or before the date the defendant is required to appear, or within such further time as the court may allow. (Acts 1950, pp. 347, 348.)
56-605a. Service upon solicitor, collector or other agent of insurer; procedure.-Service of process in any such action, suit or proceeding shall, in addition to the manner provided in section 56-604a, be valid if served upon any person within this State who, in this State on behalf of such insUl-er, is (a) soliciting insurance, or (b) making, issuing or delivering any contract of insurance, or (c) collecting or receiving any premium, membership fee, assessment or other consideration for insurance; and a copy of such process is sent within 10 days thereafter by registered mail by the plaintiff or plaintiff's attorney to the defendant at the last known principal place of business of the defendant, and the defendant's receipt, or the receipt issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the plaintiff or plaintiff's attorney showing a compliance herewith are filed with the clerk of the court in which such action is pending on or before the date the defendant is required to appear, or within such further time as th court may allow. (Acts 1950, PP. 347, 349.)
56-606a. Default judgment; necessity for affidavit of compliance. -No plaintiff or complainant shall be entitled to a judgment by default, or a judgment with leave to prove damages under this section

71

U AUTHORIZED, ETC.

56-609a

until the expiration of 30 days from date of the filing of the affidavit of compliance. (Acts 1950, pp. 347, 350.)

56-607a. Chapter cumulative of other modes of service.- othing in this Chapter shall limit or a;bridge t~e right to serve any process, notice or demands upon any illsurer m any other manner now or
hereafter permitted by law. (Acts 1950, pp. 347, 350.)

56-608a. Conditio~ preced~nt. to filing of defenses.-(l) Before any unauthori~ed foreI~ or ah~n msurer sh~ll fi!e o~ cause to ?e fil~d any pleading ill any actIOn, SUlt or proceedmg mstItuted agamst It, such unauthorized insured shall either (a) deposit with the clerk of the court in which such action, suit or proceeding is pending, cash or securities or file with such clerk a bond with good and sufficient sureties to be approved by the court, in an amount to be fixed by the court s~fficient to secure the payment of any final judgment which may be rendered .in such action: Pro~ided, .howe-yer, that the ~ourt may in its discretIon make an order dispensmg With such deposIt or bond where the insurer makes a showing satisfactory to such court that it maintains in a State of the United States funds or securities, in trust or otherwise, sufficient and available to satisfy any final judgment which may be entered in such action, suit or proceeding; or (b) procure a certificate of authority to transact the business of insurance in this State.
(2) The court in any action, suit or proceeding in which service is made in the manner provided in sections 56-604a or 56-605a, in its discretion, may order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of subsection (1) of this section and to defend such action.
(3) othing in subsection (1) of this section is to be construed to prevent an unauthorized foreign or alien insurer from filing a motion to quash a writ or to set aside service thereof made in the manner provided in sections 56-604a or 56-605a on the ground either (a) that such unauthorized insurer has not done any of the acts enumerated in section 56-603a, or (b) that the person on whom service was made pursuant to section 56-605a hereof, was not doing any of the acts therein enumerated. (Acts 1950, pp. 347, 350.)

56-609a. Recovery of attorneys' fees by plaintiff; effect of failul'e to defend.-In any action against an unauthorized foreign or alien insurer upon a contract of insurance issued or delivered in this State or a resident thereof or to a corporation authorized to do business therein, if the insurer has failed for 30 days after demand prior to the commencement of the action to make payment in accordance with the terms of the contract, and it appears to the court that such refusal wa ve~t~ous and without reasonable cause, the court may allow to ~he plaintIff a reasonable attorney fee and include such fee in any Judgment that may be rendered in such action. Such fee shall not exc.ee~ 1~% per cent. of the amount which the court or jury finds the plamtIff IS entitled to recover against the insurer, but in no event hall suc.h fee be less than $25. Failure of an insurer to defend any such actIon shall be deemed prima facie evidence that its failure to make payment was vexatious and without reasonable cause. (Acts 1950, pp. 347, 351.)

56610a

AMOUNT OF RECOVERY, ETC.

72

56-610a. Instances where Chapter inapplicable.-The provisions of tllis Chapter shall not apply to any action, suit or proceeding against any unauthorized insurer arising out of any contract of-
(1) Reinsurance effectuated in accordance with the Laws of Georgia; (2) Insurance effectuated in accordance with an Act of the legislature entitled "Excess Insurance Agents Law" as contained on page 1201 of the Georgia Laws of 1949 [Chapter 56-5A]; (3) Aircraft insurance; (4) Insurance on property or operations of railroads engaged in interstate commerce; (5) Insurance against legal liability arising out of the ownership, operation or maintenance of any property having a permanent situs outside of this State; or (6) Insurance against loss of or damage to any property having a permanent situs outside of this State--where such contract contains a provision designating the Insurance Commissioner or a bona fide resident of the State of Georgia to be its true and lawful attorney upon whom may be served all lawful process in any action. suit or proceeding instituted by or on behalf of an insured or beneficiary arising out of any such contract or where the insurer enters a general appearance in any such suit, action or proceeding. (Acts 1950, pp. 347, 351.)

CHAPTER 567. AMOUNT OF RECOVERY AND DAMAGES.

Sec. 56-701.
56-702. 56-703.

Full amount of loss paid, when;
losses on stocks of goods and merchandise.
Recovery where there are sev-
eral policies. Estimation of value; contin-
gent profits.

Sec. 56-704.
56-705.
56-706.

Privilege of rebuilding or reinstating property.
R e c 0 v e l' y back by insurer, when; nature of action.
Insurance companies shall pay damages and attorney's fees, when.

56-701. (2545) Full amount of loss paid, when; losses on stocks of goods and merchandise.-All insurance companies shall pay the full amount of loss sustained upon the property insured by them; Provided, said amount of loss does not exceed the amount of insurance expressed in the policy; and all stipulations in such policies to the contrary shall be null and void. In cases of losses on stocks of goods and merchandise and other species of personal property changing in specifics and quantity by the usual customs of trade, only the actual value of the property at the time of loss may be recovered: Provided, the loss does not exceed the amount expressed in the policy. (Acts 1895, p. 51.)
Cross-referenees.-Liquidated damages, see 20-1402. Open policies, see I
56-1210. Value, how ascertained, see 56-1211. Insurance on changing property see 56-814. Contracts against public policy, see 20-504.

56702. (2544) Recovery where there are several policies.-lf th insured shall have several policies on the same property, the recovery from each company shall be pro rata as to the amount insured.
Cross-referenees.-Double marine insurance, see 56-1203. Second fire insu ance, see 56-830. Loss from fire, what is, see 56-816.

56703. (2546) Estimation of value; contingent profits.-The valu
of property shall be estimated at the time of the loss. Contingen profits shall not be a part of such value.

73

FIRE INSURANCE

56706

cross_reference.-Remote damages for breach of contract, see 20-1406.

56-704 (2547) Privilege of rebuilding or reinstating property.The privilege of rebuilding or reinstating the property shall be reserved in the po.licy or it sha;ll not ex~st.. In such cases, .the insured shall have no clailll for rents, If done withm a reasonable time, nor the insurer for increased value from the fact of new and more valuable
materials.
Cross_reference.-Casualties not to abate rent, see 61-113.

56-705. (2548) Recovery back by insurer, when; nature of action.
-If after payment of loss, the insurer discovers evidence to show him~elf not liable on the policy! he may recover the money paid in an action for money had and receIved.

Cross-references.-Loss unknown to parties, see 56-818. Misrepresentation of

material What is

mfiasctt ~ksee,e

56-821. Recovery back see 37-202. Negligence

of voluntary payments, see and concealment as grounds

20-1007. for relief

in equity, see 37-211.

56-706. (2549) Insurance companies shall pay damages and attor-
ney's fees, when.-The several insurance companies of this State and foreign insurance companies doing business in this State in all cases when a loss shall occur and they shall refuse to pay the same within 60 days after a demand shall have been made by the holder of the policy on which said loss occurred, shall be liable to pay the holder of said policy, in addition to the loss, not more than 25 per cent. on the liability of said company for said loss; also, all reasonable attorney's fees for the prosecution of the case against said company: Provided, it shall be made to appear to the jury trying the case that the refusal of the company to pay said loss was in bad faith. (Acts 187'2, p. 43.)
Cross-references.-Expenses of litigation as damages, see 20-1404. Necessary expenses as item of damages for torts, see 105-2004.

CHAPTER 56-8. FIRE INSURANCE.

Sec. 56-801. 56-802. 56-803. 56-804.
56-805.
56-806. 56-807. 56-808. 56-809. 56-810.

Nature of contract; necessity of writing; delivery.
Capital stock of companies; increase or decrease.
Powers of companies. Policies covering losses ascrib-
able to lightning, explosives, elements of nature, riot, theft, etc.; petition for added powers; fee.
Contracts of insurance to be made through regularly commissioned and 1ice n sed agents.
Amdavit of president or chief officer, filing prerequisite to issuance of license.
Investigation of complaint of violations of law
Forfeiture of right to do business upon refusal to submit
Fatiolue.rxea~minpaatyioen~enses of exammation, proceedings on.
Standard form of policy. Poli-

Sec.
56-811. 56-812. 56-813.
56-814. 56-815. 56-816. 56-817.
56-818. 56-819. 56-820. 56-821. 56-822.

cies requiring certificates null and void. Policies to contain the entire contract.
Interest of insured which may be subject of policy.
Insuring interest of another;
rei n sur a n c e to protect against loss.
Insurance on changing property.
Construction of contract.
Loss, what constitutes. Umpire to appraise loss; ap-
pointment; notice and service thereof.
Loss unknown to the parties, effect.
Diligence by insured.
Application, good faith in making.
Misrepresentation, effect of.
Concealment of material fact, effect.

56801

FIRE INsuRA CE

74

Sec. 56-823. 56-824.
56-825.
56-826.
56-827.
56-828.
56-829.

Increasing risk, effect. Misrepresentation as to in-
terest, other insurance, etc.
Effect of alienation of insured property.
Transfer of policy to one of
several insured. Partial sale or sale not fully
executed, effect. Transfer of property or policy
after loss, effect. Transfer of property or policy
by operation of law, effect.

Sec. 56-830. 56-831.
56-832.
56-833. 56-834.

Second insurance, effect. Right of insurer to prescribe
regulations as to notice and
proof of loss. Calculation of reinsurance re-
serve for fire, marine, and
inland insurance by Commis-
sioner. Call on stockholders to bring
capital up to charter amount. Calculations of reinsurance re-
serve by commissioners of
other States.

56-801. (2470) Nature of contract; necessity of writing; delivery. -The contract of fire insurance is one whereby an individual or company, in consideration of a premium paid, shall agree to indemnify the assured against loss by fire to the property described in the policy, according to the terms and stipulations thereof. Such contract, to be binding, shall be in writing; but delivery shall not be necessary if, in other respects, the contract shall be consummated.

Cross-references.-Obligations which must be in writing, see 20-401. Contracts
to be evidenced by policy, see 56-213. Contract of life insurance, see 56-901. Law of fire insul'ance applicable to life insurance, see 56-911.

56802. (2397) Capital stock of companies; increase or decrease.The capital stock of any fu'e insurance company, whether incorporated by special Act of the General Assembly or by the Secretary of State under the general law, may be increased to such an amount as may be desired by the stockholders of such company, or said capital stock may be decreased to any sum, not less than $100,000, as may be desired by the stockholders of such company, at a meeting of such stockholders, called for the special purpose by order of the board of directors of such company, of which meeting notice shall be given to each stockholder (or in case of death to his legal representative or heirs at law), personally, or by mail addressed to his last known residence, at least 30 days previous to such special meeting, and such increase or decrease shall be made in such manner as shall have been determined by the stockholders at such meeting, it requiring the vote of a majority in amount of the entire capital stock of such company to authorize such increase or decrease, and the manner of effecting the same. If at such meeting the stockholders, holding the majority in amount of such capital stock, shall vote for such increase or decrease, the proceedings of the meeting shall be reduced to writing and entered upon the books or minutes of the company, and a copy thereof, verified by the president or secretary thereof, shall be filed and recorded in the office of the Secretary of State, and when so filed and recorded shall become an amendment to the charter of said company, and a certified copy thereof shall be evidence of all facts therein contained in all courts of this State, without further proof; Provided, such increase or decrease shall be approved by the Comptroller General as ex-officio Insurance Commissioner, to be evidenced by indorsing his approval on the said verified copy of such proceedings of said stockholders, which indorsement shall be recorded in the office of the Secretary of State, together with said verified copy, and become a part thereof. (Acts 1900, p. 76.)

75

FIRE I SURANCE

. 56-804

Cross_references.-Charters of certain corporations, how amended, see 22-505. Change of name or capital stock, or place of business, 5ee 22-510 to 22-515. Exemplifications, see 38-601.
56-803. (2401) Powers of companies:-Any fir~ insurance company incorporated under Chapter 56-2 may msure agamst any loss by fire on all kinds of property, either real, personal, or mixed, also against aU the hazards of ocean or inland navigation, and transportation of every kind' and may insure all classes of property that are now or may hereafter be allowed to be insured by the laws of this State; and may do any and all things necessary for the purpose of carrying on a fire insurance company, not in conflict with the laws of this State or of the United States. (Acts 1893, p. 76.)

56-804. Policies covering losses ascribable to lightning, explosives, elements of nature, riot, theft, etc.; petition for added powers; fee.The Secretary of State may grant to fire insurance companies incorporated under the laws of this State, authority to cover by their policies losses ascribable to lightning, explosives, storms of every character earthquake, hail, frost, snow, riot, and civil commotion, theft, spr'inkler leakage, explosions from causes other than explosives, smoke aircraft, vehicles, and against loss or damage to glass and the letteri~g or ornamentation thereon by the accidental breakage thereof: Provided, the company desiring anyone or more of the powers herein mentioned shall file in the office of the Secretary of State a petition, signed with its corporate name, stating the name and character of the corporation, the date of its charter and all amendments thereto, that it desires an amendment to its charter covering anyone or more of the powers herein mentioned, and shall file with such petition a certified abstract from the minutes of the board of directors of the said company, showing that the application for the proposed amendment has been authorized by a two-thirds vote of the entire capital stock of the company at a' meeting of the stockholders called for the purpose by resolution of said board of directors, notice of which meeting shall have been mailed to each stockholder, or, in case of death, to his legal representatives or heirs at law, and addressed to his last known residence at least 10 days previous to the day of said meeting. This section shall also be applicable to mutual and cooperative or assessment fire insurance companies whether heretofore or hereafter incorporated under either Title 56-2 or Title 56-14 of this Code, and any such company desiring an amendment to its charter under this section shall file with its petition a similar certified abstract from the minutes of the board of directors of said company showing that the application for the proposed amendment has been authorized by a two-thirds vote of its members or policyholders present or duly represented at a meeting of said members or policyholders called for the purpose as above provided. An affidavit, made and signed in due form of law by the president or secretary, shall be attached to said petition, showing that it has been published once a wee~ for four weeks in the newspaper in which are published the sh~ntf's adve~isements of the county in which the principal office of saId corporation is located. The said corporation shall pay to the Secretary of State a fee of $25 to be covered by him into the State treasury. (Acts 1921, p. 206; 1945, pp. 357, 358.)
Editorial ote.-A;cts 1952, p. 492, requested the Insurance Commissioner to conduct a thorough mvestigation as to rates for crop and hail insurance in the

56-805

FIRE INsuRA CE

76

individual counties of Georgia, and to determine whether such rates are excessive, unfair or discretionary.
56-805. (2491) Contracts of insurance to be made through regu. larly commissioned and licensed agents.-Fire insurance companies not incorporated by the laws of this State, but legally authorized to do business in this State through regularly commissioned and licensed agents located in this State, shall not make contracts of fire insurance on property herein, save through agents of such companies regularly commissioned and licensed to write policies of insurance in this State: Provided, however, that this section shall not apply to property of railroad companies and other common carriers. (Acts 1896, p. 61; 1901, p. 74.)
Cross-references.-Definition of insurance agent, see 56-501. Civil liability of agents of unauthorized companies, see 56-502. Penalty on agents of unauthorized companies, see 56-9905.
56-806. (2492) Affidavit of president or chief officer, filing pre requisite to issuance of Iicense.-Before issuing a certificate of license to any fire insurance company to transact the business of fire insurance in this State, the Insurance Commissioner shall require, in addition to requirements already provided for by law, that such fire insurance company shall file with him the affidavit of its president or other chief officer that it has not violated any of the provisions of this Chapter for the space of 12 months last past, and that it accepts the terms and obligations of this Chapter as a part of the consideration of its license. (Acts 1896, p. 62; 1901, p. 76.)

56807. (2493) Investigation of complaint of violations of law.Upon complaint being filed by any citizen of this State that a company authorized to do business in this State has violated any of the provisions of this Chapter, the Insurance Commissioner shall diligently investigate the matter, and if necessary examine, by himself or his accredited representative, at the head offices located in the United States, and also such other offices or agencies of such companies as may be deemed proper, all books, records, and papers of the same, and also the officers thereof under oath as to such alleged violation or violations: Provided, that before making such examinations the Insurance Commissioner shall require the person making complaint to file with him a good and sufficient bond to cover any expense or cost that may be necessary in making such examination; and in the event that the insurance company shall be found not guilty of a violation of this Chapter, said bond shall be responsible for all the expense incurred by reason of said investigation. If the company shall be found guilty of a violation of this law, it shall be responsible for the expense thereof. (Acts 1896, p. 62.)
56-808. (2494) Forfeiture of right to do business upon refusal to submit to examination.-Any fire insurance company violating any provision of sections 56-805 to 56-807, or refusing to submit to tM aforesaid examination when required, shall forfeit the right to do business for the next 12 months thereafter, and the Insurance Commissioner shall immediately revoke the license already issued to said company to do business. (Acts 1896, p. 62.)
Cross-reference.-License revocable, see 20-117.

77

LICENSING OF LIFE, ETC.

56-812

56-809. (2495) Failure to pay expenses of examination, proceed-
ings on.-If any such company shall fail or refuse to pay such expense of examination upon the presentation of a bill therefor by
the Insurance Commissioner, the Commissioner may issue his fieri facias against such company therefor, to be collected out of the property of the company or its deposit with the State Treasurer, in the same manner as judgments against insurance companies not chartered by this State, but doing business herein, are collected. If any company shall dispute the amount of such bill and fieri facias, it may contest such amount and its liability therefor by affidavit of illegality returnable to the superior court of Fulton county, in the same manner as the Comptroller General's executions for railroad
county taxes may be contested. (Acts 1896, p. 62.)

56-810. Standard form of policy. Policies requiring certificates null and void.-Every fire insurance company shall adopt and write a standard or uniform policy, such as may be prescribed by the Commissioner. Any policy condition requiring the insured to procure
the certificate of the nearest magistrate or notary public (not interested in the claim as a creditor or otherwise, nor related to the insured) living nearest the place of the fire, stating that he has examined the circumstances and believes the insured has honestly sustained loss to the amount that such magistrate or notary public shall certify, shall be null and void. No class of policy other than that prescribed in this section shall be issued in this State: Provided, however, that local assessment fire insurance companies doing business in not more than four counties in a division in the State, may issue and write such form of policy as may be prescribed by the Commissioner. (Acts 1912, pp. 119, 131; 1921, p. 208.)

56-811. (2471) Policies to contain the entire contract.-All fire insurance policies issued upon the property of persons within this State, whether issued by companies organized under the laws of this State or by foreign companies doing business in this State, which contain any reference to the application for insurance, or the constitution, bylaws, or other rules of the company, either as forming part of the policy or contract between the parties thereto or having any bearing on said contract, shall contain, or have attached to said policy, a correct copy of said application signed by the applicant, and of the constitution, bylaws, and rules referred to; and unless so attached and accompanying the policy, no such constitution, bylaws or rules shall be received in evidence either as part of the policy or as an independent contract in any controversy between the parties to o'!' interested in the said policy, nor shall such application, constitution, bylaws or rules be considered a part of the policy or contract between such parties. (Acts 1906, p. 107.)
~ro88-referenees.-Good faith in application, see 56-820. Bylaws as part of polley of mutual company, see 56-1403. Certificate of fraternal benefit societies, see 56-1608.

56-812. (2472) Interest of insured which may be subject of policy.
IDS'h :-To sustain any contract of insurance, it shall appear that the red has some interest in the property or event insured, and such as e represented himself to have. A slight or contingent interest, whether legal or equitable, shall be sufficient, and several having

56-813

FIRE I SURA CE

78

different interests may unite in procuring one policy; so a husband or parent may insure the separate property of his wife or child, th~ recovery being held by him in trust for them; but a mere expectation of an interest is not insurable.
Cross-references.-Wilful misrepresentation voids policy, see 56-824. Effect of alienation of property, see 56-825.

56-813. (2473) Insuring interest of another; reinsurance to protect against loss.-If one shall undertake to insure the interest of another, it shall be done by his consent or be subsequently ratified by him; but an insurer may reinsure to protect himself against loss on his contract.
56-814. (2474) Insurance on changing property.-A policy of insurance may be made to cover property changing daily in its specific articles, as a stock of goods.
Cross-reference.-Valued policy, see 56-701.

56-815. (2475) Construction of contract.-The contract of insurance should be construed so as to carry out the true intention of the parties.
Cross-reference.-Intention of parties, see 20-702.

56-816. (2476) Loss, what constitutes.-A loss or injury may occur from fire without the actual burning of the articles or property; as, a house blown up to stop a conflagration, or goods removed from imminent danger, or damage by water used to extinguish the flames.
Cross-reference.-Valued policy, see 56-701.
56-817. Umpire to appraise loss; appointment; notice and service thereof.-When, in the event of loss of or damage to property described in a policy of fire insurance and covered thereby, the ascertainment of such loss or damage is, as provided in the policy, to be determined by appraisers, one to be appointed by the insurer, the other by the insured, which appointees shall select an umpire, if the two so chosen shall have failed or neglected, for a space of 10 days after both have been chosen, to agree upon and select an umpire, either the insured or the insurer may apply to any court of record in the county where the loss occurred, on five days' notice in writing to the other party of his, or its determination so to do, to appoint a competent and disinterested umpire. Any such notice in writing, when served by the insured, may be served upon any local agent of the company; and the said court shall, on proof by affidavit of the failure or neglect of said appraisers to agree upon and select an umpire within the time aforesaid, and of the service of notice aforesaid, forthwith appoint a competent and disinterested person to act as umpire in the ascertainment of the amount of said loss or damage; and the acts of the umpire so appointed shall be binding upon the insured and the insurer to the same extent as if such umpire had been selected in the manner provided for in said policy of insurance. Any stipulation in any policy of fire insurance contrary to the terms of this section shall be void. (Acts 1916, p. 128. 156 Ga. 774, 775 (120 S. E. 102).)

56-818. (2477) Loss unknown to the parties, effect.-If the loss

79

FIRE INSURA CE

56825

shall have already occurred, and both parties shall be ignorant of it, the contract is valid; but the slightest grounds of suspicion known
to the insured shall vitiate the contract unless made known to the
insurer.

56-819. (2478) Diligence by insured.-The insured shall be bound
to ordinary diligence in protecting the property from fire, and gross
negligence on his part shall relieve the insurer. Simple negligence by a servant or the insured, unaffected by fraud or design in the latter, shall not relieve the insurer.
Cross-references.-Perils of the sea, see 56-1207. Increasing risk, see 56-823.

56-820. (2479) Application, good faith in making.-Every application for insurance shall be made in the utmost good faith, and the representations contained in such application shall be considered as covenanted to be true by the applicant. Any variation by which the nature, extent, or character of the risk is changed shall void the policy.
Cross-references.-What is fraud, see 96-202. Policies must contain the entire contract, see 56-811, 56-904. Increasing risk, see 56-823. Stricter good faith in mutual contracts, see 56-1406.

56-821. (2480) Misrepresentation, effect of.-Any verbal or written representations of facts by the insured to induce the acceptance of the risk, if material, must be true, or the policy shall be void. If, however, the party shall have no knowledge, but shall state on the representation of others, bona fide, and shall so inform the insurer, the falsity of the information shall not void the policy.
Cross-reference.-What is fraud, see 96-202. Wilful misrepresentation voids policy, see 56-824.

5&-822. (2481) Concealment of material fact, effect.-A failure to state a material fact, if not done fraudulently, shall not void the contract; but the wilful concealment of such a fact, which would enhance the risk, shall void the policy.
Cro88-reference.-Concealment, when fraud, see 96-203.

56-823. (2482) Increasing risk, effect.-Any change in the prop~rty or the use to which it is applied, without the consent of the msurer, whereby the risk shall be increased, shall void the policy.
ti Cross-references.-Increase of risk in marine insurance, see 56-1209. Applicaon, good faith, see 56-820.

56-824. (2483) Misrepresentation as to interest, other insurance, ~te.-Wilful misrepresentation by the insured, or his agent, as to the lDtere~t ?f the insured, or as to other insurance, or as to any other matenal mquiry made, shall void the policy. ~56~::O~ences.-Effect of misrepresentations, see 56-821. Second insurance,

~o~6n-

25. (2484) Effect of alienation of of the property insured and a trans

insured property.-An alienfer of the policy, without the

nsent of the insurer, shall void the policy; but the mere hypotheca-

56-826

FIRE INSURANCE

80

tion of the policy, or creating a lien on the property, shall not void the policy.
Cross-references.-Recitals do not estop, see 29-110. What mortgage may embrace, see 67-103. Interest of insured, see 56-812.
56-826. (2485) Transfer of policy to one of several insured.-A policy issuing to several may be transferred to one of the insured without the consent of the insurer.
56-827. (2486) Partial sale or sale not fully executed, effect.-A partial sale of property insured shall void the policy only pro tanto. A sale not fully executed, possession remaining with the assured, shall not void the policy.
56-828. (2487) Transfer of property or policy after loss, effect.After the loss shall occur, a sale of the property insured and transfer of the policy shall not affect the liability of the insurer, but the assignee may recover on the policy to the same extent as the assignor could have done.
56-829. (2488) Transfer of property or policy by operation of law, effect.-A transfer of the property insured or of the policy by operation of law, or under the order of the court, shall confer on the assignee all the rights of the insured.
56-830. (2489) Second insurance, effect.-A second insurance on the same property, unless by consent of the insurer, will void the policy.
Cross-references.-Amount of recovery, see 56-702. Wilful misrepresentation voids policy, see 56-824.
56-831. (2490) Right of insurer to prescribe regulations as to notice and proof of loss.-Every insurer shall have a right to prescribe regulations as to notice and preliminary proof of loss, which shall be substantially complied with by the assured: Provided, the same shall be made known at the time of the insurance, and shall not be materially changed during the existence of the contract. An absolute refusal to pay shall waive a compliance with these preliminaries.
56-832. (2434) Calculation of reinsurance reserve for fire, marine, and inland insurance by Commissioner.-For every fire insurance company doing business in this State, the Insurance Commissioner shall calculate the reinsurance reserve for unexpired fire risks, by taking 50 per cent. of the premium received on all policies that are written for a period of one year or less, and an amount determined according to the New York percentage table for calculating reinsurance on all premiums received that have more than one year to run; and in marine and inland insurance, he shall charge all the premiums received on unexpired risks as a reinsurance reserve. Having charged against the company the reinsurance reserve as above determined for fire, marine, and inland insurance, and added thereto all other debts and claims against the company, he shall, in case he finds the capital stock of the company impaired more than 20 per cent., suspend the license issued to said company and require the company to cease to do new business, and give notice to said company to make good its whole capital stock within 90 days, and if this shall not be done he

81

LIFE INSURANCE

56834

shall revoke the license of such 'Company and debar the same from doing business. (Acts 1887, p. 119; 1899, p. 45.)
Cross-references.-Licenses are revocable, see 20-117. Reserve to be stated in application for license, see 56-402. Proceedings if Commissioner knows of insolvency, see 56-106. Regulating business of fire and casualty insurance companies, see 56-805, 56-1001.
56.833. (2435) Call on stockholders to bring capital up to charter amount.-Any such insurance company, receiving the aforesaid notice of the Insurance Commissioner to make good its whole capital stock within 90 days shall forthwith call upon its stockholders for such amounts as will make its capital equal to the amount fixed by the charter of said company. (Acts 1887, p. 119.)
56.834. (2436) Calculations of reinsurance reserve by commissioners of other states.-In the case of companies chartered by other States or foreign Governments, the Insurance Commissioner of this State shall accept calculations of the reserve made by the insurance commissioners of the States in which they are chartered, when such calculations are made and furnished to the Insurance Commissionel of this State by the first of March in every year. (Acts 1887, p. 119.)

CHAPTER 56-9. LIFE INSURANCE.

Sec.

56-901. Contract of life insurance de-

fined.

56-902. By whom contracts may be

taken.

56-903. To whom insurance money to

be paid.

56-904. Policies to contain the entire

contract.

56-905. Creditor's rights in proceeds of

policy. Notice by creditor.

Annuity contracts.

56-906. Powers of companies.

56-907. Directors of companies; num-

ber; qualifications; quorum.

56-908. Rules and regulations binding

upon applicant for insurance.

Effect of fraud or misrepre-

sentations by insured or ben-

eficiary. Warranties and rep-

resentations.

56-909. Death by suicide or by hands

of justice, effect.

56-910. Time policy effective; how cal-

culated.

56-911. Law of fire insurance applica-

ble.

56-912. Calculation of net value of life

policies. 56-913. Requiring life company to cease

business where net value of

56-914.

policies is not on hand. Valuation by commissioners of

other States; certificate to be

56-915.

fUrnished. Proceedings where home com-

panies fail to m a i n t a i n

56-916.

standard. Authority of industrial life in-

6?rance companies to do or-

dinary life insurance business.

Sec.
56-917. Authority of companies doing business on assessment plan to transact general life insur-
ance business; prerequisites.
56-918. Policies and certificates of assessment companies heretofore made; valuation; re-
serve. 56-919. Compliance with law as pre-
requisite to doing business; valuation of pol i c i e sand
maintenance of reserve. 56-920. Certain laws inapplicable. Fra-
ternal societies to which law applicable.
56-921. Control of business of company by Insurance Commissioner; proceedings seeking.
56-922. Same; injunction; hearing and order.
56-923. Same; liquidation of business;
order of court. 56-924. Same; assistants of Insurance
Commissioner in liquidation
of companies; compensation. 56-925. Same; rules and regulations. 56-926. Same; report by Commissioner
to legislature and by deputy
commissioner to Commissioner. 56-927. Live-stock and steam-boiler insurance companies subject to life insurance law. 56-928. Right to proceeds of policy denied person who kills insured for pur p 0 s e of receiving same.

56901

LIFE INSURANCE

82

56-901. (2496) Contract of life insurance defined.-A contract of life insurance is one whereby the insurer, for a consideration, assumes an obligation to be performed upon the death of the insured, or upon the death of another in the continuance of whose life the insured has an interest, whether such obligation be one to pay a sum of money, or to perform services, or to furnish goods, wares or merchandise or other thing of value, and whether the cost of value of the undertaking on the part of the insurer be more or less than the consideration flowing to him. Every person, firm or corporation writing or issuing contracts of life insurance, as defined in this section, shall be deemed to be engaged in the business of life insurance and shall be subject to all of the provisions of the laws of Georgia regulating life insurance companies. (Acts 1937, pp. 702, 703.)
Cross-references.-Policies must contain entire contract, see 56-811, 56-904. Beneficiaries under fraternal benefit society policies, see 56-1606. Contract of fire insurance, see 56-801. Writing contracts of insurance as defined in this section before obtaining license from Insurance Commissioner a misdemeanor, see 56-9926.
Editorial Note.-The Act of 1937 repeals original section 56-901, substituting the above section in lieu thereof. The section as it here appears is sections 1 and 2 of the Act of 1937.
56902. (2497) By whom contracts may be taken.-Contracts of life insurance may be taken only by persons or corporations specially authorized by law to do so.

56903. (2498) To whom insurance money to be paid.-The insured may direct the money to be paid to his personal representative or to his widow, his children, or his assignee. Upon such direction given, and assented to by the insurer, no other person may defeat the same: Provided, however, that assignment of the money shall be good without such assent.
56-904. (2471) Policies to contain the entire contract.-All life insurance policies issued upon the lives of persons within this State, whether issued by companies organized under the laws of this State or by foreign companies doing business in this State, which contain any reference to the application for insurance, or the constitution, bylaws, or other rules of the company, either as forming part of the policy or contract between the parties thereto or having any bearing on said contract, shall contain, or have attached to said policy, a correct copy of said application signed by the applicant, and of the constitution, bylaws, and rules referred to; and unless so attach and accompanying the policy, no such application, constitution, bylaw or rules shall be received in evidence either as part of the policy 0 as an independent contract in any controversy between the parti to or interested in the said policy, nor shall such application, constitution, bylaws, or rules be considered a part of the policy or contract between such parties. (Acts 1906, p. 107.)
Cross-references.-Good faith in application, see 56-820. Bylaws as part policy of mutual company, see 56-1403. Certificate of fraternal benefit societi see 56-1608.
56-905. Creditor's rights in proceeds of policy. Notice by creditot Annuity contracts.-If a policy of life or endowment insuran whether heretofore or hereafter issued, is effected by any person 0

83

LIFE I S R CE

56-908

his own life, or on another life, in favor of a person other than him-

self or except in cases of transfer with intent to defraud creditors,

if a' poiicy of life or endowment insurance is assigned or in any way

made payable to any such person, the lawful beneficiary or assignee

tshuerraenocf~

other than the or executors or

insured administ

or the person rators of such

so effecting such ininsured or the person

so effecting such insurance, shall be entitled to its proceeds and avails

against the creditors and representatives of the insured and of the

person effecting the same, whether or not the right to change the

beneficiary shall be reserved or permitted, and whether or not the

policy shall be made payable to the person whose life is insured if

the beneficiary or assignee shall predecease such person: Provided,

that subject to the statute of limitations, the amount of any premi~s for said insurance paid with intent to defraud creditors, with

interest thereon, shall enure to their benefit from the proceeds of the

policy; but the company issuing the policy shall be discharged of all

liability thereon by payment of its proceeds in accordance with its

terms, unless before such payment the company shall have written

notice, by or in behalf of a creditor, of a claim to recover for transfer

made or premiums paid with intent to defraud creditors, with speci-

fications of the amount claimed. If an annuity contract, whether

heretofore or hereafter issued, shall be effected by any person, based

on his own life or on another life, payable to a person other than

himself, the lawful beneficiary or assignee thereof, other than the

person so effecting such contract or his executors or administrators.

shall be entitled to its proceeds and avails against the creditors and

representatives of the person effecting such contract, to the same

extent and under the same conditions hereinbefore provided with

reference to the proceeds and avails of policies of life or endowment

insurance. (Acts 1933, p. 181; 1947, p. 1153.)

56-906. (2400) Powers of companies.-Every life insurance company incorporated under Chapter 56-2 may insure the lives of all persons who apply for insurance therein, stand the necessary examinations, and comply with such laws as may hereafter be enacted and
with such reasonable requirements as the directors of such company may establish; and may make any and every insurance appertaining to or connected with life risks. (Acts 1893, p. 76.)

56907. Directors of companies; number; qualifications; quorum.The board of directors of all life insurance companies chartered by the .l~ws of this State shall consist of not less than five and as many add.ib?nal as may be provided by the bylaws of such companies, a majOrIty of whom shall be bona fide residents of this State, and a rnatranjority of which board shall constitute a quorum f0r the purpose of
sacting business. (Acts 1912, pp. 119, 137; 1945, pp. 458, 459.)

Wee.5690. Rules and regulations binding upon applicant for insurEf!ect of fraud or misrepresentations by insured or beneficiary. a~nbe~ and representations.-A11 persons applying for life insura::ci In a l~fe insurance company writing life insurance in this State s ~~ subrmt to such reasonable rules and regulations as may be prescn d ~y such insurance company; and after a policy shall be issued ~n.the hfe of such person, the beneficiary of such policy shall be nbtled to collect the amount of such policy under the terms of the contract when it shall mature, unless the applicant or beneficiary shall

56909

LIFE INSURANCE

84

have been guilty of actual fraud or shall have made material misrepresentations in procuring such policy, which representations change the
character and nature of the risk as contemplated in the policy so issued by the company. No statements, covenants, or representations contained in applications for insurance shall ever be held or construed to be warrants, but shall be held to be representations only. (Acts
1912, p. 130; 1927, p. 223.)

56-909. (2500) Death by suicide or by hands of justice, effect.Death by suicide, or by the hands of justice, either punitive or preventive, shall release the insurer from the obligation of his contract.

56-910. (2501) Time policy effective; how calculated.-A policy of life insurance shall run from midday of the date of the policy, and the time shall be estimated accordingly, if the policy is limited to a specified number of years.

56-911. (2499) Law of fire insurance applicable.-The principles before stated as to fire insurance, wherever applicable, shall be equally the law of life insurance.

56-912. (2438) Calculation of net value of life policies.-The Insurance Commissioner shall, as soon as practicable in each alternate year, calculate the net value, as of the 31st day of December of the previous year, of all the policies in force on that day in each life insurance company doing business in this State that fail to furnish him, as hereinafter provided, a certificate of the Insurance Commissioner of the State by whose authority the company was organized, or by the State in which it may elect to have its policies valued and its deposit made, giving the net value of all policies in force in the company of the 31st day of December of the preceding year, which calculation of the net value of each policy shall be based upon the American Experience or Actuaries' table of mortality, at four per cent. interest per annum: Provided, that when any life company shall have a cash capital of not less than $100,000, fully paid up and safely invested, the reserve to provide for the liabilities on all policies of such company, not participating in the profits of the company, shall be computed by the American Experience or Actuaries' table of mortality, with interest at not less than three nor more than six per cent. per annum, in the discretion of the Commissioner, and with reference to the rates of premiums charged by such company. The net value of a policy, at any time, shall be taken to be the single net premium which will at that time effect the insurance, less the value at that time of the future net premiums called for by the table of mortality and rate of interest.designated. (Acts 1887, p. 20.)
Cross-references.-Measure of the required deposit, see 56-306. Policies and certificates of a.ssessment companies, see 56-918. Reserve of assessment companies, see 56-919.

56-913 (2439) Requiring life company to cease business where net value of policies is not on hand.-In case it shall be found that any
life company doing business in this State has not on hand the ne value of all its policies in force after other debts of the company an claims against it, exclusive of capital stock, have been provided for,

85

LIFE INSURANCE

56916

it shall be the duty of the Insurance Commissioner to publish the fact that the then existing condition of the affairs of the company
is below the standard of legal safety established by this State, and he shall require the company at once to cease doing new business; and it is hereby made the duty of the Insurance Commissioner, after
having determined, as above, the amount of the net value of all policies in force, to see that the company has that amount in safe legal securities after all debts and claims against it, exclusive of capital stock, have been provided for. (Acts 1887, p. 120.)

56-914. (2440) Valuation by commissioners of other States; cer-

tificate to be furnished.-The Insurance Commissioner shall accept

the valuations made by the insurance commissioner of the State under

whose authority a life insurance company is chartered, when such

valuations have been made on the basis mentioned above: Provided,

the company shall furnish to the Insurance Commissioner of this

State, on or before the first day of March in each alternate year, a

certificate from the insurance commissioner of such other State, set-

ting forth the value, calculated on the dates designated above, of all

the policies in force in the company on the previous 31st day of

December, and stating that after all the other debts of the company

and claims against it at that time were provided for, the company

had in safe securities an amount equal to the net value of all its

policies in force, and that said company is entitled to do business in

its own State; and every company doing business in the State during the year for which the statement shall be made, that fails to furnish



promptly the certificate aforesaid, shall be required to make full

detailed list of policies and securities held or owned by the company

to the Insurance Commissioner of this State, and shall be liable for

all charges and expenses consequent upon not having furnished said

certificate. (Acts 1887, p. 120.)

56-915. (2441) Proceedings where home companies fail to main-
tain standard.-It shall be the duty of the Insurance Commissioner, after he has notified a life insurance company chartered by the State
to cease doing new business until the net value of its policies in force
is equal to that called for by the standard of safety established by the State, at once to cause a rigid examination into the affairs of ~uch company; in case it shall appear that there is no fraud or gross ~c~mpetencyor recklessness in the management, he may, upon publishing the facts in the case, permit such company to continue its bU~iness for one year: Provided, there is, in his opinion, reason to beheve that the company may be able to reestablish the legal net
value of all its policies in force. At the end of the year named above, he may renew the permission, in case on examination he is satisfied
that the company is likely to retrieve its affairs. (Acts 1887, p. 120.)

Cr088-reference.-Proceedings when home companies insolvent, see 56-413.
5~-916. Authority of industrial life insurance companies to do or~ry life insurance business.-Any corporation organized under bec~lon 56-1307 to do an industrial life, health or accident insurance
USlDe~s or for the purpose of doing any of said businesses, may be a~thorIzed to do an ordinary life insurance business by complying WIth the requirements of the laws applicable to life insurance com-

56-917

LIFE I S RANCE

86

panies and by filing its certificate with the Secretary of State showing that it has made the deposit required for life insurance companies, has procured a license from the Insurance Commissioner, and has complied with the othel' requirements of life insurance companies. (Acts 1912, pp. 119, 127.)

56-917. (2451) Authority of companies doing business on assessment plan to transact general life insurance business; prerequisites.Any corporation chartered to do a life insurance business on the assessment plan, and doing business in this State, may, by a compliance with this and the three succeeding sections, be relicensed and authorized to transact a general life insurance business, upon filin~ with the Insurance Department all papers and documents and makin~ the paYments required under existing laws, so far as the same are or may be applicable to such life insurance companies, and all business thereafter transacted by such corporations shall be done in accordance with and governed by the provisions of the laws relating to life insurance companies other than those doing business on the assessment plan, except as provided in this and the three succeeding sections. (Acts 1900, p. 74.)
CroBs-reference.-Penalty for fraudulently procuring insurance, see 56-9911.
56-918. (2452) Policies and certificates of assessment companies heretofore made; valuation; reserve.-Every such corporation, upon complying with the requirements of this section and sections 56-917, 56-919, and 56-920, may carry out, in good faith, its contracts heretofore made with its membel's, but all policies or certificates of insurance heretofore issued by such corporations and now l'emaining in force, which contain a provision for a paYment other than the premium stipulated therein, and under which the donation of premium payments is coequal with the duration of the contract (endowment policies and endowment certificates excepted), shall be valued and reserve maintained thereon on the basis of renewable term insurance as fixe by age, in accordance with the provisions of section 56-912. To the reserve liability determined as above, the Insurance Commissione~ shall add the determinate contract reserve under any other policie or certificates heretofore issued and remaining in force, and in th absence of such contract reserve shall value them as contracts pI' viding similar benefits are to be valued under the provisions of section 56-912: Provided, that under no policy or certificate shall a greate aggregate reserve liability be charged than is required by said section. (Acts 1900, pp. 74, 75.)

56-919. (2453) Compliance with law as prerequisite to doing business; valuation of policies and maintenance of reserve.- 0 polic or certificate of life insurance shall be issued by a company licensed under section 56-917 in this State, unless in compliance with th provisions thereof. All policies of life insurance issued by such corporation, under this law, whether or not they contain a provision f01' a paYment other than the premium specified therein, shall be valued and the reserve maintained thereon according to the provisions of section 56-912 and the nature of the insurance as defined in each policy. (Acts 1900, pp. 74, 75.)

56-920. (2454) Certain laws inapplicable. Fraternal societies to

~1 -----------L- IFE-I -S - RA- NCE------=--- 5- 6 9-22
which law applicable.-No law which relates to the formation of corporations to transact the business of life insurance upon the assessment plan, or which provides for the regulation of the business of life insurance by such corporations, shall be applicable to companies doing business under this and the three preceding sections, except to the extent of permitting the carrying out of contracts heretofore made with members: Provided, nothing in this and said preceding sections shall be construed to apply to any fraternal beneficiary order or society operating on the system of lodges, councils, or chapters, as defined by the laws regulating such orders or societies. (Acts 1900, pp. 74, 75.)
cross-reference.-Fraternal benefit societies, see Chapter 56-16.
56921. Control of business of company by Insurance Commissioner; proceedings seeking.-Whenever any domestic life insurance company (a) is insolvent; or (b) has unlawfully refused to submit its books, papers, accounts, or affairs to the reasonable inspection of the Insurance Commissioner or his deputy 01' examiner; (c) or, in the case of a capital stock company, has neglected or refused to observe an order of the Commissioner to make good within the time prescribed by law any deficiency of its capital, or, in the case of a mutual company, if its assets have not become equal to its liabilities within 90 days from the date of notification thereof by the Commissioner; or (d) has, by contract or reinsurance or otherwise, transferred or attempted to transfer substantially its entire property or business, or entered into any transaction the effect of which is to merge substantially its entire property or business in the property or business of any other company, association, society or order without having first obtained the written approval of the Commissioner; or (e) is found, after an examination, to be in such condition that its further transaction of business will be hazardous to its policyholders, or to its creditors, or to the public; or (f) has wilfully violated its charter or any law of this State; or (g) any officer thereof has unlawfully refused to be examined under oath touching its affairs, the Commissioner, the Attorney General representing him, may apply to the superior court or any judge thereof in the judicial circuit in which the principal office of such company is located, for an order directing such company to show cause why the Commissioner should not take possession of its property and conduct its business, and for such other relief as the nature of the case, the interest of its policyholders, creditors, stockholders or the public may require. (Acts 1912, pp. 119, 133.)
Cross-references.-Examination of domestic fraternal benefit societies, see 56-1636. Method of putting companies in hands of receivers, see 56-223.
56-922. Same; injunction; hearing and order.-On such application, or at any time thereafter, such court may in its discretion, issue an injunction restraining such company from the transaction of its affairs or disposition of its property until the further order of the court. On the return of such order to show cause, the court shall hear, try, and determine the issues forthwith and shall either deny the application or direct the Commissioner to take possession of the property, conduct the business of such company and retain such ~ssession and conduct such business until on the application of either the Commissioner, the Attorney General representing him, or uch company, it shall, after a like hearing, appear to the court that

56-233

LIFE I SUR 'CE

the ground for such order directing the Commissioner to take possession has been removed, and that the company can properly resume possession of its property and the conduct of its business. (Acts 1912, pp. 119, 134.)

56-923. Same; liquidation of business; order of court.-If on like application and order to show cause and after like hearing the court shall order the liquidation of the business of such company, such liquidation shall be made by and under the du"ection of the Commissioner, who may deal with the property and business of such company in his own name as Commissioner or in the name of the company as the court may direct, and the Commissioner shall be vested by operation of law with title to all the property, contracts and rights of action of such company, as of the date of the order so directing him to liquidate. The filing or recording of such order in the office of the clerk of the superior court of the county wherein said liquidation is made, shall impart the same notice that a deed, bill of sale or other evidence of title duly filed or recorded by such company would have imparted. (Acts 1912, pp. 119, 135.)

56-924. Same; assistants of Insurance Commissioner in liquidation of companies; compensation.-For the purpose of this Chapter the Commissioner may appoint under his hand and official seal one or more special deputy commissioners of insurance as his agent or agents and employ such clerks and assistants as may by him be deemed necessary, and give each of such persons such powers to assist him as he may consider wise. The compensation of such special deputy commissioners, clerks and assistants and all expense of taking possession of and conducting the business of liquidating any such company shall be fixed by the Commissioner subject to the approval of the court, and shall on certificate of the Commissioner be paid out of the funds or assets of such company. (Acts 1912, pp. 119, 135; 1931, pp. 7, 38.)
Cross-reference.-Exclusive authority of Department of Law to represent State departments, etc., see 40-1609.

56-925. Same; rules and regulations.-For the purpose of this Chapter the Commissioner shall have power subject to the approval of the court to make and prescribe such rules and regulations as to him may seem proper. (Acts 1912, pp. 119, 136.)

56-926. Same; report by Commissioner to legislature and by dep uty commissioner to Commissioner.-The Insurance Commissioner shall transmit to the legislature in his annual report the names of the companies so taken possession of, whether the same have resumed
business or have been liquidated, or such other facts as shall acquaint the policyholders, creditors, stockholdel"s and the public with his proceedings under this law, and to that end the special deputy commissioner in charge of any such company shall file annually with the Commissioner a report of the affairs of such company, similar to that required by law to be filed by such company. (Acts 1912, pp. 119, 136.)

56-927. (2463) Livestock and steam-boiler insurance companies

-B9------------=-----=---A--C.C.ID:E..-T-L-I-A-B=I-L-IT-Y-~, -E-T-C=. -------~~-::..::.5:6..1:0:01
subject to life insurance law.-All livestock and steam-boiler insurance companies chartered by this State or other States, or foreign Governments, and doing business in this State, shall be subject to all the requirements of law in relation to life insurance companies, except requirements in relation to valuation of policies. (Acts 1887, p. 127.)
56-928. Right to proceeds of policy denied person who kills insured for purpose of receiving same.-The right to receive or take any benefits from any insurance contract or policy issued on the life of a person is hereby denied to any person who shall hereafter with malice aforethought kill any person for the purpose of receiving any benefits under any insurance contract or policy issued on the life of the deceased; or conspire with another to kill or procure another to kill such an insured person, even though such person so killing or procuring or conspiring, be nam.ed beneficiary in such an insurance contract or policy; and all right, interest and estate in such an insurance contract or policy, and all the proceeds shall go to such heirs of the deceased as may be entitled thereto by the laws of descent and distribution of this State, unless secondary beneficiaries be named in said policy, in which event such secondary beneficiaries shall take. No provision of this section shall apply to any such killing as may be done by accident or in self-defense. (Acts 1952, pp. 288, 289.)
(Section 56-929) See Page 182.

CHAPTER 56-10. ACCIDENT LIABILITY AND CASUALTY INSURANCE.

Sec. 56-1001.
56-1002. 56-1003. 56-1004. 56-1005. 56-1006. 56-1007.

Contracts of insurance to be made through regular com-
missioned and I ice n sed agents.
Affidavit of president or chief officer, filing as prerequisite
to issuance of license. Investigation of complaint of
violations of law.
Forfeiture of right to do business upon refusal to submit to examination. Failure or refusal to pay ex-
penses of examination, proceedings on. Powers of accident insurance companies.
Creditor's rights in proceeds

Sec. 56-1008. 56-1009.
56-10ID. 56-1011. 56-1012.

of policy. Notice by creditor. Annuity contracts.
Res e rv e for outstanding losses; computation; liability policies; compensation claims.
Distribution of unallocated liability loss expense payments; unallocated compen-
sation loss payments; additional reserves. Schedule of experience, inclu-
sion in annual statement. Unearned premium reserve.
Definition of terms used in "lacwo~' pen"esaartnieodn";p"relimabiuilmitsy'""; "loss payments"; "loss expense payments."

56-1001. (2491) Contracts of insurance to be made through regularly commissioned and licensed agents.-Accident liability or casualty insurance companies not incorporated by the laws of this State, but legally authorized to do business in this State tlu:ough regularly commissioned and licensed agents located in this State, shall not issue a policy of accident liability or casualty insurance to any person, or cOrporation, resident in said State, save through agents of such companies regularly commissioned and licensed to write policies of accident liability or casualty insurance in this State. (Acts 1896, P. 61; 1901, p. 74.)
Cross-references.-Definition of insurance agent, see 56-501. Civil Liability of !lgents of unauthorized companies, see 56-502. Penalty on agents of unauthorIZed companies, see 56-9905.

56.1002

ACCIDENT LIABILITY, ETC.

90

56-1002. (2492) Affidavit of president or chief officer, filing as
prerequisite to issuance of license.-Before issuing certificate of li. cense to any accident liability or casualty insurance company to transact the business of accident liability or casualty insurance, the Insurance Commissioner shall require, in addition to requirements already provided for by law, that such accident liability or casualty insurance company shall file with him the affidavit of its president, or other chief officer, that it has not violated any of the provisions of this Chapter for the space of 12 months last past, and that it accepts the terms and obligations of this Chapter as a part of the considera. tion of its license. (Acts 1896, p. 62; 1901, p. 76.)

56-1003. (2493) Investigation of complaint of violations of law._
Upon complaint being filed by any citizen that a company authorized to do business in this State has violated any of the provisions of this Chapter, the Insurance Commissioner shall diligently investigate the matter, and if necessary examine, by himself or his accredited rep. resentative, at the head offices located in the United States, and also such other offices or agencies of such company as may be deemed proper, all books, records, and papers of the same, and also the officers thereof under oath as to such alleged violation or violations: Provided, that before making such examinations the Insurance Com. missioner shall require the person making complaint to file with him a good and sufficient bond to cover any expense or cost that may be necessary in making such examination; and in the event that the insurance company be found not guilty of a violation of this Chapter, then said bond shall be responsible for all the expense incurred by reason of said investigation. If the company shall be found guilty of a violation of this law, it shall be responsible for the expense thereof. (Acts 1896, p. 62.)

56-1004. (2494) Forfeiture of right to do business upon refusal to submit to examination.-Any accident liability or casualty insur-
ance company violating any provision of this Chapter, or refusing to
submit to the aforesaid examination when required, shall forfeit the right to do business for the next 12 months thereafter, and the Insurance Commissioner shall immediately revoke the license already issued to said company to do business. (Acts 1896, p. 62.)
Cross-reference.-Licenses revocable, see 20-117.
56-1005. (2495) Failure or refusal to pay expenses of examination, proceedings on.-If any such company shall fail or refuse to pay such expense of examination upon the presentation of a bill therefor by the Insurance Commissioner, the Commissioner may issue his fieri facias against such company therefor, to be collected out of the property of the company or its deposit with the State Treasurer, in the same manner as judgment against insurance companies not chartered by this State, but doing business herein are collected. If any company shall dispute the amount of such bill and fieri facias, it may contest such amount and its liability thel'efor by affidavit of illegality returnable to the superior court of Fulton county, in the same manner as the Comptroller General's executions for railroad county taxes may be contested. (Acts 1896, p. 62.)

56-1006. (2402) Powers of accident insurance companies.-Accident insurance companies, chartered under Chapter 56-2. may insure

-91

ACCIDENT LIABILlTY, ETC.

56-1008

persons against accident, loss of life, or personal injury and may

~hraolvlidheaavewaelelkltyh ei n duesumanl i tayntdo

its members in case of accident. They ordinary powers incident to accident

insurance, not in conflict with the Constitution and laws of this State

and of the United States. (Acts 1893, p. 76.)

56.1007. Creditor's rights in proceeds of policy. Notice by cred-
itor. Annuity contracts.-If a policy of accident insurance whether heretofore or hereafter issued, is effected by any person on his own life or on another life, in favor of a person other than himself, or, except in cases of transfer with intent to defraud creditors, if a policy of accident insurance is assigned or in any way made payable to any such person, the lawful beneficiary or assignee thereof, other than the insured or the person so effecting such insurance, or his executors or administrators, shall be entitled to its proceeds and avails against the creditors and representatives of the insured and of the person effecting the same, whether or not the right to change the beneficiary
sbal1 be reserved or permitted, and whether or not the policy shall
be made payable to the person whose life is insured if the beneficiary or assignee shall predecease such person: Provided, that, subject to the statute of limitations, the amount of any premiums for said insurance paid with intent to defraud creditors, with interest thereon, shall inure to their benefit from the proceeds of the policy; but the company issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms, unless before such paYment the company shall have written notice, by or in behalf of a creditor, of a claim to recover for transfer made or premiums paid with intent to defraud creditors, with specifications of the amount claimed. (Acts 1933, p. 181.)

56-1008. Reserve for outstanding losses; computation; liability policies; compensation claims.-The reserve for outstanding losses under insurance against loss or damage from accident to or injuries suffered by an employee or other person and for which the insured is liable shall be computed as follows:
(1) For all liability suits being defended under policies written more than
(a) Ten years prior to the date as of which the statement is made, 1,500 for each suit.
(b) Five and less than 10 years prior to the date as of which the statement is made, $1,000 for each suit.
(c) Three and less than five years prior to the date as of which the statement is made, $850 for each suit.
. (2) For all liability policies written during the three years immediately preceding the date as of which the statement is made, such reserve shall be 60 per centum of the earned liability premiums of each of such three years less all loss and loss expense payments made under liability policies written in the corresponding years; but in any event, such reserve shall, for the first of such three years, be not less
than $750 for each outstanding liability suit on said year's policies.
f."~~! For all compensation claims under policies written more than oun:e years prior to the date as of which the statement is made, the

561009

ACCIDENT LIABILITY, ETC.

present values at four per centum interest of the determined and estimated future payments.
(4) For all compensation claims under policies Wl'itten during the three years immediately preceding the date as of which the statement is made, such reserve shall be 65 per centum of the earned compen. sation premiums of each of such three years, less all loss and loss expense payments made in connection with such claims under policies written in the corresponding years; but in any event, in the case of the 1h'st year of any such three-year period such reserve shall not be less than the present value at four per centum interest of the determined and the estimated unpaid compensation claims under policies written during such year. (Acts 1920, pp. 111, 112.)

56-1009. Distribution of unallocated liability loss expense pay. ments; unallocated compensation loss payments; additional reserves, -All unallocated liability loss expense payments made in a given calendar year subsequent to the first four years in which an insurer has been issuing liability policies, shall be distributed as follows: Thirty-five per centum shall be charged to the policies written in that year, 40 per centum to the policies written in the preceding year, 10 per centum to the policies written in the second preceding year, 10 per centum to the policies written in the third preceding year and five per centum to the policies written in the fourth year preceding; and such payments made in each of the first four calendar years in which an insurer issued liability policies shall be distributed as fol lows: In the first calendar year 100 per centum shall be charged to the policies written in that year; in the second calendar year 50 per centum shall be charged to the policies written in that year and
50 per centum to the policies written in the preceding year; in the
third year 40 per centum shall be charged to the policies written in that year, 40 per centum to the policies written in the preceding year and 20 per centum to the policies in the second year preceding; and in the fourth calendar year 35 per centum shall be charged to the policies written in that year, 40 per centum to the policies written in the preceding year, 15 per centum to the policies written in the second year preceding, and 10 per centum to the policies written in the third year preceding; and a schedule showing such distribution shall be included in the annual statement.
All unallocated compensation loss payments made in a given cal endar year subsequent to the first three years in which an insurer has been issuing compensation policies shall be distributed as follows: Forty per centum shall be charged to the policies written in that year, 45 per centum to the policies written in the preceding year, 10 per
centum to the policies written in the second year preceding and five
per centum to the policies written in the third year preceding; and such payments made in each of the first three calendar years in which an insurer issues compensation policies shall be distributed as follows: In the first calendar year 100 per centum shall be charged to the policies written in that year; in the second year 50 per centum shall be charged to the policies written in that year and 50 per centum to the policies written in the preceding year; in the third calendar
year 45 per centum shall be charged to the policies written in that
year, 45 per centum to the policies written in the preceding year and 10 per centum to the policies written in the second year preceding;

-93

ACCIDENT LIABILITY, ETC.

561012

and a schedule showing such distribution shall be included in the

annual statement.

Whenever in the judgment of the Insurance Commissioner, the liability or compensation loss reserves of any insurer under his supervision calculated in accordance with the foregoing provisions, are inadequate, he may, in his discretion, require such insurer to maintain additional reserves based upon estimated individual claims or other-
wise. (Acts 1920, p. 114.)

56.1010.-Schedule of experience, inclusion in annual statement.Each insurer writing liability or compensation policies shall include in the annual statement required by law a schedule of its experience thereunder in such form as the Insurance Commissi0!1er may prescribe. (Acts 1920, p. 115.)
56-1011. Unearned premium reserve.-On all policies of casualty insurance in force and Wl'itten for one year or less, there shall be maintained the unearned premium reserve of 50 per centum of the current year's premium; on all such policies in force and written for more than one year there shall be maintained an unearned premium reserve of 50 per centum of the current year's premium, plus the entire premium for subsequent years: Provided, such unearned premium reserve may be reduced by the amount of unearned commissions on premiums not more than 90 days past due, which premiums are due from agents or agencies whose accounts with the insurance company are secured by bonds executed by companies licensed to do business in this State. (Acts 1920, p. 116.)

56-1012. Definition of terms used in law; "earned premiums"; "compensation"; "liability"; "loss payments"; "loss expense payments."-
1. The term "earned premiums," as used in section 56-1008 et seq., shall include gross premiums charged on all policies written, including all determined excess and additional premiums, less return premiums, other than premiums returned to policy holders as dividends, and less reinsurance premiums and premiums on policies canceled, and less unearned premiums on policies in force. But any participating company which has charged in its premiums a loading solely of dividends shall not be required to include such loading in its earned premiums, provided a statement of the amount of such loading has been filed and approved by the Insurance Commissioner.
2. The term "compensation," as used in this law, shall relate to all insurance effected by virtue of statutes providing compensation to employees for personal injuries irrespective of fault of the employer.
3. The term "liability" shall relate to all insurance except compenlation insurance against loss or damage from accident to or injuries ~uffered by an employee or other person and for which the insured is liable.
4. The term "loss payments" and "loss expense payments," as herein used, shall include all payments to claimants, including payments for medical and surgical attendance, legal expenses, salaries and expenses of investigators, adjusters, and field men, rents, stationery, telegraph and telephone charges, postage, salaries and expenses

56.HOI

FIDELITl INSURANCE

of office employees, home office expenses, and all other payments made on account of claims, whether such payments shall be allocated to specific claims or unallocated. (Acts 1920, p. 113.)

CHAPTER 56-11. FIDELITY INSURANCE.

Sec. 56-1101. 56-1102.
56-1103.
56-1104. 56-1105. 56-1106. 56-1107. 56-1108. 56-1109. 56-1110.

Contract of fidelity insurance
defined. What companies may become
sureties on bonds; release from liability.
Estoppel to deny corporate
power to execute bond. .
Bonds of city, county, and State officers.
Attachment bonds.
Remedies in case of default. Deposit to be made before becoming security.
Collection of coupons; faith of the State. Proceedings when loss occurs; receiver.
When excess of bonds shall

Sec. 56-1111. 56-1112.
56-1113. 56-1114.
56-1115. 56-1116. 56-1117.

be returned.
When a company desires to
withdraw from the State. Withdrawal of deposit by retiring company; how accom.
plished; conditions specified.
Order to Treasurer to surren. del' bonds.
Liability. Notice of suit. Judg. ment. Defense. Subrogation. Reimbursement.
Amount of bonds must be
maintained.
Actions on bonds; venuej service of process.
Deposit and withdrawal of funds covered by bond.

56-1101. (2550) Contract of fidelity insurance defined.-The con tract of fidelity insurance contemplated by this Chapter is one whereby a fidelity insurance company, or such other corporation or company as may be doing a fidelity insurance business, for a stipulated sum of money or premium, insures against loss caused by the defalcation, default, neglect, or dishonesty of a trustee, officer of the law, officer of court, agent, or other employee, and of such other persons as may be required to give bond, or guarantees the performance of all such bonds or other obligations in favor of the insured as individuals do under the law who sign the bonds of all such persons as sureties. (Acts 1887, p. 108.)
Cross-references.-Guaranty or security companies as sureties on bonds of offi cers, 89-415. Annual reports of companies, see 56-232. Licenses, see 56-404.

561102. (2551) What companies may become sureties on bonds; release from liability.-Any fidelity insurance company or such other corporation or company that may do a fidelity insurance business, incorporated and organized under the laws of this State, or of any other State or a foreign Country, for the purpose of transacting business of fidelity insurance, which has a paid-up capital of not less than $250,000, and which has complied with all requirements of law for license to transact business in this State, may, upon proper proof thereof and upon production of evidence of solvency and credit, satisfactory to the judge, head of department, or other officer or officers authorized to approve and accept bonds, be accepted as surety upon the bond of any person, company, or corporation required by law to execute bonds, in lieu of any surety or sureties now required by law; any such fidelity insurance company, or other company doing a fidelity insurance business, may be released from its liability on such bond on the same terms and conditions as are prescribed by law for the release of individuals; it being the true intent and meaning of the provisions of this Chapter to enable the companies and corpora-

95

FIDELITY I S RA CE

56-1106

tions doing a fidelity insurance business to become sureties on all bonds required by law to be taken, with all the rights and subje<:t to all the liabilities of individual sureties. (Acts 1887, p. 108.)

561103. (2552) Estoppel to deny corporate power to execute bond. _Any fidelity insurance company, or other corporation or company doing a fidelity insurance business, which shall execute any bond as surety under the provisions of this Chapter, shall be estopped, in any proceeding to enforce the liability which it shall have assumed or incurred, to deny its corporate power to execute such instrument, or assume such liability. (Acts 1887, pp. 108, 109.)
Cross-reference.-Estoppels generally, see 38-114.

561104. (2554) Bonds of city, county, and State officers.-8olveut guaranty companies, surety companies, fidelity insurance companies, and fidelity and deposit companies, incorporated and organized under the laws of this State, or any other State of the United States, for the purpose of transacting the business of fidelity insurance, which have a paid-up capital of $250,000, and which have complied with all the requirements of law as to license required by the State, may, upon proper proof thereof, and upon production of evidence of solvency, be accepted upon the bonds of all city, county, and State officers; and the various officers, whose duty it is to approve the sureties upon such bonds, are hereby authorized to accept such company or companies as one of the sureties, or the only surety, upon such bonds as the solvency of such company may warrant. No company shall be relieved of its liability upon any such bond by reason of the fact that the books and accounts of the principal have been examined and approved as correct by the proper authorities, when in fact there has been a breach of said bond and a loss occurring from such breach. Upon a recommendation by the grand jury of any county in regular session convened, immediately prior to any general election of county officers that may be held in and for any such county, each county officer so elected in such county shall give as one of the sureties on his official bond some one of the companies heretofore referred to in this section; and such surety company so given by any such officer may be accepted as the only surety on said bond, provided the grand jury shall also include this in their recommendation. (Acts 1896, p. 58; 1897, p. 60; 1920, p. 75.)
Cross-reference.-Guaranty or security companies as sureties on bonds of officers, see 89-415.

561105. (2555) Attachment bonds.-8uch company may be taken
as the sole sUl'ety upon all attachment bonds, whether it has, or does
not have real estate in this State. (Acts 1896, pp. 58, 59.)
Cross-reference.-Who not to be surety on attachment bonds, see 8-112.
561106. (2556) Remedies in case of default.-In case of default upon any bond upon which such company is surety, then the city, county, or State authorities shall have all the remedies against the Principal and surety upon said bond, including the right to issue ft. fas. instanter, as are provided by law. (Acts 1896, pp. 58, 59; 1897, p. 60.)
Cross-references.-Fi. fa. against State Treasurer failing to perform duties, s<:e

56-1107

FIDELITY INSURANCE

96

40-1005. Execution against defaulting tax collector and surety, see 92-5504. et seq.
56-1107. (2557) Deposit to be made before becoming security.All companies described in this Chapter chartered by this State or other States or foreign Governments, now doing business in this State or hereafter doing business in this State, which offer or undertake
to become security upon any bond required by law of city, county, and
State officers, before being accepted as surety thereon, shall be required to deposit with the Treasurer bonds of the United States, or bonds of this State which according to the Acts and resolutions of the General Assembly are valid, and which amount, according to their face value, to $25,000, which bonds shall be receipted for by the State Treasurer, and specially deposited by him in the vaults of the treasury, and whenever such company ceases to do business in this State and has settled up all claims against it, as hereinafter provided, and has been released from all the bonds upon which it has become surety, said bonds shall be delivered up to the proper party on presentation of the Treasurer's receipt. (Acts 1896, pp. 58, 59; 1897, p. 60.)
Cross-reference.-Deposit required, see 56-311.
56-1108. (2558) Collection of coupons; faith of the State.-While said bonds are so deposited, the owner of the same shall, subject to the notices provided for or given, be entitled to collect the coupons and use them. For the bonds so deposited the faith of the State is pledged that they shall be returned to the parties entitled to receive them, or disposed of as hereinafter provided. (Acts 1896, p. 58.)
Cross-reference.-Deposits by fire, marine and inland companies of other States, see 56-301.
56-1109. (2559) Proceedings when loss occurs; receiver.-Whenever any loss insured against occurs, the insured, in order to secure his recovery, may give notice to the State Treasurer of the pendency of the loss and of the amount claimed, after which notice the State Treasurer shall be bound to retain, subject to the order of the court trying any suit that may be brought for the recovery of such loss, a sufficient amount to pay the judgment in the case, in the event of recovery; when suit is ended, and the ascertained amount for which the party sued may be liable is not paid in 10 days, then the plaintiff may file an application with the judge of the superior court of the county where the case was tried, for a receiver to take charge of so many bonds as shall be necessary to satisfy the judgment.
When a receiver is appointed by the judge, who shall always require bond and security of him for the faithful performance of his duty, the State Treasurer, on his application, shall deliver to him bonds sufficient in their market value, if in his custody, to satisfy the judgment. The receiver's receipt shall be a complete discharge to the Treasurer and the State of Georgia. Then the receiver shall apply to the judge of the superior court for an order of sale, and in pursuance of the order sell the bonds. After deducting such expenses and commissions as shall be allowed by the judge, he shall pay over to the plaintiff, or his attorney, a sufficient amount to satisfy the judgment; and if there shall remain any residue in the hands

-97 - - - - - - - - - - -F-IDE-LI-TY-IN-SU-RA-'C-E - - - - - - " - _ 56 l.Il-I
of the receiver, he shall pay it to the agent of the company, taking his receipt for it, which shall be filed and recorded with the other papers in the case.
If there are conflicting claims, then the State Treasurer shall deliver to the receivers, in the order of their application, the bonds; and if there is any contest between creditors which cannot be settled in this mode, then the party not receiving sufficient bonds through the receiver appointed in his behalf may become a party to the other case and make known his claim to the other receiver by making affidavit of the claim and filing the same with him, and then the receiver shall report such claim to the judge of the superior court appointing him, who shall by order provide for a bill of interpleader, as in cases in equity. (Acts 1896, pp. 59, 60.)
Cross-references.-Interpleader, see 37-1503. When receiver an officer of court, see 55-301. Bond by receivers, ,see 55-308, 56-303. Retaining bonds to secure recovery when notice of loss is given, see 56-302. Conflicting claims to bonds, see 56-304. Receivers generally, see Title 55, Injunctions and Receivers, Chapter 55-3.
56-1110. (2560) When excess of bonds shall be returned.-The State Treasurer, upon demand made upon him by said companies, shall return to insurance and fidelity and deposit companies and fidelity and surety companies the excess of the deposit held by him over and above the deposits required of said companies by law. In case the deposits required of said companies al'e lessened by law, the excess of the sums required by law after much decrease shall, upon demand of said companies, be returned to them by the State Treasurer. (Acts. 1899, p. 54.)
Cross-references.-When amount reduced below amount required, see 56-306. Amount of bonds must be maintained, see 56-1115.
56-1111. (2561) When a company desires to withdraw from the State.-When any company desires to withdraw from the State and will satisfy the Insurance Commissioner that all suits pending against it, and of which no notice has been given, have been fully satisfied, or whenever no notice of claim has been given, and when it has been released from all bonds theretofore given by it, then the Treasurer shall return to it the bonds so deposited upon order from the Insurance Commissioner. When any company, having made the deposit required by this law, has assumed any liability, by suretyship or otherwise, on which no losses have accrued, and it wishes to withdraw its deposit, before being allowed to do so it shall have itself released from such obligation, whether suretyship or otherwise, and give notice of its intention to withdraw from this State, and of the fact that it has satisfied all losses and claims against it, and has been released from all obligations assumed by it, which notice shall be published in a newspaper to be designated by the Insurance Commissioner, and at the expense of said company; and it is hereby provided, that any claims of the citizens of this State must, whether for losses accrued or upon obligations theretofore assumed by said company (where no losses have occurred), be fully settled before said deposit shall be withdrawn. (Acts 1896, pp. 58, 60.)
Cross-references.-Withdrawal of insurance companies from the State, see
IS 56-323 to 56-325. Policies must be satisfied before withdrawal, see 56-324.

561112

FlDELlTY I SURANCE

98

56-1112. Withdrawal of deposit by retiring company; how accom_ plished; conditions specified.-In case any fidelity insurance company, or any surety or bonding company authorized to do the business of fidelity insurance or acting as surety on bonds under the pl'ovisions of the laws touching that subject has retired from doing that business in this State, or wishes so to retire, and wishes to withdraw the deposit required to be made with the State Treasurer, as required of such companies, the same may be accomplished in the following man. ner: The company so desiring to retire from business and to withdraw the deposit shall file with the Insurance Commissioner a writ. ing, verified by the oath of one of its executive officers, stating that it has retired, or on or after the date of the filing of such writing will retire from doing the business of fidelity insurance or becoming surety upon bonds, and stating its desire to withdraw the deposit with the State Treasurer made in pursuance of the laws regulating the business: of such companies. In addition thereto the company shall do one of the following three things:
First. Submit a statement under oath verified by one of its executive officers that such company has settled all losses which have accrued against it on account of bonds written or suretyship assumed in this State, and that its liability has terminated as to all obliga. tions incurred on account of bonds written or suretyships assumed, and shall, if required by the Insurance Commissioner, make such further proof of these facts as will satisfy the Commissioner of the truth thereof, and shall further show that there has been published in some daily newspaper of general circulation an advertisement for four insertions in separate weeks preceding the date of the application to withdraw the deposit, a notice stating the intention of such company to retire from business and withdraw its deposit with the State Treasurer, and that it claims to have settled all losses and to have procured its release from all obligations incurred on any and all bonds and any and all assumptions of suretyship; and also giving notice of the date on which application will be made to the Insul'ance Commissioner for authority to withdl'aw the deposit, and warning all persons that if they have any cause to show why said company should not be allowed to withdraw its deposit that they should make the same known in writing to the Insurance Commissioner on or before the date named. The Insurance Commissioner shall have jurisdiction to hear evidence and determine the validity of any such objection, if filed.
Second. File with the Insurance Commissioner a bond in a sum to be fixed by the Insurance Commissioner, and to be approved by him, in an amount not exceeding the amount of such deposit, payable to the State of Georgia, for the use and benefit of whom it may concern, conditioned that said company shall pay all losses which it may have sustained upon any bond or contract of suretyship written or assumed and that it will faithfully perform and fulfill all of its outstanding obligations so written or assumed according to the legal tenor and effect thereof. Such bond so to be gi"en shall have as surety thereon some fidelity insurance company or surety or bonding company, which shall have been authorized to do business in this State, and which shall have made the deposit provided by the laws governing the business of such companies. It shall be stated in said bond that it is made in pUl'suance of this section; and any person, having a right of action against the fidelity insurance company,

~-----------F- IDE-LI-TY-IN-SU-RA-NC-E ---=-----5- 6 1-11-4
surety or bonding company on account of any bond written or act of suretyship assumed by the retiring company may join the surety on the bond in this subsection of this section provided for, as defendant upon the obligation of suretyship or indemnity of the retiring company in like manner as if it were a joint obligor or joint surety upon every bond or assumption of suretyship made .01' executed by. s~id retiring company. The surety upon the bond so gIven by such retIrmg company shall be liable to the same extent and in the same manner
as if it were a cosurety with the retiring company upon each and all
of the obligations assumed upon risks and bonds written in this
state.
Third. Or make proof to the Insurance Commissioner that it has reinsured all of its risks and obligations, so far as they exist, in some other solvent fidelity insurance company or companies which have complied with the laws and been authorized to do business in this State and made the deposit required of such companies, and shall produce and file with the Commissioner a written contract signed by the proper executive officers of such reinsuring company or companies, that it or they have reinsured such risks, and that it or they consent to be bound thereon in the manner provided in this law. The reinsuring company may be joined as defendant in any action on any obligation of suretyship or indemnity of the company whose risks have thus been reinsured, and it shall be liable in like manner as if it were a joint promisor or a cosurety with the retiring company upon each and every risk upon which such retiring company may be liable as to business done, and shall be subject to suit therefor in like manner as if it were the surety solely or in connection with such retiring company upon each and all of its obligations of suretyship or indemnity. (Acts 1916, p. 129.)
56-1113. Order to Treasurer to surrender bonds.-Upon the Insurance Commissioner's being satisfied that the provisions of any of the three subsections of the foregoing section have been complied with, he shall thereupon pass an order reciting compliance and directing the State Treasurer to return to such retiring company the bonds which have been deposited with the State Treasurer by such company under the laws regulating the business of such companies, and a certified copy of such order of the Insurance Commissioner shall be authority to the State Treasurer thereupon to deliver such bonds to said company or to such person, firm or corporation. as it may in writing direct the State Treasurer to deliver them to; and upon such company or person duly authorized in writing by such company to receive such bonds for it, receipting the Treasurer therefor, the Treasurer shall deliver such bonds to said company or the person to whom said company shall direct that they be delivered. (Acts 1916, p. 132.)
561114. Liability, Notice of suit. Judgment. Defense. Subrogation. Reimbursement.-Nothing in this law shall be construed to relieve any such company so retiring from business in this State from liability upon any of its obligations, but it shall still remain bound thereon until the same shall have been fully discharged and satisfied. If the company which shall have guaranteed or assumed the liability of such retiring company is sued upon a bond executed or a risk originally assumed by such retiring company without such retiring company also being joined therein, it may give to the company

561115

FIDELITY INSURANCE

100

whose risk it has guaranteed or assumed, notice of the pendency of the suit, and as between the two companies and their privies the judgment rendered in such action shall be conclusive as to the validity and extent of the liability claimed in the suit; and the company origi. nally liable may cause itself to be made party defendant and may defend the action with like effect as if it were sued in the first instance. Upon judgment being rendered against the company assum. ing or guaranteeing the liability of the retiring company, it shall be subrogated to all the rights of the company for whose undertaking it shall so have been held liable. Any right of action for reimbursement which the retiring company would have had if it had been directly sued and held liable, against the principal on the bond, against
indemnitors or other third persons or corporations, or collateral deposited, or upon funds or against persons to which or to whom it might otherwise, either in law or equity, have the right to look for reimbursement, shall survive and may be enforced by a suit brought in the name of such retiring company for the use of the company so
held liable. (Acts 1916, p. 132.)

56-1115. (2562) Amount of bonds must be maintaine<l.-When ever, under the provisions of this Chapter, the amount of bonds so deposited is reduced, the Treasurer shall at once notify the Insurance Commissioner in writing, who will give notice to the company depositing, and require more bonds to be deposited, so as to always maintain the original amount; and if the company so notified by the Insurance Commissioner fails to comply within 30 days, the right of the com pany to do business shall be revoked and the Insurance Commissioner shall, at the same time, give notice, by publication in a newspaper published at the capital, of the facts of such failure and revocation of license, and shall mail written or printed notice to the several ordinaries, the cost of which publication shall be paid by the company failing to comply with the provisions of this law. (Acts 1896, PP. 58, 60.)
Cross-references.-When amount reduced below amount required, see 56-305. When excess of bonds shall be returned, see 56-1110.

56-1116. (2553) Actions on bonds; venue; service of process.-In the event any fidelity insurance company, or other corporation or company doing a fidelity insurance business in this State, shall become surety on any of the bonds or obligations mentioned in this Chapter, such corporation or company shall be subject to be sued on such bonds or obligations in the county of the residence of the principal in such bond or obligation, and service may be perfected on said corporation or company in the manner prescribed for service on fire insurance companies doing business in this State. (Acts 1887, pp. 108, 109.)

56-1117. Deposit and withdrawal of funds covered by bond.-It shall be lawful for any party of whom a bond, undertaking or other obligation is required, to agree with his surety or sureties for the deposit of any or all moneys and assets for which he and his surety or sureties are or may be held responsible, with a bank, savings bank, safe-deposit or trust company, authorized by law to do business as such, or with other depository approved by the court or a judge thereof, if such deposit is otherwise proper, for the safekeeping

-lO~l

M_AR_l__E_I_s_u_RAN_c_E

-.:::....5_6_-1_2_0..::.6

thereof, and in such manner as to prevent the withdrawal of such

money or assets or any part thereof, without the written consent

of such surety or sureties, or an order of court, or a judge thereof

made on such notice to such surety or sureties as such court or

judge may direct; provided, however, that such agreement shall not

in any manner release from or change the liability of the principal or

sureties as established by the terms of the said bond. (Acts 1943,

p. 296.)

CHAPTER 56-12. MARINE INSURANCE.

Sec. 56-120l.
56-1202. 56-1203. 56-1204. 56-1205. 56-1206. 56-1207. 56-1208.

Contract of marine insurance
defined. What uninsurable.
Double insurance. Implied warranty. Illegality of voyage, effect.
Deviation from voyage, effect.
Perils of the sea. Continuance of risk.

Sec. 56-1209. 56-1210. 56-121l. 56-1212.
56-1213.
56-1214.

Increase of risk, effect. Open policy, definition.
Statement of value rebuttable. Fire insurance rules applica-
ble. Rights of owners of merchan-
dise on vessels.
Owner or master of vessel to care for damaged property.

56-1201. (2515) Contract of marine insurance defined.-A contract of marine insurance is one by which a person or corporation, for a stipulated premium, insures another against losses occurring by the casualties of the sea.

56-1202. (2516) What uninsurable.-Prohibited or illegal commerce, or commerce with an enemy, or goods contraband of war, shall not be the subjects of marine insurance.

56-1203. (2517) Double insurance.-Double marine insurance may be obtained by a person having an insurable interest; but in case of loss, he may recover from both companies only the full value of such interest. If one underwriter shall pay the whole amount, he shall be entitled to contribution from the other.
Cross-references.-Contribution, see 37-303. Amount of recovery, see 56-702.
56-1204. (2518) Implied warranty.-The insured impliedly warrants that the ship is seaworthy, and shall not be changed except from necessity, and that she shall be employed, conducted, and navigated with reasonable skill and according to law.

56-1205. (2519) Illegality of voyage, effect.-The illegality of the voyage, whether known to the assured or not, shall render the contract void.

56-1206. (2520) Deviation from voyage, effect.-A deviation from the voyage, if voluntary and not from necessity, voids the policy. This necessity may arise from-
1. Stress of weather.
2. Want of necessary repairs.
3. Joining convoy.

561207

MARINE INSURANCE

102

4. Succoring ships In distress. 5. Avoiding capture or detention. 6. Sickness of master or crew. 7. Mutiny on board. 8. Any similar cause founded upon reason.

56-1207. (2521) Perils of the sea.-The "perils of the sea" com. prehend all those misfortunes to which goods and ships at sea are exposed from earth, air, fire, or water. Loss from enemies is not included, unless expressly named. The negligence, or unskillfulness of masters or mariners is not included in a policy on the ships or
goods belonging to the owners of the vessel. If loss shall occur to
third persons therefrom, the underwriter may recover from the owner of the ship the amount paid by him.
Cross-reference.-Diligence by assured to protect property from fire, see 56-819.
56-1208. (2522) Continuance of risk.-Generally the risk continues till the goods are delivered on shore at the port of destination, or to others by direction of the assured.

56-1209. (2'523) Increase of risk, effect.-Any change by which the risk is increased shall void the policy.
Cros.s~reference.-Increasing risk in case of fire insurance, see 56-823.

56-1210. (2524) Open policy, definition.-An open policy is one in which the amount of the interest of the insured is not fixed by the policy, but is left to be adjusted in case of loss; such policies may issue in blank to be filled by the insured as new risks may be desired.
Cross-reference.-Valued policy, see 56-701.

56-1211. (2525) Statement of value rebuttable.-The value stated in a policy is always subject to be reduced by proof.
Cross-reference.-Estimation of value, see 56-703.

56-1212. (2526) Fire insurance rules applicable.-The rules as to warranties, misrepresentations, and concealment, are the same in marine as in fire insurance.
Cross-reference.-See 56-820 to 56-824.

56-1213. (2527) Rights of owners of merchandise on vessels.Whenever any cotton or merchandise, on any vessel loading or loaded, within the waters of this State is damaged by fire or water, or both, while within the waters of this State, the owners or insurers of such cotton or merchandise, or the agents of either or any of them, shall, after having given a satisfactory bond for the payment of the pro rata share of said cotton or merchandise in any liability for salvage, and in the expenses of general or particular average, and after having given a bond to hold the ship harmless against the liens of those holding the bills of lading for said cotton or merchandise, be author-

-103:...---------IN-D-U-ST'R-IA-L-L_IF-E-, A.C:C.I_DE-N-T,-E-TC-.----'''----5-6--13-0-2
jzed to take possession of and control such damaged cotton or merchandise, and use, manage, and dispose of the same for the protection of the interest of such owners or insurers in such property, any law, usage, custom, or anything in the contract of affreightment with the owner, master, or agent of such vessel to the contrary notwithstanding: Provided, that, as between the owner and insurer, the rights and powers of the owner shall be prior and superior to the rights and powers of the insurer, except as specially stipulated in the contract of insurance. (Acts 1889, p. 165.)
561214. (2528) Owner or master of vessel to care for damaged property.-Nothing in the preceding section shall be construed to relieve the owner 01' master of such vessel from taking proper care of such damaged property in the event the owners or insurers, within a reasonable time after such damage, fail to take control of such cotton or merchandise, and nothing herein contained shall be construed to relieve said damaged property from the liability imposed by existing laws and customs to contribute its proportion to the expenses accruing up to the time said property is taken possession of by the owne1', insurer, or agent. (Acts 1889, p. 165.)

CHAPTER 56-13. INDUSTRIAL LIFE, ACCIDENT, AND HEALTH INSURANCE.

Sec. 56-1301. 56-1302.
56-1303.
56-1304. 56-1305. 56-1306. 56-1307.
56-1308. 56-1309.

Industrial life insurance defined. What companies regarded as industrial 1if e insurance
companies. Prerequisites to doing business; domestic companies,
etc. Same; foreign companies, etc.
Companies subject to this law. When laws to apply to. industrial life insurance.
Incorporation of companies; capital stock; rights and powers. Mutual companies may be-
come stock companies. Policies of mutual cooperative or assessment companies to

Sec.
56-1310. 56-1311. 56-1312. 56-1313. 56-1314.

show amount to be paid; payments dependent on con-
tingency; medical examinations. False representations in regard to policies prohibited;
operation of this and following -section. Receiving premium or assess-
ment after ins 01 v e n c y. Fraudulent reinstatement.
Powers of Insurance Commissioner or deputy to issue subpoenas; failure to comply
with subpoena as contempt. Surrender values, extended insurance, etc., in case of
lapse; automatic privileges. Revocation of license where
section 56-1313 violated.

561301. (2502) Industrial life insurance defined.-Industrial life insul'ance is that insurance for which the stipulated premiums, advance assessments, or dues, are regularly payable and collectible weekly, biweekly, monthly, quarterly, semiannually or annually, and the policies or benefit certificates for which are for sums of not more than $500 on a single life, and which policies or benefits certificates may provide a weekly benefit for disability, caused by sickness or accident, not greater than $20 per week. (Acts 1905, p. 96; 1924, p. 51.)
561302. (2503) What companies regarded as industrial life insurance companies.-All corporations, associations, relief Ol'ganiza-

56-1303

INDUSTRIAL LIFE, ACCIDE T, ETC.

104

tions, societies, or fraternal orders, with or without capital stock and having or not having a ritualistic form of government, whethe: operating upder the insurance laws as insurance companies or oper. ating under the laws governing fraternal beneficiary orders, and issu. ing policies or benefit certificates, and conducting their business in the manner and within the meaning and definition set forth in the preceding section, shall be held and deemed to be doing an industrial life insurance business, and shall be subject to this section and all the other laws not repugnant to this section, regulating the business of life, health, and accident insurance. (Acts 1905, p. 96.)
56-1303. (2504) Prerequisites to doing business; domestic compa. nies, etc.-Any corporation, association, society, or fraternal order organized under the laws of this State, whether organized upon the mutual assessment plan or as a stock company, for the purpose of doing the business of industrial life insurance, shall, before commencing to do business, comply with the laws regulating the manner in which other insurance companies shall be authorized to do business in this State, except that the deposit, required of companies . operating upon the plan and according to the manner specified in the two preceding sections, shall be $100,000, to be made in such securities as are required of such other insurance companies as are now required to make a deposit. (Acts 1905, p. 96; 1920, pp. 212, 213.)
56-1304. (2505) Same; foreign companies, etc.-Any corporation, association, society, or fraternal order, organized under the laws of any other State upon the mutual assessment plan, or as a stock company, for the purpose of doing the business of industrial life insurance, shall be authorized to do business in this State upon comply. ing with the other laws of this State regulating the manner in which foreign insurance companies shall be authorized to do business in this State, and filing with the Insurance Commissioner a certificate from the officer having supervision of the insurance department of the State under the laws of which such corporation, association, society, or fraternal order was chartered, or elects to make its deposit, that such corporation, association, society, or fraternal order has deposited with said State a sum of not less than $100,000 in such securities as are required to be deposited by insurance companies. (Acts 1905, pp. 96, 97; 1920, pp. 212, 213.)
Cross-reference.-Bonds and deposits required of insurance companies, see Chapter 56-3.
56-1305. (2506) Companies subject to this law.-The provisions of this Chapter shall in no way apply to any company, association, organization, or society which does not collect its premiums or dues weekly, biweekly, monthly, quarterly, semiannually or annually; but any company, association, organization, society or fraternal beneficiary order, with or without a ritualistic form of government, which collects its dues or premiums weekly, biweekly, monthly, quarterly, semiannually, or annually, and which for the purpose of securing business or members, and for collection of premiums, dues, or assessments, employs paid agents, collectors, or solicitors, shall come under the provisions of this section. (Acts 1905, p. 96; 1924, pp. 51, 52.)
56-1306. (2507) When laws to apply to industrial life insurance.No law hereafter passed shall be held, or deemed, to refer to the

~:....

I_N_D_U_ST_Rl_A_L_L_IF_E--,,_A_cC_I_D_EN_T~,,-E_T_c_,

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business of industrial life insurance, unless the same is' expressly referred to in said law. (Acts 1905, pp. 96, 98.)

56-1307. Incorporation of companies; capital stock; rights and powers.-(a) No stock insurance company shall hereafter be organized in this State for the purpose of doing an industrial life, health or accident insurance business or any of said businesses with less than a paid up capital stock of $100,000.
(b) Any insurance company now organized or chartered under the laws of Georgia for the purpose of doing any of the businesses mentioned in the next previous subsection and having less than $100,000 paid up capital stock, may engage in any or all of the branches of said businesses without increasing its capital stock until January 1 1954, after which it shall be unlawful for it to continue business
U; the State without the amount of paid up capital stock herein
required.
(c) Any stock insurance company organized under the laws of this State for the purpose of writing industrial life, health or accident insurance shall be authorized to write ordinary life insurance, and other forms of insurance usually written by ordinary life companies, whenever its paid up capital stock amounts to $100,000 and whenever it has complied with the laws applicable to the incorporation of such companies. (Acts 1950, pp. 10, 11.)
Cross-references.-Sworn statement to be filed by assessment companies, see 56-322, 56-150!.
Editorial Note.-The Act of 1950 repealed former section 56-1307, which permitted such companies as are dealt with in this section to operate with a paid in capital stock of only $25,000. The act also contained the matter from which the present section has been codified,
56-1308. Mutual companies may become stock companies.-Any mutual industrial life, health or accident insurance company may become a stock company by filing a certificate with the Secretary of State, showing that three-fourths of its outstanding policyholders have voted in lawful meeting assembled to become a stock company, and that the capital of said company is fixed at not less than $100,000, and that the other requirements of the laws in this behalf have been complied with: Pl'ovided, however, that no publication or petition for charter shall be required in such instance, except as is hereinafter provided. Policyholders in mutual companies may vote by proxy at meetings held for the aforementioned purpose. Said stock company when organized as 'aforesaid shall have the same power and authority as though it had been originally organized as a stock corporation. (Acts 1912, pp. 119, 128; 1950, pp. 10, 12.)
Editorial Note.-The Act of 1950, pp. 10, 11, repealed former section 56-1307, and raised the amount of paid in capital stock necessary for the formation of stock companies for the purpose of doing an industrial life, health, or accident insurance business from $25,000 to $100,000. The Act further provided that such a company incorporated under the old law could continue to operate until January 1, 1954, without increasing its capital stock, but after that date, the capital stock would have to be increased to $100,000 paid in, or the company must cease to operate.
It was provided in the same Act that when such a company had increased its paid in capital stock to $100,000, and had complied with all applicable laws, it

561309

II DUSTRIAL LIFE, ACCIDE T ETC.

106

might then write ordinary life insurance policies and other policies ordinarily written by regular life insurance companies.
56-1309. Policies of mutual cooperative or assessment companies to show amount to be paid; payments dependent on contingency; medical examinations.-All industrial life insurance companies char. tered under the laws of this State to do business on the mutual cooperative or assessment plan, and limiting their policies to a sum not exceeding $500, shall stipulate definitely on the face of the policies the amount to be paid to the beneficiaries under said policies in the event of the death of the insured. In no event shall payments to beneficiaries by such companies be contingent upon the number of policyholders in the company nor on the number in any division or branch of such company. The intention of this law is to require the payment of the full face of the policy as stipulated therein without regard to the subdivisions of the membership by such insurance companies in the management of their affairs. No policies shall be issued by such companies without subjecting applicants for such insurance to medical examination. It shall be the duty of the Insurance Commissioner to investigate the rates of premiums which are to be charged by all such companies and he is hereby authorized to require said companies to charge such rates as are adequate to pay their policies at maturity: Provided, that companies doing business on the industrial plan shall not be required to have medical examiners. (Acts 1912, pp. 119, 140.)
Cross-reference.-Mutual insurance plan, regulations and requirements, see 56-1407.
56-1310. False representations in regard to policies prohibited; operation of this and following section.-No insurance company or association doing business in this State, and no officer, director 01' agent thereof, shall knowingly issue, circulate or cause to be issued or circulated any estimate, illustration, circular or statement of any sort misrepresenting the terms of any policy issued by it, or the benefits or advantages promised thereby, or dividends or shares of surplus to be received thereon, nor shall they use any name or title of any policy or class of policies which shall misrepresent the true nature thereof: Provided, that this section and the following sections shall apply only to companies doing an industrial life, health or accident insurance business, and only to industrial health, life or accident insurance policies, memberships or beneficial certificates. (Acts 1913, p.98.)
Cross-reference.-Punishment for violation, see 56-9908.
56-1311. Receiving premium or assessment after insolvency. Flaudulent reinstatement.-No agent, director or officer shall knowingly and wilfully receive any premium or assessment on behalf of any insurance company, association or fraternal organization, knowing at the time of receipt of said premium or assessment that said company or association is insolvent according to the laws of the State of the organization of said company, without giving notice thereof to the person paying the said premium or assessment. No officer, director, agent, physician or other person shall knowingly issue or cause to be issued a policy or benefit certificate, nor aid in the issuing of any policy or benefit certificate or in reinstating in membership or policy standing any infirm or unhealthy person not at the time

-107

IND STRIAL LIFE, ACCIDENT ETC.

56-1314

of such reinstatement or insurance in an insurable condition, with the intent to defraud. (Acts 1913, pp. 98, 99.)

Cross-reference.-Penalty for violation, see 56-9908, 56-9909.

56-1312.-Powers of Insurance Commissioner or deputy to issue subpoenas; failure to comply with subpoena as contempt.-The Insurance Commissioner or deputy insurance commissioner may issue subpoenas and process requiring the presence of witnesses and the production of books and papers before him at the place where any investigation is being had by them, or either of them; and in the event any person who is served with such subpoena shall fail to comply therewith, he shall be punished as for a contempt by the superior court of the county in which the hearing is being had, and the superior courts are fully empowered hereunto, including the power to issue attachments or other processes on notice, to the end that the person so subpoenaed may have his proper notice and his day in court. (Acts 1913, pp. 98, 100.)
Cross-references.-Examination of insurance companies, see 56-104. Punishment for violating regulations, see 56-9908.

56-1313. Surrender values, extended insurance, etc., in case of
lapse; automatic privileges.-Where any industrial life insurance company doin,g business in the State writes or offers to the public any policy of industrial insurance, or industrial insurance contract, providing a benefit to any person upon the death of the insured, and also as a part of the terms of said policy or contract provides for a cash surrender value, extended insurance l'ight, or other right or privilege to the insured upon the lapse of such policy, after such policy or contract has been in force for any specified period of time, the insurance policy or contract of insurance so written or offered to the public shall also contain a clause, or clauses, specifically providing that upon lapse of said policy or contract for any cause or reason after the right to such cash surrender value, extended insurance right or other right or privilege provided in said contract has accrued, the insured shall be entitled to anyone of such benefits as the policy may provide at his election, and upon failure to make an election within a reasonable time which may be designated by the terms of the insurance contract, shall automatically and without notice to the insurer be entitled to one of such rights or privileges as in the policy or contract provided for; and it shall be unlawful for any such insurance company to write or to offer to the public in this State any policy or contract of insurance which by its terms provides or permits a forfeiture of any cash surrender value, extended insurance right, or other right or privilege, provided by the terms of the policy
and accrued at the time of the lapse thereof, upon failure of the insured to give notice or make an election within any specified gl'ace period, but not less than 90 days. But in the event of such failure the value automatically provided for in the policy shall be the only value available. (Acts 1937-38, Extla. Sess., pp. 338, 339.)

56-1314. Revocation of license where' section 56-1313 violated.A violation of the terms of section 56-1313 shall be ,ground for the revocation of any license, right or privilege granted to such company to do business in this State. (Acts 1937-38, Extra. Sess., pp. 338, 340.)
Cross-reference.-Additional penalty for violating 56-1313, see 56-9927.

561401

M TUAL OR COOPERATIVE I S RA1~CE, ETC.

108

CHAPTER 56-14. MUTUAL OR COOPERATIVE INSURANCE. BURGLARY AND ROBBERY INSURANCE.

Sec. 56-1401. 56-1402.
56-1403. 56-1404. 56-1405. 56-1406. 56-1407.
56-1408.
56-1409. 56-1410.
56-1411.
56-1412. 56-1413. 56-1414. 56-1415.
56-1416. 56-1417.

Contract of mutual insurance, nature of. General laws applicable to formation; contents of petition; capital stock. Bylaws become part of policy. Officers of company agents of all insured. Liability for reducing funds. Good faith requirements.
Life insurance; contents of policies; amounts of payments; m e die a I examinations; l' ate s of premiums; l'egulations and l' e qui l' ements.
Fire insurance; who may become body corporate for mutual insurance purposes; number of incorporators.
Same; articles of incorporation.
Same; name of company to contain word "mutual" or "cooperative."
Same; charter; issuance; filing copy with Insurance Commissioner; amendment.
Same; commencement of existence and business; bylaws.
Same; authority to insure and reinsure; kinds of insurance.
Same; conditions precedent to transaction of business.
Same; applications and policies validated; personal liability of legal representatives; incidental rights.
Same; voting powers.
Same; maximum premiums; cash premiums and surplus.

Sec. 56-1418. Same; investment of assets. 56-1419. Same; unearned premiums and
reserves for each kind of insurance. 56-1420. Same; required assets and assessments the l' e for; defi-
ciency. 56-1421. Same; a d van c e s of money
which may be made. Commissions or promotion expenses. 56-1422. Same; form of policy and indorsements. 56-1423. Same; taxable premiums. 56-1424. Same; reinsurance. 56-1425. Same; exception of certain companies from provisions of law; election to become subject to law. 56-1426. Burglary, robbery, etc., insurance; when companies to be licensed. 56-1427. Same; prerequisites to obtaining license. 56-1428. Same; copy of charter and statement of condition to be filed. 56-1429. Same; statement of condition to be renewed annually; fees. 56-1430. Same; certificate of authority before doing business. 56-1431. Same; line of business; reinsurance reserve.
56-1432. Same; membership fee and premium.
56-1433. Same; service of process on appointed at torn e y and otherwise.
56-1434. Same; penalty for violation of law.
56-1435. Where policy assigned as collateral waiver of conditions may be inserted.

56-1401. (2529) Contract of mutual insurance, nature of.-The contract of insurance is sometimes upon the idea of mutuality, by which each of the insured becomes one of the insurers, thereby becoming interested in the profits and liable for the losses; without a charter, such an organization would be governed by the general law of partnership; when incorporated, they are subject to the terms of their charters.
Cross-references.-Effect of provisions of preceding Chapter on those of thie Chapter, see 56-1425. To what extent provisions of Chapter 56-2 applicable to mutual insurance companies, see 56-1402. See also 56-1407.

56-1402. (2412) General laws applicable to formation; contents of petition; capital stock.-The provisions of Chapter 56-2, in so far as they are applicable, may be applied to the formation of mutual or
cooperative fire, live-stock, life, or accident insurance companies; but applicants for a charter to engage in writing this class of insurance

~ 109::'----M-U- TU- AL-O- R - CO- OP- ER- AT- IV- E I- NS' UR- A - CE- , E- TC- . ---=- 56- -1- 40- 7
shall not be required in their petition to set out the amount of the proposed capital stock or the number of shares of the same; nor shall it be necessary for the Secretary of State to incorporate in his certificate of incorporation any reference to the capital stock of said company. (Acts 1893, p. 78; 1895, p. 53.)
Cross-reference.-See 56-1413, 56-1425. Cited. 140/284, 288 (78 S. E. 915);
13 App. 329 (79 S. E. 210).
56-1403. (2530) Bylaws become part of policy.-The rules and regulations of a mutual company, adopted in pursuance of the charter, beCome a palt of each policy, and all the insured are presumed to have notice thereof, except as provided in section 56-811. New conditions may not be annexed to the policy after it shall be issued, except by the consent of the insured. (137 Ga. 579, 580 (73 S. E. 851).)
56-1404. (2531) Officers of company agents of all insured.-The officers of a mutual company are the agents of all the insured, and
to the extent of their misconduct or neglect, shall affect each, upon
the general principles governing principal and agent, except as to the transaction of making the contract of insurance; up to the time of its execution, the insured stands as a third party, and the officer issuing the policy acts for those already in the company.
Cross-reference.-Principal bound by acts of agent, see 4-311.
56-1405. (2532) Liability for reducing funds.-If a mutual insurance company, by dividends, reduces its available funds below the point of remaining able to meet all losses occurring on policies then in existence, the directors of such company primarily, and the parties receiving the dividends, ultimately and pro rata, shall be liable individually, jointly, and severally, for the amount of such unpaid losses.
56-1406. (2533) Good faith requirements.-A stricter good faith as to representations and concealments is required in mutual insurance than in any other similar contracts.
Cross-reference.-Good faith in application, see 56-820.
56-1407. Life insurance; contents of policies; amounts of payments; medical examinations; rates of premiums; regulations and requirements.-Life insurance companies chartered by the laws of this State to operate on the mutual cooperative or assessment plan without limitation as to the amount for which policies of said company are to be issued, shall stipulate definitely in the face of the policies the amount to be paid to the beneficiaries on the said policies in the event of the death of the insured. In no event shall payments
to beneficiaries by such companies be contingent upon the number
of policyholders in the company or on the number in any division or branch of such company. The intention of this law is to require the payment of the full face of the policy as stipulated therein without regard to subdivisions of the membership of such insurance comPanies in the management of their affairs. No policy shall be issued by such companies without subjecting applicants for such insurance
to medical examination. It shall be the duty of the Insurance Com-

56-1408

M TUAL OR COOPERATIVE I S RA CE, ETC.

110

rmsslOner to investigate the rates of premiums which are to be
charged by all such companies, and he is hereby authorized to require said companies to charge such rates as are deemed by him adequate to pay their policies at maturity. (Acts 1912, pp. 119, 141.)
Cross-reference.-Regulation of mutual or assessment companies, see 56-1309.
56-1408.-Fire insurance; who may become body corporate for mutual insurance purposes; number of incorporators.-Any number of persons, not less than 20, who shall be bona fide residents of this
0; State, by complying with the provisions of this law, may become
together with others who may hereafter be associated with them their successors, a body corporate for the purpose of carrying on the business of mutual insurance as herein provided. (Acts 1923, p. 113.)
Cross-references.-Punishment for violation, see 56-9910. To what companies this section and the following sections of this Chapter are applicable, see 561425. Sections 56-1408 to 56-1425 not affected by 56-507 to 56-514, see .56-515.

56-1409. Same; articles 'of incorporation.-Any persons proposing to form any such company shall subscribe and acknowledge articles of incorporation specifying:
(a) The name, the purpose for which formed and the location of its principal or home office, which shall be within this State.
(b) The names and addresses of those composing the board of directors in which the management shall be vested until the first meeting of the members.
(c) The names and places of residence of the incorporators. (Acts 1923, p. 114.)
Cross-reference.-Punishment for violation, see 56-9910.

56-1410. Same; name of company to contain word "mutual" or "eooperative."- 0 name shall be adopted by such company which does not contain the word "mutual" or "cooperative" or which is so similar to any name already in use by any such existing corporation, company, or association, organized or doing business in the United States, as to be confusing or misleading. (Acts 1923, p. 114.)
Cross-reference.-Punishment for violation, see 56-9910.

561411. Same; charter; issuance; filing copy with Insurance Commissioner; amendment.-When a petition and articles of incorporation shall be submitted to the Secretary of State and found by him to comply with this law, he shall indorse his approval thereon and shall issue a charter as now provided by law. A copy of such petition and charter shall also thereupon be filed in the office of the Insurance Commissioner. The charter may be amended in the manner now provided by law and any such amendment shall be approved, recorded and filed as in the case of the original charter. (Acts 1924, p. 122.)
Cross-reference.-Punishment for violation, see 56-9910.

56-1412. Same; commencement of existence and business; bylaws. -Such corporations shall have legal existence as soon as the charter shall have been issued by the Secretary of State. The board of directors named in the articles of incorporation may thereupon adopt

-- III

MUT AL OR COOPERATIVE I SURA CE, ETC.

56-1414

-----------------'------~:.....::....::.-=..::.=--=

bylaws, fix the qualifications for membership of all applicants for

inSurance, accept applications for insurance, and proceed to transact

the business of such company: Provided, that no insurance shall be

put into force until the company has been licensed to transact insur-

ance as provided by this law. Such bylaws and any amendments

thereto shall, within 30 days after adoption, be filed with the Insur-

ance Commissioner. (Acts 1924, p. 122.)

Cross-reference.-Punishment for violation, see 56-9910. Penalty on agents of unauthorized companies, see 56-9905.

561413. Same; authority to insure and reinsure; kinds of insurIIlce.-Any company organized under the provisions of sections 56-1408 to 56-1412 may make contracts of insurance or reinsurance or accept reinsurance or any portion thereof to the extent specified in its articles of incorporation for the kinds of insurance following:
(a) Fire insurance. Against loss or damage to property and loss of the use and occupancy by fire, lightning, hail, tempest, floods, earthquake, explosion, fire ensuing; against loss or damage to person or property occasioned by the operation of any and every kind of motal vehicle, including passenger automobiles, motorcycles, trucks and trailers, and duly licensed public service motor vehicles.
(b) Plateglass insurance. Against loss or damage to glass and the lettering or ornamentation thereon by the accidental breakage thereof. (Acts 1923, p. 115; 1937, p. 704; 1950, p. 426.)
Cross-reference.-Punishment for violation, see 56-9910.

561414. Same; conditions precedent to transaction of business.o corporation organized under this law shall issue policies or transact any business of insurance unless it shall comply with the conditions following, nor until the Insurance Commissioner has, by formal Iieense, authorized it to do so, which license shall not issue until the corporation has complied with the following conditions:
(a) It shall hold bona fide applications for insurance upon which it shall issue simultaneouslyf' or it shall have in force, at least 20 policies to at least 20 members for the same kind of insurance upon not less than 200 separate risks, each within the limit herein prescribed for the maximum single risk.
(b) The maximum single risk shall not exceed 20 per cent. of the admitted assets or three times the average risk or one per cent. of ~e insurance in force, whichever is the greatest, any ~einsurance takmg effect simultaneously with the policy being deducted in determining such maximum single risk.
(c) It shall have collected a premium upon each application, which Plemium shall be held in cash or securities in which insurance comlI&Dies are authorized to invest, and which shall aggregate not less
than twice the maximum single risk assumed subject to one fire, nor less than $10,000.
(d) It shall satisfy the Insurance Commissioner that its financial condition, methods of operation, and manner of doing business are Id(equate to meet its obligations to all policyholders in this State. Acts 1923, p. 115.)

56-1415

MUTUAL OR COOPERATIVE INSURA CE, ETC.

-112

Cross-reference.-Punishment for violation, see 56-99lO.

56-1415. Same; applications and policies validated; personal Iiabil. ity of legal representatives; incidental rights.-Any public or private corporation, board, or association in this State or elsewhere may make application, enter into agreements for, and hold policies in any such mutual insurance company. Any officer, stockholder, trustee or legal representative of any such corporation, board, association, or estate may be recognized as acting for or on its behalf for the purpose of such membership, but shall not be personally liable upon such con. tract of insurance by reason of acting in such representative capacity. The right of any corporation organized under the laws of this State to participate as a member of any such mutual insurance company is hereby declared to be incidental to the purpose for which such . corporation is organized, and as fully granted as if the rights and powers were expressly conferred. (Acts 1923, p. 116.)
Cross-reference.-Punishment for violation, see 56-9910.

56-1416. Same; voting powers.-Every member of the company shall be entitled to one vote, or to such a number of votes, based upon the insurance in force, the number of policies held or the amount of premiums paid, as may be provided in the bylaws. (Acts 1923, p. 116.)
Cross-reference.-Punishment for violation, see 556-9910.

56-1417. Same; maximum premiums; cash premiums and surplus. -The maximum premium payable by any member shall be expressed in the policy, or in the application for the insurance. Such maximum premium may be a cash premium and an additional contingent premium not less than the cash premium, or may be solely a cash pre-
mium. No policy shall be issued for a cash premium without an
additional contingent premium unless the company shall have a sur plus of at least $100,000, or a surplus which is not less in amount than the capital stock required of domestic stock insurance companies, writing the same kind of insurance. (Acts 1923, p. 117.)
Cross-reference.-Punishment for violation, see 56-9910.

56-1418. Same; investment of assets.-N0 such company shall invest any of its assets except in accordance with the laws of this State relating to the investment of the assets of domestic stock insurance companies writing the same kind of insurance. (Acts 1923, p. 117.)
Cross-reference.-Punishment for violation, see 56-9910.

56-1419. Same; unearned premiums and reserves for each kind of insurance.-Such company shall maintain unearned premiums and other reserves separately for each kind of insurance upon the same basis as that required of domestic stock insurance companies writing the same kind of insurance. (Acts 1923, p. 117.)
Cross-reference.-Punishment for violation, see 56-9910.

56-1420. Same; required assets and assessments therefor; deft. ciency.-Such company not possessed of assets at least equal to the

--113 _--------M---T -A-L-O-R-C''O-O-PE-R-A-T-IV-E-I.N.S.:R:A:N.C.E., .E-TC-.-:....-= 5:6..14:2.3.
unearned premium reserve and other liabilities shall make an assessment upon its members liable to assessment to provide for such deficiency, such assessment to be against each member in proportion
to his liability as expressed in his policy: Provided, the Insurance
Commissioner may, by written order, relieve the company from an assessment or other proceeding to restore such assets during the time fiXed in such order: and Provided further, that any domestic com-
pany which shall be deficient in providing the unearned premium
reserve required hereby may, notwithstanding such deficiency, come under this law on the condition that it shall each year thereafter reduce such deficiency at least 15 per cent. of the original amount thereof and in such case it may increase its assessments accordingly. (Acts 1923, p. 117.)
Cross-reference.-Punishment for violation, see 56-9910.
56-1421. Same; advances of money which may be made. Commissiems or promotion expenses.-Any director, officer, or member of any such company, or any other person may advance to such company any sum or sums of money necessary for the purpose of its business or to enable it to comply with any of the l'equirements of the law and such moneys and such interest thereon as may have been agreed upon shall be payable only out of the surplus remaining after providing for all reserves and other liabilities and shall not otherwise be a liability or claim against the company or any of its assets. No commission or promotion expenses shall be paid in connection with the advance of any such money to the company and the amount of such advance shall be reported in each annual statement. (Acts 1923, p. 118.)
56-1422. Same; form of policy and indorsements.-No law requiring that policies be countersigned and be delivered to a resident agent shall apply to any policy of such mutual company on which no commission shall be paid to any local agent. Such mutual company may insert in any form or policy prescribed by the law of this State any provisions or conditions required by its plan of insurance which are not inconsistent and in conflict with any law of this State. Such policy, in lieu of conforming to the language and forms prescribed by such law, may conform thereto in substance, if such policy includes a provision or indorsement reciting that the policy shall be construed
as if in the language and form prescribed by such law, and a copy of
such policy and indorsement, if any, shall have been first filed with and shall not have been disapproved by the Insurance Commissioner. (Acts 1923, p. 118.)
Cross-reference.-Punishment for violation, see 56-9910.
56-1423. Same; taxable prerniums.-The taxable premiums or premium receipts of any mutual insurance company organized in this State, for the purposes of taxation under any law of this State, shall
be the gross premiums received for direct insurance upon property
or risks in this State, deducting amounts paid for reimbursements ~pon which a tax has been or is to be paid in this State, and deductII1g premiums upon policies not taken, premiums returned on canceled POlicies, and any refund or return made to policyholders other than
tor losses. (Acts 1923, p. 118.)
Cross-reference.-Punishment for violation, see 56-9910.

56-1424

MUTUAL OR COOPERATIVE I SURA CE, ETC.

56-1424. Same; reinsurance.-Any such mutual insurance Corn. pany organized in this State may reinsure any part or all of any risk or risks in any insurance company or insurer licensed in any State of the United States or in the District of Columbia: Provided, that no such reinsurance shall be effected with any company or insurer disapproved therefor by written order of the Insurance Commissioner filed in his office. (Acts 1923, p. 119.)
Cross-reference.-Punishment for violation, see 56-9910.
56-1425. Same; exception of certain companies from provisions of
law; election to become subject to Iaw.-All laws or parts of laws in
conflict with this law, so far as companies organized under this law are concerned, are hereby repealed, but no such repeal and nothing in this law shall apply to or affect any company or association of this State now doing business, or any law under which any such company or association is organized or doing business.
Any such company or association may, however, by resolution of its board of directors, duly approved by a majority of the members at a meeting especially called for that purpose, and duly certified to by the president and secretary and filed with and approved by the Insurance Commissioner, elect to adopt and become subject to the provisions of this law in lieu of any law or laws theretofore governing such companies or associations. Any company or association so elected and fully complying with this law may thereafter effect insurance as authorized by this law and so specify in its certificate of insurance then in force, or as then or hereafter amended. (Acts 1923, p.119.)
Cross-reference.-See 56-1413. Applicability of Chapter 56-20, notwithstandilll provisions of this section, see 56-2002.
56-1426. (2535) Burglary, robbery, etc., insurance; when compa nies to be licensed.-Any insurance company organized and incorporated on the mutual plan under the laws of this State or any other State for the purpose of insuring against loss or damage resultinr from burglary and robbery or attempt threat, and insuring against the loss of money and securities in course of transportation when shipped by registered mail, shall be admitted and licensed to do business in this State as hereinafter provided. (Acts 1897, p. 64.)
Cross-reference.-See 56-1402, 56-1413. Cited. 180/661 (180 S. E. 229).
56-1427. (2536) Same; prerequisites to obtaining license.-Before such company shall be permitted and licensed to transact business it shall have in force 500 or more policies on which the premium shall have been paid in cash, or shall be evidenced by the written contracts of the policyholders, on which not less than one-fifth of the amount shall have been paid in cash, and the cash and net face value of contracts for premiums on hand shall amount to a sum of not less that $50,000. The premium contracts so held shall constitute a part of the assets of the company. (Acts 1897, p. 64.)

56-1428. (2537) Same; copy of charter and statement of conditi to be filed.-Every such company, association, or partnership shaD file in the office of the Insurance Commissioner a certified copy of i

--115 _ - - - - - -M- .T.U.A.L:O.R.C.O.O-PE-RA-T-IV-E -I -SU-RA-N"CE-, E-T-C.- - - - ' '' -56--1-43-1
charter together with a statement under oath of the president, vice ~ident, and secretary of the company for which they may act, stating the name of the company and place'where located, a detailed statement of its assets, showing the number of policyholders, aggre-
gate amount of premium contracts, the amount of cash on hand, in
bank or in the hands of agents, the amount of real estate, and how
the ;ame is incumbered by mortgage, the number of shares of stock
of every kind owned by the company, the par and market value of the
same, amount loaned on notes and m~rtgages, the amount loaned on other securities, stating the kind and the amount loaned on each, and the estimated value of the whole amount of such securities, and any other assets or property of the company; also stating the indebted-
ness of the company, the amount of losses adjusted and unpaid, the
lII10unt incurred and in process of adjustment, the amount resisted by the company as illegal and fraudulent, and all other claims existing against the company; also a copy of the last annual report, if any, uiade under any law of the State by which such company was incorporated; and no agent shall be allowed to transact business for any such company when its reinsurance reserve, as required in this section, is impaired to the extent of 20 per cent. thereof while such deficiency shall continue. (Acts 1897, p. 64,)
56-1429. (2538) Same; statement of condition to be renewed anDI811y; fees.-The statement requu'ed by the preceding section shall be renewed from year to year in such manner and form as may be required by said InsUl'ance Commissioner, with an additional statement of the amount of premiums received during the preceding year, and the said Insurance Commissioner, on being satisfied that the membership, assets, securities, and investments remain secure, as heretofore mentioned, shall furnish a renewal of the certificate as aforesaid, upon the payment to the State: at the time of filing the
tement herein provided for, of a fee of $5 for each corporation, and for each foreign corporation. (Acts 1897, p. 64.)
561430. (2539) Same; certificate of authority before doing busiNo agent or agents shall act for any company or companies
referred to in sections 56-1426 to 56-1434, directly or indirectly, in taking risks or transacting the business of burglary and robbery iDsurance, or the insurance of the safe shipping of money and securities by registered mail in this State, without procuring from the IDsurance Commissioner a certificate of authority, stating that such company has complied with all the requisitions of said sections which apply to such companies, giving the name of the attorney appointed
to act for the company. (Acts 1897, p. 64.)
Cross-references.-Definition of insurance agent, see 56-501. Penalty on agents 1lJIauthorized companies, see 56-9905.
561431. (2540) Same; line of business; reinsurance reserve.-Any pany permitted and licensed to transact business in this State r sections 56-1426 to 56-1434 shall confine its business to that ted in section 56-1426, and to banks, bankers, loan companies, and ty treasurers, and shall not issue any policy or policies to any
..."..-...,ns, firms, or corporations in this State other than banks, bankloan companies, and county treasurers. Every such company set aside a reinsurance reserve of 50 per cent. of its premiums,

56-1432

MUTUAL OR COOPERATIVE I SURA CE, ETC.

116

~--------------------'--------:;-

whether collected in cash or represented by obligations of the policy. holders, as written in its policies; this reinsurance reserve to be maintained so long as the risk is in force. (Acts 1897, p. 64.)
Cross-reference.-Calculation of reinsurance reserve by commissioners of other States, see 56-834.

56-1432. (2541) Same; membership fee and premium.-Policy.
holders of any company permitted to tl"ansact business in this State under sections 56-1426 to 56-1434, shall be held liable to pay the memo
bership fees and premiums on their insurance as paid or contracted to
be paid at the time the policy is taken out or the risk begins, and shall not be held liable for any other or further assessments or claims on the part of the company or its policyholders. The membership fee
and premium agreed upon may be collected in cash at the time the policy is issued, or evidenced by a written obligation of the policy. holder as may be agreed upon by the company and the policyholder. Such payment or obligation shall be the limit of the liability of the policyholder to the company for premiums on his insurance. (Acta
1897, p. 64.)

56-1433. (2542) Same; service of process on appointed attorney and otherwise.-No insurance company, association, or partnership incorporated by or organized under the laws of any other State for any of the purposes specified in section 56-1426, shall directly or indio rectly take risks or transact any business of insurance in this State, by any agent or agents in this State, until it shall have appointed an attorney in this State on whom process of law can be served, and file in the office of the Insurance Commissioner a written instrument, duly signed and sealed, certifying such appointment, which shall continue until another attorney shall be substituted, and any process issued by any court of record in this State, and served upon such attorney by the proper officer of the county in which such attorney may reside or may be found, shall be deemed a sufficient service of process upon such company, but service of process upon such company may also be made in any other manner provided by law. (Acts 1897, p. 64.)
Cross-references.-Service on nonresident companies, see 56-603. Service of process against corporations, how perfected, see 22-1101. Service on nonresident, assessment, etc., insurance companies, see 56-602 to 56-604.
Cited. 180/661 (180 S. E. 229).

56-1434. (2543) Same; penalty for violation of law.-Any violation of any of the provisions of sections 56-1426 to 56-1433 shall subject the party violating the same to a penalty of not less than $100 nor more than $500. (Acts 1897, p. 64.)

56-1435. Where policy assigned as collateral waiver of conditio may be inserted.-When any policy of insurance issued by any incor-
porated mutual or cooperative fire insurance company chartered or transacting business under the laws of this State is assigned as c0llateral security for the payment of a debt or made payable to a mort-
gagee or other creditor, it shall be lawful for such company to insert
in such policy or attach thereto by rider a provision or provisio
whereby any or all conditions of the policy which work a suspensi of forfeiture shall be waived in such case for the benefit of tilt
assignee, mortgagee or other creditor. (Acts 1937, p. 705.)

-117

----=.A:.:S:..:.S.:..:ES:..:S..:..M:..:E:..:.N:..:.T_I::..::.-.:s:..:.U.::..:R:..:.AN:..:.C.:..:E::........::C:...:O..:..M..:..P_A..:..N_IE_s

----.:::....:...56..:...::..1.:..:50=.=2

Editorial Note.-This section is as it appears in the enrolled Act. In the Geor-

gia Laws of 1937, the word "lawful" is written "unlawful," completely changing

the meaning of the section.

CHAPTER 56-15. ASSESSMENT INSURANCE COMPANIES.

sec.

Sec.

66-1501. Sbwyornasssteastsemmeenntt tcoombpeanfiileesd, 56-1502. Policies; contents; application

etc.

of section.

56-1501. (2450) Sworn statement to be filed by assessment compa.rri.es, etc.-No corporation or association, organized under the laws of this or any other State or County for the purpose of furnishing life indemnity or insurance upon the assessment plan, shall do any business in this State until such corporation or association shall deposit with the Insurance Commissioner a certified copy of its charter or articles of incorporation; a copy of its statement of business for the year ending the 31st day of the next preceding December, sworn to by the president or secretary or like officer thereof, setting forth the number and amount of certificates of membership or policies in force and a detailed account of its expenditures, income, assets, and liabilities, and also a certificate sworn to by the president and secretarY or like officer thereof, setting forth that it has paid, and has the ability to pay, its certificates or policies to the full limit named therein, that its certificates or policies are payable only to the beneficiaries having a legal insurable interest in the life of the member or the insured, that an ordinary assessment upon its members is sufficient to pay its maximum certificate of membership or policy theretofore or thereafter to be issued to the full amount or limit named therein; a certificate from the Insurance Commissioner, or other like officer, charged with the duty of executing or enforcing the execution of insurance laws of its home State, certifying that it is legally entitled to do business in said home State, a copy of the application for membership or insurance, and of each form thereof if more than one form is used; a copy of the constitution and bylaws, and of every amendment thereof, which must show that all indemnities to beneficiaries are in the main provided for by assessments upon all surviving members. Whenever said company shall fail to pay a valid claim to the full limit named in any policy issued to any resident of this State, the Insurance Commissioner shall revoke its authority to do business in this State. (Acts 1887, p. 124; 1900, pp. 47, 74; 1901, p. 33; 1905, p. 77.)
Cro88-references.-Incorporation, etc., of industrial life insurance companies, see 56-1307. Deposits required, see 56-312 to 56-314, 56-322. Penalty for fraudulently procuring insurance, see 56-9911.

561502. (2455) Policies; contents; application of section.-Every ~licy or certificate issued to a resident of this State by any corpora-

tion transacting therein the business of life insurance upon the

s &SSe. sment plan, or admitted into this State under the assessment

WS of Georgia, shall print in bold type, in red ink, in every policy

or certificate issued upon the life or lives of the citizens of Georgia,

J~l!~&keindg

one upon

of the principal lines the assessment plan,"

near the top thereof, the words and the words "assessment plan"

~ be printed conspicuously in red ink in or upon every application,

CIrcUlar, card advertisement, and other printed documents issued,

56-1502

llB

circulated, or caused to be circulated by such corporation within this State: Provided, that this section shall apply only to such corporations or associations as shall write or issue policies or certificates on the post mortem assessment plan, and shall not apply to such corporations or associations as shall only issue policies under which the premiums are stipulated, and made payable at fixed periods in advance. If any such corporation or association shall at any time fail or refuse to comply with this section, the Insurance Commissioner shall forthwith suspend or revoke all authority to such corporation or association and all its agents to do business, and shall publish such revocation in some newspaper published in this State. (Acts 1897, p. 67; 1898, p. 1901, p. 77.)
Cross-referenees.-Licenses are revocable, see 20-117. Penalty for fraudulently procuring insurance, see 56-9911.

CHAPTER 56-16. FRATERNAL BENEFIT SOCIETIES.

Sec. 56-1601. Fraternal benefit society de-
fined. 56-1602. Lodge system defined.
56-1603. Representative form of gov-
ernment defined. 56-1604. Exemption from other insur-
ance laws.
56-1605. Benefits. 56-1606. Beneficiaries.
56-1607. Qualifications for membership.
56-1608. The contract. 56-1609. Standard and prohibited pro-
visions.
56-1610. Benefits on lives of children.
56-1611. Benefit certificates in classes; regulations.
56-1612. Funds.
56-1613. Investments. 56-1614. Organization; articles of in-
corporation, preliminary cer-
tificate. 56-1615. Same; solicitation of members.
56-1616. Same; issuance of certificate. 56-1617. Same; power to make and
amend constitution and bylaws and other necessary and incidental powers.
56-1618. Existing societies; compliance with Chapter; reincorpora-
tion; amendments to articles of incorporation. 56-1619. Foreign. societies; right to
continue business and to become incorporated under
laws of this State. 56-1620. Same; procedure for incorpo-
ration in this State.
56-1621. Consolidations and mergers. 56-1622. Annual license.
56-1623. Admission of foreign society. 56-1624. Designation of attorney for
service of process; service, how made. 56-1625. Place of meeting of govern-
ing body. Location of principal office.

Sec. 56-1626. No personal liability of offi-
cers and members. 56-1627. Waiver,s. 56-1628. Incontestability of insurance
certificates. 56-1629. Benefits not subject to attach-
ment, garnishment, or other process. 56-1630. Certified cop i e s of amendments to laws to be filed wit h Insurance Commissioner. 56-1631. Annual statement to be filed wit h Insurance Commissioner. Duty of officers to answer Commissioner's inquiries.
56-1632. Domestic society to publish synopsis of annual statement and valuation report.
56-1633. Annual valuation of certificates; filing rep 0 r t with Commissioner.
56-1634. Same; certification by accountant or actuary; standards of valuation.
56-1635. Same; procedure on deficiency of assets.
56-1636. Examination of domestic societies; procedure if results unfavorable.
56-1637. Proceedings for dissolution, etc., to be brought by Attorney General.
56-1638. Examination of foreign societies; penalty for refusal to submit or to comply with law.
56-1639. Public statements by Commissioner pending, during or after examination.
56-1640. Revocation of licenses. 56-1641. Exemption of certain socie-
ties from operation of Chapter. 56-1642. Exemption from taxation.

11:.-9--_------------:..F.R.A.T.E.R.N:A.L.B.E-N-E-F-IT--S~O.C:1E.T.IE.S..---=-..:....5:6:1.603

sec66-1643.

Misrepresentations, misleading statements, and incom-

plete comparisons.

66-1644.

Exclusion from doing business for failure to make re-

port or appoint attorney; in-

junction.

56-1645. Authority to maintain hos-

Sec. pitals, asylums, etc.
56-1646. Authority to contract to pay
hospital, nursing, and medi-
cal benefits. 56-1647. Review of decisions of insur-
ance Commissioner. 56-1648. Laws relating to industrial in-
surance not affected.

Editorial ote.-This Chapter and Chapter 56-17, and all amending Acts, were
exPressly repealed by Acts 1943, p. 495. Section 1 of the Act of 1943, particularly desCribing these Chapters and Acts, provides that they "are hereby repealed, and in lieu of all of said repealed Acts a new Act is hereby enacted for the regula-
tion and control of fraternal benefit societies." The new Act is codified in full in the following sections in this Chapter, except that its penal provisions are codified in Chapter 56-99 as 56-9928 to 56-9934.
Section 41 of the Act provides that it shall become operative from the date of its passage and approval. It was approved on March 20, 1943.
Annotations under former Chapters 16 and 17 are found under "Notes of Deci-
sions Under Former Chapters 16 and 17" at the end of this Chapter.

56-1601. Fraternal benefit society defined.-Any incorporated society, order or supreme lodge, without capital stock, organized and carried on solely for the benefit of its members and their beneficiaries and not for profit, operating on a lodge system with ritualistic form of work, having a representative form of government, and which shall make provision for the payment of benefits in accordance with this Chapter, is hereby declared to be a fraternal benefit society. (Acts 1943, pp. 495, 498.)
Cross-reference.-For annotations under prior law, see "Notes of Decisions Under Former Chapters 16 and 17" at the end of this Chapter.

56-1602. Lodge system defined.-Any such society having a supreme governing or legislative body and subordinate lodges or
branches, by whatever name known, into which members shall be elected, initiated or admitted in accordance with such society's constitution, laws, ritual, mles and regulations, which subordinate lodges or branches shall be required by the laws of such society to hold regular or stated meetings at least once in each month, shall be deemed to be operating on the lodge system. (Acts 1943, pp. 495,
498.)

56-1603. Representative form of government defined.-Any such society shall be deemed to have a representative form of government when it shall provide in its constitution and laws for a supreme legislative or governing body, composed of representative elected either by the members or by delegates elected directly or indirectly by the
members, together with such other members of such body as may be prescribed by such society's constitution and laws: Provided, that the elective representatives shall constitute a majority in number and have not less than two-thirds of the votes, nor less than the votes required to amend its constitution and laws: and Provided, further, that the meetings of the supreme or governing body and the election of officers, representatives or delegates shall be held as often as once
in four calendar years. The members, officers, representatives or dele-
rates of a fraternal benefit society shall not vote by proxy. (Acts
1943, pp. 495, 499.)

56-1604

FRATERNAL BE EFIT SOCIETIES

120

56-1604. Exemption from other insurance laws.-Except as herein provided, such societies shall be governed by this Chapter and shall be exempt from all provisions of the insurance laws of this State not only in governmental relations with the State, but for every other purpose, and no law hereafter enacted shall apply to them, unless they be expressly designated therein. (Acts 1943, pp. 495, 499.)

56-1605. Benefits.-Any such society authorized to do business in this State shaH provide for the payment of death benefits, and may issue to its members term, life, endowment and annuity certificates and combinations thereof, and may provide for the payment of benefits in case of temporary or permanent disability as the result of disease or accident; and may grant loans, withdrawal equities, and
such nonforfeiture options as its laws may permit: Provided, such grants shaH in no case exceed in value the portion of the reserve to the credit of the certificate on which the same are made. Every such society may provide for monuments or tombstones to the memory of deceased members. (Acts 1943, pp. 495,499.)

56-1606. Beneficiaries.-No beneficiary shall have or obtain any vested interest in the proceeds of any certificate until such certificate has become due and payable in conformity with the provisions of the insurance contract. The insured member shall have the right at all times to change the beneficiary or beneficiaries in accordance with the constitution, bylaws, rules or regulations of the society. Every society may, by its constitution, bylaws, rules or regulations, limit the
scope of beneficiaries. (Acts 1943, pp. 495, 500.)

56-1607. Qualifications for membership.-Any society may admit to beneficial membership any person who has been examined by a legally qualified physician, and whose examination has been supervised and approved in accordance with the laws of the society, or who has made declaration of insurability acceptable to the society: Provided, that any beneficial member of a society who shall apply for additional benefits more than six months after becoming a beneficial member shall pass an additional medical examination, or make an additional declaration of insurability, as required by the society. Any person so admitted prior to attaining the full age of 21 years shall be bound by the terms of his or her application and certificate, and by all the laws, rules and regulations of the society, and shall be entitled to all the rights and privileges of membership therein, as fully and to the same extent as though he or she were not a minor at the time of applying for such beneficial membership. Nothing herein contained shall prevent such society from accepting general or social members, who shall have no voice or vote in the management of the insurance affairs of the society, nor from issuing juvenile certificates on the lives of children under the age of 18 years. (Acts 1943, pp. 495, 500.)
Cross-reference.-Benefits on lives of children, see 56-1610.

56-1608. The contract.-Every certificate issued or delivered in this State by any such society shall specify the amount of benefit provided thereby. The certificate, together with any riders or endorsements attached thereto, the charter or articles of incorporation, the constitution and laws of the society, the application for membership, and declaration of insurability (if used in lieu of a medical

121

FRATER "AL BENEFIT SOCIETIES

561609

examination), signed by the applicant, and all amendments to each
thereof, shall constitute the agreement between the society and the member, and the certificate shall so state. Copies of each of the aforesaid documents, certified by the secretary of the society, or corresponding officer, shall be received in evidence of the terms and conditions thereof. Any changes, additions or amendments to said charter or articles of incorporation, constitution or laws duly made or enacted subsequent to the issuance of the certificate, shall bind the member and the beneficiaries, and shall govern and control the agreement in all respects the same as though such changes, additions or amendments had been made prior to and were in force at the time of the application for membership: Provided, however, that any society may provide specifically in its certificates that the rates and benefits shall not be subject to change, in which case the certificate shall contain a provision that if the society's reserves shall become impaired, there shall be paid by the member of this society the amount of the member's equitable proportion of such deficiency as ascertained by the society's board of directors, or corresponding
body, and if such payment be not made, same shall stand as an indebtedness against the certificate, and draw interest at not to exceed six per cent. per annum. (Acts 1943, pp. 495, 501.)

56-1609. Standard and prohibited provisions.-(l) No benefit certificate shall be issued or delivered in this State unless the same shall contain in substance the following provisions:
(a) In case the age of the member or the age of the beneficiary is considered in determining the rate of contribution, then a provision that if it shall be found at any time before final settlement under the certificate that such age has been misstated, and the discrepance and rate of contribution involved have not been adjusted, the amount payable under the certificate shall be such as the rate of contribution would have purchased at the correct age: Provided, that if the correct age was not an insurable age under the society's charter, constitution or laws, only the mortuary payments shall be returned: Provided further, that if the age has been overstated, no additional amount of insurance or other values shall be granted for any excess payments, but such excess payments shall be paid without interest to the beneficiary.
Editorial Note.-The word "as" appearing in the published Act between "be" and "such" of line 6 of this subsection has been stricken because it does not appear in the enrolled Act.
(b) In case any withdrawal equities, nonforfeiture values, loan values, 01" other options are available under the contract, on default in payment of stated periodical contributions by the members, a table showing the same in figures for each year during at least the first 20 years of the certificate.
(c) A provision that the member is entitled to a grace period of not less than the full month in which the payment of any stated contribution, by whatever name known, after the first, may be made. During such grace period the certificate shall continue in full force, but in case the certificate becomes a claim during the said grace period before the overdue contribution is made, the amount of such overdue contribution or contributions may be deducted in any settlement under the certificate.

..=_5_6_'l_6_1_0

F_R_AT_E_R_N_A_L_B_E_E_F_IT_S_O_C_IE_T_IE_S

...:.:~

(d) Title on the face and on the back of the certificate clearly and correctly describing its form.
(2) No certificate shall be issued or delivered in this State con. taining any of the following provisions:
(a) Any provision limiting the time within which any action at law or in equity may be commenced to less than 18 months after cause of action shall accrue.
(b) Any provision by which the certificate shall purport to be issued or take effect more than six months before the original appli. cation for the insurance was made, except in cases of transfer from one form of certificate to another in connection with which the member is to receive credit for any reserve accumulation under the form of certificate from which the transfer is made.
Editorial Note.-In the third line of this subsection, "issuance" in the published Act has been changed to "insurance," which is the word in the enrolled Act.
(c) Any provision for forfeiture of the certificate for failure to repay any loan thereon or to pay interest on such loan, while the total indebtedness, including interest, is less than the loan value thereof. (Acts 1943, pp. 495, 502.)

56-1610. Benefits on lives of children.-(l) Every fraternal ben. efit society authorized to do business in this State may provide in its constitution or bylaws, in addition to other benefits provided for therein, for term, life, endowment and annuity benefits, and combinations thereof, on the lives of children under 18 years of age at time of application therefor, upon the application of some adult person as the bylaws, rules or regulations may provide. Every such society may, at its option, organize and operate branches for such children, and membership in local lodges, and initiation therein shall not be required of such children, nor shall they have a voice in the management of the society.
(2) The contributions to be made for death benefits under all juvenile certificates issued after the effective date of this Chapter shall be based upon the Standard Industrial Mortality Table or the American Experience Table of Mortality with Craig's or Buttolph's extension thereof, with interest assumption of not more than four per cent. per annum, or the American Men Ultimate Table of Mortality with Bowerman's Extension thereof, and interest at three and onehalf per cent. per annum, or upon any other standard appl'oved by the Insurance Commissioner.
(3) Every society issuing such benefit certificates shall maintain on all such certificates not less than the reserve required by the standard of mortality and interest adopted by the society for computing contributions.
(4) Every society issuing such benefit certificates shall have the right to provide in its bylaws, rules or regulations, for payments on account of the society's expense or general fund, which payments may be mingled with the general fund of the society. Such society shall have full power to provide for means of enforcing payment of contributions, designation of beneficiaries, and changing such designations, and in all other respects for the regulation, government and

123 FRATER AL BENEFIT SOCIETIES

. 56-1611

~::'------------------------'''----

control of such certificates and all. rights, obligations and liabilities incident thereto and connected therewith. (Acts 1943, pp. 495, 503.)

Editorial ote.-"Therein" in the last sentence of paragraph (1) of the section appears as "thereon" in the published Act but the enrolled Act has "therein."

56-1611. Benefit certificates in classes; regulations.-(a) No fraternal benefit society or order, operating or hereafter operating in this state, shall hereafter be permitted to issue any certificate or contract to members providing for the grouping of its members into groups and divisions, classified according to age and providing for the payments of contingent endowment benefits by whatever name called, from special funds created for such purpose to the oldest member in seniority of the group and division, except as is hereinafter provided.
(b) No fraternal benefit society or order shall hereafter issue such contingent endowment certificate by whatever name called to a member, and place such member in any division and class other than a division and class in existence at the time of the passage of this section and containing subsisting certificates.
(c) No fraternal benefit society or order shall issue any such contingent endowment certificate, by whatever name called unless it shall, within 30 days after the passage of this section, deposit with the Treasurer of the State of Georgia securities which are by the laws of this State a legal investment of the funds of insurance companies and of the face value of $5,000 for the security of the payments of benefits to all certificate holders, said securities to be first approved by the Insurance Commissioner, and such fraternal benefit society, or order making such deposit shall hereafter, on or before the filing of the list of contingent endowment certificate holders as provided in subsection (d) of this section increase said deposit by the sum of $5,000 in such securities for each additional 1,000 or fractional part thereof of all certificate holders until said deposit shall amount to $25,000. Said deposit to be subject to the provisions of sections 56-302 to 56-305, inclusive.
(d) Any such society or order desiring to continue the writing of said certificate after the passage of this section, shall register with the Insurance Commissioner the name and address of each certificate holder, and the position of each certificate holder in such division and class, within 30 days after the passage of this section, and thereafter the same information shall be furnished to the Insurance Commissioner by the 15th day of January and again on the 15th day of July of each year. All of such information shall be confidential with the Insurance Commissioner and shall not be divulged by him to any other person.
(e) After the passage of this section, it shall be unlawful for any such fraternal benefit society or order to issue what is known as a "persistency endowment contract," which is a contract that provides Upon the death of a member of such class, division and age that an equal amount will be divided among the then living members of such class, division and age.
(f) If there shall be only one certificate holder in a division and he should die without leaving a member in such division entitled to

. 5:6-: 161:2 ..-_--- FRA-TE-RN-AL-B-EN-EF-IT-SO-CI-ET- IES--------~12
receive said contingent endowment, such society or order shall pay such contingent endowment to the sUTviving member in such class whose contract has been in force the longest period of time. Such society or order, in order to pay such endowments as they severally mature, as well as to pay all other benefits incorporated in such certificates or contracts, now or hereafter operating upon this plan in this State, shall establish and maintain on each such policy a reserve upon a basis not lower than the American Experience Table of Mortality, Modified Preliminary Term, Illinois Standard, and inter_ est assumption of three and one-half per centum, covering each Contingency provided for in such certificate.
(g) Any such society or order failing to comply with the terms of this section or operating in violation thereof, shall forfeit its right to do business in this State. (Acts 1943, pp. 495, 504.)
Cross-reference.-Violation of section as misdemeanor, see 56-9928.
Editorial Note.-The effective date of the section was March 20, 1943. This section has been compared with the enrolled Act and appears here as it does there, except for such changes only as are usual in codification. The words in. lines 2 and 3 of subsection (f), "such division entitled to receive said contingent endowment," were omitted from the subsection in the published Act.
56-1612. Funds.-(1) Unless otherwise provided in the contract, all funds 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 therein or become entitled to any apportionment or the surrender of any part thereof, except as provided in the contract.
(2) The funds from which benefits shall be paid and the funds from which the expenses of the society shall be defrayed shall be derived from the periodical or other payments by the members and accretions to said funds, which payments may combine the separate purposes for which made: Provided, that after the effective date of this Chapter no society shall be incorporated or authorized to do business in this State which does not provide for stated periodical or other contributions on all certificates for new insurance thereafter issued, sufficient to provide for meeting the mortuary obligations contracted when computed upon the basis of the American Experience Table of Mortality with interest assumption of not more than foul' per cent. per annum, or on the basis of the American Men Ultimate Table of Mortality, with an interest assumption of not more than three and one-half per cent. per annum, or on the basis of such mortality standards and interest assumptions as may be now or hereafter authorized for use by life insurance companies. No society, domestic or foreign, shall hereafter be incorporated or admitted to write or accept members for temporary or permanent disability benefits, or accidental death benefits, unless the rates therefor are adequate upon the basis of tables based upon reliable experience with an interest assumption not higher than four per cent. per annum.
(3) Any society may create, maintain, invest, disburse and apply any special fund or funds necessary to carry out any purpose permitted by the laws of such society.
(4) Deferred payments or installments of claims shall be considered as fixed liabilities on the happening of the contingency upon which such payments or installments are thereafter to be paid. Such liability

E:.:S_-------F-RA-T-E-R-N-A-L-B-E-EF-I-T-S-O-C-JE-T-JE-S

---..::._S_6_-1_6_14

shall be the present value of such future payments or installments upon the mortality and interest basis assumed by the society for ~aluation, and every society shall maintain a fund sufficient to meet such liability regardless of proposed future collections to meet any such liabilities. (Acts 1943, pp. 495, 506.)
Editorial ote.-The effective date of the Chapter was March 20, 1943.

56-1613. Investments.-Every society shall invest its funds only in the manner permitted by the laws of this State for the investment of the assets of life insurance companies; provided, that any foreign society permitted or seeking to do business in this State, which invests its funds in accordance with the laws of the State in which it is incorporated, shall be held to meet the requirements of this section for the investment of funds. (Acts 1943, pp. 495, 508.)
Cross-reference.-Admission of foreign societies, see 56-1623.

56-1614. Ol1ganization; articles of incorporation, preliminary certificate.-A fraternal benefit society, as defined by this Chapter, may be organized in the following manner:
(1) Seven or more persons, citizens of the United States, a majority of whom are citizens of this State, who desire to form such a society, may make, sign and acknowledge before some officer, competent to take acknowledgment of deeds, articles of incorporation, in which shall be stated:
(a) The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company as to mislead the public or lead to confusion.
(b) The purposes for which it is being formed, and the mode in which its corporate powers are to be exercised. Such purposes shall not include more liberal powers than are granted by this Chapter: Provided, that any lawful social, intellectual, educational, charitable, benevolent, moral, fraternal or religious advantages may be set forth among the purposes of the society.
(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 for the first year, or until the ensuing election at which all such officers shall be elected by the supreme legislative or governing body, which election shall be held not later than one year from the date of the issuance of the permanent certificate.
(2) (a) Such articles of incorporation, duly certified copies of the eonstitution and laws, rules and regulations, copies of all proposed fonns of certificates, applications therefor, and circulars to be issued by such society, and a bond, conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year, as provided in this section, such bond to be in the sum of t5,000 with sureties approved by the Insurance Commissioner, shall
be filed with the Insurance Commissioner, who may require such fur-
ther information as he deems necessary. If the purposes of the society ClOnform to the requirements of this Chapter, and all provisions of the law have been complied with, the Insurance Commissioner shall

56-1615
so certify and retain and file the articles of incorporation, and fUrnish the incorporators a preliminary certificate authorizing said SOciety to solicit members as hereinafter provided.
(b) No preliminary certificate granted under the provisions of this section shall be valid after one year from its date, or after such further period, not exceeding one year, as may be authorized by the Insurance Commissioner, upon cause shown, unless the 500 applicants herein_ after required have been secured and the organization has been completed as herein provided. The articles of incorporation and all other proceedings thereunder shall become null and void in one year from the date of said preliminary certificate, or at the expiration of said extended period, unless such society shall have completed its organization and commenced business as hereinafter provided. (Acts 1943, pp. 495, 508.)
56-1615. Same; solicitation of members.-Upon receipt of said preliminary certificate from the Insurance Commissioner, said 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 payment, in accordance with its table of rates as provided by its constitution and laws, and shall issue to each such applicant a receipt for the amount so collected. No society shall incur any liability other than for the return of such advance payment, nor issue any certificate, nor pay, allow, or offer or promise to payor allow, any death or disability benefit to any person until:
(a) actual bona fide applications for death benefits have been secured upon at least 500 lives for at least $1,000 each;
(b) all such applicants for death benefits shall have been regularly examined by regularly qualified practicing physicians, or shall have made acceptable declarations of insurability;
(c) certificates of such examinations, or such suitable declarations of insurability have been duly filed and approved by the chief medical examiner of such society;
(d) there have been established 10 subordinate lodges or branches into which said 500 applicants have been admitted;
(e) there has been submitted to the Insurance Commissioner, under oath of the president or secretary, or corresponding officer of such society, a list of such applicants, giving their names, addresses, date each was admitted, name and number of the subordinate branch of which each applicant is a member, amount of benefits to be granted, rate of stated periodical contributions which shall be sufficient to provide for meeting mortuary obligations contracted, when valued for death benefits upon the basis of the American Experience Table of Mortality, with interest assumption of not more than four per cent. per annum, or upon the basis of the American Men Ultimate Table of Mortality with an interest assumption of not more than three and one-half per cent. per annum, or upon the basis of such mortality standards and interest assumptions as may be now or hereafter authorized for use by life insurance companies, and for disability benefits, or accidental death benefits, upon tables based upon reliable experience with an interest assumption of not more than four per cent.; and
(f) it shall have been shown to the Insurance Commissioner, by

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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 payment as herein provided per $1,000 of indemnity
to be affected, which payments in the aggregate shall amount to at
least $2,500, all of which shall be credited to the fund or funds from which benefits are to be paid, and no part of which may be used for expenses. Said advance payments shall be held in trust during the period of organization, and if the organization is not completed within the time provided herein, such payments shall be returned to said applicants. (Acts 1943, pp. 495, 508, 510.)

56-1616. Same; issuance of certificate.-The Insurance Commissioner may make such examinations and require such further information as he deems advisable, and upon presentation of satisfactory evidence that the society has complied with all the provisions of law, he shall issue to such society a certificate to that effect. Such certificate shall be prima facie evidence of the existence of such society at the date of such certificate. The Insurance Commissioner shall cause a record of such certificate to be made, and a certified copy of such record may be given in evidence with like effect as the original certificate. (Acts 1943, pp. 495, 508, 511.)

561617. Same; power to make and amend constitution and bylaws and other necessary and incidental powers.-Every such society shall have the power to make a constitution and bylaws for the government of the society, the admission of its members, the management of its
affairs, and the fixing and readjusting of the rates of contribution of
its members from time to time. It shall have the power to change, alter, add to or amend such constitution and bylaws, and shall have such
other powers as are necessary and incidental to carrying into effect
the objects and purposes of the society. (Acts 1943, pp. 495,508,512.).

56-1618. Existing societies; compliance with Chapter; reincorporation; amendments to articles of incorporation.-Any incorporated fraternal benefit society now engaged in transacting business in this State shall comply with and be governed by the provisions of this Chapter from and after the effective date thereof. No society already incorporated shall be required to reincorporate hereunder, and any such society may amend its articles of incorporation from time to time in the manner provided therein or in its constitution and laws, and all such amendments, duly certified by the secretary, or corresponding officer, shall be filed with the Insurance Commissioner, and shall become operative upon such filing, unless a later time be provided in such amendments or in its articles of incorporation, constitution or laws. (Acts 1943, pp. 495, 512.)
Editorial Note.-The Chapter became effective on March 20, 1943.

56-1619. Foreign societies; right to continue business and to beeome incorporated under laws of this State.-Any fraternal benefit
iety organized or incorporated under the laws of any other State and licensed to do business in this State, which has assets in excess
the required reserve liability when its outstanding benefit certifites or contracts are valued on the American Experience Table of ortality with an interest assumption of not more than four per cent. r annum, or upon some higher standard, may become a fraternal nefit society incorporated under the laws of this State with contin-

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1-.::28

uation without intermission or cessation of any of its powers, rights and privileges and of all mutual existing rights, obligations, liabilities powers, contracts, liens, privileges and duties at the time existing between said fraternal benefit society and its members. Its officers shall be continued in office for the terms for which they were elected with the same rights, responsibilities, liabilities, duties, powers and privileges as at the time enjoyed and imposed upon them-it being the purpose of this section to extend and continue such fraternal benefit society as such entity in this State the same as if it has in all respects originally been incorporated under the laws of this State. (Acts 1943, pp. 495, 512.)
Cross-reference.-Admission of foreign society to do business in this State, see 56-1623.
56-1620. Same; procedure for incorporation in this State.-In order to become such a fraternal benefit society corporation of this State, the officers of such society such as the board of control, trustees, directors, council, executive council, or by whatever name known, shall file with the Secretary of State articles of incorporation which shall not be inconsistent with this Chapter. The Secretary of State shall not file a certificate of incorporation for such fraternal benefit society unless such articles of incorporation shall be accompanied by a certificate of the Insurance Commissioner of this State to the effect that such fraternal benefit society has assets in excess of the required reserve liability when its outstanding benefit certificates or contracts are valued on the American Expel'ience Table of Mortality with an interest assumption of not more than four per cent. per annum, or some higher standard. When such articles of incorporation shall have been so filed with the Secretary of State and a fee of $100 paid therefor, such fraternal benefit society shall immediately thereby become incorporated as a fraternal benefit society of this State and the Secretary of State shall issue to it a certificate of incorporation as a fraternal benefit society with the powers and privileges appertaining thereto under the laws of this State, and the Insurance Commissioner shall issue to it a license as a fraternal benefit society of this State upon the payment of a fee of $40 therefor, and it shall have the same rights, responsibilities and privileges that are accorded to domestic fraternal benefit societies of this State under this Chapter. Such fraternal benefit societies shall, except as provided in this section, be governed by the general laws governing fraternal benefit societies of this State. It is the declared purpose of this section to establish and continue such fraternal benefit society as a corporation of this State the same as if it has in all respects originally been incorporated under the laws of this State. Such a fraternal benefit society so incorporated under the laws of this State as a domestic fraternal benefit society shall maintain an office in this State, together with a representative thereof, but may maintain offices and other places of business in other States. (Acts 1943, pp. 495, 512, 513.)
Cross-reference.-Admission of foreign society to do business in this State, see 56-1623.

56-1621. Consolidations and mergers.-No domestic society shall consolidate or merge with any other society unless such consolidation or merger is evidenced by contract in writing setting out in full the terms and conditions of such consolidation or merger, and filed with

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the Insurance Commissioner of this State, together with a sworn statement of the financial condition of each of said societies, by its president and secretary, or con'esponding officers, of a date not earlier than the thirty-first day of December next preceding the date of such contract, and a certificate of such officers, duly verified by their respective oaths that such consolidation or merger has been approved by a majority vote of the members of the supreme legislative or governing body of each of said societies. Upon the submission of said contract, financial statements and certificates, the Insurance Commissioner shall examine the same, and, if he shall find such financial statements to be correct, and the said contract to be in conformity with the provisions of this section, and that such consolidation or merger is just and equitable to the members of each of said societies, he shall approve said consolidation or merger, issue his certificate to that effect, and said contract of consolidation or merger shall be in full force and effect: Provided, however, that if any society, a party to such contract of consolidation or merger, shall be incorporated under the laws of any other State or territory, such consolidation or merger shall not become effective unless and until the same shall have been duly approved as provided by the laws of such State or territory, and a certificate of such approval be filed with the Insurance Commissioner of this State. In case such contract is not approved, the fact of its submission and its contents shall not be disclosed by the Insurance Commissioner. Upon any such consolidation or merger becoming effective, as hereinabove provided, all the rights, franchises and interests of the societies so consolidated or merged, in and to every species of property, real, personal and mixed, and things in action thel'eunto belonging, shall be deemed to be and shall be vested in the society resulting from or l'emaining after such consolidation or merger without any deed or other instrument; and the title to any real estate, or any interest therein, under the laws of this State vested in any of the societies so consolidated or merged, shall not revert or be in any way impaired by reason of such consolidation or merger, but shall vest absolutely in the society resulting from or remaining after such consolidation or merger. (Acts 1943, pp. 495, 514.)

56-1622. Annual license.-Societies which are now authorized to transact business in this State under a license to expire March 1, 1951, may continue such business under said license until the first day of July next succeeding the effective date of this section, and the authority of such societies, including those hereafter admitted to the State, shall be renewed annually, but in all cases to terminate on the 30th day of the succeeding June: Provided, however, a license so issued shall continue in full force and effect until the new license be issued or specifically refused. For each such license or renewal the society shall pay the Insurance Commissioner $300. A duly certified copy or duplicate of such license shall be prima facie evidence that the licensee is a fraternal benefit society within the meaning of this Chapter. (Acts 1943, pp. 495, 515; 1951, pp. 664, 667.)
&_~ditorial ote.-The approval date of the Act from which this section is codiuea was February 21, 1951.

56-1623. Admission of foreign society.-No foreign society, which not now authorized to transact business in this State, shall transact y business herein without a license from the Insurance Commis-

~-56=1-6-24'---.:-...FR:A-TE-R-N- AL-B-E-N-EF-IT-- SO-C-IE-TI-ES----------.; 130
sioner. Any such society may be licensed to transact business in this State upon filing with the Commissioner a duly certified copy of its charter or articles of incorporation, a copy of its constitution and laws, certified by its secretary, or corresponding officer, a power of attorney to the commissioner as hereinafter provided, a statement of its business under oath of its president and secretary, or corresponding officers, in the form required by the commissioner, duly verified by an examination made by the supervising insurance official of its home State or other State satisfactory to the Insurance Commissioner of this State, a certificate from the proper official in its home State, province, or country, that the society is legally incorporated and licensed to transact business therein, copies of its certificate forms, and upon furnishing the Commissioner with such other information as he may deem necessary to a proper exhibit of its business and plan of working, and upon showing that its assets are invested in accordance with the laws of the State, territory, district, province, or country where it is organized, the Commissioner shall issue a license to such society to do business in this State until the first day of the succeeding March, and such license shall, upon compliance with the provisions of this Chapter, be renewed annually, but in all cases to terminate on the fil'St day of the succeeding March: Provided, however, that the license shall continue in full force and effect until the new license be issued or specifically refused. Any foreign society desiring admission to this State shall have the qualifications required of domestic societies organized under this Chapter and have its assets invested as required by the laws of the State, territory, district, country or province where it is organized. For each such license or renewal the society shall pay the Commissioner $40. If the Commissioner refuses to license any society, or revokes its authority to do business in this State, he shall reduce his ruling, order or decision to writing and file the same in his office, and shall furnish a copy thereof, together with a statement of his reasons therefor, to the secretary, or other corresponding officer, of the society. Nothing contained in this Chapter shall be taken or construed as preventing any such society from continuing in good faith all contracts made in this State during the time such society was legally authorized to transact business herein. (Acts 1943, pp. 495, 516.)
Cross-references.-Investments by foreign societies, see 56-1613. Right of foreign societies to continue business and to become incorporated in this State, see 56-1619. Procedure for incorporation of foreign society in this State, see 56-1620.
56-1624. Designation of attorney for service of process; service, how made.-Each society, whether domestic or foreign, now doing or hereafter admitted to do business in this State, shall appoint, in writing, the Insurance Commissioner, and his successors in office, to be its true and lawful attorney, upon whom all lawful process in any action or proceeding against it shall be served, and in such writing agree that any lawful process against it which is served on said attorney shall be of the same legal force and validity as if served upon the society, and that the authority shall continue in force so long as any liability remains outstanding in this State. Copies of such appointment, certified by said Insurance Commissioner, shall be deemed sufficient evidence thereof and shall be admitted in evidence with the same force and effect as the original thereof might be admitted. Service shall only be made upon the Insurance Commissioner, or, in his

131

56-1628

absence, upon the person in charge of his office, shall be made in duplicate, and shall be deemed sufficient service upon such society: Provided, however, that no such service shall be valid or binding against anY such society when it is required thereunder to file its answer, pleading or defense in less than 30 days from the date of mailing the copy of such service to such society. When legal process against any such society is served upon the Insurance Commissioner, he shall forthwith forward one of the duplicate copies by registered mail, prepaid and directed to the secretary, or corresponding officer. Legal process shall not be served upon any such society except in the manner provided herein. (Acts 1943, pp. 495, 517.)
Cross-referenee.-Penalty for failure to appoint attorney, see 56-1644.

56-1625. Place of meeting of governing body. Location of principal office.-Any domestic society may provide that the meetings of its legislative or governing body may be held in any State, district, province or territory wherein such society has subordinate branches, and all business transacted at such meetings shall be as valid in all respects as if such meetings were held in this State; but its principal office shall be located in this State. (Acts 1943, pp. 495, 518.)

56-1626. No personal liability of officers and members.-Officers and members of the supreme, grand or any subordinate body of any such incorporated society shall not be individually liable for the pay-
ment of any disability, death, or other benefit provided for in the laws and agreements of such society, but the same shall be payable only out of the funds of such society and in the manner provided by its laws. (Acts 1943, pp. 495, 518.)

56-1627. Waivers.-Unless authorized by express provisions of the constitution and laws of the society, no employee or agent of the society, or any subordinate body, or any subordinate officer or member, shall have the power, right or authority to waive or modify any of the provisions of the constitution, laws, or any contract of the society; and no custom or course of dealing on the part of any employee or agent of the society, or any subordinate body, or any subordinate officer or member, shall have the effect of so waiving or modifying any such provision, and the same shall not be binding upon the society, or any member thereof, or any beneficiary of any member; nor shall same constitute a waiver of any of the provisions of the constitution, laws or any contract of the society, nor operate as an estoppel. (Acts 1943, pp. 495, 518.)

561628. Incontestability of insurance certificates.-Every certificate for new insurance hereafter issued shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue, except for nonpaYment of stated periodical contributions, risks limited or not assumed, violation of the provisions of the certificate relating to military or naval service, and violation of the provisions relating to religion, occupation, suspension or expulsion as substantially set forth in the contract; and at the option of the society, provisions relating to benefits in the event of total and permanent disability, and provisions which grant additional insurance specifically against death by accident or accidental means may also be excepted: Provided, however, that every such certificat~

561629

FRATERN L BEl EFIT SOCIETIES

132

may provide that the society shall have the right to contest a l'einstated certificate within a period after date of reinstatement not exceeding the period of contestability prescribed in the original certifi_ cate with the same exceptions as herein provided. (Acts 1943, pp. 495, 519.)
56-1629. Benefits not subject to attachment, garnishment, or other process.-No money or other benefit, charity or relief or aid to be paid, provided or rendered by any such 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. (Acts 1943, pp. 495, 519.)

56-1630. Certified copies of amendments to laws to be filed with Insurance Commissioner.-Every society transacting business under this Chapter shall file with the Insurance Commissioner a duly certified copy of all amendments of or additions to its constitution and laws within 90 days after the enactment of the same. Printed copies of the constitution and laws as amended, changed or added to, certified by the secretary, or corresponding officer, of the society, shall be prima facie evidence of the legal adoption thereof. (Acts 1943, pp. 495, 520.)
Editorial ote.-This is the twenty-sixth section of the Act of 1943, but it is erroneously numbered 25 in the published Act.
56-1631. Annual statements to be filed with Insurance Commissioner. Duty of officers to answer Commissioner's inquiries.-Every society transacting business in this State shall annually, on or before the first day of March, unless for cause shown such time has been extended by the Insurance Commissioner, file with the commissioner, in such form as he may require, a statement under oath of its president, secretary and treasurer, or corresponding officers, of its affairs, condition and operations during the calendar year ending on the thirty-first day of December last preceding, which statement, or the substance thereof, shall be published in the annual report of the Commissioner. The Commissioner is authorized and empowered to address any additional inquiries to every such society in relation to its doings or condition, or any other matter connected with its transactions relative to the business contemplated by this Chapter, and such officers of such society, as the Commissioner may require, shall promptly reply in writing, and under oath, if so required, to all such inquiries. (Acts 1943, pp. 495, 520.)
Cross-reference.-Penalty for failure to make reports, see 56-1644.

56-1632. Domestic society to publish synopsis of annual statement and valuation report.-Every domestic society, if it has an official publication or newspaper, shall publish therein a synopsis of its annual statement and valuation report within 60 days after the same have been filed with the Commissioner. (Acts 1943, pp. 495, 520, 521.)

56-1633. Annual valuation of certificates; filing report with Commissioner.-In addition to the annual report herein required, each society shall annually, on or before the first day of March, file with

133

FRATERNAL BENEFIT SOClETlES

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the Commissioner a valuation of its certificates in force on December thirty-first last preceding: Provided, however, the Commissioner may, in his discretion, for cause shown, extend the time for filing such valuation for not more than two calendar months. Such reports of valuation shall show, as reserve liabilities, the difference between the present mid-year value of the promised benefits provided in the contracts of such society in force and the present mid-year value of the future net contributions as the same are in practice actually collected, not including therein any value for the right to make extra assessments, and not including any amount by which the present mid-year value of future net contributions exceeds the present mid-year value of promised benefits on individual certificates. At the option of any society, in lieu of the above, the valuation may show the net tabular value which, in the case of monthly contributions, may be the means of the terminal reserve values for the end of the preceding and of the current certificate years, provided, every society which combines its funds shall maintain all of its reserves on the net tabular basis, and provided, further, that if the contribution or payment (by whatever name known) charged is less than the tabular net contribution according to the basis of the valuation used, an additional reserve be set up and maintained as a liability, except that a society which has used tabular reserves for a period of 10 years preceding the effective date of this Chapter in making its valuation on the basis of the American Experience Table of Mortality with interest at four per cent. per annum, and charges net rates of contribution lower than the tabular net rates on the said valuation basis, may, in lieu of the reserve equal to the present value of the deficiency herein mentioned on all such certificates in force on the effective date of this Chapter, set up an additional reserve to cover the deficiency in such rates calculated on a basis not less than one providing for the accumulation as a pure endowment under a level net annual rate of contribution of a sum at the end of not more than 20 years from the issue of each certificate equal to the present value at that time of the difference between the net rate charged under each certificate and the tabular net rate of
contribution used in the valuation of the same certificate. Such tabular reserve values may be computed so as to allow for not more than one year preliminary term insurance, and for certificates issued after the effective date of this Chapter, if the contribution charged for term insurance under a limited payment life preliminary term certificate providing for the payment of all contributions thereon in
less than 2'0 years from the date of the certificate, 01 under an endowment preliminary term certificate exceeds that charged for like insurance under twenty-payment life preliminary term certificate of the same society, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a twenty-payment life preliminary term certificate issued in the same year at the same age, together with an amount which shall be equivalent to the accumulation of a net level contribution sufficient to provide for a pure endowment at the end of the contribution payment period equal to the difference between the value at the end of such period of such a twenty-payment life preliminary term certificate, and the full net level contribution reserve at such time of such a limited payment life or endowment certificate. The contribution payment period is the period during which contributions are concurrently payable under such twenty-payment life preliminary term certificate and such limited payment life or endowment certificate. (Acts 1943, pp. 495, 520, 521.)

56-1634

FRATERNAL BE EFlT SOCIETIES

134

Cross-reference.-Penalty for failure to make report, see 56-1644.
Editorial Note.-The effective date of this Chapter was March 20, 1943. In the -sixth line from the end, in lieu of the word "contribution" in the enrolled Act "certificate" was used in the published Act.

56-1634. Same; certification by accountant or actuary; standards

of valuation.--Such valuation shall be certified by a competent ac-

countant or actuary, or, at the request and expense of the society,

verified by the actuary of the department of insurance of the home

State of the society. The legal minimum standard of valuation for all

death benefits shall be the National Fraternal Congress Table of

Mortality, as adopted by the National Fraternal Congress August 23,

1899, with interest assumption of not more than four per cent. per

annum, but the society may, at its option, use a table based upon the

society's own experience of at least 20 years and covering not less

than 100,000 lives, and with interest assumption of not more than

four per cent. per annum: Provided, that all death benefits provided

in certificates for new insurance issued after the effective date of

this Chapter, shall be valued according to the American Experience

Table of Mortality, with interest assumption of not more than four

per cent. per annum, or according to the American Men Ultimate Table

of Mortality with interest assumption of not more than three and

one-half per cent. per annum, or according to such mortality standards

and interest assumptions as may be now or hereafter authorized for

use by life insurance companies: and Provided, further, that the

minimum basis of valuation of all annuity certificates issued after

the effective date of this Chapter, shall be the American Annuitants

Table with interest assumption of not more than four per cent. per

annum. The minimum basis of valuation of all disability benefits

shall be Hunter's Disability Table with interest assumption of not

more than four per cent. per annum, except that Class III Disability

Experience modified to conform to the contractual waiting period with

interest assumption of not more than four per cent. per annum shall

be the minimum basis of valuation of all benefits presuming that total

disability shall be considered to be permanent whenever such disability

has existed continuously for a period of six months or less. Accidental

death benefits shall be valued upon the basis of tables based upon

reliable experience with interest assumption of not more than four

per cent. per annum. Each such valuation report shall set forth

clearly and fully the mortality, disability and interest assumption and

the method of valuation used in the computation of all reserve liabil-

ities. (Acts 1943, pp. 495, 520,523.)

.

Editorial Note.-The effective date of this Chapter was March 20, 1943.

56-1635. Same; procedure on deficiency of assets.-If such valuation on the December 31 next succeeding the effective date of this Chapter shows that the admitted assets of any such society are less than the sum of its required reserves and accrued liabilities, such society shall, within four years following such valuation, except as hereinafter provided, take the necessary action to remove, by December 31, 1950, any deficiency in its admitted assets. However, if, in any two consecutive valuations subsequent to December 31 next succeeding the effective date of this Chapter, a greater degree of deficiency in admitted assets is shown, the Insurance Commissioner shall send written notice to such society requiring it to take, within six months

135

FRATERNAL BE EFIT SOCIETIES

56-1637

from receipt of such notice, the necessary action to remove, within three years from receipt of such notice, all deficiency in its admitted assets. If either of the actions hereinbefore provided be not taken within the time herein specified, the Insurance Commissioner shall, in the case of a domestic society, notify the Attorney General, who shall institute proceedings for its liquidation, or shall, in the case of a foreign society, cancel its certificate of authority. (Acts 1943, pp. 495, 520, 524.)
56-1636. Examination of domestic societies; procedure if result unfavorable.-The Insurance Commissioner, or any person he may appoint, shall have the power of visitation and examination into the affairs of any domestic society, and shall make an examination at least once in every three years. He may employ assistants for the purpose of such examination, and he, or any person he may appoint, shall have free access to all the books, papers and documents that relate to the business of the society, and may summon and qualify as witness under oath and examine its officers and employees or other persons in relation to the affairs, transactions and condition of the society. The expense of such examination and all valuations, including compensation and actual expenses of examiners, shall be paid by the society examined, or whose contracts are valued upon statements furnished by the Insurance Commissioner. The compensation of examiners shall in each case be fixed by the Insurance Commissioner. Whenever, after examination, the Commissioner is satisfied that any domestic society has failed to comply with any provisions of this Chapter, or is exceeding its powers, or is not carrying out its contracts in good faith, or is transacting business fraudulently, or in a way hazal'dous to its members, creditors, or the public, or whenever any domestic society, after the existence of one year or more, shall have a membership of less than 400 (or shall determine to discontinue business), the Commissioner may present the facts relating thereto to the Attorney General, who shall, if he deems the circumstances warrant, commence an action in quo warranto in a court of competent jurisdiction, and such court shall thereupon notify the officers of such society of a hearing, and if it shall then appear that such society should be closed, said society shall be enjoined from carrying on any further business, and some person may be appointed receiver of such society, and shall proceed at once to take possession of the books, papers, moneys and other assets of the society, and shall forthwith, under the direction of the court, proceed to close the affairs of the society and to distribute its funds to those entitled thereto. No such proceedings shall be commenced by the Attorney General against any such society until after notice has been duly served on the chief executive officers of the society and a reasonable opportunity given to it, on a date to be named in said notice to show cause why such proceedings should not be commenced. (Acts 1943, pp. 495, 524.)
56-1637. Proceedings for dissolution, etc., to be brought by Attorney General.-No application for injunction against, or proceeding for the dissolution of, or the appointment of a receiver for, any domestic society, or branch thereof, shall be entertained by any court in this State unless the same is made by the Attorney General. (Acts 1943, pp. 495, 526.)
Cross-referenee.-Suit to enjoin society from doing business to be brought by Attorney General, see 56-1644.

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56-1638. Examination of foreign societies; penalty for refusal to submit or to comply with law.-The Insurance Commissioner, or any person whom he may appoint, may examine any foreign society trans_
acting or applying for admission to transact business in this State. The said Commissioner may employ assistants, and he, or any person
he may appoint, shall have free access to all books, papers and documents that relate to the business of the society. He may, in his discretion, accept, in lieu of such examination, the examination of the insurance department of the State, territory, district, province or country where such society is organized. The compensation and actual expenses of the examiners making any such examination, and for all general or special valuations, shall be paid by the society examined, or whose contract obligations have been valued upon statements furnished by the Insurance Commissioner. If any such society, or its officers, refuse to submit to such examinations, or to comply with the provisions of the section relative thereto, the authority of such society to write new business in the State shall be suspended or license refused until satisfactory evidence is furnished the Commissioner relating to the condition and affairs of the society, and during such suspension the society shall not write new business in this State. (Acts 1943, pp. 495, 526.)

56-1639. Public statements by Commissioner pending, during or after examination.-Pending, during or after an examination or investigation of any such society, either domestic or foreign, the Insurance Commissioner shall make public no financial statement, report or finding, nor shall he permit to become public any financial statement, report or finding affecting the status, standing or rights of any such society, until a copy thereof shall have been served upon such society, at its home office, and such society shall have been afforded a reasonable opportunity to answer any such financial statement, report or finding, and to make such showing in connection therewith as it may desire. (Acts 1943, pp. 495, 527.)

56-1640. Revocation of licenses.-When the Insurance Commissioner, on investigation, is satisfied that any society transacting business under this Chapter, has exceeded its powers, or has failed to comply with any provisions of this Chapter, or is conducting business fraudulently, or in a way hazardous to its members, creditors or the public, or is not carrying out its contracts in good faith, he shall notify the society of his findings, and state in writing the grounds of his dissatisfaction, and after reasonable notice require said society, on a date named, to show cause why its license should not be revoked. If on the date named in said notice such objections have not been removed to the satisfaction of the said Commissioner, or the society does not present good and sufficient reason why its authority to transact business in this State should not at that time be revoked, he may revoke the authority of the society to continue business in this State. (Acts 1943, pp. 495, 527.)

56-1641. Exemption of certain societies from operation of Chapter.-(1) Nothing contained in this Chapter shall be so construed as to affect or apply to:
(a) grand or subordinate lodges of societies, orders or associations now doing business in this State which provide benefits exclusively

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56-1643

through local or subordinate lodges;
(b) orders, societies or associations which admit to membership only persons engaged in one or more crafts or hazardous occupations, in the same or similar lines of business, and the ladies' societies or ladies' auxiliaries to such orders, societies or associations;
(c) domestic societies which limit their membership to employees of a particular city or town, designated firm, business house or corporation which provide for a death benefit of not more than $400 or disability benefits of not more than $350 to any person in anyone year, or both;
(2) Any such society or association described in clause (c) of subsection (1) which provides for death or disability benefits for which certificates are issued shall not be exempted from the provisions of this Chapter, but shall comply with all the requirements thereof.
(3) No society which, by the provisions of this section, is exempt from the requirements of this Chapter, except any society described in clause (b) of subsection (1) shall give or allow, or promise to give or allow to any person compensation for procuring new members.
(4) Every fraternal benefit society heretofore organized and incorporated, and which provides exclusively for benefits in case of death or disability resulting solely from accident, and which does not obligate itself to pay natural death or sick benefits, may be relicensed under the provisions of this Chapter, if theretofore authorized, and shall have all of the privileges and be subject to all the applicable provisions and regulations of this Chapter except that the provisions thereof relating to medical examination, standard provisions, prohibited provisions, valuations of benefit certificates, incontestability, and the requirement that the certificate shall specify the amount of benefits, shall not apply to such society.
(5) The Commissioner may require from any society or association, by examination or otherwise, such information as will enable him to determine whether such society or association is exempt from the provisions of this Chapter. (Acts 1943, pp. 495, 527.)

56-1642. Exemption from taxation.-Every fraternal benefit 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. (Acts 1943, pp. 495, 529.)
Editorial Note.-The words "or licensed" in the second line of this section, which are in the enrolled Act, were omitted from the published Act.
56-1643. Misrepresentations, misleading statements, and incomplete comparisons.-(1) 0 representative of any fraternal benefit society authorized to transact the business of life, accident or health insurance in this State, and no other person, firm, association or corporation, shall issue or circulate, or cause or permit to be issued or circulated, any illustration, circular, statement or memorandum misrepresenting the terms, benefits or advantages of any certificate or contract of life, accident, or health insurance issued or to be issued in this State, or shall make any misleading estimate as to the dividends

56-1644

FRATERNAL BE EFIT SOCIETIES

138

or share of surplus to be received in the future on such certificate or
contract, or shall make any false or misleading statement as to the
dividends or share of surplus previously paid by any such fraternal benefit society on similar certificates or contracts, or shall make any misleading representation, or any misrepresentation, as to the financial condition of any such fraternal benefit society, or as to the legal reserve system upon which such fraternal benefit society operates, or shall make any false or misleading statements of any other kind or nature with reference to any such fraternal benefit society. No such agent, representative, person, firm, association or corporation shall make to any person or persons any incomplete comparison of any certificates or contracts of any fraternal benefit society or societies, with the certificates or contracts of any other fraternal benefit society or societies, or of any other insurer, for the purpose of inducing or tending to induce such person or persons to lapse, forfeit or surrender any insurance certificate or contract.
(2) Any such comparison of the certificates or contracts of any such fraternal benefit society or societies, shall be deemed to be an incomplete comparison, if it does not compare in detail the groSS contributions and gross contributions less any dividend or other reduction thereof allowed by the society or societies, at the date of the comparison, and the increase in any cash values and all the benefits provided by each of such certificates or contracts for the possible duration of the certifi~ate or contract to be determined by the life expectancy of the certificate holder. The omission from any such comparison of any benefit or value provided in any such certificate or contract or of any difference as to amount or period of paYment of contributions, or of any difference in limitations or conditions or provisions which directly or indirectly affect the benefits thereunder, shall constitute such comparison an incomplete comparison.
(3) In the determination, judicial or otherwise, of the incompleteness or misleading character of any such comparison, it shall not be presumed that the certificate holder knew or knows of any of the provisions, terms or benefits contained in any insurance certificate or contract.
(4) Any representative of a fraternal benefit society, and any other person, finn, association or corporation who, or which, shall violate any of the provisions of this section, or who, or which, shall knowingly receive any compensation or commission by or in consequence of such violation, shall be liable for a civil penalty in the amount of three times the sum received, knowingly or otherwise, by such violator as compensation or commission, which penalty may be sued for and recovered by any person or fraternal benefit society aggrieved for his or its own use and benefit in accordance with the provisions of civil practice. (Acts 1943, pp. 495, 529, 530.)
Cross-reference.-Violation of section as misdemeanor, see 56-9929.

56-1644. Exclusion from doing business for failure to make report or appoint attorney; injunction.-Any such society refusing or neglecting to make the report, as provided in this Chapter, or to appoint the Insurance Commissioner as its true and lawful attorney for the purpose of this Chapter, shall be excluded from doing business in this State. Said Insurance Commissioner must, within 60 days after failure to make such report, or in case any such society shall exceed its

139

FRATERNAL BE EFIT SOCIETIES

56-1646

powers, or shall conduct its business fraudulently, or shall fail to comply with any of the provisions of this Chapter, give notice, in writing to the Attorney General, who shall immediately commence an action against any such society to enj oin the same from carrying on any business. No injunction against any such society shall be granted by any court, except on application by the Attorney General, at the request of the Insurance Commissioner. No society so enjoined shall have authority to continue business until such report shall be made or overt act or violation complained of shall have been corrected, nor until the costs of such action be paid by it, provided the court shall find that such society was in default as charged. Whereupon, the Insurance Commissioner shall reinstate such society, and not until then shall such society be allowed to again do business in this state. (Acts 1943, pp. 495, 532.)
Cr6ss-references.-Duty to designate attorney for service, see 56-1624. To make annual reports, see 56-1631. To report valuation of certificate, see 56-1633. Punishment of officer or agent acting for society while it is enjoined, see 56-9930.
56-1645. Authority to maintain hospitals, asylums, etc.-It shall be lawful for any fraternal benefit society, as defined in this Chapter, now organized and existing, or hereafter organized under and by virtue of the laws of this State or any such society organized and existing under and by virtue of the laws of any other State, country, province or territory, and now or hereafter admitted to do business in this State, to create, maintain and operate, out of its general or expense fund and from any voluntary contributions it may receive therefor, and from any bequest and the proceeds of any insurance contract in which it is named as beneficiary, in trust for the purpose mentioned in this section, hospitals, asylums, homes, sanitariums, or other charitable or benevolent institutions for the benefit of its sick, disabled, aged or distressed members and their families and dependents, and also to own, maintain and operate radio broadcasting stations and recreation centers; and for such purposes any such society may own, hold or lease personal property or real property located within or without this State, with necessary buildings thereon: Provided, that the amount of the general or expense fund to be expended, as herein provided, shall not exceed such amounts as shall have been or shall be from time to time authorized by the legislative or supreme governing body of such society: Provided, further, that maintenance, treatment and proper attendance in any such institution may be furnished free, or a reasonable charge may be made therefor, but no such institution shall be operated for profit: and Provided, further, that no part of the cost or expense of creating, maintaining or operating any such institution shall be defrayed or paid out of the mortuary, sick or disability funds of any such society. (Acts 1943, pp. 495, 533.)

56-1646. Authority to contract to pay hospital, nursing, and medical benefits.-Any such society and any society heretofore organized and incorporated which provides exclusively for benefits in case of death or disability resulting solely from accident and which does not obligate itself to pay natural death or sick benefits, may, in addition to the benefits now or hereafter authorized to be granted by it to its members, make contract provisions for full or limited hospital, nursing and medical attention, or for one or more of said items. (Acts 1943, pp. 495, 533, 534.)

56-1647

CONVERSION OF FRATER AL BENEFIT, ETC.

140

56-1647. Review of decisions of Insurance Commissioner.-All decisions and findings of the Insurance Commissioner made under the provisions of tIns Chapter shall be subject to review by proper proceedings in any court of competent jurisdiction in this State. (Acts 1943, pp. 495, 534.)
56-1648. Laws relating to industrial insurance not affected.-This Chapter shall not supersede nor repeal any law relating to industrial insurance nor shall it be construed to authorize any society referred to in it to engage in the business of industrial life and health insurance as now defined by the laws of this State. (Acts 1943, pp. 495, 534.)
Cross-reference.-Law Telating to industrial insurance, see Chapter 56-13.

CHAPTER 56-16A. CONVERSION OF FRATERNAL BENEFIT SOCIETIES I TO STOCK OR MUTUAL COMPANIES.

Sec. 56-1601a. Authority to convert.
56-1602a. Notice to subordinate lodges; time of giving, contents.
56-1603a. Resolution authorizing conversion and incorporation of new company.
56-1604a. Filing report of authorization m e e tin g with Insurance Commissioner. Approval by Commissioner.
56-1605a. Petition to Secretary of State for charter.

Sec. 56-1606a. Rights of members to sub-
scribe for stock in new company.
56-1607a. Organization and Tights and privileges and duties and
obligations of converted corporation.
56-1608a. Rights of creditors; preservation of liens and of debts,
duties, and liabilities.
56-1609a. Rights of certificate holders. E f fee t of conversion on pending suits.

56-1601a. Authority to convert.-Any fraternal benefit society organized and transacting business under the laws of this State may convert itself into a stock life insurance company or a mutual life insurance company. The conversion of such society into a stock life insurance company or a mutual life insurance company shall be ef-
fected in the manner following. (Acts 1946, pp. 690, 691.)

56-1602a. Notice to subordinate lodges; time of giving, contents.-
A notice shall be mailed by registered mail to all of the subordinate
lodges or branches of the society, by whatever name called, at least
90 days before the meeting of the supreme governing or legislative body at which such action is proposed to be taken, which notice shall state that a proposal will be made at said meeting to convert the society into a stock life insurance company or a mutual life insurance company. (Acts 1946, pp. 690, 691.)

561603a. Resolution authorizing conversion and incorporation of new company.-Pursuant to said notice, the supreme governing or legislative body shall adopt a resolution authorizing the conversion of the fraternal benefit society into a stock life insurance company or into a mutual life insurance company, as the case may be, and shall authorize the obtaining of a charter for the converted company from the Secretary of State, which resolution so authorizing such charter shall set forth the following: (1) the name of the converted company; (2) the kind or kinds of insurance to be carried on; (3) the location of its principal office; (4) the names and addresses of members of the society who shall petition the Secretary of State for a

141

Lo VERSION OF FRATERNAL BENEFIT, ETC.

56-1607a

charter for the new corporation; (5) any and all other prOVISIOns which shall be necessary to comply with the laws of the State of Georgia in existence with respect to obtaining a charter and the engaging in the insurance business as a stock life insurance company or as a mutual life insurance company, as the case may be. (Acts 1946, pp. 690-691.)
561604a. Filing report of authorization meeting with Insurance Commissioner. Approval by Commissioner.-A report of said meeting certified by the presiding officer thereof under the corporate seal, if the society has a corporate seal, shall be filed in the office of the Insurance Commissioner and the Insurance Commissioner shall approve the conversion from a fraternal benefit society into a stock life insurance company or into a mutual life insurance company, as the case may be, and the Insurance Commissioner shall thereupon issue his certificate to that effect. (Acts 1946, pp. 690,692.)
561605a. Petition to Secretary of State for charter.-Thereupon the petitioners named by the supreme governing or legislative body shall petition the Secretary of State for a charter for the new corporation and shall in all respects comply with the laws in force as to obtaining a charter for a stock life insurance or a mutual life insurance company, as the case may be, and such petition shall in addition thereto set forth the following: (1) the name of the former fraternal benefit society being converted into a new corporation; (2) a report of the meeting of the supreme governing or legislative body authorizing the conversion, certified by the presiding officer thereof; (3) a certificate from the Insurance Commissioner approving such conversion. (Acts 1946, pp. 690, 692.)
56-1606a. Rights of members to subscribe for stock in new company.-If such fraterna:I benefit society be converted into a stock life insurance company, each and every policyholder, certificate holder or other person insured by it, shall have the exclusive right, for 90 days after the conversion is completed, to subscribe for that portion of the total stock offered for sale which the amount of his insurance bears to the society's total insurance in force at the time of the conversion. (Acts 1946, pp. 690, 692.)

56-1607a. Organization and rights and privileges and duties and obligations of converted corporation.-When such fraternal benefit society shall have complied with the provisions of this Chapter and
with the laws of this State relating to domestic stock life insurance companies or domestic mutual life insurance companies, as the case may be, and shall have received from the Secretary of State a certificate of authority as prescribed by law to transact business in this State as a stock life insurance company or a mutual life insurance company, it shall thereupon perfect its organization in the manner provided by law for domestic stock life insurance companies or domestic mutual life insurance companies. Such reorganized and converted corporation shall be deemed in law to be a continuation of such fraternal benefit society and such reorganized and converted corporation shall succeed to and become vested with all and singular the rights, Privileges, franchises, and all property, real, personal or mixed, and
all debts due on any account, and all other things in action, thereto-

56-1608a

FRATERNAL BE EFICIARY ORDERS

142

fore belonging to such fraternal benefit association; and all property, rights, privileges, franchises, and all and every other interest, shall thereafter be as effectually the property of such reorganized and converted corporation as they were of the former fraternal benefit society; and the title to any real estate, by deed or otherwise, vested in such former fraternal benefit society shall vest in such reorganized and converted corporation and shall not in any way be impaired by reason of the conversion. Such converted corporation shall thereafter be subject to all laws affecting stock life insurance companies or mutual life insurance companies, as the case may be and shall not thereafter be subject to laws affecting only fraternal benefit societies. (Acts 1946, pp. 690, 692.)
56-1608a. Rights of creditors; preservation of liens and of debts, duties, and liabilities.-Rights of creditors, and all liens upon the property of the former fraternal benefit society, shall be preserved unimpaired and the former fraternal benefit society, shall be deemed to continue in existence in order to preserve the same; and all debts, liabilities and duties of the former fraternal benefit society shall thenceforth attach to the reorganized and converted corporation and may be enforced against it to the same extent as if said debts, duties and liabilities had been incurred or contracted by it. (Acts 1946, pp. 690, 693.)
56-1609a. Rights of certificate holders. Effect of conversion on pending suits.-Such reorganized and converted corporation shall be obligated to carry out and perform all of the obligations of every kind and character owing by the former fraternal benefit society to the holders of its policies or beneficial certificates, and the same may be enforced against it to the same extent as if said policies and beneficial certificates had been issued by it after such conversion. Any pending suits wherein the former fraternal benefit society was a party shall be unaffected by the conversion thereof and shall be prosecuted by or against such reorganized and converted corporation the same as if the conversion had not taken place. (Acts 1946, pp. 690, 694.)

CHAPTER 56-17. FRATERNAL BENEFICIARY ORDERS.
Editorial ote.-This Chapter was repealed by Acts 1943, p. 495. See the note at the beginning of Chapter 56-16. Annotations to the former Chapter are found in "Notes of Decisions Under Former Chapters 16 and 17," which follows 56-1648.

CHAPTER 56-18. COOPERATIVE INSURANCE EXCHANGES.

Sec.
56-1801. Pur po s e of incorporation; number and qualifications of incorporators.
56-1802. Application for charter; contents.
56-1803. Issuance of charter; filing copy of petition and of charter.
56-1804. Amendment of charter.

Sec. 56-1805. Proceedings by corporation;
bylaws.
56-1806. License to do business. 56-1807. To whom policies may be
issued. 56-1808. Votes of policyholders. 56-1809. Countersigmng and delivery
of policies to resident agent. 56-1810. Taxable premium receipts. 56-1811. Reinsurance.

56-1801. Purpose of incorporation; number and qualifications of incorporators.-Any three or more persons or corporations, at least one of whom must be a resident of or domesticated in the State of

U3

COOPERATIVE I SURAi'lCE EXCHANGES

56-1805

Georgia, by complying with the provisions of this Chapter, may become, together with others who may hereafter be associated with them or their successors, a body corporate for the purpose of carrying on the business of a cooperative insurance exchange for the purpose of insuring associates and members engaged in the same or similar manufacturing business against loss of use and occupancy in their plants and operations caused by idle plants and shut-downs arising from business depressions, lack of orders, or other economic causes beyond their control, except wars, insurrections and strikes. (Acts 1939, pp. 265,
266.)

56-1802. Application for charter; contents.-The applicants for

charter of such corporation shall file a petition addressed to the Sec-

retary of State stating:



(a) The name of the corporation which shall include the words "Cooperative Insurance Exchange" and the location of its principal or home office, which shall be within the State.

(b) The names and addresses of those composing the board of directors in which the management shall be vested until the first
meeting of members.

(c) The names and places of residence of the incorporators.

(d) The class of manufacturing business proposed to be insured by the corporation.

(e) That they have given 30 days' notice of their intention to apply
for said charter by publication of said petition in the newspaper publishing legal advertisements in the county where the pl'incipal office of said corporation is to be located, once a week for four weeks before filing said petition.

Said petition shall be signed by each of the incorporators and verified by a petitioner or an officer of the petitioners, and shall be filed in
the office of the Secretary of State, who shall indorse thereon the date of filing and record the same in a book kept by him for that purpose. (Acts 1939, pp. 265, 266.)

56-1803.' Issuance of charter; filing copy of petition and of charter. -When a petition for incorporation has been submitted to the Secretary of State, it shall be considered by him and if found to comply with this Chapter, he shall indorse his approval thereon and shall issue a charter as now provided by law. A copy of such petition and charter shall also thereupon be filed in the office of the Insurance. Commissioner. (Acts 1939, pp. 265, 267.)

56-1804. Amendment of charter.-The charter may be amended in the manner now provided by law and any such amendment shall be
approved, recorded and filed as in the case of the original charter. (Acts 1939, pp. 265, 267.)

56-1805. Proceedings by corporation; by-Iaws.-Such corporations shall have legal existence as soon as the charter shall have been issued
by the Secretary of State. The board of directors named in the articles of incorporation may thereupon adopt bylaws, fix the qualifications for
membership of all applicants for insurance, accept applications for in-

------_=....:-:..-C-O-O=PE-R-A-T-IV-=E I--S--R-A=C-E--E-X-C-H-A=NG-E-S-----------.::..1.44
surance, and proceed to transact the business of such company: Provided, that no insurance shall be put into force until the company has been licensed to transact insurance as provided by this law. Such bylaws and any amendments thereto shall, within 30 days after adoption be filed with the Insurance Commissioner. (Acts 1939, pp. 265, 267.)
56-1806. License to do business.-No corporation organized under this Chapter shall issue policies or transact any business unless it shall comply with the provisions of this Chapter, nor until the Insurance Commissioner has, by formal license, authorized it to do so, which license shall issue when the corporation shall file with the Insurance Commissioner copies of its proposed insurance contracts, its plans of operation, with a schedule of premium rates to be required of its members and those to whom policies shall issue, and the Insurance Commissioner shall be satisfied that the corporation will be so operated as to meet its obligations and serve its purposes. (Acts 1939, pp. 265, 267.)
56-1807. To whom policies may be issued.-Any manufacturing corporation, partnership or individual in this State, or elsewhere, may make application, enter into agreements for and hold policies in a corporation chartered under this Chapter. (Acts 1939, pp. 265, 268.) .
56-1808. Votes of policyholders.-Every member and policyholder shall be entitled to one vote or to such number of votes, based upon the insurance in force, the policies held, or the amount of premiums paid, as may be provided in the bylaws. (Acts 1939, pp. 265, 268.)
56-1809. Countersigning and delivery of policies to resident agent. - 0 law requiring that policies be countersigned and be delivered to a resident agent shall apply to any policy of a cooperative insurance exchange chartered under this Chapter on which no commission shall be paid to any agent. (Acts 1939, pp. 265, 268.)
56-1810. Taxable premium receipts.-The taxable premium receipts of any cooperative insurance exchange organized under this Chapter, for the purpose of taxation under any laws of this State, shall be the gross premium received for direct insurance upon risks in this State deducting amount paid for reinsurance upon which a tax has been or is to be paid in this State and deducting premiums refunded on canceled policies. (Acts 1939, pp. 265, 268.)
Cross-reference.-Taxation of premium receipts in general, see 92-2509.1.
56-1811. Reinsurance.-Any cooperative insurance exchange organized in this State, may reinsure any part or all of any risk or risks in any insurance company or insurer licensed in any State of the United States or District of Columbia: Provided, that no such reinsurance shall be effected with any company or insurer disapproved therefor by written order of the Insurance Commission filed in this office. (Acts 1939, pp. 265, 268.)
Cross-reference.-Reinsurance in general, see 56-229.
Editorial ote.-This section is set out here as it appears in both the published Laws of 1939 and in the enrolled Act in the Secretary of State's office. It would seem that "Insurance Commission" should be "Insurance Commissioner" and the concluding words, "this office," should read "his office."

TITLE I SURA CE

56-1904

CHAPTER 56-19. TITLE INSURANCE.

Sec. 66-1901. Chapter intended to supersede
previous laws and to exclude laws applicable to other insurance companies.
66-1902. Definition. 56-] 903. Supervision and control. 56-1904. License to engage in business;
requirement, revocation, sus-
pension, reinstatement. 56-1905. Same; i suance, revocation,
reinstatement. 66-1906. Trust companies authorized to
engage in business under
this Chapter. 56-1907. Capital of companies; invest-
ment. 56-1908. Deposit with State Treasurer,

Sec.

domestic companies.

56-1909. Same; nonresident companies.

56-1910. Same; issuance of license to

companies showing compli-

ance with section 56-1909.

56-1911. Same; purpose; right of with-

drawal.

.

56-1912. Withdrawal of deposits by

trust companies engaged in

title insurance business.

56-1913. Reserves for policyholders.

56-1914. Penalty for doing business

without license.

56-1915. Statements to Insurance Com-

missioner.

56-1916. Chapter inapplicable to li-

censed attorneys.

56-1901. Chapter intended to supersede previous laws and to ex-
all clude laws applicable to other insurance companies.-=--The provisions of
this hapter are intended to supersede previous laws defining, regulating and providing for the licensing of title insurance companies and are intended to exclude the regulatory provisions applicable to other insurance companies, other than as herein expressly provided. (Acts 1943, pp. 602, 609.)
Editorial Note.-The previous Jaw regulating the business of title insurance was
Acts 1939, p. 376. Section 2 of the Act of 1943 specifically states that the Act ot
1943 "superseoes the title in Ul'ance Act approved March 21, 1939."
56-1902. Definition.-Insuring or guaranteeing the titles to real properly, or against loss by reason of defects, incumbrances, lien or charges thereon, or guaranteeing, or insuring the correctne s of searches for instruments, liens, charges or other matters affecting the title to real properly, shall be deemed to be title insurance and any corporation making such guarantees or issuing such insurance shall be deemed to be engaged in the business of title insurance. (Acts 1943, pp. 602, 603.)

561903. Supervision and control.-The business of title insurance in this State, as herein defined, is placed under the supervision and
control of the Insurance Commissioner of Georgia, and every COl--pora-
tion engaged in title insurance business in this State, shall be subject
to the provisions and requirements of this Chapter. (Acts 1943, pp.
602, 603.)

56-1904. License to engage in business; requirement, revocation, suspension, reinstatement.-No corporation charlered by this State or by another State or a foreign government shall transact any business of title insurance in this State without first procuring a license from the Insurance Commissioner. Licenses granted under this Chapter may be revoked, suspended or reinstated in the manner provided by law for the revocation of licenses of insurance companies generally. (Acts 1943, pp. 602, 603.)
Cross-reference.-License tax and fee, see 92-2512.

~....::.5-=-6....::..1-=-9-=-05=--

T_IT_L_E_I_s_RA_N_C_E

-=-~

56-1905. Same; issuance, revocation, reinstatement.-It shall be
the duty of the Insurance Commissioner to issue licenses to corpora_
tions transacting the business of title insurance when they have com_ plied with the requirements of this Chapter and of the rules and regu_ lations prescribed by the Insurance Commissioner so as to enable them to do business. In every case such license shall be issued under the sea) of the Commissioner, authorizing and empowering the corporation to transact the business of title insurance. Before a corporation shall be licensed to transact title business the Insurance Commissioner shall be satisfied by such examination as he may make or such evidence as he may require that such company is duly qualified under the laws of this State to transact such business herein. In every case such licenses may be revoked and reinstated in the same manner as is prescribed by law with reference to insure companies generally. (Acts 1943, pp. 602,604.)
Cross-referenee.-Nonresident companies, see 56-1910.

56-1906. Trust companies authorized to engage in business under this Chapter.-Corporations organized under the laws of this State for the purpose of engaging in the business of a trust company and having
power under their charters as trust companies to insure or guarantee titles, and corporations chartered by the superior court which have applied to and obtained from the Secretary of State charter power to insure or guarantee titles to real property pursuant to the provisions of section 109-302, may engage in the business of title insurance as defined by this Chapter, provided such corporations comply with all
of the requirements of this Chapter and obtain from the Insurance Commissioner of Georgia a license to engage in the business of title insurance as herein provided. (Acts 1943, pp. 602, 604.)

56-1907. Capital of companies; investment.-No corporation shall be entitled to transact title insurance business in this State unless it has, and maintains, unimpaired, a capital of not less than $100,000,
fully paid, and invested in the securities in which life insurance companies are authorized by the laws of the State in which the company is
incorporated to invest their funds. (Acts 1943, pp. 602, 605.)

56-1908. Deposit with State Treasurer; domestic companies.Every corporation chartered under the laws of this State engaged in the business of title insurance in this State, shall deposit with the Treasurer of this State, in cash or in market value of securities deemed by him to be the equivalent of cash, as a guarantee for the security of all its policyholders, an amount equal to five per cent. of its capital, but in no event less than $50,000. The Treasurer is hereby authorized and directed to receive such deposit and to hold the same subject to the provisions of this Chapter and of the laws of this State relating to deposits by insurance companies generally. (Acts 1934, pp. 602, 605.)

56-1909. Same; nonresident companies.-Any title insurance company now doing business in this State or which may desire to do business in this State, chartered by the laws of another State or of a foreign government, shall make the same deposit for the benefit of and security for its policyholders as is required of domestic companies by the terms of this Chapter: Provided, however, that any such non-

147

TITLE INSURANCE

561912

resident company shall not be required to make the deposit required of domestic companies by this Chapter upon showing that it has deposited with the Treasurer of this State not less than $25,000; and has deposited with the Comptroller General of the State in which it is chartered, or the Insurance Commissioner or other officer authorized to receive it, not less than $100,000 in cash or in securities satisfactory to such officer, subject to his order, as a guaranty fund for the security of all the policyholders of such company. (Acts 1943, pp. 602, 605.)
Crossreference.-Appointment of agent for service of process, see 56-606.

56-1910. Same; issuance of license to companies showing compliance with section 56-1909.-When the showing provided for in section 56-1909 is made to the Insurance Commissioner of the State of Georgia by a proper certificate from the State officials having charge of the funds so deposited, the Insurance Commissioner of the State of Georgia is authorized to issue to the company making such showing a license to do business in the State of Georgia, upon paying the fees required by law. (Acts 1943, pp. 602, 606.)

56-1911. Same; purpose; right of withdrawal.-The bonds, cash and securities deposited with the Treasurer of this State by companies engaged in the business of title insurance, whether such companies are incorporated under the laws of this State or of any other State or foreign government, shall be held in trust for the benefit and protection of and security for the policyholders of such corporations. Said securities, bonds, or cash, shall so remain on deposit until it has been made to appear to the satisfaction of the Insurance Commissioner that all liquidated obligations and debts of the depositing corporation, relating
to its title insurance business, have been discharged and until all un-
liquidated or contingent liabilities of such company under its policies have been assumed under reinsurance contracts satisfactory to and approved by the Insurance Commissioner. Presentation to the State
Treasurer of the certificate of the Insurance Commissioner as to the payment of such debts and liquidated obligations and as to the reinsurance contracts satisfactory to and approved by the Insurance Commissioner, shall entitle the depositing eompany to withdraw such deposit. (Acts 1943, pp. 602, 606.)

56-1912. Withdrawal of deposits by trust companies engaged in title insurance business.-Funds or securities deposited with the State Treasurer or with a trust company or with one of the State depositories approved by the State Treasurer, as a guaranty fund for the protection of its policyholders, by any corporation engaged or which has been engaged in the business of title insurance under the powers granted to trust companies by section 109-201, including any corporation chartered by the superior court which has applied to and obtained from the Secretary of State powers of trust companies as provided by section 109-302, may be withdrawn from the State Treasurer or from such trust company or depository upon presentation to the State Treasurer or to such trust company or depository, of a certificate from the Insurance Commissioner that he has found all fixed obligations and claims against such corporation under its title insurance policies to have been paid and that he has approved a reinsurance contract or reinsurance contracts by which all other or contingent liabilities under the policies of such corporation have been assumed by a corporation

.::.._5_6-_1_9~13~

T_IT_L_E_I_su_R_A _CE

---.::~

licen ed under this Chapter to engage in the title insurance business in this State. The State Treasurer or any such trust company or de.. posiLor with whom such funds or securities have been deposited by such corporation, shall release and deliver the same upon receipt of said certificate of the Insurance Commissioner. (Acts 1943, pp. 602, 606.)
56-1913. Re erve for policyholders.-On every contract of title insurance hereafter issued by any company authorized under this Chapter to engage in the title insurance busines in this State, there shall be reserved, initially, the sum equal to five per cent. of the original premium, whether or not the risk hall be for a fixed time. If the risk is of a mortgagee, trustee in a deed of trust, or deed to secure debt, the sum re erved may be withdrawn at the expiration of the time of the ri. k. If the i]- i not for a fixed time, then such risk shall be deemed to ha e been written for a period of 20 years from the date of the title insuran e poli y and the reserve shall be maintained for 20 years from su h date. The sums herein required to be reserved for the protection of the policyholders shall at all times and for all purposes be considered and ol1siitute unearned portions of the original premiums. In calculating reserves, contracts of title insurance shall be assumed to be dated in the middle of the year in which they are issued. (Acts 1943, pp. 602, 607.)
56-1914. Penalty f01" doing business without licen e.- 0 corporation, individual firm or as ociation not licensed in Georgia to transact the busines of title in urance or the writing and issuance of title in urance policies shall engage in uch bu ine s within the limits of thi State. Penally for the violation of this provision shall be $1,000 for the first offense and 2,000 for each additional off nse, which penalty may be imposed and collected in the same manner as provided by law with reference to fire and ca ualty in urance companies. (Acts 1943, pp. 602, 608.)
ro s-reference .-Impo ition and collection of penalty from fire and casualty in urance companie , see 56-528 to 56-533.
56-1915. Statement to Insurance Commi ionel'.-Each corporation doing title bu iness in the State of Georgia shan furnish to the Insurance ommi ioner on forms approved by him, on or before the first day of March each year, detailed sworn statements and reports showing all assets and liabilities of such corporation, all property mortgaged or pledo'ed and all additional data, inventories and information which may be required by such forms. The Insurance Commissioner shall have the power from time to time, whenever he may deem it necessary, to require further additional sworn reports and Btatements and to examine in person or by his designated agents the books and affairs of any such corporation. (Acts 1943, pp. 602, 608.)
56-1916. Chapter inapplicable to licensed attorney .-This Chapter shall not be construed to have any application to licensed attorneys, shall not affect the right of such attorneys to examine, certify and render opinions as to title on real property, and such attorneys shall not be deemed to be insurance agents by reason of their participation in obtaining, and forwarding to title in urance companie , applications and premiums for title insurance, as an incident to their examination and certification of titles. (Acts 1943, pp. 602, 609.)

149

56-2002

CHAPTER 56-20. REGULATION OF RATE MAKING FOR CASUALTY, FIDELITY, AND MOTOR VEHICLE INSURANCE.

Sec. 56-200l. Purpose of Chapter; liberal
interpretation. 56-2002. Limitation of applicability to
casualty, fidelity, and moto~ v e hie 1e insurance; excep-
tions. 56-2003. Making of rates. 56-2004. Rate filings. 56-2005. Disapproval of filings. 56-2006. Rating organizations; licens-
ing; regulation. 56-2007. Deviations from filings; pro-
cedure for obtaining. 56-2008. Same; appeal to Commission-
er by member or subscriber;
procedure on appeal.
56-2009. Right of insured to information and to hearing and appeal.
56-2010. Advisory organization; definition; duties; procedure against.
56-2011. Joint underwriting or joint reinsurance; regulations; requiring discontinuance of

Sec. unfair or unreasonable practices.
56-2012. Examinations by Commissioner; costs, how paid; exhibi-
tion of books, documents, etc.; acceptance of report
from another State. 56-2013. Rate administration. 56-2014. Withholding information or
giving false or misleading information; penalties.
56-2015. Rate modifications; when and how allowed.
56-2016. Rebates prohibited; exclusion of commissions, dividends,
etc.; inapplicability of Bec-
tion 56-218. 56-2017. Penalties; pecuniary and sus-
pension of license; necessity
of written order by Commissioner.
56-2018. Procedure for hearing before Commissioner and review of his decisions by appeal.
56-2019. Inapplicability of other laws.

56-2001. Purpose of Chapter; liberal interpretation.-The purpose of this Chapter is to promote the public welfare by regulating insurance rates to the end that they shall not be excessive, inadequate or unfairly discriminatory, and to authorize and regulate cooperative action among insurers in rate making and in other matters within the scope of the Chapter. Nothing in this' Chapter is intended (1) to prohibit or discourage reasonable competition, or (2) to prohibit, or encourage except to the extent necessary to accomplish the aforementioned purpose, uniformity in insurance rates, rating systems, rating plans or practices. This Chapter shall be liberally interpreted to carry into effect the prcr visions of this section. (Acts 1947, p. 1506.)

56-2002. Limitation of applicability to casualty, fidelity, and motor vehicle insurance; exceptions.-This Chapter applies to casualty insurance, including fidelity, surety and guaranty bonds, and to all other forms of motor vehicle insurance, on risks or operations in this State, except:
(a) reinsurance, other than joint reinsurance to the extent stated in section 56-2011;
(b) accident and health insurance;
(c) insurance against loss of or damage to aircraft or against liability, arising out of the ownership, maintenance or use of aircraft;
(d) workmen's compensation insurance: Provided, however, that the filings required by section 114-609, may be made in behalf of any carrier of workmen's compensation insurance by a rating organization licensed in accordance with the provisions of section 56-2006.
This Chapter shall apply, notwithstanding the provisions of section 56-1425, to all insurers, including stock and mutual companies, Lloyds'

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associations and reciprocal and inter-insurance exchanges which, under any provisions of the laws of this State, write any of the kinds of in. surance to which this Chapter applies.
If any kind of insurance, subdivision or combination thereof, or tyPe of coverage, subject to this Chapter, is also subject to regulation by another rate regulatory law 'of this State, an insurer to which both laws are otherwise applicable shall file with the Commissioner of Insurance, hereinafter referred to as Commissioner, a designation as to which rate regulatory law shall be applicable to it with respect to such kind of insurance, subdivision or combination thereof, or type of coverage. (Acts 1947, pp. 1506, 1507.)
Cross-reference.-Insurance Commissioner, see 56-101.

56-2003. Making of rates.-(a) All rates shall be made in accordance with the following provision:
1. Due consideration shall be given to past and prospective loss experience within and outside this State, to catastrophe hazards, if any, to a reasonable margin for underwriting profit and contingencies to dividends, savings or unabsorbed premium deposits allowed or reo: turned by insurers to their policyholders, members or subscribers, to past and prospective expenses both country wide and those specially applicable to this State, and to all other relevant factors within and outside this State;
2. The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other in-
surers or groups of insurers to reflect the requirements of the opera-
ting methods of any such insurer or group with respect to any kind of
insurance, or with respect to any subdivision or combination thereof
for which subdivision or combination separate expense provisions are applicable;
3. Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses;
4. Rates shall not be excessive, inadequate or unfairly discriminatory.
(b) Except to the extent necessary to meet the provisions of subdivision 4 of subsection (a) of this section, uniformity among insurers in any matters within the scope of this section is neither required nor prohibited. (Acts 1947, pp. 1506, 1508.)

56-2004. Rate filings.-(a) Every insurer shall file with the Commissioner every manual of classifications, rules and rates, every rating plan and every modification of any of the foregoing which it proposes to use. Every such filing shall state the proposed effective date thereof, and shall indicate the character and extent of the coverage contemplated. When a filing is not accompanied by the information upon which the insurer supports such filing, and the Commissioner does not have sufficient information to determine whether such filing meets the

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56-2004

requirements of the Chapter, he shall require such insurer to furnish the information upon which it supports such filing and in such event the waiting period shall commence as of the date such information is furnished. The information furnished in support of a filing may include
(1) The experience or judgment of the insurer or rating organization making the filing,
(2) Its interpretation of any statistical data it relies upon,
(3) The experience of other insurers or rating organizations, or
(4) Any other relevant factors.
A filing and any supporting information shall be open to public inspection after the filing becomes effective.
(b) An insurer may satisfy its obligation to make such filings by becoming a member of, or a subscriber to, a licensed rating organization which makes such filings, and by authorizing the Commissioner to accept such filings on its behalf: Provided, that nothing contained in this Chapter shall be construed as requiring any insurer to become a member of or a subscriber of any rating organization.
(c) The Commissioner shall review filings as soon as reasonably possible after they have been made in order to determine whether they meet the requirements of this Chapter.
(d) Subject to the exception specified in subsection (e) of this section, each filing shall be on file for a waiting period of 15 days before it becomes effective, which period may be extended by the Commissioner for an additional period not to exceed 15 days if he gives written notice within such waiting period to the insurer or rating organization which made the filing that he needs such additional time for the consideration of such filing. Upon written application by such insurer or rating organization, the Commissioner may authorize a filing which he has reviewed to become effective before the expiration of the waiting period or any extension thereof. A filing shall be deemed to meet the l'equirements of this Chapter unless disapproved by the Commissioner within the waiting period or any extension thereof.
(e) Any special filing with respect to a surety or guaranty bond required by law or by court or executive order or by order, rule or regulation of a public body, not covered by a previous filing, shall become effective when filed and shall be deemed to meet the requirements of this Chapter until such time as the Commissioner reviews the filing and so long thereafter as the filing remains in effect.
(f) Under such rules and regulations as he shall adopt the Commissioner may, by written order, suspend or modify the requirement of filing as to any kind of insurance, subdivision or combination thereof, or as to classes of risks, the rates for which cannot practicably be filed before they are used. Such orders, rules and regulations shall be made known to insurers and rating organizations affected thereby. The Commissioner may make such examination as he may deem advisable to ascertain whether any rates affected by such order meet the standards set forth in subdivision 4 of subsection (a) of section 56-2003.
(g) Upon the written application of the insured, stating his reasons therefor, filed with and approved by the Commissioner, a rate in

~5-=-6-.::::.2-=-OO.::..:5=--_-.:R:..:.E::.:G::...::..::L::.:A-=-T:....:lo:..:.N-.:o:....:F_RA:...::..:..T:...:E=---M-A_K_IN_G_F_O_R_C_A_S_U_A_LT_y-,,_E_T_C_,

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excess of that provided by a filing otherwise applicable may be used on any specific risk.
(h) Beginning 90 days after the effective date of this Chapter no insurer shall make or issue a contract or policy except in accordance with filings which are in effect for said insurer as provided in this Chapter or in accordance with subsections (f) or (g) of this section. (Acts 1947, pp. 1506, 1508.)
Editorial ote.-Section 21 of the Act from which this Chapter is codified makes the Act effective on October 1, 1947,

56-2005. Disapproval of filings.-(a) If within the waiting period or any extension thereof as provided in subsection (d) of section 56-2004, the Commissioner finds that a filing does not meet the requirements of this Chapter, he shall send to the insurer or rating organization which made such filing written notice of disapproval of such filing specifying therein in what respects he finds such filing fails to meet the requirements of this Chapter and stating that such filing shall not become effective.
(b) If within 30 days after a special surety or guaranty filing subject to subsection (e) of section 56-2004 has become effective, the Commissioner finds that such filing does not meet the requirements of this Chapter, he shall send to the insurer or rating organization which made such filing written notice of disapproval of such filing specifying therein in what respects he finds that such filing fails to meet the requirements of this Chapter and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective. Said disapproval shall not affect any contract made or issued prior to the expiration of the period set forth in said notice.
(c) If at any time subsequent to the applicable review period provided for in subsection (a) or (b) of this section, the Commissioner finds that a filing does not meet the requirements of this Chapter, he shall, after a hearing held upon not less than 10 days' written notice, specifying the matters to be considered at such hearing, to every insurer and rating organization which made such filing, issue an order specifying in what respects he finds that such filing fails to meet the requirements of this Chapter, and stating when, within a reasonable period thereafter, such filings shall be deemed no longer effective. Copies of said order shall be sent to every such insurer and rating organization. Said order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in said order.
(d) Any person or organization aggrieved with respect to any finding which is in effect may make written application to the Commissioner for a hearing thereon: Provided, however, that the insurer or rating organization that made the filing shall not be authorized to proceed under this' subsection. Such application shall specify the grounds to be relied upon by the applicant. If the Commissioner shall find that the application is made in good faith, that the applicant would be so aggrieved if his grounds are established, and that such grounds otherwise justify holding such a hearing, he shall, within 30 days after receipt of such application, hold a hearing upon not less than 10 days' written notice to the applicant and to every insurer and rating organization which made such filing.

153

REGULATIO OF RATE MAKJ G FOR CASUALTY, ETC.

56200b

(e) No manual of classifications, rules, rating plan, or any modification of any of the foregoing which establishes standards for measuring variations in hazards or expense provisions, or both and which has been filed pUl"SUant to the requirements of section 56-2004 shall be disapproved if the rates thereby produced meet the requirements of this Chapter.
If, after such hearing, the Commissioner finds that the filing does not meet the requirements of this Chapter, he shall issue an order specifying in what respects he finds that such filing fails to meet said requirements, and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective. Copies of said order shall be sent to the applicant and to every such insurer and rating organization. Said order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in said order. (Acts 1947, pp. 1506, 1510.)

562006. Rating organizations; licensing; regulation.-(a) A corporation, an unincorporated association, a partnership or an individual, whether located within or outside this State, may make application to the Commissioner for license as a rating organization for such kinds of insurance or subdivisions thereof as are specified in its application and shall file therewith (1) a copy of its constitution, its articles of agreement 01" association or its certificate of incorporation, and of its bylaws, rules and regulations governing the conduct of its business, (2) a list of its members and subscribers, (3) the name and address of a resident of this State upon whom notices or orders of the Commissioner or process affecting such rating organization may be served and (4) a statement of its qualifications or a rating organization. If the Commissioner finds that the applicant is competent, trustworthy and otherwise qualified to act as a rating organization and that its constitution, articles of agreement or association or certificate of incorporation, and its bylaws, rules and regulations governing the conduct of its business conform to the requirements of law, he shall issue a license specifying the kinds of insurance or subdivisions thereof for which the applicant is authorized to act as a rating organization. Every such application shall be granted or denied in whole or part by the Commissioner within 60 days of the date of its filing with him. Licenses issued pursuant to this section shall remain in effect for three years unless sooner suspended or revoked by the Commissioner. The fee for said license shall be $125 and said fee shall be in lieu of all other fees, licenses or taxes to which a rating organization might otherwise be subject. Licenses issued pursuant to this section may be suspended or revoked by the Commissioner, after hearing upon notice, in the event the rating organization ceases to meet the requirements of this subsection. Every rating organization shall notify the Commissioner p1"omptly of every change in (1) its constitution, its articles of agreement or association or its certificate of incorporation and its bylaws, rules and regulations governing the conduct of its business, (2) its list of members and subscribers and (3) the name and address of the resident of this State designated by it upon whom notices or orders of the commissioner or process affecting such rating organization may be served.
(b) Subject to rules and regulations which have been approved by the Commissioner as reasonable, each rating organization shall permit any insurer, not a member, to be a subscriber to its rating services for any kind of insurance or subdivision thereof for which it is authorized

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154

to act as a rating organization..Notice of pro~osed changes i~ such rules and regulations shall be gIven to subscrIbers. Each ratmg or-
ganization shall furnish its rating services without discrimination to
its members and subscribers. The reasonableness of any rule or regu_ lation in its application to subscribers, or the refusal of any rating organization to admit an insurer as a subscriber, shall, at the request of any subscriber or any such insurer, be reviewed by the Commissioner at a hearing held upon at least 10 days' written notice to such rating organization and to such subscriber or insurer. If the Commissioner finds that such rule or regulation is unreasonable in its application to subscribers, he shall order that such rule or regulation shall not be applicable to subscribers. If the rating organization fails to grant or reject an insurer's application for subscribership within 30 days after it was made, the insurer may request a review by the Commissioner as if the application had been rejected. If the Commissioner finds that the insurer has been refused admittance to the rating organization as a subscriber without justification, he shall order the rating organization to admit the insurer as a subscriber. If he finds that the action of the rating organization was justified, he shall make an order affirming its action.
(c) No rating organization shaH adopt any rule the effect of which would be to prohibit or regulate the payment of dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers.
(d) Cooperation among rating organizations or among rating organizations and insurers in rate making or in other matters within the scope of this Chapter is hereby authorized, provided the filings resulting from such cooperation are subject to all the provisions of this Chapter which are applicable to filings generally. The Commissioner may review such cooperative activities and practices and if, after a hearing, he finds that any such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this Chapter, he may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with such provisions, and requiring the discontinuance of such activity or practice. (Acts 1947, pp. 1506, 1512.)

56-2007. Deviations from filings; procedure for obtaining.-Every member of or subscriber to a rating organization shall adhere to the filings made on its behalf by such organization except that any such insurer may make written application to the Commissioner for permission to file a uniform percentage decrease or increase to be applied to the premiums produced by the rating system so filed for a kind of insurance, or for a class of insurance which is found by the Commissioner to be a proper rating unit for the application of such uniform percentage decrease or increase, or for a subdivision of a kind of insurance (1) comprised of a group of manual classifications which is treated as a separate unit for rate making purposes, or (2) for which separate expense provisions are included in the filings of the rating organizations. Such application shall specify the basis for the modification and shall be accompanied by the data upon which the applicant relies. A copy of the application and data shall be sent simultaneously to such rating organization. The Commissioner shall set a time and place for a hearing at which the insurer and such rating organization may be heard and shall give them not less than 10 days' written notice

155

l{EG LATJON OF RATE MAKJ G FOR CASUALTY", ETC.

562009

thereof. In the event the Commissioner is advised by the rating organization that it does not desire a hearing he may, upon the consent of the applicant, waive such hearing. The Commissioner shall issue an order permitting the modification for such insurer to be filed if he finds it to be justified and it shall thel'eupon become effective. He shall issue an order denying such application if he finds that the modification is not justified or that the resulting premiums would be excessive, inadequate or unfairly discriminatory. Each deviation permitted to be filed shall be effective for a period of one year from the date of such permission unless terminated sooner with the approval of the Commissioner. (Acts 1947, pp. 1506, 1514.)

56-2008. Same; appeal to Commissioner by member or subscriber; procedure on appeal.-Any member of or subscriber to a rating organization may appeal to the Commissioner from the action or decision of such rating organization in approving or rejecting any proposed change in or addition to the filings of such rating organization and the Commissioner shall, after a hearing held upon not less than 10 days' written notice to the appellant and to such rating organization, issue an order approving the action or decision of such rating organization or directing it to give further consideration to such proposal, or, if such appeal is from the action or decision of the rating organization in rejecting a proposed addition to its filings, he may, in the event he finds that such action or decision was unreasonable, issue an order directing the rating organization to make an addition to its filings, on behalf of its members and subscribers, in a manner consistent with his findings, within a reasonable time after the issuance of such order.
If such appeal is based upon the failure of the rating organization to make a filing on behalf of such member or subscriber which is based on a system of expense provisions which differs, in accordance with the right granted in subdivision 2 of subsection (a) of section 56-2003, from the system of expense provisions included in a filing made by the rating organization, the Commissioner shall, if he grants the appeal, order the rating organization to make the requested filing for use by the appellant, In deciding such appeal the Commissioner shall apply the standards set forth in section 56-2003. (Acts 1947, pp. 1506, 1515.)

562009. Right of insured to information and to hearing and appeal.-Every rating organization and every insurer which makes its own rates shall, within a reasonable time after receiving written request therefor and upon payment of such reasonable charges as it may make, furnish to any insured affected by a rate made by it, or to the authorized representative of such insured, all pertinent information as to such rate.
Every rating organization and every insurer which makes its own rates shall provide within this State reasonable means whereby any person aggrieved by the application of its rating system may be heard, in person or by his authorized representative, on his written request to review the manner in which such rating system has been applied in connection with the insurance afforded him. If the rating organization or insurer fails to grant or reject such request within 30 days after it is made, the applicant may proceed in the same manner as if his application had been rejected. Any party affected by the action of such rating organization or such insurer on such request may, within 30 days after writteJ' notice of such action. appeal to the Commissioner.

562010

REGlJoLATIO, OF RATe MAKI G FOR CASUALTY, ETC.

156

who after a hearing held upon not less than 10 days' written notice to the appellant and to such rating organization or insurer, may af firm or reverse such action. (Acts 1947, pp. 1506, 1516.)

56-2010. Advisory organization; definition; duties; procedure against. -(a) Every group, association or other organization of insurers, whether located within or outside this State, which assists insurers which make their own filings or rating organizations in rate making, by the collection and furnishing of loss of expense statistics, or by the submission of recommendations, but which does not make filings under this Chapter, shall be known as an advisory organization.
(b) Every advisory organization shall file with the Commissioner (a) a copy of its constitution, its articles of agreement or association or its certificate of incOl'J}oration and of its bylaws, rules and regulations governing its activities; (2) a list of its members, (3) the name and address of a resident of this State upon whom notices or orders of the Commissioner or process issued at his direction may be served, and (4) an agreement that the Commissioner may examine such advisory organization in accordance with the provisions of section 56-
2012.
(c) If, after a hearing, the Commissioner finds that the furnishing of such information or assistance involves any act or pmctice which is unfair or unreasonable or otherwise inconsistent with the provisions of this Chapter, he may issue a written order specifying in what respects such act or practice is unfair or unreasonable or otherwise inconsistent with the provisions of the Chapter, and requiring the discontinuance of such act or practice.
(d) No insurer which makes its own filings nor any rating organization shall support its filings by statistics or adopt rate making recommendations, furnished to it by an advisory organization which has not complied with this section or with an order of the Commissioner involving such statistics or recommendations issued under subsection (c) of this section. If the Commissioner finds such insurer or rating organization to be in violation of this subsection he may issue an order requiring the discontinuance of such violation. (Acts 1947, pp. 1506, 1517.) .

56-2011. Joint underwriting or joint reinsurance; regulation; requiring discontinuance of unfair or unreasonable practices.-(a) Every group, association or other organization of insurers, which engages in joint underwriting or joint reinsurance, shall be subject to regulation with respect thereto as herein provided, subject, however, with respect to joint underwriting, to all other provisions of this Chapter and, with respect to joint reinsurance, to sections 56-2012 and 56-2016 to 56-2020.
(b) If, after a hearing, the Commissioner, finds that any activity or practice of any such group, association or other organization is unfair or unreasonable or otherwise inconsistent with the provisions of this Chapter, he may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this Chapter, and requiring the discontinuance of such activity or practice. (Acts 1947, pp. 1506, 1518.)

56-2012. Examinations by Commissioner; costs, how paid; exhibition of books, documents, etc.; acceptance of report from another

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562013

State.-The Commissioner shall, at least once in five years, make or cause to be made an examination of each rating organization licensed in this State as provided in section 56-2006 and he may, as often as he may deem it expedient, make or cause to be made an examination of each advisory organization referred to in section 56-2010 and of each group, association or other organization referred to in section 56-201l. The reasonable costs of any such examination shall be paid by the rating organization, advisory organization, or group, association or other organization examined upon presentation to it of a detailed account of such costs. The officers, manager, agents and employees of such rating organization, advisory organization, or group, association
or other organization may be examined at any time under oath and shall exhibit all books, records, accounts, documents, or agreements governing its method of operation. Such examination shall be subject to the provisions of section 56-104. In lieu of any such examination the Commissioner may accept the report of an examination made by the insurance supervisory official of another State, pursuant to the laws
of such State. (Acts 1947, pp. 1506, 1518.)

562013. Rate administration.(a) Recording and reporting of loss and expense experience. The Commissioner shall promulgate reasonable rules and statistical plans, reasonably adapted to each of the rating systems on file with him, which may be modified from time to time and which shall be used thereafter by each insurer in the recording and reporting of its loss and countryside expense experience, in order that the experience of all insurers may be made available at least annually in such forms and detail as may be necessary to aid him in determining whether rating systems comply with the standards set forth in section 56-2003. Such rules and plans may also provide for the recording and reporting of expense experience items which are specially applicable to this State and are not susceptible of determination of a prorating of countrywide expense experience. In promulgating such rules and plans, the Commissioner shall give due consideration to the rating systems on file with him and, in order that such rules and plans may be as uniform as is practicable among the several States, to the rules and to the form of the plans used for such rating systems in other States. No insurer shall be required to record or report its loss experience on a classification basis that is inconsistent with the rating system filed by it. The Commissioner may designate one or more rating organizations or other agencies to assist him in gathering such experience and making compilations thereof, and such compilations shall be made available, subject to reasonable rules promulgated by the Commissioner to insurers and rating organizations.
(b) Interchange of rating plan data. Reasonable rules and plans may be promulgated by the Commissioner for the interchange of data necessary for the application of rating plans.
(c) Consultation with other States. In order to further uniform ~ministration of rate regulatory laws, the Commissioner and every U!surer and rating organization may exchange information and expenence data with insurance supervisory officials, insurers and rating organizations in other States and may consult with them with respect to rate making and the application of rating systems.
(d) Rules and regulations. The Commissioner may make reason-

~_56.:.-._20~1...::..4_--..:...::::..:....=-------..:...

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able rules and regulations necessary to effect the purposes of this Chapter. (Acts 1947, pp. 1506, 1519.)

56-2014. Withholding information or giving false or misleading in. formation; penalties.-No person or organization shall wilfully with. hold information from, or knowingly give false or misleading informa_ tion to, the Commissioner, any statistical agency designated by the Commissioner, any rating organization, or any insurer, which will affect the rates or premiums chargeable under this Chapter. A viola. tion of this section shall subject the one guilty of such violation to the penalties provided in section 56-2017. (Acts 1947, pp. 1506, 1520.)

56-2015. Rate modifications; when and how allowed.-Agreements may be made among insurers with respect to the equitable apportionment among them of insurance which may be afforded applicants Who are in good faith entitled to but who are unable to procure such insurance through ordinary methods and such insurers may agree among themselves on the use of reasonable rate modifications for such insurance, such agreements and rate modifications to be subject to the approval of the Commissioner. (Acts 1947, pp. 1506, 1520.)

56-2016. Rebates prohibited; exclusion of commissions, dividends, etc.; inapplicability of section 56-218.-N0 broker or agent shall knowingly charge, demand or receive a premium for any policy of insurance except in accordance with the provisions of this Chapter. No insurer or employee thereof, and no broker or agent shall pay, allow, or give,
or offer to pay, allow, or give, directly or indirectly, as an inducement to insurance, or after insurance has been effected, any rebate, discount, abatement, credit or reduction of the premium named in a policy of insUl'ance, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified in the policy of insurance, except to the extent provided for in an applicable filing. No insured named in a policy of insurance, nor any employee of such insured shall knowingly receive or accept, directly or indirectly, any such rebate, discount, rabatement, credit or reduction of premium, or any such special favor of advantage or valuable consideration or inducement. Nothing in this section shall be construed as prohibiting the payment of commissions or other compensation to duly licensed agents and brokers, nor as prohibiting any insurer from allowing or returning to its participating policyholders, members or subscribers, dividends, savings or unabsorbed premium deposits. As used in this section the word "insurance" includes suretyship and the word "policy" includes bond. Section 56-218 shall not be applicable to the kinds of insurance to which this Chapter applies. (Acts 1947, pp. 1506, 1520.)

56-2017. Penalties; pecuniary and suspension of license; necessity of written order by Commissioner.-The Commissioner may, if he finds that any person or organization has violated any provision of this Chapter, impose a penalty of not more than $50 for each such violation, but if he finds such violation to be wilful he may impose a penalty of not more than $500 for each such violation. Such penalties may be in addition to any other penalty provided by law.
The Commissioner may suspend the license of any rating organization or insurer which fails to comply with an order of the Commis-

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562019

sioner within the time limited by such order, or any extension thereof which the Commissioner may grant. The Commissioner shall not suspend the license of any rating organization or insurer for failure to comply with an order until the time prescribed for an appeal therefrom has expired or if an appeal has been taken, until such order has been affirmed. The Commissioner may determine when a suspension of
license shall become effective and it shall remain in effect for the period fixed by him, unless he modifies or rescinds such suspension, or until the order upon which such suspension is based is modifiei,
rescinded or reversed.

No penalty shall be imposed and no license shall be suspended or revoked except upon a written order of the Commissioner, stating his findings, made after a hearing held upon not less than 10 days' written notice to such person or organization specifying the alleged violation. (Acts 1947, pp. 1506, 1521.)

56-2018. Procedure for hearings before Commissioner and review of his decisions by appeal.-(a) Any insurer or rating organization aggrieved by any order or decision of the Commissioner made without a
hearing, may, within 30 days after notice of the order to the insurer or organization, make written request to the Commissioner for a hearing thereon. The Commissioner shall hear such party or parties within 20 days after receipt of such request and shall give not less than 10 days' written notice of the time and place of the hearing. Within 15 days after such hearing the Commissioner shall affirm, reverse or modify his previous action, specifying his reasons therefor. Pending such hearing and decision thereon the Commissioner may suspend or postpone the effective date of his previous action.

(b) Nothing contained in this Chapter shall require the observance at any hearing of formal rules of pleading or evidence.

(c) Any order of decision of the Commissioner shall be subject to review, which shall be on the basis of the record of the proceeding before the Commissioner and shall not be limited to questions of law, by appeal to any court of competent jurisdiction at the instance of any party in interest. The court shall determine whether the filing of the appeal shall operate as a stay. The court may, in disposing of the issue before it, modify, affirm or reverse the order or decision of the Commissioner in whole or in part. (Acts 1947, pp. 1506, 1522.)

562019. Inapplicability of other laws.-Section 56-219 to 56-222 shall be inapplicable with respect to the kinds of insurance to which
this Chapter applies or to workmen's compensation insurance. (Acts 1947, pp. 1506, 1522.)

CHAPTER 56-21. REGULATION OF RATE MAKING FOR FffiE, MARINE, AND INLAND MARINE INSURANCE.

Sec.
66-2101. Purpose of Chapter; liberal interpretation.
66-2102. Limitation of applicability to
fire, marine, and inland marine insurance; exceptions. 66-2103. Making of rates. 66-2104. Rate filings.
66-2105. Disapproval of filings. 66-2106. Rating organizations; licens-

Sec.
ing; regulation. 56-2107. Deviations from filings; pro-
cedure for obtaining. 56-2108. Same; appeal to Commission-
er by member or subscriber. 56-2109. Right of insured to informa-
tion and to hearing and appeal. 56-2110. Advisory organization; defini-

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Sec.
tion; duties; pro c e d u r e
against. 56-2111. Joint underwriting or joint
reinsurance; regulation; re-
quiring discontinuance of unfair or unreasonable practices.
56-2112. Examinations by Commissioner; costs, how paid; exhibi-
tion of books, documents, etc.; acceptance of report
from another State; hearing and review on Commissioner's report.

Sec.

56-2113. Rate administration.

56-2114. Withholding information or

giving false or misleading

information; penalties.

56-2115. Penalties; pecuniary and sus-

pension of license; necessity

of written order by Commis_

sioner.

56-2116. Rebates prohibited; exclusion

of commissions, dividends

etc.

'

56-2117. Procedure for hearings before

Commissioner and review of

his decisions by appeal.

56-2101. Purpose of Chapter; liberal interpretation.-The purpose of this Chapter is to promote the public welfare by regulating insurance rates to the end that they shall not be excessive, inadequate or unfairly discriminatory, and to authorize and regulate cooperative action among insurers in rate making and in other matters within the scope of the Chapter. Nothing in this Chapter is intended (1) to prohibit or discourage reasonable competition, or (2) to prohibit, or encourage except to the extent necessary to accomplish the aforementioned purpose, uniformity in insurance rates, rating systems, rating plans or practices. This Chapter shall be liberally interpreted to carry into effect the provisions of this section. (Acts ~947, p. 1523.)

56-2102. Limitation of applicability to fire, marine, and inland marine insurance; exceptions.-This Chapter applies to fire, marine and inland marine insurance, on risks located in this State. Inland marine insurance shall be deemed to include insurance now or hereafter defined by statute, or by interpretation thereof, 01' if not so defined or interpreted, by ruling of the Insurance Commissioner, hereinafter referred to as Commissioner, or as established by general custom of the business, as inland marine insurance.
This Chapter shall not apply.
(a) To reinsurance, other than joint reinsurance to the extent stated in section 56-2111;
(b) To insurance of vessels or craft, their cargoes, marine builders' risks, marine protection and indemnity, or other risks commonly insured under marine as distinguished from inland marine, insurance policies;
(c) To insurance of hulls of aircraft, including their accessories and equipment, or against liability arising out of the ownership, maintenance or use of aircraft;
(d) To motor vehicle insurance, nor to insurance against liability arising out of the ownership, maintenance or use of motor vehicles.
If any kind of insurance, subdivision or combination thereof or type of coverage, subject to this Chapter is also subject to regulation by another rate regulatory law of this State, an insurer to which both laws are otherwise applicable shall file with the Commissioner, a designation as to which rate regulatory law shall be applicable to it with

161

REGULATIO OF RATE MAKI G FOR FIRE, ETC.

56-2104

respect to such kind of insurance, subdivision or combination thereof, of type of coverage. (Acts 1947, pp. 1523, 1524.)
Cross-reference.-Insurance Commissioner, 5ee 56-101.
56-2103. Making of rates.-(a) Rates shall be made in accordance with the following provisions:
1. Manual, minimum, class rates, rating schedules 01' rating plans, shall be made and adopted, except in the case of specific inland marine rates on risks specifically rated.
2. Rates shall not be excessive, inadequate or unfairly discriminatory.
3. Due consideration shall be given to past and prospective loss experience within and outside this State, to the conflagration and catastrophe hazards, to a reasonable margin for underwriting profit and contingencies, to dividends savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers, to past and prospective expenses both countrywide and those specially applicable to this State, and to all other relevant factors within and outside this State; and in the case of fire insurance rates consideration shall be given to the experience of the fire insurance business during a period of not less than the most recent five-year period for which such experience is available.
(b) Except to the extent necessary to meet the provisions of subdivision of 2 of subsection (a) of this section, uniformity among insurers in any matters within the scope of this section is neither required nor prohibited.
(c) Rates made in accordance with this section may be used subject to the provisions of this Chapter. (Acts 1947, pp. 1523, 1525.)
56-2104. Rate filings.-(a) Every insurer shall file with the Commissioner, except as to inland marine risks which by general custom of the business are not written according to manual rates or rating plans, every manual, minimum, class rate, rating schedule or rating plan and every other rating rule, and every modification of any of the foregoing which it proposes to use. Every such filing shall state the proposed effective date thereof, and shall indicate the character and extent of the coverage contemplated. When a filing is not accompanied by the information upon which the insUl"er supports such filing, and the Commissioner does not have sufficient information to determine whether such filing meets the requirements of the Chapter, he shall require such insurer to furnish the information upon which it supports such 'filing, and in such event the waiting period shall commence as of the date such information is furnished. The information furnished in support of a filing may include (1) the experience or judgment of the insurer or rating organization making the filing, (2) its interpretation of any statistical data it relies upon, (3) the experience of other insurers or rating organizations, or (4) any other relevant factors. A
ing and any supporting information shall be open to public inspection after the filing becomes effective. Specific inland marine'rates on risks
ially rated, made by a rating organization, shall be filed with the mmissioner.
(b) An insurer may satisfy its obligation to make such filings by oming a member of, or a subscriber to, a licensed rating organiza-

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-'---

....:.;162

tion which makes such filings, and by authorizing the Commissioner to accept such filings on its behalf: Provided, that nothing contained in this Chapter shall be construed as requiring any insurer to become a member of or a subscriber to any rating organization.
(c) The Commissioner shall review filings as soon as reasonably possible after they have been made in order to determine whether they meet the requirements of this Chapter.
(d) Subject to the exception specified in subsection (e) of this section, each filing shall be on file for a waiting period of 15 days before it becomes effective, which period may be extended by the Commissioner for an additional period not to exceed 15 days if he gives written notice within such waiting period to the insurer or rating organization which made the filing that he needs such additional time for the consideration of such filing. Upon written application by such insurer or rating organization, the Commissioner may authorize a filing which he has reviewed to become effective before the expiration of the waiting period or any extension thereof. A filing shall be deemed to meet the requirements of this Chapter unless disapproved by the Commissioner within the waiting period or any extension thereof.
(e) Specific inland marine rates on risks specially rated by a 1"ating organization shall become effective when filed and shall be deemed to meet the requirements of this Chapter until such time as the Commissioner reviews the filing and so long thereafter as the filing remains in effect.
(f) Under such rules and regulations as he shall adopt the Commissioner may, by written order, suspend or modify the requirement of filing as to any kind of insurance, subdivision or combination thereof, or as to classes of risks, the 1"ates for which cannot practicably be filed before they are used. Such orders, rules and regulations shall be made known to insurers and rating organizations affected thereby. The Commissioner may make such examination as he may deem advisable to ascertain whether any rates affected by such order meet the standards set forth in subdivision 2 of subsection (a) of section 562103.
(g) Upon the written application of the insured, stating his reasons therefor filed with and approved by the Commissioner, a rate in excess of that provided by a filing otherwise applicable may be used on any specific risk.
(h) Beginning 90 days after the effective date of this Chapter no insurer shall make or issue a contract or policy except in accordance with the filings which are in effect for said insurer as provided in this Chapter or in accordance with subsections (f) or (g) of this section. This subsection shall not apply to contracts 01" policies for inland marine risks as to which filings are not required. (Acts 1947, pp. 1523, 1525.)
Editorial Note.-Section 20 of the Act from which this Chapter is codified makes the Act effective on September 1, 1947.
56-2105. Disapproval of filings.-(a) If within the waiting period or any extension thereof as provided in subsection (d) of section 56-2104, the Commissioner finds that a filing does not meet the requirements of this Chapter, he shall send to the insurer or rating organization which made such filing, written notice of disapproval of such filing specifying

163

REG LATION OF RATE MAKI G FOR FIRE, ETC.

56-2106

therein in what respects he finds such filing fails to meet the requirements of this Chapter and stating that such filing shall not become ef-
fective.
(b) If within 30 days after a specific inland marine rate on a risk specially rated by a rating organization, subject to subsection (e) of section 56-2104 has become effective, the Commissioner finds that such filing does not meet the requirements of this Chapter, he shall send to the rating organization which made such filing written notice of disapproval of such filing specifying therein in what respects he finds that such filing fails to meet the requirements of this Chapter and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective. Said disapproval shall not affect any contract made or issued prior to the expiration of the period set forth in said notice.
(c) If at any time subsequent to the applicable review period provided for in subsection (a) or (b) of this section, the Commissioner finds that a filing does not meet the requirements of this Chapter, he shall, after a hearing held upon not less than 10 days' written notice, specifying the matters to be considered at such hearing, to every insurer and rating organization which made such filing, issue an order specifying in what respects he finds that such filing fails to meet the requirements of this Chapter, and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective. Copies of said order shall be sent to every such insurer and rating organization. Said order shall not affect any contract or policy made or issned prior to the expiration of the period set forth in said order.
(d) Any person or organization aggrieved with respect to any filing which is in effect may make written application to the Commissioner for a hearing thereon, provided, however, that the insurer or rating organization that made the filing shall not be authorized to proceed under this subsection. Such application shall specify the grounds to be relied upon by the applicant. If the Commissioner shall find that the application is made in good faith, that the applicant would be so aggrieved if his grounds are established, and that such grounds otherwise justify holding such a hearing, he shall, within 30 days after receipt of such application, hold a hearing upon not less than 10 days' written notice to the applicant and to every insurer and rating organization which made such filing.
If, after such hearing, the Commissioner finds that the filing does not meet the requirements of this Chapter, he shall issue an order specifying in what respects he finds that such filing fails to meet said requirements, and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective. Copies of said order shall be sent to the applicant and to every such insurer and rating organization. Said order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in said order.
(e) No manual, minimum, class rate, rating schedule, rating plan, rating rule, or any modification of any of the foregoing which has been filed pursuant to the requirements of section 56-2104 shall be disapproved if the rates thereby produced meet the requirements of this Chapter. (Acts 1947, pp. 1523, 1527.)

562106. Rating organizations: licensing; regulation.-(a) A corration, an unincorporated association, a partnership or an individual,

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whether located within or outside this State, may make application to the Commissioner for license as a rating organization for such kinds of insurance, or subdivision or class of risk or a part or combination thereof as are specified in its application and shall file therewith (1) a copy of its constitution, its articles of agreement or association or its certificate of incorporation, and of its bylaws, rules and regulations governing the conduct of its business, (2) a list of its members and subscribers, (3) the name and address of a resident of this State upon whom notices or orders of the Commissioner or process affecting such rating organization may be served and (4) a statement of its qualifications as a rating organization. If the Commissioner finds that the applicant is competent, trustworthy and otherwise qualified to act as a rating organization and that its constitution, articles of agreement or association or certificate of incorporation, and its by-laws, rules and regulations governing the conduct of its business conform to the requirements of law, he shall issue a license specifying the kinds of insurance, or subdivision or class of risk or part or combination thereof for which the applicant is authorized to act as a rating organization. Every such application shall be granted or denied in whole or in part by the Commissioner within 60 days of the date of its filing with him. Licenses issued pursuant to this section shall remain in effect for three years unless sooner suspended or revoked by the Commissioner. The fee for said license shall be $125. Licenses issued pursuant to this section may be suspended or revoked by the Commissioner, after hearing upon notice, in the event the rating organization ceases to meet the requirements of this subsection. Every rating organization shall notify the Commissioner promptly of every change in (1) its constitution, its articles of agreement or association, or its certificate of incorporation, and its bylaws, rules and regulations governing the conduct of its business, (2) its list of members and subscribers and (3) the name and address of the resident of this State designated by it upon whom notices or orders of the Commissioner or process affecting such rating organization may be served.
(b) Subject to rules and regulations which have been approved by the Commissioner as reasonable, each rating organization shall permit any insurer, not a member, to be a subscriber to its rating services for any kind of insurance, subdivision, or class or risk or a part or combination thereof for which it is authorized to act as a rating organization. Notice of proposed changes in such rules and regulations shall be given to subscribers. Each rating organization shall furnish its rating services without discrimination to its members and subscribers. The reasonableness of any rule or regulation in its application to subscribers, or the refusal of any rating organization to admit an insurer as a subscriber, shall, at the request of any subscriber or any such insurer, be reviewed by the Commissioner at a hearing held upon at least 10 days' written notice to such rating organization and to such subscriber or insurer. If the Commissioner finds that such rule or regulation is unreasonable in its application to subscribers, he shall order that such rule or regulation shall not be applicable to subscribers. If the rating organization fails to grant or reject an insurer's application for subscribership within 30 days after it was made, the insurer may request a review by the Commissioner as if the application had been rejected. If the Commissioner finds that the insurer has been refused admittance to the rating organization as a subscriber without justification, he shall order the rating organization to admit the insurer as a subscriber. If he finds that the action of the rating organization was jus-

165

REGULATION OF RATE MAKI G FOR FIRE, ETC.

562107

tified, he shall make an order affirming its action.
(c) No rating organization shall adopt any rule the effect of which would be to prohibit or regulate the payment of dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers.
(d) Cooperation among rating ol'ganizations or among rating organizations and insurers in rate making or in other matters within the scope of this Chapter is hereby authorized, provided the filings resulting from such cooperation are subject to all the provisions of this Chapter which are applicable to filings generally. The Commissioner may review such cooperative activities and practices and if, after a hearing, he finds that any such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this Chapter, he may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with such provisions, and requiring the discontinuance of such activity or practice.
(e) Any rating organization may provide for the examination of policies, daily reports, binders, renewal certificates, endorsements or other evidences of insurance, or the cancellation thereof, and may make reasonable rules governing their submission. Such rules shall contain a provision that in the event any insUl'er does not within 60 days furnish satisfactory evidence to the rating organization of the correction of any error or omission previously called to its attention by the rating organization, it shall be the duty of the rating organization to notify the Commissioner thereof. All information so submitted for examination shall be confidential.
(f) Any rating organization may subscribe for or purchase actuarial, technical or other services, and such devices shall be available to all members and subscribers without discrimination. (Acts 1947, pp, 1523, 1529.)

56-2107. Deviations from filings; procedure for obtaining.-Every member of or subscriber to a rating organization shall adhere to the filings made on its behalf by such organization except that any such insurer may make written application to the Commissioner for permission to file a deviation from the class rates, schedules, rating plans or rules respecting any kind of insurance, or class or risk within a kind of insurance, or combination thereof. Such application shall specify the basis for the modification and a copy thereof shall also be sent simultaneously to such rating organization. The Commissioner shall set a time and place for a hearing at which the insurer and such rating organization may be heard and shall give them not less than 10 days' written notice thereof. In the event the Commissioner is advised by the rating organization that it does not desire a hearing he may, upon the consent of the applicant, waive such hearing. In considering the application for permission to file such deviation the Commissioner shall give consideration to the available statistics and the principles for rate making as provided in section 56-2103. The Commissioner shall issue an order permitting the deviation for such insurer to be filed if he finds it to be justified and it shall thereupon become effective. He shall issue an order denying such application if he finds that t~e resulting premiums would be excessive, inadequate or unfairly discriminatory. Each deviation permitted to be filed shall be effective

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for a period of one year fl'om the date of such permission unless ter-

minated sooner with the approval of the Commissioner. (Acts 1947

pp. 1523, 1532.)

,

56-2108. Same; appeal to Commissioner by member or subscriber._
Any member of or subscriber to a rating organization may appeal to
the Commissioner from the action or decision of such rating organiza_
tion in approving or rejecting any proposed change in or addition to
the filings of such rating organization and the Commissioner shall after a hearing held upon not less than 10 days' written notice to th~ appellant and to such rating organization, issue an order approving the action or decision of such rating organization or directing it to give further consideration to such proposal, or, if such appeal is from the action or decision of the rating organization in rejecting a proposed addition to its filings, he may, in the event he finds that such action or decision was unreasonable, issue an order directing the rating organization to make an addition to its filings, on behalf of its members and subscribers, in a manner consistent with his findings, within a reasonable time after the issuance of such order. (Acts 1947, pp. 1523, 1532.)

56-2109. Right of insured to information and to hearing and appeal.-Every rating ol"ganization and every insurer which makes its own rates shall, within a reasonable time after receiving written request therefor and upon payment of such reasonable charge as it may make, furnish to any insured affected by a rate made by it, or to the authorized representative of such insured, all pertinent information as to such rate. Every rating organization and every insurer which makes its own rates shall provide within this State reasonable means whereby any person aggrieved by the application of its rating system may be heard, in person or by his authorized representative, on his written request to review the manner in which such l"ating system has been applied in connection with the insurance afforded him. If the rating organization or insurer fails to grant or reject such request within 30 days after it is made, the applicant may proceed in the same manner as if his application had been rejected. Any party affected by the action of such rating organization or such insurer on such request may, within 30 days after written notice of such action, appeal to the Commissioner, who, after a hearing held upon not less than 10 days' written notice to the appellant and to such rating organization or insurer, may affirm or reverse such action. (Acts 1947, pp. 1523, 1533.)

56-2110. Advisory organization; definition; duties; procedure against.-(a) Every group, association or other organization of insurers, whether located within or outside this State, which assists insurers which make their own filings or rating organizations in rate making, by the collection and furnishing of loss of expense statistics, or by the submission of recommendations, but which does not make filings under this Chapter, shall be known as an advisory organization.
(b) Every advisory organization shall file with the Commissioner (1) a copy of its constitution, its articles of agreement or association or its certificate of incorporation and of its by-laws, rules and regulations governing its activities, (2) a list of its members, (3) the name and address of a resident of this State upon whom notices or orders of the Commissioner or process issued at his direction may be served, and (4) an agreement that the Commissioner may examine such ad-

167

56-2112

visory organization in accordance with the provisions of section 56-
2112. (c) If, after a hearing, the Commissioner finds that the furnishing
of such information or assistance involves any act or practice which is unfair or unreasonable or otherwise inconsistent with the provisions of this Chapter, he may issue a written order specifying in what respects such act or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this Chapter, and requiring the discontinuance of such act or practice.
(d) No insurer which makes its own filings nor any rating organization shall support its filings by statistics or adopt rate making recommendations, furnished to it by an advisory ol'ganization which has not complied with this section or with an order of the Commissioner involving such statistics or recommendations issued under subsection (c) of this section.- If the Commissioner finds such insurer or rating organization to be in violation of this subsection he may issue an order requiring the discontinuance of such violation. (Acts 1947, pp. 1523, 1533.)

56-2111. Joint underwriting or joint reinsurance; regulation; requiring discontinuance of unfair or unreasonable practices.-(a) Every group, association or other organization of insurers which engages in joint underwriting or joint reinsurance, shall be subject to regulation with respect thereto as herein pl'ovided, subject, however, with respect to joint underwriting, to all other provisions of this Chapter and, with respect to joint reinsurance, to sections 56-2112 and 56-2115 to 56-2119.
(b) If, after a hearing, the Commissioner finds that any activity or practice of any such group, association or other organization is unfair or unreasonable or otherwise inconsistent with the provisions of this Chapter, he may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this Chapter, and requiring the discontinuance of such activity or practice. (Acts 1947, pp. 1523, 1534.)
56-2112. Examinations by Commissioner; costs, how paid; exhibition of books, documents, etc.; acceptance of report from another State; hearing and review on Commissioner's report.-The Commissioner shall, at least once in five years, make or cause to be made an examination of each rating organization licensed in this State as provided in section 56-2106 and he may, as often as he may deem it expedient, make or cause to be made an examination of each advisory organization referred to in section 56-2110 and of each group, association or other organization referred to in section 56-2111. The reasonable costs of any such examination shall be paid by the rating organization, advisory organization, or group, association or other organization examined upon presentation to it of a detailed account of such costs. The officers, manager, agents and employees of such rating organization, advisory organization, or group, association or other organization may be examined at any time under oath and shall exhibit all books, records, accounts, documents, or agreements governing its method of operation. In lieu of any such examination the Commissioner may accept the report of an examination made by the insurance supervisory official of another State, pursuant to the laws of such State. No report of any examination shall be made public until

56-2113

REG LATlON OF RATE MAKI G FOR FIRE, ETC.

168

the organization examined has an opportunity to review the proposed report and to have a hearing with reference thereto, after which hearing the report shall be filed for public inspection and shall become admissible evidence as a public record. (Acts 1947, pp. 1523, 1535.)

56-2113. Rate administration.(a) Recording and reporting of loss and expense experience. The Commissioner shall promulgate reasonable rules and statistical plans, reasonably adapted to each of the rating systems on file with him, which may be modified from time to time and which shall be used thereafter by each insurer in the recording and reporting of its loss and countrywide expense experience, in order that the experience of all insurers may be made available at least annually in such form and detail as may be necessary to aid him in determining whether rating systems comply with the standards set forth in section 56-2103. Such rules and plans may also provide for the recording and reporting of expense experience items which are specially applicable to this State and are not susceptible of determination by a prorating of countrywide expense experience. In promulgating such rules and plans, the Commissioner shall give due consideration to the rating systems on file with him and, in order that such rules and plans may be as uniform as is practicable among the several States, to the rules and to the form of the plans used for such rating systems in other States. No insurer shall be required to record or report its loss experience on a classification basis that is inconsistent with the rating system filed by it. The Commissioner may designate one or more rating organizations or other agencies to assist him in gathering such experience and making compilations thereof, and such compilations shall be made available, subject to rtlasonable rules promulgated by the Commissioner to insurers and rating organizations.
(b) Interchange of rating plan data. Reasonable rules and plans may be promulgated by the Commissioner for the interchange of data necessary for the application of rating plans.
(c) Consultation with other States. In order to further uniform administration of rate regulatory laws, the Commissioner and every insurer and rating organization may exchange information and experience data with insurance supervisory officials, insurers and rating organizations in other States and may consult with them with respect to rate making and the application of rating systems.
(d) Rules and regulations. The Commissioner may make reasonable rules and regulations necessary to effect the purposes of this Chapter. (Acts 1947, pp. 1523, 1535.)

56-2114. Withholding information or giving false or misleading information; penalties.-No person or organization shall wilfully with-
hold information from, or knowingly give false or misleading information to, the Commissioner, any statistical agency designated by the Commissioner, any rating organization, or any insurer, which will
affect the rates or premiums chargeable under this Chapter. A viola-
tion of this section shall subject the one guilty of such violation to the
penalties provided in section 56-2115. (Acts 1947, pp. 1523, 1536.)

56-2115. Penalties; pecuniary and suspension of license; necessity of written order by Commissioner.-The Commissioner may, if he finds

169

REGULATION OF RATE MAKI G FOR FIRE, ETC.

562117

that any person or organization has violated any provision of this Chapter, impose a penalty of not more than $50 for each such violation, but if he finds such violation to be wilful he may impose a penalty of not more than $500 for each such violation. Such penalties may be in addition to any other penalty provided by law.
The Commissioner may suspend the license of any rating organization or insurer which fails to comply with an order of the Commissioner within the time limited by such order, or any extension thereof which the Commissioner may grant. The Commissioner shall not sus-
pend the license of any rating organization or insurer for failure to
comply with an order until the time prescribed for an appeal therefrom has expired or if an appeal has been taken, until such order has been affirmed. The Commissioner may determine when a suspension of license shall become effective and it shall remain in effect for the period fixed by him, unless he modifies or rescinds such suspension, or until the order upon which such suspension is based is modified, rescinded or reversed.
No penalty shall be imposed and no license shall be suspended or revoked except upon a written order of the Commissioner, stating his findings, made after a hearing held upon not less than 10 days' written notice to such person or organization specifying the alleged violation. (Acts 1947, pp. 1523, 1537.)
56-2116. Rebates prohibited; exclusion of commissions, dividends, etc.-No broker or agent shall knowingly charge, demand or receive a premium for any policy of insurance except in accordance with the provisions of this Chapter. No insurer or employee thereof, and no broker or agent shall pay, allow, or give, or offer to pay, allow, or give, directly or indirectly, as an inducement to insurance, or after insurance has been effected, any rebate, discount, abatement, credit or reduction of the premium named in a policy of insurance, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified in the policy of insumnce, except to the extent provided for in an applicable filing. No insured named in a policy of insurance, nor any employee of such insured shall knowingly receive or accept, directly or indirectly, any such special favor or advantage or valuable consideration or inducement. Nothing in this section shall be construed as prohibiting the payment of commissions or other compensation to duly licensed agents and brokers, nor as prohibiting any insurer from allowing or returning to its participating policyholders, members or subscribers, dividends, savings or unabsorbed premium deposits. As used in this section the word "insurance" includes suretyship and the word "policy" includes bond. (Acts 1947, pp. 1523, 1537.)
56-2117. Procedure for hearings before Commissioner and review of his decisions by appeal.-(a) Any insurer or rating organization aggrieved by any order or decision of the Commissioner made without a hearing, may, within 30 days after notice of the order to the insurer or organization, make written request to the Commissioner for a hearing thereon. The Commissioner shall hear such party or parties within 20 days after receipt of such request and shall give not less than 10 days' written notice of the time and place of the hearing. Within 15 days after such hearing the Commissioner shall affirm, reverse or modify his previous action, specifying his reasons therefor. Pending such hearing

56-2201

170

and decision thereon the Commissioner may suspend or postpone the effective date of his previous action.
(b) Nothing contained in this Chapter shall require the observance at any hearing of formal rules of pleading or evidence.
(c) Any order, decision or the imposition of any penalty by the Commissioner shall be subject to review by appeal to the superior court of Fulton county, Georgia, in accordance with the provisions of Chapter 6-5. (Acts 1947, pp. 1523, 1538.)

CHAPTER 56-22. UNIFORM INSURERS LIQUIDATION ACT.

Sec. 56-2201. Short title of Chapter.
56-2202. Definitions of terms -used in Chapter.
56-2203. Conduct of delinquency proceedings a g a ins t insurers domiciled in State.
56-2004. Conduct of delinquency proceedings against insurers
not domiciled in State; domiciliary receiver may sue.
56-2205. Filing and proving of claims
of nonresidents against delinquent insurers domiciled

Sec. in State.
56-2206. Filing and proving of claims of residents against delin. quent insurers domiciled in reciprocal States.
56-2207. Priority of preferred claims, special deposit claims, and secured claims.
56-2208. Attachment and garnishment of assets.
56-2209. Construction of Chapter; effect of partial invalidity.

56-2201. Short title of Chapter.-This Chapter may be cited as the Uniform Insurers Liquidation Act. (Acts 1949, p. 1145.)

562202. Definitions of terms used in Chapter.-For the purpose of this Chapter:
(1) "Insurer" means anY.person, firm, corporation, association, or aggregation of persons doing an insurance business and subject to the insurance supervisory authority of, or to liquidation, rehabilitation, reorganization, or conservation by, the Insurance Commissioner of this State, or the equivalent insurance supervisory official of another state.
(2) "Delinquency proceeding" means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving such insurer.
(3) "State" means any state of the United States, and also the District of Columbia, Alaska, Hawaii and Puerto Rico.
(4) "Foreign Country" means territory not in any state.
(5) "Domiciliary State" means the State in which an insurer is incorporated or organized, or, in the case of an insurer incorporated or organized -in a foreign Country, the State in which such insurer, having become authorized to do business in such State, has, at the commencement of delinquency proceedings, the largest amount of its assets held in trust and assets held on deposit for the benefit of its policyholder or policyholders and creditors in the United States; and any such insurer is deemed to be domiciled in such State.
(6) "Ancillary State" means any State other than a domiciliary state.
(7) "Reciprocal State" means any State other than this State in

171

U IFOR 1 INSURERS LIQUIDATION ACT

56-2203

which in substance and effect the provisions of this Chapter are in force, including the provisions requiring that the Insurance Commissioner or equivalent insurance supervisory official be the receiver of a delinquent insurer.
(8) "General assets" means all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or a limited class or classes of persons, and as to such specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and assets held on deposit for the security or benefit of all policyholders, or all policyholders and creditors in the United States, shall be deemed general assets.
(9) "Preferred claim" means any claim with respect to which the law of a State or of the United States accords priority of payment from the general assets of the insurer.
(10) "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class or classes of persons, but not including any general assets.
(11) "Secured claim" means any claim secured by mortgage, trust, deed, pledge, deposit as security, escrow, or otherwise, but not including special deposit claims or claims against general assets. The term also includes claims which more than four months prior to the commencement of delinquency proceedings in the state of the insurer's domicile have become liens upon specific assets by reason of judicial process.
(12) "Receiver" means receiver, liquidator, rehabilitator, or conservator as the context may require. (Acts 1949, p. 1145.)

56-2203. Conduct of delinquency proceedings against insurers domiciled in State.-(l) Whenever under the laws of this State a receiver is to be appointed in delinquency proceedings for an insurer domiciled in this State, the court shall appoint the Insurance Commissioner as such receiver. The court shall direct the Insurance Commissioner forthwith to take possession of the assets of the insurer and to administer the same under the orders of the court.
(2) As domiciliary receiver the Insurance Commissioner and his successor in office shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records of the insurer wherever located as of the date of entry of the order directing him to liquidate a domestic insurer or the United States branch of an alien insurer domiciled in this State, and he shall have the right to recover the same and reduce the same to possession; except that ancillary receivers in reciprocal States shall have, as to assets located in their respective states, the rights and powers which are hereinafter prescribed for ancillary receivers appointed in this State as to assets located in this State. The filing or recording of the order directing possession to be taken, or a certified copy thereof, in the office where instruments affecting title to property are required to be filed or recorded shall impart the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded.

562204

172

The Insurance Commissioner, as domiciliary receiver, shall be respon_ sible on his official bond for the proper administration of all assets coming into his possession or control. The court may at any time require an additional bond from him or his deputies if deemed desirable for the protection of the assets.
(3) Upon taking possession of the assets of a delinquent insurer the domiciliary receiver shall, subject to the direction of the court, immediately proceed to conduct the business of the insurer or to take such steps as are authorized by the laws of this State for the purpose of liquidating, rehabilitating, reorganizing, or conserving the affairs of the insurer. In connection with delinquency proceedings he may appoint one or more special deputy commissioners to act for him, and and may employ such counsel, clerks, and assistants as he deems necessary. The compensation of the special deputies, counsel, clerks, or assistants, and all expenses of taking possession of the delinquent insurer and of conducting the delinquency proceedings shall be fixed by the receiver, subj ect to the approval of the court, and shall be paid out of the funds or assets of the insurer. Within the limits of the duties imposed upon them special deputies shall possess all the powers given to, and, in the exercise of those powers, shall be subject to all of the
duties imposed upon the receiver with respect to delinquency proceed-
ings. (Acts 1949, pp. 1145, 1147.)

56-2204. Conduct of delinquency proceedings against insurers not domiciled in this State; domiciliary receiver may sue.-(1) Whenever under the laws of this State an ancillary receiver is to be appointed in delinquency proceedings for an insurer not domiciled in this State, the court shall appoint the Insurance Commissioner as ancillary receiver. The Insurance Commissioner shall file a petition requesting the appointment (a) if he finds that there are sufficient assets of such insurer located in this State to justify the appointment of an ancillary receiver, or (b) if 10 or more persons resident in this State having claims against such insurer file a petition with the Insurance Commissioner requesting the appointment of such ancillary receiver.
(2) The domiciliary receiver for the purpose of liquidating an insurer domiciled in a reciprocal State, shall be vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records of the insurer located in this State, and he shall have the immediate right to recover balances due from local agents and to obtain possession of any books and records of the insurer found in this State. He shall also be entitled to recover the other assets of the insurer located in this State except that upon the appointment of an ancillary receiver in his State, the ancillary receiver shall during the ancillary receivership proceedings have the sole right to recover such other assets. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceedings in this State, and shall pay the necessary expenses of the proceedings. All remaining assets he shall promptly transfer to the domiciliary receiver. Subject to the foregoing provisions the ancillary receiver and his deputies shall have the same powers and be subject to the same duties with respect to the administration of such assets, as a receiver of an insurer domiciled in this State.
(3) The domiciliary receiver of an insurer domiciled in a reciprocal

173

UNIFORM INSURERS LIQUJDATJO ACT

56-2207

state may sue in this State to recover any assets of such insurer to which he may be entitled under the laws of this State. (Acts 1949,
pp. 1145, 1148.)
56-2205. Filing and proving of claims of nonresidents against delinquent insurers domiciled in State.-(1) In a delinquency proceeding begun in this State against an insurer domiciled in this State, claimants residing in reciprocal States may file claims either with the ancillary receivers, if any, in their respective states, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiliciary delinquency proceedings.
(2) Controverted claims belonging to claimants residing in reciprocal States may either (a) be proved in this State as provided by law, or (b), if ancillary proceedings have been commenced in such reciprocal States, may be proved in those proceedings. In the event a claimant elects to prove his claim in ancillary proceedings, if notice of the claim and opportunity to appear and be heard is afforded the domiciliary receiver of this State, as provided in section 56-2206 with respect to ancillary proceedings in this State, the final allowance of such claim by the courts in the ancillary State shall be accepted as conclusive as to its priority, if any, against special deposits or other security located within the ancillary State. (Acts 1949, pp. 1145, 1149.)
56-2206. Filing and proving of claims of residents against delinquent insurers domiciled in reciprocal States.-(1) In a delinquency proceeding in a reciprocal State against an insurer domiciled in that State, claimants against such insurer who reside within this State may file claims either with the ancillary receiver, if any, appointed in this State, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceeding.
(2) Controverted claims belonging to claimants residing in this State may either (a) be proved in the domiciliary State as provided by the law of that State, or (b), if ancillary proceedings have been commenced in this State, be proved in those proceedings. In the event that any such claimant elects to prove his claim in this State, he shall file his claim with the ancillary receiver in the manner provided by the law of this State for the proving of claims against insurers domiciled in this State, and he shall give notice in writing to the receiver in the domiciliary state, either by registered mail or by personal service at least 40 days prior to the date set for hearing. The notice shall contain a concise statement of the amount of the claim, the facts on which the claim is based, and the priorities asserted, if any. If the domiciliary receiver, within 30 days after the giving of such notice, shall give notice in writing to the ancillary receiver and to the claimant, either by registered mail or by personal service, of his intention to contest such claim, he shall be entitled to appear or to be represented in any proceeding in this State involving the adjudication of the claim. The final allowance of the claim by the courts of this State shall be accepted as conclusive as to its amount, and shall also be accepted as conclusive as to its amount, and shall also be accepted as conclusive as to its priority, if any, against special deposits or other security located within this State. (Acts 1949, pp. 1145, 1149.)

562207. Priority of preferred claims, special deposit claims and se-

562208

174,

cured claims.-(l) In a delinquency proceeding against an insurer domiciled in this State, claims owing to residents of ancillary states shall be preferred claims if like claims are preferred under the laws of this State. All such claims whether owing to residents or nonresidents shall be given equal priority of payment from general assets regardless of where such assets are located.
(2) In a delinquency proceeding against an insurer domiciled in a reciprocal State, claims owing to residents of this State shall be preferred if like claims are preferred by the laws of that State.
(3) The owners of special deposit claims against an insurer for which a receiver is appointed in this or any other State shall be given priority against their several special deposits in accordance with the provisions of the statutes governing the creation and maintenance of such deposits. If there is a deficiency in any such deposit so that the claims secured thereby are not fully discharged therefrom, the claimants may share in the general assets, but such sharing shall be deferred until general creditors and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit.
(4) The owner of a secured claim against an insurer for which a receiver has been appointed in this or any other State may surrender his security and file his claim as a general creditor, or the claim may be discharged by resort to the security, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors. If the amount of the deficiency has been adjudicated in ancillary proceedings as provided in this Chapter, or if it has been adjudicated by a court of competent jurisdiction in proceedings in which the domiciliary receiver has had notice and opportunity to be heard, such amount shall be conclusive; otherwise the amount shall be determined in the delinquency proceeding in the domiciliary State. (Acts 1949, pp. 1145, 1150.)

56-2208. Attachment and garnishment of assets.-During the pendency of delinquency proceedings in this or any reciprocal State no action or proceeding in the nature of an attachment, garnishment, or execution shall be commenced or maintained in the courts of this State against the delinquent insurer or its assets. Any lien obtained by any such action or proceeding within four mQnths prior to the commencement of any such delinquency proceeding or at any time thereafter shall be void as against any rights arising in such delinquency proceeding. (Acts 1949, pp. 1145, 1151.)
56-2209. Construction of Chapter; effect of partial invalidity.-(I) If any provision of this Chapter or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the Chapter which can be given effect without the invalid provision or application, and to this end the provisions of this Chapter are declared to be severable.
(2) This Chapter shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states that enact it. To the extent that its provisions, when applicable, conflict with other laws, the provisions of this Chapter shall control. (Acts 1949, pp. 1145, 1151.)

175

562305

CHAPTER 56-23. GROUP INSURANCE OF PUBLIC EMPLOYEES.

Sec. 56-2301. Governmental units empow-
ered to make deductions and enter into agreements. 56-2302. Participation by employees to be voluntary. 56-2303. Insurance not to affect rights under Workmen's Compen-

Sec. sation Act.
56-2304. Fixing minimum number of employees permitted within group.
56-2305. Local and special laws unaffected.

Editorial Note.-Acts 1950, p. 2608, provides that in any county having wholly or partially within its borders a city having a population of 200,000 or more ac-
cording to the U. S. census of 1940 or any future census, the board of education
may make contracts for group insurance for the benefit of its officers and employees of all classes. Benefits may include life, health, hospitalization, medical services and accident coverage as well as pensions. The board is authorized to
make salary deductions to cover premiums.

56-2301. Governmental units empowered to make deductions and enter into agreements.-Each and every county, county board of public instruction, city, town, governmental unit, department, board, or bu-
reau of the State of Georgia, or of the cities and towns thereof, is hereby authorized and empowered to make deductions periodically from the wages or salaries of it~ employees with which to pay the premium for life, health, accident, hospitalization, or annuity insurance, or all or any kind of such insul'ance, for the benefit of such employees, upon a group insurance plan, and to that end to enter into agreements with insurance companies whereby the kind of group insurance desired by the employees may be furnished to them and the premiums therefor remitted periodically by said counties, boards, cities, towns, bureaus, or departments thereof. (Acts 1950, p. 355.)

56-2302. Participation by employees to be voluntary.-Participation in such group insurance by such employees shall be entirely voluntary on the part of each employee at all times. Any employee, upon any pay day, may withdraw or retire from such group plan upon giving his employer written notice thereof and directing the discontinuance of deductions from his wages or salary in payment of such plan. (Acts 1950, p. 355.)

56-2303. Insurance not to affect rights under Workmen's Compensation Act.-The insurance pennitted under this Chapter shall be in addition to and in no manner in lieu of the provisions of the Georgia Workmen's Compensation Act. (Acts 1950, p. 355.)

56-2304. Fixing minimum number of employees permitted within group.-The minimum number of employees in said groups to whom
policies of insurance may be issued on the group plan, shall be fixed
by the Insurance Commissioner, and policies may not be issued by
insurance companies to a group containing less than the number fixed by him. (Acts 1950, p. 355.)

56-2305. Local and special laws unaffected.-Nothing in this Chapter is intended to restrict or repeal the operation of any special or local law heretofore enacted authorizing the participation in group insurance by employees of the State, counties, cities, or towns thereof. (Acts 1950, pp. 355, 356.)

569901

CRIMES

176

CHAPTER 56-99. CRIMES.

Sec. 56-9901. Neglect of summons or ob-
structing Commissioner's
examination.
56-9902. False statements by officers, agents, etc., of insurance companies.
56-9903. Giving rebates or making discriminatory contracts.
56-9904. Investments by insurance companies.
56-9905. Penalty on agents of unauthorized insurance compa-
nies.
56-9906. False representation as to
policy sold.
56-9907. Receiving commissions from
undertakers on account of employment.
56-9908. Violating regulations for in-
dustrial health, life, or accident insurance business.
56-9909. Receiving premium after insolvency or fraudulent rein-
statement. 56-9910. Incorporated mutual or coop-
erative fire insurance com-
panies, violation of law relating to.
56-9911. Fraudulently procuring insur-
ance.
56-9912. Fraternal ben e fit societies; fraudulent representations with reference to applica-
tions for membership or for
purpose of obtaining money.
56-9913. Same; false statements as to death or disability, etc.
56-9914. Same; soliciting membership in society not licensed or authorized to do business in
State. 56-9915. Same; punishment for viola-
tion of law where not fixed by preceding sections.
56-9916. Fraudulent insurance claims. 56-9917. Acting for fraternal benefici-
ary order prohibited from
doing business.
56-9918. Acting for fraternal beneficiary order not complying with law.

Sec. 56-9919. Acting as agent for unli-
censed insurance or bonding company.
56-9920. Insurer's contract as to funeral, prohibition of.
56-9921. Insurance to be payable only in legal tender.
56-9922. Insurer's contract with under_ taker unlawful.
56-9923. Insurer's contracts as to fu-
neral merchandise or services. 56-9924. Revocation of license for vio-
lation of four preceding sections.
56-9925. Violation of sections 56-9920 to 56-9923 a misdemeanor.
. 56-9926. Issuing life insurance con-
tracts without complying with law. 56-9927. Violation of section 56-1313 concerning industrial life insurance. 56-9928. Fraternal benefit societies;
violation of section 56-1611, relating to benefit certifi-
cates in classes. 56-9929. Same; violation of section 56-
1643, relating to misrepre-
sentations, misleading statements, and incomplete comparisons.
56-9930. Same; acting for society enjoined from doing business.
56-9931. Same; fraudulent representation with reference to appli-
cations for membership or for purpose of obtaining money.
56-9932. Same; false sworn statements as to death, disability, etc., punishable as perjury.
56-9933. Same; soliciting membership in society not authorized to
do business in this State. 56-9934. Same; punishment for viola-
tions of law not fixed by
sections 56-9931 to 56-9933. 56-9935. Violations of Chapter 56-5B
as to licensing of agents of
life, health, and accident in-
surance companies.

56-9901. Neglect of summons or obstructing Commissioner's examination.-Whoever without justifiable cause shall neglect, upon legal summons being served within this State, to appear and testify before the Commissioner or his examiner in the examination of any company as provided in section 56-104, and whoever wilfully and without just cause shall obstruct the Commissioner, his deputy or examiner, in any such examination, shall be punished by a fine of not more than $1,000 or by imprisonment for not more than one year. It shall be the duty of the Insurance Commissioner to report any and all such offenses under this section to the solicitor general of th.e circuit in which it or they shall occur. (Acts 1912, pp. 119, 125.)

177

CRIMES

56-9907

Cross-reference.-Punishment for burning goods to defraud insurer, see 26-2213.
569902. False statements by officers, agents, etc., of insurance cornpanies.-Any director, officer, agent or emp.loyee of any insurance company who wilfully and knowingly subscribes, makes or concurs in making any annual or other statement required by law containing any material statement which is false shall be deemed guilty of a misdemeanor. It shall be the duty of the Insurance Commissioner to report all such misrepresentations and false statements to the solicitor general of the circuit in which they shall occur. (Acts 1912, pp. 119, 125.)
Cross-references.-Issuing license, see 56-402. When certain insurance companies may transact business, see 56-209, 56-210, 56-403.
569903. Giving rebates or making discriminatory contracts.-Any person acting as agent for any insurance company in giving a rebate on any insurance premium, or in making any discriminatory contract, and the party receiving the benefit of any such rebate or discrimination, in violation of section 56-218, shall be deemed guilty of a misdemeanor. (Acts 1912, pp. 119, 130.)

56-9904. Investments by insurance companies.-Any person acting as agent for any company contemplated by section 56-224, with regard to investments by insurance companies, who shall knowingly and wilfully violate the provisions of said section, shall be deemed guilty of a misdemeanor. (Acts 1912, pp. 119, 137.)

56-9905. (2444; 626 P. C.) Penalty on agents of unauthorized insurance companies.-Any person who shall do or perform any of the acts or things specified in section 56-501 for any insurance company, or agent of said company, without such company's having first received a certificate of authority from the Insurance Commissioner, as required by law, shall be punished as for a misdemeanor, and shall also pay a sum equal to the State, county, and municipal taxes and licenses required to be paid by insurance companies legally doing business in this State. It shall be the duty of the Insurance Commissioner to see that violators of the provisions of this section are prosecuted. (Acts 1887, p. 122.)
Cross-reference.-Civil liability, see 56-502.
56-9906. False representation as to policy sold.-Any person violating section 56-519, making unlawful false representations as to the policy sold, shall be deemed guilty of a misdemeanor. (Acts 1912, PP. 119, 124.)

56-9907. Receiving commissions from undertakers on account of employrnent.-No person, firm, or corporation engaged in the life insurance business or the industrial life insurance business shall contract for or receive any compensation or gratuity, directly or indirectly, on account of the employment of any undertaker in connection with a burial or preparation for burial of any person whose life is insured by said company; and no undertaker shall give or agree to give any such compensation or commission to such person, firm, or corporation engaged in the insurance business. Any person, firm, or corporation violating the provisions of this section shall be guilty of a misdemeanor, and punished as such. (Acts 1933, p. 186.)

56-9908

CRIMES

178

56-9908. Violating regulations for industrial health, life or accident insurance business.-Any person who shall violate sections 56-517 or 56-1310 to 56-1312, regulating the business of industrial health, life or accident insurance, shall be guilty of a misdemeanor. (Acts 1913,
p. 98.)

56-9909. Receiving premium after insolvency or fraudulent rein. statement.-Any person violating any provision of section 56-1311, prohibiting the receiving of premiums or assessments with knowledge of the insolvency of the insurance company or association without giving notice to the person paying the premium or assessment, and
prohibiting the fraudulent issuance of policies or benefit certificates as therein prescribed, shall be guilty of a misdemeanor. (Acts 1913, pp. 98, 99.)

56-9910. Incorporated mutual or cooperative fire insurance com panies, violation of law relating to.-Any person or corporation violating the provisions of sections 56-1408 to 56-1424, regulating incorporated mutual or cooperative fire insurance companies, shall be guilty
of a misdemeanor, and upon conviction shall be punished by a fine of not less than $50 nor more than $500, and the Insurance Commissioner shall have power to revoke the license of any such person or corporation. (Acts 1923, pp. 113, 119.)

56-9911. (2457; 627 P. C.) Fraudulently procuring insurance.-Any agent, physician, or other person who shall knowingly secure, or cause to be secured, a certificate of membership in any assessment life insurance company on any person without his knowledge or consent, or, by means of misrepresentation, false, fraudulent, or untrue statements, shall be instrumental in securing a certificate of membership in any such company on any aged or infirm person, or in restoring to membership any person not in an insurable condition, shall be deemed guilty of a misdemeanor, and said certificate or renewal shall be absolutely void. (Acts 1887, p. 125.)
Cross-reference.-Assessment life insurance, see 56-1501, 56-1502.
Cited. 8 App. 149, 156 (68 S. E. & 12).

56-9912. Fraternal benefit societies; fraudulent representations with reference to applications for membership or for purpose of obtaining money.-(Repealed by Acts 1943, p. 495.)
Editorial Note.-The Act of 1943 repealed all the existing laws relating to fraternal benefit societies. See the note at the beginning of Chapter 56-16. For the penal provisions of the Act of 1943, see 56-9928 to 56-9934.

56-9913. Same; false statements as to death, disability, etc.-(Repealed by Acts 1943, p. 495.)
Editorial Note.-See the note to 56-9912.
Cross-reference.-Perjury, see 26-4001, 26-4002.

56-9914. Same; soliciting membership in society not licensed or au thorized to do business in State.-(Repealed by Acts 1943, p. 495.)
Editorial Note.-8ee the note to 56-9912.

179

CRIMES

56-9921

56-9915. Same; punishment for violation of law where not fixed by preceding sections.-(Repealed by Acts 1943, p. 495.)
Editorial Note.-8ee the note to 66-9912.
56-9916. Fraudulent insurance claims.-Any person who shall knowingly or wilfully make, or aid in the making of, any false or fraudulent statement or representation of any material fact or thing in any written statement or certificate, for the purpose of procuring or attempting to procure the payment of any false or fraudulent claim against any industrial, health, life or accident insurance company, or fraternal or benefit association licensed, or which may be licensed, to do business in this State, and any person who shall make any false or fraudulent statement in any application for insurance, or as to the death or disability of a policy or certificate holder in any such industrial, health, life or accident insurance company, or fraternal or benefit association, for the purpose of fraudulently obtaining any money or benefit from any such insurance company, or from any fraternal or benefit association licensed or which may be licensed, to do business, shall be guilty of a misdemeanor. (Acts 1921, pp. 250, 251.)
56-9917. (629 P. C.) Acting for fraternal beneficiary order prohibited from doing business.-(Repealed by Acts 1943, p. 495.)
Editorial Note.-See the note to 66-9912.
56-9918. (630 P. C.) Acting for fraternal beneficiary order not complying with law.-(Repealed by Acts 1943, p. 495.)
Editorial ote.-See the note to 66-9912.
56-9919. Acting as agent for unlicensed insurance or bonding company.-It shall be deemed a misdemeanor for any person to act as agent for any fire or casualty insurance company or fidelity or surety bonding company without such person having first received a license as provided in Chapter 56-5. (Acts 1935, p. 144.)
Cross-reference.-Penalty for insurance or bonding company doing business without license, see 66-628; violations as to agents of life, health, and accident insurance companies, see 66-9936.
56-9920. Insurer's contract as to funeral, prohibition of.-It shall be unlawful for any life insurance company, fraternal benefit society, or other similar company, association, or society issuing insurance policies, contracts, or certificates upon the lives of citizens of this State, to designate in said policy, contract, or certificate, or otherwise, the person, firm, or corporation to conduct the funeral of the insured or to organize, promote or operate any entel-prise or plan, or to enter into any contract with such insured or with any other person, which plan or contract tends to limit or restrict the freedom of choice in the open market of the person or persons having the legal right of such choice regarding contracts, purchases and arrangements with reference to any part of a funeral ~ervice for such insured. (Acts 1935, p. 392.)
Cross-reference.-Penalty for violation, see 66-9926.
Cited. 182/60 (184 S. E. 8786).
56-9921. Insurance to be payable only in legal tender.-It shall be unlawful for any life insurance company, fraternal benefit society, or similar company, associations, or society issuing life insurance policies, contracts, or certificates upon the lives of citizens of this State, to provide therein that the face amount thereof, or any loss or indemnity,

569922

CRIMES

180

which may accrue thereunder, shall be pay,able in any thing other than legal tender of the United States and of this State to the beneficiary named therein or the legal representative of such insured; and any provision to the contrary shall be null and void. (Acts 1935, p. 392.)
Cross-reference.-Penalty for violation, see 56-9925.
56-9922. Insurer's contract with undertaker unlawful.-It shall be unlawful for any life insurance company, fraternal benefit society association, or similar company; or any person, firm or corporation en~ gaged in writing any type of life insurance, by whatever term described, upon the lives of citizens of this State, to enter into any contract with any funeral director, or undertaker, providing that such funeral director, or undertaker, shall conduct the funeral of members insured by such insurance company, fraternal benefit society, or simi. l~r company. (Acts 1935, p. 392.)
Cross-reference.-Penalty for violation, see 56-9925.
56-9923. Insurer's contracts as to funeral merchandise or services.It shall be unlawful for any life insurance company, fraternal benefit society, or similar company, or association, engaged in writing any type of life insurance by whatever name called, upon the lives of citi zens of this State, to enter any contract with any citizen of this State, contracting and agreeing to furnish funeral merchandise or services upon the death of any person insured. (Acts 1935, p. 392.)
Cross-reference.-Penalty for violation, see 56-9925.
56-9924. Revocation of license for violation of four preceding sections.-The violation of any provision of sections 56-9920 to 56-9923, inclusive, by any such life insurance company, fraternal benefit society, association, or similar company or any agent thereof, shall be grounds for the revocation by the Insurance Commissioner of this State of the license granted to said company, association, or society, or to said agent. (Acts 1935, p. 392.)
Cross-reference.-Penalty for violation, see 56-9925.
56-9925. Violation of sections 56-9920 to 56-9923 a misdemeanor.Any person, firm or corporation violating any of the provisions of sections 56-9920 to 56-9923, inclusive, shall be deemed guilty of a misdemeanor and shall, upon conviction thereof, be punished as for a misdemeanor. (Acts 1935, p. 392.)
56-9926. Issuing life insurance contracts without complying with law.-Any person, firm, or corporation who shall write or issue contracts of insurance, as defined by section 56-901, before complying with the laws of Georgia regulating life insurance companies, or before obtaining a license from the Insurance Commissioner of Georgia, shall be guilty of a misdemeanor, and on conviction shall be punished as pl'Ovided by law. (Acts 1937, pp. 702, 703.)
56-9927. Violation of section 56-1313 concerning industrial life insurance.-Any company, representative, or solicitor therefor who shall write, offer to the public, or deliver to any insured any policy or contract of insurance, which in form or legal effect is contrary to or in violation of the terms of section 56-1313, with respect to cash surrender value, extended insurance or other benefits in case of lapsed industrial life insurance policies, shall be guilty of a misdemeanor and upon

181

eRl iES

56-9931

conviction in any court of competent jurisdiction of this State shall be punished as provided in section 27-2506. (Acts 1937-38, Extra. Sess., pp. 338, 340.)
Cross-reference.-Revocation of license to do business in event of violation of 56-1313, see 56-1314.
56-9928. Fraternal benefit societies; violation of section 56-1611, relating to benefit certificates in c1asses.-Any officer of any fraternal benefit society or order violating the provisions of section 56-1611, relating to benefit certificates in classes, shall be guilty of a misdemeanor and upon conviction thereof shall be punished as provided in section 27-2506. (Acts 1943, pp. 495, 504, 506.)
Editorial ote.-Chapter 56-16 is based on Acts 1943, p. 495 et seq., and generally regulates fraternal benefit societies.
56-9929. Same; violation of section 56-1643, relating to misrepresentations, misleading statements, and incomplete comparisons.-Any representative of a fraternal benefit society, and any other person, finn, association or corporation who or which, shall violate any of the provisions of section 56-1643, relating to misrepres'entations, misleading statements and incomplete comparisons, or who, or which, shall knowingly receive any compensation or commission by or in consequence of such violation, shall be guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine of not less than '$100, nor more than $500, or by imprisonment in the county jail for not less than 30 days, nor more than one year, or both, in the discretion of the court. (Acts 1943, pp. 495, 529, 530.)
56-9930. Same; acting for society enjoined from doing business.Any officer, or person acting for any society, or subordinate body thereof, in this State, while such society shall be so enjoined or prohibited from doing business pursuant to Chapter 56-16 as is provided in section 56-1644, shall be deemed guilty of a misdemeanor, and on conviction thereof shall be punished by a fine of not less than $50, nor more than $200, or by imprisonment in the county jail for not less than 30 days, nor more than one year, or by both such fine and imprisonment in the discretion of the court. (Acts 1943, pp. 495, 532, 533.)
56-9931. Same; fraudulent representations with reference to applications for membership or for purpose of obtaining money.-Any person, officer, member or examining physician of any society authorized to do business under Chapter 56-16, who shall knowingly or wilfully make any false or fraudulent statement or representation in or with reference to any application for membership, or for the purpose of obtaining money from, or benefit in, any society transacting business under said Chapter, shall be guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine of not less than $100, nor more than $500, or by imprisonment in the county jail for not less than 30 days, nor more than one year, or both, in the discretion of the court. (Acts 1943, pp. 495, 531.)
56-9932. Same; false sworn statements as to death, disability, etc., punishable as perjury.-Any person who shall wilfully make a false statement of any material fact or thing in a sworn statement as to the death or disability of a certificate holder in any such society for the purpose of procuring payment of a benefit named in the certificate of

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182

such holder, and any person who shall wilfully make any false statement in any verified report or declaration under oath required or authorized by Chapter 56-16 shall be guilty of perjury, and shall be proceeded against and punished as provided by the statutes of this State in relation to the crime of perjury. (Acts 1943, pp. 495, 531.)
Cross-references.-Perjury, see 26-4001, 26-4002.

56-9933. Same; soliciting membership in society not authorized to do business of this State.-Any person who shall solicit membership for or in any manner assist in procuring membership in, any fraternai benefit society not licensed to do business in this State, or who shall solicit membership for, or in any manner assist in procuring membership in any such society not authorized, as herein provided, to do business as herein defined, in this State, shall be guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine of not less than $50, nor more than $200. (Acts 1943, pp. 495, 531, 532.)

56-9934. Same; punishment for violations of law not fixed by sections 56-9931 to 56-9933.-Any society, or any officer, or employee thereof, neglecting or refusing to comply with, or violating any of, the provisions of Chapter 56-16 the penalty for which neglect, refusal or violation is not specified in sections 56-9931 to 56-9933, shall be fined not exceeding $200 upon conviction thereof. (Acts 1943, pp. 495, 531, 532.)
Editorial Note.-See Editorial Note following 56-9928.

56-9935. Violations of Chapter 56-5B as to licensing of agents of life, health and accident insurance companies.-Any person who shall violate any of the provisions of Chapter 56-5B, providing for the licensing of agents of life, health, and accident insurance companies, shall be deemed guilty of a misdemeanor, and shall, upon conviction thereof, be punished as for a misdemeanor, and the Commissioner shall revoke the license of any such person who shall be an agent. (Acts 1953, pp. 497, 512.)

INSURRECTION: See Title 26, Crimes and Punishment, Chapter 26-9; Title

86, Public Defense, Chapter 86-13.



Section 56-929. No policy of group life insurance may be deliv-
ered in this State to an employer, or to a labor union, or to the trus-
tees of a fund established in whole or in part by an employer or a labor union, which provides term insurance on any person which to-
gether with any other term insurance under any group life insurance policy or policies issued to the employer or employers of such per-
son or to a labor union or labor unions of which such person is a member or to the trustees of a fund or funds established in whole or in part by such employer or employers or such labor union or
labor unions, exceeds $20,000, unless 150 % of the annual com-
pensation of such person from his employer or employers exceeds $20,000, in which event all such term insurance shall not exceed $40,000 or 150 % of such annual compensation whichever is the lesser, except that a group policy which is issued by the same or another carrier to replace another group policy may provide term insurance not to exceed the amounts provided by the poilcy which it replaces, or the amounts provided above, whichever are greater.

APPENDIX

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184

APPENDIX

CONSTITUTIONAL PROVISIONS PERTAINING TO INSURANCE COMPANIES

Sec. 2-2901.
2-2902.
2-2903.

Nonresident insurance companies.
License by Comptroller Gen-
eral. Resident insurance companies;
guarantee fund.

Sec. 2-2904.
2-2905.

General Assembly to enact laws for people's protection, etc.
Reports by insurance companies.

2-2901. (6457) Paragraph I. Nonresident insurance companies.AlIllie insurance companies now doing business in this State, or which may desire to establish agencies and do business in the State of Georgia, chartered by other States of the Union, or foreign States, shall show that they have deposited with the Comptroller General of the State in which they are chartered, or of this State, the Insurance Commissioner, or such other officer as may be authorized to receive it, not less than one hundred thousand dollars, in such securities as may be deemed by such officer equivalent to cash, subject to his order, as a guarantee fund for the security of policy-holders.
Cross-references.-Deposits of life and accident insurance companies of other States, see 56-316. Fire, marine, life and casualty insurance companies, see 56-301.

2-2902. (6458) Paragraph II. License by Comptroller General.When such showing is made to the Comptroller General of the State of Georgia by a proper certificate from the State officials having charge of the funds so deposited, the Comptroller General of the
State of Geol'gia is authorized to issue to the company making such showing, a license to do business in the State, upon paying the fees required by law.

2-2903. (6459) Paragraph III. Resident insurance companies; guarantee fund.-All life insurance companies chartered by the State of Georgia, or which may hereafter be chartered by the State, shall, before doing business, deposit with the Comptroller General of the State of Georgia, or with some strong corporation, which may be approved by said Comptroller General, one hundred thousand dollars, in such securities as may be deemed by him equivalent to cash, to be subject to his order, as a guarantee fund for the security of the policyholders of the company making such deposit, all interest and dividends from such securities to be paid, when due, to the company so depositing. Any such securities as may be needed or desired by the company may be taken from said department at any time by replacing them with other securities equally acceptable to the Comptroller General, whose certificate for the same shall be furnished to the company.
Cross-references.-Filing financial statement before issuance of license, see 56-402, 56-403. Changes of securities deposited, see 56-309.

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2-2904. (6460) Paragraph IV. General Assembly to enact laws for people's protection, etc.-The General Assembly shall, from time to time enact laws to compel all fire insurance companies, doing business in this State, whether chartered by this State, or otherwise, to deposit reasonable securities with the Treasurer of this State, to secure the people against loss by the operations of said companies.

2-2905. (6461) Paragraph V. Reports by insurance companies. -The General Assembly shall compel all insurance companies in this State, or doing business therein, under proper penalties, to make annual reports to the Comptroller General, and print the same at their own expense, for the information and protection of the people.
Cross-references.-Reports by insurance companies, see 56-232, 56-402, 56-403. Investigations by Insurance Commissioner, see 56-105.
Editorial Note.-The Constitution of 1945 substituted "annual" for "semiannual" in the third line.

SECURITIES ELIGIBLE FOR DEPOSIT WITH STATE TREASURER AND INVESTMENT BY INSURANCE COMPANIES
16-437. Shares of associations as investment of trust funds.Shares of a State chartered building and loan association, as defined in section 16-402, and of a Federal savings and loan association shall be legal investments up to $10,000, or such other amount as may be from time to time fixed by Federal laws or regulations as the maximum amount insurable by the Federal Savings and Loan Insurance Corporation, in each institution for the funds of administrators, executors, guardians, trustees, and other fiduciaries of every kind and nature, and for the funds of all insurance companies, credit unions, fraternal benefit societies, and other building and loan and savings and loan associations, provided the institution in whose shares the funds are invested is insured by Federal Savings and Loan Insurance Corporation pursuant to the provisions of Title IV of the National Housing Act of the Congress of the United States, as now or hereafter amended. (Acts 1937-38, Ex. Sess., p. 322; 1951, pp. 756, 757.)
16-438. Shares as deposit by insurance companies.-Such insured shares referred to in section 16-437 shall be deemed to be securities equivalent to cash, and the TJ:easurer of this State shall accept as a deposit either in whole or in part such insured shares from any insurance company required by law to make deposits of any kind or character with the Treasurer of this State. (Acts 1937-38, Ex. Sess., pp. 322, 323.)
32-120a. Bonds of University System Building Authority as legal investment; security for deposit.-The bonds herein authorized are hereby made securities in which all public officers and bodies of this State and all municipalities and all municipal subdivisions, all insurance companies and associations and other persons carrying on an insuTance business, all banks, bankers, trust companies, savings banks and savings associations, including savings and loan associations, building and loan associations, investment companies and other persons carrying on a banking business, all administrators, guardians, executors, trustees and other fiduciaries and all other persons what-

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186

soever who are now or may hereafter be authorized to invest in bonds or other obligations of the State may properly and legally invest funds including capital in their control or belonging to them. The bonds are also hereby made securities which may be deposited with and shall be received by all public officers and bodies of this State and all municipalities and municipal subdivisions for any purpose for which the deposit of the bonds or other obligations of this State is now or may hereafter be authorized. (Acts 1949, pp. 1009, 1020.)
32-1420a. Bonds of State School Building Authority as legal investment; security for deposit.-The bonds herein authorized are hereby made securities in which all public officers and bodies of this State and all municipalities and all municipal subdivisions, all insurance companies and associations and other persons carrying on an insurance business, all banks, bankers, trust companies, savings banks and savings associations, including savings and loan associations, building and loan associations, investment companies and other persons carrying on a banking business, all administrators, guardians, executors, trustees and other fiduciaries and all other persons whatsoever who are now or may hereafter be authorized to invest in bonds or other obligations of the State may properly and legally invest funds including capital in their control or belonging to them. The bonds are also hereby made securities which may be deposited with and shall be received by all public officers and bodies of this State and all municipalities and municipal subdivisions for any purpose for which the deposit of the bonds or other obligations of this State is now or may hereafter be authorized. (Acts 1951, pp. 241, 257.)
98-216. Bonds of State Ports Authority as legal investments for trustees and as lawful deposits of securities of public officers.-The bonds are hereby made securities in which all public officers and bodies of this State and all municipalities and all municipal subdivisions, all insurance companies and associations and other persons carrying on an insurance business, all banks, bankers, trust companies, savings banks and savings associations including savings and loan associations, building and loan associations, investment companies and other persons carrying on a banking business, all administrators, guardians, executors, trustees and other fiduciaries and all other persons whatsoever who are now or may hereafter be authorized to invest in bonds or other obligations of the State may properly and legally invest funds including capital in their .control or belonging to them. The bonds are also hereby made securities which may be deposited with and shall be received by all public officers and bodies of this State and all municipalities and municipal subdivisions for any purpose for which the deposit of the bonds or other obligations of this State is now or may hereafter be authorized. (Acts 1945, pp. 464, 477.)
99-1136. Bonds of Housing Authorities as legal investments.Notwithstanding any restrictions on investments contained in any laws of this State, the state and all public officers, municipal corporations, political subdivisions, and public bodies, all banks, bankers, trust companies, savings banks and institutions, building and loan associations, savings and loan associations, investment companies, and other persons carrying on a banking business, all insurance companies, insurance associations, and other persons carrying on an

187

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insurance business and all executors, administrators, guardians, trustees and other fiduciaries may legally invest any sinking funds, moneys or other funds belonging to them or within their control in any bonds or other obligations issued by a housing authority pursuant to this Chapter, or issued by any public housing authority or agency in the United States, when such bonds or other obligations are secured by a pledge of annual contributions to be paid by the United States Government or any agency thereof, and such bonds and other obligations shall be authorized security f01' all public deposits; it being the purpose of this section to authorize any persons, firms, corporations, associations, political subdivisions, bodies and officers, public or private, to use any funds owned or controlled by them, including (but not limited to) sinking, insurance, investment, retirement, compensation, pension and trust funds, and funds held on deposit, fOl' the purchase of any such bonds or other obligations: Provided, however, that nothing contained in this section shall be construed as relieving any person, firm, or corporation from any duty of exercising reasonable care in selecting securities.
Notwithstanding any other evidence of legislative intent, it is hereby declared to be the controlling legislative intent, that if any provision of this section, or the application thereof to any person or circumstances is held invalid, the remainder of the section and the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby. In so far as the provisions of this section are inconsistent with the provisions of any other law, the provisions of this section shall be controlling. (Acts 1939, p. 122.)
99-1420. Bonds of State Hospital Authority as legal investments. -The bonds are hereby made securities in which all public officers and bodies of this State and all municipalities and all municipal subdivisions, all insurance companies and associations and other persons carrying on an insurance business, all banks, bankers, trust companies, savings banks and savings associations, including savings and loan associations, building and loan associations, investment companies and other persons carrying on a banking business, all administrators, guardians, executors, trustees and other fiduciaries and all other persons whatsoever who are now or may hereafter be authorized to invest in bonds or other obligations of the State may properly an9 legally invest funds including capital in their control or belonging to them, The bonds are also hereby made securities which may be deposited with and shall be received by all public officers and bodies of this State and all municipalities and municipal subdivisions for any purpose for which the deposit of the bonds or other obligations of this State is now or may hereafter be authorized. (Acts 1939, pp. 144, 157.)

SCHOOL BUS INSURANCE
32-429. Liability insurance on school buses; requirement; amount. -The various school boards of the counties, cities and independent school systems employing school buses, are hereby authorized and required to cause policies of insurance to be issued insuring the school children riding therein to and from school against bodily injury or death at any time therefrom resulting from an accident or collision

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188

in which said buses are involved. The amount of such insurance shall be within the discretion of the respective boards. (Acts 1949, p. 1155.)

32-430. Same; premiums.-Where a bus is owned by the school board, the board shall pay the premium for such insurance. Where the bus is not owned by the board, the premium shall be paid by the owner. (Acts 1949, p. 1155.)
32-431. Same; insurance covering general public-; liability of school boards.-Such boards are hereby authorized to cause a provision to be inserted in said policies insuring the members of the general public against personal injury or death or damage to property resulting from the negligent operation of said buses. Nothing, however, in this law shall be construed as imposing legal liability upon such boards on account of such accidents. Wherever an insurance company issues a policy containing such a provision, the company shall be estopped to deny its liability thereunder on account of the nonliability of said board. (Acts 1949, pp. 1155, 1156.)

32-432. Same; nonassessment by mutual companies as to further premiums.-Any policy authorized by this law (Sections 32-429 to 32-433), when issued by a mutual insurance company shall be nonassessable as to fUl'ther premiums, and the policy shall so state. (Acts 1949, pp. 1155, 1156.)
32-433. Same; custody of policies.-Such policies shall be filed with and l'etained by the respective school boards for the benefit of the school children patronizing such buses and for the genel'al public. (Acts 1949, pp. 1155, 1156.)

SERVICE UPON NONRESIDENT MOTOR COMMON CARRIER
68-618. Service of process upon nonresident carrier. Venue.Every nonresident person and every foreign corporation being a motor common carrier shall, before any certificate is issued to him or it under this Chapter, designate and maintain in this State an agent or agents upon whom service of process or notice may be made, and who shall have power to accept or acknowledge service or notice in behalf of such nonresident person or foreign corporation, and such service or notice shall have the same effect as if made personally upon such nonresident or such foreign corporation, such designation to be in writing, giving the name and address of such agent or agents, and to be filed in the office of the Comptroller General. Upon failure of any motor common carrier who is a nonresident person or a foreign corporation to file said designation of agent as aforesaid or to maintain in this State, at the address given, such agent, such motor common carrier shall be conclusively deemed to have designated the Comptroller General and his successors in office as such agent; and service of process or notice upon or acceptance or acknowledgment of service thereof by the Comptroller General shall have the same effect as if personally made upon such motor common carrier. Action against motor common carriers, except in those cases where the Constitution otherwise provides, may be brought and maintained in any county or militia district where the action could be brought if the defendant were a railroad company being sued upon a like cause

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of action; and if the defendant or defendants or any of them shall not be found for service in the county or militia district, as the case may be, where the action is brought, second original or originals may issue and service be made in any other county where the service can be made upon the defendant or defendants or his, its, or their agents. This provision of this section shall apply to motor common carriers, whether engaged in interstate commerce or not. (Acts 1931, pp. 199, 205.)

TAXATION OF INSURANCE COMPANIES, AGENTS AND ADJUSTERS

Sec. 92-2501.
92-2502.
92-2503.
92-2504. 92-2505. 92-2506. 92-2507.

Local life, fire, marine, accident, indemnity, fidelity, etc., insurance agents.
Local assessment, industrial, live-stock, or cooperative insurance agents.
Traveling, special, or general life, fire, marine, accident, indemnity, fidelity, etc., insurance agents or managers.
Traveling, etc., agents of assessment, etc., companies.
Insurance adjustment bureaus.
Insurance adjusters. License tax payable in ad-
vance.

Sec. 92-2508. Railroad ticket agents selling
accident insurance excepted. 92-2509. Insurance premiums. 92-2509.1. Same; inclusion of annuity
considerations; exemption of farmers' mutual companies. 92-2509.2. Time of payment of tax on insurance premiums. 92-2503.3. Effect of partial invalidity of
law relating to insurance premium tax.
92-2510. Same; reduction of tax. 92-2511. Returns of insurance com-
panies. 92-2512. Title insurance companies.

92-2501. Local life, fire, marine, accident, indemnity, fidelity, etc., insurance agents.-(Repealed by Acts 1950, pp. 122, 124.)

922502. . Local assessment, industrial, livestock, or cooperative insurance aJgents.-(Repealed by Acts 1950, pp. 122, 125.)

92-2503. Traveling, special, or general life, fire, marine, accident, indemnity, fidelity, etc., agents or managers.-(Repealed by Acts 1950, pp. 122, 125.)

922504. Traveling, etc., agents of assessment, etc., companies.(Repealed by Acts 1950, pp. 122, 125.)

92-2505. Insurance adjustment bureaus.-All adjustment bureaus employing adjusters shall pay a tax of $50 for each person who adjusts any loss, to the Insurance Commissioner, whose receipt shall authorize the person named therein to go into any county in the State. (Acts 1927, p. 75; 1935, p. 38.)

92-2506. Insurance adjusters.-Each and every person not connected with an adjustment bureau, who adjusts insurance losses, shall pay $50 to the Insurance Commissioner, whose receipt shall authorize the person named therein to go into any county in the State: Provided, that this tax shall not apply to local insurance agents who adjust losses without remuneration. (Acts 1927, p. 75; 1935, p. 38.)

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190

922507. License tax payable in advance.-The occupation taxes imposed by the preceding sections of this Chapter shall be paid in advance to the Insurance Commissioner, for the fiscal year for which they are levied, before the agents shall be authorized to act for any insurance company. (Acts 1927, p. 75; 1935, p. 38.)

922508. Railroad ticket agents selling accident insurance excepted. -Railroad ticket agents selling accident insurance shall not be
deemed insurance agents within the meaning of this law. (Acts 1927, p. 75; 1935, p. 38.)

92-2509. Insurance premiums.-(Repealed by Acts 1945, pp. 419, 421.)
Cross-references.-See 92-2509.1 and editorial note following. Cooperative insurance exchanges, see 56-1810.

92-2509.1. Same; inclusion of annuity considerations; exemption of farmers' mutual companies.-All foreign and domestic insurance companies doing business in this State shall pay a tax of two per cent, upon gross direct premiums received by them upon persons, property or risks in Georgia from January 1, to December 31, both inclusive, of each year, without l-egard to business ceded to or assumed from other companies, with no deductions for dividends whether returned in cash or allowed in payment or reduction of premiums, or for additional insurance; nor shall any deductions be allowed for premium abatements of any kind or character or for reinsurance or for cash surrender values paid, or for losses or expenses of any kind, said tax being imposed upon gross premiums received from' direct writings, without any deductions whatever except for premiums retumed on change of rate or cancelled policies. The term "gross direct premiums" shall include annuity considerations: Provided that local organizations known as "farmers' mutual insurance companies" operating in not more than four counties in a division shall not be subject to this tax. (Acts 1945, pp. 419, 420.)
Editorial ote.-The section of the Act of 1945 from which this section is codified makes the section applicable to premiums received on and after January 1, 1945; and 3 of the Act provides that upon premiums received prior to that date taxes shall be collected at the rate specified in 92-2509.

92-2509.2. Time of payment of tax on insurance premiums.-The annual premium taxes required by section 92-2509.1 of all foreign and domestic insurance companies doing business in this State upon gross direct premiums received by them upon persons, property or risks in Georgia shall be paid to the Insurance Commissioner of Georgia annually on or before March 1, following the close of the preceding calendar year upon all such premiums collected during that calendar year. (Acts 1945, pp. 419, 421.)

92-2509.3. Effect of partial invalidity of law relating to insurance premium tax.-If any section or provision of this law (Sections 56-315,
92-2509 to 92-2509.3) shall be declared unconstitutional the remain-
ing sections or provisions shall nevertheless remain effective. (Acts 1945, pp. 419, 421.)

922510. Same; reduction of tax.-Whenever any insurance com-

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APPENDIX

pany doing business in this State shall make it appear by proof to the Insurance Commissioner that one-fourth of the total assets, exclusive of government war bonds, which are hereby defined and declared to mean United States Government bonds or United States treasury bonds, or obligations issued on and after December 7, 1941, and prior to the official termination of World War II, are invested in any or all of the following securities, to wit: Bonds of this State or of any county or municipality of this State, properly situated in this State and taxable herein, loans secured by liens on real estate situated in this State, or policy loans on insurance policies issued by such company on lives of persons resident in this State, then the premium tax levied by section 92-2509 shall be abated or reduced to one per centum upon the gross receipts of such company; and if the amounts so invested by any such company shall be as much as three-fourths of the total assets of such company, then said premium tax shall be abated or reduced to one-fourth of one per centum upon such gross receipts of such company. (Acts 1927, p. 94; 1935, p. 61; 1945, pp. 267, 268; 1946, p. 15.)
Editorial Note.-The amending Act of 1945 inserted the words "exclusive of government war bonds", and the Act of 1946 added the definition of government war bonds.
92-2511. Returns of insurance companies.-Every insurance company incorporated under the laws of this State, doing business on the legal reserve plan, shall be required to return for taxation all of its real estate as other real estate is returned. The value of the personal property owned by and taxable against it shall be ascertained in the following manner: From the total value of the assets held by the company, both real and personal, shall be deducted the assessed value of all real estate owned by the company in this State, the nontaxable funds deposited by the company with the State Treasurer. and the amount of reserve or net value of the policies required by law to be held by the company for its policyholders, and which belongs to such policyholders; the remainder shall be the value of the personal property owned by and taxable against such company. (Acts 1927, p. 93; 1935, p. 61.)
92-2512. Title insurance companies.-On or before March first of each year each corporation engaged in the business of title insurance in this State shall pay to the Insurance Commissioner of Georgia as an annual license tax and fee the same percentage of its gross receipts for title insurance premiums on policies covering properties in this State, as are levied upon the gross premium receipts of other insurance companies. Such annual license tax and fee shall be paid on gross premiums received by such company during the preceding calendar year and shall be in lieu of all other licenses, taxes and fees, State and county or municipal, except ad valorem taxes on real and personal property and business licenses to municipalities. (Acts 1939, pp. 276, 379; 1943, pp. 602, 609.)

EXTRACTS FROM MOTOR VEHICLE SAFETY RESPONSIBILITY LAW
92A-617. Assigned risk plans; review of decision of Insurance Commissioner.-After consultation with insurance companies auth-

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192

orized to issue automobile liability policies in this State, the Insurance Commissioner shall approve a reasonable plan or plans for the equitable apportionment among such companies of applicants for such policies and for motor vehicle liability policies who are in good faith entitled to but are unable to procure such policies through ordinary methods. When any such plan has been approved, all such insurance companies shall subscribe thereto and participate therein. Any applicant for any such policy, any person insured under such plan, and any insurance company affected, may appeal to the Insurance Commissioner from any ruling or decision of the manager or committee designated to operate such plan. Any person aggrieved hereunder by any order or act of the Insurance Commissioner may, within 10 days after notice thereof, file a petition in the superior court of the county of his residence for a review thereof. The court shall summarily hear the petition and may make any appropriate order or decree. (Acts 1951, pp. 565, 576.)

92A-621. Insurance for U-Drive-Jt operators.-Any person, firm, corporation or association who rents motor vehicles from a U-Drive-It
owner is hereby required to provide their own insurance or bond and the insurance companies referred to in section 92A-617 shall be required by the Insurance Commissioner to provide "spot" insurance which shall be purchased by said third person, firm, corporation or association before said U-Drive-It owner shall be authorized to turn a motor vehicle over to said person, fiTm, corporation or association:
Provided, however, that in the event said U-Drive-It owner turns over any motor vehicle to said person, firm, corporation or association without first ascertaining that such "spot" insurance has been obtained, then said U-Drive-It owner shall not be exempted from the provisions
of this Chapter as provided in section 92A-615, as to that particular rental transaction. (Acts 1951, pp. 565, 578.)

HOSPITAL SERVICE NON-PROFIT CORPORATIONS

Sec. 99-1001. Incorporation. 99-1002. Application for membership. 99-1003. Corporations not insurance
companies; no bond or deposit required. 99-1004. Corporations to be non-profit organizations. 99-1005. Authority of corporations to contract. 99-1006. Extension of service. 99-1007. Limitation upon authority to contract and operate. 99-1008. Provision against attempting to control relations between patient and physician. 99-1009. Personnel of directors. 99-1010. Supervision of rates by Insurance Commissioner.

Sec. 99-1011. 99-1012. 99-1013.
99-1014. 99-1015. 99-1016.
99-1017.
99-1018.
99-1019.
99-1020. 99-1021.

Approval of rates. Membership certificates. Bond of treasurer; deposit of
funds. Finance procedure. Investments. Reports to Insurance Com-
missioner. Examination of books and
records. Definition as charitable and
benevolent institutions. Expense of examination and
supervision. Dissolution. Chapter to govern pre-exist-
ing nonprofit hospital service corporations.

Editorial ote.-This Chapter was codified from Acts 1950, p. 335 et seq. According to 23 of this Act, it specifically repeals the Hospital Service Nonprofit Corporations Act of 1937 (Acts 1937, p. 690 et seq.), formerly codified as
Chapter 99-10.

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99-1001. Incorporation.-Any tlu'ee or more persons upon petition to the superior courts of this State for a corporate charter, as provided in Chapter 22-18, may be incorporated for the purpose of establishing, maintaining and operating a nonprofit hospital service plan whereby hospital care may be provided by said corporation through an established licensed hospital or license hospitals with which it has contracted for such care, as is hereinafter defined. (Acts 1950, pp. 335, 336.)
99-1002. Application for membership.-Such corporations when organized shall be authorized to accept applicants, who may become members of said corporations furnishing group hospital service under a contract, which shall entitle each member to such hospital care for such period of time as is provided therein. (Acts 1950, pp. 335, 336.)
991003. Corporations not insurance companies; no bond or deposit required.-Such corporations shall be governed by this Chapter and shall not be construed as being engaged in the business of insurance under the laws of this State. Such corporations organized and operated under the provisions of this Chapter shall not be required by any department of this State to post bond, or put up deposits with any depal'tment of this State to begin and/or operate under this Chapter, and the provisions of Chapter 56-3 are hereby declared inapplicable to corporations organized and/or operated under this Chapter. (Acts 1950, pp. 335, 336.)
99-1004. Corporations to be nonprofit organizations.-Such corporations shall be governed and conducted as nonprofit organizations, for the purpose of offering and furnishing hospital service to their members in consideration of the payment by such members of a definite sum for the hospital care so contracted to be furnished. In order to implement the distribution of voluntary health care to the people of this State, such corporations may, at their discretion, act as agent for surgical and/or medical service plans operating in this State, providing that contractual arrangements for such service be first approved by the Insurance Commissioner. The necessary expenses of administering the affairs of said corporations may be paid from the dues or payments collected. (Acts 1950. pp. 335, 337.)

99-1005. Authority of corporations to contract.-Such corporations shall have the authority to contract with hospitals charging for services rendered, in such manner as to assure to each person holding a contract of said corporation the furnishing of such hospital and said member, with the right of said corporation to limit in said contract the type of diseases for which it shall furnish or pay for hospital care in any hospital. Hospitals so conh'acted with shall be known as participating hospitals. (Acts 1950, pp. 335, 337.)
991006. Extension of service.-All membership contracts issued by such cOl'porations shall contain a provision, to be fil'St approved by the Insurance Commissioner, which shall permit the person with whom made, and all persons entitled to hospital service thereunder, the right to receive hospitalization either in ol'dinary or in emergency cases, at any non-participating licensed general medical hospital selected by such person which has been approved according to this Chapter; and such hospital shall be paid by said corporation a charge

APPENDIX

194

or rate for hospital service, not to exceed the rate provided for in contracts of said hospital service corporation for non-participating hospitals. This section shall not restrict the right of such corporations in their discretion, to extend this same rate to persons entitled to ho~ pital service in non-participating hospitals other than general medical hospitals. (Acts 1950, pp. 335, 337.)
99-1007. Limitation upon authority to contract and operate.Said corporations shall have authority to contract with only hospitals licensed by the State Board of Health. (Acts 1950, pp. 335, 337.)

99-1008. Provision against attempting to control relations between patient and physician.-Such corporations shall not control or attempt to control the relationship existing between the member and his physician and shall not restrict the right of the patient to obtain the service of any licensed doctor of medicine; and any hospital which shall contract with such corporation for the furnishing of hospital care, shall accept a member or subscriber of such corporation with the physician of his choice in charge of his treatment at such hospital, provided such acceptance is in conformity with the hospital's regular rules of admission, and further provided that such physician is otherwise acceptable for practice in said hospital. (Acts 1950, pp. 335, 338.)

99-1009. Personnel of directors.-At least a majority of the directors of such corporation must be at all times directors, superintendents, or trustees of hospitals, as herein defined, which have contracted or may contract with such corporation to render its subscribers hos-
pital service. (Acts 1950, pp. 335, 338.)

99-1010. Supervision of rates by Insurance Commissioner.-Such corporations shall before accepting applications for membership in said non-profit hospital service plan, submit to the State Insurance Commissioner a plan of operation and overhead expenses, operation cost, salaries paid or to be paid during any current year, together with a schedule of its rates or dues to be charged and the amount of hospital service contracted to be rendered; which plan, rates and amounts of service shall first be approved by the Insurance Commissioner as
fair and reasonable before said corporations shall engage in business.
(Acts 1950, pp. 335-338.)

99-1011. Approval of rates.-The Insurance Commissioner shall like wise first approve the rates of payment to be made by said corporations to hospitals for the rendering of hospital care to the members of said corporation as being reasonable and just. Said hospitals shall guarantee the benefits of the certificates of membership issued by the corporation in such a way as will be satisfactory to the Insurance Commissioner. (Acts 1950, pp. 335, 338.)

99-1012. Membership certificates.-Every such corporation shall issue to its members certificates of membership which shall set forth the contract between the corporation and the member, and give the name or names and location of hospital or hospitals with which the corporation has contracted for service to its members, and the period of such service; and the rate per day or week payable by said corporation for hospital service rendered to said member at any hospital

195

APPENDIX

other than the hospitals with which said corporation shall be contracted. (Acts 1950, pp. 335, 339.)

99-1013. Bond of treasurer; deposit of funds.-The treasurer of such corporation and other officers and employees who handle its funds shall be required to give a fidelity bond with corporate surety in such sum as may be determined by the officers of said corporation for the faithful handling of the funds of said corporation; and all funds collected from members or subscribers of said corporation shall be deposited to the account of said corporation in a bank which is a State depository. (Acts 1950, pp. 335, 339.)

99-1014. Finance procedure.-Said corporations shall not pay any of the funds collected from members or subscribers to any hospital until after said hospital shall have rendered hospital care to a subscriber or member. (Acts 1950, pp. 335, 339.)

991015. Investments.-The funds of any corporations subject to the provisions of this Chapter shall be invested only in securities permitted by the laws of the State of Georgia for the investment of assets of life insurance companies. (Acts 1950, pp. 335, 339.)

99-1016. Reports to Insurance Commissioner.-Every such corporation shall annually, on or before the first day of March, file in the office of the Insurance Commissioner a statement verified by at least two of the principal officers of said corporations, showing its condition on the 31st day of December, next preceding, which statement shall be in such form and shall contain such matters as the Insurance Commissioner shall prescribe. (Acts 1950, pp. 335, 339.)

99-1017. Examination of books and records.-Every such corporation shall keep complete books and records, showing all funds collected and disbursed, and all books and records shall be subject to examination by the Insurance Commissioner annually, the expense of such examination to be borne by said corporation. (Acts 1950, pp. 335, 339.)
99-1018. Definition as charitable and benevolent institutions.Every corporation subject to the provisions of this Chapter is hereby declared to be a charitable and benevolent institution and shall be exempt from all taxes as such charitable and benevolent institutions are now or may hereafter be exempt from taxes. (Acts 1950, pp. 335, 340.)
991019. Expense of examination and supervision.-Any and all supervision, liquidation or examination of the affairs of any such corporation by the Insurance Commissioner shall be at the expense of such corporation. (Acts 1950, pp. 335, 340.)

99-1020. Dissolution.-Any dissolution or liquidation of any such corporation subject to the provisions of this Chapter shall be undt:!r the supervision of the Insurance Commissioner. In case of dissolution of any corporation formed under the provisions of this Chapter, the claims of membership certificate holders of such corporation shall be given priority over all other claims except cost of liquidation. Next priority shall be given to claims of contracting hospitals for losses or

_ _ _ _ _ _ _ _ _ _ _ _ _--=A.:.p~P:....:E=N.:.:D~I.:..:X

~l9(j

write-offs shown by the corporation's records to have been incurred by said contracting hospitals in furnishing service to membership certificate holders. Any remaining funds may be distributed only in a manner consistent with the purposes of the charter and bylaws of such corporation. (Acts 1950, pp. 335, 340.)
99-1021. Chapter to govern pre-existing nonprofit hospital service corporations.-All corporations organized and operating as nonprofit hospital service corporations in the State of Georgia at the time of the enactment of this Chapter shall be deemed nonprofit hospital service corporations existing and operating under and subject to the provisions of this Chapter. (Acts 1950, pp. 335, 340.)
Editorial Note.-Acts 1950, p. 335 et seq., from which this Chapter was codified was approved February 17, 1950.

NONPROFIT MEDICAL SERVICE CORPORATIONS

Sec.
99-1001a. Declaration of public policy; lib era I construction of Chapter; short title.
99-1002a. Definitions. 99-1003a. Corporations to provide med-
ical service. 99-1004a. Corporations to be nonprofit
organizations; administration expenses. 99-1005a. Incorporation.
99-1006a. Organization; board of directors; qualifications, number, compensation.
99-1007a. Persons authorized to write medical service plan contracts.
99-1008a. Membership in corporation; applications.
99-1009a. Same; limitation of service. 99-1010a. Authority of corporation to
contract. 99-1011a. Same; linlitation upon au-
thority. 99-1012a. Membership certificates; con-
tents, form, substance. 99-1013a. Prohibition against corporate
practice of medicine. 99-1014a. All licensed doctors may par-
ticipate in corporation. 99-1015a. Acquisition and administra-
tive expenses. 99-1016a. Bond of treasurer.

99-1017a. Investments. 99-1018a. Reserves to be maintained
for unearned subscription fees, etc.; rate annually. 99-1019a. Funds collected not payable to physicians until services performed. 99-1020a. Corporations regulated by Ins u ran ce Commissioner; bond or deposit not required. 99-1021a. Supervision of rates. 99-1022a. Approval of rates. 99-1023a. Certificate of authorization; application, contents. 99-1024a. Same; when issued. 99-1025a. Examination of books and records; expense of examination. 99-1026a. Annual report to Insuranc~ Commissioner. 99-1027a. Certificate of authorization; annual renewal, revocation; notice of hearing.
99-1028a. Soliciting agents; improperly solicited subscription certificates.
99-1029a. Review of disputes.
99-1030a. Definition as charitable and benevolent institutions.
99-1031a. Dissolution.

99-1001a. Declaration of public policy; liberal construction of Chapter; short title.-(a) It is declared to be the public policy of this State to conserve its human resources by making available to all its citizens medical and surgical care in keeping with modern scientific practices in the field of medicine, and to this end this law is enacted.
(b) This Chapter shall be construed liberally to promote its humanitarian purposes.
(c) This Chapter may be cited as "Nonprofit Medical Service Act of 1950." (Acts 1950, p. 266.)

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99-1002a. Definitions.-As used in this Chapter, the following terms have the meanings respectively assigned to them unless the context otherwise plainly requires:
(a) "Medical service corporation" means a corporation organized without capital stock and not for profit, and incorporated in accordance with section 99-1005a, specifically for the purpose of establishing, maintaining and operating a nonprofit medical service plan.
(b) "Medical service plan" means a plan or arrangement under which medical services are or may be rendered to a subscriber, a covered dependent or other beneficiary by a licensed physician and surgeon at the expense of a medical service corporation, as defined herein, in consideration of periodical payments made by the subscriber or another in his behalf prior to the occurrence of the condition calling for the rendition of medical or surgical services.
(c) "Medical services" means the general and usual services and care rendered and administered by doctors of medicine. It shall not include hospital service.
(d) "Subscriber" and "member" mean a person to whom a subscription certificate is issued by a medical service corporation which sets forth the kinds and extent of the medical services for which the corporation is liable to make payment.
(e) "Beneficiary" and "covered dependent" mean a person designated in the subscription contract, or application therefor, as entitled to the medical services referred to in subsection (d) of this section, with respect to whom appropriate dues are specified in writing between the corporation and the member holding such certificate.
(f) "Participating physician" means a doctor of medicine licensed to practice medicine and surgery in this State who agrees, in writing, with a medical service corporation to perform the medical services specified in the subscription certificates issued by the corporation, and at such rates of compensation as shall be determined by the board of directors of the corporation, and who agrees to abide by the bylaws, rules and regulations of the corporation applicable to participating physicians.
(g) "Commissioner" means the Insurance Commissioner of the State of Georgia.
(h) "Person" includes a natural person, a copartnership, an association, a common law trust or a corporation.
(i) The personal pronoun as used in this Chapter, except where otherwise clearly indicated, shall import masculine, feminine or neuter gender. (Acts 1950, pp. 266, 267.)

99-1003a. Corporations to provide medical service.-Corporations contemplated by this Chapter may be incorporated for the purpose of
establishing, maintaining, and operating a nonprofit medical service
plan under which medical or surgical care, or both, may be rendered by licensed doctors of medicine with whom any such corporation has contracted for such medical or surgical care, as herein defined. (Acts 1950, pp. 266, 268.)

APPENDIX

198

99-1004a. Corporations to be nonprofit organizations; administration expenses.--Such corporations shall be governed and conducted as nonprofiit organizations for the sole purpose of offering and furnishing a medical service plan or plans to its members, beneficiaries and covered dependents in consideration of the payment by such members or other persons of a definite sum for the medical or surgical care, or both, so contracted to be furnished: Provided, however, the necessary expense of administering the affairs of said corporation may be paid
from the dues or payments collected. (Acts 1950, pp. 266, 268.)

99-1005a. Incorporation.-Corporations contemplated by this Chapter shall be chartered and organized as nonprofit corporations in the manner prescribed by the "Corporation Act of 1938" (Chapter 22-18) and amendments thereto, with such modifications only as are set forth in this Chapter. (Acts 1950, pp. 266, 268.)

991006a. Organization; board of directors; qualifications, number, compensation.-The business of such corporations shall be managed by a board of directors of three or more persons, the majority of whom, at all times, shall be licensed doctors of medicine, and elected by the members and for such terms as may be provided by the bylaws: Provided, however, of such corporations shall operate in as many as six counties of this State, its board of directors shall consist of not less than five persons, and, if such corporations shall operate in as many as 15 or more counties of this State, its board of directors shall consist of not less than seven persons. The medical members of the board shall be nominated by the medical societies in the county or counties in which the corporation shall operate and the other members of the board shall be representative of the subscribers of the areas involved and shall be nominated by the members of the corporation, and all members of the board shall be elected by the members of the corporation as herein provided. Directors shall serve without pay for their work in this capacity; however, they may receive pay for particular services actually rendered, such as legal counsel, medical or surgical service, accounting or other required services, upon specific approval of the board of directors, such approval being made a part of the minutes of the board of directors, except a director shall have
no vote in any matter in which he has a financial interest. (Acts 1950, pp. 266, 269.)

99-1007a. Persons authorized to write medical service plan contracts.-It shall be unlawful for any person except a medical service corporation (incorporated in accordance with the provisions of this Chapter and operating in accordance with authority from the Commissioner) to establish, maintain, or operate a medical service plan, or to solicit subscribers to or enter into contracts with respect to a medical service plan: Provided, such corporations, with the approval of the Commissioner, may enter into an agency contract with any licensed nonprofit hospital service corporation: and, Provided further, nothing in this Chapter shall be construed as preventing a person from furnishing medical services for the prevention of disease among his employees or from furnishing such medical services as are required under the workmen's compensation or other laws of this State, or as preventing any duly licensed insurance company from writing medical indemnity insurance. (Acts 1950, pp. 266, 269.)

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ApPENDIX

99-1008a. Membership in corporation; applications.-Corporations when organized shall be authorized to accept applicants individually or in groups who may become members of said corporation furnishing medical or surgical care, or both, under a contract which shall entitle each member, beneficiary, and covered dependent to such medical or surgical care, or both, for such period of time as is provided therein; and such corporations shall be governed by this Chapter and shall not be construed as being engaged in the insurance business under the
laws of this State. (Acts 1950, pp. 266, 270.)

99-1009a. Same; limitation of service.-Each corporation shall be authorized to accept applications for membership and to issue contracts only to persons residing in counties in which the medical service plan of such corporation shall have been approved by the county medical society of such county. In the event there is no medical society in the particular county concerned, approval by the medical society in an adjoining county WIll be considered sufficient. (Act 1950, pp. 266, 270.)
99-1010a. Authority of corporations to contract.-Corporations shall have the authority to contract with physicians, for payment of services rendered, in such manner as to assure to each person holding a contract of said corporation the furnishing of such medical or surgical care, or both, as may be agreed upon in the contract of said corporation, with the right of said corporation to limit in said contract the types of diseases and conditions for which it shall furnish medical or surgical care, or both. (Acts 1950, pp. 266, 270.)

991011a. Same; limitation upon authority.-Corporations shall have authority to contract with only licensed doctors of medicine: Provided, however, that all contracts issued by such corporations to members shall contain a provision, to be first approved by the Insurance Commissioner, which shall permit the persons with whom made, and all persons entitled to medical service thereunder, the right to receive such service, either in ordinary or emergency cases, from any licensed doctor of medicine selected by such person, and that such doctor of medicine will be paid by such corporation an amount provided for in the contract of such corporation for nonparticipating licensed doctors of medicine. (Acts 1950, pp. 266, 270.)

991012a. Membership certificates; contents, form, substance.-
Every such corporation shall issue to its members certificates of
membership, which shall set forth the contract between the corporation and the member, and specify how the holder of such contract may
obtain the name or names and addresses of the physicians upon whom
the member shall have the right to call for medical or surgical care, or both, and the nature of such services. Such certificate shall be consistent with this Chapter and tIie purposes thereof. It shall contain no unnecessary or rigid restriction, limitation or exclusion. It shall be prepared with the greatest possible degree of clearness, and in such a way as not to mislead the holder. Its ~orm, size of type, general arrangement, and contents shall be subject to the approval of the
Insurance Commissioner and shall be filed with and approved by him,
before being issued in this State. (Acts 1950, pp. 266, 271.)

APPENDIX

200

99.1013a. Prohibition against corporate practice of medicine._ Such corporations shall have the right to sell contracts providing for the payment of specified charges made by physicians furnishing medicalor surgical care, or both, to the holders of such contracts, their beneficiaries and covered dependents as herein provided for. Such contracts shall not in any manner restrict the right of the holder to obtain the services of any licensed doctor of medicine nor shall such contracts attempt to control the relation existing between any holder or beneficiary of any such contract and his physician. Such corporations shall impose no restriction on the doctors of medicine who treat its subscribers as to the methods of diagnosis or treatment. The private physician-patient relationship shall be maintained, and a subscriber shall at all times have free choice of any doctor of medicine who is a participating physician in the corporation and who agrees to accept a particular beneficiary as a patient.
It is the purpose of this section to make it.clear that the creation of the relationship of patient and physician depends upon the mutual assent of both parties. Contracts issued by the corporation to the subscribers shall not constitute individually or jointly obligations of the participating physician or physicians servicing the plan.
No provision of this Chapter shall be construed as authorizing the corporate practice of medicine; and such corporations shall not practice medicine. No provision of this Chapter shall be construed as authorizing the corporate practice of medicine; and such corporations shall not practice medicine. No physician rendering service or called on to render service to a member, beneficiary, or covered dependent shall be construed to be an agent or employee of such corporation and such corporation shall not be liable for the negligence, misfeasance, malfeasance, nonfeasance or malpractice of any physician rendering medicalor surgical services to any such member, beneficiary or covered dependent. (Acts 1950, pp. 266, 271.)

99-1014a. AU licensed doctors may participate in corporations.Every doctor of medicine licensed to practice in this State and who is
reputable and in good standing, shall have the right to become a participating physician in the corporation operating in the county in
which he resides or practices, for medical or surgical care, or both, as the case may be, under such terms and conditions as are imposed on
other participating physicians under similar circumstances, or as
prescribed in this Chapter and approved by the Commissioner. (Acts 1950, pp. 266, 272.)

99-1015a. Acquisition and administrative expenses.-All acquisition and administrative expenses incurred in connection with such corporations shall at all times be subject to the approval of the Commissioner. The term "administrative expenses" as used in this section shall include all expenditures except payment for subscribers' claims. Claim service expense shall be separately classified and included in administrative expense, unless otherwise ordered by the Commissioner. (Acts 1950, pp. 266, 272.)

99-1016a. Bond of treasurer.-The treasurer of such corporation shall be required to give a fidelity bond with corporate surety in such sum as may be determined by the officers of said corporation and all

201

ApPENDIX

funds collected from the members or subscribers of said corporation shall be deposited to the account of said corporation in a bank, which is a State depository. (Acts 1950, pp. 266, 272.)

99-1017a. Investments.-The funds of such corporation shall be invested only in securities permitted by the laws of the State of Georgia for the investment of assets of insurance companies. (Acts
1950, pp. 266, 272.)

99-1018a. Reserves to be maintained for unearned subscription fees, etc.; rate annually.-Every such corporation shall maintain at all times proper reserves, subject to the approval of the Commissioner, for unearned subscription fees and unearned premiums, and for unpaid medical service bills, including provision for umeported and undischarged medical cases and other known liabilities. In addition, a contingency or epidemic reserve shall be accumulated annually at the rate of not less than 2% per cent. of net premium income. When such contingency or epidemic reserves equal $75,000 or 55 per cent. of the annual premium income (whichever is higher), further accumulations may be discontinued for any length of time that they are not required to meet the above requirements. (Acts 1950, pp. 266, 273.)

99-1019a. Funds collected not payable to physicians until services performed.-Said corporations shall not pay any of the funds collected from the members or subscribers to any physician until after said physician shall have rendered the necessary medical or surgical care, or both, as the case may be, to such subscriber or member. (Acts 1950, pp. 266, 273.)

99-1020a. Corporations regulated by Insurance Commissioner; bond or deposit not required.-Such corporations shall be subject to regulation and supervision by the Insurance Commissioner: Provided, any such corporation shall not be required by any department of this State to post bond or place deposits with any department of this State to begin business or to operate under this Chapter, and the provisons of Title 56, relating to insurance companies or any of them, are hereby declared inapplicable to corporations organized or operated under this Chapter. (Acts 1950, pp. 266, 273.)

99-1021a. Supervision of rates.-Such corporations shall, before accepting applications for membership in said nonprofit medical service plan, submit to the Insurance Commissioner a plan of operating and overhead expenses, operation cost, salaries, paid or to be paid during any current year, together with a schedule of its rates or dues to be charged and the amount of medical and surgical contracted to be rendered; which plan, rates and amount of service shall first be approved by the Insurance Commissioner as fair and reasonable before said corporation shall engage in business. (Acts 1950, pp. 266,273.)

99-1022a. Approval of rates.-The Insurance Commissioner shall likewise first approve the rates of payment to be made by said corporations to physicians for the rendering of medical or surgical care, or both, on behalf of said corporation, its members, beneficiaries, and covered dependents, as being reasonable and just. (Acts 1950, pp. 266, 274.)

APPENDIX

202

991023a. Certificate of authorization; application, contents.-A corporation subject to the provisions of this Chapter may issue contracts when the Commissioner has authorized it to do so. Every application for such certificate of authorization shall be accompanied by copies of the following documents:
(a) A certified copy of its charter or certificate of incorporation. (b) A copy of its bylaws, certified by the lawful custodian of the
original. (c) Proposed contracts between the corporation and the participat-
ing physicians showing terms under which medical service is to be
furnished to subscribers. (d) Subscription contracts to be issued to subscribers showing a
table of the rates to be charged and the benefits to which they are entitled, showing benefits expressed in service and in dollars. Such contracts shall make clear the responsibility for service to the subscribers rests with the corporation, and not with the participating physicians.
(e) A statement of the county or counties in which it proposes to operate medical service plans.
(f) A statement of its financial condition and business in such form and detail as the Commissioner may require, including the amounts of contributions paid for working capital and the name or names of each contributor, and the terms of such contributions, signed and sworn to by its president and secretary, or other proper officers. Contributions not paid, but agreed to be paid, may be reported as a separate item, but shall not be admitted as assets of the corporation. (Acts 1950, pp. 266, 274.)

99-1024a. Same; when issued.-The Commissioner shall issue a certificate of authorization upon compliance with this Chapter, and other proper requirements of the Commissioner, and upon being satisfied upon the following points:
(a) That all items required to be filed are in proper form and meet the approval of the Commissioner.
(b) That the applicant is established as a bona fide medical service corporation, that the services rendered by such corporation are not an unnecessary duplication of similar services in the community served, are desirable for public necessity and convenience, and that a fair opportunity has been given to all practicing physicians of standing in the area to be served to become participating physicians.
(c) That the solicitation of contracts by the corporation and its conditions or methods of operation are fair and reasonable.
(d) That the rates charged are fair, reasonable, adequate and not unfairly discriminatory, that benefits to be provided are fair, reasonable, and not unfairly discriminatory. That rates may differ between subscribers in recognized groups and individual subscribers not in groups, all subject to the approval of the Commissioner.
(e) That the amount of money actually available for working capital is sufficient to carryall acquisition costs and operating expenses for a period of at least six months from the date of the issuance of the certificates.
(f) That the amount provided as working capital shall only be provided by individuals or groups who have no financial interest in the activities of such medical service corporation, or by the participatjng physicians. Interest charged therefor, if any, shall not exceed

203

ApPENDIX

six per cent. and payment of interest, if any, and repayment of such working capital shall be permitted only after provision has been adequately made for operating expenses, payments to participating
physicians for medical and surgical services, and the establishment of legal reserves and such other reserves as may be required by the
Commissioner. (g) That a provision has been made in the subscription contract au-
thorizing medical and surgical services by other than participating physicians, in which case money benefits shall be provided, as specified in the subscription contract and approved as fair by the Commissioner. Such certificate of authority issued by the Commissioner to operate a medical service plan or plans will be limited by the Commissioner to the contracts and practices approved by him. (Acts 1950, pp. 266, 275.)

99-1025a. Examination of books and records; expense of examination.- Every "Such corporation shall keep complete books and records, showing all funds collected and disbursed, and all books and records shall be subject to examination by the Insurance Commissioner annually, the expense of such examination to be borne by said corporation. (Acts 1950, pp. 266, 276.)

99-1026a. Annual report to Insurance Commissioner.-Every such corporation shall annually on or before the first day of March file in the office of the Insurance Commissioner a statement verified by at least two of the principal officers of said corporation, showing its condition on the 31st day of December, then next preceding, which statement shall be in such form and shall contain such matters as the Insurance Commissioner shall prescribe. (Acts 1950, pp. 266, 276.)
99-1027a. Certificate of authorization; annual renewal, revocation; notice of hearing.-The certificate of authorization referred to in section 99-1023a shall be applied for and renewed annually by the Commissioner, except on such application such corporation shall not be required to furnish documents set forth in section 99-1023a. He shall not renew such certificate, and shall be authorized to revoke an existing one, upon the failure of the corporation to comply with the provisions of this law. Due notice and opportunity to be heard on the question of refusing to renew a certificate of authorization or the revocation of an existing one, shall first be given by the Commissioner. (Acts 1950, pp. 266, 276.)
99-1028a. Soliciting agents; improperly solicited subscription certificates.- Whenever the Insurance Commissioner finds, after investigation, than an organizer, solicitor, or agent of such corporation has unfairly or improperly solicited subscription certificates by misrepresenting the terms thereof or has engaged in any other unfair or deceptive practice, or for any reason is incompetent to serve as such organizer, agent, or solicitor, or that his services are not, in fact, needed, he shall order such corporation to dispense with such services. (Acts 1950, pp. 266, 276.)
99-1029a. Review of disputes.-Any dispute arising within the purview of this Chapter with reference to the regulation and supervision, of either of them, of any such corporation shall, within 30 days after such dispute arises, he submitted by the aggrieved person to the

ApPE D1X

204

Insurance Commissioner for his decision with reference thereto: Provided, nothing herein shall authorize or require the Insurance Commissioner to determine the contractual rights between the parties interested in any such corporations. After proper notice and hearing, any decision and order of the Insurance Commissioner made pursuant to the provisions of this Chapter, shall be binding on the persons involved, unless set aside on review as herein provided. A review of any such decision or order made by the Insurance Commissioner may be had in the Superior Court of Fulton County, Georgia, upon a writ of certiorari. Application for such writ shall be made within 30 days of such decision or order. (Acts 1950, pp. 266, 277.)
99-1030a. Definition as charitable and benevolent institutions.Every corporation subject to the provisions of this Chapter is hereby declared to be a charitable and benevolent institution and shall be exempt from all taxes as such charitable and benevolent institutions are now or may hereafter be exempt from taxes. Any and all supervision, liquidation or examination of the affairs of any such corporation by the Insurance Commissioner shall be at the expense of such corporation. (Acts 1950, pp. 266, 277.)
99-1031a. Dissolution.-Any dissolution or liquidation of any such corporation subject to the provisions of this Chapter shall be under the supervision of the Insurance Commissioner. In case of dissolution of any such corporation formed under the provisions of this Chapter, claims of certificate holders of such corporation shall be given priority over all other claims except cost of liquidation. Any assets remaining after satisfaction of all claims of certificate holders and payments of all costs of liquidation, may be used only to carry out the original purposes for which such corporation was chartered. (Acts 1950, pp. 266,277.)

EXTRACTS FROM WORKMEN'S COMPENSATION LAW.

Sec. 114-601. 114-602.
114-603. 114-604. 114-605. 114-606. 114-607. 114-608. 114-609.
114-610.
114-611.

Duty of employers to insure payment of compensation.
Duty to insure in licensed company, association, etc., or to deposit security, indemnity, or bond.
Evidence of compliance with requirements of law, filing.
Certificate. Substitute systems; approval;
termination. Knowledge of injury. Bond or
deposit of insurer.
Policy or contract of insurance.
Policies subject to this Title; exceptions.
Rates of insurance carriers. A uthority of Insurance Commissioner to investigate rates, publish data, take testimony, etc.
Permits for insurance carriers to engage in business; requirement.
Same; application for permit and hearing thereon.

Sec. 114-612. Apportionment of rejected
risks; rules and regulations. 114-613. Standard policy to be issued.
Rules and regulations when lack of accident prevention and safety engineering is questioned.
114-614. Revocation of permit of insurance carrier to engage in
business on refusal to accept risk assigned to it. 114-615. Appeals from decisions under
114-610 to 114-614.
114-9901. Refusal or neglect of employer to file evidence showing compliance with 114-603.
114-9902. Carrying on insurance busi-
ness without permit or after revocation of permit. 114-9903. Receiving fees in compensation cases unless approved, or soliciting employment a misdemeanor. 114-9904. Failure of employer to have employees examined for
silicosis or asbestosis.

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114-601. Duty of employers to insure payment of compensation.Every employer who accepts the compensation provisions of this Title Shall insure the payment of compensation to his employees in the manner hereinafter provided, and while such insurance remains in force he or those conducting his business shall be liable to any employee for personal injury or death by accident only to the extent
and in the manner herein specified. (Acts 1920, p. 176.)

114-602. Duty to insure in licensed company, accociation, etc., or to deposit security, indemnity, or bond.-Every employer who accepts the provisions of this Title relative to the payment of compensation shall fully insure and keep fully insured, unless otherwise ordered or permitted by the Department of Industrial Relations, his liability hereunder in some corporation, association, or organization, licensed as provided by law to transact the business of workmen's compensation insurance in this State, or in some mutual insurance association formed by a group of employers so licensed, or shall furnish to the Department satisfactory proof of his financial ability to pay directly the compensation in the amount and manner and when due as provided for in this law. In the latter case the Department may in their discretion require the deposit of acceptable security, indemnity or bond to secure the payment of compensation liabilities as they are incurred: Provided, that it shall be satisfactory proof of the employer's financial ability to pay directly the compensation in the amount and manner when due, as provided for in this Title, and the equivalent of acceptable security, indemnity or bond to secure the payment of compensation liabilities as they are incurred, if the employer shall show to the Department that he is a member of a mutual insurance company, duly licensed to do business in this State by the Insurance Commissioner, as provided by the laws of this State, or of an association or group of employers, so licensed, and as such is exchanging contracts of insurance with the employers of this and other States, through a medium specified and located in their aggreements between each other, but this proviso shall in no wise restrict or qualify the right of self-insurance as hereinbefore authorized. Nothing herein shall be construed to require an employer to place his entire insurance in a single insurance carrier. (Acts 1920, p. 203; 1931, pp. 7, 43.)
Cross-reference.-Penalty for employer's failure to comply with this section, see 114-9901.
114-604. Certificate.-Whenever an employer has complied with the provisions of section 114-602, relating to self-insurance, the Department of Industrial Relations shall issue to such employer a certificate, which shall remain in force for a period fixed by the Department, but the Department may upon at least 60 days' notice and hearing to the employer revoke the certificate upon satisfactory evidence for such revocation having been presented. At any time after such revocation the Department may grant a new certificate to the employer upon his petition. (Acts 1920, p. 204; 1931, pp. 7, 43.)

114-605. Substitute systems; approval; termination.-(a) Subject to the approval of the Department of Industrial Relations, any employer may enter into or continue any agreement with his employees to provide a system of compensation, benefit or insurance in lieu of the compensation and insurance provided by this law. No such substitute

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system shall be approved unless it confers benefits upon injured employees at least equivalent to the benefits provided by this Title, nOl', if it requires contribution from the employees, unless it confers benefits in addition to those provided under this Title at least commensurate with such contribution. (b) Such substitute system may be terminated by the Department on l'easonable notice and hearing to the
interested parties if it shall appear that the same is not fairly administered or if its operation shall disclose defects threatening its solvency, or if for any substantial reason it fails to accomplish the purpose of this law; and in this case the Department shall determine upon the proper distribution of all remaining assets, if any, subject to the right of any party at interest to take an appeal to the superior
court of the county wherein the principal office or chief place of business of the employer is located. (Acts 1920, p. 205; 1931, pp. 7, 43.)

114-606. Knowledge of injury. Bond or deposit of insurer.-All policies insuring the payment of compensation under this Title, including all contracts of mutual, reciprocal, or inter-insurance, must contain a clause to the effect that as between the employer and the insurer or insurers the notice to or knowledge of the occunence of the injury on the pal't of the insured employer shall be deemed notice or knowledge, as the case may be, on the part of the insurer or insurers; that jurisdiction of the insured for the purposes of this Title shall be jurisdiction of the insurer or insurers; and that the insurer or insurers shall in all things be bound by and subject to awards, judgments, or decrees rendered against such insured employer. Every insurance company doing a workmen's compensation business in this State shall furnish a bond payable to the State in the sum of $50,000 with some surety company authorized to transact business in this State as surety, in such form as may be approved by the Insurance Commissioner, conditioned for the payment of compensation losses on policies issued by such insurance company upon risks located in this State. Suit may be brought upon said bond by the Department of Industrial Relations, for the use and benefit of any party or pal'ties at interest. The annual license of such company shall not be issued or renewed until it has filed with the Insurance Commissioner of this State a bond as aforesaid. In lieu of such bond a deposit of the same amount may be made with the Treasurer of the State in the form of other security satisfactory to the Insurance Commissioner. (Acts 1920, p. 205; 1933, pp. 182, 183.)

114-607. Policy or contract of insurance.-No policy or contract of insurance shall be issued unless it contains the agreement of the insurer or insurers that it or they will promptly pay to the person entitled to same all benefits confened by this Title and all installments of the compensation that may be awarded or agreed upon, and that the obligation shall not be affected by any default of the insured after the injury, or by any default in giving notice required by such policy, or otherwise. Such agreement shall be construed to be a direct promise by the insurer or insurers to the person entitled to compensation, enforceable in his name.
,
A policy of insurance issued under this Title shall always first be construed as an agreement to pay compensation; and an insurer who issues a policy of compensation insurance to an employer not subject to this Title shall not plead as a defense that the employer is not

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subject to the Title; and an insurer who issues to an employer subject to this Title a policy of compensation insurance covering an employee or employees ordinarily exempt from its provisions shall not plead the exemption as a defense. In either case compensation shall be paid to an injured employee or to the dependents of a deseased employee for a compensable accident as if the employer and/or the employee were subject to this Title, the policy of compensation insurance constituting a definite contract between all parties concerned. (Acts 1920, p. 206;
1933, pp. 184, 185.)

114-608. Policies subject to this Title; exceptions.-Every policy for the insurance of the compensation herein provided, or against liability therefor, including all contracts of mutual, reciprocal or interinsurance, shall be deemed to be made subject to the provisions of this Title. No corporation, association or organization, and no mutual, reciprocal or inter-insurers shall enter into or make any such policy or contract of insurance unless its form shall have been approved by the Department of Industrial Relations. This law shall not apply to policies of insurance against loss from explosion of boilers or fly wheels or other similar catastrophic hazards. (Acts 1920, p. 206; 1931, pp.
7,43.)

114-609. Rates of insurance carriers. Authority of Insurance Commissioner to investigate rates, publish data, take testimony, etc.(a) The rates charged by all carriers of insurance, including the parties to any mutual, reciprocal, or other plan or scheme for writing insurance against the liability for compensation under this law, shall be fair, reasonable, and adequate, with due allowance for merit l'ating, and all risks of the same kind and degree of hazard shall be written at the same rate by the same carrier. The basic rates for policies or contracts of insurance against liability for compensation under this Title shall be filed with the Insurance Commissioner for his approval, and no policy of insurance against such liability shall be valid until the basic rates thereof have been filed with and approved by the Insurance Commissioner, nor if they have been subsequently disapproved by him. Any plan or scheme for modification of such basic rates by physical inspection or experience or merit rating shall likewise be filed with the Insurance Commissioner and by him approved, and no carrier of insurance shall write any such policy or contract until after filing and approval of a basic rate therefor and a schedule or plan to be employed in producing individual rates for risks. (b) Each such insurance carrier, including the parties to any mutual, reciprocal, or other plan or scheme for writing insurance against the liability for compensation under this law, shall report to the Insurance Commissioner as provided by law, and in accordance with such reasonable rules as the Insurance Commissioner may at any time prescribe for the purpose of determining the solvency of the carrier, and the adequacy or reasonableness of its rates and reserves; for such purpose the Insurance Commissioner may inspect all the books and records of such insurance carrier and its agent or agents, and examine its agents, officers, and directors under oath. (c) Said Commissioner shall have the power, in such manner and by such means as he may deem proper and adequate, to gather statistics and information and make investigations concerning rates for such insurance, and to that end he may take into considera-
tion the income and earnings, from any and every source whatever,

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208

of any such company, and may call upon the directors of the Department of Industrial Relations to sit with him in an advisory capacity at any investigation or hearing concerning such rates. Authority is hereby conferred upon the Insurance Commissioner to make such arrangements with the Department of Industrial Relations as may be agreeable to them for collecting, compiling, preserving and publishing statistical and other data in connection with the work of regulating workmen's compensation insurance rates; and whenever he deems proper, with the consent of the directors, he may appoint any of the directors, or employees of the Department, as special agents of the Insurance Commissioner to take testimony and make reports with reference to any matters involving questions of workmen's compensation insurance rates. Any party at interest may appeal from any decision of the Insurance Commissioner, made under this section, in the manner provided by law. (Acts 1920, p. 206; 1929, pp. 358, 360; 1931, pp. 7, 43.)
114-610. Permits for insurance carriers to engage in business; requirement.-Every insurance company and every person, firm or corporation, writing policies of insurance under this Title, or insuring the payment of compensation to employees as provided by this Title, before writing any such policy, or entering upon any such insurance contract, or continuing any such contract or force, shall obtain from the Department of Industrial Relations a permit authorizing such company or such person, firm or corporation to engage in business as an insurance carrier under this Title and to write and enter upon such insurance contracts. (Acts 1935, p. 146.)
Cross-references.-Penalty for writing compensation insurance without permit, see 114-9902. Revocation of permit, see 114-614.
Editorial Note.-In Acts 1935, p. 146, amending Chapter 114-6, 114-610 to 114-615, inclusive, appear as a single section numbered 114-610. For more convenient use the section has been divided into the six sections.
114-611. Same; application for permit and hearing thereon.-The application for such permit shall set forth such facts as the Department of Industrial Relations may, by regulation, require. The Department of Industrial Relations is authorized to prescribe the form of permit, and to provide by regulation for a hearing upon such application. Upon the filing of such application, the Department of Industrial Relations shall have such hearing thereon as may be provided for by regulation, and shall grant such permit if in its discretion the applicant is qualified, financially and otherwise, to carryon such insurance business. (Acts 1935, p. 147.)
114-612. Apportionment of rejected risks; rules and regulations.The Department of Industrial Relations shall prescribe the rules and regulations for apportioning rejected workmen's compensation policies, and may establish an equitable assignment of such policies and enforce such provision; Provided, however, that if and when any ratemaking or rate-modification bureau or other similar bureau maintained by the insurance carriers and approved by the Insurance Commissioner, with authority to handle such matters in this State, agree that when a risk has been rejected by any three companies doing business in this State, the bureau will immediately assign a company to write said risk, then the Department of Industrial Relations shall not make the assignment, hut shall refer the matter to said bureau,

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which shall make the assignment subject to rules approved by the Department of Industrial Relations. (Acts 1935, p. 147.)

114-613. Standard policy to be issued. Rules and regulations when lack of accident prevention and safety engineering is questioned.The policy to be issued shall be the standard workmen's compensation policy of insurance containing the usual and customary provisions found in such policies thereof, at the rate prescribed by the Insurance Commissioner, and further that the premium charge shall be promptly paid. If there is any question regarding the lack of accident prevention and safety engineering with respect to a particular risk, reasonable rules and regulations are to be promulgated, which shall be put into full force and effect when approved by the Department of Industrial Relations. The requirements of sections 114-610 to 114-615 shall be in addition to anything required of insurance companies under the general laws of this State as embodied in Title 56 of this Code. (Acts 1935, p. 147.)

114-614. Revocation of permit of insurance carrier to engage in business on refusal to accept risk assigned to it.-The Department of Industrial Relations is authorized, of its own motion, or upon complaint filed with it, after notice of not less than 10 days and a hearing thereon, to revoke any permit gxanted under sections 114-610 and 114-611 if it shall appear that the holder of such permit declines to accept and underwrite any risk so assigned to it after said risk shall be assigned to said company by the Department of Industrial Relations and/or a bureau established and approved for rating purposes where the employer is ready, willing, and able to pay the premium thereon at the rate prescribed by the Insurance Department, or if it shall appear that the holder of any such permit fails and refuses to obey and valid order of the Department of Industrial Relations, or to pay any award entered against it by the Department and not appealed from, or affirmed on appeal, or if it should appear that the holder of such permit is otherwise not qualified to carryon such business. (Acts 1935, p. 148.)
Gross-reference.-Penalty for writing compensation insurance after revocation of permit, see 114-9902.
114-615. Appeals from decisions under sections 114-610 to 114614.-Appeal from any decision under sections 114-610 to 114-614, inclusive, may be made in the manner provided elsewhere for appeals from orders or judgments of the Directors of the Department of Industrial Relations. (Acts 1935, p. 148.)
Gross-reference.-Appeal to superior court, see 114-710.

114-9901. Refusal or neglect of employer to file evidence showing compliance with section 114-603.-1f an employer accepting the compensation provisions of this Title shall refuse or wilfully neglect to comply with section 114-603, providing that he shall file with the Department of Labor evidence satisfactory to the Commissioner of Labor of his compliance with the provisions of section 114-602, relating to insurance of his liability, etc., he shall be guilty of a misdemeanor. (Acts 1923, p. 97; 1937, pp. 230, 233.)
Editorial Note.-The Acts of 1937 changed the "Department of Industrial Rela-

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tions" to the "Department of Labor" and the "directors" of the said Department to "Commissioner of Labor."
114-9902. Carrying on insurance business without permit or after revocation of permit.-Any company or any person, firm or corporation who shall write insurance under this Title, or enter upon any contract to insure the payment of compensation under this Title, or continue any such contract of force, without first obtaining a permit from the Department of Industrial Relations as required by section 114-610, or after the revocation of any such permit, shall be guilty of a misdemeanor. (Acts 1935, p. 148.)
Cross-reference.-Revocation of permit, see 114-614.
114-9903. Receiving fees in compensation cases unless approved, or solicited employment a misdemeanor.-Any person (1) who receives any fee, other consideration or any gratuity on account of services rendered under this Title, unless such consideration or gratuity is approved by the State Board of Workmen's Compensation or such court, or (2) who makes it a business to solicit employment for a lawyer or for himself in respect to any claim or award for compensation, shall be guilty of a misdemeanor, and upon conviction thereof shall, for each offense, be punished by a fine of not more than $5,000 or by imprisonment not to exceed one year, or by both such fine and imprisonment. (Acts 1937, pp. 230,233,528,535; 1943, pp. 167-169.)
Editorial Note.-In the Acts of 1937, p. 528, the penal provisions here codified and 114-714 constitute a single section. Acts 1937, p. 230, changed "Department" to "Industrial Board," and the Act of 1943 changed "Industrial Board" to "State Board of Workmen's Compensation" (see editorial note at the beginning of this Title).
114-9904. Failure of employer to have employees examined for silicosis or asbestosis.-The failure of an employer to provide for thE! examination of employees for silicosis or asbestosis, when ordered by the State Board of Workmen's Compensation, as provided by section 114-816, shall constitute a misdemeanor and shall be punishable as such. (Acts 1946, pp. 102, 111.)

SUPPLEMENT
Insurance Laws Enacted at January-February Session 1955 of the Legislature of Georgia

212
INSURANCE COMPANIES-CAPITAL STOCK.
Code 56-207 Amended.
No. 153 (Senate Bill No. 86).
An Act to amend Section 56-207 of the Code of Georgia, relating to capital stock required of insurance companies, as amended by an Act approved March 1, 1937 (Ga. Laws 1937, p. 459), so as to reduce the par value of the shares of such stock; to repeal conflicting laws; and for other purposes.
Be it enacted by the General Assembly of Georgia:
Section 1. Section 56-207 of the Code of Georgia, relating to capital stock required of insurance companies, as amended by an Act approved March 1, 1937 (Ga. Laws 1937, p. 459), is hereby amended by striking the figure "$10.00" and inserting in lieu thereof the words and figure "not less than $5.00", so that when so amended, Section 56-207 shall read as follows:
"56-207. When such certificate shall have been issued, the persons named therein, in case they have not take the whole capital stock, may open books of subscription to obtain the full capital stock of the company, and after giving such notice as they may deem expedient, may from time to time receive subscriptions until the whole capital stock shall be subscribed. The capital stock of said company shall be divided into shares of not less than $5.00 each, and shall not be less than $100,000 for each class of insurance to be engaged in, and no insurance company chartered under this Chapter shall commence the insurance business until at least this amount for each class of insurance to be engaged in shall have been paid in cash, or invested in bonds of the United States, of this State, or of the cities or counties of this State, estimated at their cash market value, or in mortgages on real estate worth twice the amou~t for which the same is mortgaged, which investment shall be approved by the Secretary of State, or, when he is disqualified, by the Comptroller General. When the investment shall be in bonds of the cities or counties of this State, the Secretary of State or Comptroller General, as the case may be, shall require an opinion from the Attorney General that the bonds are good, legal, and valid bonds, before approving the investment."
Section 2. All laws and parts of laws in conflict with this Act are hereby repealed.
Approved March 3, 1955.
NON-PROFIT MEDICAL SERVICE ACT AMENDED.
No. 168 (House Bill No. 307).
An Act to amend an Act known as the "Non-Profit Medical Service Act of 1950", approved February 16, 1950 (Ga. L. 1951, p. 266), so as to provide that the definition of "Medical serv-

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SUPPLEMENT - GEORGIA LAWS 1955

ices" shall include doctors of dental surgery; to provide that the definition of "participating physician" shall include a licensed dental surgeon; to repeal conflicting laws; and for other purposes.

Be it enacted by the General Assembly of Georgia:

Section 1. An Act known as the "Non-Profit Medical Service Act of 1950", approved February 16, 1950 (Ga. L. 1950, p. 266) is hereby amended by striking Sub-section (c) of Section 2 of said
Act in its entirety and inserting a new Section 2 (c) to read:

"(c) 'Medical services' means the general and usual services and care rendered and administered by doctors of medicine and doctors of dental surgery. It shall not include hospital service."

Section 2. Said Act is further amended by adding to Subsection (f) of Section 2 of said Act the following words "and a dental surgeon licensed to practice dental surgery in this State", so that as amended Section 2 (f) shall read:
"(f) 'Participating physician' means a doctor of medicine licensed to practice medicine and surgery in this State and a dental surgeon licensed to practice dental surgery in this State, who agrees in writing, with a medical service corporation to perform the medical services specified in the subscription certificates issued by the corporation, and at such rates of compensation as shall be determined by the board of directors of the corporation, and who agrees to abide by the by-laws, rules and regulations of the corporation applicable to participating physicians."

Section 3. All laws and parts of laws in conflict with this Act are hereby repealed.

Approved March 3, 1955.

INSURANCE COMPANIES-AUTHORIZED
INVESTMENTS.
Code 56-224 Amended.
No. 182 (Senate Bill No. 99).
An Act to amend Section 56-224 of the Code of Georgia, relating to authorized investments by insurance companies, as amended, particularly by an Act approved March 31, 1937 (Ga. Laws 1937, p. 462), so as to authorize additional investments for insurance companies; to repeal conflicting laws; and for other purposes.
Be it enacted by the General Assembly of Georgia:

214
Section 1. Section 26-224 of the Code of Georgia, relating to authorized investments by insurance companies as amended, particularly by an Act approved March 31, 1937 (Ga. Laws 1937, p. 462), is hereby amended by striking Paragraph (a) in its entirety and inserting in lieu thereof a new Paragraph (a), to read as follows:
"(a) Any and all bonds or securities issued by the United States of America, the District of Columbia, or any State of the United States, or any county or city therein; bonds of any township or school district therein; bonds issued by the Federal Land Banks under provisions of the Act of Congress of July 17, 1916, its amendments and supplements; bond and securities issued by any political subdivision, authority, unit, or other corporate body created by the United States Government, or the government of any State."
Section 2. Said section is further amended by striking in its entirety Paragraph (j) and inserting in lieu thereof a new Paragraph (j), to read as follows:
" (j) Common stocks of solvent railroads, street railways, and other utility corporations and industrial corporations which are listed on an established stock exchange, or regularly traded and on which quotations are readily available, where, prior to the date of acquisition of the stock, the company issuing such stock has maintained and paid dividends thereon for three consecutive years, and the current earnings of such company issuing such stock have been sufficient in each of such three consecutive years to fully pay the dividends."
Section 3. Said section is further amended by striking in its entirety Paragraph (1) and inserting in lieu thereof a new Paragraph (1), to read as follows:
"(1) Securities insured by the Federal Housing Administrator, or debentures issued by such Administrator, and securities insured or guaranteed by the United States Veterans Administration, or other United States Government body insuring or guaranteeing securities."
Section 4. All laws and parts of laws in conflict with this Act are hereby repealed.
Approved March 3, 1955.

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INSURANCE ON AUTOMOBILE FURNISHED GOVERNOR.
No. 39 (Senate Resolution No. 160-528e).

A Resolution
Authorizing the coverage by property and liability insurance of the automobile furnished to the Governor for his official use by the State, and to pay the premiums therefor; and for other purposes.

Whereas, there is no insurance coverage on the automobile furnished by the State of Georgia to the Governor for his official use;
Therefore be it resolved by the House of Representatives, the Senate concurring, that the Governor of Georgia is hereby authorized to obtain property and liability insurance coverage on the automobile furnished to him by the State for his official use, and the Executive Department is authorized to reimburse the Governor for the cost of the premiums paid out by him for such insurance.
Approved March 3, 1955.

INDUSTRIAL LOAN ACT.
No. 219 (House Bill No. 151).
An Act to regulate certain loans of $2,500.00 or less to be known as the Georgia Industrial Loan Act; to provide for license and define the persons who may operate thereunder; to provide exemptions therefrom; to create the office of Georgia Industrial Loan Commissioner and to define his duties; to empower said Commissioner to make rules and regulations, levy and collect license, examination and investigation fees, examine and investigate lenders doing business under this Act; to provide for the appointment of an advisory board to the Commissioner; to provide for hearings before the Commissioner; to provide for appeals in the Superior Courts from decisions of the Commissioner; and for bills of exception in the Court of Appeals and in the Supreme Court; to regulate advertising, the interest rates and other fees and charges on money loaned under this Act; to regulate insurance sold in connection with loans under this Act; to prohibit charges not provided therein; to fix penalties for violations; to make certain violations a misdemeanor; to repeal certain other conflicting statutes; to make appropriations for the administration of this Act for certain fiscal years; and for other purposes.
Be it enacted by the General Assembly of the State of Georgia:

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216

Section 1. This Act may be cited as the "Georgia Industrial Loan Act".

Section 2. Purpose. The purpose of this Act is to authorize and provide regulation of the business of making loans of
$2,500.00 or less and to bring within the regulation of this Act and within its provisions all loans of $2,500.00 or less, whether or not made by a person organized or operating under the provisions and authority of some other statute except those persons and loans expressly exempted by the terms of this Act. Even
though authorized by other statutes of force, such loans and the persons making them unless expressly exempted shall be within the operation of this Act in accordance with its terms.

Section 3. Scope. This Act shall apply to all persons, as hereinafter defined, unless expressly exempted herein, engaged in the business of making loans in amounts of $2,500.00 or less. The repeals hereinafter provided shall not affect corporate or other
business existence of persons now making loans of $2,500.00 or less, but such corporate or business existence shall continue under
this Act and subject to its terms. On and after the effective date of this Act no person within the operation of this Act shall charge, contract for or receive, directly or indirectly, on or in connection with any loan, any interest, charges, fees, compensation or consideration which are greater than the rates for same provided herein, or engage in the business of making such loans of $2,500.00 or less, without a license from the Commissioner as provided in this Act. Persons engaged in the business of making loans of
$2,500.00 or less, who are not exempted from the operation of this Act may engage in such business and may make such loans lawfully under the provisions of this Act provided they comply with
the provisions of this Act.

Section 4. Definitions. For the purpose of this Act and as used herein, unless a different meaning or construction is clearly required by the context: (1) "Person" includes individuals, copartnerships, associations, corporations, and all other legal and commercial entities; (2) "License" means a single license issued or required under the provisions of this Act; (3) "Licensee" means a person to whom one or more licenses under this Act has been issued; (4) "Commissioner" means the Georgia Industrial Loan Commissioner; (5) "Loan" means any advance of money in an amount of $2,500.00 or less, under a contract requiring repayment and any and all renewals or refinancing thereof, or any
part thereof.

Section 5. Exemptions. The provisions of this Act shall not apply to businesses organized or operating under the authority
or any law of this State or of the United States relating to banks, trust companies, real estate loan or mortgage companies, Federal and Georgia building and loan associations not including "like associations" organized pursuant to Section 16-101 of the Code of Georgia of 1933, as amended, credit unions and pawn brokers, or to the transactions of such businesses which businesses are expressly excluded from regulation under this Act and exempted

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from the operation of its provisions. It is expressly provided that no bank, trust company or national bank, insurance company or real estate loan or mortgage company, authorized to do business in this State shall be required to obtain a license under this Act.

It is further provided that persons making loans and charging interest thereon at a rate of not more than eight (8) per cent simple interest per annum shall not be subject to the provisions of this Act or required to obtain a license hereunder.

Section 6. Commissioner created and invested with authority. There is hereby created the office of Georgia Industriay Loan
Commissioner, and the Comptroller General of the State of Georgia, ex officio, is hereby designated and constituted the Georgia Industrial Loan Commissioner under this Act, and is hereby invested with all of the powers and authority provided for such Commissioner. In addition to those powers specifically enumerated, it shall be his duty and authority to supervise generally and to exercise regulatory powers over the making of loans of $2,500.00
or less in the State of Georgia by persons governed and regulated by this Act.

(a) Power to make rules and regulations and to employ agents
and employees. "The said Commissioner is hereby granted power and authority to promulgate rules and regulations governing the
making of loans of $2,500.00 or less as authorized and regulated under this Act consistent with the terms hereof, and essential to effectuate this Act according to its terms. Such rules and regulations shall be promulgated pursuant to public hearing after notice of such hearing is advertised at least once in one newspaper in Atlanta, Georgia, having general statewide circulation not less than ten days prior to such hearing. Such l'ules and regulations so promulgated by the Commissioner in his discretion, consistent with the terms of this Act and other applicable statutes, shall have the full force and effect of law. The Commissioner shall have authority to designate and employ and compensate agents and employees in the manner other agents and employees are employed by his department to assist him in the discharge of his duties under this Act, and the Commissioner is hereby authorized and empowered to delegate to an assistant or deptuy, authority
to act in his place and stead in his absence or disability.

(b) Advisory board created. There is hereby created an advistory board consisting of five citizens of the State of Georgia.
The original members and their successors shall be appointed by the Governor. Two of the original members shall be appointed for a term of one year and three of the original members shall be appointed for a term of two years. All succeeding regular terms on such board shall be for two years and the appointments shall be made in the same manner. Vacancies shall be filled in the same manner, but only for the unexpired term. Such board, under such rules and regulations as shall be prescribed by the Commissioner consistent with the terms of this Act, shall meet and func-

SUPPLEMENT - GEORGIA LAWS 1955

218

tion by majority action to advise the Commissioner in the promulgation of rules and regulations and in the performance of his duties under this Act and said board members shall be entitled to receive the same per diem and mileage allowance now paid to members of the General Assembly, in lieu of actual expenses
incurred in the performance of their duties.

Section 7. Application; fees; existing businesses. All persons
engaged in the business of making loans of $2,500.00 or less in the State of Georgia, unless expressly exempted therefrom, shall be required to obtain a license under this Act. Application for license shall be made to the Commissioner in writing, under oath, on forms prescribed by the Commissioner and shall give the loca-
tion from which the business is to be conducted and shall give the names of the persons connected with the business together with any other information required by the Commissioner. Except as hereinafter provided the application shall be accompanied by a fee of $50.00 to cover cost of investigation of applicant, and by a license fee of $200.00. Said license shall expire on the last day of the calendar year in which granted, subject to renewal pursuant to Section 9 of this Act; provided, however, the license fee on all licenses issued on or after July 1st shall be the sum of $100.00; provided, further, that all persons required to obtain a
license under this Act who are on the date of approval of this Act, lawfully authorized and bona fide engaged in making loans of $2,500.00 or less in the State of Georgia shall be entitled to a license hereunder upon the filing of an application as herein provided and the payment of the license fee as herein set out and such person shall also be required to pay the $50.00 investigation fee. The Commissioner shall collect fees and cost as provided in this Act, and shall issue his receipt for all sums collected by him, and periodically, not less than once in each quarter of each year, at such times as may be convenient, shall pay into the State Treasurer all sums collected by him.

Section 8. Investigation of application; issuance and denial of application. Except as provided in Section 7, upon the filing of the application and the payment of the fees provided therein the Commissioner shall cause an investigation to be made and if he shall find the financial responsibility, character and general fitness of the applicant are such as to command the confidence of the public
and to warrant a belief that the business will not be operated unlawfully or improperly within the purposes of this Act, the Commissioner shall grant such application and issue to the applicant
a license which shall be authority to engage in the business of making loans pursuant to said license in accordance with the provisions of this statute;

(a) If the Commissioner shall not so find, he shall prepare a rejection of the application, in writing, with a written finding of facts, which shall be sent by registered mail to the applicant which shall constitute notice to the applicant of the rejection of his application.

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(b) The Commissioner shall grant or deny an application for a license made in pursuance of the provisions of this Act within thirty days from the date of the filing of such application; failure to act upon an application in such period shall have the effect of a grant of the application.
Section 9. Place of business; continuing license; -annual fee. No more than one place of business shall be maintained under the same license, but the Commissioner may issue more than one license to the same licensee. Each such license issued shall be conspicuously displayed in the place of business for which granted and shall remain in full force and effect until surrendered, revoked or suspended, as provided by this Act. Every licensee shall, on or before the twentieth (20th) of each December, pay to the Commissioner the sum of $200.00 for each license held by him as an annual license fee for the succeeding calendar year. If a licensee wishes to remove his office within the county, he shall give the Commissioner 15 days' written notice thereof and the license shall be amended accordingly.
Section 10. Books and records. Each licensee shall keep and use in his business sufficient books and records to enable the Commissioner to determine whether or not the licensee is complying with the provisions of this Act, or any other Act under which such licensee is operating, and such licensee shall preserve such record for at least four years after making the final entry thereon. The renewal or refinancing of a loan shall not constitute a final entry. The Commissioner may under rules and regulations promulgated by him under the procedure provided in this Act require annual reports from licensees to facilitate the performance of his duties and to effectively regulate the making of loans under this Act.

Section 11. Examinations. For the purpose of discovering vio-
lations of this Act, the Commissioner or his duly authorized representative may from time to time examine the books, accounts, papers and records of: (1) any licensee, (2) any person who ad-
vertises for, solicits, or holds himself out as willing to make loans in amounts of $2,500.00 or less, or (3) any person whom the Commissioner has reason to believe is violating or is about to violate the provisions of this Act. The Commissioner may subpoena witnesses, books, accounts, papers and records, administer oaths, hold hearings, and take testimony under oath in conducting examinations and hearings authorized under this Act. The cost of any such examination, investigation or hearing, in the discretion of the Commissioner may be charged to the licensee or person
examined subject to review by the superior court under Section 13. The examinations, investigations or hearings provided for herein shall be conduded in the county wherein the business of the licensee is located or where the person required to have a license hereunder, is engaged in the business of making loans or elsewhere upon consent of the parties involved.

Section 12. Revocation or suspension of license. The Commissioner upon 10 days' written notice in the form of a show cause order to the licensee stating his contemplated action and in gen-

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eral the ground therefor, and after giving the licensee a reasonable opportunity to be heard, subject to the right to review hereinafter provided may by order in writing suspend or revoke any license issued under the provisions of this Act if the Commissioner shall find: (1) that the licensee has failed to pay the annual license fee, or any fee required under this Act, or (2) that the licensee, knowingly has violated any of the provisions of this Act; provided, however, that no suspension, revocation, relinquishment or expiration of any license shall invalidate, impair or affect the legality of obligations of any pre-existing contracts, or
prevent the enforcement and collection thereof; and provided further any such suspension or revocation shall not become final pending and subject to the right of review herein provided, but the court shall have and is hereby granted power to enter such order as justice shall require pending hearing of such appeal; and provided further, the court upon such appeal may tax the
cost, including the cost of the hearing before the Commissioner, against the losing party.

Section 13. Review. The decision of the Commissioner in the granting or refusing to grant a license and in the revocation or suspension of such license and in any other order or decision auth-
orized herein shall be final and conclusive and binding as to all determinations of fact made by him; but any applicant or licensee who deems himself aggrieved may, within 30 days from entry of
such final order, but not thereafter, appeal from the decision of the Commissioner to the superior court of the county wherein such applicant or licensee may reside or conduct his business in the manner hereinafter outlined, and upon the following grounds:

The applicant or licensee deeming himself to be aggrieved may file an application in writing with the Commssioner asking for an appeal from such decision, stating generally the grounds upon
which such appeal is sought. In the event such appeal is filed, the Commissioner shall, within 30 days from the filing of same, cause certified copies of all documents and papers then on file in his office in the matter, and a transcript of all the testimony taken therein to be transmitted with his findings and order to the clerk of the superior court to which the case is appealable, as hereinbefore set out. The cause so appealed may thereupon be brought on for a hearing in either term time or vacation before said superior court upon such record by either party on 10 days
written notice by the court, and upon such hearing the court shall set aside the order or decision of the Commissioner if it be found that:

(1) The Commissioner acted arbitrarily or in excess of his powers;
(2) The order or decision was obtained by fraud;
,(3) There is not sufficient competent evidence in the record to warrant the Commissioner in making the order or decision complained of; or that

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(4) The order or decision is contrary to law.

No order or decision of the Commissioner shall be set aside by the court except upon one or more of the grounds hereinbefore set out, and if it is found that none of such grounds for setting aside such order or decision of the Commissioner exists, the court shall affirm the order or decision of the Commissioner so appealed. Upon the setting aside of any order or decision of the Commissioner upon appeal, the court may re-commit the controversy to the Commissioner for further hearing or proceedings in conformity with the judgment and opinion of the court, or the court may enter such judgment upon the findings, as the nature of the case may demand.

Any party in interest who is aggrieved by a judgment entered by the superior court upon an appeal from any order or decision of the Commissioner, may have the same reviewed by the Court of Appeals or the Supreme Court within the time and in the manner provided by law in other cases.

Section 14. Advertising. No person shall advertise, display, distribute or broadcast in any manner whatsoever any false, misleading or deceptive statement or representation with regard to
the rates, terms or conditions for loans subject to the provisions of this Act.

Section 15. Maximum rate of charge. Every licensee hereunder may loan any sum of money not exceeding $2,500.00 for a period of two years or less, and may charge, contract for, collect and receive interest, and fees and may require the fulfillment of conditions on such loans as hereinafter provided:
(a) Charge, contract for, receive and collect interest at a rate not to exceed 8 percent per annum of the face amount of the contract, whether repayable in one single payment or repayable in monthly or other periodic installments. On loan contracts repayable in 18 months or less, the interest may be discounted in advance, and on contracts repayable over a greater period, the interest shall be added to the principal amount of the loan. On all contracts, interest or discount shall be computed proportionately on equal calendar months.
(b) In addition thereto, charge, contract for, receive or collect at the time the loan is made, a fee for making the loan in an amount not greater than $1.00 plus 8 percent of the first $600.00 of the face amount of the contract, plus 4 percent of the excess; provided, however, that such fee shall not be charged or collected on that part of a loan which is used to payor apply on a prior loan, or installment of a prior loan from the same licensee to the same borrower made within the immediately preceding 6 months period; provided, however, if the loan balance is $100.00 or less, the said period shall be 2 months, not 6 months; provided, further, that nothing contained in Subsections 15 (a) and 15 (b) shall be construed to permit charges, interest or fees of any nature whatsoever in the aggregate in excess of the charges, interest and

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fees which would constitute a violation of Section 57-117 of the Code of Georgia of 1933 and the repeals hereinafter set forth in this Act shall in no wise affect Section 57-117 and Section 57-9901 of the Code of Georgia of 1933.
( C) A licensee may charge and collect from the borrower premiums actually paid or to be paid for insurance obtained for the borrower. A licensee may accept as security on any loan or advance made hereunder insurance on tangible property against sub~tantial risks or loss, and a licensee may accept as such security reasonable insurance on the life, health and/or against accident of the principal party obligated on any such loan or advance; provided, however, that any sucn insurance shall be reasonably related to the type and value of the property insured and to the amount and term of the loan and shall be obtained from an insurance company authorized to conduct such business in the State of Georgia and at rates lawfully filed by such company with the Commissioner of Insurance and through a regular insurance agent licensed by the Insurance Commissioner of Georgia; provided, further, the amount of life, health and/or accident insurance required as security for loans made under this Act shall not exceed the amount of the loan, including charges, to be secured, and the premiums on such insurance required of the principal party obligated shall be limited to premiums reasonably based upon reliable actuary experience and sound insurance practice, and the Commissioner is hereby authorized and directed to promulgate rules and regulations to effectuate this provision in accordance with the spirit and intent thereof. It shall be the duty of the Commissioner from time to time under the foregoing direction, after public hearing in the manner as provided in Section 6 (a) of this Act, to determine and promulgate the rates and maximum premiums pel"missible to be charged for life, health and/or accident insurance required as security for a loan made under this Act, and to make regulations incident thereto necessary to effectuate the same; such premiums when thus established, and as changed from time to time in the manner aforesaid, shall be the maximum effective and permissible charges under this subsection. Premiums paid or to be paid pursuant to the authority of this subsection shall not constitute interest. The insurance company in turn may pay to the party writing the insurance policy sold in connection with the loan a fee or commission in an amount which is reasonable in relationship to the transaction and in no event in excess of the amount of fee or commission customarily paid within the industry where comparable insurance is sold in a transaction not involving credit, as determined by the Commissioner and the advisory board.
(d) Charge and collect from the borrower a late or delinquent charge in an amount equal to 5 cents for each $1.00 of any installment which is not paid within 5 days from the date such payment is due, provided that this late or delinquent charge shall not be collected more than once for the same default.
Section 16. No further charges. No licensee shall charge, contract for, or receive any other or further amount in connection with any loans authorized by this Act, in addition to those here-

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inbefore provided, except the actual lawful fees paid to a public official or agency of the State for filing, recording, or, on loans over $100.00 the amount of the lawful premiums, no greater than such fees, actually paid for insurance against the risk of nonrecording or releasing any instrument securing the loan; the court costs and attorney fees authorized by law incurred in the collection of any contract in default; and the actual and reasonable expenses of repossessing, storing and selling any collateral pledged as security for any contract in default. No licensee shall divide into separate parts any contract for the purpose or with the effect of obtaining charges in excess of those authol'ized by this Act.

Any renewal or increased amount to any outstanding loan at the time of the effective date of this bill shall be on the basis of the provisions of this Act.

Section 17. Refunds. Notwithstanding the prOVISIOns of any contract to the contrary, a borrower may at any time prepay all or any part of the unpaid balance to become payable under any installment contract. If the bonower pays the time balance in full before maturity, the licensee shall refund to him a portion of the prepaid interest, calculated in complete even months (odd
days omitted), as follows: The amount of the refund shall represent at least as great a proportion of the total interest as the sum of the periodical time balance after the date of prepayment bears to the sum of all periodical time balances under the schedule of payments in the original contract. Where the amount of the refund due to anticipation of payment is less than $1.00, no refund need be made. Provided, further, that if the borrower has been required to purchase other than insurance coverage in a blanket policy when he has paid no acquisition cost, he shall have the option to continue such insurance in force for the balance of the policy period, with all rights transferred to the borrower or his
assigns, in which event no refund of insurance premiums shall be made to him.

Section 18. Appropriations. For the purpose of providing funds for the expense of administration of this Act for the fiscal year ending June 30, 1955, the sum of $25,000 is hereby appropriated, and for the fiscal years ending June 30, 1956, and June 30, 1957, the sum of $150,000.00 annually is hereby appropriated to the Commissioner for use in enforcing the provisions hereof during said fiscal years. The appropriations herein made shall be subject to budgetary control. For the fiscal years June 30, 1958 and thereafter, the General Assembly shall appropriate funds for the administration of this Act, provided, however, in no event after the periods of the foregoing initial appropriations shall the amount appropriated for a fiscal year exceed the amount of fees and charges collected during the last full fiscal year immediately preceding such approportion.

Section 19, Making and payment of loans. At the time the
loan is made, each licensee hereunder shall deliver to the borrower, or if there be two or more, to one of them, a copy of the loan contract or a written itemized statement in the English language

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showing in clear terms, the date and amount of the loan; a sched~ ule of the payments or a description thereof; the type of security for the loan, the licensee's name and address; the actual cash advanced to or on behalf of the borrower; the amount of each class of insurance carried and the premiums paid thereon and the amount of interest and fees. Each licensee shall give a receipt for every cash payment made.

Section 20. Penalties. Any person who shall make loans under the provisions of this Act without first obtaining a license or who shall make a false statement under oath in an application
for a license hereunder, or who shall do business while the license of such person under this Act is finally suspended or revoked, or who shall knowingly charge, contract for, receive and collect charges in excess of those permitted by this Act shall be punished as for a misdemeanor. Any loan contract made in violation of
this Act shall be null and void.

Section 21. Severability. If any prOViSIOn of this law or its application to any person or circumstance is held invalid, such invalidity shall not affect any other provision or application of this Act which can be given effect without the invalid provision or application, and to this end the provisions of this law are declared
to be severable.

Section 22. Repeals. Be it further enacted by the authority aforesaid that the following laws and parts of laws be and the same are hereby repealed:

(a) The words "other like associations" contained in the second line of Chapter 16-1 of the 1933 Code of Georgia as Amended relating to Building and Loan Associations and "other like associations" and the definition of "other like associations" following thereafter, so that such "other like associations" shall not be authorized to operate under said chapter;

(b) Chapter 25-2 of the 1933 Code of Georgia, relating to the business of making loans on personal property or buying wages or salaries in general, providing for the licensing of such businesses, the giving of bond by licensees, and the regulation of such business;

(c) Chapter 25-3 of the 1933 Code of Georgia, relating to small loan business, providing for the licensing and regulation of such business by the Superintendent of Banks, fixing the rate of inter-
est chargeable at 1 Y2 per cent per month as amended by the Act
of 1935 (Georgia Laws, page 394) ;

(d) Be it further enacted by the authority aforesaid that all laws or parts of laws inconsistent with any of the provisions of this Act be, and the same are hereby repealed, to the extent of such inconsistency.

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(e) The provisions of this Act shall become effective sixty (60) days from the date of its approval.

(f) Nothing in this Act shall be construed as repealing the provisions of Section 57-116 of the Code of Georgia of 1933, as amended.

Approved March 4, 1955.

GOVERNMENTAL MOTOR VEHICLES-INSURANCE
TO COVER INJURIES BY.
No 237 (Senate Bill No. 74).
An Act authorizing a municipal corporation, a county, or any other political subdivision of the State to procure insurance to cover liability for damages on account of bodily injury or death resulting therefrom to any person, or for damages to property of any person, or both, arising by reason of ownership, maintenance, operation, or use of any motor vehicle; providing for limited waiver of governmental immunity; to authorize payment of premiums therefor from general funds; providing for the effective date of this Act; to repeal conflicting laws; and for other purposes.
Be it enacted by the General Assembly of Georgia:
Section 1. A municipal corporation, a county or any other political subdivision of the State is authorized in its discretion to secure and provide insurance to cover liability for damages on account of bodily injury or death resulting therefrom to any person, or for damage to property of any person, or both, arising by reason of ownership, maintenance, operation, or use of any motor vehicle by the municipal corporation, county, or any other political subdivision of the State, under its management, control or supervision, whether in a governmental undertaking or not, and to pay premiums therefor.
Section 2. Whenever a municipal corporation, a county, or any other political subdivision of the State shall purchase such insurance the negligence of any duly authorized officer, agent, servant, attorney, or employee. in the performance of his official duties, its governmental immunity shall be waived to the extent of the amount of insurance so purchased. Neither the municipal corporation, county or political subdivision of the State, as the case may be, nor the insuring company shall plead such governmental immunity as a defense and may make only such defenses as could be made if the insured were a private person. The municipal corporation, county or any other political subdivision of the State shall be liable for negligence as herein provided only for damages suffered while said insurance is in force, but in no case in an

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226

amount exceeding the limits or the coverage of any such insurance policy. No attempt shall be made in the trial of any action brought against a municipal corporation, county or any other political
subdivision of the State to suggest the existence of any insurance which covers in whole or in part any judgment or award which
may be rendered in favor of the plaintiff, and if the verdict rendered by the jury exceeds the limits of the applicable insurance,
the court shall reduce the amount of said judgment or award to a sum equal to the applicable limits stated in the insurance policy.

Section 3. Premiums on the insurance authorized by Section 1 shall be paid from the general funds of the municipal corporation,
county or political subdivision.

Section 4. This Act shall become effective upon its passage by the General Assembly and approval by the Governor.

Section 5. All laws and parts of laws in conflict with this Act are hereby repealed.

Approved March 4, 1955.

TRADE-MARK ACT AMENDED.
No. 240 (Senate Bill No. 31).
An Act to amend the Trade-Mark Act of 1952 (No. 730 House . Bill No. 380), approved February 14, 1952 by adding Section 17a thereto, to provide injunctive relief for likelihood of injury to business reputation or dilution of the distinctive quality of a trade-mark or other industrial property, and for other purposes.
Be it enacted by the People of the State of Georgia, represented in the General Assembly:
Section 1. Section 17a is added to the Trade-Mark Act of 1952 (No. 730 House Bill No. 380) approved February 14, 1952 the added section to read as follows:
Section 17a. Every person, association, or union of working men adopting and using a trade-mark, trade name, label or form of advertisement may proceed by suit, and all courts having jurisdiction thereof shall grant injunctions, to enjoin subsequent use by another of the same or any similar trade-mark, trade name, label or form of advertisement if there exists a likelihood of injury to business reputation or of dilution of the distinctive quality of the trade-mark, trade name, label, or form of advertisement of the prior user, notwithstanding the absence of competition between the parties or of confusion as to the source of goods or services; except that the provisions of this section shall not deprive any party of any vested lawful rights acquired prior to the effective date of this amendatory Act.

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Section 2. All laws and parts of laws in conflict with this law are hereby repealed.

Approved March 4, 1955.

MOTOR VEHICLES-LIABILITY OF OWNERS
FOR NEGLIGENT INJURIES.
No. 242 (Senate Bill No. 103).
An Act to provide for the liability of the owner of any motor vehicle which may be operated upon the public highways, roads or streets of this State in the prosecution of the business of the owner or for the benefit of the owner; to repeal conflicting laws; and for other purposes.
Be it enacted by the General Assembly of Georgia:
Section 1. Every owner of a motor vehicle operated upon the public highways, roads or streets of this State shall be liable and responsible for the death, or injuries to person or property resulting from negligence in the operation of such motor vehicle, if said motor vehicle is being used in the prosecution of the business of such owner or if said motor vehicle is being operated for the benefit of such owner.
Section 2. All laws and parts of laws in conflict with this Act are hereby repealed.
Approved March 4, 1955.

INSURANCE COMPANY DEPOSITS WITH
TREASURER-NOTICE OF CLAIMS.
No. 421 (House Bill No. 412).
An Act to provide for the disposition of notices of claims against deposits of insurance companies filed with the State Treasurer; to provide that all claims shall expire within a certain time unless renewed; to prescribe the procedure connected with the foregoing; to repeal conflicting laws; and for other purposes.
Be it enacted by the General Assembly of Georgia:
Section 1. Whenever a notice of claim is filed with the State Treasurer as provided by law against the bond deposit of any insurance company doing business in Georgia, and said claim has

228
not been withdrawn at the expiration of seven (7) years from the date of such notice of claim, the State Treasurer is hereby authorized to treat such notice as void and not binding upon him unless the notice of claim is renewed within said seven (7) year period. In the event the State Treasurer determines that a claim on which notice has been filed, and not released by claimant, has been settled or disposed of in any manner, he is authorized to proceed as if such notice of claim had never been filed.
Section 2. All laws and' parts of laws in conflict with this Act are hereby repealed.
Approved March 16, 1955.