Section 94D: Domestic exchange; provisional and permanent certificates to transact business; application and declaration
Section 94D. Organizers of a domestic exchange, having obtained a preliminary certificate to solicit subscribers, under section ninety-four C, may obtain a provisional certificate of authority to transact business, upon compliance with the requirements hereinafter provided. Said certificate shall be valid for a period of one hundred and eighty days from the date of issuance. Upon the expiration of said period, the exchange shall petition the commissioner for a permanent certificate of authority to transact business as hereinafter described.
A domestic exchange, in order to obtain a provisional certificate of authority to transact business, shall file with the commissioner an application therefore, accompanied by a declaration signed and sworn to by its attorney in fact setting forth the information required by paragraphs (a) to (k), inclusive. For the purposes of said provisional certifying period, the minimum number of contracts or bona fide applications for insurance shall be at least twenty-five separate risks, aggregating not less than one million two hundred and fifty thousand dollars.
For the purpose of said provisional certifying period, the surplus fund described in paragraph (g), shall be at least one hundred thousand dollars. Any increase in the minimum number of insurance contracts described in subsection (h), during the provisional certifying period, shall be accompanied by a pro rata increase of said surplus fund.
A domestic exchange, in order to obtain a certificate of authority to transact business, shall file with the commissioner an application therefor, accompanied by a declaration signed and sworn to by its attorney in fact, setting forth:—
(a) The name or designation under which the reciprocal or inter-insurance contracts are to be issued, which shall not be so similar to the name of any other insurance company as likely to be mistaken for it, and which, as to domestic exchanges, shall be subject to the approval of the commissioner.
(b) The location of the office or offices from which such contracts are to be issued.
(c) The classes of insurance to be written.
(d) An exact copy of the form of agreement or policy contracts to be used in the exchanging of the insurance provided for.
(e) An exact copy of the form of power of attorney authorizing the attorney in fact to effect the exchanging of insurance provided for and which as to domestic exchanges, shall be subject to the approval of the commissioner.
(f) The name of the attorney in fact; provided, that the commissioner shall not issue a certificate of authority to transact business to a domestic exchange until he is satisfied, by such examination as he may make and such evidence as he may require, that the attorney in fact is competent, of good repute, and intends in good faith to act as attorney in fact for subscribers at said exchange and has adopted a proper system of accounting and employed a competent accountant, a competent claim manager and a competent and experienced underwriter; and provided, further, that if the commissioner is of the opinion that the granting of such a certificate of authority to transact business to any domestic exchange would, in any case, be prejudicial to the public interest, he may, in his discretion, refuse to issue it.
(g) That a fund of at least two hundred thousand dollars is in the possession of the attorney in fact or trustees duly authorized for that purpose as a surplus fund for the carrying out of reciprocal or inter-insurance contracts executed by said attorney in fact, said fund to be in cash or invested in such securities as are specified or referred to in sections sixty-three, eighty and ninety for the investment of the surplus of mutual companies.
(h) That, except as to the kinds of insurance hereinafter specifically mentioned in paragraphs (a), (b) and (c) of this subdivision, applications have been made for insurance upon at least fifty separate risks aggregating not less than two and one half million dollars represented by executed contracts or bona fide applications to become concurrently effective upon the issuance of a certificate of authority to transact business.
(a) That, in the case of employers' liability or workers' compensation insurance, applications have been made for insurance upon at least one hundred separate risks covering a total annual pay roll of not less than two and one half million dollars, represented by executed contracts or bona fide applications to become concurrently effective upon the issuance of a certificate of authority to transact business, and arrangements satisfactory to the commissioner for reinsurance in the manner required for domestic mutual companies under section ninety-three have been made, except that a domestic exchange may, for this purpose, reinsure under the provisions of either section twenty or section ninety-four J.
(b) That, in the case of automobile insurance, whether written by an exchange writing automobile insurance only or in conjunction with other risks on any of the coverages permitted for any one stock or mutual insurance company, applications have been made for insurance upon at least one thousand motor vehicles, represented by executed contracts or bona fide applications to become concurrently effective upon the issuance of a certificate of authority to transact business, the premiums on which shall amount to not less than one hundred thousand dollars, and, in the case of domestic exchanges, that a deposit of not less than two hundred thousand dollars has been made with the state treasurer in the manner provided for domestic mutual companies under section ninety-three.
(c) That, in the case of an exchange to be authorized to transact business under clause Fifth of section forty-seven, arrangements for its protection from extraordinary losses caused by any one disaster have been made by reinsurance as provided in section twenty or section ninety-four J.
(i) That every subscription for insurance in the list filed with the commissioner is genuine and that all premium deposits paid thereon have actually been paid to the attorney in fact in full in cash.
(j) That the attorney in fact will execute no contracts of insurance save upon the express condition that the commissioner shall be the attorney for each subscriber to receive service of process in any action or proceeding against the subscriber, nor unless the subscriber shall have authorized the attorney in fact to designate the commissioner for service of process and shall have ratified any prior designations or appointments for service of process.
(k) Any reinsurance contracts entered into by such exchanges must be obtained in accordance with the laws of the commonwealth and in amounts adequate to satisfy the commissioner.
This declaration shall be accompanied by a power of attorney executed by the attorney in fact, constituting and appointing the commissioner or his successor the true and lawful attorney of the subscribers upon whom all lawful process in an action or legal proceeding against them may be served, which shall be in the form prescribed by and shall be subject to the provisions of clause Third of section one hundred and fifty-one except that the power of attorney therein provided shall be executed in the manner provided in this subsection in the case of exchanges.
The service of such process shall be made as provided in said clause Third of said section one hundred and fifty-one and notice of legal process shall be given to the exchange by the commissioner in the manner provided for notice to foreign companies under section one hundred and fifty-four. In case the attorney in fact for an exchange is a corporation, the application, declaration and power of attorney for service of process provided for in this section shall be signed and sworn to by said corporate attorney in fact by an executive officer thereof duly authorized thereto under its corporate seal.