Chap. 396.—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 suits on such contracts, and
prescribing certain fees, taxes and licenses, and penalty for ee ;

{S B
Approved March 20, 1918.

Section 1. Be it enacted by the general assembly of Virginia,
That individuals, partnerships and corporations of this State, here-
by designated subscribers, are hereoy authorized to exchange recipro-
cal or inter-insurance contracts with each other or with individuals,
partnerships and corporations of other States and countries pro-
viding indemnity among themselves from any loss which may be
insured against by any fire insurance company or association under
other provisions of the laws. Such contracts and the exchange there-
of and such subscribers, their attorneys and representatives shall be
regulated by this act and by no other law relating to insurance,
unless such law is referred to in this act, and no law hereafter en-
acted shall apply to them, unless they be expressly designated
therein.

Sec. 2. Such contracts may be executed by an attorney, agent or
other representative herein designated attorney, duly authorized
and acting for such subscribers, and such attorney may be a cor-
poration. The office or offices of such attorney may be maintained
at such place or places as may be designated by the subscribers in
the power of attorney.
Sec. 3. Such subscribers so contracting among themselves shall
through their attorney file with the commissioner of insurance a de-
claration verified by the oath of such attorney, or where such at-
torney is a corporation, by the oath of the proper officer thereof,
setting forth: ;

(a) The name of the attorney and the name or designation un-
der 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.

te) 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 authority is to be effected
or exchanged.

(e) The location of the office or offices from which such con-
tracts or agreements are to be issued. ~

(f) That applications have been made for indemnity upon at
least seventy-five separate risks aggregating not less than one and
one-half million dollars as represented by executed contracts or
bona fide applications to become concurrently effective.

(g) That there is in the possession of such attorney and avail-
able for the payment of losses assets conforming. to section six here-

(h) A financial statement in form prescribed for the annual re-
ort.

P 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
certificate of authority provided for in section ten hereof, action
may be brought in the county in which the property insured there-
under is situated and service of process may be had upon the com-
missioner of insurance 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 commissioner of insurance
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 the
maximum amount of indemnity upon a single risk, and no subscriber
shall at any time assume on a single risk an amount greater than ten
per cent of the net worth of such subscriber.

Sec. 6. There shall at all times be maintained as a reserve, &
sum in cash or securities, of the kind and character specified by
the laws of the State where the principal office of the attorney
is located regulating the investments of insurance companies, equal
to fifty per cent of the net annual advance premiums or deposits
collected and credited to the accounts of the subscribers on policies
having one year or less to run and pro rata on those for longer
periods. Net premiums or deposits as used in this section shall be
construed to mean the advance payments made by subscribers after
deducting therefrom the amount provided in the subscribers’ agree-
ments for expenses. If at any time the assets on hand are less than
the foregoing requirement or less than seventy-five thousand dol-
lars, whichever is the greater, the subscribers shall make up the de-
ciency. .

Sec. 7. Such attorney shall within the time limited for filing the
annual report by insurance companies transacting the same kind of
business make a report to the commissioner of insurance for each
calendar year showing the financial condition of affairs at the office
where such contracts are Issued and shall furnish such additional
information and reports as may be required to show the total pre-
miums or deposits collected; the total losses paid, the total amounts
returned to subscribers and the amounts retained for expenses. Pro-
vided, however, that such attorney shall not be required to furnish
the names and addresses of any subscribers except in case of an un-
paid final judgment. The business affairs and assets of such or-
ganization shall be subject to examination by the commissioner of
insurance at the expense of the office examined.

Sec. 8. Any corporation now or hereafter organized under the
laws of this State, shall, in addition to the rights, powers and fran-
chises specified in its articles of incorporation have full power and
authority to exchange contracts of the kind and character herein
mentioned. The right to exchange such contracts is hereby de-
clared to be incidental to the purposes for which such incorporations
are organized and as much granted as the rights and powers express-
ly conferred. |

Sec. 9. Any attorney who shall exchange any contracts of in-
demnity of the kind and character specified in this act or any at-
torney or representative of such attorney who shall solicit or nego-
tiate any application for same or adjust or attempt to adjust any
loss, without said attorney first complying with the foregoing pro-
visions shall be Weemed guilty of a misdemeanor and on convic-
tion thereof shall be subjected to a fine of not less than one hun-
dred dollars nor more than five hundred dollars. For purposes of
organization and upon issuance of permit by the commissioner of
insurance powers of attorney may be solicited without license but
no attorney, agent or other person shall effect any such contracts of
insurance until all the provisions of this act shall have been com-
plied with. ;

Sec. 10. Upon compliance with the foregoing requirements and
the payment of the fees and taxes provided for in this act the com
missioner of insurance shall issue a certificate to the attorney spect-
fying the name or designation under which such contracts of in
demnity are issued. The commissioner of insurance may revoke or
suspend any certificate of authority issued hereunder in case of
breach of any of the conditions imposed by this act after reasonable
notice has been given such attorney in writing so that he may ap-
pear and show cause why such action should not be taken. Any
attorney who may have procured a certificate of authority hereunder
may have same renewed annually thereafter, provided, however,
that any certificate of authority issued shall continue in force and
effect until a new certificate of authority is issued or specifically
refused.

Sec. 11. There shall be paid with the initial certificate of au-
thority the sum of two hundred dollars, which shall cover the li-
cense tax for the first year if the period be one year. Otherwise
such license tax shall be such proportion of two hundred dollars as
the space of time between the issuance of the license and the 30th
day of April following bears to the whole year. Thereafter there
shall be paid on or before the first day of April of each year a tax
of two and three-fourths per centum of the gross premium or de-
posit income collected from and credited to the accounts of sub-
scribers in Virginia during the year ending the 31st day of Decem-
ber next preceding, decreased by all returns for cancellations, and all
amounts returned to subscribers or credited to their accounts as
savings. The license tax on premiums or deposits as provided in
this section shall be in lieu of all other license fees, taxes and levies
whatsoever for State, county, municipal or local purposes.

Sec. 12. All laws or parts of laws in conflict herewith, be, and
the same are hereby, repealed in so far as they are in conflict with
this act.