Chap. 312.—An ACT to amend and re-enact sections 1, 3, 4, 5 and 6, of an act
entitled an act to authorize and regulate the exchanges of certain classes
of reciprocal and inter-insurance contracts among individuals, partner-
ships and corporations, empowering corporations generally to make such
contracts, regulating process in suits on such contracts, and prescribing
certain fees, taxes and licenses and penalty for violation, approved March
20, 1918. {H B 140)

Approved March 19, 1920.

1. Be it enacted by the general assembly of Virginia, That sec-
tions one, three, four, five and six of an act entitled an act to authorize
and regulate the exchange of certain classes of reciprocal and inter-
insurance contracts among individuals, partnerships and corporations,
empowering corporations generally to make such contracts, regulating
process in sutts on such contracts and prescribing certain fees, taxes
and licenses and penalty for violation, approved March twentieth,
nineteen hundred and eighteen, be amended and re-enacted so as to
read as follows:

Sec. 1. Individuals, partnerships and corporations of this State
herein designated subscribers, are authorized to exchange reciprocal
or inter-insurance contracts with each other or with individuals, part-
nerships and corporations of other States and countries providing in-
demnity among themselves from any loss which may be insured
against under other provisions of the law, excepting fidelity and
surety and life, insurance. Such contracts and the exchange thereof
and such subscribers, their attorneys and representatives shall be
regulated by this act and by no other law relating to insurance, except
that act known as the Virginia worknien’s compensation act, and laws
relating to workmen’s compensation insurance, enacted subsequent
thereto, and except all provisions of law relating to supervision of
rates and prohibition of discrimination of rates unless such law 1s
referred to in this act, and no law hereafter enacted shall apply to
them unless they be expressly designated therein, but inter-insurance
or reciprocal exchanges may make return of unused portion of pre-
mium or deposit to insured or subscriber, and nothing shall be con-
strued to prevent in the case of workmen’s compensation or employer's
lability insurance, merit rating or weekly or monthly adjustments
for the purpose of reaching cost basis to insured.

Sec. 3. Such subscribers so contracting among themselves shall

through their attorney file with the commissioner of insurance a decla-
ration verified by the oath of such attorney, or where such attorney
is a corporation, by the oath of the proper officer thereof, sétting
forth : :
(a) The name of the attorney and the name or designation under
which such contracts are issued, which name or designation shall not
be so similar to any name or designation adopted by any attorney,
or by any insurance organization in the United States prior to the
adoption of such name or designation by such attorney as to confuse
or deceive.

(b) The kind or kinds of insurance to be affected or exchanged.

(c) A copy of the form of policy contract or agreement under or
by which such insurance is to be effected or exchanged. -

(d) A copy of the form of power of attorney or other authority
of such attorney under or by which such insurance is to be effected
or exchanged.

(e) The location of the office or offices from which such contracts
or agreements are to be issued. ,

(f) That applications have been made for indemnity upon at
least one hundred separate risks aggregating not less than one and
one-half million dollars ($1,500,000.00), represented by executed con-.
tracts or bona fide applications to become concurrently effective ; or,
in case of employers’ liability or workmen’s compensation insurance
covering a total pay roll of not less than two and one-half million
dollars ($2,500,000.00).

(g) That there is in the possession of such attorney and available
for the payment of losses assets conforming to section six hereof.

(h) A financial statement in form prescribed for the annual
report. ie ts

Sec. 4. Concurrently with the filing of the declaration provided
for by the terms of section three hereof, the attorney shall file with
the commissioner of insurance an instrument in writing executed
by him for said subscribers conditioned that upon the issuance of cer-
tificate of authority provided for in section ten hereof, action may be
brought in the county in which the cause of action arises, or the
claimant resides, and service of process may be had upon the secretary
of the Commonwealth in all suits in this State arising out of such
policies, contracts or agreements, which service shall be valid and
binding upon all subscribers exchanging at any time reciprocal or
inter-insurance contracts through such attorney. Three copies of such
process shall be served and the secretary of the Commonwealth shall
file one copy, forward one copy to said attorney and return one copy
with his admission of service. ,

Sec. 5. There shall be filed with the commissioner of insurance
by such attorney whenever the commissioner of insurance shall so
require, a statement under the oath of such attorney showing in the
case of fire insurance, the maximum amount of indemnity upon a
single risk, and no subscriber shall assume on any single fire insurance
risk an amount greater than ten per centum (10%) of the net worth
of such subscriber.

Sec. 6. There shall be maintained at all times assets in cash, or
securities authorized by the laws of the State in which the principal
office of the attorney is located, for the investment of funds of insur-
ance companies doing the same kind of business an amount equal to
fifty per centum (50%) of the net annual advance premiums or de-
posits collected and credited to the accounts of subscribers on poli-
cies having one year or less to run and pro rata on those for longer
periods, or in lieu thereof, one hundred per centum (100%) of the
net unearned premiums or deposits collected and credited to the ac-
counts of subscribers.

There shall also be maintained as a guaranty fund or surplus, an
additional sum in cash or such securities amounting to not less than
two hundred thousand dollars. In addition to the foregoing require-
ments, in the case of liabilities or workmen’s compensation insur-
ance, there shall be maintained as a reserve in cash or such securi-
ties assets sufficient to discharge all liabilities on all outstanding
losses arising under policies issued, the same to be calculated on the
basis of net premiums or deposits as in this act defined, and in ac-
cordance with the laws of the State relating to similar reserves for
companies insuring similar risks. If at any time the surplus on hand
is less than the foregoing requirements the subscribers, or their attor-
ney for them, shall make up the deficiency. Provided, however, that
the foregoing requirements in this section contained, shall not apply
to such reciprocal or inter-insurance exchanges as were, on February
15, 1920, licensed in this State under the provisions of this act, nor
to renewals of such licenses; but exchanges, in lieu thereof, shall
at all times maintain assets in cash or securities of the kinds men-
tioned above an amount equal to fifty per centum of the net annual
advance premiums or deposits collected and credited to the accounts
of subscribers on policies having one year or less to run and pro rata
on those for longer periods, or in lieu thereof one hundred per centum
of the net unearned premiums or deposits collected and credited to the
account of subscribers; and whenever the assets are less than such
amount or less than seventy-five thousand dollars, whichever is the
greater, the subscribers or their attorneys for them shall make tp
the deficiency. Net premiums or deposits, as used in this act, shall be
construed to mean the advance payments made by subscribers after
deducting therefrom the amounts specifically provided in subscribers’
agreements for expenses.