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This entry was published on 2014-09-22
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Mutual insurance corporations; membership and dividends
Insurance (ISC) CHAPTER 28, ARTICLE 12
§ 1211. Mutual insurance corporations; membership and dividends. (a)
Every domestic mutual insurance corporation shall be organized,
maintained and operated for the benefit of its members as a non-stock
corporation. Every policyholder shall be a member of such corporation
and shall, except as provided in subsection (d) hereof, be entitled to
vote at any regular or special meeting of such corporation, to notice
thereof pursuant to the by-laws and to share equitably in dividends
declared by the board of directors. The board of directors may, subject
to limitations in this chapter, from time to time declare a dividend
from the corporation's surplus. No dividend shall be declared or paid if
thereby the company's minimum or other required surplus will be
impaired. In declaring and paying any dividend the board of directors
may make reasonable classifications of policies, and shall declare and
pay such dividend in a manner that is fair and equitable to the
policyholders. Unless otherwise provided in the corporation's charter or
by-laws, each member shall be entitled to one vote at any regular or
special meeting. The charter or by-laws may, with the approval of the
superintendent, provide for distribution of voting power among members
on the basis of the amount of insurance held, number of policies held,
amount of premiums paid by them or on any other basis the superintendent
finds fair and equitable.

(b) A member of any such corporation may vote at any such meeting in
person or by proxy. No proxy or power of attorney given by him, to vote
at any meeting of such corporation, shall be valid or effective after
the next meeting. No person shall directly or indirectly sell or
purchase, or offer to sell or purchase, any proxy or power of attorney
to vote at any such meeting, nor shall any person directly or indirectly
give or receive, or offer to give or receive, any proxy or power of
attorney to vote at any such meeting as an inducement to the negotiation
or making of a contract of insurance or any renewal thereof, to the
settlement of any claim thereunder, or to any other act relating

(c) All corporations, their directors and representatives and all
persons, firms or corporations holding property in trust may insure the
same in mutual insurance corporations and by so doing such directors,
representatives or trustees, in their representative capacity, may
assume the liabilities and be entitled to the rights of a member of such
insurer, but shall not be personally liable as individuals upon such
contract of insurance.

(d) The provisions of this section as to members' voting rights and
the election of directors shall not apply to any domestic mutual life
insurance company governed by the provisions of section four thousand
two hundred ten of this chapter, nor shall they require any such company
to hold a meeting of its members.

(e) As to any surety or fidelity bond or like obligation executed by a
mutual property/casualty insurance company as a surety or guarantor, the
principal, and not the obligee, shall be a member of such corporation.