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This entry was published on 2014-09-22
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Contingent liability; non-assessable policies
Insurance (ISC) CHAPTER 28, ARTICLE 61
§ 6108. Contingent liability; non-assessable policies. (a) Every
contract of insurance and subscriber's agreement under or by which
contracts of insurance are issued or exchanged by any authorized
reciprocal insurer shall provide for a contingent several liability for
assessment of the subscriber as an inter-insurer on the risks of every
other subscriber in an amount not less than one nor more than ten times
the annual premium and in addition to the annual premium expressed in
such contracts of insurance issued to the subscriber by the reciprocal

(b) If the admitted assets of any such insurer are at any time
insufficient for the payment of losses and expenses after providing for
all other liabilities of such insurer and the minimum surplus to
policyholders required by this chapter, the advisory committee shall,
within thirty days thereafter, order an assessment for the amount
necessary to pay such losses and expenses, and authorize the
attorney-in-fact to collect from each subscriber liable therefor a pro
rata share of the amount of such assessment, subject to the limit
specified in the contract of such subscriber and to maintain an action
therefor in the name of the attorney-in-fact.

(c) Every policy issued by any such insurer shall clearly state
whether or not the holder of the policy is subject to liability for
assessment. All policies issued by any such insurer which are subject to
liability for assessment shall contain a clear statement of the
liability of the policyholder for payment of a proportionate share of
any deficiency or impairment as provided by law within the limit
provided by the policy, and shall further state that any assessment
shall be for the exclusive benefit of holders of policies which provide
for such a contingent liability, and the holders of policies subject to
assessment shall not be liable to assessment in an amount greater in
proportion to the total deficiency than the ratio that the deficiency
attributable to the assessable business bears to the total deficiency.

(d) Any reciprocal insurer, except a municipal reciprocal insurer
which issues policies not covered by the property/casualty insurance
security fund, may with the permission of the superintendent issue
non-assessable policies or agreements in this state upon compliance with
the following requirements:

(1) It shall have and maintain a surplus to policyholders at least
equal to one hundred fifty percent of the amount of surplus to
policyholders which such insurer is required to maintain by the
provisions of section six thousand one hundred two of this article. Such
surplus shall be inclusive of any surplus required by any other sections
of this chapter.

(2) It shall have submitted a copy of its proposed non-assessable
policy or policies for approval of the superintendent, and shall have
obtained his approval thereof.