H. B. 3025


(By Delegates Beane, Webb and G. White)
[Introduced March 28, 2001; referred to the
Committee on the Judiciary.]




A BILL to amend and reenact sections two and six, article twenty-three, chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, all relating to fraternal benefit societies; providing that fraternal benefit societies be subject to the variable contract provisions set forth in article thirteen-a, chapter thirty-three of the code of West Virginia, and that the United States citizenship requirements be removed.

Be it enacted by the Legislature of West Virginia:
That sections two and six, article twenty-three, chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted, all to read as follows:
ARTICLE 23. FRATERNAL BENEFIT SOCIETIES.
§33-23-2. Applicability of other provisions.
Every fraternal benefit society shall be governed and be subject to the same extent as other insurers transacting like kinds of insurance, to the following articles of this chapter: Article one (definitions); article two (insurance commissioner); article four (general provisions); section thirty, article six (fee for form and rate filing); article seven (assets and liabilities); article ten (rehabilitation and liquidation); article eleven (unfair trade practices); article twelve (agents, brokers, solicitors and excess lines); article thirteen (life insurance); article thirteen-a (variable contracts); article fifteen-a (long-term care insurance); article twenty-seven (insurance holding company systems); article thirty-three (annual audited financial report); article thirty-four (administrative supervision); article thirty-four-a (standards and commissioner's authority for companies deemed to be in hazardous financial condition); article thirty-five (criminal sanctions for failure to report impairment); article thirty-seven (managing general agents); and article thirty-nine (disclosure of material transactions).
§33-23-6. Organization.
The organization of a domestic society shall be governed as follows:
(a) Seven or more citizens of the United States individuals, a majority of whom are citizens residents of this State, who desire to form a fraternal benefit society, may make, sign and acknowledge before some officer, competent to take acknowledgment of deeds, articles of incorporation, in which shall be stated:
(1) The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company as to be misleading or confusing;
(2) 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 article: Provided, That any lawful, social, intellectual, educational, charitable, benevolent, moral, fraternal or religious advantages may be set forth among the purposes of the society; and
(3) 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.
(b) Such articles of incorporation, duly certified copies of the constitution, laws and rules, copies of all proposed forms of certificates, applications therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year, such bond to be in an amount to be determined by the commissioner not to exceed the sum of twenty-five thousand dollars with sureties approved by the commissioner, shall be filed with the commissioner, who may require such further information as he deems necessary. All documents filed are to be in the English language. If the purposes of the society conform to the requirements of this article and all provisions of law have been complied with, the commissioner shall approve same in writing, whereupon the incorporators may file such approved articles with the secretary of state of this State and receive a certificate of incorporation in the same manner as such certificates are issued to other nonstock corporations.
(c) No 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 commissioner upon cause shown, unless the five hundred applicants hereinafter 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 the certificate, or at the expiration of the extended period, unless the society shall have completed its organization and received a license as hereinafter provided.
(d) Upon receipt of the certificate of incorporation, the 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 premium 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 premium, nor issue any certificate, nor pay, allow, or offer or promise to pay or allow, any death or disability benefit to any person until:
(1) Actual bona fide applications for death benefits have been secured aggregating at least five hundred thousand dollars on not less than five hundred lives;
(2) All such applicants for death benefits shall have furnished evidence of insurability satisfactory to the society;
(3) Certificates of examinations or acceptable declarations of insurability have been duly filed and approved by the chief medical examiner of the society;
(4) Ten subordinate lodges or branches have been established into which the five hundred applicants have been admitted;
(5) There has been submitted to the commissioner, under oath of the president or secretary, or corresponding officer of the 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 and premiums therefor; and
(6) It shall have been shown to the commissioner, by sworn statement of the treasurer, or corresponding officer of such society, that at least five hundred applicants have each paid in cash at least one regular monthly premium as herein provided, which premiums in the aggregate shall amount to at least twenty-five hundred dollars, 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 premiums shall be held in trust during the period of organization and if the society has not qualified for a certificate of authority within one year, as herein provided, such premiums shall be returned to said applicants.
(e) The commissioner may make such examination and require such further information as he deems advisable. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, he shall issue to the society a license to transact insurance pursuant to the provisions of this article. The license shall be prima facie evidence of the existence of the society at the date of such license. The commissioner shall cause a record of such license to be made. A certified copy of such record may be given in evidence with like effect as the original license.
(f) Every society shall have the power to adopt a constitution and laws 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 its members from time to time. It shall have the power to change, alter, add to or amend such constitution and laws and shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society.


NOTE: The purpose of this bill is to require that fraternal benefit societies be subject to the variable contract provisions set forth in article thirteen-a, chapter thirty-three of the code of West Virginia.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.