IC 27TITLE 27. INSURANCE
           Art. 1.DEPARTMENT OF INSURANCE
           Art. 2.POWERS AND DUTIES OF INSURERS
           Art. 3.CONSOLIDATIONS AND REORGANIZATION
           Art. 4.UNFAIR COMPETITION; UNAUTHORIZED INSURERS; FOREIGN INSURERS
           Art. 5.REPEALED
           Art. 5.1.FARM MUTUAL INSURANCE COMPANIES
           Art. 6.REINSURANCE; INTERINSURANCE; RECIPROCAL INSURANCE
           Art. 7.SPECIAL TYPES OF INSURANCE
           Art. 8.LIFE, ACCIDENT, AND HEALTH
           Art. 9.SUPERVISION; REHABILITATION; LIQUIDATION
           Art. 10.INDIANA BAIL LAW
           Art. 11.FRATERNAL BENEFIT SOCIETIES
           Art. 12.REPEALED
           Art. 13.HEALTH MAINTENANCE ORGANIZATIONS
           Art. 14.MUTUAL INSURANCE HOLDING COMPANY LAW
           Art. 15.DEMUTUALIZATION OF MUTUAL INSURANCE COMPANIES
           Art. 16.PROFESSIONAL EMPLOYER ORGANIZATIONS
           Art. 17.DISCOUNT MEDICAL CARD PROGRAM ORGANIZATIONS
           Art. 18.SURPLUS LINES INSURANCE COMPACT
           Art. 19.HEALTH BENEFIT EXCHANGE

 

IC 27-1ARTICLE 1. DEPARTMENT OF INSURANCE
           Ch. 1.Department Created
           Ch. 2.Application of Article; Definitions
           Ch. 2.1.Health Care Sharing Ministries
           Ch. 3.General Powers and Duties of the Department
           Ch. 3.1.Examinations
           Ch. 3.5.Annual Audited Financial Reports
           Ch. 4.Repealed
           Ch. 4.1.Corporate Governance Annual Disclosure
           Ch. 5.Classification of Insurance
           Ch. 6.Formation of Domestic Companies
           Ch. 6.5.Redomestication of Insurers
           Ch. 7.General Corporate Powers and Responsibilities of Insurance Companies
           Ch. 7.5.Indemnification of Directors
           Ch. 8.Procedures for Amending Articles of Incorporation
           Ch. 9.Merger, Consolidation, and Reinsurance
           Ch. 10.Voluntary Dissolution
           Ch. 11.Reorganization of Existing Insurance Companies
           Ch. 12.Life Insurance Company Powers and Policy Requirements
           Ch. 12.1.Limited Purpose Subsidiary Life Insurance Companies
           Ch. 12.3.Interest Rates on Insurance Policy Loans
           Ch. 12.4.Charitable Gift Annuities
           Ch. 12.5.Nonforfeiture Provisions of Annuity Contracts
           Ch. 12.6.General Provisions of Annuity Contracts
           Ch. 12.7.Funding Agreements
           Ch. 12.8.Standard Valuation Law
           Ch. 13.Casualty, Fire, and Marine Insurance Company Powers and Policy Requirements
           Ch. 14.Repealed
           Ch. 15.Repealed
           Ch. 15.5.Repealed
           Ch. 15.6.Insurance Producers
           Ch. 15.7.Insurance Producer License Renewal
           Ch. 15.8.Surplus Lines Producers
           Ch. 15.9.Portable Electronics Insurance
           Ch. 16.Repealed
           Ch. 16.1.Self-Storage Insurance
           Ch. 17.Admission of Foreign and Alien Companies to Transact Business in Indiana
           Ch. 18.Additional Provisions Pertaining to Foreign and Alien Companies
           Ch. 19.Reorganization of Foreign Companies Into Domestic Companies
           Ch. 20.Additional Provisions Pertaining to All Insurance Companies
           Ch. 21.Additional Provisions Pertaining to Insurance Company Investments
           Ch. 22.Regulation of Insurance Rates
           Ch. 23.Regulation of Insurance Holding Company Systems
           Ch. 23.5.Risk Management and Own Risk and Solvency Assessment
           Ch. 24.Repealed
           Ch. 25.Insurance Administrators
           Ch. 25.1.Certain Insurer Responsibilities
           Ch. 26.Policy Language Simplification
           Ch. 27.Public Adjusters
           Ch. 28.Independent Adjuster Licensing
           Ch. 29.Indiana Political Subdivision Risk Management Commission
           Ch. 29.1.Political Subdivision Catastrophic Liability Fund
           Ch. 30.Group Casualty and Liability Insurance for Foster Parents
           Ch. 31.Cancellation and Nonrenewal of Commercial Property and Casualty Insurance
           Ch. 32.Repealed
           Ch. 33.Managing General Agents
           Ch. 34.Multiple Employer Welfare Arrangements
           Ch. 35.Business Transacted With Producer Controlled Property and Casualty Insurers
           Ch. 36.Risk Based Capital Requirements
           Ch. 37.Health Provider Contracts
           Ch. 37.1.Termination of Health Provider Contracts
           Ch. 37.2.Health Insurance Educator
           Ch. 37.3.Third Party Rights and Responsibilities Under Health Care Contracts
           Ch. 37.4.Electronic Prescription Drug Prior Authorization
           Ch. 38.Regulation of Depository Institutions
           Ch. 39.Independent Educational Institution Self-Insurance Consortium
           Ch. 40.Entry of Unauthorized Alien Companies
           Ch. 41.Group Personal Excess or Umbrella Liability Insurance
           Ch. 42.Certificates of Insurance
           Ch. 43.Electronic Delivery of Notices and Documents
           Ch. 43.2.Service Contracts
           Ch. 44.Electronic Posting of Documents

 

IC 27-1-1Chapter 1. Department Created
           27-1-1-1Creation; functions
           27-1-1-2Insurance commissioner
           27-1-1-3Personnel
           27-1-1-4Repealed
           27-1-1-5Repealed

 

IC 27-1-1-1Creation; functions

     Sec. 1. There is hereby created a department in the state government of the state of Indiana which shall be known as the department of insurance. Said department shall have charge of the organization, supervision, regulation, examination, rehabilitation, liquidation, and/or conservation of all insurance companies to which this title is applicable, shall have charge of the enforcement, administration, and execution of the provisions of this title and the provisions of any other statute applicable to insurance companies, to the insurance department, or to the insurance commissioner, and shall exercise such other powers and perform such other duties as may at any time be imposed or conferred on the department by law. Wherever by any of the provisions of any statute any right, power, or duty is imposed or conferred on the department, the right, power, or duty so imposed or conferred shall be possessed and exercised by the insurance commissioner, unless otherwise provided in that statute, or unless any such right, power, or duty is delegated to the duly appointed deputies, assistants, or employees of the department, or any of them, by an appropriate rule or order of the insurance commissioner.

Formerly: Acts 1945, c.351, s.1. As amended by P.L.252-1985, SEC.1.

 

IC 27-1-1-2Insurance commissioner

     Sec. 2. (a) The powers, duties, management and control of the department of insurance are hereby conferred on and vested in the "insurance commissioner". The insurance commissioner shall be appointed by the governor, and shall be familiar with and known to possess a knowledge of the subject of insurance and be skilled in matters pertaining thereto and shall be chosen solely for fitness, irrespective of political beliefs or affiliations. The commissioner shall serve and may be removed at the pleasure of the governor, and shall be the chief executive and administrative officer of the department. The commissioner shall take an oath of office and give bond in the sum of fifty thousand dollars ($50,000) with surety to be approved by the governor for the faithful performance of his duties.

     (b) The commissioner is authorized to attend and participate in the meetings of the national convention of insurance commissioners and of the committees thereof and may require the deputies, actuaries, and assistants that the commissioner may designate to attend and participate in such meetings. If the commissioner deems it advisable, the commissioner may request the attorney general or a deputy attorney general to attend and participate in such meetings. The commissioner and the deputies, actuaries, assistants, and attorneys of the department of insurance shall aid in promoting improvements in the insurance laws and the uniformity thereof in the several states. The expense of such attendance by the commissioner, and the deputies, actuaries, assistants, and attorneys shall be paid by the treasurer of state upon the warrant of the commissioner certifying that the commissioner has examined and approved the charges for such expenses.

Formerly: Acts 1945, c.351, s.2; Acts 1959, c.351, s.1. As amended by P.L.100-2012, SEC.62.

 

IC 27-1-1-3Personnel

     Sec. 3. The commissioner shall appoint a chief deputy, an actuary, a securities deputy, and such other deputies, examiners, assistants and other employees as may be necessary to carry on the work of the department. With respect to all of such positions, aptitude, previous training and experience, intelligence and moral and physical qualifications shall be carefully considered and such employees shall be chosen for their fitness, either professional or practical, as the nature of the position may require, irrespective of their political beliefs or affiliations; it being the responsibility of the commissioner to develop and maintain a highly trained and effective personnel within the insurance department. The actuary of the department shall have had at least five (5) years experience in a responsible actuarial position in a life or casualty insurance company, in consulting actuarial practice, or in a comparable actuarial position in a state or federal agency; however, only two (2) years experience of the type aforesaid shall be required (a) if the applicant is a fellow or associate of the society of actuaries or the casualty actuarial society, or (b) if said applicant has completed courses in actuarial mathematics or theory in an accredited college or university. The technical or professional qualifications of any applicant shall be determined by examination, professional rating or otherwise, as the commissioner shall determine. The securities deputy and any securities clerk shall each give bond in the sum fixed by the governor, but not less than twenty-five thousand dollars ($25,000) surety, for the faithful performance of their duties.

Formerly: Acts 1945, c.351, s.3; Acts 1959, c.351, s.2. As amended by P.L.100-2012, SEC.63.

 

IC 27-1-1-4Repealed

Formerly: Acts 1945, c.351, s.4; Acts 1959, c.351, s.3; Acts 1963(ss), c.8, s.1. Repealed by P.L.100-2012, SEC.64.

 

IC 27-1-1-5Repealed

Formerly: Acts 1945, c.351, s.5. As amended by P.L.252-1985, SEC.2. Repealed by P.L.4-1988, SEC.17.

 

IC 27-1-2Chapter 2. Application of Article; Definitions
           27-1-2-1Citation
           27-1-2-2Application of article
           27-1-2-2.3Captive insurers
           27-1-2-2.5Health insurance providers; registration
           27-1-2-3Definitions
           27-1-2-4Violation of Indiana Insurance Law

 

IC 27-1-2-1Citation

     Sec. 1. IC 27-1-2 through IC 27-1-20 shall be known and may be cited as the Indiana Insurance Law.

Formerly: Acts 1935, c.162, s.1. As amended by P.L.252-1985, SEC.3.

 

IC 27-1-2-2Application of article

     Sec. 2. This article shall be applicable to all persons, firms, partnerships, corporations, associations, orders, societies, and systems and to associations operating as Lloyds, interinsurers, or individual underwriters authorized as of March 8, 1935, to make insurance under the provisions of any statute enacted prior to March 8, 1935, or organized or incorporated before or after March 8, 1935, under the provisions of any statute of this state, or which are doing or attempting to do, or which are representing that they are doing an insurance business in this state, or which are in process of organization for the purpose of doing or attempting to do such business. All domestic, foreign, and alien companies authorized to do business in this state shall be subject to this article; however, any not-for-profit corporation which pays death benefits to the owner of a valuable registered horse on the death of said horse shall for that purpose not be subject to this article.

Formerly: Acts 1935, c.162, s.2; Acts 1973, P.L.269, SEC.1. As amended by P.L.252-1985, SEC.4; P.L.8-1993, SEC.408.

 

IC 27-1-2-2.3Captive insurers

     Sec. 2.3. (a) As used in this section, "captive insurer" means a foreign company or an alien company:

(1) that is supervised in the foreign or alien jurisdiction;

(2) that is owned by a person that conducts business in Indiana;

(3) whose exclusive purpose is to insure property and casualty risks of:

(A) the parent entity described in subdivision (2);

(B) affiliates of the parent entity; or

(C) a controlled unaffiliated business;

which may include reinsuring (through risk-sharing arrangements) property and casualty risks insured by other foreign companies or alien companies described in subdivision (1); and

(4) that:

(A) is owned or controlled by a state educational institution (as defined by IC 21-7-13-32); or

(B) has made an election under Section 831(b) of the Internal Revenue Code if that election is in effect.

     (b) As used in this section, "controlled unaffiliated business" means a business:

(1) that:

(A) is not an affiliate of; and

(B) has a contractual relationship with;

a parent entity described in subsection (a)(2) or an affiliate of the parent entity; and

(2) the risks of which are managed by a captive insurer.

     (c) Except as provided in this section, this article does not apply to a captive insurer.

     (d) A captive insurer that is doing business in Indiana:

(1) is not required to obtain a certificate of authority in Indiana under IC 27-1-6 for domestic formation or under IC 27-1-17 for foreign company admission;

(2) shall register with the commissioner; and

(3) shall, for each calendar year after 2012 in which the captive insurer is doing business in Indiana, pay into the treasury of this state a tax of two thousand five hundred dollars ($2,500).

     (e) A captive insurer that is required to pay the tax imposed for a calendar year under subsection (d)(3) shall pay the tax as follows:

(1) For a tax imposed under subsection (d)(3) for calendar year 2013, the captive insurer shall pay the tax before July 1, 2014.

(2) For a tax imposed under subsection (d)(3) for a calendar year after 2013, the captive insurer shall pay the tax before April 15 of the following calendar year.

     (f) The state and a political subdivision of the state shall not impose a license fee or privilege or other tax on a captive insurer, except the following:

(1) The tax described in subsection (d)(3).

(2) An applicable tax on real and tangible personal property of the captive insurer.

As added by P.L.129-2014, SEC.3. Amended by P.L.242-2015, SEC.42.

 

IC 27-1-2-2.5Health insurance providers; registration

     Sec. 2.5. A person or other entity that provides coverage in Indiana for medical, surgical, chiropractic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital, optometric, or podiatric expenses, whether coverage is by direct payment, reimbursement, or other means, shall:

(1) register with the commissioner; and

(2) indicate in the registration if the coverage provided by the person or other entity is an employee benefit plan subject to the Employee Retirement Income Security Act (29 U.S.C. 1001 et seq.).

As added by P.L.147-1990, SEC.1.

 

IC 27-1-2-3Definitions

     Sec. 3. As used in this article, and unless a different meaning appears from the context: (a) "Insurance" means a contract of insurance or an agreement by which one (1) party, for a consideration, promises to pay money or its equivalent or to do an act valuable to the insured upon the destruction, loss or injury of something in which the other party has a pecuniary interest, or in consideration of a price paid, adequate to the risk, becomes security to the other against loss by certain specified risks; to grant indemnity or security against loss for a consideration.

     (b) "Commissioner" means the "insurance commissioner" of this state.

     (c) "Department" means "the department of insurance" of this state.

     (d) The term "company" or "corporation" means an insurance company and includes all persons, partnerships, corporations, associations, orders or societies engaged in or proposing to engage in making any kind of insurance authorized by the laws of this state.

     (e) The term "domestic company" or "domestic corporation" means an insurance company organized under the insurance laws of this state.

     (f) The term "foreign company" or "foreign corporation" means an insurance company organized under the laws of any state of the United States other than this state or under the laws of any territory or insular possession of the United States or the District of Columbia.

     (g) The term "alien company" or "alien corporation" means an insurance company organized under the laws of any country other than the United States or territory or insular possession thereof or of the District of Columbia.

     (h) The term "person" includes individuals, corporations, associations, and partnerships; personal pronoun includes all genders; the singular includes the plural and the plural includes the singular.

     (k) The term "insurance solicitor" means any natural person employed to aid an insurance producer in any manner in soliciting, negotiating, or effecting contracts of insurance or indemnity other than life.

     (l) The term "principal office" means that office maintained by the corporation in this state, the address of which is required by the provisions of this article to be kept on file in the office of the department.

     (m) The term "articles of incorporation" includes both the original articles of incorporation and any and all amendments thereto, except where the original articles of incorporation only are expressly referred to, and includes articles of merger, consolidation and reinsurance, and in case of corporations, heretofore organized, articles of reorganization filed in the office of the secretary of state, and all amendments thereto.

     (n) The term "shareholder" means one who is a holder of record of shares of stock in a corporation, unless the context otherwise requires.

     (o) The term "policyholder" means one who is a holder of a contract of insurance in an insurance company.

     (p) The term "member" means one who holds a contract of insurance or is insured in an insurance company other than a stock corporation.

     (q) The term "capital stock" means the aggregate amount of the par value of all shares of capital stock.

     (r) The term "capital" means the aggregate amount paid in on the shares of capital stock of a corporation issued and outstanding.

     (s) The term "life insurance company" means any company making one or more of the kinds of insurance set out and defined in class 1(a) of IC 27-1-5-1.

     (t) The term "casualty insurance company" means any company making the kind or kinds of insurance set out and defined in class 2 of IC 27-1-5-1.

     (u) The term "fire and marine insurance company" means any company making the kind or kinds of insurance set out and defined in class 3 of IC 27-1-5-1.

     (v) The term "certificate of authority" means an instrument in writing issued by the department to an insurer, which sets out the authority of such insurer to engage in the business of insurance or activities connected therewith.

     (w) The term "premium" means money or any other thing of value paid or given in consideration to an insurer, insurance producer, or solicitor on account of or in connection with a contract of insurance and shall include as a part but not in limitation of the above, policy fees, admission fees, membership fees and regular or special assessments and payments made on account of annuities.

     (x) The term "insurer" means a company, firm, partnership, association, order, society or system making any kind or kinds of insurance and shall include associations operating as Lloyds, reciprocal or inter-insurers, or individual underwriters.

     (y) The terms "assessment plan" and "assessment insurance" mean the mode or plan and the business of a corporation, association or society organized and limited to the making of insurance on the lives of persons and against disability from disease, bodily injury or death by accident, and which provides for the payment of policy claims, accumulation of reserve or emergency funds, and the expenses of the management and prosecution of its business by payments to be made either at stated periods named in the contract or upon assessments, and wherein the insured's liability to contribute is not limited to a fixed sum.

     (z) "Agency billed" refers to a system in which an insured pays a premium directly to an insurance agency.

     (aa) "Reinsurer" means an insurer that:

(1) is principally engaged in the business of reinsurance;

(2) does not conduct a significant amount of direct insurance as a percentage of the insurer's net premiums; and

(3) is not engaged on an ongoing basis in the business of soliciting direct insurance.

Formerly: Acts 1935, c.162, s.3; Acts 1963, c.203, s.1. As amended by Acts 1977, P.L.280, SEC.1; P.L.8-1993, SEC.409; P.L.48-2000, SEC.1; P.L.178-2003, SEC.13; P.L.11-2011, SEC.3.

 

IC 27-1-2-4Violation of Indiana Insurance Law

     Sec. 4. A person who recklessly violates the Indiana Insurance Law (chapters 2 through 20 of this article) commits a Class A misdemeanor, except as otherwise provided.

As added by Acts 1978, P.L.2, SEC.2701. Amended by P.L.82-1998, SEC.1.

 

IC 27-1-2.1Chapter 2.1. Health Care Sharing Ministries
           27-1-2.1-1"Health care sharing ministry"
           27-1-2.1-2Health care sharing ministry not engaged in the business of insurance

 

IC 27-1-2.1-1"Health care sharing ministry"

     Sec. 1. (a) As used in this chapter, "health care sharing ministry" means a nonprofit organization that:

(1) is comprised only of participants who share similar and sincerely held religious beliefs;

(2) is tax exempt under Section 501(c)(3) of the Internal Revenue Code;

(3) acts as a facilitator among participants who have financial or medical needs that are qualified in accordance with the organization's criteria, matching those participants with other participants who have the present ability to assist with financial or medical needs;

(4) provides for the financial or medical needs of a participant through contributions from one (1) participant to another participant;

(5) provides information about amounts that participants, with no assumption of risk or promise to pay, may contribute for distribution:

(A) among the participants; or

(B) by the organization to participants;

(6) provides a written monthly statement to all participants that specifies:

(A) the total dollar amount of qualified needs submitted to the organization; and

(B) the amount actually published or assigned to participants for their contribution; and

(7) includes the following statement, in writing, on or accompanying all applications and guideline materials:

"Notice: The organization facilitating the sharing of medical expenses is not an insurance company, and neither its guidelines nor its plan of operation is an insurance policy. Any assistance you receive with your medical bills will be totally voluntary. Neither the organization nor any other participant can be compelled by law to contribute toward your medical bills. As such, participation in the organization or a subscription to any of its documents should never be considered to be insurance. Whether or not you receive any payments for medical expenses and whether or not this organization continues to operate, you are always personally responsible for the payment of your own medical bills.".

     (b) The term does not include a fraternal benefit society described in IC 27-11-1-1.

As added by P.L.13-2012, SEC.1.

 

IC 27-1-2.1-2Health care sharing ministry not engaged in the business of insurance

     Sec. 2. A health care sharing ministry is not considered to be engaged in the business of insurance under this title or any other provision of Indiana law.

As added by P.L.13-2012, SEC.1.

 

IC 27-1-3Chapter 3. General Powers and Duties of the Department
           27-1-3-1Exemption from individual liability
           27-1-3-2Conflicts of interest
           27-1-3-3Seal of department
           27-1-3-4Business practices of insurance companies
           27-1-3-5Certified copies of documents and commissioner's certification of facts as prima facie evidence
           27-1-3-6Commissioner's annual report
           27-1-3-7Rules and regulations
           27-1-3-8Repealed
           27-1-3-9Repealed
           27-1-3-10Power to revoke or suspend certificate of authority
           27-1-3-10.5Disclosure of information
           27-1-3-11Confidential information
           27-1-3-12Acceptance of examination made by another state
           27-1-3-13Blanks for annual statement; separate exhibit
           27-1-3-14Notice of insolvency, failure, or suspension of operations; failure to give notice
           27-1-3-15Filing fees; collection
           27-1-3-16Disposition of taxes and fees accrued
           27-1-3-17Repealed
           27-1-3-18Solicitation for political assessments or contributions; violations
           27-1-3-19Order to correct improper practices or remedy deficiencies; actions to compel compliance
           27-1-3-20Certificate of authority; issuance; necessity; removal of unqualified officers or directors; violations; civil penalties
           27-1-3-21Execution of instruments or documents
           27-1-3-22Fraudulent insurance act; definition; liability
           27-1-3-23Civil actions; substantial justification
           27-1-3-24Declaration of dividend other than from earned surplus; approval
           27-1-3-25Review of ordinary shareholder dividends to determine reasonableness
           27-1-3-26Order to limit ordinary shareholder dividends
           27-1-3-27Order to limit or disallow payment of ordinary shareholder dividends
           27-1-3-28Department of insurance fund; establishment; deposits
           27-1-3-29Enforceability of policies exceeding authority of insurer or violating statute or rule
           27-1-3-30Expired
           27-1-3-31Expired
           27-1-3-32Posting of life insurance and other financial information
           27-1-3-33Publication of grievance related information on Internet
           27-1-3-34Proof of mailing

 

IC 27-1-3-1Exemption from individual liability

     Sec. 1. Neither the insurance commissioner nor the several officers and employees of the department shall be liable, in their individual capacity, except to the state of Indiana, for any act done or omitted in connection with the performance of their respective duties under the provisions of this article.

Formerly: Acts 1935, c.162, s.8. As amended by P.L.252-1985, SEC.5.

 

IC 27-1-3-2Conflicts of interest

     Sec. 2. Neither the insurance commissioner, during his term of office, nor any deputy, actuary, securities clerk, examiner or employee shall be directly or indirectly interested in any insurance company, except as an ordinary policyholder.

Formerly: Acts 1935, c.162, s.9.

 

IC 27-1-3-3Seal of department

     Sec. 3. The department of insurance shall have an official seal of such design as may be approved by the insurance commissioner.

Formerly: Acts 1935, c.162, s.10.

 

IC 27-1-3-4Business practices of insurance companies

     Sec. 4. Every insurance company to which this article is applicable:

(1) shall conduct and transact its business in a safe and prudent manner;

(2) shall maintain such company in a safe and solvent condition; and

(3) shall establish and maintain safe and sound methods for the conduct of such insurance company and its business and prudential affairs.

Formerly: Acts 1935, c.162, s.11. As amended by P.L.252-1985, SEC.6.

 

IC 27-1-3-5Certified copies of documents and commissioner's certification of facts as prima facie evidence

     Sec. 5. Copies of all certificates, documents, reports, or other papers lawfully received and filed by the department pursuant to this article or any other law of this state, when duly certified by the commissioner or any deputy and authenticated by the official seal of the department, shall be taken and received in all courts and places as prima facie evidence of the facts therein stated, and a certificate from the commissioner under the official seal of the department as to the existence or nonexistence of the facts relating to any insurance company which would not appear from a certified copy of any paper lawfully filed with the department shall be taken and received in all courts and places as prima facie evidence of the existence or nonexistence of the facts therein stated.

Formerly: Acts 1935, c.162, s.12. As amended by P.L.252-1985, SEC.7.

 

IC 27-1-3-6Commissioner's annual report

     Sec. 6. During December the commissioner shall report to the governor the names of all insurance companies which are in the charge of the department for rehabilitation, liquidation or conservation and such information in regard to those companies as the commissioner may deem pertinent.

Formerly: Acts 1935, c.162, s.13. As amended by Acts 1979, P.L.17, SEC.54.

 

IC 27-1-3-7Rules and regulations

     Sec. 7. (a) The department may promulgate rules and regulations for any of the following enumerated purposes:

(1) For the conduct of the work of the department.

(2) Prescribing the methods and standards to be used in making the examinations and prescribing the forms of reports of the several insurance companies to which IC 27-1 is applicable.

(3) Defining what is a safe or an unsafe manner and a safe or an unsafe condition for conducting business by any insurance company to which IC 27-1 is applicable.

(4) For the establishment of safe and sound methods for the transaction of business by such insurance companies and for the purpose of safeguarding the interests of policyholders, creditors, and shareholders respecting the withdrawal or payment of funds by any life insurance company in times of emergency. Any rule or regulation promulgated under this subdivision may apply to one (1) or more insurance companies as the department may determine.

(5) For the administration and termination of the affairs of any such insurance company which is in involuntary liquidation or whose business and property have been taken possession of by the department for the purpose of rehabilitation, liquidation, conservation, or dissolution under IC 27-1.

(6) For the regulation of the solicitation or use of proxies, in general and as they concern consents or authorizations, in respect of securities issued by any domestic stock company for the purpose of protecting investors by prescribing the form of proxies, including such consents or authorizations, and by requiring adequate disclosure of information relevant to such proxies, including such consents or authorizations, and relevant to the business to be transacted at any meeting of shareholders with respect to which such proxies, including such consents or authorizations, may be used, which regulations may, in general, conform to those prescribed by the National Association of Insurance Commissioners.

(7) For regulation related to a health benefit exchange established under the federal Patient Protection and Affordable Care Act (P.L. 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (P.L. 111-152), and operating in Indiana.

     (b) The department may adopt a rule under IC 4-22-2 to provide reasonable simplification of the terms and coverage of individual and group Medicare supplement accident and sickness insurance policies and individual and group Medicare supplement subscriber contracts in order to facilitate public understanding and comparison and to eliminate provisions contained in those policies or contracts which may be misleading or confusing in connection either with the purchase of those coverages or with the settlement of claims and to provide for full disclosure in the sale of those coverages.

Formerly: Acts 1935, c.162, s.14; Acts 1965, c.178, s.1. As amended by Acts 1978, P.L.2, SEC.2702; Acts 1980, P.L.168, SEC.1; Acts 1981, P.L.233, SEC.1; Acts 1982, P.L.159, SEC.1; P.L.114-1991, SEC.8; P.L.278-2013, SEC.19.

 

IC 27-1-3-8Repealed

Formerly: Acts 1935, c.162, s.15. Repealed by P.L.26-1991, SEC.28.

 

IC 27-1-3-9Repealed

Formerly: Acts 1935, c.162, s.16. As amended by P.L.252-1985, SEC.8; P.L.244-1989, SEC.1. Repealed by P.L.26-1991, SEC.28.

 

IC 27-1-3-10Power to revoke or suspend certificate of authority

     Sec. 10. The commissioner shall have power:

(1) to revoke or suspend the authority to do business in this state of any company which refuses to permit an examination under IC 27-1-3.1; and

(2) to revoke or suspend any certificate of authority when any condition prescribed by law for granting it no longer exists.

Formerly: Acts 1935, c.162, s.17. As amended by P.L.26-1991, SEC.3.

 

IC 27-1-3-10.5Disclosure of information

     Sec. 10.5. (a) As used in this section, "confidential information" means information that has been designated as confidential by statute, rule, or regulation issued under a statute.

     (b) The commissioner may not:

(1) disclose; or

(2) subject to subpoena;

financial information regarding material transactions disclosed by an insurer under IC 27-2-18.

     (c) The commissioner may not disclose any information, including any document or report received from:

(1) the National Association of Insurance Commissioners; or

(2) an insurance department of another state;

if the information is designated as confidential information in the other jurisdiction.

     (d) The commissioner may share confidential information with:

(1) the National Association of Insurance Commissioners; or

(2) an insurance department of another state;

on the condition that the National Association of Insurance Commissioners and the other state agree to maintain the same level of confidentiality that is provided to the information under Indiana law.

     (e) The commissioner may share confidential information related to a health benefit exchange established under the federal Patient Protection and Affordable Care Act (P.L. 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (P.L. 111-152), with the health benefit exchange if the health benefit exchange:

(1) agrees to maintain the same level of confidentiality that is provided to the confidential information under Indiana law; and

(2) complies with all applicable confidentiality requirements under federal law.

As added by P.L.251-1995, SEC.1. Amended by P.L.278-2013, SEC.20.

 

IC 27-1-3-11Confidential information

     Sec. 11. (a) The commissioner or any deputy, actuary, assistant, examiner, or employee or any other person having access to any information obtained through an examination conducted under IC 27-1-3.1 may not disclose to any person, other than officially to the department, by the report made to it, or to the board of directors, trustees, partners, attorney-in-fact, or owners, or in compliance with an order of a court, any information concerning the affairs of any insurance company as shown by the report of the examination of such company by the department. However, this prohibition against disclosure does not apply after the report of the examiners has been submitted to the department and the department has in turn submitted the report with its recommendations, if any, to the board of directors, trustees, partners, attorney-in-fact, or owners.

     (b) This section does not prohibit the publication by any company of the facts contained in its own examination.

Formerly: Acts 1935, c.162, s.18; Acts 1969, c.164, s.6. As amended by Acts 1978, P.L.2, SEC.2703; P.L.17-1984, SEC.7; P.L.159-1986, SEC.1; P.L.26-1991, SEC.4.

 

IC 27-1-3-12Acceptance of examination made by another state

     Sec. 12. The department may in its discretion accept any examination of any insurance company made by the commissioners' convention or by the proper authority of the state in which a foreign or alien company is domiciled in lieu of the examination made under the provisions of this article.

Formerly: Acts 1935, c.162, s.19. As amended by P.L.252-1985, SEC.9.

 

IC 27-1-3-13Blanks for annual statement; separate exhibit

     Sec. 13. (a) Each company authorized to conduct business in Indiana and required to file an annual statement with the department under IC 27-1-20-21 shall submit the company's statement on the National Association of Insurance Commissioners (NAIC) Annual Statement Blank prepared in accordance with NAIC Annual Statement Instructions, and following practices and procedures prescribed by the most recent NAIC Accounting Practices and Procedures Manual.

     (b) To the extent that the NAIC Annual Statement Instructions require disclosure under subsection (a) of compensation paid to or on behalf of an insurer's officers, directors, or employees, the information may be filed with the department as an exhibit separate from the annual statement blank. The compensation information described under this subsection shall be maintained by the department as confidential and may not be made public.

Formerly: Acts 1935, c.162, s.20; Acts 1963, c.154, s.1. As amended by P.L.130-1994, SEC.1; P.L.116-1994, SEC.5; P.L.251-1995, SEC.2.

 

IC 27-1-3-14Notice of insolvency, failure, or suspension of operations; failure to give notice

     Sec. 14. If any domestic insurance company is insolvent, or in imminent danger of insolvency, or fails or suspends operation between the periods of examination authorized, it is a Class B misdemeanor for the highest officer then actively in charge of such domestic insurance company to knowingly fail to notify the department immediately, of such condition, failure, or suspension.

Formerly: Acts 1935, c.162, s.21. As amended by Acts 1978, P.L.2, SEC.2704.

 

IC 27-1-3-15Filing fees; collection

     Sec. 15. (a) Except as provided in subsections (f) and (h), the commissioner shall collect the following filing fees:

     Document                                                                         Fee

     Articles of incorporation                                                 $ 350

     Amendment of articles of

     incorporation                                                                   $   10

     Filing of annual statement

     and consolidated statement                                             $  100

     Annual renewal of company license

     fee                                                                                    $    50

     Withdrawal of certificate

     of authority                                                                       $   25

     Certified statement of condition                                      $     5

     Any other document required to be 

     filed by this article                                                            $   25

The commissioner shall deposit fees collected under this subsection into the department of insurance fund established by section 28 of this chapter.

     (b) The commissioner shall collect a fee of ten dollars ($10) each time process is served on the commissioner under this title.

     (c) The commissioner shall collect the following fees for copying and certifying the copy of any filed document relating to a domestic or foreign corporation:

     Per page for copying                                              As determined by

                                                                                    the commissioner

                                                                                    but not to exceed

                                                                                    actual cost

     For the certificate                                                   $10

     (d) Each domestic and foreign insurer and each health maintenance organization shall remit annually to the commissioner for deposit into the department of insurance fund established by section 28 of this chapter one thousand dollars ($1,000) as an internal audit fee. All assessment insurers, farm mutuals, and fraternal benefit societies shall remit to the commissioner for deposit into the department of insurance fund two hundred fifty dollars ($250) annually as an internal audit fee.

     (e) Beginning July 1, 1994, each insurer shall remit to the commissioner for deposit into the department of insurance fund established by section 28 of this chapter a fee of thirty-five dollars ($35) for each policy, rider, rule, rate, or endorsement filed with the state, including subsequent filings. Except as provided in subsection (f), each policy, rider, rule, rate, or endorsement that is filed as part of a particular product filing or in association with a particular product filing is an individual filing subject to the fee under this subsection. However, the total amount of fees paid under this subsection by each insurer for a particular product filing may not exceed one thousand dollars ($1,000).

     (f) Beginning July 1, 2009, a policy, rider, rule, rate, or endorsement that is filed as part of a particular product filing or in association with a particular product filing for a commercial product described in:

(1) Class 2(b), Class 2(c), Class 2(d), Class 2(e), Class 2(f), Class 2(g), Class 2(h), Class 2(i), Class 2(j), Class 2(k), Class 2(l), or Class 2(m) of IC 27-1-5-1; or

(2) Class 3 of IC 27-1-5-1;

is considered to be part of a single filing for which the insurer is subject only to one (1) thirty-five dollar ($35) fee under subsection (e).

     (g) The commissioner shall pay into the state general fund by the end of each calendar month the amounts collected during that month under subsections (b) and (c).

     (h) The commissioner may not collect fees for quarterly statements filed under IC 27-1-20-33.

     (i) The commissioner may adopt rules under IC 4-22-2 to provide for the accrual and quarterly billing of fees under this section.

Formerly: Acts 1935, c.162, s.22. As amended by P.L.31-1988, SEC.9; P.L.130-1994, SEC.2; P.L.116-1994, SEC.6; P.L.91-1998, SEC.3; P.L.268-1999, SEC.1; P.L.203-2001, SEC.4; P.L.173-2007, SEC.6; P.L.234-2007, SEC.188; P.L.3-2008, SEC.207.

 

IC 27-1-3-16Disposition of taxes and fees accrued

     Sec. 16. All taxes provided by this article and all fees accruing to the department as provided in this article shall be paid into the state treasury monthly.

Formerly: Acts 1935, c.162, s.23. As amended by P.L.252-1985, SEC.10; P.L.146-2015, SEC.2.

 

IC 27-1-3-17Repealed

Formerly: Acts 1935, c.162, s.24. As amended by P.L.252-1985, SEC.11. Repealed by P.L.4-1988, SEC.17.

 

IC 27-1-3-18Solicitation for political assessments or contributions; violations

     Sec. 18. It is a Class A misdemeanor for a person to knowingly solicit from any officer or employee of the department any money or other property for political assessments or contributions.

Formerly: Acts 1935, c.162, s.25. As amended by Acts 1978, P.L.2, SEC.2705.

 

IC 27-1-3-19Order to correct improper practices or remedy deficiencies; actions to compel compliance

     Sec. 19. (a) Whenever the commissioner determines that any insurance company to which this article is applicable:

(1) is conducting its business contrary to law or in an unsafe or unauthorized manner;

(2) has had its capital or surplus fund impaired or reduced below the amount required by law; or

(3) has failed, neglected, or refused to observe and comply with any order or rule of the department or commissioner;

then the commissioner may, by an order in writing addressed to the board of directors, board of trustees, attorney in fact, partners, or owners of or in any such insurance company, to direct the discontinuance of any such illegal, unauthorized, or unsafe practice, the restoration of an impairment to the capital or the surplus fund, or the compliance with any such law, order, or rule of the department or commissioner. The order shall be mailed to the last known principal office of the insurance company by certified or registered mail or delivered to an officer of the company and shall be considered to be received by the insurance company three (3) days after mailing or on the date of delivery.

     (b) If the insurance company fails, neglects, or refuses to comply with the terms of that order within thirty (30) days after its receipt by the insurance company, or within a shorter period set out in the order if the commissioner determines that an emergency exists, the commissioner may, in addition to any other remedy conferred upon the department or the commissioner by law, bring an action against any such insurance company, its officers, and agents to compel that compliance.

     (c) The action shall be brought by the commissioner in the Marion County circuit court. The action shall be commenced and prosecuted in accordance with the Indiana Rules of Trial Procedure, and relief for noncompliance of the order includes any remedy appropriate under the facts, including injunction, preliminary injunction, and temporary restraining order. In that action, a change of venue from the judge, but no change of venue from the county, is permitted.

Formerly: Acts 1935, c.162, s.26. As amended by P.L.252-1985, SEC.12; P.L.31-1988, SEC.10.

 

IC 27-1-3-20Certificate of authority; issuance; necessity; removal of unqualified officers or directors; violations; civil penalties

     Sec. 20. (a) The commissioner may issue a certificate of authority to any company when it shall have complied with the requirements of the laws of this state so as to entitle it to do business herein. The certificate shall be issued under the seal of the department authorizing and empowering the company to make the kind or kinds of insurance specified in the certificate. No certificate of authority shall be issued until the commissioner has found that:

(1) the company has submitted a sound plan of operation; and

(2) the general character and experience of the incorporators, directors, and proposed officers is such as to assure reasonable promise of a successful operation, based on the fact that such persons are of known good character and that there is no good reason to believe that they are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions, or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts, or reinsurance.

No certificate of authority shall be denied, however, under subdivision (1) or (2) until notice, hearing, and right of appeal has been given as provided in IC 4-21.5.

     (b) Every company possessing a certificate of authority shall notify the commissioner of the election or appointment of every new director or principal officer, within thirty (30) days thereafter. If in the commissioner's opinion such a new principal officer or director does not meet the standards set forth in this section, the commissioner shall request that the company effect the removal of such persons from office. If such removal is not accomplished as promptly as under the circumstances and in the opinion of the commissioner is possible, then upon notice to both the company and such principal officer or director and after notice, hearing, and right of appeal pursuant to IC 4-21.5, and after a finding that such person is incompetent or untrustworthy or of known bad character, the commissioner may order the removal of such person from office and may, unless such removal is promptly accomplished, suspend the company's certificate of authority until there is compliance with such order.

     (c) No company shall transact any business of insurance or hold itself out as a company in the business of insurance in Indiana until it shall have received a certificate of authority as prescribed in this section.

     (d) No company shall make, issue, deliver, sell, or advertise any kind or kinds of insurance not specified in the company's certificate of authority.

     (e) Notwithstanding IC 27-1-2-4, a director or officer of a company who knowingly, intentionally, or recklessly violates subsection (c) or (d) commits a Level 6 felony.

     (f) The commissioner shall impose a civil penalty of not more than twenty-five thousand dollars ($25,000) on a director or officer of a company that violates subsection (c) or (d). The amount imposed must be proportionate to the costs incurred by the department of insurance, other governmental entities, and the courts in regulating the activity of the director, officer, or company who violates subsection (c) or (d). A civil penalty imposed under this subsection may be enforced in the same manner as a civil judgment.

Formerly: Acts 1935, c.162, s.27; Acts 1967, c.127, s.1; Acts 1975, P.L.278, SEC.1. As amended by P.L.7-1987, SEC.135; P.L.67-1998, SEC.1; P.L.158-2013, SEC.296.

 

IC 27-1-3-21Execution of instruments or documents

     Sec. 21. All rules, regulations, notices, orders, deeds, assignments and other instruments or documents issued, executed or promulgated by the department shall be executed in the name of "the department of insurance," on its behalf, by the insurance commissioner, or, in case of his absence or disability, by a deputy insurance commissioner, and shall be sealed with the official seal of the department; but the commissioner may authorize the execution of such deeds, assignments, releases, petitions, notices or any other instruments or documents issued or executed by the department in connection with the rehabilitation, liquidation or conservation of any insurance company by such department in the name of "the department of insurance," by any special deputy commissioner duly appointed in charge of rehabilitation, liquidation or conservation of any insurance company; and all such documents so executed by the special deputy insurance commissioner need not bear the official seal of the department.

Formerly: Acts 1935, c.162, s.28.

 

IC 27-1-3-22Fraudulent insurance act; definition; liability

     Sec. 22. (a) As used in this section, "fraudulent insurance act" means:

(1) the preparation or presentation of a written statement as part of, or in support of:

(A) a fraudulent application for the issuance or rating of a policy of commercial insurance; or

(B) a fraudulent claim under a policy of commercial or personal insurance; or

(2) the concealment, for the purpose of misleading, of information concerning any fact material to an application or claim described in subdivision (1).

     (b) As used in this section, "fraudulent insurance act" includes the act or omission of a person who, knowingly and with intent to defraud, does any of the following:

(1) Presents, causes to be presented, or prepares with knowledge or belief that it will be presented, to or by an insurer, a reinsurer, a purported insurer or reinsurer, a broker, or an agent of an insurer, reinsurer, purported insurer or reinsurer, or broker, an oral or written statement that the person knows to contain materially false information as part of, in support of, or concerning any fact that is material to:

(A) an application for the issuance of an insurance policy;

(B) the rating of an insurance policy;

(C) a claim for payment or benefit under an insurance policy;

(D) premiums paid on an insurance policy;

(E) payments made in accordance with the terms of an insurance policy;

(F) an application for a certificate of authority;

(G) the financial condition of an insurer, a reinsurer, or a purported insurer or reinsurer; or

(H) the acquisition of an insurer or a reinsurer;

or conceals any information concerning a subject set forth in clauses (A) through (H).

(2) Solicits or accepts new or renewal insurance risks by or for an insolvent insurer, reinsurer, or other entity regulated under this title.

(3) Removes or attempts to remove:

(A) the assets;

(B) the record of assets, transactions, and affairs; or

(C) a material part of the assets or the record of assets, transactions, and affairs;

of an insurer, a reinsurer, or another entity regulated under this title, from the home office, other place of business, or place of safekeeping of the insurer, reinsurer, or other regulated entity, or conceals or attempts to conceal from the department assets or records referred to in clauses (A) through (C).

(4) Diverts, attempts to divert, or conspires to divert funds of an insurer, a reinsurer, another entity regulated under the Indiana Code, or other persons, in connection with any of the following:

(A) The transaction of insurance or reinsurance.

(B) The conduct of business activities by an insurer, a reinsurer, or another entity regulated under this title.

(C) The formation, acquisition, or dissolution of an insurer, a reinsurer, or another entity regulated under this title.

     (c) A person who acts without malice, fraudulent intent, or bad faith is not subject to civil liability for filing a report or furnishing, orally or in writing, other information concerning a suspected, anticipated, or completed fraudulent insurance act if the report or other information is provided to or received from any of the following:

(1) The department or an agent, an employee, or a designee of the department.

(2) Law enforcement officials or an agent or employee of a law enforcement official.

(3) The National Association of Insurance Commissioners.

(4) Any agency or bureau of federal or state government established to detect and prevent fraudulent insurance acts.

(5) Any other organization established to detect and prevent fraudulent insurance acts.

(6) An agent, an employee, or a designee of an entity referred to in subdivisions (3) through (5).

     (d) This section does not abrogate or modify in any way any common law or statutory privilege or immunity.

As added by P.L.159-1986, SEC.2. Amended by P.L.121-1992, SEC.1.

 

IC 27-1-3-23Civil actions; substantial justification

     Sec. 23. (a) For the purposes of this section, a party is "substantially justified" in initiating a civil action if the action had a reasonable basis in law or fact at the time the action was initiated.

     (b) If:

(1) a person or entity referred to in section 22(c) of this chapter, or an employee or agent of a person or entity referred to in section 22(c), is the prevailing party in a civil action for libel, slander, or any other relevant tort arising out of the filing of a report or the furnishing of information under section 22(c) of this chapter; and

(2) the party who initiated the action was not substantially justified in initiating the action;

the person, entity, employee, or agent referred to in subdivision (1) is entitled to an award of attorney's fees and costs.

As added by P.L.121-1992, SEC.2.

 

IC 27-1-3-24Declaration of dividend other than from earned surplus; approval

     Sec. 24. (a) As used in this section, "earned surplus" means an amount equal to the unassigned funds of an insurer as set forth in the most recent annual statement of the insurer that is submitted to the commissioner, excluding surplus arising from unrealized capital gains or revaluation of assets.

     (b) A domestic insurer may not:

(1) declare; or

(2) pay;

a dividend from any source of money other than earned surplus unless the commissioner approves the payment of the dividend before the dividend is paid.

As added by P.L.130-1994, SEC.3 and P.L.116-1994, SEC.7.

 

IC 27-1-3-25Review of ordinary shareholder dividends to determine reasonableness

     Sec. 25. The department shall establish and maintain a procedure under which the department, at least one (1) time each year, reviews the ordinary shareholder dividends paid by each domestic insurer to determine whether dividends paid by the insurer are reasonable in relation to the following:

(1) The adequacy of the level of surplus as regards policyholders of the insurer remaining after the payment of dividends.

(2) The quality of the earnings of the insurer and the extent to which the reported earnings of the insurer include extraordinary items, such as surplus relief, reinsurance transactions, and reserve destrengthening.

As added by P.L.130-1994, SEC.4 and P.L.116-1994, SEC.8.

 

IC 27-1-3-26Order to limit ordinary shareholder dividends

     Sec. 26. The department shall establish and follow a practice under which the department issues an order to a domestic insurer to limit the payment of ordinary shareholder dividends by the insurer if the department determines that the surplus of the insurer as regards policyholders:

(1) is not reasonable in relation to the outstanding liabilities of the insurer; and

(2) is not adequate to the financial needs of the insurer.

As added by P.L.130-1994, SEC.5 and P.L.116-1994, SEC.9.

 

IC 27-1-3-27Order to limit or disallow payment of ordinary shareholder dividends

     Sec. 27. The department shall establish and follow a practice under which the department issues an order to limit or disallow the payment of ordinary shareholder dividends by a domestic insurer if the domestic insurer is found to be financially distressed or troubled.

As added by P.L.130-1994, SEC.6 and P.L.116-1994, SEC.10.

 

IC 27-1-3-28Department of insurance fund; establishment; deposits

     Sec. 28. (a) The department of insurance fund is established for the following purposes:

(1) To provide supplemental funding for the operations of the department of insurance.

(2) To pay the costs of hiring and employing staff.

(3) To enable the department of insurance to maintain accreditation by the National Association of Insurance Commissioners.

(4) To carry out any other purpose determined necessary by the department of insurance to carry out the department's duties under this title.

     (b) The fund shall be administered by the commissioner. The following shall be deposited in the department of insurance fund:

(1) Audit fees remitted by insurers to the commissioner under section 15(d) of this chapter.

(2) Filing fees remitted by insurers to the commissioner under section 15(a) or 15(e) of this chapter.

(3) Any other amounts remitted to the commissioner or the department that are required by rule or statute to be deposited into the department of insurance fund.

     (c) The expenses of administering the fund shall be paid from money in the fund.

     (d) The treasurer of state shall invest the money in the fund not currently needed to meet the obligations of the fund in the same manner as other public funds may be invested. Interest that accrues from these investments shall be deposited in the fund.

     (e) Money in the fund at the end of a particular fiscal year does not revert to the state general fund.

     (f) There is annually appropriated to the department of insurance, for the purposes set forth in subsection (a), the entire amount of money deposited in the fund in each year.

As added by P.L.130-1994, SEC.7 and P.L.116-1994, SEC.11. Amended by P.L.252-1995, SEC.1; P.L.91-1998, SEC.4; P.L.173-2007, SEC.7; P.L.234-2007, SEC.189; P.L.100-2012, SEC.65.

 

IC 27-1-3-29Enforceability of policies exceeding authority of insurer or violating statute or rule

     Sec. 29. (a) Except as otherwise provided by statute, a policy is enforceable against the insurer according to its terms, even if the policy exceeds the authority of the insurer.

     (b) A policy that violates a statute or rule is enforceable against the insurer as if the policy conformed to the statute or rule.

     (c) Upon the written request of the policyholder or the insured whose rights under the policy are continuing and not transitory, an insurer shall reform and reissue its written policy to comply with the requirements of the law existing at the date of issue or last renewal of the policy.

As added by P.L.268-1999, SEC.2.

 

IC 27-1-3-30Expired

As added by P.L.166-2003, SEC.1. Amended by P.L.28-2004, SEC.165; P.L.125-2005, SEC.1. Expired 12-31-2010 by P.L.125-2005, SEC.1.

 

IC 27-1-3-31Expired

As added by P.L.144-2009, SEC.1. Expired 12-31-2009 by P.L.144-2009, SEC.1.

 

IC 27-1-3-32Posting of life insurance and other financial information

     Sec. 32. The department shall develop, post, and maintain on the department's Internet web site information related to life insurance, including the manner in which an individual may do the following:

(1) Obtain information concerning the existence of a life insurance policy.

(2) File a claim for life insurance benefits.

(3) Make provision for resolution of financial affairs after the individual's death, including notification of life insurance beneficiaries and making financial documents known and accessible to survivors.

As added by P.L.166-2015, SEC.1.

 

IC 27-1-3-33Publication of grievance related information on Internet

     Sec. 33. The department shall develop, post, and maintain on the department's Internet web site information concerning the internal and external grievance procedures for accident and sickness insurance policies and health maintenance organization contracts. The department shall include on the web site:

(1) information concerning the process that a consumer should follow in filing an internal grievance or an external grievance; and

(2) a telephone number for the department where consumers may call to obtain additional information.

As added by P.L.18-2016, SEC.1.

 

IC 27-1-3-34Proof of mailing

     Sec. 34. For purposes of this title, a person may use the following as proof of mailing:

(1) A United States Postal Service intelligent mail bar code tracking record, as proof of the type of mailing to which the record applies.

(2) A United States Postal Service certificate of mailing at the last known address of the recipient, as proof of the type of mailing to which the certificate applies.

(3) Another similar method of first class mail tracking that identifies the recipient, the recipient's last known address, and the date of mailing, as proof of mailing by first class mail.

As added by P.L.148-2017, SEC.1.

 

IC 27-1-3.1Chapter 3.1. Examinations
           27-1-3.1-1Commissioner
           27-1-3.1-2Company
           27-1-3.1-3Department
           27-1-3.1-4Examiner
           27-1-3.1-5Insurer
           27-1-3.1-6NAIC examiner's handbook
           27-1-3.1-7Person
           27-1-3.1-8Procedure
           27-1-3.1-9Warrant; access to information; refusal; penalties; subpoenas; oaths; order to appear; evidence
           27-1-3.1-10Reports
           27-1-3.1-11Review of report; order
           27-1-3.1-12Orders; findings and conclusions; appeal; hearing
           27-1-3.1-13Hearing
           27-1-3.1-14Confidentiality of report; public inspection; disclosures
           27-1-3.1-15Confidential information; use in court proceedings
           27-1-3.1-16Appointment of examiner; conflict of interest; support staff
           27-1-3.1-17Liability of commissioner, authorized representative, or examiner; attorney's fees
           27-1-3.1-18Financial analysis ratios; written requests; examination synopses; confidentiality

 

IC 27-1-3.1-1Commissioner

     Sec. 1. As used in this chapter, "commissioner" refers to the insurance commissioner appointed under IC 27-1-1-2.

As added by P.L.26-1991, SEC.5.

 

IC 27-1-3.1-2Company

     Sec. 2. As used in this chapter, "company" means any person engaging in or proposing or attempting to engage in any transaction or kind of insurance or surety business and any person or group of persons who may otherwise be subject to the administrative, regulatory, or taxing authority of the commissioner.

As added by P.L.26-1991, SEC.5.

 

IC 27-1-3.1-3Department

     Sec. 3. As used in this chapter, "department" refers to the department of insurance of Indiana.

As added by P.L.26-1991, SEC.5.

 

IC 27-1-3.1-4Examiner

     Sec. 4. As used in this chapter, "examiner" means any individual or firm authorized by the commissioner to conduct an examination under this chapter.

As added by P.L.26-1991, SEC.5.

 

IC 27-1-3.1-5Insurer

     Sec. 5. As used in this chapter, "insurer" has the meaning set forth in IC 27-1-2-3.

As added by P.L.26-1991, SEC.5.

 

IC 27-1-3.1-6NAIC examiner's handbook

     Sec. 6. As used in this chapter, "NAIC examiner's handbook" means the Examiners' Handbook adopted by the National Association of Insurance Commissioners.

As added by P.L.26-1991, SEC.5.

 

IC 27-1-3.1-7Person

     Sec. 7. As used in this chapter, "person" means any individual, aggregation of individuals, trust, association, partnership, limited liability company, or corporation, or any affiliate of these entities.

As added by P.L.26-1991, SEC.5. Amended by P.L.8-1993, SEC.410.

 

IC 27-1-3.1-8Procedure

     Sec. 8. (a) The commissioner or any of the commissioner's examiners:

(1) may conduct an examination under this chapter of any company as often as the commissioner, in the commissioner's sole discretion, considers appropriate; and

(2) shall, at a minimum, conduct an examination of every insurer licensed in Indiana at least once every five (5) years.

     (b) In scheduling and determining the nature, scope, and frequency of the examinations, the commissioner shall consider such matters as the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified public accountants, and other criteria as set forth in the NAIC examiner's handbook.

     (c) For purposes of completing an examination of any company under this chapter, the commissioner may examine or investigate any person, or the business of any person, in so far as such examination or investigation is, in the sole discretion of the commissioner, necessary or material to the examination of the company.

     (d) In lieu of an examination under this chapter of any foreign or alien insurer licensed in Indiana, the commissioner may accept an examination report on such company as prepared by the insurance department of the company's state of domicile or port-of-entry state until January 1, 1994. After January 1, 1994, those reports may only be accepted if:

(1) the insurance department that prepared the report was at the time of the examination accredited under the National Association of Insurance Commissioners' Financial Regulation Standards and Accreditation Program; or

(2) the examination is performed with the participation of one (1) or more examiners who are employed by an accredited State Insurance Department and who after a review of the examination work papers and report state under oath that the examination was performed in a manner consistent with the standards and procedures required by their insurance department.

As added by P.L.26-1991, SEC.5. Amended by P.L.1-1992, SEC.144.

 

IC 27-1-3.1-9Warrant; access to information; refusal; penalties; subpoenas; oaths; order to appear; evidence

     Sec. 9. (a) Upon determining that an examination should be conducted, the commissioner or the commissioner's designee shall issue an examination warrant appointing one (1) or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall observe those guidelines and procedures set forth in the NAIC examiner's handbook. The commissioner may also employ such other guidelines or procedures as the commissioner considers appropriate. The commissioner is not required to issue an examination warrant for a data call.

     (b) Every company or person from whom information is sought, and the officers, directors, and agents of the company or person, must provide to the examiners appointed under subsection (a) timely, convenient, and free access at all reasonable hours at its offices to all books, records, accounts, papers, documents, and any or all computer or other recordings relating to the property, assets, business, and affairs of the company being examined. The officers, directors, employees, and agents of the company or person must facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of any company, by its officers, directors, employees, or agents within the company's control, to submit to examination or to comply with any reasonable written request of the examiners, or the failure of any company to make a good faith effort to require compliance with such a request, is grounds for:

(1) suspension;

(2) refusal; or

(3) nonrenewal;

of any license or authority held by the company to engage in an insurance or other business subject to the commissioner's jurisdiction. The commissioner may proceed to suspend or revoke a license or authority upon the grounds set forth in this subsection under IC 27-1-3-10 or IC 27-1-3-19.

     (c) The commissioner and the commissioner's examiners may issue subpoenas, administer oaths, and examine under oath any person as to any matter pertinent to an examination conducted under this chapter. Upon the failure or refusal of any person to obey a subpoena, the commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter any order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order is punishable as contempt of court.

     (d) When making an examination under this chapter, the commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners. The cost of retaining these examiners shall be borne by the company that is the subject of the examination.

     (e) This chapter does not limit the commissioner's authority to terminate or suspend any examination in order to pursue other legal or regulatory action pursuant to this title. Findings of fact and conclusions made pursuant to any examination shall be prima facie evidence in any legal or regulatory action.

As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.8; P.L.116-1994, SEC.12; P.L.111-2008, SEC.1.

 

IC 27-1-3.1-10Reports

     Sec. 10. (a) All examination reports shall be comprised of only:

(1) facts:

(A) appearing upon the books, records, or other documents of the company; and

(B) ascertained from the agents or other persons examined, or as ascertained from the testimony of its officers or agents or other persons examined concerning the affairs of the company; and

(2) conclusions and recommendations that the examiners find reasonably warranted from those facts.

     (b) No more than sixty (60) days after the completion of the examination, the examiner in charge shall file with the department a verified written report of examination under oath. Upon receipt of the verified report, the department shall transmit the report to the company examined, together with a notice that affords such company examined a reasonable opportunity of not more than thirty (30) days to make a written submission or rebuttal with respect to any matters contained in the examination report. The thirty (30) day period may be extended if the commissioner, in the commissioner's sole discretion, determines that an extension is appropriate or necessary.

As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.9; P.L.116-1994, SEC.13.

 

IC 27-1-3.1-11Review of report; order

     Sec. 11. (a) Within thirty (30) days after the end of the period allowed for the receipt of written submissions or rebuttals, the commissioner shall fully consider and review the report, together with any written submissions or rebuttals and any relevant portions of the examiner's workpapers, and enter an order:

(1) adopting the examination report as filed or with modification or corrections;

(2) rejecting the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation or information, and refiling the report under this chapter; or

(3) calling for an investigatory hearing with no less than twenty (20) days notice to the company for purposes of obtaining additional documentation, data, information and testimony.

     (b) If the examination report reveals that the company is operating in violation of any law, regulation, or prior order of the commissioner, the commissioner may order the company to take any action the commissioner considers necessary and appropriate to cure that violation.

As added by P.L.26-1991, SEC.5.

 

IC 27-1-3.1-12Orders; findings and conclusions; appeal; hearing

     Sec. 12. (a) All orders entered under section 11(a) of this chapter shall be accompanied by findings and conclusions resulting from the commissioner's consideration and review of the examination report, relevant examiner workpapers, and any written submissions or rebuttals.

     (b) Any order entered under section 11(a) of this chapter shall be considered a final administrative decision that may be appealed under IC 4-21.5-5, and shall be served upon the company by certified mail, together with a copy of the adopted examination report. Within thirty (30) days of the issuance of the adopted report, the company shall file an affidavit stating that each director has received a copy of the adopted report and related orders.

     (c) Any hearing conducted under section 11(a)(3) of this chapter by the commissioner or an authorized representative shall be conducted as a nonadversarial confidential investigatory proceeding as necessary for the resolution of any inconsistencies, discrepancies, or disputed issues apparent upon the face of the filed examination report or raised by or as a result of the commissioner's review of relevant workpapers or by the written submission or rebuttal of the company. Within twenty (20) days of the conclusion of the hearing, the commissioner shall enter an order under section 11 of this chapter.

As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.10; P.L.116-1994, SEC.14.

 

IC 27-1-3.1-13Hearing

     Sec. 13. (a) The commissioner may not appoint an examiner as authorized representative to conduct a hearing. The hearing shall proceed expeditiously with discovery by the company limited to the examiner's workpapers which tend to substantiate any assertions set forth in any written submission or rebuttal. The commissioner or the commissioner's representative may issue subpoenas for the attendance of any witnesses or the production of any documents deemed relevant to the investigation whether under the control of the department, the company, or other persons. The documents produced shall be included in the record and testimony taken by the commissioner or the commissioner's representative shall be under oath and preserved for the record.

     (b) This section does not require the department to disclose any information or records which would indicate or show the existence or content of any investigation or activity of a criminal justice agency.

     (c) The hearing shall proceed with the commissioner or the commissioner's representative posing questions to the persons subpoenaed. Thereafter, the company and the department may present testimony relevant to the investigation. The commissioner, the department, and the company may cross-examine witnesses. The company and the department shall be permitted to make closing statements and may be represented by counsel of their choice.

As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.11; P.L.116-1994, SEC.15.

 

IC 27-1-3.1-14Confidentiality of report; public inspection; disclosures

     Sec. 14. (a) Upon the adoption of an examination report under section 11(a)(1) of this chapter, the commissioner shall continue to hold the content of the examination report as confidential information for a period of thirty (30) days except to the extent provided in section 10(b) of this chapter. Thereafter, the report shall be open for public inspection.

     (b) This chapter does not prevent or prohibit the commissioner from disclosing the content of an examination report, preliminary examination report, or results, or any matter relating thereto, to the National Association of Insurance Commissioners, the insurance department of any other state or country, or to law enforcement officials of Indiana or any other state or agency of the federal government at any time, if the agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this chapter.

     (c) If the commissioner determines that regulatory action is appropriate as a result of any examination, the commissioner may initiate any proceedings or actions authorized by law.

     (d) This chapter does not limit the commissioner's authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or company work papers or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or regulatory action that the commissioner may, in the commissioner's sole discretion, consider appropriate.

As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.12; P.L.116-1994, SEC.16; P.L.11-2011, SEC.4.

 

IC 27-1-3.1-15Confidential information; use in court proceedings

     Sec. 15. (a) All working papers, recorded information, documents, and copies thereof produced by, obtained by, or disclosed to the commissioner or any other person in the course of an examination under this chapter (including trade secrets and information obtained from a federal agency, a foreign country, or the National Association of Insurance Commissioners, or under another state law):

(1) are confidential and privileged;

(2) are not subject to public inspection or copying under IC 5-14-3-3;

(3) are not subject to subpoena;

(4) are not subject to discovery or admissible in evidence in a private civil action; and

(5) may not be made public by the commissioner or any other person, except to the extent provided in section 14 of this chapter.

     (b) The commissioner may use the materials and information described in subsection (a) in relation to a regulatory or legal action brought as part of the commissioner's duties. Access to the materials and information described in subsection (a) may also be granted to the National Association of Insurance Commissioners. A party receiving materials or information under this subsection must agree in writing prior to receiving the materials or information to provide to it the same confidential treatment as required by this section, unless the prior written consent of the company to which it pertains has been obtained.

     (c) A court order requiring a release or production of materials or information described in subsection (a) that is not authorized under this section is null and void unless the commissioner has been served, in accordance with the Indiana Rules of Trial Procedure, with a pleading or motion requesting the court to order release or production of the materials or information.

As added by P.L.26-1991, SEC.5. Amended by P.L.11-2011, SEC.5; P.L.276-2013, SEC.1.

 

IC 27-1-3.1-16Appointment of examiner; conflict of interest; support staff

     Sec. 16. (a) No examiner may be appointed by the commissioner if that examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in any person subject to examination under this chapter. However, this section does not automatically preclude an examiner from being:

(1) a policyholder or claimant under an insurance policy;

(2) a grantor of a mortgage or similar instrument on the examiner's residence to a regulated entity if done under customary terms and in the ordinary course of business;

(3) an investment owner in shares of regulated diversified investment companies; or

(4) a settlor or beneficiary of a "blind trust" into which any otherwise impermissible holdings have been placed.

     (b) Notwithstanding the requirements of this section, the commissioner may periodically retain on an individual basis qualified actuaries, certified public accountants, and other similar individuals who are independently practicing their professions, even though those persons may from time to time be similarly employed or retained by persons subject to examination under this chapter.

As added by P.L.26-1991, SEC.5.

 

IC 27-1-3.1-17Liability of commissioner, authorized representative, or examiner; attorney's fees

     Sec. 17. (a) No cause of action shall arise nor shall any liability be imposed against the commissioner, the commissioner's authorized representatives or any examiner appointed by the commissioner for any statements made or conduct performed in good faith while carrying out the provisions of this chapter.

     (b) No cause of action may arise, and no liability be imposed against any person for the act of communicating or delivering information or data to the commissioner or the commissioner's authorized representative or examiner pursuant to an examination made under this chapter, if that act of communication or delivery is performed in good faith and without fraudulent intent or the intent to deceive.

     (c) This section does not abrogate or modify in any way any common law or statutory privilege or immunity enjoyed by any person identified in subsection (a).

     (d) A person identified in subsection (a) is entitled to an award of attorney's fees and costs if that person is the prevailing party in a civil cause of action for libel, slander or any other relevant tort arising out of that person's activities in carrying out the provisions of this chapter and if the court finds the action was frivolous, unreasonable, groundless, or litigated in bad faith.

As added by P.L.26-1991, SEC.5.

 

IC 27-1-3.1-18Financial analysis ratios; written requests; examination synopses; confidentiality

     Sec. 18. (a) The commissioner shall provide any financial analysis ratios computed by the Insurance Regulatory Information System of the National Association of Insurance Commissioners within five (5) business days after receiving a written request for those ratios.

     (b) All examination synopses concerning insurance companies that are submitted to the department by the Insurance Regulatory Information System of the National Association of Insurance Commissioners are confidential and may not be disclosed by the department.

As added by P.L.26-1991, SEC.5.

 

IC 27-1-3.5Chapter 3.5. Annual Audited Financial Reports
           27-1-3.5-0.5"Audit committee"
           27-1-3.5-1"Commissioner"
           27-1-3.5-2"Domestic insurer"
           27-1-3.5-2.6"Group of insurers"
           27-1-3.5-3"Independent auditor"
           27-1-3.5-3.1"Insurance holding company system"
           27-1-3.5-3.2"Internal audit function"
           27-1-3.5-3.3"Internal control over financial reporting"
           27-1-3.5-3.4"Section 404"
           27-1-3.5-3.5Repealed
           27-1-3.5-3.6"Section 404 report"
           27-1-3.5-3.7"SOX compliant entity"
           27-1-3.5-4"Work papers"
           27-1-3.5-5Application of chapter; exemptions
           27-1-3.5-6Annual audit; filing; time; extension
           27-1-3.5-6.5Filing annual audited financial reports by domestic insurer
           27-1-3.5-7Contents of report
           27-1-3.5-8Independent auditor
           27-1-3.5-9Qualifications of independent auditor
           27-1-3.5-10Consolidated returns
           27-1-3.5-11Report from independent auditor of financial condition irregularities; subsequent facts
           27-1-3.5-12Report of unremediated material weaknesses in internal control over financial reporting
           27-1-3.5-12.1Audit committee; members; duties; waiver
           27-1-3.5-12.3Internal audit function
           27-1-3.5-12.5Management's report of internal control over financial reporting
           27-1-3.5-13Independent audit work papers and communications; review by department examiners
           27-1-3.5-14Exemption application; hearing
           27-1-3.5-15Repealed
           27-1-3.5-16Penalty for noncompliance
           27-1-3.5-17Effect of chapter on examinations under IC 27-1-3.1
           27-1-3.5-18British or Canadian insurers

 

IC 27-1-3.5-0.5"Audit committee"

     Sec. 0.5. (a) As used in this chapter, "audit committee" means a body established by the board of directors of a domestic insurer or group of insurers for the purpose of overseeing:

(1) the accounting and financial reporting processes;

(2) external audits of financial statements; and

(3) the internal audit function;

of a domestic insurer or group of insurers.

     (b) For purposes of this chapter, the audit committee of an insurance holding company system is considered to be the audit committee of a group of insurers that are members of the insurance holding company system, at the election of the insurance holding company system.

     (c) For purposes of this chapter, if a board of directors does not establish an audit committee, the entire board of directors constitutes the audit committee.

As added by P.L.146-2015, SEC.3.

 

IC 27-1-3.5-1"Commissioner"

     Sec. 1. As used in this chapter, "commissioner" refers to the insurance commissioner appointed under IC 27-1-1-2.

As added by P.L.244-1989, SEC.2.

 

IC 27-1-3.5-2"Domestic insurer"

     Sec. 2. (a) As used in this chapter, "domestic insurer" means an insurer organized under the laws of Indiana.

     (b) If a domestic insurer is a member of an "insurance holding company system" (as defined in IC 27-1-23-1), the term "domestic insurer" also includes:

(1) any person in immediate control of the domestic insurer; and

(2) any affiliate:

(A) in which the domestic insurer has invested; or

(B) that is indebted to the domestic insurer.

As added by P.L.244-1989, SEC.2.

 

IC 27-1-3.5-2.6"Group of insurers"

     Sec. 2.6. As used in this chapter, "group of insurers" means two (2) or more insurers that are part of an insurance holding company system.

As added by P.L.146-2015, SEC.4.

 

IC 27-1-3.5-3"Independent auditor"

     Sec. 3. As used in this chapter, "independent auditor" means a certified public accountant or a certified public accounting firm that conducts an annual audit of a domestic insurer as required by this chapter.

As added by P.L.244-1989, SEC.2.

 

IC 27-1-3.5-3.1"Insurance holding company system"

     Sec. 3.1. As used in this chapter, "insurance holding company system" has the meaning set forth in IC 27-1-23-1.

As added by P.L.146-2015, SEC.5.

 

IC 27-1-3.5-3.2"Internal audit function"

     Sec. 3.2. As used in this chapter, "internal audit function" means a process that provides independent, objective, and reasonable assurance that is designed to:

(1) add value to and improve a domestic insurer's or group of insurers' operations; and

(2) accomplish the domestic insurer's or group of insurers' objectives;

through introduction of a systematic, disciplined approach to the evaluation and improvement of the effectiveness of risk management, control, and governance processes.

As added by P.L.146-2015, SEC.6.

 

IC 27-1-3.5-3.3"Internal control over financial reporting"

     Sec. 3.3. As used in this chapter, "internal control over financial reporting" means a process effected by a domestic insurer's board of directors, management, or other personnel that is designed to provide reasonable assurance regarding the reliability of financial statements of the domestic insurer, including the following:

(1) The items specified in section 7(c)(2) through section 7(c)(6) and section 7(d) of this chapter.

(2) Policies and procedures that do the following:

(A) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and deposit of assets.

(B) Provide reasonable assurance that:

(i) transactions are recorded as necessary to permit preparation of the financial statements; and

(ii) receipts and expenditures are made only in accordance with the authorization of management and the board of directors.

(C) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that may have a material effect on the financial statements.

As added by P.L.146-2015, SEC.7.

 

IC 27-1-3.5-3.4"Section 404"

     Sec. 3.4. As used in this chapter, "Section 404" refers to Section 404 of the federal Sarbanes-Oxley Act of 2002 (Public Law 107-204).

As added by P.L.146-2015, SEC.8.

 

IC 27-1-3.5-3.5Repealed

As added by P.L.251-1995, SEC.3. Repealed by P.L.146-2015, SEC.9.

 

IC 27-1-3.5-3.6"Section 404 report"

     Sec. 3.6. As used in this chapter, "Section 404 report" means a domestic insurer's or group of insurers' management's report on internal control over financial reporting (as defined by the federal Securities and Exchange Commission) and the related attestation report of an independent auditor.

As added by P.L.146-2015, SEC.10.

 

IC 27-1-3.5-3.7"SOX compliant entity"

     Sec. 3.7. As used in this chapter, "SOX compliant entity" means an entity that is required to be compliant, or is voluntarily compliant, with all of the following provisions of the federal Sarbanes-Oxley Act of 2002 (Public Law 107-204):

(1) The preapproval requirements of Section 201.

(2) The audit committee independence requirements of Section 301.

(3) The internal control over financial reporting requirements of Section 404.

As added by P.L.146-2015, SEC.11.

 

IC 27-1-3.5-4"Work papers"

     Sec. 4. (a) As used in this chapter, "work papers" means the records kept by the independent auditor of the procedures followed, the tests performed, the information obtained, and the conclusions reached by the independent auditor's audit of the financial statements of a domestic insurer.

     (b) The term includes any audit planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents, and schedules or commentaries that:

(1) are prepared or obtained by the independent auditor in the course of any audit of the financial statements of a domestic insurer; and

(2) support the independent auditor's opinion on the domestic insurer's financial statements.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.4.

 

IC 27-1-3.5-5Application of chapter; exemptions

     Sec. 5. (a) Except as provided in subsections (b) and (c), this chapter applies to all domestic insurers.

     (b) A domestic insurer that has:

(1) direct written premiums of less than one million dollars ($1,000,000) in any calendar year;

(2) less than one thousand (1,000) policyholders or certificate holders of directly written policies nationwide at the end of a calendar year; and

(3) assumed premiums under contracts or treaties of reinsurance of less than one million dollars ($1,000,000);

is exempt from this chapter with respect to that year. However, the commissioner may require compliance with this chapter upon a finding that compliance with this chapter is necessary for the commissioner to carry out a statutory responsibility.

     (c) A foreign or an alien insurer that files an audited financial report in another state or country pursuant to that state's or country's requirement for audited financial reports is exempt, with respect to the year of that audited financial report, from the requirement to file an audited financial report with the commissioner under this chapter, if:

(1) the commissioner has found the other state's or country's requirement for audited financial reports to be substantially similar to the requirements of this chapter;

(2) copies of the audited financial report, a communication of internal control related matters noted in an audit, and the accountant's letter of qualifications filed with the other state or country are filed with the commissioner in accordance with the filing requirements set forth in sections 6, 8, and 12 of this chapter; and

(3) a copy of a notification of an adverse financial condition report that is filed with the other state is filed with the commissioner within the time specified in section 11 of this chapter.

This subsection does not prevent the commissioner from ordering, conducting, or performing examinations of foreign or alien insurers under the rules, regulations, and practices of the department.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.5; P.L.146-2015, SEC.12.

 

IC 27-1-3.5-6Annual audit; filing; time; extension

     Sec. 6. (a) A domestic insurer shall have an audit by an independent auditor every year and shall file an audited financial report with the commissioner every year before June 1 immediately following the December 31 that ends the year reported on in the financial report. The commissioner may require a domestic insurer to file an audited financial report earlier than June 1 if the commissioner gives the domestic insurer ninety (90) days advance notice of the earlier filing date.

     (b) An extension of the June 1 filing date may be granted by the commissioner for thirty (30) days upon a showing by the insurer and its independent auditor of the reasons for requesting the extension and a determination by the commissioner that there is good cause for an extension. The request for an extension must be submitted in writing at least ten (10) days before the due date, and must include sufficient detail to permit the commissioner to make an informed decision with respect to the requested extension.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.6.

 

IC 27-1-3.5-6.5Filing annual audited financial reports by domestic insurer

     Sec. 6.5. Except as provided in this chapter, a domestic insurer shall file the annual audited financial reports required under this chapter for the calendar year ending December 31, 1989, and for every calendar year after 1989.

As added by P.L.220-2011, SEC.420.

 

IC 27-1-3.5-7Contents of report

     Sec. 7. (a) The annual audited financial report filed by a domestic insurer under this chapter shall report:

(1) the financial position of the domestic insurer as of the end of the most recently ended calendar year; and

(2) the results of the domestic insurer's operations, cash flow, and changes in capital and surplus for that year;

in conformity with statutory accounting practices prescribed, or otherwise permitted, by the department of insurance.

     (b) The financial statements included in the annual audited financial report filed by a domestic insurer under this chapter shall be examined by an independent auditor. The independent auditor shall conduct its examination of the domestic insurer's financial statements in accordance with generally accepted auditing standards, and shall consider such other procedures illustrated in the Financial Condition Examiner's Handbook published by the National Association of Insurance Commissioners as the independent auditor considers necessary.

     (c) An annual audited financial report filed by a domestic insurer under this chapter must include the following:

(1) The report of the insurer's independent auditor.

(2) A balance sheet reporting admitted assets, liabilities, capital, and surplus.

(3) A statement of operations.

(4) A statement of cash flow.

(5) A statement of changes in capital and surplus.

(6) Notes to financial statements. The notes must be those required by the National Association of Insurance Commissioners' annual statement instructions and any other notes required by statutory accounting practices, which must include a reconciliation of differences, if any, between the financial statements included in the audited financial report and the annual statement filed by the insurer under IC 27-1-20-21, including a written description of the nature of these differences.

     (d) The financial statements included in a domestic insurer's audited financial report shall be prepared in the same form, and using language and groupings substantially the same, as the relevant sections of the annual statement of the insurer filed with the commissioner under IC 27-1-20-21.

     (e) The financial statements included in a domestic insurer's audited financial report must be comparative, presenting the amounts as of December 31 of the year of the report and comparative amounts as of the immediately preceding December 31. However, in the first year in which an insurer is required to file an audited financial report under this chapter, the comparative data may be omitted.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.7; P.L.146-2015, SEC.13.

 

IC 27-1-3.5-8Independent auditor

     Sec. 8. (a) A domestic insurer that is required by this chapter to file annual audited financial reports shall, not more than sixty (60) days after becoming subject to the requirement, register in writing with the commissioner the name and address of the independent auditor retained by the insurer to conduct the annual audits required by this chapter. The domestic insurer shall continuously ensure that the information provided to the commissioner under this section is accurate, and shall inform the commissioner in writing of any change in the identity or address of its independent auditor.

     (b) A domestic insurer shall obtain a letter from its independent auditor that:

(1) states that the independent auditor is aware of the provisions of IC 27 and the administrative rules of the department of insurance that relate to auditing, accounting, and financial matters; and

(2) affirms that the independent auditor will express its opinion on the financial statements of the domestic insurer in the terms of their conformity to the statutory accounting practices prescribed or otherwise permitted by the department, specifying such exceptions as the independent auditor may believe appropriate.

The domestic insurer shall file a copy of this letter with the commissioner.

     (c) If an independent auditor that audited the most recent financial report filed by the insurer with the commissioner under this chapter subsequently ceases to be the independent auditor for the insurer, the insurer shall:

(1) not more than five (5) business days after the cessation of the independent auditor's services, notify the commissioner in writing of the identity and address of the new independent auditor;

(2) not more than ten (10) business days after the notification given in subdivision (1), furnish the commissioner with a separate letter that states whether in the twenty-four (24) months preceding the engagement of the new independent auditor there were any disagreements between the insurer and its former independent auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of the former independent auditor, would have caused the former independent auditor to make reference to the subject matter of the disagreement in the former independent auditor's statement of its opinion on the insurer's financial report, and, if there was such a disagreement, provides a description of the disagreement. Disagreements required to be reported under this subdivision include those at the decision making level that were resolved:

(A) to the former accountant's satisfaction; and

(B) not to the former accountant's satisfaction; and

(3) comply with subsection (d).

For the purposes of this subsection, "decision making level" refers to the personnel of the insurer who are responsible for the presentation of the insurer's financial statements and the personnel of the independent auditor who are responsible for rendering the opinion of the auditor on the insurer's financial report.

     (d) A domestic insurer subject to the provisions of subsection (c) shall:

(1) provide its former independent auditor with a copy of the letter furnished to the commissioner under subsection (c)(2); and

(2) request in writing its former independent auditor to furnish a letter addressed to the insurer stating whether the former independent auditor agrees with the statements contained in the letter furnished to the commissioner under subsection (c)(2) and, if not, stating the reasons for the former independent auditor's disagreement.

The domestic insurer shall furnish the commissioner with a copy of any responsive letter it receives from its former independent auditor within five (5) business days after the insurer receives the letter.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.8.

 

IC 27-1-3.5-9Qualifications of independent auditor

     Sec. 9. (a) For the purposes of this chapter, the commissioner may not recognize as an independent auditor any individual or firm that is not:

(1) a certified public accountant (if an individual) or made up of certified public accountants (if a firm); or

(2) in good standing with:

(A) the American Institute of Certified Public Accountants; and

(B) all of the authorities that license certified public accountants and certified public accounting firms in the states in which the individual or firm is licensed to practice.

     (b) A partner or other individual responsible for rendering a report may not act in that capacity for more than five (5) consecutive years. An individual who has been responsible for rendering a report for five (5) years is disqualified from acting in that or a similar capacity for the same company or its insurance subsidiaries or affiliates for five (5) years. A domestic insurer may apply to the commissioner and request to be exempted from the five (5) year rotation requirement on the basis of unusual circumstances. The commissioner may consider the following factors in determining if relief should be granted:

(1) The number of partners, expertise of the partners, or number of insurance clients in the currently registered firm.

(2) The premium volume of the domestic insurer.

(3) The number of jurisdictions in which the domestic insurer transacts business.

     (c) The commissioner may not recognize as an independent auditor or accept an annual audited financial report prepared in whole or part by a person who:

(1) has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act under federal law (18 U.S.C. 1961 through 1968) or state law (IC 35-45-6) or any dishonest conduct or practices under federal or state law;

(2) has been found to have violated the insurance law of this state with respect to any previous reports submitted under this chapter; or

(3) has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under this chapter.

     (d) The commissioner shall not recognize as a qualified independent certified public accountant, or accept an annual audited financial report prepared in whole or in part by an accountant that provides to a domestic insurer, contemporaneously with the audit, any of the following nonaudit services:

(1) Bookkeeping or other services related to the accounting records or financial statements of the domestic insurer.

(2) Financial information systems design or implementation.

(3) Appraisal or valuation services, fairness opinions, or contribution-in-kind reports.

(4) Actuarially oriented advisory services involving the determination of amounts recorded in the financial statements. This does not include the following:

(A) The accountant assisting the domestic insurer to understand the methods, assumptions, and inputs used in the determination of amounts recorded in the financial statement if it is reasonable to conclude that the assistance provided is not subject to audit procedures during an audit of the domestic insurer's financial statements.

(B) An accountant's actuary issuing an actuarial opinion or certification concerning the domestic insurer's reserves if the following apply:

(i) The accountant and the accountant's actuary have not performed any management functions or made any management decisions.

(ii) The domestic insurer has competent personnel, or engages a third party actuary, to estimate the reserves for which management takes responsibility.

(iii) The accountant's actuary tests the reasonableness of the reserves after the domestic insurer's management has determined the amount of the reserves.

(5) Internal audit outsourcing services.

(6) Management or human resources functions.

(7) Broker, dealer, investment adviser, or investment banking services.

(8) Legal services or expert services unrelated to the audit.

(9) Any other services that the commissioner determines to be impermissible in rules adopted under IC 4-22-2.

     (e) In making a determination under subsection (d), the commissioner shall generally consider whether the accountant's independence has been impaired by any of the following, in which case the commissioner shall not recognize the accountant or accept the annual audited financial report from the accountant:

(1) Functioning in the role of management for the domestic insurer.

(2) Auditing the accountant's own work.

(3) Serving as an advocate for the domestic insurer.

     (f) The commissioner may conduct a hearing under IC 4-21.5 to determine whether an independent auditor engaged by a domestic insurer is sufficiently independent of that domestic insurer to be capable of exercising independent judgment and expressing an objective opinion on the financial statements in the annual financial report filed by the insurer under this chapter. If the commissioner determines that the auditor is not sufficiently independent of the insurer, the commissioner shall require the insurer to replace the auditor with another that is sufficiently independent of the insurer.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.9; P.L.11-2011, SEC.6; P.L.146-2015, SEC.14.

 

IC 27-1-3.5-10Consolidated returns

     Sec. 10. A domestic insurer may apply in writing to the commissioner for approval to satisfy the requirements of this chapter by filing audited consolidated or combined financial statements instead of separate annual audited financial statements if the insurer is part of a group of insurance companies that utilizes a pooling or one hundred percent (100%) reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer cedes all of the insurer's direct and assumed business to the pool. If a domestic insurer whose application is approved elects to file a consolidated return, the insurer shall file, with its financial statements, a columnar consolidating or combining schedule, which must meet the following requirements:

(1) Amounts shown on the consolidated or combined audited financial report shall be shown on the schedule.

(2) Amounts for each insurer subject to this section shall be stated separately.

(3) Noninsurance operations shall be shown on the schedule on an individual basis.

(4) Explanations of consolidating and eliminating entries shall be included.

(5) A reconciliation shall be included of any differences between the amounts shown in the individual insurer columns of the schedule and comparable amounts shown on the annual statements of the insurers.

As added by P.L.244-1989, SEC.2. Amended by P.L.130-1994, SEC.13; P.L.116-1994, SEC.17.

 

IC 27-1-3.5-11Report from independent auditor of financial condition irregularities; subsequent facts

     Sec. 11. (a) A domestic insurer required to file annual audited financial reports under this chapter shall require its independent auditor to report in writing to the board of directors or the board of director's audit committee, not more than five (5) business days after making a determination, the independent auditor's determination that:

(1) the domestic insurer has materially misstated to the commissioner the financial condition of the insurer as of the date of the balance sheet being examined by the independent auditor; or

(2) the domestic insurer does not meet the minimum capital and surplus requirements of Indiana as of the date of the balance sheet being examined by the independent auditor.

The domestic insurer who has received a report under this section shall forward a copy of the report to the commissioner within five (5) business days after receipt of the report and shall provide the independent accountant making the report with evidence of the report being furnished to the commissioner. An independent auditor who does not receive the evidence that the report was filed with the commissioner within the required five (5) business days shall furnish the commissioner a copy of the report within the next five (5) business days. An independent auditor may not be liable to any person for a statement made in connection with this subsection, if the statement is made in good faith compliance with this subsection.

     (b) If the independent auditor of a domestic insurer, after the filing of the insurer's audited financial report under this chapter, becomes aware of facts that, if the independent auditor had been aware of the facts when writing its report, might have affected the independent auditor's report that was included in the insurer's audited financial report, the independent auditor shall take such action as is prescribed in the Professional Standards of the American Institute of Certified Public Accountants.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.10.

 

IC 27-1-3.5-12Report of unremediated material weaknesses in internal control over financial reporting

     Sec. 12. (a) A domestic insurer required by this chapter to file an annual audited financial report with the commissioner shall also furnish the commissioner with a written communication describing any unremediated material weaknesses (as defined by the NAIC Statement on Auditing Standard 60, Communication of Internal Control Related Matters Noted in an Audit) in the domestic insurer's internal control over financial reporting as of the December 31 immediately preceding the audit (coinciding with the domestic insurer's annual audited financial report), noted during the audit. If no unremediated material weaknesses are noted during the audit, the communication must reflect that fact.

     (b) The written communication required under subsection (a) must be prepared not later than sixty (60) days after the filing of the annual audited financial report.

     (c) If a description of remedial actions taken or proposed to correct unremediated material weaknesses described under subsection (a) is not provided by the independent auditor, the domestic insurer shall provide a description of the remedial actions.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.11; P.L.146-2015, SEC.15.

 

IC 27-1-3.5-12.1Audit committee; members; duties; waiver

     Sec. 12.1. (a) As used in this section, "independent", with respect to a member of an audit committee, means that the member, other than in the member's capacity as a member of the audit committee, the board of directors, or another board committee:

(1) does not accept a consulting fee, an advisory fee, or another compensatory fee from the domestic insurer or group of insurers; and

(2) is not an affiliate of the domestic insurer or group of insurers.

     (b) This section does not apply to any of the following:

(1) A foreign insurer or an alien insurer that possesses a certificate of authority.

(2) A domestic insurer that is a SOX compliant entity.

(3) A wholly-owned subsidiary of a SOX compliant entity.

     (c) The audit committee of a domestic insurer or group of insurers is directly responsible for the:

(1) appointment;

(2) compensation; and

(3) oversight of the work;

of the domestic insurer's or group of insurers' accountant, including resolution of disagreements between management and the accountant concerning financial reporting, for the purpose of preparing or issuing an annual audited financial report or related work under this chapter. Each accountant reports directly to the audit committee.

     (d) The audit committee of a domestic insurer or group of insurers is responsible for:

(1) oversight of the domestic insurer's or group of insurers' internal audit function; and

(2) granting the person that performs the internal audit function suitable authority and resources to fulfill the person's responsibilities if required by section 12.3 of this chapter.

     (e) The following apply to the membership of an audit committee:

(1) Each member shall be:

(A) a member of the board of directors of the domestic insurer; or

(B) if the audit committee of the entity that controls a group of insurers serves as the audit committee of the domestic insurer or group of insurers, a member of the audit committee of the entity that controls the group of insurers.

(2) The percentage of independent members must meet the following minimum requirements:

(A) If the domestic insurer had direct written and assumed premiums during the immediately preceding calendar year of less than three hundred million dollars ($300,000,000), no minimum requirement applies.

(B) If the domestic insurer had direct written and assumed premiums during the immediately preceding calendar year of at least three hundred million dollars ($300,000,000) and less than five hundred million dollars ($500,000,000), at least fifty percent (50%) of the members must be independent members.

(C) If the domestic insurer had direct written and assumed premiums during the immediately preceding calendar year of at least five hundred million dollars ($500,000,000), at least seventy-five percent (75%) of the members must be independent members.

     (f) If:

(1) state or federal law requires that a board of directors of a domestic insurer or group of insurers include otherwise nonindependent members; and

(2) an otherwise nonindependent member is not an officer or employee of the domestic insurer, group of insurers, or an affiliate of the domestic insurer or group of insurers;

the nonindependent member may serve as a member of an audit committee and be considered to be independent for audit committee purposes.

     (g) If:

(1) a member of an audit committee of a domestic insurer ceases to be independent for reasons beyond the member's reasonable control; and

(2) the domestic insurer notifies the department of the cessation of independence;

the member may continue to serve as an audit committee member until the next annual meeting of the domestic insurer or one (1) year after the date on which the member's independence ceased, whichever occurs first.

     (h) The ultimate controlling person of a domestic insurer may designate the audit committee of the domestic insurer by providing written notice to each commissioner responsible for regulation of each affected insurer. The written notice must:

(1) be timely provided before the issuance of the annual audited financial report; and

(2) include a description of the basis for the designation.

     (i) A designation:

(1) under subsection (h) may be changed with written notice from the domestic insurer to the commissioner, including a description of the basis for the designation; and

(2) under subsection (h) or this subsection remains in effect unless rescinded or changed.

     (j) A domestic insurer's audit committee shall require the accountant that performs an audit required by this chapter to report to the audit committee in accordance with the requirements of AICPA Statements on Auditing Standards (SAS) 61, Communication with Audit Committees, or its replacement, including the following:

(1) All significant accounting policies and material permitted practices.

(2) All:

(A) material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the domestic insurer; and

(B) ramifications of the use of the alternative disclosures and treatments.

(3) The treatment described in subdivision (2) that is preferred by the accountant.

(4) Any other material written communication between the accountant and the management of the domestic insurer, including any management letter or schedule of unadjusted differences.

     (k) If:

(1) a domestic insurer is a member of an insurance holding company system; and

(2) any substantial differences among insurers in the insurance holding company system are identified to the audit committee;

the reports required by subsection (j) may be provided to the audit committee on an aggregate basis for insurers in the holding company system.

     (l) If a domestic insurer has direct written and assumed premiums (excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than five hundred million dollars ($500,000,000), the domestic insurer may apply to the commissioner for a waiver from the audit committee requirements of this section based on hardship.

     (m) A domestic insurer that receives a waiver under subsection (l) shall file the waiver, with the domestic insurer's annual statement filing, with the:

(1) commissioners of insurance in the states in which the domestic insurer is licensed or doing insurance business; and

(2) National Association of Insurance Commissioners.

If another state has access to electronic filing with the National Association of Insurance Commissioners, the domestic insurer shall file the waiver with the other state electronically in accordance with National Association of Insurance Commissioners electronic filing specifications.

As added by P.L.146-2015, SEC.16.

 

IC 27-1-3.5-12.3Internal audit function

     Sec. 12.3. (a) This section does not apply to a domestic insurer that meets the following requirements:

(1) The domestic insurer has annual direct written and unaffiliated assumed premiums (including international direct and assumed premiums and excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than five hundred million dollars ($500,000,000).

(2) If the domestic insurer is a member of a group of insurers, the group has annual direct written and unaffiliated assumed premiums (including international direct and assumed premiums and excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than one billion dollars ($1,000,000,000).

A domestic insurer or group of insurers described in this subsection shall comply with the requirements of this section not later than one (1) year after the year in which the domestic insurer's or group's annual direct written and unaffiliated assumed premiums described in subdivisions (1) and (2) exceed the applicable maximum amount specified in subdivision (1) or (2).

     (b) A domestic insurer shall establish an internal audit function to:

(1) provide independent, objective, and reasonable assurance to the domestic insurer's audit committee and management concerning the domestic insurer's governance, risk management, and internal controls;

(2) perform general and specific audits, reviews, and tests; and

(3) use other techniques considered necessary to protect assets, evaluate control effectiveness and efficiency, and evaluate compliance with policies and regulations.

     (c) An internal audit function established under subsection (b) must be organizationally independent, as follows:

(1) Ultimate judgment concerning audit matters must be made by the department responsible for the internal audit function.

(2) The department responsible for the internal audit function shall appoint an individual:

(A) to be responsible for the internal audit function; and

(B) to have direct and unrestricted access to the board of directors of the domestic insurer.

The internal audit function's organizational independence does not preclude dual reporting relationships.

     (d) The director of the internal audit function shall report to the audit committee of a domestic insurer on a regular basis, at least annually, concerning the following:

(1) The internal audit function's periodic audit plan.

(2) Factors that may adversely affect the internal audit function's independence or effectiveness.

(3) Material findings from completed audits.

(4) The appropriateness of corrective actions implemented by management as a result of audit findings.

     (e) If a domestic insurer is a member of an insurance holding company system or a member of a group of insurers, the domestic insurer may satisfy the internal audit function requirements of this section at the ultimate controlling person level, an intermediate holding company level, or an individual legal entity level.

As added by P.L.146-2015, SEC.17. Amended by P.L.72-2016, SEC.7.

 

IC 27-1-3.5-12.5Management's report of internal control over financial reporting

     Sec. 12.5. (a) A domestic insurer that is required to file an annual audited financial report under this chapter that has annual direct written and assumed premiums (excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of at least five hundred million dollars ($500,000,000) shall prepare a report of the domestic insurer's or group of insurers' management's internal control over financial reporting as of the immediately preceding December 31. The report shall be filed with the commissioner along with the communication of internal control related matters noted in an audit.

     (b) The commissioner may require a domestic insurer that is:

(1) not described in subsection (a); and

(2) in a RBC level event described in IC 27-1-36 or considered by the commissioner to be in hazardous financial condition (as defined in rules adopted under IC 27-1-3-7);

to file a report of management's internal control over financial reporting.

     (c) If:

(1) a domestic insurer or group of insurers is:

(A) directly subject to Section 404;

(B) part of an insurance holding company system whose parent is directly subject to Section 404;

(C) not directly subject to Section 404, but is a SOX compliant entity; or

(D) part of an insurance holding company system whose parent is not directly subject to Section 404, but is a SOX compliant entity; and

(2) the domestic insurer's or group of insurers' internal controls over financial reporting that have a material impact on the preparation of the domestic insurer's or group of insurers' annual audited financial statements are included in the Section 404 report;

the domestic insurer or group of insurers may satisfy the requirement of this section to file a report of management's internal control over financial reporting by including with the domestic insurer's or group of insurers' Section 404 report an addendum described in subsection (d).

     (d) An addendum described in subsection (c) must be a positive statement by the domestic insurer's or group of insurers' management that no internal controls over financial reporting that have a material impact on the preparation of the domestic insurer's or group of insurers' annual audited financial statements exist, other than the internal controls that are included in the Section 404 report.

     (e) If:

(1) a domestic insurer or group of insurers is described in subsection (c)(1); and

(2) the domestic insurer's or group of insurers' internal controls over financial reporting that have a material impact on the preparation of the domestic insurer's or group of insurers' annual audited financial statements are not all included in the Section 404 report;

the domestic insurer or group of insurers shall file a report of management's internal control over financial reporting as required by this section for the internal controls that have a material impact and are not included in the Section 404 report.

     (f) A domestic insurer's or group of insurers' report of management's internal control over financial reporting required by this section must include the following:

(1) A statement that management is responsible for establishment and maintenance of adequate internal control over financial reporting.

(2) A statement that management has established internal control over financial reporting and an assertion of whether, to the best of management's knowledge and belief after diligent inquiry, management's internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles.

(3) A statement that briefly describes the approach or processes by which management evaluated the effectiveness of management's internal control over financial reporting.

(4) A statement that briefly describes the scope of work that is included in the report and whether any of management's internal controls over financial reporting were excluded.

(5) Disclosure of any unremediated material weaknesses in the management's internal control over financial reporting identified by management as of the immediately preceding December 31. The management may not conclude that the internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of annual audited financial statements in accordance with statutory accounting principles if one (1) or more unremediated material weaknesses exist in the management's internal control over financial reporting.

(6) A statement regarding the inherent limitations of the management's internal control over financial reporting.

(7) Signatures of the chief executive officer and the chief financial officer, or equivalent position, of the domestic insurer or group of insurers.

     (g) A domestic insurer's or group of insurers' management shall document and make available upon financial condition examination the basis on which the management's assertions described in subsection (f) are made. The management's assertions may be based, in part, upon the management's review, monitoring, and testing of internal controls over financial reporting that are undertaken in the normal course of the management's activities. The management may determine the nature of the internal control framework used and the nature and extent of documentation to make the management's assertion in a cost effective manner, including assembly of or reference to existing documentation.

     (h) A report of management's internal control over financial reporting required by this section, and any supporting documentation provided during the course of a financial condition examination, is confidential.

As added by P.L.251-1995, SEC.12. Amended by P.L.146-2015, SEC.18.

 

IC 27-1-3.5-13Independent audit work papers and communications; review by department examiners

     Sec. 13. (a) A domestic insurer required to file an audited financial report under this chapter shall require its independent auditor to make available for review by department examiners:

(1) all work papers prepared in the conduct of the independent auditor's examination; and

(2) any record of significant communications related to the audit between the independent auditor and the insurer that took place at:

(A) the offices of the insurer;

(B) the department;

(C) the offices of the independent auditor; or

(D) any other reasonable place designated by the commissioner.

The insurer shall require the independent auditor to retain the audit work papers and communications until the department has filed a report on the examination covering the period of the audit but not later than seven (7) years after the date of the audit report.

     (b) Department examiners, in conducting a review of an independent auditor's work papers, may make and retain copies of the work papers and communications. A review of an independent auditor's work papers and communications shall be considered an investigation and all work papers and communications obtained or copied during the course of that investigation are confidential under IC 27-1-3.1-15.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.13.

 

IC 27-1-3.5-14Exemption application; hearing

     Sec. 14. (a) In response to a written application from a domestic insurer, the commissioner may grant an exemption from compliance with this chapter if the commissioner finds, upon review of the application, that compliance with this chapter would constitute a financial or an organizational hardship upon the domestic insurer. An exemption may be granted at any time for a specified period.

     (b) Within ten (10) days after the denial of a domestic insurer's written request for an exemption from this chapter, the insurer may, in writing, request a hearing on its application for an exemption. The hearing shall be held under IC 4-21.5.

As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.14.

 

IC 27-1-3.5-15Repealed

As added by P.L.244-1989, SEC.2. Repealed by P.L.251-1995, SEC.22.

 

IC 27-1-3.5-16Penalty for noncompliance

     Sec. 16. A domestic insurer that fails to file an audited annual financial report before July 1 or any other deadline established by the commissioner for the insurer under this chapter without having obtained an extension is subject to a civil penalty of fifty dollars ($50) per day until the report is received by the commissioner.

As added by P.L.244-1989, SEC.2.

 

IC 27-1-3.5-17Effect of chapter on examinations under IC 27-1-3.1

     Sec. 17. This chapter does not prohibit or in any way restrict the commissioner from ordering, conducting, or performing examinations of insurers under IC 27-1-3.1.

As added by P.L.244-1989, SEC.2. Amended by P.L.26-1991, SEC.6.

 

IC 27-1-3.5-18British or Canadian insurers

     Sec. 18. (a) In the case of a British or Canadian insurer, the annual audited financial report refers to the annual statement of total business on the form filed by the company with its domiciliary supervision authority audited by an independent auditor.

     (b) For a British or Canadian insurer, the letter required under section 8 of this chapter shall state that the accountant is aware of the requirement relating to the annual audited statement filed with the commissioner under section 6 of this chapter and shall affirm that the opinion expressed is in conformity with those requirements.

As added by P.L.251-1995, SEC.15.

 

IC 27-1-4Chapter 4. Repealed

Repealed by Acts 1979, P.L.255, SEC.3.

 

IC 27-1-4.1Chapter 4.1. Corporate Governance Annual Disclosure
           27-1-4.1-1Application and scope of chapter
           27-1-4.1-2"Corporate governance annual disclosure"; "CGAD"
           27-1-4.1-3"Insurance group"
           27-1-4.1-4"Insurer"
           27-1-4.1-5"NAIC"
           27-1-4.1-6Annual submission of CGAD
           27-1-4.1-7Level of disclosure
           27-1-4.1-8CGAD submitted by insurance group member
           27-1-4.1-9Nonduplication of other filings
           27-1-4.1-10Additional information; CGAD preparation requirements
           27-1-4.1-11Confidentiality; privilege; use of information; sharing and disclosure
           27-1-4.1-12Third party consultants; confidentiality; sharing of information
           27-1-4.1-13Failure to timely file; penalty; waiver
           27-1-4.1-14Nonseverability
           27-1-4.1-15Rulemaking

 

IC 27-1-4.1-1Application and scope of chapter

     Sec. 1. (a) This chapter applies beginning January 1, 2016.

     (b) This chapter does not do the following:

(1) Impose corporate governance standards or internal procedures that are not otherwise required under IC 27.

(2) Limit the commissioner's authority, or the rights and obligations of third parties, under IC 27-1-3.1.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-2"Corporate governance annual disclosure"; "CGAD"

     Sec. 2. As used in this chapter, "corporate governance annual disclosure" or "CGAD" means a confidential report filed by an insurer or insurance group under this chapter.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-3"Insurance group"

     Sec. 3. As used in this chapter, "insurance group" means insurers and affiliates of an insurance holding company system (as defined in IC 27-1-23-1).

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-4"Insurer"

     Sec. 4. As used in this chapter, "insurer" has the same meaning as set forth in IC 27-1-2-3, except that the term:

(1) refers only to domestic insurers (as defined in IC 27-1-36-8); and

(2) does not include agencies, authorities, or instrumentalities of the United States, possessions and territories of the United States, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-5"NAIC"

     Sec. 5. As used in this chapter, "NAIC" refers to the National Association of Insurance Commissioners.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-6Annual submission of CGAD

     Sec. 6. (a) An insurer or insurance group of which the insurer is a member shall, not later than June 1 of each calendar year, submit:

(1) to the commissioner; or

(2) if the insurer is a member of an insurance group, to the lead state commissioner of the insurance group (as determined by the procedures in the most recent Financial Analysis Handbook adopted by the NAIC) according to the law of the lead state;

a CGAD.

     (b) An insurer that is a member of an insurance group and not required to submit a CGAD to the commissioner under subsection (a) shall submit a CGAD to the commissioner upon the commissioner's request.

     (c) A CGAD submitted under this section must include the signature of the insurer's or insurance group's chief executive officer or corporate secretary attesting that to the best of the chief executive officer's or corporate secretary's knowledge the insurer has:

(1) implemented corporate governance procedures; and

(2) provided a copy of the CGAD to the insurer's board of directors or the appropriate committee of the board of directors.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-7Level of disclosure

     Sec. 7. (a) Subject to subsection (b), an insurer or insurance group may complete a CGAD using corporate governance information at the level of disclosure at which the insurer's or insurance group's system of corporate governance is structured, as follows:

(1) The ultimate controlling parent level.

(2) An intermediate holding company level.

(3) The individual legal entity level.

     (b) An insurer or insurance group may, but is not required to, choose the level of disclosure at which to complete a CGAD under subsection (a) according to one (1) of the following criteria:

(1) The level at which the insurer's or insurance group's risk tolerance is determined.

(2) The level at which the insurer's or insurance group's earnings, capital, liquidity, operations, and reputation are:

(A) collectively overseen; and

(B) supervised.

(3) The level at which legal liability for failure of general corporate governance would be placed.

     (c) If the insurer or insurance group chooses the level of disclosure at which to complete a CGAD under subsection (a) according to a criterion described in subsection (b), the insurer or insurance group shall:

(1) indicate which of the three (3) criteria was used to determine the level of disclosure; and

(2) explain any change in the level of disclosure that is subsequently used.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-8CGAD submitted by insurance group member

     Sec. 8. If a CGAD is submitted by an insurer as a member of an insurance group, the lead state commissioner of the insurance group (as determined by the procedures in the most recent Financial Analysis Handbook adopted by the NAIC) shall:

(1) review a CGAD submitted under section 6 of this chapter; and

(2) make any requests for additional information.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-9Nonduplication of other filings

     Sec. 9. If an insurer or insurance group:

(1) submits, in other:

(A) documents submitted to the commissioner, including proxy statements filed with registration statements required by IC 27-1-23-3; or

(B) state or federal filings provided to the department;

information that is substantially similar to the information required by this chapter; and

(2) cross references in the CGAD the document or filing that contains the substantially similar information;

the insurer or insurance group is not required to duplicate the information in the CGAD.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-10Additional information; CGAD preparation requirements

     Sec. 10. (a) If a CGAD contains the material information necessary to allow the reviewing commissioner to understand the insurer's or insurance group's corporate governance structure, policies, and procedures, the insurer or insurance group may determine whether to respond to a request from the reviewing commissioner for additional information.

     (b) If the reviewing commissioner considers additional information to be material and necessary to provide a clear understanding of an insurer's or insurance group's:

(1) corporate governance structure, policies, and procedures;

(2) reporting or information system; or

(3) controls implementing subdivisions (1) and (2);

the commissioner may request the additional information.

     (c) A CGAD must be:

(1) prepared in a manner consistent with the NAIC's Corporate Governance Annual Disclosure Model Regulation; and

(2) made available to the commissioner upon:

(A) examination under IC 27-1-3.1; or

(B) request of the commissioner.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-11Confidentiality; privilege; use of information; sharing and disclosure

     Sec. 11. (a) Documents, materials, and other information related to a CGAD, including the CGAD, that are in the possession or control of the department and obtained by, created by, or disclosed to the commissioner or another person under this chapter, are:

(1) considered to be proprietary and contain trade secrets;

(2) confidential and privileged;

(3) not subject to subpoena; and

(4) not subject to discovery or admissible in evidence in a private civil action.

     (b) The commissioner may:

(1) use the documents, materials, and other information described in subsection (a) in relation to a regulatory or legal action brought as part of the commissioner's duties; and

(2) otherwise make the documents, materials, and other information public only with the prior written consent of the insurer.

     (c) The commissioner, and any other person:

(1) who receives documents, materials, or other information related to a CGAD while acting under the authority of the commissioner; or

(2) with whom the documents, materials, or other information are shared;

under this chapter is not permitted or required to testify in a private civil action concerning any documents, materials, or other information described in subsection (a).

     (d) The commissioner may, in the performance of the commissioner's duties, do the following:

(1) Upon request, share all documents, materials, and other information described in subsection (a) with the following if the recipient agrees in writing, and provides written verification that the recipient has the legal authority, to maintain the confidential and privileged status of the documents, materials, and other information:

(A) Other state, federal, and international financial regulatory agencies.

(B) The NAIC.

(C) Members of a supervisory college (as defined in IC 27-1-23-1).

(D) A third party consultant under section 12 of this chapter.

(2) Receive all documents, materials, and other information described in subsection (a) from:

(A) other state, federal, and international financial regulatory agencies;

(B) members of a supervisory college (as defined in IC 27-1-23-1); and

(C) the NAIC;

if the commissioner maintains the confidential or privileged status of the documents, materials, and other information that are received with notice or the understanding that the documents, materials, and other information are confidential or privileged under the laws of the jurisdiction that is the source of the documents, materials, and other information.

     (e) The sharing of information by the commissioner under this chapter is not a delegation of regulatory authority. The commissioner is solely responsible for the administration, implementation, and enforcement of this chapter.

     (f) Disclosure to or sharing by the commissioner of documents, materials, or other information under this chapter is not a waiver of any applicable privilege or claim of confidentiality in the documents, materials, or other information.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-12Third party consultants; confidentiality; sharing of information

     Sec. 12. (a) The commissioner may, at the insurer's expense, retain third party consultants, including attorneys, actuaries, accountants, and others who are not part of the commissioner's staff, that:

(1) the commissioner considers necessary to review a CGAD, related information, or the insurer's or insurance group's compliance with this chapter; and

(2) have verified, with notice to the insurer, that the third party consultant:

(A) has no conflict of interest affecting the commissioner's retention of the third party consultant; and

(B) has internal procedures to:

(i) monitor whether a conflict of interest arises after the third party consultant has been retained; and

(ii) comply with the confidentiality requirements of this chapter.

     (b) A third party consultant who is retained under subsection (a) is under the direction and control of the commissioner and acts only in an advisory capacity.

     (c) The NAIC and a third party consultant who is retained under subsection (a) are subject to the same confidentiality requirements as the confidentiality requirements that apply to the commissioner under this chapter. The NAIC may share information received under this chapter only with state regulators from states in which insurers that are members of an insurance group are domiciled.

     (d) The commissioner shall enter into a written agreement with the NAIC or a third party consultant governing sharing and use of information provided under this chapter, including the following:

(1) Procedures and protocols concerning the confidentiality and security of information shared:

(A) with the NAIC or third party consultant under this chapter; and

(B) by the NAIC with regulators of other states in which insurers that are members of an insurance group are domiciled.

(2) A statement that the recipient:

(A) agrees in writing; and

(B) provides written verification that the recipient has the legal authority;

to maintain the confidential and privileged status of the documents, materials, and other information.

(3) A statement that, with respect to information shared with the NAIC or third party consultant under this chapter:

(A) the commissioner maintains ownership of the information; and

(B) the use of the information is subject to the direction of the commissioner.

(4) A statement that the NAIC or third party consultant may not store information shared under this chapter in a permanent data base after the underlying analysis is completed.

(5) A requirement that, if CGAD related information of an insurer that is in the possession of the NAIC or third party consultant under this chapter is subject to a request or subpoena to the NAIC or third party consultant for production or disclosure, the NAIC or third party consultant will provide prompt notice to the commissioner and to the insurer or insurance group.

(6) A requirement that the NAIC or third party consultant will allow intervention by an insurer in a judicial or administrative action under which the NAIC or third party consultant may be required to disclose confidential information concerning the insurer that has been shared with the NAIC or third party consultant under this chapter.

(7) An express requirement that the written consent of the insurer or insurance group is required before the NAIC or third party consultant makes public any information shared under this chapter.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-13Failure to timely file; penalty; waiver

     Sec. 13. (a) An insurer that fails, without just cause (as determined by the commissioner), to timely file a CGAD as required by this chapter shall, after notice and hearing under IC 4-21.5, pay a civil penalty of one hundred dollars ($100) for each day of noncompliance, not to exceed ten thousand dollars ($10,000).

     (b) The commissioner may reduce a penalty imposed under subsection (a) if the insurer demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer.

     (c) A civil penalty collected under this section shall be deposited in the department of insurance fund established by IC 27-1-3-28.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-14Nonseverability

     Sec. 14. Notwithstanding IC 1-1-1-8, section 11 of this chapter is not severable.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-4.1-15Rulemaking

     Sec. 15. The commissioner may adopt rules under IC 4-22-2 to implement this chapter.

As added by P.L.146-2015, SEC.19.

 

IC 27-1-5Chapter 5. Classification of Insurance
           27-1-5-1Authority to write one or more kinds of insurance; restrictions on assessment plan companies; classes of insurance
           27-1-5-2Management of segregated investment account
           27-1-5-3"Property" and "property interests" defined
           27-1-5-4Repealed

 

IC 27-1-5-1Authority to write one or more kinds of insurance; restrictions on assessment plan companies; classes of insurance

     Sec. 1. A company, including a foreign or alien company authorized to transact business in Indiana, may make all or any one (1) or more of the kinds of insurance and reinsurance comprised in any one (1) of the following classes, subject to the provisions of IC 27-1. However, insurance on the assessment plan is limited to the making of insurance on the lives of persons and against disability from disease, bodily injury or death by accident.

     CLASS 1. INSURANCE APPERTAINING TO PERSONS ONLY:

     (a) To insure the lives of persons, including insurance against permanent mental or physical disability resulting from accident or disease, or against accidental death combined with a policy for life insurance, and to grant, purchase or dispose of annuities;

     (b) To insure against bodily injury or death by accident and against disablement resulting from sickness and every insurance appertaining thereto, including contracts between an insurer and policyholder providing for the indemnification of the policyholder (or the other party) obligated to pay benefits resulting from bodily injury, death by accident, or disablement from sickness in accordance with the provisions of a benefit plan; however, for purposes of Class 2(1) of this section, this provision does not apply;

     (c) Within the meaning of "Insurance Appertaining to Persons Only," generally described in Class 1 of this section, are to be included, among other things:

(1) contracts providing for immediate or future life insurance and/or annuity benefits, fundable and/or computable as to cost or payment or both; and

(2) contracts providing for insurance against bodily injury or sickness, a portion of which may be funded;

out of or on the basis of assets in a segregated investment account; the assets being those received by the company from or in relation to contributions, premiums or considerations received by it under such contracts. The establishment of such account shall in no way affect the company's absolute ownership of the investment items to which the account from time to time pertains. A company issuing contracts of the nature described may as to them establish one (1) or more segregated accounts, dependent upon the company's plan of operation.

     A segregated investment account established as contemplated in this paragraph (c) shall not be chargeable with liabilities arising out of any other business the company may conduct and which has no specific relation to or dependence upon such account. Any surplus or deficit which may arise in any such segregated investment account by virtue of any guarantee by the company of the value of the assets allocated to the account, their investment or income, or mortality experience shall be adjusted by withdrawals from or additions to such account so that the assets of such account shall always equal the assets required to satisfy all liabilities arising under contracts fundable by such account.

     CLASS 2.

     (a) To insure any persons against bodily injury, disablement or death resulting from accident and against disablement resulting from disease and every insurance appertaining thereto;

     (b) To insure against loss or damage resulting from accident to, or injury sustained by, an employee or other person for which accident or injury the insured is liable;

     (c) To insure against loss or damage by burglary, theft or housebreaking;

     (d) To insure glass, its fittings or lettering thereon, against breakage or damage;

     (e) To insure against loss from injury to persons or property which results accidentally from steam-boilers, elevators, electrical devices, engines and all machinery and appliances used in connection therewith or operated thereby; and to make inspection of and issue certificates of inspection upon such boilers, elevators, electrical devices, engines, machinery and appliances;

     (f) To insure against any loss, expense and/or liability resulting from the ownership, maintenance, use and/or operation of any automobile or other motor vehicle, including complete line coverage on automobiles or other motor vehicles;

     (g) To insure against loss or damage by water to any goods or premises arising from the breakage or leakage of sprinklers and/or water-pipes;

     (h) To insure against any loss or damage resulting from accident to or injury suffered by any person, for which loss or damage the insured is liable; excepting employer's liability insurance as authorized under subsection (b) of Class 2 of this section;

     (i) To insure persons, associations or corporations against loss or damage by reason of the giving or extending of credit;

     (j) To insure against loss or damage on account of encumbrances upon or defects in the title to real estate and against loss by reason of the nonpayment of the principal or interest of bonds, mortgages or other evidences of indebtedness;

     (k) To become surety or guarantor for any person, partnership or corporation in any position or place of trust or as custodian of money or property, public or private; to become a surety or guarantor for the performances by any person, copartnership or corporation of any lawful obligation, undertaking, agreement or contract of any kind, except contracts or policies of insurance, to become surety or guarantor for the performance of insurance contracts where surety bonds are required by states or municipalities. The business covered by this subsection (k) shall be considered as fidelity and surety obligations and construed as such regardless of any other classification contained in this chapter to the contrary;

     (l) To insure against any other casualty or insurance risk specified in the articles of incorporation which lawfully may be made the subject of insurance and for which specific provision is not made in this chapter.

     (m) To insure against legal expenses, such as attorneys fees, court costs, witness fees and incidental expenses incurred in connection with the use of the professional services of attorneys at law, in consideration of a specified payment for an interval of time, regardless of whether payment is made by the beneficiaries individually or by a third person for them, so that the total cost incurred by assuming the obligation is spread directly or indirectly among the group, except those expenses resulting from the following:

(1) Retainer contracts made with a single client with the fee based on an estimate of the nature and the amount of services that will be provided to that client, and similar contracts made with a group of clients involved in the same or closely related legal matters (such as class actions).

(2) Plans providing no benefits other than a limited amount of consultation and advice on simple matters either alone or in combination with referral services or the promise of fee discounts for other matters.

(3) Plans providing limited benefits on simple legal matters on a voluntary and informal basis, not involving a legally binding promise, in the context of an employment or educational or similar relationship.

(4) Legal services provided by unions or employee associations to its members in matters solely relating to employment or occupation, and provided, further, that nothing in this chapter shall prohibit group legal services of any other kind.

(5) Payment of fines, penalties, judgments or assessments.

     CLASS 3.

     (a) To make insurance on buildings and personal property of every description against loss or damage, including loss of use or occupancy, caused by fire, smoke or smudge, lightning or other electrical disturbance, earthquake, windstorm, cyclone, tornado, tempest, hail, frost or snow, ice, sleet, weather or climatic conditions, including excess or deficiency of moisture, flood, rain or drought, rising of the waters of the ocean, or its tributaries, bombardment, invasion, insurrection, riot, civil war or commotion, military or usurped power, and by explosion, whether fire ensues or not, except explosion of steam-boilers;

     (b) To insure against loss or damage from any cause, to crops or farm products and loss of rental value of land used in producing such crops or products;

     (c) To insure against loss or damage by water or other fluid to any goods or premises arising from the breakage or leakage of sprinklers, pumps, or other apparatus erected for extinguishing fires or of other conduits or containers or by water entering through leaks or openings in buildings and/or water-pipes, and against accidental injury to such sprinklers, pumps, or other apparatus, conduits, containers or water-pipes;

     (d) To insure vessels, boats, cargoes, goods, merchandise, freight, specie, bullion, jewels, profits, commissions, bank notes, bills of exchange, other evidences of debt, bottomry and respondentia interests, and other property against loss or damage by any or all of the risks of lake, river, canal and inland navigation and transportation, and other insurances appertaining to or connected with marine risks, including complete line coverage automobile insurance, and also insurance on any other property or risk, or the use thereof, by reason of any contingency unless the granting of such insurance is contrary to public policy. However, such companies may not grant or make insurance against:

(1) losses arising from explosion of steam boilers;

(2) losses arising from breakage of plate or other glass, except when caused by fire, wind, or hail storm, and except when the loss occurs to glass which is a part of any dwelling house;

(3) risks of the classes commonly known as fidelity insurance and surety bonds;

(4) risks of the classes commonly known as burglary or theft insurance, except as above specifically permitted, and except for the risks to any dwelling house; and

(5) the risk of legal liability by reason of bodily injury to the person except as such liability may result from the ownership, maintenance, use or operation of an automobile.

Formerly: Acts 1935, c.162, s.59; Acts 1957, c.265, s.1; Acts 1959, c.87, s.1; Acts 1961, c.138, s.2. As amended by Acts 1978, P.L.129, SEC.1; Acts 1982, P.L.160, SEC.1; P.L.260-1983, SEC.5.

 

IC 27-1-5-2Management of segregated investment account

     Sec. 2. Notwithstanding any other provisions of this article, any company which has established or establishes on or after March 8, 1935, a segregated investment account of assets as authorized in Class 1(c) of section 1 of this chapter may provide that such segregated investment account of assets shall be managed by a committee, board, or similarly designated body, the members of which need not be otherwise affiliated with such company or its board of directors and the members of which may be elected solely by the owners of the contracts issued and outstanding under such account, and may further provide that each contract owner under such account shall have the right, with respect to the election of members of such committee, board, or body and with respect to other matters pertaining only to such account, to vote a number of votes proportionate to the value of the contract owner's interest in the account in the manner provided by such rules as may be adopted by such committee, board, or body.

Formerly: Acts 1935, c.162, s.59a; Acts 1967, c.127, s.6. As amended by P.L.252-1985, SEC.13.

 

IC 27-1-5-3"Property" and "property interests" defined

     Sec. 3. "Property" and "property interests", as used in section 1 of this chapter, shall include real and personal property, chattels real, currency, coin, bank notes, bullion, postage or revenue stamps, express, postal, pension or bank money orders, bonds, debentures, checks, coupons, demand or time drafts, bills of exchange, acceptances, promissory notes, certificates of deposit, certificates of stock, warehouse receipts, bills of lading, and all other choses in action.

Formerly: Acts 1935, c.162, s.60. As amended by P.L.252-1985, SEC.14.

 

IC 27-1-5-4Repealed

As added by Acts 1979, P.L.254, SEC.2. Repealed by P.L.255-1995, SEC.15.

 

IC 27-1-6Chapter 6. Formation of Domestic Companies
           27-1-6-1Authority to incorporate; excluded kinds of insurance
           27-1-6-2Applicable rights, powers, privileges, duties, obligations, and liabilities
           27-1-6-3Names; required and prohibited words; similarity of names; change of name
           27-1-6-4Articles of incorporation; contents
           27-1-6-5Publication of notice of intention to organize
           27-1-6-6Articles of incorporation; form; execution
           27-1-6-7Articles of incorporation; submission to department; proof of publication
           27-1-6-8Articles of incorporation; approval or disapproval by department
           27-1-6-9Articles of incorporation; submission to attorney general
           27-1-6-10Articles of incorporation; submission to secretary of state; filing
           27-1-6-11Articles of incorporation; filing certified copy with department; surety bond; permit for completion of organization; procedure
           27-1-6-12Commencement of corporate existence; powers
           27-1-6-13Requirements for commencing business or incurring indebtedness; liability for violations
           27-1-6-14Stock companies; capital stock and surplus requirements
           27-1-6-15Mutual companies; initial subscriptions and premiums; deposits; surplus
           27-1-6-16Extension of charter powers and licenses; limitation of actions
           27-1-6-17Examination of proposed companies; revocation and renewal of permit and insurance producer's authority
           27-1-6-18Certificate of authority; issuance; recording
           27-1-6-19Bylaws; procedure for adoption
           27-1-6-20Repealed
           27-1-6-21Company domiciled in Indiana; requirements

 

IC 27-1-6-1Authority to incorporate; excluded kinds of insurance

     Sec. 1. Any number of natural persons, not less than seven (7), all of whom are eighteen (18) years of age or older, at least a majority of whom are residents of the state of Indiana and citizens of the United States, may form a corporation under the provisions of this chapter for the purpose of making any kind or kinds of insurance described in any one class set out in IC 27-1-5-1, other than reciprocal, farm mutual, fraternal, and assessment insurance, by complying with the provisions of this chapter.

Formerly: Acts 1935, c.162, s.61; Acts 1973, P.L.270, SEC.1. As amended by P.L.252-1985, SEC.15.

 

IC 27-1-6-2Applicable rights, powers, privileges, duties, obligations, and liabilities

     Sec. 2. Any insurance company incorporated as such under this chapter, and its successors shall have the rights and powers, shall be entitled to the privileges, and shall be subject to the duties, obligations, and liabilities as prescribed in this article.

Formerly: Acts 1935, c.162, s.62. As amended by P.L.252-1985, SEC.16.

 

IC 27-1-6-3Names; required and prohibited words; similarity of names; change of name

     Sec. 3. The name of any company organized under this article shall contain the word "insurance" and the word "company," "corporation" or "incorporated," or shall end with an abbreviation of one of these words, except that the word "company" or the abbreviation "Co." may be used only if that word or abbreviation is not immediately preceded by the word "and," or any substitute therefor.

     No company organized under this article shall:

     (a) Use as a part of its corporate name the words "United States," "Federal," "government," "official," or any word that would imply that the company was an administrative agency of the state of Indiana or of the United States, or is subject to supervision of any department other than the department of insurance of the state of Indiana.

     (b) Take or assume a corporate name the same as, or confusingly similar to, the name of any other insurance company then existing under the laws of this state or authorized to transact business in this state, unless at the same time (1) such other company shall change its corporate name or withdraw from transacting business in this state, and (2) the written consent of such company, signed and verified under oath by its secretary, shall be filed with the department.

     Any company organized under this article may change its corporate name at any time by amending its articles of incorporation in the manner hereinafter provided. The provisions of this section shall not affect the right of any insurance company which is existing under the laws of this state on March 8, 1935, or of any such company which thereafter reorganizes or reincorporates under this article or of any company authorized to transact business in this state on March 8, 1935, to continue the use of its corporate name.

Formerly: Acts 1935, c.162, s.63. As amended by Acts 1977, P.L.281, SEC.3; P.L.1-2009, SEC.145.

 

IC 27-1-6-4Articles of incorporation; contents

     Sec. 4. The incorporators shall execute articles of incorporation, not inconsistent with the provisions of this article, setting forth the following:

(a) The name of the proposed corporation.

(b) The post office address of its principal office.

(c) A precise and accurate statement of the purpose or purposes for which the company is organized, which shall be restricted to the kind or kinds of insurance comprised within one (1) of the classes of insurance specified in IC 27-1-5-1, and that it is organized under this article.

(d) The term for which it is to continue as a corporation, which may be perpetual.

(e) In the case of a stock company, the amount of its capital and the aggregate number of shares which the company shall have authority to issue and the par value thereof.

(f) The amount of paid-in capital with which the company will begin business.

(g) The plan or principle upon which the business is to be transacted.

(h) The name, occupation, and post office address of each of the incorporators.

(i) The names of the first officers and directors, their post office addresses, and their terms of office.

(j) Any other provisions, consistent with the laws of this state, for the regulation of the business and conduct of the affairs of the company and creating, defining, limiting, or regulating the powers of the company, of the directors, or of the shareholders or any class or classes of shareholders.

Formerly: Acts 1935, c.162, s.64. As amended by P.L.252-1985, SEC.17.

 

IC 27-1-6-5Publication of notice of intention to organize

     Sec. 5. At least ten (10) and not more than twenty (20) days prior to the presentation of the articles of incorporation to the department as provided in section 6 of this chapter, the incorporators shall publish at least once in a newspaper of general circulation, printed and published in the English language, in the county in which the principal office of the proposed company is to be located, and at least once in a newspaper of general circulation, printed and published in the English language, in the city of Indianapolis, Marion County, Indiana, a notice of intention to organize such a corporation, which publication shall contain the following:

(a) The name of the proposed company.

(b) A statement that the proposed company is to be organized under the provisions of this article.

(c) The general character and class or classes of insurance to be transacted by the proposed company.

(d) The time when the articles of incorporation will be presented to the department.

(e) The names, occupations, and addresses of the incorporators.

Formerly: Acts 1935, c.162, s.65. As amended by P.L.252-1985, SEC.18.

 

IC 27-1-6-6Articles of incorporation; form; execution

     Sec. 6. The form of the articles of incorporation shall be prescribed and furnished by the department. The articles of incorporation shall be:

(1) prepared and signed in triplicate originals by all of the incorporators, or, in the case of a redomestication under IC 27-1-6.5, by the corporate officers if the original incorporators are no longer available;

(2) acknowledged by at least three (3) of the incorporators or corporate officers before a notary public; and

(3) presented in triplicate originals to the department at the office of the department.

Formerly: Acts 1935, c.162, s.66. As amended by P.L.116-1994, SEC.18.

 

IC 27-1-6-7Articles of incorporation; submission to department; proof of publication

     Sec. 7. At the time of presenting the articles of incorporation for approval, the incorporators shall file with the department the proof of publication required by section 5 of this chapter. The department shall determine whether the proof of publication conforms with the provisions of section 5 of this chapter and is hereby authorized to approve or disapprove the same. If the department shall disapprove the proof of publication, it shall endorse its disapproval thereon and return the proof of publication and the articles of incorporation to the incorporators. If the department approves the proof of publication, it shall then consider the articles of incorporation.

Formerly: Acts 1935, c.162, s.67. As amended by P.L.252-1985, SEC.19.

 

IC 27-1-6-8Articles of incorporation; approval or disapproval by department

     Sec. 8. The department is hereby authorized, in its discretion, to approve or disapprove the articles of incorporation of the proposed company. If the department shall approve the articles of incorporation of the proposed company, the department shall write or stamp, in an appropriate place on each of said triplicate copies of such articles of incorporation, the:

(1) words "Approved by the department of insurance of the state of Indiana";

(2) date of the approval;

(3) impression of the seal of the department; and

(4) signature of the commissioner.

Formerly: Acts 1935, c.162, s.68. As amended by P.L.146-2015, SEC.20.

 

IC 27-1-6-9Articles of incorporation; submission to attorney general

     Sec. 9. In the event the department approves the articles of incorporation of the proposed company, it shall then submit the proposed articles of incorporation to the attorney general for the state of Indiana, who shall examine said articles. If the attorney general finds that the articles of incorporation conform to the provisions of this article and are not inconsistent with the constitution of this state, and of the United States, he shall so certify and shall thereupon return the articles of incorporation to the department with his approval endorsed thereon.

Formerly: Acts 1935, c.162, s.69. As amended by P.L.252-1985, SEC.20.

 

IC 27-1-6-10Articles of incorporation; submission to secretary of state; filing

     Sec. 10. When the articles of incorporation have been approved by the attorney-general and returned to the department, then the department shall present the same to the secretary of state for the state of Indiana. If the secretary of state finds that the articles of incorporation conform to law, he shall indorse his approval upon each of the triplicate copies of the articles, and when all fees have been paid as required by law, he shall file one (1) copy in his office and return the other two (2) copies to the incorporators or their representatives.

Formerly: Acts 1935, c.162, s.70.

 

IC 27-1-6-11Articles of incorporation; filing certified copy with department; surety bond; permit for completion of organization; procedure

     Sec. 11. (a) When the articles of incorporation are returned to the incorporators or their representatives bearing the endorsement of the approval of the secretary of state, as provided in section 10 of this chapter, the incorporators or their representatives shall obtain a certified copy of the articles of incorporation from the secretary of state and file such certified copy with the department.

     (b) The incorporators shall also file with the department a surety bond payable to the state of Indiana in the sum of ten thousand dollars ($10,000), with surety to be approved by the commissioner or collateral in the sum of ten thousand dollars ($10,000), as approved by the commissioner, and conditioned upon the faithful accounting to the department on completion of organization and receipt of its certificate of authority from the department, or to its shareholders, members, applicants for policies and creditors, or the trustee, receiver, or assignee of the proposed company duly appointed in any proceedings in any court of competent jurisdiction in the state in accordance with their respective rights in case the organization of the proposed company should not be completed and a certificate of authority should not be procured from the department.

     (c) Whenever the incorporators have filed their certified copy of the articles of incorporation and bond as provided in this section, then the department may issue a permit for completion of organization. The company shall have authority under such permit to solicit subscriptions and payments for capital stock, if a stock company, and applications and advance premiums for insurance, if a mutual company, and to exercise such powers, subject to the limitations in this article prescribed, as may be necessary and proper in completing its organization and qualifying itself for a certificate of authority from the department to make the kind or kinds of insurance proposed in its articles of incorporation, provided that such company shall not issue policies or enter into contracts of insurance until it shall have received the certificate of the department authorizing it so to do.

Formerly: Acts 1935, c.162, s.71. As amended by P.L.252-1985, SEC.21.

 

IC 27-1-6-12Commencement of corporate existence; powers

     Sec. 12. Upon the issuance of the permit for completion of organization by the department, the corporate existence shall begin, and thereupon such incorporators and their associates shall become a body corporate with power to sue and be sued, contract and be contracted with, adopt a seal, and do such other acts, subject to the provisions and to the restrictions of this article, as shall be needful to accomplish the purpose of completing its organization, provided, that such company shall not issue policies or enter into contracts of insurance until it shall have received the certificate of the department authorizing it so to do.

Formerly: Acts 1935, c.162, s.72. As amended by P.L.252-1985, SEC.22.

 

IC 27-1-6-13Requirements for commencing business or incurring indebtedness; liability for violations

     Sec. 13. Any company organized under this article shall not transact any business or incur any indebtedness until:

(a) one (1) of the triplicate copies of the articles of incorporation, bearing the approval of the department and the attorney general and the endorsement of the approval of the secretary of state, as provided in section 10 of this chapter has been filed for record with the county recorder of the county in which the principal office is located; and

(b) a certified copy of the permit for completion of organization, issued pursuant to section 11 of this chapter, shall be filed for record with the county recorder of the county in which the principal office is located, which certified copy shall be evidence only that the company has been authorized to proceed in the completion of its organization.

If a company transacts any business or incurs any indebtedness in violation of this section, the officers who participated therein and the directors, except those who dissented therefrom and caused their dissent to be filed at the time in the principal office of the company or who, being absent, filed their dissent upon learning of the action, shall be severally liable for the debts or liabilities of the company so incurred or arising therefrom.

Formerly: Acts 1935, c.162, s.73. As amended by P.L.252-1985, SEC.23.

 

IC 27-1-6-14Stock companies; capital stock and surplus requirements

     Sec. 14. (a) A domestic capital stock company that organized before March 7, 1967, must maintain a paid-in capital stock of not less than:

(1) two hundred thousand dollars ($200,000), if it markets one (1) or more kinds of insurance under Class I;

(2) two hundred thousand dollars ($200,000), if it markets one (1) kind of insurance under Class II, other than Class II(k) insurance;

(3) three hundred thousand dollars ($300,000), if it markets two (2) kinds of insurance under Class II, other than Class II(k) insurance;

(4) four hundred thousand dollars ($400,000), if it markets three (3) or more kinds of insurance under Class II, other than Class II(k) insurance;

(5) four hundred thousand dollars ($400,000), if it markets one (1) or more kinds of insurance under Class III;

(6) seven hundred fifty thousand dollars ($750,000), if it markets one (1) or more kinds of insurance under both Class II and Class III; or

(7) seven hundred fifty thousand dollars ($750,000), if it markets one (1) or more kinds of insurance under Class II, including Class II(k) insurance.

     (b) A domestic capital stock company that organized after March 6, 1967, and before July 1, 1977, must maintain a paid-in capital stock of not less than:

(1) four hundred thousand dollars ($400,000), if it markets one (1) or more kinds of insurance under Class I;

(2) four hundred thousand dollars ($400,000), if it markets one (1) or more kinds of insurance under Class II, other than Class II(k) insurance;

(3) four hundred thousand dollars ($400,000), if it markets one (1) or more kinds of insurance under Class III;

(4) seven hundred fifty thousand dollars ($750,000), if it markets one (1) or more kinds of insurance under both Class II and Class III; or

(5) seven hundred fifty thousand dollars ($750,000), if it markets one (1) or more kinds of insurance under Class II, including Class II(k) insurance.

     (c) A domestic capital stock company that organized after June 30, 1977, must maintain a paid-in capital stock of not less than one million dollars ($1,000,000).

     (d) A domestic capital stock company must deposit with the department the following percentage of its paid-in capital stock requirement under this section in cash or in obligations of the United States:

(1) Twenty-five percent (25%), if it organized before July 1, 1977.

(2) Ten percent (10%), if it organized after June 30, 1977.

     (e) A domestic capital stock company must maintain a surplus of not less than two hundred fifty thousand dollars ($250,000). However, when it organizes, it must have a surplus of not less than one million dollars ($1,000,000).

     (f) If the commissioner determines that the continued operation of a domestic capital stock company may be hazardous to the policyholders or the general public, the commissioner may, upon the commissioner's determination, issue an order requiring the insurer to increase the insurer's capital and surplus based on the type, volume, and nature of the business transacted.

Formerly: Acts 1935, c.162, s.74; Acts 1955, c.316, s.1; Acts 1959, c.13, s.1; Acts 1967, c.127, s.2. As amended by Acts 1977, P.L.282, SEC.1; Acts 1980, P.L.169, SEC.1; P.L.130-1994, SEC.14; P.L.116-1994, SEC.19.

 

IC 27-1-6-15Mutual companies; initial subscriptions and premiums; deposits; surplus

     Sec. 15. (a) Except as provided in subsection (b), a domestic mutual company that organized before July 1, 1977, must maintain a surplus of not less than two hundred fifty thousand dollars ($250,000). This subsection does not apply to a standard farm mutual insurance company that is organized under IC 27-5 (before its repeal) or IC 27-5.1.

     (b) A domestic mutual company that organized before July 1, 1977, must maintain a surplus of not less than:

(1) seven hundred fifty thousand dollars ($750,000), if it markets one (1) or more kinds of insurance under both Class II and Class III, other than Class II(k) insurance;

(2) one million dollars ($1,000,000), if it markets one (1) or more kinds of insurance under Class II, including Class II(k) insurance; or

(3) one million dollars ($1,000,000), if it markets one (1) or more kinds of insurance under both Class II and Class III, including Class II(k) insurance.

     (c) A domestic mutual company that organized after June 30, 1977, must maintain a surplus of not less than one million two hundred fifty thousand dollars ($1,250,000). However, when it organizes, it must:

(1) have a surplus of not less than two million dollars ($2,000,000);

(2) for the one (1) or more kinds of insurance under Class I that it intends to market, have received applications for insurance from not less than four hundred (400) persons, each application for an amount not less than one thousand dollars ($1,000), and have received the first year's premium due on a policy to be issued on each such application; and

(3) for the one (1) or more kinds of insurance under Class II or Class III that it intends to market, have received applications for insurance covering not less than eight hundred (800) separate risks in not less than forty (40) policies to be issued to not less than forty (40) members, and have received premiums amounting to not less than one hundred thousand dollars ($100,000) for those policies.

     (d) A domestic mutual company must deposit with the department in cash or in obligations of the United States:

(1) twenty-five thousand dollars ($25,000), if it organized before June 30, 1955;

(2) fifty thousand dollars ($50,000), if it organized after June 29, 1955, and before March 7, 1967; or

(3) one hundred thousand dollars ($100,000), if it organized after March 6, 1967.

This subsection does not apply to a standard farm mutual insurance company that is organized under IC 27-5 (before its repeal) or IC 27-5.1.

     (e) If the commissioner determines that the continued operation of a domestic mutual company may be hazardous to the policyholders or the general public, the commissioner may, upon the commissioner's determination, issue an order requiring the insurer to increase the insurer's capital and surplus based on the type, volume, and nature of the business transacted.

Formerly: Acts 1935, c.162, s.75; Acts 1955, c.316, s.2; Acts 1967, c.127, s.3. As amended by Acts 1977, P.L.282, SEC.2; P.L.130-1994, SEC.15; P.L.116-1994, SEC.20; P.L.129-2003, SEC.1.

 

IC 27-1-6-16Extension of charter powers and licenses; limitation of actions

     Sec. 16. (a) The charter powers and licenses of any domestic insurers authorized to market one or more kinds of insurance or reinsurance under Class II or Class III and meeting the requirements set out in section 14 or 15 of this chapter may be broadened and extended hereunder to include the right, power and authority to make any one or more of the kinds of insurance and reinsurance specified in both Class II and Class III of IC 27-1-5-1.

     (b) Any domestic company authorized to insure against loss or damage by fire, which has been actively engaged in the fire insurance business continuously for ten (10) years or more, or whose predecessor or predecessors, if any prior to merger or consolidation, shall have been so engaged for such period, may, if it complies with the provisions of this subsection and without complying with the capitalization and surplus requirements of section 14 or section 15 of this chapter, insure against loss or damage to dwellings and appurtenant structures and to the contents thereof and any other personal property of a similar nature of the insured or of the members of his household, resulting from any peril, and may, in connection with making such insurance, also make insurance against the legal liability of the insured or of the members of his household, and for any medical, surgical and hospital expenses of any person other than the insured or such members, arising out of nonbusiness pursuits of the insured or such members or out of the condition of, or acts performed by the insured or such members on such dwellings and appurtenant structures and the real estate on which each is located. Where a company is entitled to make such additional insurance solely by virtue of this subsection, it shall not make such insurance unless it has made reinsurance arrangements satisfactory to the commissioner whereby all of such additional insurance is reinsured with a company which is qualified under IC 27-1 to make reinsurance of such additional kind of insurance. The charter powers and licenses of any domestic insurer meeting the requirements set out in this subsection may be broadened and extended hereunder to include the right, power and authority to make any one or more of the kinds of insurance permitted by this subsection.

     (c) No policy issued by a mutual company including a farm mutual insurance company, shall be required to contain a provision limiting the time within which suit against the insurer on such policy must be filed.

Formerly: Acts 1935, c.162, s.75 1/2; Acts 1947, c.50, s.1; Acts 1957, c.265, s.2; Acts 1967, c.233, s.2. As amended by Acts 1977, P.L.282, SEC.3; P.L.129-2003, SEC.2.

 

IC 27-1-6-17Examination of proposed companies; revocation and renewal of permit and insurance producer's authority

     Sec. 17. The commissioner may, personally or through the commissioner's deputies and assistants, examine into the affairs of any such proposed company and inspect its books and papers, and may summon and examine under oath any officer or insurance producer or any person who is or has been connected with such company, and if the commissioner finds the company is violating the law, or if the company shall not be qualified for a certificate of authority within one (1) year from date of its permit, the commissioner may revoke its permit; and if the commissioner finds an insurance producer of such company has violated the law, the commissioner may revoke the insurance producer's authority, and the commissioner may for the insurance producer's violation revoke the company's permit. Any revocation shall be after notice and hearing. The commissioner may renew any company's permit or agent's authority which the commissioner has revoked.

Formerly: Acts 1935, c.162, s.76. As amended by P.L.178-2003, SEC.14.

 

IC 27-1-6-18Certificate of authority; issuance; recording

     Sec. 18. When the provisions of sections 2 through 17 of this chapter have been complied with, and the department has made an investigation and examination as required in section 17, then the commissioner may issue a certificate of authority under IC 27-1-3-20, which shall license the company to transact only the kind or kinds of insurance specified in its articles of incorporation. The company shall file a certified copy of such certificate of authority for record with the county recorder of the county wherein the principal office is located, which certified copy shall be evidence only that the company is authorized and licensed to transact the class or classes of insurance set out therein.

Formerly: Acts 1935, c.162, s.77. As amended by Acts 1977, P.L.283, SEC.1.

 

IC 27-1-6-19Bylaws; procedure for adoption

     Sec. 19. (a) If the articles of incorporation provide for the adoption of the bylaws by the shareholders, members, or policyholders, the incorporators or a majority of them after the issuance of the certificate of authority, shall call a meeting of the shareholders, members, or policyholders for the purpose of adopting the bylaws, giving at least ten (10) days' notice by mail to each shareholder, member, or policyholder entitled to vote at the time and place of such meeting, unless the giving of such notice be waived in writing by any or all of such shareholders, members, or policyholders, in which case notice shall be given only to such shareholders, members, or policyholders who have not so waived such notice. Such shareholders, members, or policyholders shall meet at the time and place designated and shall adopt the bylaws. After the adoption of such bylaws, the directors named in the articles of incorporation as the first board of directors shall meet at the call of a majority thereof and shall elect officers and transact such other business as may properly come before such board.

     (b) If the articles of incorporation do not provide for the adoption of the bylaws by the shareholders, members, or policyholders, then, after the issuance of the certificate of authority, the directors named in the articles as the first board of directors shall meet at the call of a majority thereof, adopt the bylaws, elect officers, and transact such other business as may properly come before such board.

Formerly: Acts 1935, c.162, s.78. As amended by P.L.252-1985, SEC.24.

 

IC 27-1-6-20Repealed

Formerly: Acts 1967, c.127, s.7. Repealed by P.L.108-1985, SEC.1.

 

IC 27-1-6-21Company domiciled in Indiana; requirements

     Sec. 21. (a) A company that is approved by the department after June 30, 2000, to be domiciled in Indiana, must have and maintain in Indiana the following:

(1) A physical presence that provides economic benefit to the state.

(2) Complete records of the company's assets, transactions, and affairs in accordance with methods and systems that are customary or suitable to the kind or kinds of insurance transacted by the company, including all records required under IC 27-1-7-16. Records may be maintained in a form that is physically or electronically available to the department within Indiana.

     (b) The commissioner shall determine whether the requirements of subsection (a) are met. In making a determination under subsection (a)(1), the commissioner shall compare and consider the following:

(1) The economic benefit to Indiana and Indiana communities offered by the domestication of the company.

(2) The costs that may be incurred by the state in regulating the company as a domestic company versus a foreign company.

     (c) If a domestic company subject to this section fails to comply with the provisions of subsection (a), the commissioner may:

(1) require the company to transfer its domicile under IC 27-1-6.5-2; or

(2) annually impose an additional administrative fee on the company in an amount equal to the difference between the cost of regulating the company as a domestic company and the cost of regulating the company as a foreign company. The fee shall be deposited in the department of insurance fund established by IC 27-1-3-28.

     (d) In the case of a company that is part of an insurance holding company system (as defined in IC 27-1-23-1) whose presence provides an economic benefit to the state, the commissioner shall consider the insurance holding company system and any domestic company in the aggregate when making the determination required under subsection (b).

As added by P.L.144-2000, SEC.1.

 

IC 27-1-6.5Chapter 6.5. Redomestication of Insurers
           27-1-6.5-1Foreign insurers; qualification as domestic insurer; requirements
           27-1-6.5-2Domestic insurers; transfer of domicile to another state; approval
           27-1-6.5-3Foreign insurers; change of domicile to another foreign state; merger or consolidation conditions
           27-1-6.5-4Transfer of domicile to another state; requisites
           27-1-6.5-5Transfer of domicile to this or another state; effectiveness of certificate of authority
           27-1-6.5-6Regulations

 

IC 27-1-6.5-1Foreign insurers; qualification as domestic insurer; requirements

     Sec. 1. (a) Any foreign insurance company which is admitted to transact business in Indiana may, upon complying with the requirements for formation of a domestic company under IC 27-1-6, become a domestic insurer. When those requirements have been met, the commissioner may issue a certificate of authority, under IC 27-1-3-20, to permit the company to transact business in the state as a domestic company.

     (b) A company which changes its status from foreign to domestic under subsection (a) has all the rights, titles, and interests in the assets of the original corporation, as well as all of its liabilities and obligations. The company shall be recognized as a company formed under the laws of this state as of the date of its incorporation in its original domiciliary state.

As added by Acts 1980, P.L.170, SEC.1.

 

IC 27-1-6.5-2Domestic insurers; transfer of domicile to another state; approval

     Sec. 2. Any domestic insurance company may, upon the approval of the commissioner, transfer its domicile from this state to any other state in which it is admitted to transact business. The commissioner shall approve the proposed transfer of domicile, unless he determines that the transfer is contrary to the best interests of the company's policyholders. If the commissioner does not approve the transfer, he shall give the company written notice of the refusal and the reasons for it within thirty (30) days after the date the request for transfer was made. If the request for transfer is granted, and the company is otherwise qualified, it may operate in this state as a foreign insurer without interruption in licensing.

As added by Acts 1980, P.L.170, SEC.1.

 

IC 27-1-6.5-3Foreign insurers; change of domicile to another foreign state; merger or consolidation conditions

     Sec. 3. Any foreign insurance company admitted to transact business in this state may, upon proper notice to the commissioner, change its domicile by merger, consolidation, or otherwise to another foreign state without interruption of its licensing and without reapplying as a foreign insurer if:

(1) the change in domicile does not result in a reduction in the company's assets or surplus below the requirements for admission as a foreign insurer under IC 27-1-17-5;

(2) there is no substantial change in the lines of insurance to be written by the company; and

(3) the change in domicile has been approved by the supervising regulatory officials of both the former and new state of domicile.

As added by Acts 1980, P.L.170, SEC.1.

 

IC 27-1-6.5-4Transfer of domicile to another state; requisites

     Sec. 4. Each insurer admitted to transact business in this state that transfers its domicile to any other state shall notify the commissioner of the proposed transfer and shall file promptly with him any necessary amendments to articles of incorporation, charters, bylaws, and other corporate documents.

As added by Acts 1980, P.L.170, SEC.1.

 

IC 27-1-6.5-5Transfer of domicile to this or another state; effectiveness of certificate of authority

     Sec. 5. When any insurer admitted to transact business in this state transfers its domicile to this or any other state, its certificate of authority, insurance producers' appointments and licenses, policy forms, rates, authorizations, and other filings and approvals which existed at the time of the transfer, remain in effect after the transfer of domicile occurs.

As added by Acts 1980, P.L.170, SEC.1. Amended by P.L.178-2003, SEC.15.

 

IC 27-1-6.5-6Regulations

     Sec. 6. The commissioner may develop and promulgate regulations, under IC 4-22-2, to carry out the purposes of this chapter.

As added by Acts 1980, P.L.170, SEC.1.

 

IC 27-1-7Chapter 7. General Corporate Powers and Responsibilities of Insurance Companies
           27-1-7-1"Corporation" defined
           27-1-7-2Capacity and authority to act; general rights, privileges, and powers; excluded powers
           27-1-7-3Principal office; change of location
           27-1-7-4Shares of stock; classes; sale for less than par; shareholders' liability; preemptive rights
           27-1-7-5Stock certificate; contents; transferability
           27-1-7-6Bylaws
           27-1-7-7Meetings of shareholders, members, or policyholders; location; annual meeting; special meetings; notice; quorum; actions taken without meeting
           27-1-7-8Voting rights of shareholders; shares that cannot be voted; voting by particular shareholders; proxy votes
           27-1-7-9Voting rights of policyholders and members; proxy votes
           27-1-7-9.5Shareholders' derivative proceedings; procedure
           27-1-7-10Board of directors; general provisions; management of business; executive committee; removal of directors
           27-1-7-11Citizenship and residence qualifications of directors
           27-1-7-12Directors; attendance record and report; record of communications; annual examination and report of condition
           27-1-7-12.5Directors; good faith discharge of duties; liability; conflict of interest; authorization of unlawful payments to shareholders
           27-1-7-13Officers; secretary; duties; resignation; removal; contract rights
           27-1-7-14Bonding officers having access to money or securities; blanket bond
           27-1-7-15Loans to or borrowing by directors or officers; offense; exceptions
           27-1-7-16Books and records to be kept at principal office
           27-1-7-17Restrictions on dividend payments
           27-1-7-18Repealed
           27-1-7-19Mutual or stock companies; borrowing for surplus funds
           27-1-7-20Authority of corporations, boards, and associations to insure with mutual insurance company
           27-1-7-21Mutual companies; statement of maximum premium in policy; limitation of liability for single risk; reinsurance requirements
           27-1-7-22Vouchers for disbursements
           27-1-7-23Annual or other required statements; material false statement

 

IC 27-1-7-1"Corporation" defined

     Sec. 1. The term "corporation", as used in this chapter and IC 27-1-8, means any company organized or reorganized under the provisions of this article and any company organized or reorganized under the provisions of any statute of this state enacted prior to March 8, 1935.

Formerly: Acts 1935, c.162, s.79. As amended by P.L.252-1985, SEC.25.

 

IC 27-1-7-2Capacity and authority to act; general rights, privileges, and powers; excluded powers

     Sec. 2. (a) Every corporation has the capacity to act that is possessed by natural persons, but has the authority to perform only those acts that are necessary, convenient, or expedient to accomplish the purposes for which it is formed and that are not repugnant to law.

     (b) Subject to any limitations or restrictions imposed by law or the articles of incorporation, each corporation has the following general rights, privileges, and powers:

(1) To continue as a corporation, under its corporate name, for the period set forth in its articles of incorporation.

(2) To sue and be sued in its corporate name.

(3) To have a corporate seal and to alter the same at pleasure.

(4) To acquire, own, hold, lease, mortgage, pledge, convey, or otherwise dispose of property, real and personal, tangible and intangible.

(5) To acquire, subscribe for, own, hold, vote, mortgage, lend, pledge, convey, or otherwise dispose of, and to guarantee or otherwise deal in and with, shares or other interests in, or obligations of, any entity, including itself, except as otherwise prohibited or limited by this article.

(6) To be a promoter, partner, member, associate, or manager of any partnership, joint venture, trust, or other entity.

(7) To borrow money, and to issue its notes or debentures to evidence such borrowings, but any debentures so issued shall be subordinate to the rights of policyholders, members, or creditors of such corporations.

(8) To conduct business in this state and elsewhere; to have one (1) or more offices out of this state; to acquire, own, hold and use, and to lease, mortgage, pledge, sell, convey, or otherwise dispose of property, real and personal, tangible and intangible, out of this state.

(9) To appoint such officers and agents as the business of the corporation may require, and to define their duties and fix their compensation.

(10) To lend money, invest and reinvest its funds, and receive and hold real estate and personal property as security for repayment, except as otherwise limited in this title.

(11) To pay pensions and establish and administer pension plans, pension trusts, profit sharing plans, share bonus plans, share option plans, welfare plans, qualified and nonqualified retirement plans, and benefit or incentive plans for any or all of its current or former directors, officers, employees, and agents.

(12) To make donations for the public welfare or for charitable, scientific, or education purposes.

(13) To make bylaws for the government and regulation of its affairs.

(14) To cease doing business and to dissolve and surrender its corporate franchise and authority and license to transact an insurance business in this state.

(15) To do all acts and things necessary, convenient, or expedient to carry out the purposes for which it is formed.

(16) To become a member of any federal home loan bank; to purchase stock therein, to borrow money or obtain advances from any such bank and to transfer, assign, and pledge property to or with such bank as security for the payment of such loans or advances, to do and perform all acts required of members of a federal home loan bank, and to possess and exercise all rights, powers, and privileges conferred upon such members under the provisions of the act of Congress entitled Federal Home Loan Bank Act.

     (c) No corporation shall, by any implication or construction, be deemed to possess the power of carrying on the business of receiving deposits of money, bullion, or foreign coins, or receiving deposits of securities or other personal property from any person or corporation or acting as a safe deposit company, or of issuing bills, notes, or other evidences of debt for circulation as money.

     (d) A corporation that is a stock company may establish one (1) or more procedures by which it regulates transactions that would, when consummated, result in a change of control of such corporation.

     (e) For purposes of this section "control" means:

(1) for any corporation having one hundred (100) or more shareholders, the beneficial ownership, or the direct or indirect power to direct the voting, of no less than ten percent (10%) of the voting shares of a corporation's outstanding voting shares; or

(2) for any corporation having fewer than one hundred (100) shareholders, the beneficial ownership, or the direct or indirect power to direct the voting, of no less than fifty percent (50%) of the voting shares of the corporation's outstanding voting shares.

     (f) A procedure established under this section may be adopted:

(1) in a corporation's original articles of incorporation or bylaws;

(2) by amending the articles of incorporation; or

(3) notwithstanding that a vote of the shareholders would otherwise be required by any other provision of this article or the articles of incorporation for the adoption or implementation of all or any portion of the procedure, by amending the bylaws.

Formerly: Acts 1935, c.162, s.80; Acts 1939, c.63, s.1; Acts 1973, P.L.271, SEC.1. As amended by P.L.266-1987, SEC.1.

 

IC 27-1-7-3Principal office; change of location

     Sec. 3. Each corporation shall maintain an office or place of business in this state, to be known as the "Principal Office." The post-office address of the principal office shall be stated in the original articles of incorporation at the time of incorporating. Thereafter, the location of the principal office, may be changed at any time or from time to time when authorized by the board of directors by:

(1) filing with the department and secretary of state, on or before the day any change is to take effect, a certificate signed by the president or a vice-president and the secretary or an assistant secretary of the corporation, and verified under oath, stating the change to be made and reciting that such change is made pursuant to authorization by the board of directors; and

(2) notifying each policyholder of the address and telephone number of the new location.

Formerly: Acts 1935, c.162, s.81. As amended by P.L.94-1999, SEC.1.

 

IC 27-1-7-4Shares of stock; classes; sale for less than par; shareholders' liability; preemptive rights

     Sec. 4. (a) Every stock company organized under this article shall have the right, when authorized by its articles of incorporation, to issue one (1) or more classes or kinds of shares of capital stock, any or all of which classes or kinds may consist of shares with par value or shares without par value, with full, limited, or no voting powers as provided in the articles of incorporation and with such designations, and such relative rights, preferences, qualifications, limitations, or restrictions as shall be stated and expressed in the articles of incorporation.

     (b) No stock company organized under this article shall issue or sell any of its shares of stock having a par value for less than the par value thereof.

     (c) The shareholders of any stock company organized under this article shall be liable for the debts of such stock company only to the extent of any unpaid portion of their subscriptions for shares of such company or any unpaid portion of the consideration for the issuance to them of shares of such stock company.

     (d) The shareholders of such stock company shall not have preemptive rights to subscribe to any additional issues of shares of the capital stock of such company, except to the extent, if any, that such rights shall be fixed and prescribed in the articles of incorporation, or in a bylaw adopted by the board of directors of such stock company.

Formerly: Acts 1935, c.162, s.82; Acts 1969, c.164, s.3. As amended by P.L.252-1985, SEC.26.

 

IC 27-1-7-5Stock certificate; contents; transferability

     Sec. 5. In the case of a stock company, every shareholder shall be entitled to a certificate, or other evidence of stock ownership, signed by the president or a vice president and by the secretary or an assistant secretary, which shall state the name of the registered holder, the number of shares represented thereby and the par value of each share. Where such certificate is also signed by a transfer agent or registrar, or both, the signatures of any such president, vice president, secretary or assistant secretary may be facsimiled. The shares represented thereby shall be transferable on the books of the company in such manner and under such regulations, not inconsistent with the laws of this state relating to the transfer of shares of stock in corporations, as may be provided in the by-laws. If such company is authorized to issue shares of more than one (1) class, every certificate shall state the kind and class of shares represented thereby, and the relative rights, interests, preferences and restrictions of such class, or a summary thereof.

Formerly: Acts 1935, c.162, s.83; Acts 1963, c.144, s.1.

 

IC 27-1-7-6Bylaws

     Sec. 6. Unless otherwise provided in the articles of incorporation, the power to make, alter, amend or repeal the bylaws of a company is hereby vested in the board of directors. The bylaws so adopted may contain any provision for the regulations and management of the affairs of the corporation which is not inconsistent with this article or of any law of this state or with the articles of incorporation and may include provisions concerning:

(a) the time and place of holding, and the manner of conducting meetings of the shareholders, members, or policyholders, and of directors;

(b) the manner of calling special meetings of shareholders, members, or policyholders and directors;

(c) the powers, duties, tenure, and qualifications of the officers of the corporation and the time, place, and manner of electing them;

(d) the creation and appointment of executive or other committees and the number of members thereof and prescribing their powers;

(e) the classification of its risks and of its members, the payment of dividends and the creation of a surplus fund or funds, if other than a stock company; and

(f) the form of stock certificates or other evidences of stock ownership and the manner of transferring shares of capital stock if a stock company, and the manner of creating and exercising proxies.

Formerly: Acts 1935, c.162, s.84. As amended by P.L.252-1985, SEC.27.

 

IC 27-1-7-7Meetings of shareholders, members, or policyholders; location; annual meeting; special meetings; notice; quorum; actions taken without meeting

     Sec. 7. (a) All meetings of shareholders, members, or policyholders shall be held within this state and at the principal office of the corporation, unless otherwise provided in the articles of incorporation.

     (b) An annual meeting of shareholders, members, or policyholders shall be held within five (5) months after the close of each fiscal year of the corporation and at such time within that period as the bylaws may provide. The failure to hold the annual meeting at the designated time shall not work any forfeiture or a dissolution of the corporation. The time and place of such annual meeting of a mutual company may be stated in the policies thereof or notice of such meeting shall be given as provided in subsection (d).

     (c) Special meetings of the shareholders, members, or policyholders may be called by the president, by the board of directors, by shareholders, members, or policyholders holding not less than one-fourth (1/4) of all of the shares or policies outstanding and entitled by the articles of incorporation to vote on the business proposed to be transacted thereat, or by such other officers or persons as the bylaws may provide.

     (d) A written or printed notice stating the place, day, and hour of the meeting, and in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered or mailed by the secretary, or by the officers or persons calling the meeting, to each shareholder, member, or policyholder of record, entitled by the articles of incorporation and by this article to vote at such meeting, at such address as appears upon the records of the corporation, at least thirty (30) days before the date of the meeting. Notice of any meeting of the shareholders, members, or policyholders may be waived in writing by any shareholder, member, or policyholder if the waiver sets forth in reasonable detail the purpose or purposes for which the meeting is called and the time and place thereof. Attendance at any meeting in person or by proxy shall constitute a waiver of notice of such meeting.

     (e) Unless otherwise provided in the articles of incorporation or by the provisions of this article or the bylaws, at any meeting of the shareholders, members, or policyholders, a majority of the shares of the outstanding capital stock entitled by the articles of incorporation to vote at such meeting or in the case of a company other than a stock company, not less than ten percent (10%) of the policyholders or members entitled to vote at such meeting, represented in person or by proxy, shall constitute a quorum.

     (f) Unless otherwise provided in the articles of incorporation or bylaws, action to be taken at a meeting of shareholders, members, or policyholders may be taken without a meeting if the action is taken by all the shareholders, members, or policyholders entitled to vote on the action. The action must be evidenced by one (1) or more written consents that:

(1) describe the action taken;

(2) are signed by all the shareholders, members, or policyholders entitled to vote on the action; and

(3) are delivered to the corporation for inclusion in the minutes or for filing with the corporate records.

     (g) The record date for determining shareholders, members, or policyholders entitled to take action without a meeting is the date the first shareholder, member, or policyholder signs the consent under subsection (f).

     (h) Action taken under subsection (f) is effective when the last shareholder, member, or policyholder signs the consent, unless the consent specifies a different prior or subsequent effective date.

     (i) A consent signed under subsection (f) has the effect of a meeting vote and may be described as a meeting vote in any document.

Formerly: Acts 1935, c.162, s.85; Acts 1965, c.6, s.1. As amended by P.L.252-1985, SEC.28; P.L.185-1997, SEC.1.

 

IC 27-1-7-8Voting rights of shareholders; shares that cannot be voted; voting by particular shareholders; proxy votes

     Sec. 8. (a) Except as otherwise provided in the articles of incorporation or in this section, every shareholder in a stock insurance company shall have the right, at every shareholders' meeting, to one (1) vote for each share of stock standing in his name on the books of the corporation. No share shall be voted at any meeting:

(1) which shall have been transferred on the books of the corporation within such number of days, not exceeding fifty (50), next preceding the date of such meeting as the board of directors shall determine, or, in the absence of such determination, within ten (10) days next preceding the date of such meeting; or

(2) which belongs to the corporation that issued it.

     (b) Shares standing in the name of a corporation, other than the issuing corporation, may be voted by such officer, agent or proxy as the board of directors of such corporation may appoint or as the by-laws of such corporation may prescribe.

     (c) Shares held by fiduciaries may be voted by the fiduciaries in such manner as the instrument or order appointing such fiduciaries may direct. In the absence of such direction, or the inability of the fiduciaries to act in accordance therewith, the following provisions shall apply:

(1) Where shares are held jointly by three (3) or more fiduciaries, such shares shall be voted in accordance with the will of the majority.

(2) Where the fiduciaries, or a majority of them, can not agree, or where they are equally divided upon the question of voting such shares, any court having general equity jurisdiction may, upon petition filed by any of such fiduciaries, or by any party in interest, direct the voting of such shares as it may deem to be for the best interest of the beneficiaries, and such shares shall be voted in accordance with such direction.

     (d) Unless otherwise provided in the agreement of pledge, or in the by-laws of the corporation, shares that are pledged may be voted by the shareholder pledging such shares until the shares shall have been transferred to the pledgee on the books of the corporation, and thereafter such shares may be voted by the pledgee.

     (e) Shares issued and held in the names of two (2) or more persons shall be voted in accordance with the will of the majority, and if a majority of them can not agree, or if they are equally divided as to the voting of such shares, the shares shall be divided equally between or among such persons for voting purposes.

     (f) A shareholder, including any fiduciary, may vote either in person or by proxy executed in writing by the shareholder or a duly authorized attorney in fact. Unless a longer time is expressly provided therein, no proxy shall be valid after eleven (11) months from the date of its execution.

Formerly: Acts 1935, c.162, s.86. As amended by Acts 1981, P.L.234, SEC.1.

 

IC 27-1-7-9Voting rights of policyholders and members; proxy votes

     Sec. 9. Except as otherwise provided in the articles of incorporation every policyholder or member, in all companies other than stock companies, shall have the right to one (1) vote at every policyholders' or members' meeting, regardless of the number of policies or amount of insurance he may have with such company.

     Any policyholder or member may vote either in person or by proxy executed in writing by the policyholder or by a duly authorized attorney in fact. Unless a longer time is expressly provided therein, no proxy hereafter given shall be valid after eleven (11) months from the date of its execution.

Formerly: Acts 1935, c.162, s.87.

 

IC 27-1-7-9.5Shareholders' derivative proceedings; procedure

     Sec. 9.5. (a) As used in this section, "shareholder" includes:

(1) with respect to a stock company formed under this article, a shareholder or a beneficial owner whose shares are held in a voting trust or held by a nominee on the owner's behalf; and

(2) with respect to a mutual company formed under this article, a member or policyholder.

     (b) A person may not commence a proceeding in the right of a corporation unless the person was a shareholder of the corporation when the transaction complained of occurred or unless the person became a shareholder through transfer by operation of law from one who was a shareholder at that time. The derivative proceeding may not be maintained if it appears that the person commencing the proceeding does not fairly and adequately represent the interests of the shareholders in enforcing the right of the corporation.

     (c) A complaint in a proceeding brought in the right of a corporation must be verified and allege with particularity the demand made, if any, to obtain action by the board of directors, and either that the demand was refused or ignored or why the shareholder did not make the demand. Whether or not a demand for action was made, if the corporation commences an investigation of the charges made in the demand or complaint (including an investigation commenced under subsection (e)), the court may stay any proceeding until the investigation is completed.

     (d) A proceeding commenced under this section may not be discontinued or settled without the court's approval. If the court determines that a proposed discontinuance or settlement will substantially affect the interest of the corporation's shareholders or a class of shareholders, the court shall direct that notice be given the shareholders affected. On termination of the proceeding, the court may require the plaintiff to pay any defendant's reasonable expenses (including attorney's fees) incurred in defending the proceeding if it finds that the proceeding was commenced without reasonable cause.

     (e) Unless prohibited by the articles of incorporation, the board of directors may establish a committee consisting of three (3) or more disinterested directors or other disinterested persons to determine:

(1) whether the corporation has a legal or equitable right or remedy; and

(2) whether it is in the best interests of the corporation to pursue that right or remedy, if any, or to dismiss a proceeding that seeks to assert that right or remedy on behalf of the corporation.

     (f) In making a determination under subsection (e), the committee is not subject to the direction or control of or termination by the board. A vacancy on the committee may be filled by the majority of the remaining members by selection of another disinterested director or other disinterested person.

     (g) If the committee determines that pursuit of a right or remedy through a derivative proceeding or otherwise is not in the best interests of the corporation, the merits of that determination shall be presumed to be conclusive against any shareholder making a demand or bringing a derivative proceeding with respect to such right or remedy, unless such shareholder can demonstrate that:

(1) the committee was not disinterested, as described in subsection (h); or

(2) the committee's determination was not made after an investigation conducted in good faith.

     (h) For purposes of this section, a director or other person is disinterested if the director or other person:

(1) has not been made a party to a derivative proceeding seeking to assert the right or remedy in question, or has been made a party but only on the basis of a frivolous or insubstantial claim or for the sole purpose of seeking to disqualify the director or other person from serving on the committee;

(2) is able under the circumstances to render a determination in the best interests of the corporation; and

(3) is not an officer, employee, or agent of the corporation or of a related corporation. However, an officer, employee, or agent of the corporation or a related corporation who meets the standards of subdivisions (1) through (2) shall be considered disinterested in any case in which the right or remedy under scrutiny is not assertable against a director or officer of the corporation or the related corporation.

As added by P.L.266-1987, SEC.2.

 

IC 27-1-7-10Board of directors; general provisions; management of business; executive committee; removal of directors

     Sec. 10. (a) The business of every corporation shall be managed by a board of directors, composed of not less than five (5) nor more than the maximum number fixed in the articles of incorporation. The exact number of directors to serve for each year shall be determined from time to time, in such manner as the bylaws prescribe.

     (b) The first board of directors shall be elected by the incorporators and shall hold office until the first annual meeting of the shareholders, members or policyholders. At the first annual meeting of the shareholders, members or policyholders, and at each annual meeting thereafter, directors shall be elected by the shareholders, members or policyholders for the term or terms hereinafter prescribed.

     (c) The articles of incorporation or the bylaws may provide that the directors may be divided into two (2) or more classes whose terms of office expire at different times, but no term shall continue longer than six (6) years. In the absence of such provision, each director, except members of the first board of directors, shall be elected for a term of one (1) year and shall hold office until the director's successor is elected and has qualified.

     (d) Any vacancy which may occur in the membership of the board of directors, caused by an increase in the number of directors or otherwise (except death, resignation, or disqualification), shall be filled by a majority vote of the remaining members of the board, until the next annual meeting of the shareholders, members or policyholders. A vacancy in the membership in the board of directors caused by death, resignation or disqualification of a member shall be filled by a majority vote of the remaining membership of the board for the unexpired term of the directorship.

     (e) A majority of the whole board of directors is necessary to constitute a quorum for the transaction of any business except the filling of vacancies, and the act of a majority of the board of directors present at any meeting at which a quorum is present is the act of the board of directors, unless a greater number is required by this article, or by the articles of incorporation or the bylaws.

     (f) The board of directors may, by a resolution adopted by a majority of the whole board, pursuant to a provision of the bylaws, designate two (2) or more of their number to constitute an executive committee, which, to the extent provided in that resolution or in the bylaws, has all of the authority of the board of directors in the management of the corporation, during the interval between the meetings of the board, but the designation of the committee and the delegation to the committee of such authority does not operate to relieve the board of directors or any member of the board of directors of any responsibility imposed upon it or the member by this article. The minutes of each meeting of the executive committee shall be read at the next succeeding meeting of the board of directors.

     (g) Meetings of the board of directors may be held at such time at the principal office of the corporation or at such other place as may be unanimously designated by the board of directors, and upon the notice provided in the bylaws. Unless otherwise provided by the articles of incorporation or bylaws, a member of the board of directors or of a committee designated by the board may participate in a meeting of the board or committee by means of a conference telephone or similar communications equipment by which all persons participating in the meeting can communicate with each other, and participation by these means constitutes presence in person at the meeting.

     (h) Unless otherwise provided in the articles of incorporation or bylaws, an action required or permitted to be taken at a meeting of the board of directors or of a committee of the board may be taken without a meeting if:

(1) before the action is taken, a written consent to the action is signed by all members of the board or of the committee; and

(2) the written consent is filed with the minutes of the proceedings of the board or the committee.

     (i) Every director, when elected, shall take and subscribe an oath that he will, insofar as the duty devolves upon him, faithfully, honestly and diligently administer the affairs of such corporation, and that he will not knowingly violate or willingly permit to be violated any of the provisions of law applicable to any such corporation.

     (j) A director may be removed in any manner provided by the articles of incorporation. Unless the articles of incorporation provide otherwise, a director may be removed, with or without cause, by a majority vote of:

(1) the shareholders of a stock company;

(2) the members or policyholders of a mutual company qualified to elect directors; or

(3) the directors.

     (k) A director may be removed under this subsection:

(1) only at a meeting called for the purpose of removing the director; and

(2) the meeting notice must state that the purpose, or one (1) of the purposes, of the meeting is removal of the director.

Formerly: Acts 1935, c.162, s.88; Acts 1969, c.164, s.4; Acts 1971, P.L.1, SEC.7. As amended by Acts 1982, P.L.161, SEC.1; P.L.266-1987, SEC.3.

 

IC 27-1-7-11Citizenship and residence qualifications of directors

     Sec. 11. A majority of directors must, during their entire terms of service, be citizens of the United States or Canada. At least one (1) of the directors must reside in Indiana.

Formerly: Acts 1935, c.162, s.89; Acts 1941, c.127, s.1; Acts 1947, c.18, s.1; Acts 1969, c.164, s.5. As amended by P.L.245-1989, SEC.1.

 

IC 27-1-7-12Directors; attendance record and report; record of communications; annual examination and report of condition

     Sec. 12. In addition to such other duties as may be imposed upon the directors by any other provisions of this article, such directors shall keep a record of the attendance of directors at meetings of the board, and shall make a report showing the names of the directors, the number of meetings of the board, regular and special, the number of meetings attended, and the number of meetings from which each director was absent, which report shall be read at and incorporated in the minutes of the annual meeting of the shareholders, members, or policyholders. Such directors, at such times as they are meeting as a board of directors, shall also require the secretary of such board, or some other duly designated agent, to make such communications from the department as the department designates a matter of record in the minutes of the meetings of such board of directors. The board of directors, a committee therefrom, or the auditor, actuary, or comptroller of such corporation shall examine the corporation once each year and submit a complete statement of the condition of such corporation to the department. Such report of examination, if made by other than the board of directors or a committee thereof, shall be approved by the board of directors before the same is submitted to the department.

Formerly: Acts 1935, c.162, s.90. As amended by P.L.252-1985, SEC.29.

 

IC 27-1-7-12.5Directors; good faith discharge of duties; liability; conflict of interest; authorization of unlawful payments to shareholders

     Sec. 12.5. (a) A director shall, based on facts then known to the director, discharge the duties as a director, including the director's duties as a member of a committee:

(1) in good faith;

(2) with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and

(3) in a manner the director reasonably believes to be in the best interests of the corporation.

     (b) In discharging the director's duties, a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:

(1) one (1) or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented;

(2) legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the person's professional or expert competence; or

(3) a committee of the board of directors of which the director is not a member if the director reasonably believes the committee merits confidence.

     (c) A director is not acting in good faith if the director has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (b) unwarranted.

     (d) A director may, in considering the best interests of a corporation, consider the effects of any action on shareholders, members, policyholders, agents, employees, suppliers, and customers of the corporation, and the communities in which offices or other facilities of the corporation are located, and any other factors the director considers pertinent.

     (e) A director is not liable for any action taken as a director, or any failure to take any action, unless:

(1) the director has breached or failed to perform the duties of the director's office under subsections (a) through (d); and

(2) the breach or failure to perform constitutes willful misconduct or recklessness.

     (f) A conflict of interest transaction is a transaction with the corporation in which a director of the corporation has a direct or indirect interest. A conflict of interest transaction is not voidable by the corporation solely because of the director's interest in the transaction if any one (1) of the following is true:

(1) The material facts of the transaction and the director's interest were disclosed or known to the board of directors or a committee of the board of directors and the board of directors or committee authorized, approved, or ratified the transaction.

(2) The material facts of the transaction and the director's interest were disclosed or known to the shareholders entitled to vote and they authorized, approved, or ratified the transaction.

(3) The transaction was fair to the corporation.

     (g) For purposes of subsection (f), a director of the corporation has an indirect interest in a transaction if:

(1) another entity in which the director has a material financial interest or in which the director is a general partner is a party to the transaction; or

(2) another entity of which the director is a director, officer, or trustee is a party to the transaction and the transaction is, or is required to be, considered by the board of directors of the corporation.

     (h) For purposes of subsection (f)(1), a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the directors on the board of directors (or on the committee) who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved, or ratified under this section by a single director. If a majority of the directors who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any action taken under subsection (f)(1) if the transaction is otherwise authorized, approved, or ratified as provided in subsection (f)(1).

     (i) For purposes of subsection (f)(2), shares owned by or voted under the control of a director who has a direct or indirect interest in the transaction, and shares owned by or voted under the control of an entity described in subsection (g), may be counted in a vote of shareholders to determine whether to authorize, approve, or ratify a conflict of interest transaction.

     (j) Subject to subsection (e), a director who votes for or assents to a payment in the form of a dividend or otherwise to the corporation's shareholders made in violation of this article or the articles of incorporation is personally liable to the corporation for the amount of the payment that exceeds what could have been paid without violating this article or the articles of incorporation.

     (k) A director held liable for an unlawful payment under subsection (j) is entitled to contribution:

(1) from every other director who voted for or assented to the distribution, subject to subsection (e); and

(2) from each shareholder for the amount the shareholder accepted.

     (l) The purchase and holding of a contract of insurance or annuity or a certificate in a group policy by a director does not constitute a conflict of interest.

As added by P.L.266-1987, SEC.4.

 

IC 27-1-7-13Officers; secretary; duties; resignation; removal; contract rights

     Sec. 13. (a) A corporation has the officers described in its bylaws. However, a corporation must have at least one (1) officer.

     (b) An officer of a corporation may appoint one (1) or more officers or assistant officers if authorized to do so by the bylaws or the board of directors.

     (c) The bylaws or the board of directors must delegate to one (1) of the officers responsibility for preparing minutes of the directors' and shareholders' meetings and for authenticating records of the corporation, and that officer is the secretary for purposes of this article. The same individual may simultaneously hold more than one (1) office in the corporation.

     (d) Each officer of a corporation has the authority and shall perform the duties set forth in the bylaws, to the extent consistent with the bylaws or, the duties prescribed by the board of directors or by direction of an officer authorized by the board of directors to prescribe the duties of other officers.

     (e) An officer of a corporation may resign at any time by delivering notice to the board of directors, its chairman, the secretary of the corporation or, if the articles of incorporation or bylaws so provide, to another designated officer. A resignation is effective when the notice is delivered unless the notice specifies a later date. If a resignation is made effective at a later date and the corporation accepts the future effective date, its board of directors may fill the pending vacancy before the effective date if the board of directors provides that the successor does not take office until the effective date.

     (f) The board of directors of a corporation may remove an officer of the corporation at any time with or without cause. An officer who appoints another officer or assistant officer may remove the appointed officer or assistant officer at any time with or without cause.

     (g) The election or appointment of an officer of a corporation does not itself create contract rights.

     (h) The removal of an officer of a corporation does not affect the officer's contract rights, if any, with the corporation. An officer's resignation does not affect the corporation's contract rights, if any, with the officer.

Formerly: Acts 1935, c.162, s.91. As amended by P.L.266-1987, SEC.5.

 

IC 27-1-7-14Bonding officers having access to money or securities; blanket bond

     Sec. 14. All officers and home office employees of every corporation having control of or access to moneys or securities of such corporation in the regular discharge of their duties, shall, before entering upon the performance of their duties, execute their individual bonds with adequate surety payable to the corporation to indemnify the corporation for any pecuniary loss it shall sustain of money or other personal property by any act or acts of fraud, dishonesty, forgery, theft, embezzlement, wrongful abstraction, or willful misapplication. The amount and form of such bonds and the sufficiency of the sureties thereon shall be approved by the board of directors of the corporation and by the department and shall be filed with the department within such time as it may prescribe. In lieu of individual bonds, a blanket bond covering all such officers and employees may be used, subject to the same approval as individual bonds. No officer or director of the corporation shall sign the bond of any other person as surety thereon required by this article. If any bonds required by this section are signed by individuals as sureties, the bonds must contain separate affidavits as to the net worth of each surety.

Formerly: Acts 1935, c.162, s.92. As amended by P.L.252-1985, SEC.30.

 

IC 27-1-7-15Loans to or borrowing by directors or officers; offense; exceptions

     Sec. 15. A board of directors, director, or officer of any insurance company doing business in this state who lends any of its money or other property, to any director or officer of the insurance company commits a Class B misdemeanor. A director or officer who borrows from the insurance company any money or other property commits a Class B misdemeanor. However, this section does not apply to:

(1) the continuation to maturity of any loan that did not violate this section when it was made; or

(2) a loan made by a life insurance company to any director or officer of the company in an amount not greater than the net cash surrender value of, and secured by, a policy with the company held by the borrower; or

(3) a loan made by any insurance company to an officer, other than a director, secured by a first mortgage loan upon a single-family dwelling, condominium unit or cooperative apartment unit, which is the borrower's personal residence acquired on account of the officer's relocation or initial employment.

Formerly: Acts 1935, c.162, s.93. As amended by Acts 1978, P.L.2, SEC.2707; Acts 1981, P.L.235, SEC.1.

 

IC 27-1-7-16Books and records to be kept at principal office

     Sec. 16. Every corporation shall keep correct and complete books of account and minutes of the proceedings of its shareholders, members or policyholders, directors, executive and/or finance committees, and it shall likewise keep, at its principal office, an original or a duplicate stock transfer book and/or records giving the names and addresses of all shareholders, members or policyholders, and if a stock company the number of shares held by each.

Formerly: Acts 1935, c.162, s.94.

 

IC 27-1-7-17Restrictions on dividend payments

     Sec. 17. No domestic company shall make any payments in form of dividends or otherwise to its shareholders, for or on account of any interest in or relation to the company as shareholders, unless it possesses assets in the amount of such payment, in excess of its liabilities, including its capital stock: Provided, That in no instance shall such dividend reduce the surplus below an amount equal to fifty per cent (50%) of the capital stock of such company; and no domestic company shall make any payments to its members or policyholders for or on account of any interest in or relation to the company as members or policyholders, except for matured claims or other policy obligations and in the purchase of surrender values, unless it possesses assets in the amount of such payments in excess of its liabilities.

Formerly: Acts 1935, c.162, s.95.

 

IC 27-1-7-18Repealed

Formerly: Acts 1935, c.162, s.96. Repealed by P.L.260-1983, SEC.8.

 

IC 27-1-7-19Mutual or stock companies; borrowing for surplus funds

     Sec. 19. (a) A mutual or stock company organized under this article may borrow or assume a liability for the repayment of a sum of money to provide itself with surplus funds with the prior approval of the department. The rate of interest on any loan or advance may not exceed the following:

(1) The corporate base rate in effect on the first business day of the month in which the loan document is executed, as reported by the bank or branch with the greatest amount of assets in Indiana, plus three percent (3%) per annum.

(2) A variable rate determined by a formula that:

(A) is specified in the loan document;

(B) is based on objective data or information that is reasonably related to commercial lending rates;

(C) provides an initial rate that is not more than the corporate base rate in effect on the first business day of the month in which the loan document is executed, as reported by the bank or branch with the greatest amount of assets in Indiana, plus two percent (2%) per annum; and

(D) is approved by the department as reasonable and appropriate in relation to the company's financial condition.

The company shall elect and state in the written agreement whether the interest rate is to be fixed or floating for the term of the agreement. The agreement shall be submitted to and approved by the department before the agreement's execution.

     (b) The loan or advance, with interest at a rate not exceeding the maximum rate of interest as defined in subsection (a), shall be repaid only out of the surplus of the company. Repayment of principal or payment of interest may be made only when approved by the department whenever in its judgment the financial condition of the company shall warrant. However, the department may not withhold approval if:

(1) the company has and submits to the department satisfactory evidence that a surplus that is equal to or greater than the surplus existing immediately after the issuance of the loan or advance will exist after the repayment; and

(2) the surplus that will exist immediately after repayment of principal or payment of interest is:

(A) reasonable in relation to the company's outstanding liabilities; and

(B) adequate to the company's financial needs;

in light of the factors set forth in IC 27-1-23-4(f).

     (c) A loan or advance made under this section, or interest accruing on the loan or advance, may not form a part of the legal liabilities of the company until authorized for payment by the department. However, until a loan or an advance is repaid, all statements published by the company or filed with the department must show the amount of the loan or advance then remaining unpaid, including any accrued and unpaid interest charges.

Formerly: Acts 1935, c.162, s.97. As amended by P.L.138-1984, SEC.1; P.L.253-1985, SEC.1; P.L.184-1996, SEC.1; P.L.111-2000, SEC.1.

 

IC 27-1-7-20Authority of corporations, boards, and associations to insure with mutual insurance company

     Sec. 20. Any public or private corporation, board or association in this state or elsewhere may make applications, enter into agreements for, and hold policies in, any mutual insurance company. Any officer, stockholder, trustee or legal representative of any such company, board, association, or estate may be recognized as acting for or on its behalf for the purposes of such membership, but shall not be personally liable upon such contract of insurance by reason of acting in such representative capacity.

Formerly: Acts 1935, c.162, s.97a.

 

IC 27-1-7-21Mutual companies; statement of maximum premium in policy; limitation of liability for single risk; reinsurance requirements

     Sec. 21. (a) The maximum premium shall be expressed in the policy of a mutual company and shall be solely a cash premium without contingent premium but no such company other than a life insurance company shall issue any policy providing limits of liability for any one (1) risk under any one (1) line of insurance in an amount exceeding five percent (5%) of its surplus, including contingent reserves, if any, until and unless it either possesses a surplus, including contingent reserves, if any, of at least four hundred thousand dollars ($400,000), or has reinsured in a reinsurer (or reinsurers) admitted to do business in this state and authorized to make such kind or kinds of reinsurance in this state all of such liability in excess of such amount or such greater amount as the commissioner may authorize and such reinsurance contract or contracts shall have been submitted to and approved by the commissioner. Such reinsurance contract or contracts shall be in such form as to enable the insured under such policy or the holder of a judgment against the insured for which such company is liable under such policy to maintain an action on such reinsurance contract or contracts against such reinsured company jointly with the reinsurer and, upon recovering judgment, to have recovery against such reinsurer or reinsurers for payment to the extent to which it or they may be liable under such reinsurance contract (or contracts) and in discharge thereof. In no event shall the unreinsured liability assumed under this section on any one (1) risk exceed the amount otherwise authorized by this article to be written upon any one (1) risk.

     (b) Any determination of permissible limits of liability and amount of surplus pursuant to the provisions of subsection (a) shall be made as of December 31 immediately preceding except that in the case of a newly formed company such determination shall be made as of the date it receives the certificate of the department authorizing it to commence business.

     (c) Any reinsurance contract submitted to and approved by the commissioner in accordance with the requirements of this section shall continue in full force and effect until notice of its termination or amendment has been filed with the commissioner, and in the case of an amendment has been approved by him.

     (d) Subsection (a) shall apply only to companies organized under this article after July 26, 1967, except that any company in existence on July 26, 1967, under any of the insurance statutes of this state and to which subsection (a) would otherwise apply may, by appropriate action of its policyholders and board of directors, elect to comply with subsection (a).

     (e) This section shall not affect nor invalidate any policy of any mutual insurance company in existence on July 26, 1967, issued pursuant to Acts 1935, c.162, s.98. Any such policy issued on or after July 26, 1967, by a mutual insurance company in existence on July 26, 1967, and the rights and obligations thereunder shall continue to be subject to the provisions of Acts 1935, c.162, s.98 until such company has exercised the right of election provided in this section and has complied with the provisions of this section.

Formerly: Acts 1935, c.162, s.98; Acts 1967, c.233, s.1. As amended by P.L.252-1985, SEC.31.

 

IC 27-1-7-22Vouchers for disbursements

     Sec. 22. No domestic insurance corporation shall make any disbursement of one hundred dollars ($100) or more unless the same be evidenced by a voucher signed by or on behalf of the person, firm, limited liability company, or corporation receiving the money and correctly describing the consideration for the payment, and if the same be for services and disbursements, setting forth the services rendered and an itemized statement of the disbursements made, and if it be in connection with any matter pending before any legislative or public body or before any department or officer of any government, correctly describing in addition the nature of the matter and of the interest of such corporation therein, or, if such a voucher can not be obtained by an affidavit stating the reasons therefor and setting forth the particulars above mentioned.

Formerly: Acts 1935, c.162, s.99. As amended by P.L.8-1993, SEC.411.

 

IC 27-1-7-23Annual or other required statements; material false statement

     Sec. 23. A director, officer, agent, or employee of any company who knowingly subscribes, makes, or concurs in making or publishing any annual or other statement required by law, containing any material statement which is false, commits a Class A misdemeanor.

Formerly: Acts 1935, c.162, s.100. As amended by Acts 1978, P.L.2, SEC.2708.

 

IC 27-1-7.5Chapter 7.5. Indemnification of Directors
           27-1-7.5-1"Corporation" defined
           27-1-7.5-2"Director" defined
           27-1-7.5-3"Expenses" defined
           27-1-7.5-4"Liability" defined
           27-1-7.5-5"Official capacity" defined
           27-1-7.5-6"Party" defined
           27-1-7.5-7"Proceeding" defined
           27-1-7.5-8Conditional indemnification of director against liability
           27-1-7.5-9Mandatory indemnification of director for expenses incurred in successful defense
           27-1-7.5-10Advancement of expenses before final disposition; conditions
           27-1-7.5-11Court ordered indemnification; determination
           27-1-7.5-12Determination of permissible indemnification; authorization of indemnification and evaluation as to reasonableness of expenses
           27-1-7.5-13Indemnification of corporate employees other than directors
           27-1-7.5-14Liability insurance purchased and maintained by corporation
           27-1-7.5-15Limitation of remedies; effect of chapter

 

IC 27-1-7.5-1"Corporation" defined

     Sec. 1. As used in this chapter, "corporation" has the meaning set forth in IC 27-1-2-3. The term also includes any domestic or foreign predecessor entity of a corporation in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-2"Director" defined

     Sec. 2. As used in this chapter, "director" means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, whether for profit or not. A director is considered to be serving an employee benefit plan at the corporation's request if the director's duties to the corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. The term includes, unless the context requires otherwise, the estate or personal representative of a director.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-3"Expenses" defined

     Sec. 3. As used in this chapter, "expenses" includes counsel fees.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-4"Liability" defined

     Sec. 4. As used in this chapter, "liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-5"Official capacity" defined

     Sec. 5. (a) As used in this chapter, "official capacity" means:

(1) when used with respect to a director, the office of director in a corporation; and

(2) when used with respect to an individual other than a director, as contemplated in section 13 of this chapter, the office in a corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the corporation.

     (b) The term does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, employee benefit plan, or other enterprise, whether for profit or not.

As added by P.L.266-1987, SEC.6. Amended by P.L.5-1988, SEC.141.

 

IC 27-1-7.5-6"Party" defined

     Sec. 6. As used in this chapter, "party" includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-7"Proceeding" defined

     Sec. 7. As used in this chapter, "proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-8Conditional indemnification of director against liability

     Sec. 8. (a) A corporation may indemnify an individual made a party to a proceeding because the individual is or was a director against liability incurred in the proceeding if:

(1) the individual's conduct was in good faith;

(2) the individual reasonably believed:

(A) in the case of conduct in the individual's official capacity with the corporation, that the individual's conduct was in its best interests; and

(B) in all other cases, that the individual's conduct was at least not opposed to its best interests; and

(3) in the case of any criminal proceeding, the individual either:

(A) had reasonable cause to believe the individual's conduct was lawful; or

(B) had no reasonable cause to believe the individual's conduct was unlawful.

     (b) A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection (a)(2).

     (c) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-9Mandatory indemnification of director for expenses incurred in successful defense

     Sec. 9. Unless limited by its articles of incorporation, a corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the director was a party because the director is or was a director of the corporation against reasonable expenses incurred by the director in connection with the proceeding.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-10Advancement of expenses before final disposition; conditions

     Sec. 10. (a) A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:

(1) the director furnishes the corporation a written affirmation of the director's good faith belief that the director has met the standard of conduct described in section 8 of this chapter;

(2) the director furnishes the corporation a written undertaking, executed personally or on the director's behalf, to repay the advance if it is ultimately determined that the director did not meet the standard of conduct; and

(3) a determination is made that the facts then known to those making the determination would not preclude indemnification under this chapter.

     (b) The undertaking required by subsection (a)(2) must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.

     (c) Determinations and authorizations of payments under this section shall be made in the manner specified in section 12 of this chapter.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-11Court ordered indemnification; determination

     Sec. 11. Unless a corporation's articles of incorporation provide otherwise, a director of the corporation who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may order indemnification if it determines that:

(1) the director is entitled to mandatory indemnification under section 9 of this chapter, in which case the court shall also order the corporation to pay the director's reasonable expenses incurred to obtain court ordered indemnification; or

(2) the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in section 8 of this chapter.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-12Determination of permissible indemnification; authorization of indemnification and evaluation as to reasonableness of expenses

     Sec. 12. (a) A corporation may not indemnify a director under section 8 of this chapter unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in section 8 of this chapter.

     (b) The determination shall be made by any one (1) of the following procedures:

(1) By the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding.

(2) If a quorum cannot be obtained under subdivision (1), by majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two (2) or more directors not at the time parties to the proceeding.

(3) By special legal counsel:

(A) selected by the board of directors or its committee in the manner prescribed in subdivision (1) or (2); or

(B) if a quorum of the board of directors cannot be obtained under subdivision (1) and a committee cannot be designated under subdivision (2), selected by majority vote of the full board of directors (in which selection directors who are parties may participate).

     (c) Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection (b)(3) to select counsel.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-13Indemnification of corporate employees other than directors

     Sec. 13. The following apply unless a corporation's articles of incorporation provide otherwise:

(1) An officer of the corporation, whether or not a director, is entitled to mandatory indemnification under section 9 of this chapter and is entitled to apply for court ordered indemnification under section 11 of this chapter, in each case to the same extent as a director.

(2) The corporation may indemnify and advance expenses under this chapter to an officer, employee, or agent of the corporation, whether or not a director, to the same extent as to a director.

(3) A corporation may also indemnify and advance expenses to an officer, employee, or agent, whether or not a director, to the extent, consistent with public policy, that may be provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-14Liability insurance purchased and maintained by corporation

     Sec. 14. A corporation may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, against liability asserted against or incurred by the individual in that capacity or arising from the individual's status as a director, officer, employee, or agent, whether or not the corporation would have power to indemnify the individual against the same liability under section 8 or 9 of this chapter.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-7.5-15Limitation of remedies; effect of chapter

     Sec. 15. (a) The indemnification and advance for expenses provided for or authorized by this chapter does not exclude any other rights to indemnification and advance for expenses that a person may have under:

(1) a corporation's articles of incorporation or bylaws;

(2) a resolution of the board of directors or of the shareholders of a stock company, or members or shareholders of a mutual company qualified to elect directors; or

(3) any other authorization, whenever adopted, after notice, by a majority vote of all the voting shares then issued and outstanding of a stock company or of all the members or policyholders of a mutual company authorized to elect directors.

     (b) If the articles of incorporation, bylaws, resolutions of the board of directors or of the shareholders, or other duly adopted authorization of indemnification or advance for expenses limit indemnification or advance for expenses, indemnification and advance for expenses are valid only to the extent consistent with the articles, bylaws, resolution of the board of directors or of the shareholders, members, or directors or other duly adopted authorization of indemnification or advance for expenses.

     (c) This chapter does not limit a corporation's power to pay or reimburse expenses incurred by a director, officer, employee, or agent in connection with the person's appearance as a witness in a proceeding at a time when the person has not been made a named defendant or respondent to the proceeding.

As added by P.L.266-1987, SEC.6.

 

IC 27-1-8Chapter 8. Procedures for Amending Articles of Incorporation
           27-1-8-1Authority to amend
           27-1-8-2Proposal of amendment
           27-1-8-3Vote of shareholders, policyholders, or members; exceptions; notice of corporation name change
           27-1-8-4Form and content of articles of amendment
           27-1-8-5Execution and presentation of articles of amendment to department
           27-1-8-6Approval or disapproval of articles of amendment by department
           27-1-8-7Submission of articles of amendment to attorney general
           27-1-8-8Presentation of articles of amendment to secretary of state; duties of secretary of state
           27-1-8-9Amended certificate of authority
           27-1-8-10Effect of amendment
           27-1-8-11Prerequisites to corporate acts under amendment
           27-1-8-12Restrictions on amendments; decreasing capital stock
           27-1-8-13Repealed

 

IC 27-1-8-1Authority to amend

     Sec. 1. Any corporation may, at any time, amend its articles of incorporation without limitation so long as the articles as amended would have been authorized by this article as original articles, by complying with the provisions of this chapter.

Formerly: Acts 1935, c.162, s.101. As amended by P.L.252-1985, SEC.32.

 

IC 27-1-8-2Proposal of amendment

     Sec. 2. Every amendment to the articles of incorporation shall first be proposed by the board of directors, by the adoption of a resolution setting forth the proposed amendment and directing that it be submitted to a vote of the shareholders, members, or policyholders entitled to vote in respect thereof at a designated meeting of such shareholders, members, or policyholders which may be an annual meeting of the shareholders, members, or policyholders or a special meeting of the shareholders, members, or policyholders entitled to vote in respect thereof. If the resolution shall direct that the proposed amendment is to be submitted at an annual meeting, notice of the submission of the proposed amendment shall be included in the notice of such annual meeting. If the said resolution shall direct that the proposed amendment is to be submitted to a special meeting of the shareholders, members, or policyholders entitled to vote thereon, such special meeting shall be called by the resolution proposing the amendment, and notice of such meeting shall be given at the time in the manner provided in IC 27-1-7-7.

Formerly: Acts 1935, c.162, s.102. As amended by P.L.252-1985, SEC.33.

 

IC 27-1-8-3Vote of shareholders, policyholders, or members; exceptions; notice of corporation name change

     Sec. 3. (a) Except as provided in subsection (b), an amendment to the articles of incorporation so proposed shall be submitted to a vote of the shareholders, members, or policyholders at the annual or at the special meeting directed by the resolution of the board of directors proposing the amendment, and the proposed amendment shall be adopted upon receiving the affirmative votes of at least a majority of the stock, or such greater portion as the articles of incorporation may require, of the outstanding shares of stock entitled to vote, if a stock company; and upon receiving the affirmative votes of at least two-thirds (2/3) of the members or policyholders voting at such annual or special meeting, if other than a stock company.

     (b) Unless the articles of incorporation provide otherwise, a corporation's board of directors may adopt one (1) or more amendments to the corporation's articles of incorporation without shareholder, member, or policyholder action to:

(1) extend the duration of the corporation, if the corporation was incorporated at a time when limited duration was required by law;

(2) delete the names and addresses of the initial directors, officers, or incorporators;

(3) delete the name and address of the initial registered agent or registered or principal office, if a statement of change is on file with the secretary of state;

(4) change each issued and unissued authorized share of an outstanding class into a greater number of whole shares or a lesser number of whole shares and fractional shares if the corporation has only shares of that class outstanding;

(5) reduce the number of authorized shares solely as the result of a cancellation of treasury shares; or

(6) change the corporate name, if the new name complies with IC 27-1-6-3.

     (c) If a corporation changes its name under subsection (b)(6), the corporation shall, not more than thirty (30) days after the effective date of the amendment changing the corporate name, mail or deliver a written or printed notice of the new corporate name to each shareholder, member, or policyholder of record of the corporation.

Formerly: Acts 1935, c.162, s.103. As amended by P.L.185-1997, SEC.2.

 

IC 27-1-8-4Form and content of articles of amendment

     Sec. 4. Upon the proposal and adoption of any amendment to the articles of incorporation, there shall be executed articles of amendment setting forth the following:

     (a) The amendment so adopted;

     (b) The manner of its adoption and the vote by which it was adopted;

     (c) In the case of a stock corporation;

     (1) If the total authorized amount or number of shares is increased by such amendment, a statement of the shares theretofore authorized and a statement of the additional shares authorized by the amendment;

     (2) If the total authorized amount or number of shares is reduced by such amendment, a statement of the shares theretofore authorized and the amount thereof that has been issued, and a statement of the reduction authorized by the amendment and the manner in which the reduction shall be effected; and

     (3) If any change is made in the shares without increasing or reducing the total authorized amount or number of shares, a statement of the shares theretofore authorized and the amount thereof that has been issued, and a statement of the change to be made by the amendment and the manner in which the change shall be effected.

Formerly: Acts 1935, c.162, s.104.

 

IC 27-1-8-5Execution and presentation of articles of amendment to department

     Sec. 5. The form of the articles of amendment shall be prescribed and furnished by the department. The articles of amendment shall be prepared and signed in triplicate originals by the president or a vice-president and by the secretary or an assistant secretary of the corporation, and shall be acknowledged before a notary public by the officers signing the articles and shall be presented in triplicate originals to the department at its office, for the approval or disapproval of the department.

Formerly: Acts 1935, c.162, s.105.

 

IC 27-1-8-6Approval or disapproval of articles of amendment by department

     Sec. 6. The department is hereby authorized to approve or disapprove such articles of amendment, and the approval of them, if given, shall be evidenced in the manner prescribed in IC 27-1-6-8.

Formerly: Acts 1935, c.162, s.106. As amended by P.L.252-1985, SEC.34.

 

IC 27-1-8-7Submission of articles of amendment to attorney general

     Sec. 7. In the event the department approves the articles of amendment, they shall then be submitted to the attorney general for the state of Indiana who shall examine said articles. And his approval, if given, shall be evidenced in the manner provided in IC 27-1-6-9, and he shall return the same to the department.

Formerly: Acts 1935, c.162, s.107. As amended by P.L.252-1985, SEC.35.

 

IC 27-1-8-8Presentation of articles of amendment to secretary of state; duties of secretary of state

     Sec. 8. When the articles of amendment have been approved by the attorney-general and returned to the department, then the department shall present the same to the secretary of state for the state of Indiana. If the secretary of state finds that the articles conform to law, he shall indorse his approval upon each of the triplicate copies of the articles, and when all fees have been paid as required by law, he shall file one (1) copy in his office and shall return the other two (2) copies of the articles of amendment bearing the indorsement of his approval, to the corporation, one (1) of which copies the corporation shall file with the department.

Formerly: Acts 1935, c.162, s.108.

 

IC 27-1-8-9Amended certificate of authority

     Sec. 9. When the provisions of sections 2 through 8 of this chapter have been complied with, then the commissioner may issue an amended certificate of authority, which shall license the company to transact the kind or kinds of insurance specified in its articles of incorporation and in the amendment to its articles of incorporation, and which shall expire at midnight, April 30, next following the date of issuance.

Formerly: Acts 1935, c.162, s.109. As amended by P.L.252-1985, SEC.36.

 

IC 27-1-8-10Effect of amendment

     Sec. 10. Upon the issuance of the amended certificate of authority by the commissioner, the amendment shall become effective and the articles of incorporation shall be deemed to be amended accordingly. No amendment shall effect any existing cause of action in favor of or against such corporation, or any pending suit in which such corporation shall be a party, or the existing rights of persons other than shareholders of a stock company, or the members or policyholders in companies other than stock companies; and in the event the corporate name shall be changed by any amendment, no suit brought against such corporation under its former name shall be abated for that reason.

Formerly: Acts 1935, c.162, s.110.

 

IC 27-1-8-11Prerequisites to corporate acts under amendment

     Sec. 11. (a) A corporation whose articles of incorporation have been amended in accordance with the provisions of this chapter shall not exercise any power, right, or authority conferred by, or take any action pursuant to, such amendment until:

(1) the corporation shall have filed one (1) of the triplicate copies of the articles of amendment, bearing the endorsement of the approval of the secretary of state as provided in section 8 of this chapter, for record in the office of the county recorder of the county in which the articles of incorporation of such corporation were or should have been filed for record as provided in IC 27-1-6-13; and

(2) the company shall have filed a certified copy of such amended certificate of authority for record with the county recorder of the county wherein the principal office is located, which certified copy shall be evidence only that the company is authorized and licensed to transact the kind or kinds of insurance set out therein, for the period stated therein.

     (b) If a corporation exercises any such power, right, or authority, or takes any such action, in violation of this section, the officers and directors who participated therein shall be severally liable for any debts or liabilities of the corporation incurred thereby or arising therefrom.

Formerly: Acts 1935, c.162, s.111. As amended by P.L.252-1985, SEC.37.

 

IC 27-1-8-12Restrictions on amendments; decreasing capital stock

     Sec. 12. A company may amend its articles by providing for a decrease of its capital stock to an amount not less than the minimum capital required for the kind or kinds of insurance theretofore transacted by the company. The department shall not approve or issue its certified copy of such amendment to the company if it shall be of the opinion that the interests of policyholders or creditors may be prejudiced thereby. No distribution of the assets of the company shall be made to shareholders upon any such decrease of capital which shall reduce the surplus of its assets over its liabilities, including capital, to less than the minimum surplus required by this article. Upon any such amendment so decreasing the capital, such company may require each shareholder to return his certificate of stock and accept a new certificate for such proportion of the amount of its original stock as the reduced capital shall bear to the original capital.

Formerly: Acts 1935, c.162, s.113. As amended by P.L.252-1985, SEC.38.

 

IC 27-1-8-13Repealed

Formerly: Acts 1935, c.162, s.113a; Acts 1969, c.164, s.1. As amended by P.L.252-1985, SEC.39; P.L.7-1987, SEC.136. Repealed by P.L.94-1999, SEC.4.

 

IC 27-1-9Chapter 9. Merger, Consolidation, and Reinsurance
           27-1-9-1Authority to merge, consolidate, or reinsure
           27-1-9-2Effect of article on corporate powers and kinds of business
           27-1-9-2.5Definitions relating to merger
           27-1-9-3Procedure for merger
           27-1-9-4Procedure for consolidation
           27-1-9-5Effective time of merger or consolidation
           27-1-9-6Recording certified copies of certificate of merger or consolidation
           27-1-9-7Repealed
           27-1-9-8Voting at meeting of shareholders, policyholders, or members; proxies; vote required
           27-1-9-9Dissenting shareholders; payment of value of shares; appraisal
           27-1-9-10Hearing on petition of members or policyholders of mutual company in opposition to merger or consolidation; revocation of approval
           27-1-9-11Effect of merger or consolidation
           27-1-9-12Execution of articles of merger or consolidation by foreign corporations; approval by foreign regulatory authority; appointment of commissioner as attorney for service of process on foreign corporation
           27-1-9-13Transfer of deposit covering policies assumed by foreign corporation to foreign state
           27-1-9-14Statement of compensation to persons securing, aiding, promoting, or assisting in merger, consolidation, or reinsurance
           27-1-9-15Undisclosed compensation; violations

 

IC 27-1-9-1Authority to merge, consolidate, or reinsure

     Sec. 1. Subject to the provisions of this article and IC 27-6-1.1, any domestic corporation is authorized and empowered to:

(1) merge or consolidate with any other domestic company;

(2) merge or consolidate with any foreign company, including any foreign company organized as a stock, mutual, nonstock, nonprofit, fraternal benefit, mutual benefit, or medical or hospital service company under the insurance or other laws of the foreign company's state of domicile, if the surviving company meets the requirements for authorization to engage in the insurance business in this state, and provided such merger or consolidation is authorized by the laws of the state, or territory in which such foreign company is organized;

(3) subject to the requirements of IC 27-6-1.1-5, reinsure under an agreement of assumption reinsurance all or a portion of its risks with another domestic company or with any foreign or alien company authorized to engage in the insurance business in this state; and

(4) subject to the requirements of IC 27-6-1.1-5, reinsure under an agreement of assumption reinsurance all or a portion of the risks of another domestic company or of a foreign or alien company whether such company is or is not authorized to engage in the insurance business in this state.

Formerly: Acts 1935, c.162, s.114; Acts 1941, c.115, s.1; Acts 1969, c.164, s.2. As amended by P.L.260-1983, SEC.2; P.L.185-1997, SEC.3.

 

IC 27-1-9-2Effect of article on corporate powers and kinds of business

     Sec. 2. Nothing contained in this chapter shall be construed to enlarge the corporate powers of any insurance company, nor to authorize any insurance company to engage in any kind or kinds of insurance business not authorized by its articles of incorporation, nor to authorize any foreign insurance company to engage in any kind or kinds of insurance business in this state not covered by its certificate of authority to do business in this state.

Formerly: Acts 1935, c.162, s.115. As amended by P.L.252-1985, SEC.40.

 

IC 27-1-9-2.5Definitions relating to merger

     Sec. 2.5. (a) As used in section 3 of this chapter, "participating shares" means shares that entitle the shareholders to participate without limitation in distributions.

     (b) As used in section 3 of this chapter, "voting members" means members or policyholders entitled to vote unconditionally in the election of directors.

     (c) As used in section 3 of this chapter, "voting shares" means shares that entitle the shareholders to vote unconditionally in the election of directors.

As added by P.L.185-1997, SEC.4.

 

IC 27-1-9-3Procedure for merger

     Sec. 3. (a) Any domestic corporation may merge with any other corporation or corporations, subject to the provisions of sections 1 and 2 of this chapter, in the following manner. The board of directors of each corporation shall, by a resolution adopted by a majority vote of the members of such board, approve a joint agreement of merger setting forth:

(1) the names of the corporations proposed to merge, and the name of the corporation into which they propose to merge, which is designated in this section as the surviving corporation;

(2) the terms and conditions of the proposed merger and the mode of carrying the same into effect;

(3) the manner and basis, if any, of converting the shares of each stock corporation, other than the surviving corporation into shares or other securities or obligations of the surviving corporation, or, in whole or in part, into cash, property, shares, or other securities or obligations of any corporation;

(4) a restatement of such provisions of the articles of incorporation of the surviving corporation as may be deemed necessary or advisable to give effect to the proposed merger; and

(5) such other provisions with respect to the proposed merger as are deemed necessary or desirable.

Unless shareholder, member, or policyholder approval is not required by subsection (i), the resolution of the board of directors of each corporation approving the agreement shall direct that the agreement be submitted to a vote of the shareholders, members, or policyholders of such corporation entitled to vote in respect thereof at a designated meeting thereof, which may be an annual meeting of shareholders, members, or policyholders, or a special meeting of the shareholders, members, or policyholders entitled to vote in respect thereof. If the designated meeting of any corporation at which the agreement is to be submitted is an annual meeting, notice of the submission of the agreement shall be included in the notice of such annual meeting. If the designated meeting of any corporation at which the agreement is to be submitted is a special meeting of the shareholders, members, or policyholders entitled to vote in respect thereof, such special meeting shall be called by the resolution designating the meeting, and notice of such meeting shall be given at the time and in the manner provided in IC 27-1-7-7.

     (b) Unless shareholder, member, or policyholder approval is not required by subsection (i), the agreement of merger so approved shall be submitted to a vote of the shareholders, members, or policyholders of each corporation entitled to vote in respect thereof at the meeting directed by the resolution of the board of directors of such corporation approving the agreement, and the agreement shall be adopted by such corporation upon receiving the affirmative vote of such proportion of the shareholders, members, or policyholders as provided in section 8 of this chapter.

     (c) Unless shareholder, member, or policyholder approval is not required by subsection (i), within five (5) days after the agreement of merger shall be adopted by any corporation, the secretary of such corporation shall mail or deliver a written or printed notice of the adoption of the agreement to each shareholder, member, or policyholder of record of such corporation who was not present in person or represented by proxy at the meeting at which the agreement was adopted. And the corporation shall file an affidavit with the department, signed by the president and secretary of such corporation, that such notice was given.

     (d) Unless shareholder, member, or policyholder approval is not required by subsection (i), any shareholder, member, or policyholder of any such corporation who did not vote in favor of the adoption of the agreement of merger may object to such merger in the manner and with the effect provided in sections 9 and 10 of this chapter.

     (e) Unless shareholder, member, or policyholder approval is not required by subsection (i), as soon as practicable after the expiration of a period of thirty (30) days after the adoption of the agreement of merger by the shareholders, members, or policyholders of that one (1) of the merging corporations which is the last, in point of time, to adopt the same, the agreement shall again be considered by the board of directors of each corporation a party thereto, at a regular or special meeting of such board, and if the board of directors of each such corporation, by a majority vote of the members of such board, shall again approve the agreement and shall authorize the execution thereof, the agreement shall be signed on behalf of each such corporation by its president or a vice president and its secretary or an assistant secretary and shall have the corporate seal of each such corporation thereto affixed.

     (f) Upon the execution of the agreement of merger by all of the corporations parties thereto, there shall be executed and filed, in the manner provided in this section, articles of merger setting forth the agreement of merger, the signatures of the several corporations parties thereto, the manner of its adoption, and the vote, if any, by which adopted by each of such corporations. The articles of merger shall be signed on behalf of each such corporation by its president or a vice president and its secretary or an assistant secretary, and acknowledged before a notary public by the officers signing the same, in such multiple copies as shall be required to enable the corporations to comply with the provisions of this chapter with respect to filing and recording the articles of merger, and shall then be presented to the department at its office. The department is hereby authorized to approve or disapprove the articles of merger. In the event that the department shall approve the articles of merger, it shall endorse its approval thereon in the manner provided in IC 27-1-6-8, and it shall present the same to the secretary of state of the state of Indiana at his office.

     (g) Upon the presentation of the articles of merger, the secretary of state, if he finds that they conform to law, shall endorse his approval on each of the multiple copies of the articles and, when all fees have been paid as required by law, shall file one (1) copy of the articles of merger in his office and issue a certificate of merger and shall return the remaining copies of the articles bearing the endorsement of his approval, together with the certificate of merger, to the surviving corporation or its representatives.

     (h) The surviving corporation shall obtain a certified copy of the certificate of merger from the secretary of state and file the same with the department, accompanied by a copy of the articles of merger bearing the endorsement and approval of the secretary of state.

     (i) If a domestic corporation is the surviving corporation, action by the shareholders, members, or policyholders is not required if the articles of incorporation of the surviving corporation will not differ (except for amendments enumerated in IC 27-1-8-3(b)) from its articles before the merger and:

(1) if the corporation is a stock corporation:

(A) each shareholder of the surviving corporation whose shares were outstanding immediately before the merger will hold the same proportionate number of shares relative to the number of shares held by all shareholders (except for shares of the surviving corporation received solely as a result of the shareholder's proportionate shareholdings in the other corporations participating in the merger) with identical designations, preferences, limitations, and relative rights, immediately after the merger;

(B) the number of voting shares outstanding immediately after the merger, including the number of voting shares issuable as a result of the merger (either by the conversion of securities issued under the merger or the exercise of rights and warrants issued under the merger), will not exceed by more than twenty percent (20%) the total number of voting shares (adjusted to reflect any forward or reverse share split that occurs under the plan of merger) of the surviving corporation outstanding immediately before the merger; and

(C) the number of participating shares outstanding immediately after the merger, including the number of participating shares issuable as a result of the merger (either by conversion of securities issued under the merger or the exercise of rights and warrants issued under the merger), will not exceed by more than twenty percent (20%) the total number of participating shares (adjusted to reflect any forward or reverse share split that occurs under a plan of merger) outstanding immediately before the merger; or

(2) if the surviving corporation is an insurance company other than a stock corporation:

(A) each member or policyholder of the surviving corporation will retain the same contractual and other rights to which the member or policyholder was entitled before the merger; and

(B) the number of votes of voting members immediately after the merger, including the number of votes of voting members added as a result of the merger, will not exceed by more than twenty percent (20%) the total number of votes of voting members of the surviving corporation immediately before the merger.

Formerly: Acts 1935, c.162, s.116; Acts 1973, P.L.272, SEC.1. As amended by P.L.252-1985, SEC.41; P.L.185-1997, SEC.5.

 

IC 27-1-9-4Procedure for consolidation

     Sec. 4. Any domestic corporation may consolidate with any other corporation or corporations, subject to the provisions of sections 1 and 2 of this chapter, in the following manner:

     (a) Agreement of Consolidation. The board of directors of each corporation shall, by a resolution adopted by a majority vote of the members of such board, approve a joint agreement of consolidation setting forth:

     (1) The names of the corporations proposing to consolidate, and the name of the new corporation into which they proposed to consolidate, which is hereinafter designated as the new corporation;

     (2) The terms and conditions of the proposed consolidation and the mode of carrying the same into effect;

     (3) The manner and basis, if any, of converting the shares of each stock corporation into shares of other securities or obligations of the new corporation, or, in whole or in part, into cash, property, shares, or other securities or obligations of any other corporation;

     (4) With respect to the new corporation, all of the statements required by IC 1971, 27-1-6-4 to be set forth in original articles of incorporation for corporations formed under this article; and

     (5) Such other provisions with respect to the proposed consolidation as are deemed necessary or desirable;

     (b) Adoption of Agreement. The agreement of consolidation shall then be submitted to a vote of the shareholders, members or policyholders entitled to vote in respect thereof of each corporation in the same manner as provided in section 3 of this chapter and this agreement shall be adopted by such corporation upon receiving the affirmative vote of such proportion of the shareholders, members or policyholders, as provided in section 8 of this chapter; and the adoption thereof by directors and by the shareholders, members or policyholders shall be followed by the same notice to shareholders, members or policyholders as hereinabove provided in paragraphs (a), (b) and (c) of section 3 of this chapter in case of a merger.

     (c) Objections. Any shareholder, member or policyholder, of any such corporation who did not vote in favor of the adoption of the agreement of consolidation, may object to such consolidation in the manner and with the effect provided in sections 9 and 10 of this chapter.

     (d) Reapproval and Execution of Agreement. Upon the adoption of the agreement of consolidation it shall again be considered by the board of directors of each corporation a party to the agreement, and, if again approved and the execution of the agreement authorized by such board, the agreement shall be signed and filed, all in the same manner and within the same time as provided in subsection (e) of section 3 of this chapter.

     (e) Articles of Consolidation. Under the execution of the agreement of consolidation by all of the corporations parties thereto, articles of consolidation shall be executed and filed, accompanied by the fees prescribed by law in the same manner and form and in such multiple copies as provided in subsection (f) of section 3 of this chapter.

     (f) Certificate of Consolidation and Incorporation. Upon the presentation of the articles of consolidation, the secretary of state, if he finds that they conform to law, shall indorse his approval on each of the multiple copies of the articles, and, when all fees have been paid as required by law, shall file one (1) copy of the articles of consolidation in his office and issue a certificate of consolidation and incorporation, and shall return the remaining copies of the articles bearing the indorsement of his approval, together with the certificate of consolidation and incorporation, to the new corporation, or its representatives.

     (g) Filing Certificate. The surviving corporation shall obtain a certified copy of the certificate of consolidation and incorporation from the secretary of state and file the same with the department, accompanied by a copy of the articles of consolidation bearing the indorsement of the approval of the secretary of state.

Formerly: Acts 1935, c.162, s.117; Acts 1973, P.L.272, SEC.2.

 

IC 27-1-9-5Effective time of merger or consolidation

     Sec. 5. Upon the issuance of a certificate of merger or a certificate of consolidation and incorporation by the secretary of state, the merger or consolidation, as the case may be, shall be effected, subject to the rights of dissenting shareholders, members, or policyholders, as provided in sections 9 and 10 of this chapter.

Formerly: Acts 1935, c.162, s.118. As amended by P.L.252-1985, SEC.42.

 

IC 27-1-9-6Recording certified copies of certificate of merger or consolidation

     Sec. 6. The surviving or new corporation, as the case may be, resulting from a merger or consolidation, shall within ten (10) days after such merger or consolidation has become effective as hereinabove provided, file for record with the county recorder of each county in which the principal office of any of the corporations parties to the agreement is located, and of each county in this state in which any of such corporations shall have real property at the time of such merger or consolidation the title to which will be transferred by the merger or consolidation, a certified copy of the certificate of merger or certificate of consolidation and incorporation, as the case may be, accompanied by one (1) of the copies of the articles of merger or articles of consolidation, bearing the indorsement of the approval of the secretary of state, as the case may be.

Formerly: Acts 1935, c.162, s.119.

 

IC 27-1-9-7Repealed

Formerly: Acts 1935, c.162, s.120; Acts 1941, c.115, s.2. Repealed by P.L.260-1983, SEC.8.

 

IC 27-1-9-8Voting at meeting of shareholders, policyholders, or members; proxies; vote required

     Sec. 8. At any meeting of the shareholders, members, or policyholders held pursuant to the resolution of the board of directors for the purpose of adopting an agreement of merger or consolidation, as provided for in sections 3 and 4 of this chapter, the shareholders, members, or policyholders entitled to vote in respect thereof may vote in person or by proxy. Each shareholder entitled to vote at such meeting shall have one (1) vote for each share of voting stock held by him, and each member or policyholder entitled to vote at such meeting shall have one (1) vote regardless of the amount of insurance or number of policies held by him. The affirmative votes representing two-thirds (2/3) of all outstanding capital stock in case of purely stock companies, or two-thirds (2/3) of all outstanding capital stock, if any, and two-thirds (2/3) of the votes cast by the members or policyholders represented at the meeting in person or by proxy in the case of other companies, shall be necessary for the adoption of such proposed articles of merger or consolidation.

Formerly: Acts 1935, c.162, s.122; Acts 1941, c.115, s.4. As amended by P.L.252-1985, SEC.43.

 

IC 27-1-9-9Dissenting shareholders; payment of value of shares; appraisal

     Sec. 9. (a) If any shareholder of any corporation a party to a merger or consolidation who did not vote in favor of such merger or consolidation at the meeting at which the agreement of merger or consolidation was adopted by the shareholders of such corporation shall, at any time within thirty (30) days after the filing of the affidavit of notice of the adoption of the agreement of merger or consolidation as provided for in sections 3 and 4 of this chapter, object thereto in writing and demand payment of the value of his shares, the surviving or new corporation shall, in the event that the merger or consolidation shall be made effective, pay to such shareholder upon surrender of his certificates therefor, the value of such shares at the effective date of the merger or consolidation. If within thirty (30) days after such effective date, the value of such shares is agreed upon between the shareholder and the surviving or new corporation, as the case may be, payment therefor may be made within ninety (90) days after the effective date. If, within thirty (30) days after such effective date, the surviving or new corporation, as the case may be, and the shareholder do not so agree, either such corporation or the shareholder may, within ninety (90) days after such effective date, petition the judge of the circuit or superior court of the county in which the principal office of the corporation is located, to appraise the value of such shares, and payment of the appraised value thereof shall be made within sixty (60) days after the entry of the judgment or order finding such appraised value. The practice, procedure, and judgment in the circuit or superior court upon such petition shall be the same, so far as practicable, as that under the eminent domain laws in this state, and the judgment of such circuit or superior court in such matter shall be final.

     (b) Upon the effective date of the merger or consolidation, any shareholder who has made such objection and demand shall cease to be a shareholder and shall have no rights with respect to such shares except the right to receive payment therefor. Every shareholder who did not vote in favor of such merger or consolidation and who does not object in writing and demand payment of the value of his shares at the time and in the manner provided in this section shall be conclusively presumed to have assented to such merger or consolidation.

Formerly: Acts 1935, c.162, s.123; Acts 1941, c.115, s.5. As amended by P.L.252-1985, SEC.44.

 

IC 27-1-9-10Hearing on petition of members or policyholders of mutual company in opposition to merger or consolidation; revocation of approval

     Sec. 10. If not less than five percent (5%) of the members or policyholders in a mutual corporation who did not vote in favor of such merger or consolidation at the meeting at which the agreement of merger or consolidation was adopted by the members or policyholder of such corporation shall, at any time within thirty (30) days after the filing of the affidavit of notice of the adoption of the agreement of merger or consolidation as provided for in sections 3 and 4 of this chapter, file a petition with the department for a hearing upon the adoption of such agreement or merger or consolidation, the department shall order a hearing upon said petition and give notice fixing the time and place of such hearing to the corporations which are parties to the merger or consolidation fifteen (15) days before the date of such hearing. The company whose policyholders file such petition shall give notice by mail to each member or policyholder of such company, at least ten (10) days before such hearing. At the time and place fixed in such notice, or at the time or times and place or places to which such hearing shall be adjourned, the commissioner shall proceed with the hearing and make or order such examination into the affairs and condition of each of such corporations as he may deem proper. The commissioner shall have the power to summon and compel the attendance and testimony of witnesses and the production of books and papers before him at such hearing. Any member or policyholder, as the case may be, of the corporation so petitioning may appear before the commissioner and be heard with reference to said contract. If, upon such hearing being had, the commissioner is not satisfied that the interests of the members or policyholders, as the case may be, of such company are properly protected, or if he finds that any reasonable objection exists to such contract, he shall revoke the approval already given, and the said agreement of merger or consolidation shall thereupon become null and void. The commissioner shall have like power to revoke any approval of any such agreement of merger or consolidation if any officer, director, or employee of either corporation party to such agreement of merger or consolidation shall, after reasonable notice, fail or refuse to attend and testify at such hearing, or to produce any books or papers called for by said commissioner.

Formerly: Acts 1935, c.162, s.124; Acts 1941, c.115, s.6. As amended by P.L.252-1985, SEC.45.

 

IC 27-1-9-11Effect of merger or consolidation

     Sec. 11. When such merger or consolidation has been effected as provided in this chapter, the following apply:

(a) The several corporations parties to the agreement of merger or consolidation shall be a single corporation, which shall be:

(1) in case of a merger, the surviving corporation a party to the agreement of merger into which it has been agreed the other corporations parties to the agreement shall be merged, which surviving corporation shall survive the merger; or

(2) in case of a consolidation, the new corporation into which it has been agreed the corporations parties to the agreement of consolidation shall be consolidated.

(b) The separate existence of all of the corporations parties to the agreement of merger or consolidation, except the surviving corporation in the case of a merger, shall cease.

(c) Such single corporation shall have all of the rights, privileges, immunities, and powers and shall be subject to all of the duties and liabilities of a corporation organized under this article.

(d) Such single corporation shall thereupon and thereafter possess all the rights, privileges, immunities, powers, and franchises of a public as well as of a private nature of each of the corporations so merged or consolidated, and all property, real, personal, and mixed, and all debts due on whatever account, including subscriptions to shares of capital stock, and all other choses in action and all and every other interest, of or belonging to or due to each of the corporations so merged or consolidated shall be taken and deemed to be transferred to and vested in such single corporation without further act or deed, and the title to any real estate, or any interest therein, under the laws of this state vested in any of such corporations shall not revert or be in any way impaired by reason of such merger or consolidation.

(e) Such single corporation shall thenceforth be responsible and liable for all the liabilities and obligations of each of the corporations so merged or consolidated in the same manner and to the same extent as if such single corporation had itself incurred the same or contracted therefor; any claim existing or action or proceeding pending by or against any of such corporations may be prosecuted to judgment as if such merger or consolidation had not taken place, or such single corporation may be substituted in its place. Neither the rights of creditors nor any liens upon the property of any of such corporations shall be impaired by such merger or consolidation, but such liens shall be limited to the property upon which they were liens immediately prior to the time of such merger or consolidation, unless otherwise provided in the agreement of merger or consolidation.

(f) In case of a merger, the articles of incorporation of the surviving corporation shall be supplanted and superseded to the extent, if any, that any provision or provisions of such articles shall be restated in the agreement of merger as provided by section 3 of this chapter, and such articles of incorporation shall be deemed to be thereby and to that extent amended; and in case of a consolidation, the statements set forth in the agreement of consolidation as provided in section 4 of this chapter shall be deemed to be articles of incorporation of the new corporation formed by such consolidation.

Formerly: Acts 1935, c.162, s.125. As amended by P.L.252-1985, SEC.46.

 

IC 27-1-9-12Execution of articles of merger or consolidation by foreign corporations; approval by foreign regulatory authority; appointment of commissioner as attorney for service of process on foreign corporation

     Sec. 12. (a) In case of a merger or consolidation between a domestic and a foreign company, the articles of merger or consolidation shall be regarded as executed by the proper officers of said foreign company when such officers are duly authorized to execute same through such action on the part of the directors, shareholders, members, or policyholders of said foreign company as may be required by the laws of the state where the same is incorporated; and upon execution, said articles of merger or consolidation shall be submitted to the commissioner of insurance or other officer at the head of the insurance department of the state where such foreign company is incorporated. No such merger or consolidation shall take effect until it shall have been approved by the insurance official of the state where said foreign company is incorporated nor until a certificate of his approval has been filed in the office of the department of insurance of the state of Indiana. Such submission to and approval by the proper official of such other state shall not be required unless the same are required by the laws of such foreign state. The domestic company involved in such merger or consolidation shall not through anything contained in this section be relieved of any of the procedural requirements enumerated in the preceding sections of this article.

     (b) No merger or consolidation between a domestic and a foreign company shall take effect, unless and until the surviving or new company, if such is a foreign company, shall file with the department a power of attorney appointing the commissioner and his successors in office, the attorney for service of said foreign company, upon whom all lawful process against said company may be served. Said power of attorney shall be irrevocable so long as said foreign company has outstanding in this state any contract of insurance, or other obligation whatsoever, and shall by its terms so provide. Service upon the commissioner shall be deemed sufficient service upon the company.

Formerly: Acts 1935, c.162, s.127; Acts 1941, c.115, s.8. As amended by P.L.260-1983, SEC.3.

 

IC 27-1-9-13Transfer of deposit covering policies assumed by foreign corporation to foreign state

     Sec. 13. If the state in which a foreign, new, surviving or accepting company, is incorporated or organized, shall require the maintenance with any official of such state of a deposit of the legal reserve on the policies so assumed and such foreign company shall maintain such deposit, then the commissioner is authorized to deliver to the proper custodian of such funds in the state in which the said foreign company is incorporated or organized, such deposits as he may hold pertaining to the policies so assumed by the new, surviving or accepting company. If a surviving, new or accepting domestic company assumes all or a substantial number of the risks of a foreign company incorporated in a state which requires the maintenance with a state official of a deposit of the legal reserve on policies so assumed, then the commissioner is hereby authorized to receive from such official such deposits as he may hold pertaining to the policies so assumed. Such surviving, new or accepting company shall, within sixty (60) days after the transfer of such deposit, notify the holder of every policy secured by such transferred deposit that the transfer has been made; and the president and secretary of such company shall, within thirty (30) days thereafter, file with the commissioner an affidavit of the fact that due notification to policyholders, as provided for herein, has been given. The amount of deposit to be maintained from time to time for each policy on which liability is assumed shall be at least equal to the amount which would be required in the state where such deposit has theretofore been maintained.

Formerly: Acts 1935, c.162, s.128.

 

IC 27-1-9-14Statement of compensation to persons securing, aiding, promoting, or assisting in merger, consolidation, or reinsurance

     Sec. 14. Whenever articles of merger, consolidation or reinsurance are filed with the department, there shall also be filed a certificate, executed by the president or a vice-president and attested by the secretary or an assistant secretary, and under the corporate seal of each of the corporations parties to the agreement of merger, consolidation and reinsurance, verified by the affidavits of all such officers, setting forth all fees, commissions or other compensations, or valuable considerations paid or to be paid, directly or indirectly, to any person or persons, firm or firms, limited liability company or limited liability companies, corporation or corporations whomsoever, which in any manner secured, aided, promoted or assisted in any such merger, consolidation or reinsurance.

Formerly: Acts 1935, c.162, s.129. As amended by P.L.8-1993, SEC.412.

 

IC 27-1-9-15Undisclosed compensation; violations

     Sec. 15. (a) No director, officer, or member of any such corporation or corporations, except as fully expressed in the affidavits described in section 14 of this chapter, may receive any money or other property for aiding, promoting, or assisting in such a merger, consolidation, or reinsurance.

     (b) A person who violates this section commits a Class A misdemeanor.

Formerly: Acts 1935, c.162, s.130. As amended by Acts 1978, P.L.2, SEC.2709.

 

IC 27-1-10Chapter 10. Voluntary Dissolution
           27-1-10-1Surrender of certificate of incorporation; time; procedure
           27-1-10-2Submission of question of dissolution; vote of shareholders, members, or policyholders
           27-1-10-3Reinsurance of noncancellable policies
           27-1-10-4Publication of notice of dissolution; payment of debts and liabilities; distribution of remaining assets; disposal of unclaimed distributive shares
           27-1-10-5Articles of dissolution; contents; executions; approval
           27-1-10-6Articles of dissolution; duties of secretary of state
           27-1-10-7Articles of dissolution; filing certified copies; surrender of certificate of authority; recording
           27-1-10-8Final dissolution; pending liabilities

 

IC 27-1-10-1Surrender of certificate of incorporation; time; procedure

     Sec. 1. With the approval in writing of the department, the incorporators named in the articles of incorporation of any corporation organized under the provisions of this article may surrender the certificate of incorporation and all of the corporate rights and franchises of the corporation at any time within one (1) year from the date of the issuance of the certificate and before the issuance of any of the shares of capital stock of the corporation and before the beginning by it of the business for which it was formed, by presenting to the secretary of state at his office, accompanied by the fees prescribed by law, a certificate in triplicate, signed and verified by the joint and several oaths of a majority of the incorporators in the form prescribed by the secretary of state, showing that no shares of the capital stock of the corporation have been issued and that the amount, if any, actually paid in on the shares, less any part thereof disbursed for necessary expenses, had been returned to those entitled thereto, that such business has not been begun, that no debts remain unpaid, and that they surrender all rights and franchises.

Formerly: Acts 1935, c.162, s.131. As amended by P.L.252-1985, SEC.47.

 

IC 27-1-10-2Submission of question of dissolution; vote of shareholders, members, or policyholders

     Sec. 2. Any corporation organized under the provisions of this article may liquidate its affairs and dissolve in the following manner:

     (1) Whenever the board of directors by a resolution adopted by a majority vote of the members of such board shall deem it advisable to submit the question of dissolution, or whenever the board of directors shall be required in writing by the holders of a majority of the outstanding shares of capital stock, if a stock company, or a majority of the members or policyholders, if other than a stock company, to submit the question of dissolution, the board of directors shall submit the question of dissolving the company to a vote of the shareholders, members, or policyholders of a company entitled to vote in respect thereof at such meeting thereof as may be designated in such request, or, in the absence of such request or of such designation, in such resolution, the designated meeting may be an annual meeting of shareholders, members or policyholders, entitled to vote in respect thereof. If the designated meeting is an annual meeting, notice of the submission of the question of dissolution shall be included in the notice of such annual meeting. If the designated meeting is a special meeting of the shareholders, members, or policyholders entitled to vote in respect thereof, such special meeting shall be called by the board of directors, and notice of such meeting shall be given at the time and in the manner as provided in IC 27-1-7-7.

     (2) The question of dissolving the corporation shall be submitted to a vote of the shareholders, members, or policyholders entitled to vote in respect thereof at the meeting designated as provided in this section, and the dissolution shall be authorized upon receiving the affirmative votes of the holders of two-thirds (2/3) of the outstanding shares entitled to vote in respect thereof, if a stock company, or not less than two-thirds (2/3) of the members or policyholders entitled to vote, if other than a stock company. The shareholders, members, or policyholders of a corporation entitled to vote in respect to dissolution of the corporation shall be the shareholders entitled to vote under IC 27-1-7-8 and the members or policyholders entitled to vote under IC 27-1-7-9.

Formerly: Acts 1935, c.162, s.132. As amended by P.L.252-1985, SEC.48.

 

IC 27-1-10-3Reinsurance of noncancellable policies

     Sec. 3. Nothing contained in this article shall authorize or be construed to authorize the dissolution of any life insurance company or health and accident insurance company having noncancellable policies in force, after the same shall have commenced business, unless and until all of its policies shall have been reinsured, to the satisfaction of the commissioner, in a solvent life insurance company or health and accident insurance company respectively.

Formerly: Acts 1935, c.162, s.133. As amended by P.L.252-1985, SEC.49.

 

IC 27-1-10-4Publication of notice of dissolution; payment of debts and liabilities; distribution of remaining assets; disposal of unclaimed distributive shares

     Sec. 4. Upon authorization of the dissolution, the board of directors shall then proceed to:

     (a) Cause a notice that the corporation is about to be dissolved to be published at least once in a newspaper of general circulation, printed and published in the English language, in the county in which the principal office of the corporation is located, and at least once in a newspaper of general circulation, printed and published in the English language in the city of Indianapolis, Marion County, Indiana, and to be mailed to each creditor of the corporation;

     (b) Collect all of the corporate assets;

     (c) Pay and discharge all of the corporate debts and liabilities; and

     (d) After the expiration of a period of thirty (30) days following the publication and mailing of said notice, distribute the remaining corporate assets and property among the shareholders, members or policyholders according to their respective interests.

     In case the holders of shares or policies are unknown or shall fail or refuse to accept their distributive shares in such property and assets, or are under any disability, or can not be found, after diligent inquiry or in case the ownership of any shares or policies is in dispute, the board of directors shall deposit the distributive portions of such shares of stock or policies with the clerk of the circuit court in the county in which the principal office is located for the use and benefit of those who may be lawfully entitled thereto, and such deposit shall have the same force and effect as if payment had been made directly to and accepted by the persons lawfully entitled thereto. Such distributive shares shall be paid over by such clerk to such shareholders or policyholders, respectively, or to the lawful owner of the shares or policies, the ownership of which has been in dispute, or to their respective legal representatives, upon satisfactory proof being made to such clerk of their respective rights thereto.

Formerly: Acts 1935, c.162, s.134.

 

IC 27-1-10-5Articles of dissolution; contents; executions; approval

     Sec. 5. The corporation shall then execute and file, in the manner provided in this chapter, articles of dissolution, setting forth the following:

(a) The name of the corporation.

(b) The place where its principal office is located.

(c) The date of the meeting of the shareholders, members, or policyholders at which the dissolution was authorized and a copy of the notice of such meeting.

(d) A copy of the resolution of the shareholders, members, or policyholders authorizing the dissolution.

(e) The manner of its adoption and the vote by which it was adopted.

(f) A copy of the notice published and mailed as provided in this chapter.

(g) The names and addresses of the then existing directors and officers of the corporation.

(h) A complete itemized list of all the corporate debts and liabilities of the corporation existing at the time of the adoption of such resolution and thereafter incurred, and the date and manner of payment of each such debt and liability.

(i) A complete itemized list of all the corporate assets and property distributed to its shareholders, members, or policyholders, the name of each such shareholder, member, or policyholder, the amount distributed to each, and the date of distribution.

The articles of dissolution shall be executed in triplicate originals, in the form prescribed by the department, and signed by the president or a vice president and the secretary or an assistant secretary of the corporation, and verified by the oaths of the officers signing the same, and shall be presented in triplicate originals to the department at its office accompanied by the proof of publication of the notice required by section 4 of this chapter. The department is hereby authorized, in its discretion, to approve or disapprove the articles of dissolution and proof of publication. If the department shall approve the articles of dissolution and proof of publication, it shall endorse its approval thereon as required in IC 27-1-6-8 and present the same to the attorney general of the state of Indiana for examination. In the event the attorney general approves the articles of dissolution and proof of publication he shall certify his approval thereon as required in IC 27-1-6-9 and return the same to the department when the articles of dissolution and proof of publication have been approved by the attorney general and returned to the department.

Formerly: Acts 1935, c.162, s.135. As amended by P.L.252-1985, SEC.50.

 

IC 27-1-10-6Articles of dissolution; duties of secretary of state

     Sec. 6. Then the department shall present the same to the secretary of state for the state of Indiana. If the secretary of state finds that the articles of dissolution and proof of publication conform to law he shall indorse his approval upon each of the triplicate copies of the articles, and the proof of publication, and when all fees have been paid as required by law, he shall file one (1) copy of the articles of dissolution and the proof of publication in his office and issue a certificate of dissolution to the corporation, and shall return the certificate of dissolution to the corporation together with the two (2) remaining copies of the articles of dissolution, bearing the indorsement of his approval, to the corporation or its representatives.

Formerly: Acts 1935, c.162, s.136.

 

IC 27-1-10-7Articles of dissolution; filing certified copies; surrender of certificate of authority; recording

     Sec. 7. (a) The corporation shall then file a certified copy of the articles of dissolution with the department, and present to the department its certificate of authority issued or renewed under IC 27-1-6-18 for cancellation. The department shall file the certified copy of the articles of dissolution and shall cancel the said certificate of authority and endorse the cancellation thereon, and return the cancelled certificate of authority to the corporation or its representatives.

     (b) The corporation shall then file for record with the county recorder of the county in which the articles of incorporation were or should have been recorded, as provided in IC 27-1-6-13, one (1) of the triplicate originals of the articles of dissolution bearing the endorsement of the approval of the secretary of state as provided for in section 6 of this chapter.

Formerly: Acts 1935, c.162, s.137. As amended by P.L.252-1985, SEC.51.

 

IC 27-1-10-8Final dissolution; pending liabilities

     Sec. 8. (a) Upon the issuance of the certificate of dissolution and the recording of the articles of dissolution, as provided in section 7 of this chapter, the corporation shall be dissolved and its existence shall cease.

     (b) The dissolution of any corporation in accordance with the provisions of this article shall not take away or impair any remedy against such corporation, its directors, officers, or shareholders, for any liability incurred by the corporation previous to its dissolution if suit is brought and service of process is had, as provided by the laws of this state, within two (2) years after the date of such dissolution.

Formerly: Acts 1935, c.162, s.138. As amended by P.L.252-1985, SEC.52.

 

IC 27-1-11Chapter 11. Reorganization of Existing Insurance Companies
           27-1-11-1Authority to reorganize; reorganization of mutual company as stock company unauthorized
           27-1-11-2Articles; approval by directors
           27-1-11-3Articles; submission to shareholders, members, or policyholders; vote required; eligibility to vote
           27-1-11-4Articles; execution; approval or disapproval by department
           27-1-11-5Articles; presentation to secretary of state; duties of secretary of state
           27-1-11-6Filing copy of articles; cancellation of certificate of authority; recording articles; exercise of new powers
           27-1-11-7Completion of reorganization; effect

 

IC 27-1-11-1Authority to reorganize; reorganization of mutual company as stock company unauthorized

     Sec. 1. Any stock company or mutual company organized before March 8, 1935, under any of the laws of this state may reorganize under the provisions of this article and thereafter avail itself of the rights, privileges, immunities, and franchises provided by this article by complying with the provisions of this chapter. Nothing in this chapter shall be construed or interpreted as permitting or authorizing the reorganization of a mutual company as a stock company.

Formerly: Acts 1935, c.162, s.139. As amended by P.L.252-1985, SEC.53.

 

IC 27-1-11-2Articles; approval by directors

     Sec. 2. The board of directors of such company desiring to reorganize under this article shall, by resolution adopted by a majority vote of the members of such board, approve the articles of reorganization setting forth:

(1) the name of the corporation;

(2) the location of its principal office;

(3) the date of its incorporation or organization;

(4) a designation of the statute under which it was organized;

(5) a declaration that it accepts all of the terms and provisions of this article; and

(6) a restatement of such provisions of its articles of incorporation or association as may be deemed desirable so long as the provisions restated would have been authorized by this article as provisions of original articles of incorporation for a corporation organized under this article.

Formerly: Acts 1935, c.162, s.140. As amended by P.L.252-1985, SEC.54.

 

IC 27-1-11-3Articles; submission to shareholders, members, or policyholders; vote required; eligibility to vote

     Sec. 3. (a) The resolution of the board of directors approving the articles of reorganization shall direct that the articles be submitted to a vote of the shareholders, members, or policyholders of such corporation entitled to vote in respect thereof, at a designated meeting thereof, which may be an annual meeting of shareholders, members, or policyholders or a special meeting of the shareholders, members, or policyholders, entitled to vote in respect thereof. If the designated meeting is an annual meeting, notice of the submission of the articles of reorganization shall be included in the notice of such annual meeting. If the designated meeting is a special meeting of the shareholders, members, or policyholders entitled to vote in respect thereof, such meeting shall be called by the resolution designating the meeting, and notice of such meeting shall be given at the time and in the manner as provided in IC 27-1-7-7.

     (b) The articles of reorganization so approved shall be submitted to a vote of the shareholders, members, or policyholders entitled to vote in respect thereof at the meeting directed by the resolution of the board of directors approving the articles, and shall be adopted upon receiving the affirmative vote of the holders of two-thirds (2/3) of the outstanding shares entitled to vote in respect thereof, if a stock company, or not less than two-thirds (2/3) of the members or policyholders present and voting at such meeting, if other than a stock company. The shareholders, members, or policyholders of a corporation entitled to vote in respect of the organization of such corporation shall be the shareholders entitled to vote under IC 27-1-7-8 and the members or policyholders entitled to vote under IC 27-1-7-9.

Formerly: Acts 1935, c.162, s.141. As amended by P.L.252-1985, SEC.55.

 

IC 27-1-11-4Articles; execution; approval or disapproval by department

     Sec. 4. (a) Upon the approval and adoption thereof, the articles of reorganization shall be filed in triplicate originals, in the form prescribed by the department, by the president or a vice president and the secretary or an assistant secretary of the corporation, and acknowledged and sworn to before a notary public by the officer signing the same and shall be presented in triplicate to the department at its office.

     (b) The department is hereby authorized, in its discretion, to approve or disapprove the articles of reorganization, and if the department shall approve the articles of reorganization it shall endorse its approval thereon as required in IC 27-1-6-8 and present the same to the secretary of state for the state of Indiana for his approval.

Formerly: Acts 1935, c.162, s.142. As amended by P.L.252-1985, SEC.56.

 

IC 27-1-11-5Articles; presentation to secretary of state; duties of secretary of state

     Sec. 5. Upon the presentation of the articles of reorganization, the secretary of state, if he finds they conform to law, shall indorse his approval on each of the triplicate copies of the articles, and when all fees have been paid as required by law, shall file one (1) copy of the articles in his office, issue a certificate of reorganization, and return two (2) copies of the articles of reorganization, bearing the indorsement of his approval, together with the certificate of reorganization to the corporation or its representatives.

Formerly: Acts 1935, c.162, s.143.

 

IC 27-1-11-6Filing copy of articles; cancellation of certificate of authority; recording articles; exercise of new powers

     Sec. 6. (a) The corporation shall then file a certified copy of the articles of reorganization with the department and present to the department its certificate of authority issued or renewed under IC 27-1-6-18 for cancellation. The department shall file the certified copy of articles of reorganization and shall cancel the said certificate of authority and endorse the cancellation thereon, and issue a new certificate of authority to the corporation under the provisions of IC 27-1-6-18.

     (b) The corporation shall then file for record with the county recorder of the county in which the principal office of the corporation is located, one (1) of the triplicate copies of the articles of reorganization bearing the endorsement of the approval of the secretary of state as provided for in section 5 of this chapter.

     (c) A corporation which is reorganized in accordance with the provisions of this chapter shall not exercise any new power, right, or authority conferred by, or take any action pursuant to, such reorganization until subsections (a) and (b) have been complied with. If a corporation exercises any such new power, right, or authority or takes any such action in violation of this section, the officers and directors who participated therein shall be severally liable for any debts or liabilities of the corporation incurred thereby or arising therefrom.

Formerly: Acts 1935, c.162, s.144. As amended by P.L.252-1985, SEC.57.

 

IC 27-1-11-7Completion of reorganization; effect

     Sec. 7. Upon the issuance of the certificate of reorganization by the secretary of state, the filing for record of the articles with the department and the county recorder as provided in section 6 of this chapter, and the issuance of the new certificate of authority provided for in section 6 of this chapter:

(1) the reorganization shall become effective;

(2) the corporation shall be entitled to all of the rights, privileges, immunities, powers, and franchises and be subject to all of the penalties, liabilities, and restrictions by the provisions of this article granted to or imposed upon corporations organized under this article; and

(3) the articles of incorporation or organization shall be deemed to be amended to the extent, if any, that any provision or provisions of such articles shall be restated in the articles of reorganization as provided by section 2 of this chapter.

Formerly: Acts 1935, c.162, s.145. As amended by P.L.252-1985, SEC.58.

 

IC 27-1-12Chapter 12. Life Insurance Company Powers and Policy Requirements
           27-1-12-0.1Application of certain amendments to chapter
           27-1-12-1Particular rights, privileges, and powers
           27-1-12-2Investments; categories, conditions, limitations, and standards
           27-1-12-2.1Repealed
           27-1-12-2.2Derivative transactions
           27-1-12-2.4Participation in certain investment pools; requirements for pooling agreements
           27-1-12-2.5Investments; assets of certain segregated investment accounts; limitations and exceptions
           27-1-12-3Real estate
           27-1-12-3.5Intangible assets attributable to investment in subsidiary; exceptions
           27-1-12-4Valuation of bonds and securities
           27-1-12-5Required provisions of policies between July 1, 1935, and transition date or January 1, 1948
           27-1-12-6Required provisions of policies after transition date or January 1, 1948
           27-1-12-7Required provisions relating to defaulting or surrendering policyholder
           27-1-12-8Prohibited provisions
           27-1-12-9Repealed
           27-1-12-10Repealed
           27-1-12-10.1Repealed
           27-1-12-10.5Rules for minimum standards for establishment of reserves
           27-1-12-11Deposit of assets to cover reserve valuation and liabilities; additional deposits; foreign deposits; continuation of deposits under repealed or superseded laws
           27-1-12-12Transition period; selection of date; effect
           27-1-12-13Filing form of policy with department; objections; effect on right to issue
           27-1-12-14Designation of beneficiary; change of beneficiary; eligible beneficiaries; exemption of policy proceeds from claims of creditors
           27-1-12-15Competency of certain minors to contract for insurance and receive payments
           27-1-12-16Proceeds of life insurance; definition; payment to trustees
           27-1-12-17Authority of corporation to insure life of director, officers, agent, or employee; consent to change of beneficiary
           27-1-12-17.1Acquisition of insurable interest in and policy on life of employee
           27-1-12-18Contract to extend time for premium payments
           27-1-12-19Ascertainment of indebtedness due upon policy or premium loans; interest
           27-1-12-20Premium deposits; maximum; inclusion in cash surrender value; disposition; withdrawal
           27-1-12-21Power to hold proceeds under trust or other agreement with policyholder
           27-1-12-22Impairment of assets or capital; notice of time for restoration; suspension of right to issue new policies
           27-1-12-23Procedure for converting domestic stock life insurance company into mutual life insurance company
           27-1-12-24Offering stock or certificates as inducement for purchase of insurance or annuity; revocation of authority
           27-1-12-25Misrepresentation of policy terms or benefits; inducing policyholder to lapse, forfeit, or surrender insurance
           27-1-12-26Fraudulent representations; offense
           27-1-12-27Repealed
           27-1-12-28Repealed
           27-1-12-29Group life insurance; exemption of proceeds from legal process
           27-1-12-30Group life insurance; assignment of incidents of ownership
           27-1-12-31Authority to issue life or endowment insurance upon group plan; special premium rates; valuation of policies; segregation
           27-1-12-32Financial qualifications of companies issuing certain contracts
           27-1-12-33Variable life insurance policies; contents; regulation
           27-1-12-34Repealed
           27-1-12-34.1Wholesale, franchise, and employee term life insurance; issuance or delivery; requirements
           27-1-12-35Life insurance proceeds; payment; time limit; liability for interest
           27-1-12-36Repealed
           27-1-12-37Group life insurance; eligible policyholders; regulations
           27-1-12-38Group life insurance; requirements for issuance of policy to certain groups
           27-1-12-39Direct response solicitations; notice of payment of compensation
           27-1-12-40Group life insurance; premiums; spouse or dependent child coverage
           27-1-12-41Group life insurance; required provisions
           27-1-12-42Group life insurance; conversion rights; notice; time to exercise rights
           27-1-12-43Life insurance provision allowing for right to return policy
           27-1-12-44Stranger originated life insurance allegation; lack of insurable interest
           27-1-12-45Execution of POST form does not affect life insurance; prohibition on consideration of POST form in determining life insurance premiums
           27-1-12-46Policy or certificate designated for purchase of funeral services or merchandise; representations by issuer; required disclosures; violations

 

IC 27-1-12-0.1Application of certain amendments to chapter

     Sec. 0.1. The addition of sections 37, 38, 39, 40, 41, and 42 of this chapter by P.L.254-1985 applies to insurance policies delivered in Indiana after December 31, 1985.

As added by P.L.220-2011, SEC.421.

 

IC 27-1-12-1Particular rights, privileges, and powers

     Sec. 1. In addition to the general rights, privileges, and powers conferred by IC 27-1-5 through IC 27-1-13 and IC 27-11, and subject to the limitations and restrictions contained in this article and in the articles of incorporation, every life insurance company shall possess and may exercise the rights, privileges, and powers enumerated in this chapter and IC 27-1-12.8.

Formerly: Acts 1935, c.162, s.146. As amended by P.L.252-1985, SEC.59; P.L.3-1990, SEC.96; P.L.276-2013, SEC.2.

 

IC 27-1-12-2Investments; categories, conditions, limitations, and standards

     Sec. 2. (a) The following definitions apply to this section:

(1) "Acceptable collateral" means, as to securities lending transactions:

(A) cash;

(B) cash equivalents;

(C) letters of credit; and

(D) direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

(2) "Acceptable collateral" means, as to lending foreign securities, sovereign debt that is rated:

(A) A- or higher by Standard & Poor's Corporation;

(B) A3 or higher by Moody's Investors Service, Inc.;

(C) A- or higher by Duff and Phelps, Inc.; or

(D) 1 by the Securities Valuation Office.

(3) "Acceptable collateral" means, as to repurchase transactions:

(A) cash;

(B) cash equivalents; and

(C) direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

(4) "Acceptable collateral" means, as to reverse repurchase transactions:

(A) cash; and

(B) cash equivalents.

(5) "Admitted assets" means assets permitted to be reported as admitted assets on the statutory financial statement of the life insurance company most recently required to be filed with the commissioner.

(6) "Business entity" means:

(A) a sole proprietorship;

(B) a corporation;

(C) a limited liability company;

(D) an association;

(E) a partnership;

(F) a joint stock company;

(G) a joint venture;

(H) a mutual fund;

(I) a trust;

(J) a joint tenancy; or

(K) other, similar form of business organization;

whether organized for-profit or not-for-profit.

(7) "Cash" means any of the following:

(A) United States denominated paper currency and coins.

(B) Negotiable money orders and checks.

(C) Funds held in any time or demand deposit in any depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.

(8) "Cash equivalent" means any of the following:

(A) A certificate of deposit issued by a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.

(B) A banker's acceptance issued by a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.

(C) A government money market mutual fund.

(D) A class one money market mutual fund.

(9) "Class one money market mutual fund" means a money market mutual fund that at all times qualifies for investment pursuant to the "Purposes and Procedures of the Securities Valuation Office" or any successor publication either using the bond class one reserve factor or because it is exempt from asset valuation reserve requirements.

(10) "Dollar roll transaction" means two (2) simultaneous transactions that have settlement dates not more than ninety-six (96) days apart and that meet the following description:

(A) In one (1) transaction, a life insurance company sells to a business entity one (1) or both of the following:

(i) Asset-backed securities that are issued, assumed, or guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation or the successor of an entity referred to in this item.

(ii) Other asset-backed securities referred to in Section 106 of Title I of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1), as amended.

(B) In the other transaction, the life insurance company is obligated to purchase from the same business entity securities that are substantially similar to the securities sold under clause (A).

(11) "Domestic jurisdiction" means:

(A) the United States;

(B) any state, territory, or possession of the United States;

(C) the District of Columbia;

(D) Canada; or

(E) any province of Canada.

(12) "Earnings available for fixed charges" means income, after deducting:

(A) operating and maintenance expenses other than expenses that are fixed charges;

(B) taxes other than federal and state income taxes;

(C) depreciation; and

(D) depletion;

but excluding extraordinary nonrecurring items of income or expense appearing in the regular financial statements of a business entity.

(13) "Fixed charges" includes:

(A) interest on funded and unfunded debt;

(B) amortization of debt discount; and

(C) rentals for leased property.

(14) "Foreign currency" means a currency of a foreign jurisdiction.

(15) "Foreign jurisdiction" means a jurisdiction other than a domestic jurisdiction.

(16) "Government money market mutual fund" means a money market mutual fund that at all times:

(A) invests only in:

(i) obligations that are issued, guaranteed, or insured by the United States; or

(ii) collateralized repurchase agreements composed of obligations that are issued, guaranteed, or insured by the United States; and

(B) qualifies for investment without a reserve pursuant to the "Purposes and Procedures of the Securities Valuation Office" or any successor publication.

(17) "Guaranteed or insured," when used in reference to an obligation acquired under this section, means that the guarantor or insurer has agreed to:

(A) perform or insure the obligation of the obligor or purchase the obligation; or

(B) be unconditionally obligated, until the obligation is repaid, to maintain in the obligor a minimum net worth, fixed charge coverage, stockholders' equity, or sufficient liquidity to enable the obligor to pay the obligation in full.

(18) "Investment company" means:

(A) an investment company as defined in Section 3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended; or

(B) a person described in Section 3(c) of the Investment Company Act of 1940.

(19) "Investment company series" means an investment portfolio of an investment company that is organized as a series company to which assets of the investment company have been specifically allocated.

(20) "Letter of credit" means a clean, irrevocable, and unconditional letter of credit that is:

(A) issued or confirmed by; and

(B) payable and presentable at;

a financial institution on the list of financial institutions meeting the standards for issuing letters of credit under the "Purposes and Procedures of the Securities Valuation Office" or any successor publication. To constitute acceptable collateral for the purposes of paragraph 29 of subsection (b), a letter of credit must have an expiration date beyond the term of the subject transaction.

(21) "Market value" means the following:

(A) As to cash, the amount of the cash.

(B) As to cash equivalents, the amount of the cash equivalents.

(C) As to letters of credit, the amount of the letters of credit.

(D) As to a security as of any date:

(i) the price for the security on that date obtained from a generally recognized source, or the most recent quotation from such a source; or

(ii) if no generally recognized source exists, the price for the security as determined in good faith by the parties to a transaction;

plus accrued but unpaid income on the security to the extent not included in the price as of that date.

(22) "Money market mutual fund" means a mutual fund that meets the conditions of 17 CFR 270.2a-7, under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).

(23) "Multilateral development bank" means an international development organization of which the United States is a member.

(24) "Mutual fund" means:

(A) an investment company; or

(B) in the case of an investment company that is organized as a series company, an investment company series;

that is registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).

(25) "Obligation" means any of the following:

(A) A bond.

(B) A note.

(C) A debenture.

(D) Any other form of evidence of debt.

(26) "Person" means:

(A) an individual;

(B) a business entity;

(C) a multilateral development bank; or

(D) a government or quasi-governmental body, such as a political subdivision or a government sponsored enterprise.

(27) "Repurchase transaction" means a transaction in which a life insurance company purchases securities from a business entity that is obligated to repurchase the purchased securities or equivalent securities from the life insurance company at a specified price, either within a specified period of time or upon demand.

(28) "Reverse repurchase transaction" means a transaction in which a life insurance company sells securities to a business entity and is obligated to repurchase the sold securities or equivalent securities from the business entity at a specified price, either within a specified period of time or upon demand.

(29) "Securities lending transaction" means a transaction in which securities are loaned by a life insurance company to a business entity that is obligated to return the loaned securities or equivalent securities to the life insurance company, either within a specified period of time or upon demand.

(30) "Securities Valuation Office" refers to:

(A) the Securities Valuation Office of the National Association of Insurance Commissioners; or

(B) any successor of the office referred to in Clause (A) established by the National Association of Insurance Commissioners.

(31) "Series company" means an investment company that is organized as a series company (as defined in Rule 18f-2(a) adopted under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended).

(32) "Supported", when used in reference to an obligation, by whomever issued or made, means that:

(A) repayment of the obligation by:

(i) a domestic jurisdiction or by an administration, agency, authority, or instrumentality of a domestic jurisdiction; or

(ii) a business entity;

as the case may be, is secured by real or personal property of value at least equal to the principal amount of the obligation by means of mortgage, assignment of vendor's interest in one (1) or more conditional sales contracts, other title retention device, or by means of other security interest in such property for the benefit of the holder of the obligation; and

(B) the:

(i) domestic jurisdiction or administration, agency, authority, or instrumentality of the domestic jurisdiction; or

(ii) business entity;

as the case may be, has entered into a firm agreement to rent or use the property pursuant to which it is obligated to pay money as rental or for the use of such property in amounts and at times which shall be sufficient, after provision for taxes upon and other expenses of use of the property, to repay in full the obligation with interest and when such agreement and the money obligated to be paid thereunder are assigned, pledged, or secured for the benefit of the holder of the obligation. However, where the security for the repayment of the obligation consists of a first mortgage lien or deed of trust on a fee interest in real property, the obligation may provide for the amortization, during the initial, fixed period of the lease or contract, of less than one hundred percent (100%) of the obligation if there is pledged or assigned, as additional security for the obligation, sufficient rentals payable under the lease, or of contract payments, to secure the amortized obligation payments required during the initial, fixed period of the lease or contract, including but not limited to payments of principal, interest, and taxes other than the income taxes of the borrower, and if there is to be left unamortized at the end of such period an amount not greater than the original appraised value of the land only, exclusive of all improvements, as prescribed by law.

     (b) Investments of domestic life insurance companies at the time they are made shall conform to the following categories, conditions, limitations, and standards:

     1. Obligations of a domestic jurisdiction or of any administration, agency, authority, or instrumentality of a domestic jurisdiction.

     2. Obligations guaranteed, supported, or insured as to principal and interest by a domestic jurisdiction or by an administration, agency, authority, or instrumentality of a domestic jurisdiction.

     3. Obligations issued under or pursuant to the Farm Credit Act of 1971 (12 U.S.C. 2001 through 2279aa-14) as in effect on December 31, 1990, or the Federal Home Loan Bank Act (12 U.S.C. 1421 through 1449) as in effect on December 31, 1990, interest bearing obligations of the FSLIC Resolution Fund or shares of any institution whose deposits are insured by the Federal Deposit Insurance Corporation to the extent that such shares are insured, obligations issued or guaranteed by a multilateral development bank, and obligations issued or guaranteed by the African Development Bank.

     4. Obligations issued, guaranteed, or insured as to principal and interest by a city, county, drainage district, road district, school district, tax district, town, township, village, or other civil administration, agency, authority, instrumentality, or subdivision of a domestic jurisdiction, providing such obligations are authorized by law and are:

(a) direct and general obligations of the issuing, guaranteeing or insuring governmental unit, administration, agency, authority, district, subdivision, or instrumentality;

(b) payable from designated revenues pledged to the payment of the principal and interest thereof; or

(c) improvement bonds or other obligations constituting a first lien, except for tax liens, against all of the real estate within the improvement district or on that part of such real estate not discharged from such lien through payment of the assessment. The area to which such improvement bonds or other obligations relate shall be situated within the limits of a town or city and at least fifty percent (50%) of the properties within such area shall be improved with business buildings or residences.

     5. Loans evidenced by obligations secured by first mortgage liens on otherwise unencumbered real estate or otherwise unencumbered leaseholds having at least fifty (50) years of unexpired term, such real estate, or leaseholds to be located in a domestic jurisdiction. Such loans shall not exceed eighty percent (80%) of the fair value of the security determined in a manner satisfactory to the department, except that the percentage stated may be exceeded if and to the extent such excess is guaranteed or insured by:

(a) a domestic jurisdiction or by an administration, agency, authority, or instrumentality of any domestic jurisdiction; or

(b) a private mortgage insurance corporation approved by the department.

If improvements constitute a part of the value of the real estate or leaseholds, such improvements shall be insured against fire for the benefit of the mortgagee in an amount not less than the difference between the value of the land and the unpaid balance of the loan.

For the purpose of this section, real estate or a leasehold shall not be deemed to be encumbered by reason of the existence in relation thereto of:

(1) liens inferior to the lien securing the loan made by the life insurance company;

(2) taxes or assessment liens not delinquent;

(3) instruments creating or reserving mineral, oil, water or timber rights, rights-of-way, common or joint driveways, sewers, walls, or utility connections;

(4) building restrictions or other restrictive covenants; or

(5) an unassigned lease reserving rents or profits to the owner.

A loan that is authorized by this paragraph remains qualified under this paragraph notwithstanding any refinancing, modification, or extension of the loan. Investments authorized by this paragraph shall not in the aggregate exceed forty-five percent (45%) of the life insurance company's admitted assets.

     6. Loans evidenced by obligations guaranteed or insured, but only to the extent guaranteed or insured, by a domestic jurisdiction or by any agency, administration, authority, or instrumentality of any domestic jurisdiction, and secured by second or subsequent mortgages or deeds of trust on real estate or leaseholds, provided the terms of the leasehold mortgages or deeds of trust shall not exceed four-fifths (4/5) of the unexpired lease term, including enforceable renewable options remaining at the time of the loan.

     7. Real estate contracts involving otherwise unencumbered real estate situated in a domestic jurisdiction, to be secured by the title to such real estate, which shall be transferred to the life insurance company or to a trustee or nominee of its choosing. For statement and deposit purposes, the value of a contract acquired pursuant to this paragraph shall be whichever of the following amounts is the least:

(a) eighty percent (80%) of the contract price of the real estate;

(b) eighty percent (80%) of the fair value of the real estate at the time the contract is purchased, such value to be determined in a manner satisfactory to the department; or

(c) the amount due under the contract.

For the purpose of this paragraph, real estate shall not be deemed encumbered by reason of the existence in relation thereto of: (1) taxes or assessment liens not delinquent; (2) instruments creating or reserving mineral, oil, water or timber rights, rights-of-way, common or joint driveways, sewers, walls or utility connections; (3) building restrictions or other restrictive covenants; or (4) an unassigned lease reserving rents or profits to the owner. Fire insurance upon improvements constituting a part of the real estate described in the contract shall be maintained in an amount at least equal to the unpaid balance due under the contract or the fair value of improvements, whichever is the lesser.

     8. Improved or unimproved real property, whether encumbered or unencumbered, or any interest therein, held directly or evidenced by joint venture interests, general or limited partnership interests, trust certificates, or any other instruments, and acquired by the life insurance company as an investment, which real property, if unimproved, is developed within five (5) years. Real property acquired for investment under this paragraph, whether leased or intended to be developed for commercial or residential purposes or otherwise lawfully held, is subject to the following conditions and limitations:

(a) The real estate shall be located in a domestic jurisdiction.

(b) The admitted assets of the life insurance company must exceed twenty-five million dollars ($25,000,000).

(c) The life insurance company shall have the right to expend from time to time whatever amount or amounts may be necessary to conform the real estate to the needs and purposes of the lessee and the amount so expended shall be added to and become a part of the investment in such real estate.

(d) The value for statement and deposit purposes of an investment under this paragraph shall be reduced annually by amortization of the costs of improvement and development, less land costs, over the expected life of the property, which value and amortization shall for statement and deposit purposes be determined in a manner satisfactory to the commissioner. In determining such value with respect to the calendar years in which an investment begins or ends with respect to a point in time other than the beginning or end of a calendar year, the amortization provided above shall be made on a proportional basis.

(e) Fire insurance shall be maintained in an amount at least equal to the insurable value of the improvements or the difference between the value of the land and the value at which such real estate is carried for statement and deposit purposes, whichever amount is smaller.

(f) Real estate acquired in any of the manners described and sanctioned under section 3 of this chapter, or otherwise lawfully held, except paragraph 5 of that section which specifically relates to the acquisition of real estate under this paragraph, shall not be affected in any respect by this paragraph unless such real estate at or subsequent to its acquisition fulfills the conditions and limitations of this paragraph, and is declared by the life insurance company in a writing filed with the department to be an investment under this paragraph. The value of real estate acquired under section 3 of this chapter, or otherwise lawfully held, and invested under this paragraph shall be initially that at which it was carried for statement and deposit purposes under that section.

(g) Neither the cost of each parcel of improved real property nor the aggregate cost of all unimproved real property acquired under the authority of this paragraph may exceed two percent (2%) of the life insurance company's admitted assets. For purposes of this paragraph, "unimproved real property" means land containing no structures intended for commercial, industrial, or residential occupancy, and "improved real property" consists of all land containing any such structure. When applying the limitations of subparagraph (d) of this paragraph, unimproved real property becomes improved real property as soon as construction of any commercial, industrial, or residential structure is so completed as to be capable of producing income. In the event the real property is mortgaged with recourse to the life insurance company or the life insurance company commences a plan of construction upon real property at its own expense or guarantees payment of borrowed funds to be used for such construction, the total project cost of the real property will be used in applying the two percent (2%) test. Further, no more than ten percent (10%) of the life insurance company's admitted assets may be invested in all property, measured by the property value for statement and deposit purposes as defined in this paragraph, held under this paragraph at the same time.

     9. Deposits of cash in a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation, or certificates of deposit issued by a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.

     10. Bank and bankers' acceptances and other bills of exchange of kinds and maturities eligible for purchase or rediscount by federal reserve banks.

     11. Obligations that are issued, guaranteed, assumed, or supported by a business entity organized under the laws of a domestic jurisdiction and that are rated:

(a) BBB- or higher by Standard & Poor's Corporation (or A-2 or higher in the case of commercial paper);

(b) Baa 3 or higher by Moody's Investors Service, Inc. (or P-2 or higher in the case of commercial paper);

(c) BBB- or higher by Duff and Phelps, Inc. (or D-2 or higher in the case of commercial paper); or

(d) 1 or 2 by the Securities Valuation Office.

     Investments may also be made under this paragraph in obligations that have not received a rating if the earnings available for fixed charges of the business entity for the period of its five (5) fiscal years next preceding the date of purchase shall have averaged per year not less than one and one-half (1 1/2) times its average annual fixed charges applicable to such period and if during either of the last two (2) years of such period such earnings available for fixed charges shall have been not less than one and one-half (1 1/2) times its fixed charges for such year. However, if the business entity is a finance company or other lending institution at least eighty percent (80%) of the assets of which are cash and receivables representing loans or discounts made or purchased by it, the multiple shall be one and one-quarter (1 1/4) instead of one and one-half (1 1/2).

     11.(A) Obligations issued, guaranteed, or assumed by a business entity organized under the laws of a domestic jurisdiction, which obligations have not received a rating or, if rated, have not received a rating that would qualify the obligations for investment under paragraph 11 of this section. Investments authorized by this paragraph may not exceed ten percent (10%) of the life insurance company's admitted assets.

     12. Preferred stock of, or common or preferred stock guaranteed as to dividends by, any corporation organized under the laws of a domestic jurisdiction, which over the period of the seven (7) fiscal years immediately preceding the date of purchase earned an average amount per annum at least equal to five percent (5%) of the par value of its common and preferred stock (or, in the case of stocks having no par value, of its issued or stated value) outstanding at date of purchase, or which over such period earned an average amount per annum at least equal to two (2) times the total of its annual interest charges, preferred dividends and dividends guaranteed by it, determined with reference to the date of purchase. No investment shall be made under this paragraph in a stock upon which any dividend is in arrears or has been in arrears for ninety (90) days within the immediately preceding five (5) year period.

     13. Common stock of any solvent corporation organized under the laws of a domestic jurisdiction which over the seven (7) fiscal years immediately preceding purchase earned an average amount per annum at least equal to six percent (6%) of the par value of its capital stock (or, in the case of stock having no par value, of the issued or stated value of such stock) outstanding at date of purchase, but the conditions and limitations of this paragraph shall not apply to the special area of investment to which paragraph 23 of this section pertains.

     13.(A) Stock or shares of any mutual fund that:

(a) has been in existence for a period of at least five (5) years immediately preceding the date of purchase, has assets of not less than twenty-five million dollars ($25,000,000) at the date of purchase, and invests substantially all of its assets in investments permitted under this section; or

(b) is a class one money market mutual fund or a class one bond mutual fund.

Investments authorized by this paragraph 13(A) in mutual funds having the same or affiliated investment advisers shall not at any one (1) time exceed in the aggregate ten percent (10%) of the life insurance company's admitted assets. The limitations contained in paragraph 22 of this subsection apply to investments in the types of mutual funds described in subparagraph (a). For the purposes of this paragraph, "class one bond mutual fund" means a mutual fund that at all times qualifies for investment using the bond class one reserve factor under the "Purposes and Procedures of the Securities Valuation Office" or any successor publication.

     The aggregate amount of investments under this paragraph may be limited by the commissioner if the commissioner finds that investments under this paragraph may render the operation of the life insurance company hazardous to the company's policyholders or creditors or to the general public.

     14. Loans upon the pledge of any of the investments described in this section other than real estate and those qualifying solely under paragraph 20 of this subsection, but the amount of such a loan shall not exceed seventy-five percent (75%) of the value of the investment pledged.

     15. Real estate acquired or otherwise lawfully held under the provisions of IC 27-1, except under paragraph 7 or 8 of this subsection, which real estate as an investment shall also include the value of improvements or betterments made thereon subsequent to its acquisition. The value of such real estate for deposit and statement purposes is to be determined in a manner satisfactory to the department.

     15.(A) Tangible personal property, equipment trust obligations, or other instruments evidencing an ownership interest or other interest in tangible personal property when the life insurance company purchasing such property has admitted assets in excess of twenty-five million dollars ($25,000,000), and where there is a right to receive determined portions of rental, purchase, or other fixed obligatory payments for the use of such personal property from a corporation whose obligations would be eligible for investment under the provisions of paragraph 11 of this subsection, provided that the aggregate of such payments together with the estimated salvage value of such property at the end of its minimum useful life, to be determined in a manner acceptable to the insurance commissioner, and the estimated tax benefits to the insurer resulting from ownership of such property, is adequate to return the cost of the investment in such property, and provided further, that each net investment in tangible personal property for which any single private corporation is obligated to pay rental, purchase, or other obligatory payments thereon does not exceed one-half of one percent (1/2%) of the life insurance company's admitted assets, and the aggregate net investments made under the provisions of this paragraph do not exceed five percent (5%) of the life insurance company's admitted assets.

     16. Loans to policyholders of the life insurance company in amounts not exceeding in any case the reserve value of the policy at the time the loan is made.

     17. A life insurance company doing business in a foreign jurisdiction may, if permitted or required by the laws of such jurisdiction, invest funds equal to its obligations in such jurisdiction in investments legal for life insurance companies domiciled in such jurisdiction or doing business therein as alien companies.

     17.(A) Investments in (i) obligations issued, guaranteed, assumed, or supported by a foreign jurisdiction or by a business entity organized under the laws of a foreign jurisdiction and (ii) preferred stock and common stock issued by any such business entity, if the obligations of such foreign jurisdiction or business entity, as appropriate, are rated:

(a) BBB- or higher by Standard & Poor's Corporation (or A-2 or higher in the case of commercial paper);

(b) Baa 3 or higher by Moody's Investors Service, Inc. (or P-2 or higher in the case of commercial paper);

(c) BBB- or higher by Duff and Phelps, Inc. (or D-2 or higher in the case of commercial paper); or

(d) 1 or 2 by the Securities Valuation Office.

If the obligations issued by a business entity organized under the laws of a foreign jurisdiction have not received a rating, investments may nevertheless be made under this paragraph in such obligations and in the preferred and common stock of the business entity if the earnings available for fixed charges of the business entity for a period of five (5) fiscal years preceding the date of purchase have averaged at least three (3) times its average fixed charges applicable to such period, and if during either of the last two (2) years of such period, the earnings available for fixed charges were at least three (3) times its fixed charges for such year. Investments authorized by this paragraph in a single foreign jurisdiction shall not exceed ten percent (10%) of the life insurance company's admitted assets. Subject to section 2.2(g) of this chapter, investments authorized by this paragraph denominated in foreign currencies shall not in the aggregate exceed ten percent (10%) of a life insurance company's admitted assets, and investments in any one (1) foreign currency shall not exceed five percent (5%) of the life insurance company's admitted assets. Investments authorized by this paragraph and paragraph 17(B) shall not in the aggregate exceed twenty percent (20%) of the life insurance company's admitted assets. This paragraph in no way limits or restricts investments which are otherwise specifically eligible for deposit under this section.

     17.(B) Investments in:

(a) obligations issued, guaranteed, or assumed by a foreign jurisdiction or by a business entity organized under the laws of a foreign jurisdiction; and

(b) preferred stock and common stock issued by a business entity organized under the laws of a foreign jurisdiction;

which investments are not eligible for investment under paragraph 17.(A).

     Investments authorized by this paragraph 17(B) shall not in the aggregate exceed five percent (5%) of the life insurance company's admitted assets. Subject to section 2.2(g) of this chapter, if investments authorized by this paragraph 17(B) are denominated in a foreign currency, the investments shall not, as to such currency, exceed two percent (2%) of the life insurance company's admitted assets. Investments authorized by this paragraph 17(B) in any one (1) foreign jurisdiction shall not exceed two percent (2%) of the life insurance company's admitted assets.

     Investments authorized by paragraph 17(A) of this subsection and this paragraph 17(B) shall not in the aggregate exceed twenty percent (20%) of the life insurance company's admitted assets.

     18. To protect itself against loss, a company may in good faith receive in payment of or as security for debts due or to become due, investments or property which do not conform to the categories, conditions, limitations, and standards set out above.

     19. A life insurance company may purchase for its own benefit any of its outstanding annuity or insurance contracts or other obligations and the claims of holders thereof.

     20. A life insurance company may make investments although not conforming to the categories, conditions, limitations, and standards contained in paragraphs 1 through 11, 12 through 19, and 29 through 31 of this subsection, but limited in aggregate amount to the lesser of:

(a) ten percent (10%) of the company's admitted assets; or

(b) the aggregate of the company's capital, surplus, and contingency reserves reported on the statutory financial statement of the insurer most recently required to be filed with the commissioner.

     This paragraph 20 does not apply to investments authorized by paragraph 11.(A) of this subsection.

     20.(A) Investments under paragraphs 1 through 20 and paragraphs 29 through 31 of this subsection are subject to the general conditions, limitations, and standards contained in paragraphs 21 through 28 of this subsection.

     21. Investments in obligations (other than real estate mortgage indebtedness) and capital stock of, and in real estate and tangible personal property leased to, a single corporation, shall not exceed two percent (2%) of the life insurance company's admitted assets, taking into account the provisions of section 2.2(h) of this chapter. The conditions and limitations of this paragraph shall not apply to investments under paragraph 13(A) of this subsection or the special area of investment to which paragraph 23 of this subsection pertains.

     22. Investments in:

(a) preferred stock; and

(b) common stock;

shall not, in the aggregate, exceed twenty percent (20%) of the life insurance company's admitted assets, exclusive of assets held in segregated accounts of the nature defined in class 1(c) of IC 27-1-5-1. These limitations shall not apply to investments for the special purposes described in paragraph 23 of this subsection nor to investments in connection with segregated accounts provided for in class 1(c) of IC 27-1-5-1.

     23. Investments in subsidiary companies must be made in accordance with IC 27-1-23-2.6.

     24. No investment, other than commercial bank deposits and loans on life insurance policies, shall be made unless authorized by the life insurance company's board of directors or a committee designated by the board of directors and charged with the duty of supervising loans or investments.

     25. No life insurance company shall subscribe to or participate in any syndicate or similar underwriting of the purchase or sale of securities or property or enter into any transaction for such purchase or sale on account of said company, jointly with any other corporation, firm, or person, or enter into any agreement to withhold from sale any of its securities or property, but the disposition of its assets shall at all times be within its control. Nothing contained in this paragraph shall be construed to invalidate or prohibit an agreement by two (2) or more companies to join and share in the purchase of investments for bona fide investment purposes.

     26. No life insurance company may invest in the stocks or obligations, except investments under paragraphs 9 and 10 of this subsection, of any corporation in which an officer of such life insurance company is either an officer or director. However, this limitation shall not apply with respect to such investments in:

(a) a corporation which is a subsidiary or affiliate of such life insurance company; or

(b) a trade association, provided such investment meets the requirements of paragraph 5 of this subsection.

     27. Except for the purpose of mutualization provided for in section 23 of this chapter, or for the purpose of retirement of outstanding shares of capital stock pursuant to amendment of its articles of incorporation, or in connection with a plan approved by the commissioner for purchase of such shares by the life insurance company's officers, employees, or agents, no life insurance company shall invest in its own stock.

     28. In applying the conditions, limitations, and standards prescribed in paragraphs 11, 12, and 13 of this subsection to the stocks or obligations of a corporation which in the seven (7) year period preceding purchase of such stocks or obligations acquired its property or a substantial part thereof through consolidation, merger, or purchase, the earnings of the several predecessors or constituent corporations shall be consolidated.

     29. A. Before a life insurance company may engage in securities lending transactions, repurchase transactions, reverse repurchase transactions, or dollar roll transactions, the life insurance company's board of directors must adopt a written plan that includes guidelines and objectives to be followed, including the following:

(1) A description of how cash received will be invested or used for general corporate purposes of the company.

(2) Operational procedures for managing interest rate risk, counterparty default risk, and the use of acceptable collateral in a manner that reflects the liquidity needs of the transaction.

(3) A statement of the extent to which the company may engage in securities lending transactions, repurchase transactions, reverse repurchase transactions, and dollar roll transactions.

     B. A life insurance company must enter into a written agreement for all transactions authorized by this paragraph, other than dollar roll transactions. The written agreement:

(1) must require the termination of each transaction not more than one (1) year after its inception or upon the earlier demand of the company; and

(2) must be with the counterparty business entity, except that, for securities lending transactions, the agreement may be with an agent acting on behalf of the life insurance company if:

(A) the agent is:

(i) a business entity, the obligations of which are rated BBB- or higher by Standard & Poor's Corporation (or A-2 or higher in the case of commercial paper), Baa3 or higher by Moody's Investors Service, Inc. (or P-2 or higher in the case of commercial paper), BBB- or higher by Duff and Phelps, Inc. (or D-2 or higher in the case of commercial paper), or 1 or 2 by the Securities Valuation Office;

(ii) a business entity that is a primary dealer in United States government securities, recognized by the Federal Reserve Bank of New York; or

(iii) any other business entity approved by the commissioner; and

(B) the agreement requires the agent to enter into with each counterparty separate agreements that are consistent with the requirements of this paragraph.

     C. Cash received in a transaction under this paragraph shall be:

(1) invested:

(A) in accordance with this section 2; and

(B) in a manner that recognizes the liquidity needs of the transaction; or

(2) used by the life insurance company for its general corporate purposes.

     D. For as long as a transaction under this paragraph remains outstanding, the life insurance company or its agent or custodian shall maintain, as to acceptable collateral received in the transaction, either physically or through book entry systems of the Federal Reserve, the Depository Trust Company, the Participants Trust Company, or another securities depository approved by the commissioner:

(1) possession of the acceptable collateral;

(2) a perfected security interest in the acceptable collateral; or

(3) in the case of a jurisdiction outside the United States:

(A) title to; or

(B) rights of a secured creditor to;

the acceptable collateral.

     E. The limitations set forth in paragraphs 17 and 21 of this subsection do not apply to transactions under this paragraph 29. For purposes of calculations made to determine compliance with this paragraph, no effect may be given to the future obligation of the life insurance company to:

(1) resell securities, in the case of a repurchase transaction; or

(2) repurchase securities, in the case of a reverse repurchase transaction.

     F. A life insurance company shall not enter into a transaction under this paragraph if, as a result of the transaction, and after giving effect to the transaction:

(1) the aggregate amount of securities then loaned, sold to, or purchased from any one (1) business entity under this paragraph would exceed five percent (5%) of the company's admitted assets (but in calculating the amount sold to or purchased from a business entity under repurchase or reverse repurchase transactions, effect may be given to netting provisions under a master written agreement); or

(2) the aggregate amount of all securities then loaned, sold to, or purchased from all business entities under this paragraph would exceed forty percent (40%) of the admitted assets of the company (provided, however, that this limitation does not apply to a reverse repurchase transaction if the borrowing is used to meet operational liquidity requirements resulting from an officially declared catastrophe and is subject to a plan approved by the commissioner).

     G. The following collateral requirements apply to all transactions under this paragraph:

(1) In a securities lending transaction, the life insurance company must receive acceptable collateral having a market value as of the transaction date at least equal to one hundred two percent (102%) of the market value of the securities loaned by the company in the transaction as of that date. If at any time the market value of the acceptable collateral received from a particular business entity is less than the market value of all securities loaned by the company to that business entity, the business entity shall be obligated to deliver additional acceptable collateral to the company, the market value of which, together with the market value of all acceptable collateral then held in connection with all securities lending transactions with that business entity, equals at least one hundred two percent (102%) of the market value of the loaned securities.

(2) In a reverse repurchase transaction, other than a dollar roll transaction, the life insurance company must receive acceptable collateral having a market value as of the transaction date equal to at least ninety-five percent (95%) of the market value of the securities transferred by the company in the transaction as of that date. If at any time the market value of the acceptable collateral received from a particular business entity is less than ninety-five percent (95%) of the market value of all securities transferred by the company to that business entity, the business entity shall be obligated to deliver additional acceptable collateral to the company, the market value of which, together with the market value of all acceptable collateral then held in connection with all reverse repurchase transactions with that business entity, equals at least ninety-five percent (95%) of the market value of the transferred securities.

(3) In a dollar roll transaction, the life insurance company must receive cash in an amount at least equal to the market value of the securities transferred by the company in the transaction as of the transaction date.

(4) In a repurchase transaction, the life insurance company must receive acceptable collateral having a market value equal to at least one hundred two percent (102%) of the purchase price paid by the company for the securities. If at any time the market value of the acceptable collateral received from a particular business entity is less than one hundred percent (100%) of the purchase price paid by the life insurance company in all repurchase transactions with that business entity, the business entity shall be obligated to provide additional acceptable collateral to the company, the market value of which, together with the market value of all acceptable collateral then held in connection with all repurchase transactions with that business entity, equals at least one hundred two percent (102%) of the purchase price. Securities acquired by a life insurance company in a repurchase transaction shall not be:

(A) sold in a reverse repurchase transaction;

(B) loaned in a securities lending transaction; or

(C) otherwise pledged.

     30. A life insurance company may invest in obligations or interests in trusts or partnerships regardless of the issuer, which are secured by:

(a) investments authorized by paragraphs 1, 2, 3, 4, or 11 of this subsection; or

(b) collateral with the characteristics and limitations prescribed for loans under paragraph 5 of this subsection.

For the purposes of this paragraph 30, collateral may be substituted for other collateral if it is in the same amount with the same or greater interest rate and qualifies as collateral under subparagraph (a) or (b) of this paragraph.

     31. A life insurance company may invest in obligations or interests in trusts or partnerships, regardless of the issuer, secured by any form of collateral other than that described in subparagraphs (a) and (b) of paragraph 30 of this subsection, which obligations or interests in trusts or partnerships are rated:

(a) A- or higher by Standard & Poor's Corporation or Duff and Phelps, Inc.;

(b) A 3 or higher by Moody's Investor Service, Inc.; or

(c) 1 by the Securities Valuation Office.

Investments authorized by this paragraph may not exceed ten percent (10%) of the life insurance company's admitted assets.

     32. A. A life insurance company may invest in short-term pooling arrangements as provided in this paragraph.

     B. The following definitions apply throughout this paragraph:

(1) "Affiliate" means, as to any person, another person that, directly or indirectly through one (1) or more intermediaries, controls, is controlled by, or is under common control with the person.

(2) "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract (other than a commercial contract for goods or non-management services), or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote or holds proxies representing ten percent (10%) or more of the voting securities of another person. This presumption may be rebutted by a showing that control does not exist in fact. The commissioner may determine, after furnishing all interested persons notice and an opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.

(3) "Qualified bank" means a national bank, state bank, or trust company that at all times is not less than adequately capitalized as determined by standards adopted by United States banking regulators and that is either regulated by state banking laws or is a member of the Federal Reserve System.

     C. A life insurer may participate in investment pools qualified under this paragraph that invest only in:

(1) obligations that are rated BBB- or higher by Standard & Poor's Corporation (or A-2 or higher in the case of commercial paper), Baa 3 or higher by Moody's Investors Service, Inc. (or P-2 or higher in the case of commercial paper), BBB- or higher by Duff and Phelps, Inc. (or D-2 or higher in the case of commercial paper), or 1 or 2 by the Securities Valuation Office, and have:

(A) a remaining maturity of three hundred ninety-seven (397) days or less or a put that entitles the holder to receive the principal amount of the obligation which put may be exercised through maturity at specified intervals not exceeding three hundred ninety-seven (397) days; or

(B) a remaining maturity of three (3) years or less and a floating interest rate that resets not less frequently than quarterly on the basis of a current short-term index (for example, federal funds, prime rate, treasury bills, London InterBank Offered Rate (LIBOR) or commercial paper) and is not subject to a maximum limit, if the obligations do not have an interest rate that varies inversely to market interest rate changes;

(2) government money market mutual funds or class one money market mutual funds; or

(3) securities lending, repurchase, and reverse repurchase and dollar roll transactions that meet the requirements of paragraph 29 of this subsection and any applicable regulations of the department;

provided that the investment pool shall not acquire investments in any one (1) business entity that exceed ten percent (10%) of the total assets of the investment pool.

     D. For an investment pool to be qualified under this paragraph, the investment pool shall not:

(1) acquire securities issued, assumed, guaranteed, or insured by the life insurance company or an affiliate of the company; or

(2) borrow or incur any indebtedness for borrowed money, except for securities lending, reverse repurchase, and dollar roll transactions that meet the requirements of paragraph 29 of this subsection.

     E. A life insurance company shall not participate in an investment pool qualified under this paragraph if, as a result of and after giving effect to the participation, the aggregate amount of participation then held by the company in all investment pools under this paragraph and section 2.4 of this chapter would exceed thirty-five percent (35%) of its admitted assets.

     F. For an investment pool to be qualified under this paragraph:

(1) the manager of the investment pool must:

(A) be organized under the laws of the United States, a state or territory of the United States, or the District of Columbia, and designated as the pool manager in a pooling agreement; and

(B) be the life insurance company, an affiliated company, a business entity affiliated with the company, or a qualified bank or a business entity registered under the Investment Advisors Act of 1940 (15 U.S.C. 80a-1 et seq.);

(2) the pool manager or an entity designated by the pool manager of the type set forth in subdivision (1) of this subparagraph F shall compile and maintain detailed accounting records setting forth:

(A) the cash receipts and disbursements reflecting each participant's proportionate participation in the investment pool;

(B) a complete description of all underlying assets of the investment pool (including amount, interest rate, maturity date (if any) and other appropriate designations); and

(C) other records which, on a daily basis, allow third parties to verify each participant's interest in the investment pool; and

(3) the assets of the investment pool shall be held in one (1) or more accounts, in the name of or on behalf of the investment pool, under a custody agreement or trust agreement with a qualified bank, which must:

(A) state and recognize the claims and rights of each participant;

(B) acknowledge that the underlying assets of the investment pool are held solely for the benefit of each participant in proportion to the aggregate amount of its participation in the investment pool; and

(C) contain an agreement that the underlying assets of the investment pool shall not be commingled with the general assets of the qualified bank or any other person.

     G. The pooling agreement for an investment pool qualified under this paragraph must be in writing and must include the following provisions:

(1) Insurers, subsidiaries, or affiliates of insurers holding interests in the pool, or any pension or profit sharing plan of such insurers or their subsidiaries or affiliates, shall, at all times, hold one hundred percent (100%) of the interests in the investment pool.

(2) The underlying assets of the investment pool shall not be commingled with the general assets of the pool manager or any other person.

(3) In proportion to the aggregate amount of each pool participant's interest in the investment pool:

(A) each participant owns an undivided interest in the underlying assets of the investment pool; and

(B) the underlying assets of the investment pool are held solely for the benefit of each participant.

(4) A participant or (in the event of the participant's insolvency, bankruptcy, or receivership) its trustee, receiver, or other successor-in-interest may withdraw all or any portion of its participation from the investment pool under the terms of the pooling agreement.

(5) Withdrawals may be made on demand without penalty or other assessment on any business day, but settlement of funds shall occur within a reasonable and customary period thereafter. Payments upon withdrawals under this paragraph shall be calculated in each case net of all then applicable fees and expenses of the investment pool. The pooling agreement shall provide for such payments to be made to the participants in one (1) of the following forms, at the discretion of the pool manager:

(A) in cash, the then fair market value of the participant's pro rata share of each underlying asset of the investment pool;

(B) in kind, a pro rata share of each underlying asset; or

(C) in a combination of cash and in kind distributions, a pro rata share in each underlying asset.

(6) The records of the investment pool shall be made available for inspection by the commissioner.

Formerly: Acts 1935, c.162, s.147; Acts 1937, c.288, s.1; Acts 1939, c.63, s.3; Acts 1941, c.115, s.9; Acts 1945, c.175, s.1; Acts 1947, c.43, s.1; Acts 1959, c.21, s.1; Acts 1961, c.138, s.1; Acts 1967, c.60, s.1; Acts 1969, c.184, s.1; Acts 1974, P.L.121, SEC.1; Acts 1975, P.L.44, SEC.2; Acts 1975, P.L.279, SEC.1. As amended by Acts 1981, P.L.236, SEC.1; P.L.267-1987, SEC.1; P.L.49-1988, SEC.2; P.L.8-1991, SEC.8; P.L.26-1991, SEC.7; P.L.1-1992, SEC.145; P.L.186-1997, SEC.1; P.L.126-2001, SEC.1; P.L.40-2004, SEC.1; P.L.89-2011, SEC.29.

 

IC 27-1-12-2.1Repealed

As added by P.L.31-1988, SEC.11. Repealed by P.L.26-1991, SEC.28.

 

IC 27-1-12-2.2Derivative transactions

     Sec. 2.2. (a) The following definitions apply to this section:

(1) "Acceptable collateral" means, as to over-the-counter derivatives transactions and for the purpose of calculating counterparty exposure amounts:

(A) cash;

(B) cash equivalents;

(C) letters of credit; and

(D) direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

(2) "Admitted assets" means the life insurance company's assets permitted to be reported as admitted assets on the statutory financial statement of the insurer most recently required to be filed with the commissioner.

(3) "Business entity" means:

(A) a sole proprietorship;

(B) a corporation;

(C) a limited liability company;

(D) an association;

(E) a partnership;

(F) a joint stock company;

(G) a joint venture;

(H) a mutual fund;

(I) a trust;

(J) a joint tenancy; or

(K) another, similar form of business organization;

whether organized for-profit or not-for-profit.

(4) "Cap" means an agreement obligating the seller to make payments to the buyer, with each payment based on the amount by which a reference price or level or the performance or value of one (1) or more underlying interests exceeds a predetermined number, sometimes called the strike rate or strike price.

(5) "Cash" means any of the following:

(A) United States denominated paper currency and coins.

(B) Negotiable money orders and checks.

(C) Funds held in any time or demand deposit in any depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.

(6) "Cash equivalent" means any of the following:

(A) A certificate of deposit issued by a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.

(B) A banker's acceptance issued by a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.

(C) A government money market mutual fund.

(D) A class one money market mutual fund.

(7) "Class one money market mutual fund" means a money market mutual fund that at all times qualifies for investment pursuant to the "Purposes and Procedures of the Securities Valuation Office" or any successor publication either using the bond class one reserve factor or because it is exempt from asset valuation reserve requirements.

(8) "Collar" means two (2) derivatives transactions on the same underlying interest in which the insurer receives payments as the buyer of an option, cap, or floor in one (1) transaction and makes payments as the seller of a different option, cap, or floor in the second transaction.

(9) A. "Counterparty exposure amount" means the net amount of credit risk attributable to a derivative instrument that a life insurance company enters into with another business entity other than through a qualified exchange or a qualified foreign exchange, or cleared through a qualified clearing house ("over the counter derivative instrument"). The amount of credit risk equals:

(1) the market value of the over-the-counter derivative instrument, if the liquidation of the instrument would result in a final cash payment to the insurer; or

(2) zero (0), if the liquidation of the over-the-counter derivative instrument would not result in a final cash payment to the insurer.

B. If a life insurance company enters into one (1) or more over-the-counter derivative instruments with another business entity under a written master agreement that provides for netting of payments owed by the respective parties, and the domiciliary jurisdiction of the counterparty is either within the United States or a foreign jurisdiction listed in the "Purposes and Procedures of the Securities Valuation Office" or any successor publication as eligible for netting, the net amount of credit risk attributable to the counterparty is the greater of zero (0) or the remainder of:

(1) the market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment to the insurer by the business entity; minus

(2) the market value of the over-the-counter derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment by the insurer to the business entity.

C. For open transactions involving over-the-counter derivative instruments, market value:

(1) shall be determined not less frequently than at the end of the most recent quarter of the insurer's fiscal year; and

(2) shall be reduced by the market value of acceptable collateral that is:

(A) held by the insurer; or

(B) placed in escrow by one (1) or both parties.

(10) "Covered" means, in the case of a call option, that:

(A) the life insurance company owns the instrument underlying the call option it has written (a "written call") during the entire period that the written call is outstanding; or

(B) pursuant to the exercise of options, warrants, or conversion rights already owned when the call option is written and held during the period that the written call is outstanding, the life insurance company can immediately acquire the instrument underlying the written call, if:

(1) the price at which the underlying instrument can be acquired is less than or equal to the strike price of the written call; or

(2) the life insurance company has placed in escrow or, pursuant to a custodian agreement, has segregated during the entire period that the written call is outstanding, cash, cash equivalents, or securities with a market value equal to the difference between the price at which the underlying instrument can be acquired and the strike price of the written call.

(11) "Covered" means, in the case of a put option, that the life insurance company has placed in escrow or, pursuant to a custodian agreement, has segregated during the entire period that the put option it has sold (a "written put") is outstanding, cash, cash equivalents, or securities with a market value equal to the amount of the insurer's obligation under the written put.

(12) "Covered" means, in the case of a cap or floor, that the life insurance company holds in its portfolio, during the entire period that the cap or floor is outstanding, investments that generate sufficient cash flow to make all required payments under the cap or floor.

(13) "Derivative instrument" means an agreement (in the nature of a bilateral contract, option, or otherwise), an instrument, or a series or combination of agreements and instruments:

(A) to make or take delivery of, or assume or relinquish, a specified amount of one (1) or more of the interests underlying the derivative instrument, or to make a cash settlement in lieu thereof; or

(B) that has a price, performance, value, or cash flow based primarily upon the actual or expected price, level, performance, value, or cash flow of one (1) or more of the interests underlying the derivative instrument.

Derivative instruments include options, warrants used in a hedging transaction and not attached to another financial instrument, caps, floors, collars, swaps, swaptions, forwards, futures, and any other agreements (in the nature of bilateral contracts, options, or otherwise) or substantially similar instruments, or any series or combination thereof, and any agreements (in the nature of bilateral contracts, options, or otherwise) or instruments permitted under rules adopted by the department.

(14) "Derivative transaction" means a transaction involving the use of one (1) or more derivative instruments. For purposes of this section, a derivative transaction may involve a requirement that the insurer, a counterparty, or both, are required to post collateral with the other party (or a designated third party) pursuant to an agreement between the insurer and the counterparty.

(15) "Domestic jurisdiction" means the United States, any state, territory, or possession of the United States, the District of Columbia, Canada, or any province of Canada.

(16) "Floor" means an agreement obligating the seller to make payments to the buyer, with each payment based on the amount by which a predetermined number, sometimes called the floor rate or price, exceeds a reference price or level or the performance or value of one or more underlying interests.

(17) "Foreign currency" means a currency other than that of a domestic jurisdiction.

(18) "Foreign jurisdiction" means a jurisdiction other than a domestic jurisdiction.

(19) "Forward" means an agreement (other than a future) to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance, or value of, one (1) or more underlying interests.

(20) "Future" means an agreement, traded on a qualified exchange or qualified foreign exchange, to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance, or value of, one or more underlying interests.

(21) "Government money market mutual fund" means a money market mutual fund that at all times:

(A) invests only in obligations issued, guaranteed, or insured by the United States or collateralized repurchase agreements composed of these obligations; and

(B) qualifies for investment without a reserve pursuant to the "Purposes and Procedures of the Securities Valuation Office" or any successor publication.

(22) "Guaranteed or insured," when used in connection with an obligation acquired under this section, means that the guarantor or insurer has agreed to:

(A) perform or insure the obligation of the obligor or purchase the obligation; or

(B) be unconditionally obligated until the obligation is repaid to maintain in the obligor a minimum net worth, fixed charge coverage, stockholders' equity, or sufficient liquidity to enable the obligor to pay the obligation in full.

(23) "Hedging transaction" means a derivative transaction that is entered into and maintained to manage:

(A) the risk of a change in the value, yield, price, cash flow, or quantity of assets or liabilities (or a portfolio of assets, liabilities, or assets and liabilities) that the insurer has acquired or incurred or anticipates acquiring or incurring; or

(B) currency exchange rate risk or the degree of exposure to assets or liabilities (or a portfolio of assets, liabilities, or assets and liabilities) that the insurer has acquired or incurred or anticipates acquiring or incurring.

(24) "Income generation transaction" means a derivative transaction involving the writing of covered call options, covered put options, covered caps, or covered floors.

(25) "Investment company" means an investment company as defined in Section 3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended, and a person described in Section 3(c) of the Investment Company Act of 1940.

(26) "Investment company series" means an investment portfolio of an investment company that is organized as a series company and to which assets of the investment company have been specifically allocated.

(27) "Letter of credit" means a clean, irrevocable, and unconditional letter of credit issued or confirmed by, and payable and presentable at, a financial institution on the list of financial institutions meeting the standards for issuing letters of credit under the "Purposes and Procedures of the Securities Valuation Office" or any successor publication.

(28) "Market value" means:

(A) as to cash, cash equivalents, and letters of credit, the amounts thereof;

(B) as to a security (other than a security that is an over-the-counter derivative instrument) as of any date, the price for the security on that date obtained from a generally recognized source or the most recent quotation from such a source or, to the extent no generally recognized source exists, the price for the security as determined in good faith by the parties to a transaction, plus accrued but unpaid income on the security to the extent not included in the price as of that date; and

(C) as to an over-the-counter derivative instrument as of any date, the amount that a life insurance company would have to pay or would receive for entering into an over-the-counter derivative transaction on substantially identical terms with another counterparty.

(29) "Money market mutual fund" means a mutual fund that meets the conditions of 17 CFR 270.2a-7, under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).

(30) "Mutual fund" means:

(A) an investment company; or

(B) in the case of an investment company that is organized as a series company, an investment company series;

that is registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).

(31) "Obligation" means any of the following:

(A) A bond.

(B) A note.

(C) A debenture.

(D) Any other form of evidence of debt.

(32) "Option" means an agreement giving the buyer the right to buy or receive (a "call option"), sell or deliver (a "put option"), enter into, extend or terminate, or effect a cash settlement based on the actual or expected price, level, performance, or value of one or more underlying interests.

(33) "Qualified business entity" means a business entity that is:

(A) an issuer of obligations, preferred stock, or derivative instruments that are rated 1 or 2 or are rated the equivalent of 1 or 2 by the Securities Valuation Office or by a nationally recognized statistical rating organization recognized by the Securities Valuation Office; or

(B) a primary dealer in United States government securities, recognized by the Federal Reserve Bank of New York.

(34) "Qualified clearinghouse" means a clearinghouse:

(A) that is for, and subject to the rules of, a qualified exchange or qualified foreign exchange; and

(B) that provides clearing services, including acting as a counterparty to each of the parties to a transaction so that the parties no longer have credit risk as to each other.

(35) "Qualified exchange" means:

(A) a securities exchange registered as a national securities exchange, or a securities market regulated under the Securities Exchange Act of 1934 (15 U.S.C. 78 et seq.), as amended;

(B) a board of trade or commodities exchange designated as a contract market by the Commodity Futures Trading Commission (CFTC) or any successor of the CFTC;

(C) Private Offerings, Resales, and Trading through Automated Linkages (PORTAL);

(D) a designated offshore securities market as defined in Securities Exchange Commission Regulation S (17 C.F.R. Part 230), as amended; or

(E) a qualified foreign exchange.

(36) "Qualified foreign exchange" means a foreign exchange, board of trade, or contract market located outside the United States or its territories or possessions:

(A) that has received regulatory comparability relief under CFTC Rule 30.10 (as set forth in Appendix C to Part 30 of the CFTC's Regulations (17 C.F.R. Part 30));

(B) that is, or whose members are, subject to the jurisdiction of a foreign futures authority that has received regulatory comparability relief under CFTC Rule 30.10 (as set forth in Appendix C to Part 30 of the CFTC's Regulations (17 C.F.R. Part 30)) as to futures transactions in the jurisdiction where the exchange, board of trade, or contract market is located; or

(C) upon which are listed foreign stock index futures contracts that are the subject of no-action relief issued by the CFTC's Office of the General Counsel, provided that an exchange, board of trade, or contract market that qualifies as a qualified foreign exchange only under this clause is a qualified foreign exchange only as to foreign stock index futures contracts that are the subject of no-action relief.

(37) "Replication transaction" means a derivative transaction that is intended to replicate the investment in one (1) or more assets that an insurer is authorized to acquire or sell under this section or section 2 of this chapter. A derivative transaction that is entered into as a hedging transaction shall not be considered a replication transaction.

(38) "Securities Valuation Office" refers to:

(A) the Securities Valuation Office of the National Association of Insurance Commissioners; or

(B) any successor of the office referred to in Clause (A) established by the National Association of Insurance Commissioners.

(39) "Swap" means an agreement to exchange or to net payments at one (1) or more times based on the actual or expected price, level, performance, or value of one (1) or more underlying interests.

(40) "Swaption" means an agreement giving the buyer the right (but not the obligation) to enter into a swap at a specified time in the future.

(41) "Underlying interest" means the assets, liabilities, other interests or a combination thereof underlying a derivative instrument, such as any one (1) or more securities, currencies, rates, indices, commodities, or derivative instruments.

(42) "Warrant" means an instrument that gives the holder the right to purchase an underlying financial instrument at a given price and time or at a series of prices and times outlined in the warrant agreement. Warrants may be issued alone or in connection with the sale of other securities, for example, as part of a merger or recapitalization agreement or to facilitate divestiture of the securities of another business entity.

     (b) A life insurance company's board of directors shall do all the following:

(1) Before engaging in derivatives transactions, approve a written plan that specifies guidelines, systems, and objectives to be followed, such as:

(A) investment or, if applicable, underwriting objectives and risk constraints, such as credit risk limits;

(B) permissible transactions and the relationship of those transactions to the insurer's operations;

(C) internal control procedures;

(D) a system for determining whether a derivative instrument used for hedging has been effective;

(E) a credit risk management system for over-the-counter derivatives transactions that measures credit risk exposure using the counterparty exposure amount; and

(F) a mechanism for reviewing and auditing compliance with the guidelines, systems, and objectives specified in the written plan.

(2) Before engaging in derivatives transactions, make a determination that the insurer's investment managers have adequate professional personnel, technical expertise, and systems to implement the insurer's intended investment practices involving derivative instruments.

(3) Review whether derivatives transactions have been made in accordance with the approved guidelines and are consistent with stated objectives.

(4) Take action to correct any deficiencies in internal controls relating to derivatives transactions.

     (c) A life insurance company may use derivative instruments under this section to engage in hedging transactions, certain income generation transactions, and certain replication transactions, as these terms may be further defined in rules adopted by the department. For each hedging and replication transaction in which it engages, a life insurance company must be able to demonstrate to the commissioner:

(1) the intended characteristics; and

(2) the ongoing effectiveness;

of the derivative transaction or combination of the derivatives transactions through appropriate analyses.

     (d) A life insurance company insurer may enter into a hedging transaction under this section if, as a result of the transaction, and after giving effect to the transaction:

(1) the aggregate statement value of options, caps, floors, and warrants not attached to another financial instrument purchased and used in hedging transactions does not exceed seven and one half percent (7.5%) of the insurer's admitted assets;

(2) the aggregate statement value of options, caps, and floors written in hedging transactions does not exceed three percent (3%) of the insurer's admitted assets; and

(3) the aggregate potential exposure of collars, swaps, forwards, and futures used in hedging transactions does not exceed six and one-half percent (6.5%) of the insurer's admitted assets.

     (e) A life insurance company may enter into the following types of income generation transactions:

(1) sales of covered call options on:

(A) non-callable fixed income securities;

(B) callable fixed income securities if the option expires by its terms before the end of the noncallable period; or

(C) derivative instruments based on fixed income securities or yields;

(2) sales of covered call options on equity securities;

(3) sales of covered puts on investments that the insurer is permitted to acquire under section 2 of this chapter; and

(4) sales of covered caps or floors;

only if, as a result of the transactions and after giving effect to the transactions, the aggregate statement value of the fixed income securities that are subject to call or that generate the cash flows for payments under the caps or floors, plus the face value of fixed income securities underlying a derivative instrument subject to call, plus the amount of the purchase obligations under the puts, does not exceed ten percent (10%) of the insurer's admitted assets.

     (f) A life insurance company may enter into replication transactions. For the purposes of this subsection, a replication transaction is subject to the limitations and restrictions set forth in section 2 of this chapter to which the replicated investments are subject.

     (g) An investment of a life insurance company that is:

(1) permitted under section 2(b)(17A) or 2(b)(17B) of this chapter; and

(2) denominated in a foreign currency;

shall not be considered denominated in a foreign currency if the acquiring insurer enters into one (1) or more contracts permitted under this section in which the business entity counterparty agrees to exchange, or grants to the insurer the option to exchange, all payments made on the foreign currency denominated investment (or amounts equivalent to the payments that are or will be due to the insurer in accordance with the terms of such investment) for United States or Canadian dollars during the period that the contract or contracts are in effect, or other contracts with like effect, to insulate the insurer against loss caused by diminution of the value of payments owed to the insurer due to future changes in currency exchange rates.

     (h) A life insurance company shall include all counterparty exposure amounts in determining compliance with the limitations set forth in section 2(b)(21) of this chapter.

     (i) Upon the request of a life insurance company, the commissioner may approve additional transactions involving the use of derivative instruments that:

(1) exceed the limits set forth in subsections (d), (e), and (f); or

(2) are for other risk management purposes.

     (j) A life insurance company shall maintain documentation and records relating to each derivative transaction. The documentation and records must record and include matters such as the following:

(1) The purpose or purposes of the transaction.

(2) The assets or liabilities to which the transaction relates.

(3) The specific derivative instrument used in the transaction.

(4) For collateralized derivatives transactions, a description of any collateral posted by the insurer or the counterparty, as well as records documenting any subsequent variations in the amount of the collateral.

(5) For over-the-counter derivative transactions, the name of the counterparty and the counterparty exposure amount.

(6) For exchange traded derivative instruments, the name of the exchange and the name of the firm that handled the trade.

     (k) Each derivative instrument shall be:

(1) traded on a qualified exchange;

(2) entered into with, or guaranteed by, a business entity;

(3) issued or written by or entered into with the issuer of the underlying interest on which the derivative instrument is based; or

(4) entered into on a qualified foreign exchange.

As added by P.L.186-1997, SEC.2. Amended by P.L.81-2012, SEC.1.

 

IC 27-1-12-2.4Participation in certain investment pools; requirements for pooling agreements

     Sec. 2.4. (a) The following definitions apply to this section:

(1) "Admitted assets" means a life insurance company's assets permitted to be reported as admitted assets on the statutory financial statement of the insurer most recently required to be filed with the commissioner.

(2) "Affiliate" means, as to any person, another person that, directly or indirectly, through one (1) or more intermediaries:

(A) controls;

(B) is controlled by; or

(C) is under common control with;

the person.

(3) "Business entity" means:

(A) a sole proprietorship;

(B) a corporation;

(C) a limited liability company;

(D) an association;

(E) a partnership;

(F) a joint stock company;

(G) a joint venture;

(H) a mutual fund;

(I) a trust;

(J) a joint tenancy; or

(K) another, similar form of business organization;

whether organized for-profit or not-for-profit.

(4) "Cash" means any of the following:

(A) United States denominated paper currency and coins.

(B) Negotiable money orders and checks.

(C) Funds held in any time or demand deposit in any depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.

(5) "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract (other than a commercial contract for goods or non-management services), or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote or holds proxies representing ten percent (10%) or more of the voting securities of another person. This presumption may be rebutted by a showing that control does not exist in fact. The commissioner may determine, after furnishing all interested persons notice and an opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.

(6) "Fixed charges" includes interest on funded and unfunded debt, amortization of debt discount, and rentals for leased property.

(7) "Guaranteed or insured," when used in connection with an obligation acquired under this section, means that the guarantor or insurer has agreed to:

(A) perform or insure the obligation of the obligor or purchase the obligation; or

(B) be unconditionally obligated until the obligation is repaid to maintain in the obligor a minimum net worth, fixed charge coverage, stockholders' equity or sufficient liquidity to enable the obligor to pay the obligation in full.

(8) "Investment company" means an investment company as defined in Section 3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-1, et seq.), as amended, and a person described in Section 3(c) of the Investment Company Act of 1940.

(9) "Investment company series" means an investment portfolio of an investment company that is organized as a series company and to which assets of the investment company have been specifically allocated.

(10) "Market value" means:

(A) as to cash, cash equivalents, and letters of credit, the amounts thereof; and

(B) as to a security as of any date, the price for the security on that date obtained from a generally recognized source or the most recent quotation from such a source or, to the extent no generally recognized source exists, the price for the security as determined in good faith by the parties to a transaction, plus accrued but unpaid income on the security to the extent not included in the price as of that date.

(11) "Multilateral development bank" means an international development organization of which the United States is a member.

(12) "Mutual fund" means:

(A) an investment company; or

(B) in the case of an investment company that is organized as a series company, an investment company series;

that is registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).

(13) "Obligation" means any of the following:

(A) A bond.

(B) A note.

(C) A debenture.

(D) Any other form of evidence of debt.

(14) "Person" means an individual, a business entity, a multilateral development bank or a government or quasi-governmental body, such as a political subdivision or a government sponsored enterprise.

(15) "Qualified bank" means a national bank, state bank, or trust company that:

(A) at all times is not less than adequately capitalized, as determined by standards adopted by United States banking regulators; and

(B) is regulated by state banking laws or is a member of the Federal Reserve System.

(16) "Series company" means an investment company that is organized as a series company, as defined in Rule 18f-2(a) adopted under the Investment Company Act of 1940 (15 U.S.C. 80a-1, as amended).

     (b) In addition to the authority to participate in investment pools under section 2(b)(31) of this chapter, a life insurance company may participate in investment pools that:

(1) are qualified under this section; and

(2) invest only in investments that an insurer may acquire under section 2 of this chapter;

if the company's proportionate interest in the amount invested in these investments does not exceed the applicable limits of section 2 of this chapter.

     (c) For an investment pool to be qualified under this section, the investment pool shall not:

(1) acquire securities issued, assumed, guaranteed, or insured by the insurer or an affiliate of the insurer; or

(2) borrow or incur any indebtedness for borrowed money, except for securities lending, reverse repurchase, and dollar roll transactions that meet the requirements of section 2(b)(29) of this chapter.

     (d) A life insurance company shall not participate in an investment pool qualified under this section if, as a result of the participation and after giving effect to the participation, the aggregate amount of participation then held by the insurer in all investment pools under this section and under section 2(b)(31) of this chapter would exceed thirty-five percent (35%) of the admitted assets of the insurer.

     (e) For an investment pool to be qualified under this section:

(1) the manager of the investment pool:

(A) must be organized under the laws of the United States, a state or territory of the United States, or the District of Columbia;

(B) must be designated as the pool manager in a pooling agreement; and

(C) must be:

(i) the insurer;

(ii) an affiliated insurer;

(iii) a business entity affiliated with the insurer;

(iv) a qualified bank; or

(v) a business entity registered under the Investment Advisors Act of 1940 (15 U.S.C. 80a-1 et seq.);

(2) the pool manager or an entity of the type referred to in subdivision (1)(C) that is designated by the pool manager must compile and maintain detailed accounting records setting forth:

(A) the cash receipts and disbursements reflecting each participant’s proportionate participation in the investment pool;

(B) a complete description of all underlying assets of the investment pool (including the amount, interest rate, maturity date (if any) and other appropriate designations); and

(C) other records that, on a daily basis, allow third parties to verify each participant’s interest in the investment pool; and

(3) the assets of the investment pool must be held in one (1) or more accounts, in the name of or on behalf of the investment pool, in a qualified bank under a custody agreement or trust agreement that:

(A) states and recognizes the claims and rights of each participant;

(B) acknowledges that the underlying assets of the investment pool are held solely for the benefit of each participant in proportion to the aggregate amount of the participant's participation in the investment pool; and

(C) contains an agreement that the underlying assets of the investment pool shall not be commingled with the general assets of the qualified bank or the assets of any other person.

     (f) The pooling agreement for an investment pool that is qualified under this section must be in writing and must provide the following:

(1) Insurers, subsidiaries, or affiliates of insurers holding interests in the pool, or any pension or profit sharing plan of the insurers or their subsidiaries or affiliates, must at all times hold one hundred percent (100%) of the interests in the investment pool.

(2) The underlying assets of the investment pool must not be commingled with the general assets of the pool manager or any other person.

(3) In proportion to the aggregate amount of each pool participant’s interest in the investment pool:

(A) each participant owns an undivided interest in the underlying assets of the investment pool; and

(B) the underlying assets of the investment pool are held solely for the benefit of each participant.

(4) A participant or (in the event of the participant's insolvency, bankruptcy, or receivership) its trustee, receiver, or other successor-in-interest may withdraw all or any portion of its participation from the investment pool under the terms of the pooling agreement.

(5) Withdrawals may be made on demand without penalty or other assessment on any business day, but settlement of funds shall occur within a reasonable and customary period thereafter. Payments upon withdrawals under this paragraph shall be calculated in each case net of all then applicable fees and expenses of the investment pool. The pooling agreement shall provide for such payments to be made to the participants in one (1) of the following forms, at the discretion of the pool manager:

(A) in cash, the then fair market value of the participant's pro rata share of each underlying asset of the investment pool;

(B) in kind, a pro rata share of each underlying asset; or

(C) in a combination of cash and in kind distributions, a pro rata share in each underlying asset.

(6) The records of the investment pool shall be made available for inspection by the commissioner.

As added by P.L.186-1997, SEC.3.

 

IC 27-1-12-2.5Investments; assets of certain segregated investment accounts; limitations and exceptions

     Sec. 2.5. (a) A domestic life insurance company, which has a segregated account or accounts in relation to contracts to which class 1(c) of IC 27-1-5-1 applies, is governed as to its investment of assets by the investment limitations of section 2 of this chapter with the following exceptions:

(1) the limitations prescribed in paragraph 22 of section 2(b) of this chapter are not applicable to investments in relation to such segregated account or accounts;

(2) investments under paragraph 20 of section 2(b) of this chapter are solely limited to ten percent (10%) of the assets of such segregated account; and

(3) the limitations in sections 2 and 3 of this chapter do not apply with regard to contributions, premiums, or considerations made by holders of pension contracts issued by a domestic life insurance company, which has net assets of at least twenty-five million dollars ($25,000,000) at the end of the preceding calendar year and which has allocated such contributions, premiums, or considerations to a segregated investment account or accounts.

     (b) Nothing in section 2 of this chapter or this section prohibits the investment of all assets of a segregated account or accounts in any open-end diversified management company registered under the federal Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).

     (c) Pension contracts for the purposes of subsection (a)(3) means contracts to which both class 1(c) of IC 27-1-5-1 applies and which are issued in connection with a plan or other arrangement described in section 3(a)(2) of the Securities Act of 1933, (15 U.S.C. 77c(a)(2)). The term also includes agreements reinsuring other insurers' contracts which were issued in connection with plans or other arrangements described in 15 U.S.C. 77c(a)(2).

As added by Acts 1981, P.L.236, SEC.2. Amended by P.L.186-1997, SEC.4.

 

IC 27-1-12-3Real estate

     Sec. 3. Any domestic life insurance company shall have power to acquire, hold and convey real estate as described below, and no other:

     1. The building in which it has its principal office and the land on which it stands;

     2. Such as shall be necessary for the convenient transaction of its business;

     3. Such as shall have been acquired for the accommodation of its business;

     4. Such as shall have been mortgaged to it in good faith by way of security for loans previously contracted or for money due;

     5. Such as shall have been conveyed to it in connection with its investments in real estate contracts or its investments in real estate under lease or for the purpose of leasing or developing in accordance with paragraph 8 of section 2 of this chapter or such as shall have been acquired for the purpose of investment under paragraph 20 of section 2(b) of this chapter. Any real estate acquired under paragraph 20 of section 2(b) of this chapter shall be evaluated for statement purposes in a manner satisfactory to the department.

     6. Such as shall have been conveyed to it in satisfaction of debts previously contracted in the course of its dealings, or in exchange for real estate so conveyed to it; and

     7. Such as it shall have purchased at sales on judgments, decrees or mortgages obtained or made for such debts.

     All such real estate specified in paragraphs (3), (4), (5), (6), and (7) of this section, which shall not be necessary for the convenient transaction of its business, and which is not held under paragraphs 7, 8 or 20 of section 2(b) of this chapter, shall be sold by the life insurance company and disposed of within ten (10) years after it shall have acquired the title to same, or within five (5) years after the same shall have ceased to be necessary for the accommodation of its business, unless the company procures the certificate of the commissioner that its interests will suffer materially by a forced sale thereof, in which event the time for the sale may be extended to such time as the commissioner shall direct in such certificate.

Formerly: Acts 1935, c.162, s.148; Acts 1945, c.175, s.2; Acts 1951, c.24, s.1. As amended by Acts 1981, P.L.236, SEC.3; P.L.186-1997, SEC.5.

 

IC 27-1-12-3.5Intangible assets attributable to investment in subsidiary; exceptions

     Sec. 3.5. Goodwill, trade names, and other like intangible assets attributable to any investment in a subsidiary shall be admitted as assets except:

(1) to the extent that the aggregate amount thereof exceeds ten percent (10%) of the capital and surplus of the insurer as reported in its latest annual report filed with the commissioner;

(2) to the extent that any such asset is not being amortized ratably over a period of ten (10) years or less from the date of acquisition; and

(3) in determining the financial condition or solvency of an insurer under IC 27-9.

As added by P.L.160-1986, SEC.1.

 

IC 27-1-12-4Valuation of bonds and securities

     Sec. 4. (a) All bonds or other evidences of debt having a fixed term and rate of interest held by an insurer may, if amply secured and not in default as to principal or interest, be valued as follows: If purchased at par, at the par value; if purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made, or, instead of this method, according to an accepted method of valuation approved by the department. The purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual brokerage, transfer, postage, or express charges paid in the acquisition of the securities. The department shall have full discretion in determining the method of calculating values according to the rules set forth in this subsection. However, no such method or valuation under this subsection may be inconsistent with any applicable method or valuation used by insurers in general or any such method then currently formulated or approved by the National Association of Insurance Commissioners or its successor organization.

     (b) Securities held by an insurer, other than those referred to in subsection (a), shall be valued, in the discretion of the department, at their market value or at their appraised value or at prices determined by the department as representing the fair market value of the securities. Preferred or guaranteed stocks or shares, while paying full dividends, may be carried at a fixed value in lieu of market value at the discretion of the department and in accordance with the method of valuation that the department approves. No valuation under this subsection may be inconsistent with any applicable valuation or method then currently formulated or approved by the National Association of Insurance Commissioners or its successor organization.

Formerly: Acts 1935, c.162, s.150. As amended by P.L.130-1994, SEC.16; P.L.116-1994, SEC.21.

 

IC 27-1-12-5Required provisions of policies between July 1, 1935, and transition date or January 1, 1948

     Sec. 5. (a) No policy of life insurance, other than industrial insurance, group life insurance, or reinsurance, bearing a date of issue not earlier than July 1, 1935, nor later than a transition date to be selected by the company pursuant to section 12 of this chapter, such transition date in no event to be later than January 1, 1948, shall be delivered or issued for delivery in this state or issued by a company organized under the laws of this state unless the same shall provide the following:

(1) That all premiums shall be payable in advance, either at the home office of the company, or to an agent of the company, upon delivery of a receipt signed by one (1) or more of the officers who shall be designated in the policy.

(2) For a grace of not less than thirty (30) days for the payment of every premium after the first premium, which may be subject to an interest charge, during which period the insurance shall continue in force; provided, that if the insured shall die within such period of grace the unpaid premium for the current policy year may be deducted in any settlement under the policy.

(3) That the policy, together with the application therefor, a copy of which application shall be attached to the policy and made a part thereof, shall constitute the entire contract between the parties and shall be incontestable after it shall have been in force during the lifetime of the insured for two (2) years from its date, or, at the option of the company after it shall have been in force for two (2) years from its date, except for nonpayment of premiums, and except for violation of the conditions of the policy relating to naval and military service in time of war, and at the option of the company provisions relative to benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident may also be excepted.

(4) That if the age of the insured and/or the beneficiary, if that age enters into the determination of the premiums charged or benefits promised, has been misstated, the amount payable under the policy shall be such as the premium would have purchased at the correct age of the insured and/or beneficiary.

(5) That all statements made by the insured in the application shall, in the absence of fraud, be deemed representations and not warranties.

(6) That, in the case of participating policies, the policy shall participate in the surplus of the company as apportioned by the board of directors of the company, and that, beginning not later than the end of the fifth policy year, the company will determine and account for the portion of the divisible surplus so ascertained accruing on the policy, and that the owner of the policy shall have the right to have the current dividends arising from such participation paid in cash, and that at periods of not more than five (5) years, such accounting and payment at the option of the policyholder shall be had. The owner of the policy may elect to take any of the other dividend options in the policy. If the owner of the policy shall not elect any of the other dividend options provided in the policy, the apportioned dividends shall be held to the credit of the policy and be payable in cash at maturity of the policy or be withdrawable in cash at an anniversary of its date; provided, however, if the policy shall contain a provision for an apportionment of the surplus at the end of the first policy year and annually thereafter, then and in that event said policy may provide that each dividend shall be paid subject to the payment of the premium of the next ensuing year.

(7) A table showing in figures the loan values and the cash, paid-up and extended insurance options upon surrender, or available under the policy each year, upon default in premium payment during at least the first twenty (20) years of the policy, beginning at the end of the third policy year, which values shall be equal to the full reserve on the policy, except the reserve for permanent mental or physical disability, or for accidental death, and/or other supplemental benefits, less not to exceed two and one-half percent (2 1/2%) of the sum insured; following this table there shall be a clause specifying the mortality table and rate of interest adopted for computing the reserve and specifying the basis for the values and options after the period covered by the table. The provisions of this subdivision shall not apply to term policies nor to any form of paid-up insurance issued or granted in exchange for lapsed or surrendered policies.

(8) Policies issued by companies doing business in this state may provide for not more than one (1) year preliminary term insurance by incorporating therein the following clause immediately following the table of options and statement of basis therefor, as provided for in subdivision (7): "The first year's insurance under this policy is term insurance, purchased by the whole or part of the premium to be received during the first policy year and the policy shall be valued according to its terms and the laws of the state of Indiana".

(9) That after three (3) full years' premiums shall have been paid, the company, at any time while the policy is in force, will loan, on the execution of a proper assignment of the policy and on the sole security thereof, at a specified rate of interest, a sum equal to, or at the option of the insured, less than the amount stated in the table of options to be loaned at the end of the current policy year plus the value of the reserve on any dividend additions to the policy, and that the company will deduct from such loan value any existing indebtedness on or secured by the policy and any unpaid balance of the premiums for the current policy year, and may collect interest in advance on the loan to the end of the current policy year, and may further provide that such loan may be deferred for not exceeding six (6) months after the application therefor is made. It shall be further stipulated in the policy that failure to repay any such loan or pay interest thereon shall not void the policy unless such total indebtedness to the company shall equal or exceed such loan value at the time of such failure, nor until thirty (30) days after notice shall have been mailed by the company to the last known address of the insured and to the assignee, if any, if such assignee has notified the company of his address. No condition other than as provided in this subdivision shall be exacted as a prerequisite to any such loan. The provisions of this subdivision shall not be required in term policies nor shall they apply to paid-up insurance issued or granted in exchange for lapsed or surrendered policies.

(10) That in the event of default of premium payment after premiums have been paid for not less than three (3) years, the insured shall be entitled to the extended insurance shown in the table of values and options for the end of the last year for which full annual premiums shall have been paid; provided, that if there be any unpaid note given for a premium or any indebtedness to the company on account of or secured by the policy, the amount of extended insurance shall be reduced in the ratio of such indebtedness to the net value of such extended insurance, or the amount of such indebtedness shall be deducted from the net value of the extended insurance otherwise available and the balance shall be applied as a net single premium to purchase extended insurance for an amount equal either to the face of the policy or to the face of the policy less the amount of such indebtedness; and provided further, that the policy may be surrendered to the company at its home office within one (1) month from the due date of the unpaid premium for a specified cash value at least equal to the sum which would otherwise be available for the purchase of extended insurance as provided in this subdivision; and provided further, that the company may defer payment for not more than six (6) months after the application therefor is made. The provisions of this subdivision shall not be required in term insurance of twenty (20) years or less.

(11) That, should there have been default in premium payment, and the value of the policy applied to the extension of the insurance, and such insurance be in force and the original policy not surrendered to the company and cancelled, the policy may be reinstated within three (3) years from such default, upon evidence of insurability satisfactory to the company and payment of arrears of premiums with interest.

(12) That when a policy shall become a claim by the death of the insured, settlement shall be made upon receipt of due proof of death and of the interest of the claimant and not later than two (2) months after receipt of such proof.

(13) A title on the face and on the back of the policy describing the same.

     (b) Any of the provisions of subsection (a) not applicable to single premium policies shall to that extent not be incorporated therein. The provisions of subsection (a) shall not apply to policies issued on substandard, underaverage, or impaired risks. Any policy may be issued or delivered in this state which in the opinion of the department contains provisions on any one (1) or more of the several requirements of subsection (a) more favorable to the policyholder than those required in subsection (a).

Formerly: Acts 1935, c.162, s.151; Acts 1943, c.189, s.1. As amended by P.L.252-1985, SEC.60.

 

IC 27-1-12-6Required provisions of policies after transition date or January 1, 1948

     Sec. 6. (a) No policy of life insurance, other than industrial insurance, group life insurance or reinsurance, bearing a date of issue which is the same as or later than a transition date to be selected by the company pursuant to section 12 of this chapter, such transition date in no event to be later than January 1, 1948, shall be delivered or issued for delivery in this state or issued by a company organized under the laws of this state unless the same shall provide the following:

(1) That all premiums shall be payable in advance, either at the home office of the company, or to an agent of the company, upon delivery of a receipt signed by one (1) or more of the officers who shall be designated in the policy.

(2) For a grace period of not less than thirty (30) days for the payment of every premium after the first premium, which may be subject to an interest charge, during which period the insurance shall continue in force; provided, that if the insured shall die within such period of grace the unpaid premium for the current policy year may be deducted in any settlement under the policy.

(3) That the policy, together with the application therefor, a copy of which application shall be attached to the policy and made a part thereof, shall constitute the entire contract between the parties and shall be incontestable after it shall have been in force during the lifetime of the insured for two (2) years from its date, or, at the option of the company after it shall have been in force for two (2) years from its date, except for nonpayment of premiums, and except for violation of the conditions of the policy relating to naval and military service in time of war, and at the option of the company provisions relative to benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident may also be excepted.

(4) That if the age of the insured and/or beneficiary, if that age enters into the determination of the premiums charged or benefits promised, has been misstated, the amount payable under the policy shall be such as the premium would have purchased at the correct age of the insured and/or beneficiary.

(5) That all statements made by the insured in the application shall, in the absence of fraud, be deemed representations and not warranties.

(6) That, in the case of participating policies, the policy shall participate in the surplus of the company as apportioned by the board of directors of the company, and that, beginning not later than the end of the fifth policy year, the company will determine and account for the portion of the divisible surplus so ascertained accruing on the policy, and that the owner of the policy shall have the right to have the current dividends arising from such participation paid in cash, and that at periods of not more than five (5) years, such accounting and payment at the option of the policyholder shall be had. The owner of the policy may elect to take any of the other dividend options in the policy. If the owner of the policy shall not elect any of the other dividend options provided in the policy, the apportioned dividends shall be held to the credit of the policy and be payable in cash at maturity of the policy or be withdrawable in cash at any anniversary of its date; provided, however, that if the policy shall contain a provision for an apportionment of the surplus at the end of the first policy year and annually thereafter, then and in that event, said policy may provide that each dividend shall be paid subject to the payment of the premium of the next ensuing year.

(7) Nonforfeiture provisions in accordance with the requirements of section 7 of this chapter.

(8) That the company, at any time while the policy is in force, will loan, on the execution of a proper assignment of the policy, and on the sole security thereof, at a specified rate of interest (payable in advance if the company so elects), a sum, which, together with the sum of:

(A) previously existing indebtedness, if any, including interest thereon to the end of the current policy year; and

(B) interest to the end of the current policy year on the amount newly loaned;

is equal to or, at the option of the insured, less than the cash surrender value at the end of the current policy year as provided for by the policy in accordance with the terms of section 7 of this chapter; provided, that the company may, as a condition precedent to the making of such loan, and at its own option, require the payment of the unpaid balance, if any, of the premium or premiums for the current policy year, and may require the payment of interest in advance on the total loan to the end of the current policy year. The policy may provide that, if interest on the loan is not paid when due, it shall be added to the existing loan and become a part thereof and bear interest at the same rate as the loan. It shall further be stipulated in the policy that failure to repay any such loan or pay interest thereon shall not void the policy unless such total indebtedness to the company shall equal or exceed such cash surrender value at the time of such failure, nor until thirty (30) days after notice shall have been mailed by the company to the last known address of the insured and to the assignee, if any, if such assignee has notified the company of his address. No condition other than as provided in this subdivision shall be exacted as prerequisite to any such loan. The company shall reserve the right to defer the granting of any loan, except when made to pay premiums on a policy or policies issued by it, for six (6) months after application therefor is made. The provisions of this subdivision shall not be required in term policies nor shall they apply to paid-up insurance issued or granted in exchange for lapsed or surrendered policies.

(9) That, should there have been default in premium payment and the value of the policy applied to the extension of the insurance, and such insurance be in force and the original policy not surrendered to the company and canceled, the policy may be reinstated within three (3) years from the due date of the premium in default, upon evidence of insurability satisfactory to the company and payment of arrears of premiums with interest.

(10) That when a policy shall become a claim by the death of the insured, settlement shall be made upon receipt of due proof of death and of the interest of the claimant and not later than two (2) months after receipt of such proof.

(11) A title on the face and on the back of the policy describing the same.

     (b) Any of the provisions of subsection (a) not applicable to single premium policies shall to that extent not be incorporated therein. The provisions of subsection (a) shall not apply to policies issued on substandard, underaverage, or impaired risks. Any policy may be issued or delivered in this state which in the opinion of the department contains provisions on any one (1) or more of the several requirements of subsection (a) more favorable to the policyholder than those required in subsection (a).

Formerly: Acts 1935, c.162, s.151A; Acts 1943, c.189, s.2; Acts 1959, c.146, s.1. As amended by P.L.252-1985, SEC.61.

 

IC 27-1-12-7Required provisions relating to defaulting or surrendering policyholder

     Sec. 7. (a) No policy of life insurance, except as stated in subsection (f) of this section, bearing a date of issue which is the same as or later than a transition date to be selected by the company pursuant to section 12 of this chapter, such transition date in no event to be later than January 1, 1948, shall be delivered or issued for delivery in this state, or issued by a company organized under the laws of this state, unless it shall contain in substance the following provisions, or corresponding provisions which in the opinion of the department are at least as favorable to defaulting or surrendering policyholders as are the minimum requirements specified in this section and are essentially in compliance with subsection (g) of this section:

     (1) That, in the event of default in any premium payment after premiums have been paid for at least one (1) full year in the case of ordinary insurance or three (3) full years in the case of industrial insurance, the company will grant, upon proper request made not later than sixty (60) days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of an amount determined as specified in this section. In lieu of such stipulated paid-up nonforfeiture benefit, the company may substitute, upon proper request not later than sixty (60) days after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits;

     (2) That, upon surrender of the policy within sixty (60) days after the due date of any premium in default, after premiums have been paid for at least three (3) full years in the case of ordinary insurance or five (5) full years in the case of industrial insurance, the company will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of a stated amount determined as specified in this section;

     (3) That, if a request for a nonforfeiture benefit or surrender of the policy is not made or effected as contemplated in subdivisions (1) and (2) of this subsection, a designated paid-up nonforfeiture benefit shall become operative as specified in the policy;

     (4) That, if the policy shall have become paid up by completion of all premium payments or if it continues in the form of a paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the company will pay, upon surrender of the policy within thirty (30) days after any policy anniversary, a cash surrender value of such amount as may be determined in this section;

     (5) In the case of policies which cause, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first twenty (20) policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions to the credit of the policy and that there is no indebtedness to the company on account of or secured by the policy;

     (6) A brief and general statement of the method to be used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy on the policy anniversaries beyond the last anniversary of those for which such values and benefits are consecutively shown in the table provided for in subdivision (5) of this subsection;

     (7) An explanation of the manner in which the cash surrender value and the paid-up nonforfeiture benefit or benefits are affected by the existence of any paid-up additions to the policy or any indebtedness to the company on account of or secured by the policy.

     Any of the provisions of this subsection not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy.

     The company shall reserve the right to defer the payment of any cash surrender value for a period of six (6) months after demand therefor and surrender of the policy.

     (b) Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be an amount not less than the excess, if any, of the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy (including any existing paid-up additions) if there had been no default, over the sum of (1) the then present value of the adjusted premiums as defined in subsections (d) and (dd), corresponding to premiums which would have fallen due on and after such anniversary, and (2) the amount of any indebtedness to the company on account of or secured by the policy. However, for any policy issued on or after the operative date of subsection (dd) of this section which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value is an amount not less than the sum of the cash surrender value as defined in this paragraph for an otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender value as defined in this paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision.

     For any family policy issued on or after the operative date of subsection (dd) of this section, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse's age seventy-one (71), the cash surrender value referred to in the first paragraph of this subsection shall be an amount not less than the sum of the cash surrender value, as defined in that paragraph, for an otherwise similar policy issued at the same age without such term insurance on the life of the spouse and the cash surrender value, as defined in that paragraph, for a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse. Any cash surrender value available within thirty (30) days after any policy anniversary under any policy paid up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit, shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for by such paid-up policy (including any existing paid-up additions) decreased by any indebtedness to the company on account of or secured by the policy.

     (c) Any paid-up nonforfeiture benefit available under a policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be not less than the cash surrender value then provided for by such policy or, if none is provided for, the minimum amount determinable in accordance with subsection (b) in the absence of the condition of subsection (a)(2) that premiums be paid for at least a specified period.

     (d) This subsection does not apply to policies issued on or after the operative date of subsection (dd) of this section. Except as provided in the third paragraph of this subsection, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding any extra premiums charged because of impairments or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of (i) the then present value of the future guaranteed benefits provided for by the policy; (ii) two per cent (2%) of the amount of insurance, if the insurance be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with duration of the policy; (iii) forty per cent (40%) of the adjusted premium for the first policy year; (iv) twenty-five per cent (25%) of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less; provided that for the sole purpose of computing the amounts of (iii) and (iv) above, no adjusted premiums in excess of four per cent (4%) of the amount of insurance or uniform amount equivalent thereto shall be used.

     In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for the purpose of this subsection shall be deemed to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at date of issue as the benefits under the policy; provided that in the case of a policy for a varying amount of insurance issued on the life of a child under age ten (10), the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age ten (10) were the amount provided by such policy at age ten (10) or at expiry, if earlier.

     The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to (a) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during the period for which premiums for such term insurance benefits are payable, by (b) the adjusted premiums for such term insurance, the foregoing items (a) and (b) being calculated separately and as specified in the first two (2) paragraphs of this subsection except that, for the purposes of (ii), (iii) and (iv) of the first such paragraph, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (b) shall be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in (a).

     Except as otherwise provided in the succeeding paragraphs of this subsection, all adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1941 Standard Ordinary Mortality Table, provided, that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six (6) years younger than the actual age of the insured, and such calculations for all policies of industrial insurance shall be made on the basis of the 1941 Standard Industrial Mortality Table. All calculations shall be made on the basis of the rate of interest, not exceeding three and one-half percent (3 1/2%) per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits; provided that in calculating the present value of any nonforfeiture benefits consisting of paid-up term insurance with or without pure endowment of a lesser amount, the rates of mortality assumed may be not more than one hundred and thirty per cent (130%) of the rates of the mortality according to such applicable table; and provided that for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table or tables of mortality as may be specified by the company and approved by the department.

     In the case of ordinary policies bearing a date of issue which is the same as or later than the operative date of this paragraph as defined in the succeeding paragraph, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the Commissioners 1958 Standard Ordinary Mortality Table and the rate of interest, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits; provided, that such rate of interest shall not exceed three and one-half percent (3 1/2%) per annum, except that such rate of interest shall not exceed four percent (4%) per annum for policies bearing a date of issue of or later than September 1, 1973 and prior to September 1, 1979, and the interest rate may not exceed five and one-half percent (5 1/2%) per annum for policies bearing a date of issue after August 31, 1979; provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six (6) years younger than the actual age of the insured; provided that in calculating the present value of any nonforfeiture benefits consisting of paid-up term insurance with or without pure endowment of a lesser amount, the rates of mortality assumed may be not more than those shown in the Commissioners 1958 Extended Term Insurance Table; and provided that for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table or tables of mortality as may be specified by the company and approved by the department.

     Any company may file with the department a written notice of its election to invoke the provisions of the preceding paragraph after a specified date before January 1, 1966. After the filing of such notice, then upon such specified date (which shall be the operative date of the preceding paragraph for such company), the preceding paragraph shall become operative with respect to the ordinary policies issued by such company and bearing a date of issue which is the same as or later than such specified date. If a company makes no such election, the operative date of the preceding paragraph for such company shall be January 1, 1966.

     In the case of policies of industrial insurance bearing a date of issue which is the same as or later than the operative date of this paragraph as defined in the succeeding paragraph, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table and the rate of interest, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits; provided that such rate of interest shall not exceed three and one-half percent (3 1/2%) per annum, except that such rate of interest shall not exceed four percent (4%) per annum for policies bearing a date of issue of or later than September 1, 1973 and before September 1, 1979, and the rate of interest may not exceed five and one-half percent (5 1/2%) per annum for policies bearing a date of issue after August 31, 1979; provided, further, that in calculating the present value of any nonforfeiture benefits consisting of paid-up term insurance with or without pure endowment of a lesser amount, the rates of mortality assumed may be not more than those shown in the Commissioners 1961 Industrial Extended Term Insurance Table; and provided that for insurance issued on a substandard basis, the calculations of any such adjusted premiums and present values may be based on such other table or tables of mortality as may be specified by the company and approved by the department.

     Any company may file with the department a written notice of its election to invoke the provisions of the preceding paragraph after a specified date before January 1, 1968. After the filing of such notice, then upon such specified date (which shall be the operative date of the preceding paragraph for such company), the preceding paragraph shall become operative with respect to the policies of industrial insurance issued by such company and bearing a date of issue which is the same as or later than such specified date. If a company makes no such election, the operative date of the preceding paragraph for such company shall be January 1, 1968.

     (dd)(1) This subsection applies to all policies issued on or after the operative date of this subsection. Except as provided in subdivision (7) of this subsection, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of (i) the then present value of the future guaranteed benefits provided for by the policy; (ii) one percent (1%) of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years; and (iii) one hundred twenty-five percent (125%) of the nonforfeiture net level premium as defined in this subsection. Provided that in applying the percentage specified in (iii) no nonforfeiture net level premium may be considered to exceed four percent (4%) of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years. The date of issue of a policy for the purpose of this subsection shall be the date as of which the rated age of the insured is determined.

     (2) The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one (1) per annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due.

     (3) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums, the future adjusted premiums, nonforfeiture net level premiums, and present values shall be recalculated on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change.

     (4) Except as otherwise provided in subdivision (7) of this subsection, the recalculated future adjusted premiums for any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits or premiums, of all such future adjusted premiums shall be equal to the excess of: (A) the sum of (i) the then present value of the then future guaranteed benefits provided for by the policy and (ii) the additional expense allowance, if any, over (B) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.

     (5) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum of (i) one percent (1%) of the excess, if positive, of the average amount of insurance at the beginning of each of the first ten (10) policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first ten (10) policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and (ii) one hundred twenty-five percent (125%) of the increase, if positive, in the nonforfeiture net level premium.

     (6) The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (A) by (B) where:

(A) equals the sum of:

(i) the nonforfeiture net level premium applicable prior to the change times the present value of an annuity of one (1) per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred; and

(ii) the present value of the increase in future guaranteed benefits provided for by the policy; and

(B) equals the present value of an annuity of one (1) per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due.

     (7) Notwithstanding any other provisions of this subsection to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that, in each policy year, that policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform amounts of insurance on the standard basis.

     (8) All adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of (i) the Commissioners 1980 Standard Ordinary Mortality Table or (ii) at the election of the company for any one (1) or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors; shall for all policies of industrial insurance be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table; and shall for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this subsection, for policies issued in that calendar year. However:

(A) At the option of the company, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this subsection, for policies issued in the immediately preceding calendar year.

(B) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by subsection (a) of this section, shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any.

(C) A company may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.

(D) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1980 Extended Term Insurance Table for policies of ordinary insurance and not more than the Commissioners 1961 Industrial Extended Term Insurance Table for policies of industrial insurance.

(E) For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on appropriate modifications of the tables referred to in this subdivision.

(F) For policies issued:

(i) before the operative date of the valuation manual specified in IC 27-1-12.8-34, any commissioners standard ordinary mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table; or

(ii) on or after the operative date of the valuation manual specified in IC 27-1-12.8-34, the valuation manual must provide the commissioners standard ordinary mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table. If the commissioner adopts a rule under IC 4-22-2 to approve any commissioners standard ordinary mortality table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.

(G) For policies issued:

(i) before the operative date of the valuation manual specified in IC 27-1-12.8-34, any commissioners standard industrial mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table; or

(ii) on or after the operative date of the valuation manual specified in IC 27-1-12.8-34, the valuation manual must provide the commissioners standard industrial mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table. If the commissioner adopts a rule under IC 4-22-2 to approve any commissioners standard industrial mortality table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.

     (9) The nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be as follows:

(A) For policies issued before the operative date of the valuation manual specified in IC 27-1-12.8-34, equal to one hundred twenty-five percent (125%) of the calendar year statutory valuation interest rate for such policy under IC 27-1-12.8, rounded to the nearer one quarter of one percent (1/4 of 1%).

(B) For policies issued on or after the operative date of the valuation manual specified in IC 27-1-12.8-34, the nonforfeiture interest rate per annum for a policy issued in a particular calendar year must be provided by the valuation manual.

     (10) Notwithstanding any other provision in this title to the contrary, any refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form.

     (11) After September 1, 1981, any company may file with the commissioner a written notice of its election to comply with the provisions of this subsection after a specified date before January 1, 1989, which shall be the operative date of this subsection for such company. If a company makes no such election, the operative date of this subsection for such company shall be January 1, 1989.

     (e) Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in subsections (b), (c), (d), and (dd) may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, shall be not less than the amounts used to provide such additions. Notwithstanding the provisions of subsection (b), additional benefits payable (1) in the event of death or dismemberment by accident or accidental means, (2) in the event of total and permanent disability, (3) as reversionary annuity or deferred reversionary annuity benefits, (4) as term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this section would not apply, (5) as term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child's age is twenty-six (26), is uniform in amount after the child's age is one (1), and has not become paid up by reason of the death of a parent of the child, and (6) as other policy benefits additional to life insurance and endowment benefits, and premiums for all such additional benefits, shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this section, and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.

     (f) This section shall not apply to any reinsurance, group insurance, pure endowment, annuity or reversionary annuity contract, nor to any term policy of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, or renewal thereof, of twenty (20) years or less expiring before age seventy-one (71), for which uniform premiums are payable during the entire term of the policy, nor to any term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium, calculated as specified in subsections (d) and (dd), is less than the adjusted premium so calculated on a term policy of uniform amount, or renewal of it, which provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance, and for a term of twenty (20) years or less expiring before age seventy-one (71), for which uniform premiums are payable during the entire term of the policy, nor to any policy which provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in subsections (b), (c), (d), and (dd) of this section, exceeds two and one-half percent (2 1/2%) of the amount of insurance at the beginning of the same policy year, nor to any policy which shall be delivered outside this state through an agent or other representative of the company issuing the policy. For purposes of determining the applicability of this section, the age at expiry for a joint term life insurance policy shall be the age at expiry of the oldest life.

     (g) This subsection, in addition to all other applicable subsections of this section, applies to all policies issued on or after January 1, 1985. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be an amount which does not differ by more than two tenths of one percent (.2%) of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years, from the sum of (a) the greater of zero (0) and the basic cash value specified in this subsection and (b) the present value of any existing paid-up additions less the amount of any indebtedness to the company under the policy.

     The basic cash value shall be equal to the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the company, if there had been no default, less the then present value of the nonforfeiture factors, as defined in this subsection, corresponding to premiums which would have fallen due on and after such anniversary. However, the effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in subsection (b) or (d) of this section, whichever is applicable, shall be the same as are the effects specified in that subsection on the cash surrender values defined in that subsection.

     The nonforfeiture factor for each policy year shall be an amount equal to a percentage of the adjusted premium for the policy year, as defined in subsection (d) or (dd), whichever is applicable. Except as is required by the next succeeding sentence of this paragraph, such percentage:

(1) must be the same percentage for each policy year between the second policy anniversary and the later of (i) the fifth policy anniversary and (ii) the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least two tenths of one percent (.2%) of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years; and

(2) must be such that no percentage after the later of the two (2) policy anniversaries specified in the preceding item (a) may apply to fewer than five (5) consecutive policy years. No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in subsection (d) or (dd) of this section, whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value.

     All adjusted premiums and present values referred to in this subsection shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the policy's compliance with the other subsections of this section. The cash surrender values referred to in this subsection shall include any endowment benefits provided for by the policy.

     Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment shall be determined in manners consistent with the manners specified for determining the analogous minimum amounts in subsections (a), (b), (c), (dd), and (e) of this section. The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed as subdivisions (1) through (6) in subsection (e) of this section shall conform with the principles of this subsection.

     (h) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance which is of such a nature that minimum values cannot be determined by the methods described in subsections (a), (b), (c), (d), or (dd) of this section then:

     (1) the commissioner must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by subsection (a), (b), (c), (d), or (dd) of this section;

     (2) the commissioner must be satisfied that the benefits and the pattern of premiums of that plan are not such as to mislead prospective policyholders or insureds; and

     (3) the cash surrender values and paid-up nonforfeiture benefits provided by such plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this section, as determined by regulations promulgated by the department.

Formerly: Acts 1935, c.162, s.151B; Acts 1943, c.189, s.3; Acts 1949, c.8, s.1; Acts 1959, c.146, s.2; Acts 1963, c.212, s.1; Acts 1973, P.L.273, SEC.1. As amended by Acts 1979, P.L.250, SEC.1; Acts 1981, P.L.237, SEC.1; P.L.276-2013, SEC.3.

 

IC 27-1-12-8Prohibited provisions

     Sec. 8. No policy of life insurance shall hereafter be issued or delivered in this state, or be issued by a life insurance company organized under the laws of this state, if it contain any of the following provisions:

     (1) Limiting the time within which any action at law or in equity may be commenced, to less than three (3) years after the cause of action shall accrue.

     (2) By which the policy shall purport to be issued or to take effect more than six (6) months before the original application for insurance was made.

     (3) That in the event of the maturity of any policy after the expiration of the contestable period thereof, for any mode of settlement at maturity of less value according to the company's published rates therefor then in use, than the amount insured under the policy, plus dividend additions, if any, less any indebtedness to the company on account of or secured by the policy and less any premium that may, by the terms of the policy, be deducted.

     (4) For the forfeiture of the policy for failure to repay any loan on the policy, or to pay interest on such loan while the total indebtedness on the policy is less than the loan value thereof; or any provision for forfeiture for failure to repay any such loan or to pay interest thereon, unless such provision contain a stipulation that no such forfeiture shall occur until at least thirty (30) days after notice shall have been mailed by the company to the last-known address of the insured and to the assignee, if any, if such assignee has notified the company of his address.

     (5) Which contains any clause promising to the holder of such policy any special dividend or benefit to be derived from any other policy; nor shall any company organized under the laws of this state issue in connection with any policy any separate paper or contract promising any such special dividend or benefit; nor shall any company be admitted to do business in this state that issues policies which contain any such clause, or which issues in connection with any policy any separate paper or contract promising any such dividend or benefit.

Formerly: Acts 1935, c.162, s.152.

 

IC 27-1-12-9Repealed

Formerly: Acts 1935, c.162, s.153; Acts 1943, c.189, s.4. As amended by P.L.252-1985, SEC.62. Repealed by P.L.276-2013, SEC.4.

 

IC 27-1-12-10Repealed

Formerly: Acts 1935, c.162, s.153A; Acts 1943, c.189, s.5; Acts 1959, c.146, s.3; Acts 1963, c.212, s.2; Acts 1973, P.L.273, SEC.2. As amended by Acts 1979, P.L.250, SEC.2; Acts 1980, P.L.22, SEC.16; Acts 1981, P.L.237, SEC.2; P.L.2-1987, SEC.35; P.L.5-1988, SEC.142; P.L.130-1994, SEC.17; P.L.116-1994, SEC.22. Repealed by P.L.276-2013, SEC.5.

 

IC 27-1-12-10.1Repealed

As added by P.L.130-1994, SEC.18 and P.L.116-1994, SEC.23. Repealed by P.L.276-2013, SEC.6.

 

IC 27-1-12-10.5Rules for minimum standards for establishment of reserves

     Sec. 10.5. The department shall adopt rules under IC 4-22-2 to prescribe minimum standards for the establishment of reserves as required by the National Association of Insurance Commissioners or its successor organization for insurers writing Class 1(a), Class 1(b), and Class 1(c) lines of business.

As added by P.L.130-1994, SEC.19 and P.L.116-1994, SEC.24.

 

IC 27-1-12-11Deposit of assets to cover reserve valuation and liabilities; additional deposits; foreign deposits; continuation of deposits under repealed or superseded laws

     Sec. 11. (a) After the department has ascertained the net reserve value of all policies under IC 27-1-12.8-18 or the reserve liabilities under IC 27-1-12.8 of any life insurance company organized and doing business in this state, the department shall notify said company of the amount or amounts thereof. Within sixty (60) days after the date of such notification, the officers of such company shall deposit with the department, solely for the security and benefit of all its policyholders, assets in an amount, invested in accordance with section 2 of this chapter (except paragraph 20 of section 2(b) of this chapter) which together with the assets already deposited with the department and such additional assets as may be deposited by said company with other states or governments, pursuant to the requirements of the laws of such other states or governments in which said company is doing business, shall be not less than the lesser of the amount of such reserve value or reserve liabilities or the amount provided under subsection (f). No life insurance company organized under this article or any other law of this state shall be required to make such deposit until the amount prescribed by this subsection exceeds the amount deposited by said company under IC 27-1-6-14 or IC 27-1-6-15. Investments in real estate shall be deposited in the form of satisfactory evidences of ownership. The deposit requirement in relation to policy loans and bank deposits shall be considered fulfilled by the inclusion of such item in the company's annual statement, but subject to the right of the company at any time, and the obligation of the company on demand of the department, to file with the department a certificate as to the amount of such item.

     (b) If the department in the course of the year ascertains that the net reserve value of a company's policies under IC 27-1-12.8-18 or its reserve liabilities under IC 27-1-12.8 exceeds such company's deposits as required by subsection (a), it may require such company within sixty (60) days to increase its deposit to the required amount.

     (c) Nothing in this article shall prevent the deposit of bonds, mortgages, or other securities which meet the investment requirements of a foreign or alien state or country, to an amount not exceeding the amount of the reserves on policies issued to residents of, and to corporations doing business in, such state or country. If, pursuant to the law of a foreign or alien state or country in which an Indiana life insurance company is doing business, securities belonging to such a company are required to be deposited within the boundaries of such foreign or alien state or country, credit for the amount of such deposit, not exceeding the amount of the reserves on policies issued to residents of, and to corporations doing business in, such foreign or alien state or country, may be taken by the company as an offset against its deposits required under this article.

     (d) If, pursuant to the law of a foreign or alien state or country, a life insurance company domiciled therein is not permitted a reserve credit for reserves maintained by a reinsurer foreign to such a state or country, except on the condition that the amount of such reserve be deposited with the insurance supervisory official of such state or country, a deposit credit for the amount of such reserves so deposited shall be allowed a domestic life insurance company accepting reinsurance from companies domiciled in such state or country.

     (e) Any deposit of assets with the department pursuant to any law superseded by this chapter shall, prior to the first deposit date contemplated in subsection (a), be continued with the department and otherwise be subject to this section.

     (f) The amount of the deposit, except as otherwise provided in subsection (a), shall be one million dollars ($1,000,000) excluding policy loans and bank deposits, or such greater amount as the department deems necessary to protect the interests of the policyholders of a particular company by an order to the company to deposit additional amounts under this section.

Formerly: Acts 1935, c.162, s.153B; Acts 1943, c.189, s.6; Acts 1945, c.175, s.4. As amended by Acts 1981, P.L.238, SEC.1; P.L.31-1988, SEC.12; P.L.186-1997, SEC.6; P.L.81-2012, SEC.2; P.L.276-2013, SEC.7; P.L.129-2014, SEC.4.

 

IC 27-1-12-12Transition period; selection of date; effect

     Sec. 12. The period beginning July 1, 1943, and ending January 1, 1948, both dates inclusive, shall be a transition period between the nonforfeiture provisions set forth respectively in sections 5, 6, and 7 of this chapter and between the valuation provisions set forth respectively in IC 27-1-12.8-18 and IC 27-1-12.8-19 through IC 27-1-12.8-40. Accordingly, a company may, by means of a writing filed with the department, select a transition date within such period, but should a company fail to make such a selection, the transition date as to such company shall be January 1, 1948. Except as otherwise provided in IC 27-1-12.8, for group annuities and pure endowments, policies issued prior to the transition date shall be governed in all respects and at all times by section 5 of this chapter and IC 27-1-12.8-18, and policies issued on or after such transition date shall be governed in all respects and at all times by sections 6 and 7 of this chapter and IC 27-1-12.8. A company's election of a transition date shall be irrevocable and shall apply to sections 6 and 7 of this chapter and IC 27-1-12.8 without exception, as well as to that portion of section 31 of this chapter which relates to policies bearing a date of issue later than such transition date.

Formerly: Acts 1935, c.162, s.153C; Acts 1943, c.189, s.7; Acts 1973, P.L.273, SEC.3; Acts 1974, P.L.1, SEC.12. As amended by P.L.252-1985, SEC.63; P.L.276-2013, SEC.8.

 

IC 27-1-12-13Filing form of policy with department; objections; effect on right to issue

     Sec. 13. A policy of life insurance shall not be issued or delivered in this state until the form of the same has been filed with the department, nor if the department give written notice within thirty (30) days of such filing, to the company proposing to issue it showing wherein the form of such policy does not comply with the requirements of the laws of this state.

Formerly: Acts 1935, c.162, s.154.

 

IC 27-1-12-14Designation of beneficiary; change of beneficiary; eligible beneficiaries; exemption of policy proceeds from claims of creditors

     Sec. 14. (a) As used in this section, "premium" includes any deposit or contribution.

     (b) As used in this section, "proceeds or avails" means death benefits, cash surrender and loan values, premiums waived, and dividends whether used in reduction of the premiums or in whatsoever manner used or applied, excepting only where the debtor has, subsequent to the issuance of the policy, actually elected to receive the dividends in cash.

     (c) Any person whose life is insured by any life insurance company may name as his payee or beneficiary any person or persons, natural or artificial, with or without an insurable interest, or his estate. A designation at the option of the policyowner may be made either revocable or irrevocable, and the option elected shall be set out in and shall be made a part of the application for the certificate or policy of insurance. When the right of revocation has been reserved, the person whose life is insured, subject to any existing assignment of the policy, may at any time designate a new payee or beneficiary, with or without reserving the right of revocation, by filing written notice thereof at the home office of the corporation, accompanied by the policy for suitable indorsement thereon.

     (d) Any person may effect an insurance on his life, for any definite period of time, or for the term of his natural life, to inure to the sole benefit of the spouse and children, or of either, or other relative or relatives dependent upon such person or any creditor or creditors as he may cause to be appointed and provided in the policy.

     (e) Except as provided in subsection (g), all policies of life insurance upon the life of any person, which name as beneficiary, or are bona fide assigned to, the spouse, children, or any relative dependent upon such person, or any creditor, shall be held, subject to change of beneficiary from time to time, if desired, for the benefit of such spouse, children, other relative or creditor, free and clear from all claims of the creditors of such insured person or of the person's spouse; and the proceeds or avails of all such life insurance shall be exempt from all liabilities from any debt or debts of such insured person or of the person's spouse.

     (f) A premium paid for an individual life insurance policy that names as a beneficiary, or is legally assigned to, a spouse, child, or relative who is dependent upon the policy owner is not exempt from the claims of the creditors of the policy owner if the premium is paid:

(1) not more than one (1) year before the date of the filing of a voluntary or involuntary bankruptcy petition by; or

(2) to defraud the creditors of;

the policy owner.

     (g) The insurer issuing the policy is discharged from all liability by payment of the proceeds and avails of the policy in accordance with the terms of the policy unless, before payment, the insurer has received at the insurer's home office, written notice by or on behalf of a creditor of the policy owner that specifies the amount claimed against the policy owner.

Formerly: Acts 1935, c.162, s.155; Acts 1973, P.L.274, SEC.1; Acts 1975, P.L.280, SEC.1. As amended by Acts 1981, P.L.239, SEC.1; P.L.253-1995, SEC.1; P.L.82-1998, SEC.2.

 

IC 27-1-12-15Competency of certain minors to contract for insurance and receive payments

     Sec. 15. (a) Any person who is not of the full age of eighteen (18) years but who is of the age, as determined by the nearest birthday, of not less than sixteen (16) years, shall be deemed competent to contract for life, accident and sickness insurance or annuities upon the life of such minor for the benefit of such minor or for the benefit of the father, mother, husband, wife, brother or sister, child or children, or any grandparent of such minor, and to exercise and enjoy every right, privilege and benefit provided by any such contracts on the life of such minor, subject to the foregoing limitations as to the designation of beneficiary.

     (b) No person who shall have attained the age of eighteen (18) years is incompetent because of age to contract for any of the kinds of insurance described in Class 1 of IC 1971, 27-1-5-1, or to exercise and enjoy every right, privilege and benefit provided by any such contract.

     (c) No person who shall have attained the age of eighteen (18) years is incompetent because of age to receive and to give full acquittance and discharge for payments made to such person by a life insurance company under the provisions of a contract of insurance of any of the kinds described in Class 1 of IC 1971, 27-1-5-1, or under the provisions of a settlement agreement executed in connection with any such contract of insurance.

Formerly: Acts 1935, c.162, s.155a; Acts 1961, c.203, s.1; Acts 1971, P.L.383, SEC.1; Acts 1973, P.L.275, SEC.1.

 

IC 27-1-12-16Proceeds of life insurance; definition; payment to trustees

     Sec. 16. (A) The terms "proceeds" and "proceeds of life insurance" and similar phrases used in this section mean and include any and all benefits payable by the insurer by reason of the death of the insured under any "life insurance," "policy of life insurance," "insurance policy," "policy," or "annuity contract" providing for benefits on the death of the insured, including individual ordinary life policies, certificates issued under a group policy, annuity contracts, and accident or health policies.

     (B) Proceeds of life insurance policies heretofore made payable to a trustee or trustees named as beneficiary or hereafter to be named beneficiary under an inter vivos trust shall be paid directly to the trustee or trustees and held and disposed of by the trustee or trustees as provided in the trust agreement or declaration of trust in writing made and in existence on the date of death of the insured, whether or not such trust or declaration of trust is amendable or revocable or both, or whether it may have been amended, and notwithstanding the reservation of any or all rights of ownership under the insurance policy or annuity contract; subject, however, to a valid assignment of any part of the proceeds. It is not necessary to the validity of such trust agreement or declaration of trust that it be funded or have a corpus other than the right, which need not be irrevocable, of the trustee or trustees named therein to receive such proceeds as beneficiary.

     (C) A policy of life insurance or annuity contract may designate as beneficiary a trustee or trustees named or to be named by will if the designation is made in accordance with the provisions of the policy or contract whether or not the will is in existence at the time of the designation. The company shall, within sixty days after receipt at its home office of proof of probate of the will, pay the proceeds of such insurance or contract to the trustee or trustees designated in the insurance policy or annuity contract, subject to a valid assignment of any part thereof and any other provisions of the policy or contract, unless prior to the actual payment by the company it shall have received at its home office written notice of the filing or pendency of (1) objection to the probate of said will, or (2) a suit to contest the validity of said will or of the testamentary trust or trusts created therein to which such proceeds are payable, or (3) petition for the construction of that part of the testamentary trust designating the trustee or trustees: Provided, however, That if the company makes any payment or payments of proceeds to such trustee or trustees in accordance with the terms of the policy or contract before receipt at the home office of such written notice, said trustee or trustees shall give full acquittance therefor to the company and such payment shall fully discharge the company from all claims and liability to the extent thereof. Provided, further, That if such written notice is received by the company, payment by it of any unpaid proceeds may be delayed during the pendency of said objections, suit, or petition for construction for not to exceed one (1) year from the date of death of insured, and thereafter the company may pay any and all unpaid proceeds due by reason of the death of the insured to the clerk of the court wherein the probate proceeding is pending by depositing them with such clerk who, as such clerk, shall give full acquittance to the company for all proceeds so paid and the company shall be fully discharged from any and all liability and claims by or on behalf of any other person or persons whomsoever to the extent of the amount so paid and deposited. The clerk shall thereafter hold and disburse said proceeds in accordance with the order of said court to the party or parties and in the amount or amounts provided in said order upon receiving proper receipts therefor; all Provided, however, That the procedure provided for herein shall not preclude the company from interpleading or being interpleaded in any appropriate proceeding or filing a bill of interpleader in any court of competent jurisdiction.

     (d) If no claim to proceeds is made by any trustee designated as the beneficiary in any policy of insurance or annuity contract within one year after the death of the insured or if satisfactory evidence is furnished the insurance company within the one-year period showing that there is or will be no trustee qualified to receive the proceeds, payment may be made by the insurance company to those thereafter entitled.

     (e) The proceeds of insurance collected by the trustee or trustees are not part of the testator's estate and are not subject to the debts of the insured or to transfer, inheritance, or estate taxes to any greater extent than if the proceeds were payable to some named beneficiary or beneficiaries other than to the estate of the insured or executor or administrator thereof.

     (f) This section applies to all trustee designations of a beneficiary or beneficiaries by an insured dying after June 15, 1967, regardless of when made, naming a trustee or trustees of a trust or trusts established by will.

     If any provision of this section or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of this section which can be given effect without the invalid provision or application.

Formerly: Acts 1935, c.162, s.155b; Acts 1967, c.127, s.4.

 

IC 27-1-12-17Authority of corporation to insure life of director, officers, agent, or employee; consent to change of beneficiary

     Sec. 17. Any corporation organized under the laws of this state may, when authorized by its board of directors, or its executive committee, cause to be insured, for its benefit, the life of any of its directors, officers, agents or employees, and to pay the premiums for such insurance; and may continue to pay such premiums after the insured shall cease to be such a director, officer, agent or employee of such corporation.

     Due authority for such corporation to effect, assign, release, convert, surrender, or take any other action with reference to such insurance, shall be sufficiently evidenced to the insurance company by a certificate to that effect by the secretary, or other corresponding officer of such corporation under its corporate seal. Any such certificate shall protect the insurance company for any act done or suffered by it upon the faith thereof, without further inquiry into the validity of the corporate authority or the regularity of the corporate proceedings. The beneficiary in such a policy shall not be changed except with the consent of such corporation, beneficiary, effecting such insurance.

     No person shall, by reason of interest in the subject matter, be disqualified from acting as a director, or as a member of the executive committee of such corporation on any corporate act touching such insurance.

Formerly: Acts 1935, c.162, s.156.

 

IC 27-1-12-17.1Acquisition of insurable interest in and policy on life of employee

     Sec. 17.1. (a) As used in this section, "employee" includes a director, an officer, a partner, a manager, a nonmanagement employee, and a retired employee of the employer or the employer's affiliates.

     (b) As used in this section, "employer" means an individual, a corporation, a partnership, a limited liability company, and any other legal entity that has at least one (1) employee and is legally doing business in Indiana. The term includes an association of employers and the employer's affiliates.

     (c) An employer that provides life insurance, health insurance, disability insurance, retirement benefits, or similar benefits to an employee of the employer has an insurable interest in the life of the employee. The trustee of a trust established by an employer for the benefit of the employer has the same insurable interest as the employer in the life of an employee. The trustee of a trust established by an employer that provides life insurance, health insurance, disability insurance, retirement benefits, or similar benefits to an employee of the employer and acts in a fiduciary capacity with respect to that employee or the employee's dependents or beneficiaries has an insurable interest in the life of the employee for whom benefits are to be provided.

     (d) An employer or the trustee of a trust established by the employer may acquire insurance upon an employee in whom the employer or the trustee of the trust has an insurable interest as determined under subsection (c) if the employee consents to be insured. An employee consents to be insured if the employee is provided written notice of the insurance coverage and does not object to the insurance coverage within thirty (30) days of receipt of the notice.

     (e) An insurable interest must exist at the time the contract of life or disability insurance becomes effective, but need not exist at the time the loss occurs.

     (f) Proceeds of a policy issued under this section are exempt from the claims of the employee's creditors or dependents.

As added by P.L.254-1995, SEC.1.

 

IC 27-1-12-18Contract to extend time for premium payments

     Sec. 18. A life insurance company may enter into subsequent agreements in writing with the insured, which need not be attached to the policy, to extend the time for the payment of any premium, or part thereof, upon condition that failure to comply with the terms of such agreement shall lapse the policy as provided in said agreement or in the policy. Subject to such lien as may be created to secure any indebtedness contracted by the insured in consideration of such extension, said agreement shall not impair any right existing under the policy.

Formerly: Acts 1935, c.162, s.157.

 

IC 27-1-12-19Ascertainment of indebtedness due upon policy or premium loans; interest

     Sec. 19. In ascertaining the indebtedness due upon policy or premium loans, the interest, if not paid when due, shall be added to the principal of such loans and shall bear interest at the rate specified in the note or loan agreement.

Formerly: Acts 1935, c.162, s.158.

 

IC 27-1-12-20Premium deposits; maximum; inclusion in cash surrender value; disposition; withdrawal

     Sec. 20. No life insurance company shall receive or accept, by virtue of the provisions set forth in any policy or indorsement thereon, any premium deposit in excess of the regular premium then due whenever the total premium deposit together with the policy reserve shall be sufficient as a gross premium to convert the policy into a fully paid policy. The policy or indorsement shall contain a provision that the amount of any premium deposit fund held by the company will be included as a part of the cash surrender value of the policy, a provision providing for the disposition of such fund if it is not sufficient to pay the next premium, and a provision that such fund is not withdrawable except by surrender of the policy, a loan thereon or through the selection of a nonforfeiture value.

Formerly: Acts 1935, c.162, s.159.

 

IC 27-1-12-21Power to hold proceeds under trust or other agreement with policyholder

     Sec. 21. Any life insurance company organized under the laws of this state shall have power to hold the proceeds of any policy issued by it under a trust or other agreement upon such terms and restrictions as to revocation by the policyholder and control by beneficiaries and with such exemptions from the claims of creditors of beneficiaries other than the policyholder as shall have been agreed to in writing by such company and the policyholder. Such insurance company shall not be required to segregate funds so held but may hold them as a part of its general corporate assets.

Formerly: Acts 1935, c.162, s.160.

 

IC 27-1-12-22Impairment of assets or capital; notice of time for restoration; suspension of right to issue new policies

     Sec. 22. If it appears to the department from an examination made by it or by an examiner appointed by it, that the assets of any domestic life insurance company are insufficient to justify its continuance in business or that its capital is impaired the department shall notify such company, setting a time, within the discretion of the commissioner, by which such impairment of assets or of its capital shall be restored and further notifying such company to issue no new policies until its assets have become equal to its liabilities, or its capital has been restored unimpaired.

Formerly: Acts 1935, c.162, s.161.

 

IC 27-1-12-23Procedure for converting domestic stock life insurance company into mutual life insurance company

     Sec. 23. Any domestic stock life insurance company may become a mutual life insurance company and to that end may carry out a plan for the acquisition of shares of its capital stock by amending its articles of incorporation and complying with the following requirements:

     (a) Such plan shall be approved by a two-thirds (2/3) vote of the policyholders, present and voting at a meeting called for that purpose. For the purpose of this section a quorum shall consist of at least ten per cent (10%) of the policyholders of such company. Each policyholder whose insurance shall have been in force for at least one (1) year prior to such meeting shall have one (1) vote, regardless of the number of policies or amount of insurance he may have with such company. Notice of such meeting shall be given by mailing from the principal office of such company at least thirty (30) days prior to the date set for such meeting in a sealed envelope, postage prepaid, addressed to such policyholders at their last known post-office addresses. Voting shall be by ballot, in person or by proxy, or by mail under the direction of inspectors appointed by the commissioner and in accordance with such other regulations as he may prescribe. Such inspectors shall have the power to determine all questions concerning the verification of the ballots, the ascertainment of the validity thereof, the qualifications of the voters, and to canvass the vote. They shall certify to the commissioner and to the company the result of such election. All necessary expenses incurred by the commissioner or by the inspectors appointed by him shall be certified by him to and paid by the company.

     (b) Such plan shall be submitted to and approved by the commissioner. The commissioner shall not approve said plan unless in his opinion the rights and interests of all policyholders are preserved. In carrying out said plan a company may acquire any shares of its own stock by gift, bequest or purchase. Any shares thus acquired shall be held in trust for the policyholders of the company as hereinafter provided and shall be assigned and transferred on the books of the company to three (3) trustees who shall hold in trust and shall vote them at all company meetings until all the capital stock of such company is acquired, when the entire capital stock shall be cancelled, and thereupon, the company shall be and become a mutual life insurance company without capital stock. Such trustees shall be appointed and vacancies shall be filled as provided in the plan adopted under the provisions of this section. Such trustees shall file with the company a verified acceptance of their appointments and declarations that they will faithfully discharge their duties as such trustees. All dividends and other sums acquired, after paying the necessary expenses of executing said trust, shall be immediately repaid to said company for the benefit of all who are or may become policyholders of said company and entitled to participate in the profits thereof, and shall be added to and become a part of the surplus earned by said company and be apportionable accordingly as a part of said surplus among said policyholders.

Formerly: Acts 1935, c.162, s.162.

 

IC 27-1-12-24Offering stock or certificates as inducement for purchase of insurance or annuity; revocation of authority

     Sec. 24. No life insurance company doing business in this state shall issue in this state, nor permit its agents, officers, or employees to issue or deliver in this state, agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities, or any special advisory board or other contracts of any kind promising returns and profits as an inducement to insurance or for the purchase of an annuity; and no life insurance company shall be authorized to do business in this state which issues or permits its agents, officers, or employees to issue in this state or in any other state or territory agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities, or any special advisory board or other contracts of any kind promising returns and profits as an inducement to insurance or for the purchase of an annuity; and no corporation or stock company acting as agent of a life insurance company nor any of its agents, officers, or employees shall be permitted to sell, agree to offer or sell, or give or offer to give, directly or indirectly, in any manner whatsoever, any share of stock, securities, bonds, or agreement of any form or nature promising returns and profits as an inducement to insurance or for the purchase of an annuity; or in connection therewith. The department may, upon due proof after notice and hearing that any such company or agent thereof has violated any of the provisions of this section, revoke the authority of the company or agent so offending.

Formerly: Acts 1935, c.162, s.163.

 

IC 27-1-12-25Misrepresentation of policy terms or benefits; inducing policyholder to lapse, forfeit, or surrender insurance

     Sec. 25. No life insurance company doing business in this state, and no officer, director or agent thereof shall make, issue or circulate, or cause to be issued or circulated, any estimate, illustration, circular, or statement of any sort misrepresenting the terms of any policy issued or to be issued by it or the benefits or advantages promised thereby, or the dividends or share of the surplus to be received thereon, or shall use any name or title of any policy or class of policies misrepresenting the true nature thereof. Nor shall a person make any misrepresentation to any person insured in any company for the purpose of inducing or tending to induce a policyholder in any company to lapse, forfeit, or surrender his insurance.

Formerly: Acts 1935, c.162, s.164. As amended by Acts 1978, P.L.2, SEC.2710.

 

IC 27-1-12-26Fraudulent representations; offense

     Sec. 26. A person who knowingly makes any false or fraudulent statement or representation in or with reference to any application for life insurance, or for the purpose of obtaining any fee, commission, money, or benefit from or in any company transacting business under this article, commits a Class A misdemeanor.

Formerly: Acts 1935, c.162, s.165. As amended by Acts 1978, P.L.2, SEC.2711.

 

IC 27-1-12-27Repealed

Formerly: Acts 1935, c.162, s.166; Acts 1943, c.311, s.1; Acts 1945, c.59, s.1; Acts 1953, c.228, s.1; Acts 1957, c.54, s.1; Acts 1969, c.327, s.1; Acts 1974, P.L.122, SEC.1. Repealed by P.L.254-1985, SEC.7.

 

IC 27-1-12-28Repealed

Formerly: Acts 1935, c.162, s.167; Acts 1953, c.228, s.2. Repealed by P.L.254-1985, SEC.7.

 

IC 27-1-12-29Group life insurance; exemption of proceeds from legal process

     Sec. 29. (a) As used in this section, "premium" includes any deposit or contribution.

     (b) Except as provided in subsection (c), no policy of group insurance nor the proceeds thereof, when paid to any employee or employees, shall be liable to attachment, garnishment, or other process, or to be seized, taken, appropriated, or applied to any legal or equitable process or operation of law, to pay any debt or liability of such employee, or his beneficiary, or any other person who may have a right thereunder, either before or after payment, nor shall the proceeds thereof, where not payable to a named beneficiary, constitute a part of the estate of the employee for the payment of his debts.

     (c) A premium paid for an individual life insurance policy that names as a beneficiary, or is legally assigned to, a spouse, child, or relative who is dependent upon the policy owner is not exempt from the claims of the creditors of the policy owner if the premium is paid:

(1) not more than one (1) year before the date of the filing of a voluntary or involuntary bankruptcy petition by; or

(2) to defraud the creditors of;

the policy owner.

     (d) The insurer issuing the policy is discharged from all liability by payment of the proceeds and avails of the policy (as defined in section 14(b) of this chapter) in accordance with the terms of the policy unless, before payment, the insurer has received at the insurer's home office, written notice by or on behalf of a creditor of the policy owner that specifies the amount claimed against the policy owner.

Formerly: Acts 1935, c.162, s.168. As amended by P.L.253-1995, SEC.2.

 

IC 27-1-12-30Group life insurance; assignment of incidents of ownership

     Sec. 30. No provision of this article or of any other law shall be construed as prohibiting an insured under a group insurance policy, pursuant to agreement among the insured, the group policyholder and the insurer, from making an assignment of all or any part of the incidents of ownership held by the insured under such policy, including specifically but not by way of limitation, any right to designate a beneficiary thereunder and any right to have an individual policy issued in accordance with provisions (8) and (9) of section 28 of this chapter. All such assignments, whether made prior to or subsequent to August 18, 1969, shall be valid for the purpose of vesting in the assignee thereof all the incidents of ownership so assigned, and shall entitle the insurer to deal with the assignee as the owner thereof in accordance with the provisions of said policy, but without prejudice to the insurer on account of any payment made or individual policy issued prior to receipt by the insurer of such notice as may be required by the provisions of the policy.

Formerly: Acts 1935, c.162, s.168.1; Acts 1969, c.327, s.2. As amended by P.L.252-1985, SEC.64.

 

IC 27-1-12-31Authority to issue life or endowment insurance upon group plan; special premium rates; valuation of policies; segregation

     Sec. 31. Any life insurance company may issue life or endowment insurance, with or without annuities, upon the group plan as defined in this chapter, with special rates of premiums less than the usual rates of premiums for such policies, and may value such policies on any accepted table of mortality and interest assumption adopted by the company for that purpose, provided, that in no case shall such standard be lower than the American Men Table of Mortality (ultimate) with interest assumption at three and one-half percent (3 1/2%) in the case of policies issued before the transition date selected by the company pursuant to section 12 of this chapter, nor lower than the standard prescribed in IC 27-1-12.8 in the case of policies issued on and after such transition date. All policies of group insurance shall be segregated by the company into a separate class, the mortality experience kept separate, and the number of policies, amount of insurance, reserves, premiums, and payments to policyholders thereunder, together with the mortality table and interest assumption adopted by the company shall be reported separately in the company's annual financial statement.

Formerly: Acts 1935, c.162, s.169; Acts 1943, c.189, s.8. As amended by P.L.252-1985, SEC.65; P.L.276-2013, SEC.9.

 

IC 27-1-12-32Financial qualifications of companies issuing certain contracts

     Sec. 32. A domestic life insurance company shall not issue the type of life insurance or annuity contracts defined and sanctioned under Class 1(c) of IC 27-1-5-1 unless, in addition to fulfilling all other qualifications prescribed by law, it possesses assets of not less than twenty million dollars ($20,000,000), or combined capital and surplus, in the case of a stock company, or surplus, in the case of a mutual company, of not less than two million five hundred thousand dollars ($2,500,000). In applying these qualifications to a subsidiary stock life insurance company that is a subsidiary company (as defined in IC 27-1-23-2.6), the requirements concerning assets, capital, and surplus shall be regarded as fulfilled if the consolidated assets, capital, and surplus of the primary and subsidiary companies equal or exceed the required amounts.

Formerly: Acts 1935, c.162, s.169.1; Acts 1961, c.138, s.3. As amended by P.L.252-1985, SEC.66; P.L.1-2002, SEC.103.

 

IC 27-1-12-33Variable life insurance policies; contents; regulation

     Sec. 33. Variable life insurance policies (contracts providing for immediate or future life insurance benefits as described in Class 1 (c) of IC 1971, 27-1-5-1), to the extent that benefits thereunder are on a variable basis, shall contain a statement to that effect in lieu of stipulating the dollar amount of benefits. Such policies shall also contain such grace period, reinstatement, and nonforfeiture provisions, and shall be subject to the establishment of such reserve liabilities, in accordance with actuarial procedures that recognize the variable nature of benefits provided and any mortality guarantees, as the commissioner shall by regulation prescribe. Upon promulgation of such regulation, variable life insurance policies shall not thereafter be subject to the grace period, nonforfeiture, policy loan, reinstatement, and valuation provisions of the Indiana Insurance Law applicable to or required to be contained in other policies of life insurance. Such regulation shall establish such other requirements with respect to variable life insurance policies, variable life insurance, or any matter incidental thereto, as the commissioner deems to be in the public interest.

Formerly: Acts 1973, P.L.276, SEC.1.

 

IC 27-1-12-34Repealed

Repealed, as added by Acts 1977, P.L.284, SEC.1, by Acts 1978, P.L.8, SEC.16. Repealed, as added by Acts 1977, P.L.285, SEC.1, by Acts 1982, P.L.6, SEC.18.

 

IC 27-1-12-34.1Wholesale, franchise, and employee term life insurance; issuance or delivery; requirements

     Sec. 34.1. (a) No policy of wholesale, franchise, or employee life insurance, as defined in this section, shall be issued or delivered in this state unless it conforms to the requirements of this section.

     (b) Wholesale, franchise, or employee life insurance is defined as a term life insurance plan under which a number of individual term insurance policies are issued at special rates to a selected group. A special rate is any rate lower than the rate shown in the issuing insurance company's manual for individually issued policies of the same type and to insureds of the same class.

     (c) Wholesale, franchise, or employee life insurance may be issued to:

(1) three (3) or more employees of any corporation, copartnership, or individual employer, or any governmental corporation, agency, or department thereof; or

(2) ten (10) or more members, employees, or employees of members of any trade or professional association, or of a labor union, or of any association of members in the same or related occupations, profession, or industry having been in existence for at least two (2) years, where such association or union has a constitution or bylaws and is formed in good faith for purposes other than that of obtaining insurance. Evidence of individual insurability satisfactory to the insurer may be required by the insurer as a condition to coverage.

     (d) The premiums on such policies may be paid to the insurer periodically by the employer, with or without payroll deductions, or by the insured or association or union for its members, or by some designated person acting on behalf of such employer, association, or union. The term "employees" as used in this chapter refers to officers, managers, employees, and retired employees of the employer and the individual proprietor or partners if the employer is an individual or partnership.

     (e) Each policy issued under this section shall provide that, if the insured person ceases to qualify for the policy he may convert the policy, without evidence of insurability, to an individual policy of life insurance, provided application for such conversion is made within thirty-one (31) days of the date the insured person ceases to qualify for coverage under this section. The individual policy shall be issued on any one (1) of the forms, except term insurance, then customarily issued by the insurer at the age and in the amount applied for. The premium on this individual policy is to be at the insurer's then customary rate applicable to the form and amount of such individual policy, the class of risk to which the insured person then belongs, and his age attained on the effective date of such individual policy.

As added by Acts 1982, P.L.6, SEC.17.

 

IC 27-1-12-35Life insurance proceeds; payment; time limit; liability for interest

     Sec. 35. (a) Any resident of this state who becomes entitled to receive payment of an obligation in cash under the terms of a policy of individual life insurance issued in this state, including any death benefit riders attached thereto, endowment insurance or an individual annuity contract, shall be entitled to receive payment of interest from the insuring company if any payment is not received by such resident within thirty (30) days after the event giving rise to the obligation, or within thirty (30) days after the scheduled date of payment as the case may be. Interest payable shall be calculated from the date of the event or the scheduled date of payment. However, any interest awarded by a court shall be in lieu of that provided in this section.

     (b) The rate of interest payable pursuant to this section shall be not less than that rate, as determined from time to time by the insuring company, applicable to proceeds of life insurance left on deposit with the insuring company and subject to withdrawal on demand.

     (c) For the purposes of this section, payment shall be deemed to have been received by a resident when manually delivered by an agent or representative of the insuring company or when deposited by the insuring company in the United States mails, postage prepaid, and directed to the resident at his last known address as evidenced by the business records of the insuring company.

As added by Acts 1978, P.L.8, SEC.15.

 

IC 27-1-12-36Repealed

As added by Acts 1979, P.L.251, SEC.1. Repealed by P.L.254-1985, SEC.7.

 

IC 27-1-12-37Group life insurance; eligible policyholders; regulations

     Sec. 37. Except as provided in section 38 of this chapter, no policy of group life insurance may be delivered in Indiana unless it conforms to one (1) of the following descriptions:

(1) A policy issued to an employer or to the trustees of a fund established by an employer (which employer or trustees must be deemed the policyholder) to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements:

(A) The employees eligible for insurance under the policy must be all of the employees of the employer, or all of any class or classes of employees. The policy may provide that the term "employees" includes the employees of one (1) or more subsidiary corporations and the employees, individual proprietors, and partners of one (1) or more affiliated corporations, limited liability companies, proprietorships, or partnerships if the business of the employer and of the affiliated corporations, proprietorships, limited liability companies, or partnerships is under common control. The policy may provide that the term "employees" includes the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term "employees" may include retired employees, former employees, and directors of a corporate employer. A policy issued to insure the employees of a public body may provide that the term "employees" includes elected or appointed officials.

(B) The premium for the policy must be paid either from the employer's funds, from funds contributed by the insured employees, or from both sources of funds. Except as provided in clause (C), a policy on which no part of the premium is to be derived from funds contributed by the insured employees must insure all eligible employees, except those who reject the coverage in writing.

(C) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.

(2) A policy issued to a creditor or its parent holding company or to a trustee or trustees or agent designated by two (2) or more creditors (which creditor, holding company, affiliate, trustee, trustees, or agent must be deemed the policyholder) to insure debtors of the creditor, or creditors, subject to the following requirements:

(A) The debtors eligible for insurance under the policy must be all of the debtors of the creditor or creditors, or all of any class or classes of debtors. The policy may provide that the term "debtors" includes:

(i) borrowers of money or purchasers or lessees of goods, services, or property for which payment is arranged through a credit transaction;

(ii) the debtors of one (1) or more subsidiary corporations; and

(iii) the debtors of one (1) or more affiliated corporations, proprietorships, limited liability companies, or partnerships if the business of the policyholder and of the affiliated corporations, proprietorships, limited liability companies, or partnerships is under common control.

(B) The premium for the policy must be paid either from the creditor's funds, from charges collected from the insured debtors, or from both sources of funds. Except as provided in clause (C), a policy on which no part of the premium is to be derived from the funds contributed by insured debtors specifically for their insurance must insure all eligible debtors.

(C) An insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer.

(D) The amount of the insurance on the life of any debtor may at no time exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor.

(E) The insurance may be payable to the creditor or any successor to the right, title, and interest of the creditor. Each payment under this clause must reduce or extinguish the unpaid indebtedness of the debtor to the extent of the payment, and any excess of the insurance must be payable to the estate of the insured.

(F) Notwithstanding clauses (A) through (E), insurance on agricultural credit transaction commitments may be written up to the amount of the loan commitment on a nondecreasing or level term plan, and insurance on educational credit transaction commitments may be written up to the amount of the loan commitment less the amount of any repayments made on the loan.

(3) A policy issued to a labor union or similar employee organization (which organization must be deemed to be the policyholder) to insure members of the union or organization for the benefit of persons other than the union or organization or any of its officials, representatives, or agents, subject to the following requirements:

(A) The members eligible for insurance under the policy must be all of the members of the union or organization, or all of any class or classes of members.

(B) The premium for the policy must be paid either from funds of the union or organization, from funds contributed by the insured members specifically for their insurance, or from both sources of funds. Except as provided in clause (C), a policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, except those who reject the coverage in writing.

(C) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.

(4) A policy issued to a trust or to one (1) or more trustees of a fund established or adopted by two (2) or more employers, or by one (1) or more labor unions or similar employee organizations, or by one (1) or more employers and one (1) or more labor unions or similar employee organizations (which trust or trustees must be deemed the policyholder) to insure employees of the employers or members of the unions or organizations for the benefit of persons other than the employers or the unions or organizations, subject to the following requirements:

(A) The persons eligible for insurance must be all of the employees of the employers or all of the members of the unions or organizations, or all of any class or classes of employees or members. The policy may provide that the term "employees" includes the employees of one (1) or more subsidiary corporations and the employees, individual proprietors, and partners of one (1) or more affiliated corporations, proprietorships, limited liability companies, or partnerships if the business of the employer and of the affiliated corporations, proprietorships, limited liability companies, or partnerships is under common control. The policy may provide that the term "employees" includes the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term "employees" includes retired employees, former employees, and directors of a corporate employer. The policy may provide that the term "employees" includes the trustees or their employees, or both, if their duties are principally connected with the trusteeship.

(B) The premium for the policy must be paid from funds contributed by the employer or employers of the insured persons, by the union or unions or similar employee organizations, or by both, from funds contributed by the insured persons, or from both the insured persons and one (1) or more employers, unions, or similar employee organizations. Except as provided in clause (C), a policy on which no part of the premium is to be derived from funds contributed by the insured persons, specifically for their insurance must insure all eligible persons, except those who reject the coverage in writing.

(C) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.

(5) A policy issued to an association, a trust, or one (1) or more trustees of a fund established, created, or maintained for the benefit of members of one (1) or more associations. The association or associations must have at the outset a minimum of one hundred (100) persons; must have been organized and maintained in good faith for purposes other than that of obtaining insurance; must have been in active existence for at least two (2) years; and must have a constitution and bylaws that provide that the association or associations hold regular meetings not less than annually to further purposes of the members, that, except for credit unions, the association or associations collect dues or solicit contributions from members, and that the members have voting privileges and representation on the governing board and committees. The policy must be subject to the following requirements:

(A) The policy may insure members or employees of the association or associations, employees of members, one (1) or more of the preceding, or all of any class or classes of members, employees, or employees of members for the benefit of persons other than the employee's employer.

(B) The premium for the policy must be paid from funds contributed by the association or associations, by employer members, or by both, from funds contributed by the covered persons, or from both the covered persons and the association, associations, or employer members.

(C) Except as provided in clause (D), a policy on which no part of the premium is to be derived from funds contributed by the covered persons specifically for the insurance must insure all eligible persons, except those who reject such coverage in writing.

(D) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.

(6) A policy issued to a credit union or to one (1) or more trustees or an agent designated by two (2) or more credit unions (which credit union, trustee, trustees, or agent must be deemed the policyholder) to insure members of the credit union or credit unions for the benefit of persons other than the credit union or credit unions, trustee, trustees, or agent, or any of their officials, subject to the following requirements:

(A) The members eligible for insurance must be all of the members of the credit union or credit unions, or all of any class or classes of members.

(B) The premium for the policy shall be paid by the policyholder from the credit union's funds and, except as provided in clause (C), must insure all eligible members.

(C) An insurer may exclude or limit the coverage on any member as to whom evidence of individual insurability is not satisfactory to the insurer.

As added by P.L.254-1985, SEC.1. Amended by P.L.19-1986, SEC.46; P.L.8-1993, SEC.413.

 

IC 27-1-12-38Group life insurance; requirements for issuance of policy to certain groups

     Sec. 38. (a) Group life insurance offered to a resident of Indiana under a group life insurance policy issued to a group other than one described in section 37(1)(A), (2)(A), (3)(A), (4)(A), (5)(A), or (6)(A) of this chapter is subject to the requirements set forth in subsections (b) through (e).

(b) A group life insurance policy described in subsection (a) may not be delivered in Indiana unless the commissioner finds that:

(1) the issuance of the policy is not contrary to the best interest of the public;

(2) the issuance of the policy would result in economies of acquisition or administration; and

(3) the benefits of the policy are reasonable in relation to the premiums charged.

     (c) Group life insurance coverage may not be offered in Indiana by an insurer under a policy that was issued in another state unless Indiana or another state having requirements substantially similar to those contained in subsection (b) has made a determination that the policy meets those requirements.

     (d) The premium for a policy described in subsection (a) must be paid either from the policyholder's funds, from funds contributed by the covered persons, or from both sources of funds.

     (e) An insurer may exclude or limit the coverage under a policy described in subsection (a) on any person as to whom evidence of individual insurability is not satisfactory to the insurer.

As added by P.L.254-1985, SEC.2. Amended by P.L.268-1987, SEC.1.

 

IC 27-1-12-39Direct response solicitations; notice of payment of compensation

     Sec. 39. (a) As used in this section, "direct response solicitation" means a solicitation through a sponsoring or endorsing entity through the mails, telephone, or other mass communications media.

     (b) As used in this section, "sponsoring or endorsing entity" means an organization that has arranged for the offering of a program of insurance in a manner that communicates that:

(1) eligibility for participation in the program is dependent upon affiliation with the organization; or

(2) the organization encourages participation in the program.

     (c) This section applies to any program of insurance that, if issued on a group basis, would not conform to one (1) of the descriptions in section 37 of this chapter.

     (d) If compensation of any kind will or may be paid, under a program of insurance described in subsection (c), to:

(1) a policyholder or sponsoring or endorsing entity in the case of a group policy; or

(2) a sponsoring or endorsing entity in the case of individual, blanket, or franchise policies marketed by means of direct response solicitation;

the insurer shall cause to be distributed to prospective insureds under the program a written notice that compensation will or may be paid under the program as indicated in subdivision (1) or (2).

     (e) The notice required under subsection (d) shall be given:

(1) whether the compensation that will or may be paid is direct or indirect; and

(2) whether the compensation is to be paid to or retained by:

(A) the policyholder or sponsoring or endorsing entity; or

(B) a third party, at the direction of the policyholder or sponsoring or endorsing entity, or any entity affiliated with the sponsoring or endorsing entity by way of ownership, contract, or employment.

     (f) The notice required under subsection (d) shall be placed on or accompany any application or enrollment form provided prospective insureds.

As added by P.L.254-1985, SEC.3.

 

IC 27-1-12-40Group life insurance; premiums; spouse or dependent child coverage

     Sec. 40. Except for a policy that conforms to the description in section 37(2) of this chapter, a group life insurance policy may be extended to insure the employees or members, or any class or classes of employees or members, against loss due to the death of their spouses and dependent children, subject to the following:

(1) The premium for the insurance must be paid either from funds contributed by the employer, union, association, or other person to whom the policy has been issued, from funds contributed by the covered persons, or from both sources of funds. Except as provided in subdivision (2), a policy on which no part of the premium for the spouse's and dependent child's coverage is to be derived from funds contributed by the covered persons must insure all eligible employees or members, or any class or classes of eligible employees or members, with respect to their spouses and dependent children.

(2) An insurer may exclude or limit the coverage on any spouse or dependent child as to whom evidence of individual insurability is not satisfactory to the insurer.

As added by P.L.254-1985, SEC.4. Amended by P.L.111-2008, SEC.2.

 

IC 27-1-12-41Group life insurance; required provisions

     Sec. 41. (a) A policy of group life insurance may not be delivered in Indiana unless it contains in substance:

(1) the provisions described in subsection (b); or

(2) provisions that, in the opinion of the commissioner, are:

(A) more favorable to the persons insured; or

(B) at least as favorable to the persons insured and more favorable to the policyholder;

than the provisions set forth in subsection (b).

     (b) The provisions referred to in subsection (a)(1) are as follows:

(1) A provision that the policyholder is entitled to a grace period of thirty-one (31) days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder has given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder is liable to the insurer for the payment of a pro rata premium for the time the policy was in force during the grace period.

(2) A provision that the validity of the policy may not be contested, except for nonpayment of premiums, after the policy has been in force for two (2) years after its date of issue, and that no statement made by a person insured under the policy relating to the person's insurability may be used in contesting the validity of the insurance with respect to which the statement was made, unless:

(A) the insurance has not been in force for a period of two (2) years or longer during the person's lifetime; or

(B) the statement is contained in a written instrument signed by the insured person.

However, a provision under this subdivision may not preclude the assertion at any time of defenses based upon provisions in the policy that relate to eligibility for coverage.

(3) A provision that a copy of the application, if any, of the policyholder must be attached to the policy when issued, that all statements made by the policyholder or by the persons insured are to be deemed representations and not warranties, and that no statement made by any person insured may be used in any contest unless a copy of the instrument containing the statement is or has been furnished to the insured person or, in the event of death or incapacity of the insured person, to the insured person's beneficiary or personal representative.

(4) A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of the person's coverage.

(5) A provision specifying an equitable adjustment of premiums, benefits, or both to be made in the event the age of a person insured has been misstated. A provision under this subdivision must contain a clear statement of the method of adjustment to be made.

(6) A provision that any sum becoming due by reason of the death of the person insured must be payable to the beneficiary designated by the person insured. However, if a policy contains conditions pertaining to family status, the beneficiary may be the family member specified by the policy terms, subject to the provisions of the policy in the event there is no designated beneficiary, as to all or any part of the sum, living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of the sum not exceeding two thousand dollars ($2,000) to any person appearing to the insurer to be equitably entitled to that payment by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured.

(7) A provision that the insurer will issue to the policyholder, for delivery to each person insured, a certificate setting forth a statement that:

(A) explains the insurance protection to which the person insured is entitled;

(B) indicates to whom the insurance benefits are payable;

(C) explains any dependent's coverage included in the certificate; and

(D) sets forth the rights and conditions that apply to the person under subdivisions (8), (9), (10), and (11).

(8) A provision that if the insurance, or any portion of it, on a person covered under the policy, or on the dependent of a person covered, ceases because of termination of employment or termination of membership in the class or classes eligible for coverage under the policy, the person or dependent is entitled, without evidence of insurability, to an individual policy of life insurance issued to the person or dependent by the insurer without disability or other supplementary benefits, provided that an application for the individual policy is made and that the first premium is paid to the insurer within thirty-one (31) days after the termination, and provided further that:

(A) the individual policy must, at the option of the person or dependent, be on any one (1) of the forms then customarily issued by the insurer at the age and for the amount applied for, except that the group policy may exclude the option to elect term insurance;

(B) the individual policy must be in an amount not in excess of the amount of life insurance that ceases because of the termination, less the amount of any life insurance for which the person or dependent becomes eligible under the same policy or any other group policy within thirty-one (31) days after the termination (however, any amount of insurance that has matured on or before the date of the termination as an endowment payable to the person insured, whether in one (1) sum, in installments, or in the form of an annuity, may not, for the purposes of this clause, be included in the amount of insurance that is considered to cease because of the termination); and

(C) the premium on the individual policy must be at the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which the person or dependent then belongs, and to the individual age attained by the person or dependent on the effective date of the individual policy.

Subject to the conditions set forth in this subdivision, the conversion privilege created by this subdivision must be available to a surviving dependent of a person covered under a group policy, with respect to the coverage under the group policy that terminates by reason of the death of the person covered, and to the dependent of an employee or member after termination of the coverage of the dependent because the dependent ceases to be a qualified family member under the group policy, while the employee or member remains insured under the group policy.

(9) A provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured under the policy at the date of the termination whose insurance terminates, including the insured dependent of a covered person, and who has been so insured for at least five (5) years before the termination date, is entitled to have issued by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided in subdivision (8), except that the group policy may provide that the amount of the individual policy may not exceed the lesser of:

(A) the amount of the person's life insurance protection that is ceasing because of the termination or amendment of the group policy, less the amount of any life insurance for which the person is eligible or becomes eligible under a group policy issued or reinstated by the same insurer or another insurer within thirty-one (31) days after the termination; or

(B) ten thousand dollars ($10,000).

(10) A provision that if a person insured under the group policy, or the insured dependent of a covered person, dies during the period within which the covered person or dependent would have been entitled to have an individual policy issued under subdivision (8) or (9) or before such an individual policy becomes effective, the amount of life insurance that the covered person or dependent would have been entitled to have issued under an individual policy is payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium for the individual policy has been made.

(11) If active employment is a condition of insurance, a provision that an insured may continue coverage during the insured's total disability by timely payment to the policyholder of that portion, if any, of the premium that would have been required for the insured had total disability not occurred. The continuation of coverage under this subdivision on a premium paying basis must extend for a period of six (6) months from the date on which the total disability started, but not beyond the earlier of:

(A) the date of approval by the insurer of continuation of the coverage under any disability provision that the group insurance policy may contain; or

(B) the date of discontinuance of the group insurance policy.

(12) In the case of a policy insuring the lives of debtors, a provision that the insurer will furnish to the policyholder, for delivery to each debtor insured under the policy, a certificate of insurance describing the coverage and specifying that the death benefit will first be applied to reduce or extinguish the indebtedness.

     (c) Subsections (b)(6) through (b)(11) do not apply to policies insuring the lives of debtors. The standard provisions required under IC 27-1-12 for individual life insurance policies do not apply to group life insurance policies.

     (d) If a group life insurance policy is on a plan of insurance other than the group plan, it must contain a nonforfeiture provision that, in the opinion of the commissioner, is equitable to the insured persons and to the policyholder. However, group life insurance policies need not contain the same nonforfeiture provisions as are required for individual life insurance policies under IC 27-1-12.

As added by P.L.254-1985, SEC.5.

 

IC 27-1-12-42Group life insurance; conversion rights; notice; time to exercise rights

     Sec. 42. (a) If a person who:

(1) is insured under a group life insurance policy delivered in Indiana; and

(2) is entitled under the terms of the group policy to have an individual policy of life insurance issued without evidence of insurability upon the making of application and payment of the first premium within the period specified in the policy;

is not given notice of the existence of the conversion right referred to in subdivision (2) at least fifteen (15) days before the expiration of the period during which the application and payment of the first premium must be made under the terms of the policy, the person has an additional period within which to exercise the conversion right.

     (b) The additional period created under subsection (a) for exercise of a right of conversion expires fifteen (15) days after the person is given notice of the conversion right. However, irrespective of the date on which notice is given or of the absence of any notice, the additional period may not extend beyond sixty (60) days after the expiration date of the period within which application and payment of the first premium were to be made under the terms of the policy.

     (c) For purposes of this section, notice of the right of conversion may be given to the person in a writing:

(1) presented to the person;

(2) mailed by the policyholder to the last known address of the person; or

(3) mailed by the insurer to the last known address of the person as furnished by the policyholder.

As added by P.L.254-1985, SEC.6.

 

IC 27-1-12-43Life insurance provision allowing for right to return policy

     Sec. 43. (a) As used in this section, "life insurance policy" means:

(1) an individual life insurance policy other than a credit life insurance policy; or

(2) an individual policy of variable life insurance;

that is sold after June 30, 1994.

     (b) No life insurance policy may be issued in Indiana or issued for delivery in Indiana unless it contains a provision allowing the policyholder to return the policy to:

(1) the insurer;

(2) the insurance producer through whom the policy was purchased; or

(3) any agent of the insurer;

within ten (10) days after the policy is received by the policyholder for a full refund of all money paid by the policyholder.

     (c) Each life insurance policy must have prominently printed on its first page a notice setting forth in substance the provisions of subsection (b).

As added by P.L.116-1994, SEC.25. Amended by P.L.178-2003, SEC.16.

 

IC 27-1-12-44Stranger originated life insurance allegation; lack of insurable interest

     Sec. 44. (a) This section applies to a life insurance policy that is issued after June 30, 2008.

     (b) Notwithstanding any other law, an insurer shall not, after a life insurance policy has been in force for two (2) years after the life insurance policy's date of issue, allege that the life insurance policy was issued in connection with stranger originated life insurance (as defined in IC 27-8-19.8-7.8) as a basis to deny payment of the proceeds of the life insurance policy. However, an insurer may seek to void a life insurance policy at any time for lack of insurable interest at the time the life insurance policy was issued.

As added by P.L.112-2008, SEC.1.

 

IC 27-1-12-45Execution of POST form does not affect life insurance; prohibition on consideration of POST form in determining life insurance premiums

     Sec. 45. (a) The execution of a POST form under IC 16-36-6 does not affect the sale, issuance, or terms of a policy of life insurance.

     (b) A policy of life insurance is not legally impaired or invalidated by the execution of a POST form, including the withholding or withdrawal of life prolonging procedures from an insured under the medical orders included in the POST form.

     (c) A POST form may not be considered in the establishment of insurance premiums for an individual.

     (d) A person may not require an individual to complete a POST form as a condition for being insured for health care services.

As added by P.L.164-2013, SEC.9.

 

IC 27-1-12-46Policy or certificate designated for purchase of funeral services or merchandise; representations by issuer; required disclosures; violations

     Sec. 46. (a) This section applies to a life insurance policy or certificate:

(1) that is issued after June 30, 2015;

(2) the proceeds of which may be designated for use in the purchase of funeral services or merchandise upon the death of the insured; and

(3) the ownership of which is not irrevocably assigned to a trustee and used to fund a contract under IC 30-2-13.

     (b) An issuer of a life insurance policy or certificate described in subsection (a) may not represent to a policyholder or certificate holder, a prospective policyholder or certificate holder, an insured, a beneficiary, or any other person that the life insurance policy or certificate is:

(1) a contract for prepaid services or merchandise under IC 30-2-13; or

(2) a funeral policy or a policy with any similar designation.

     (c) A life insurance policy or certificate described in subsection (a) may not be delivered or issued for delivery in Indiana, or issued by a company organized under the laws of this state, unless the life insurance policy or certificate either contains or includes in an attached disclaimer the following provisions, or corresponding provisions that the department determines are at least as favorable to policyholders or certificate holders:

(1) A statement that the life insurance policy or certificate is not a contract for prepaid services or merchandise under IC 30-2-13.

(2) A statement that the life insurance policy or certificate does not entitle the policyholder, the certificate holder, or any other person to:

(A) prepaid funeral services or merchandise, or any services or merchandise described in IC 30-2-13-8; or

(B) the right to file a complaint with the state board of funeral and cemetery service established by IC 25-15-9-1 for restitution from the preneed consumer protection fund under IC 30-2-13-29;

unless ownership of the policy is irrevocably assigned to a trustee to fund a contract entered into with a seller (as defined under IC 30-2-13-10) under IC 30-2-13.

(3) A statement that:

(A) the life insurance policy or certificate:

(i) is not guaranteed to be exempt as a resource in determining eligibility for Medicaid under IC 12-15-2-17; and

(ii) does not guarantee Medicaid eligibility; and

(B) Medicaid eligibility determinations are made in accordance with applicable Medicaid laws and policies.

     (d) A person that willfully violates this section commits an unfair and deceptive act or practice in the business of insurance under IC 27-4-1-4 and is subject to the penalties and procedures set forth in IC 27-4-1.

As added by P.L.227-2015, SEC.5.

 

IC 27-1-12.1Chapter 12.1. Limited Purpose Subsidiary Life Insurance Companies
           27-1-12.1-1Affiliate
           27-1-12.1-2Limited purpose subsidiary
           27-1-12.1-3Organizing domestic life insurance company
           27-1-12.1-4Parent
           27-1-12.1-5Risk
           27-1-12.1-6Organization of limited purpose subsidiary
           27-1-12.1-7Requirements for assumption of risk
           27-1-12.1-8Certificate of authority; conditions; production and disclosures to commissioner
           27-1-12.1-9Authority of limited purpose subsidiary
           27-1-12.1-10Investment of organizing domestic life insurance company
           27-1-12.1-11Officers and directors
           27-1-12.1-12Purchase of reinsurance
           27-1-12.1-13Admitted assets
           27-1-12.1-14Duties of limited purpose subsidiary
           27-1-12.1-15Administrative rules; emergency rulemaking

 

IC 27-1-12.1-1Affiliate

     Sec. 1. As used in this chapter, "affiliate" means a domestic life insurance company that is a wholly owned subsidiary of the parent of a limited purpose subsidiary.

As added by P.L.11-2011, SEC.7.

 

IC 27-1-12.1-2Limited purpose subsidiary

     Sec. 2. As used in this chapter, "limited purpose subsidiary" means a subsidiary life insurance company that is organized under this chapter.

As added by P.L.11-2011, SEC.7.

 

IC 27-1-12.1-3Organizing domestic life insurance company

     Sec. 3. As used in this chapter, "organizing domestic life insurance company" refers to a life insurance company that organizes a limited purpose subsidiary under this chapter.

As added by P.L.11-2011, SEC.7.

 

IC 27-1-12.1-4Parent

     Sec. 4. As used in this chapter, "parent" means a person that through at least one (1) intermediary wholly owns a limited purpose subsidiary.

As added by P.L.11-2011, SEC.7. Amended by P.L.115-2011, SEC.1.

 

IC 27-1-12.1-5Risk

     Sec. 5. As used in this chapter, "risk" means a risk:

(1) that is associated with a life insurance policy that is:

(A) written by a ceding domestic life insurance company; or

(B) assumed by a ceding domestic life insurance company from an affiliate; and

(2) for which a ceding domestic life insurance company holds direct statutory reserves for the policy as required under IC 27-1-12-10.5.

As added by P.L.11-2011, SEC.7.

 

IC 27-1-12.1-6Organization of limited purpose subsidiary

     Sec. 6. A domestic life insurance company that is authorized to engage in the business of insurance in Indiana may organize a limited purpose subsidiary under this chapter.

As added by P.L.11-2011, SEC.7.

 

IC 27-1-12.1-7Requirements for assumption of risk

     Sec. 7. Before assuming risk under a reinsurance contract, a limited purpose subsidiary must do all of the following:

(1) Comply with IC 27-1-6.

(2) File with the commissioner an affidavit, signed by the limited purpose subsidiary's president, vice president, treasurer, or chief financial officer, including all of the following to the best of the individual's knowledge after reasonable inquiry:

(A) That the proposed organization and operation of the limited purpose subsidiary complies with this chapter.

(B) That the limited purpose subsidiary's investment policy reflects and considers the liquidity of assets and the reasonable preservation, administration, and management of the assets with respect to the risks associated with reinsurance contracts issued by the limited purpose subsidiary.

(C) That the reinsurance contract and any arrangement intended to secure the limited purpose subsidiary's obligations under the reinsurance contract (including an agreement to implement the arrangement) comply with this chapter.

(3) File with the commissioner the opinion of a qualified actuary that the methodology and assumptions (including significant stress tests of key assumptions) used to establish reserves held by the limited purpose subsidiary are sufficient to provide for the risk assumed by the limited purpose subsidiary.

(4) File with the commissioner the limited purpose subsidiary's plan of operation, including the following:

(A) A statement that the limited purpose subsidiary will, before an offer and sale of securities of or by the limited purpose subsidiary, file with the commissioner, in a form acceptable to the commissioner, a legal opinion that the offering and sale of securities:

(i) of the limited purpose subsidiary complies with all federal securities laws; and

(ii) by the limited purpose subsidiary complies with all Indiana securities laws.

For purposes of this clause, the issuance of stock by the limited purpose subsidiary to the organizing domestic life insurance company is not the offer and sale of securities requiring a legal opinion.

(B) A complete description of the material terms of all proposed reinsurance transactions, reinsurance security arrangements, securitizations, and any other material transactions or arrangements of the limited purpose subsidiary.

(C) A description of the source and form of the limited purpose subsidiary's capital and surplus.

(D) The investment policy of the limited purpose subsidiary.

(E) Pro forma balance sheets and income statements that illustrate at least one (1) adverse case scenario, as determined using criteria required by the commissioner, for the performance of the limited purpose subsidiary under all reinsurance contracts.

(F) Policies for payment of dividends and other distributions to the organizing domestic life insurance company.

(G) Copies of all contracts between the limited purpose subsidiary and affiliates.

(H) Other documentation or information required by the commissioner.

(5) Obtain from the commissioner a certificate of authority to engage in the business of reinsurance in Indiana.

As added by P.L.11-2011, SEC.7. Amended by P.L.115-2011, SEC.2.

 

IC 27-1-12.1-8Certificate of authority; conditions; production and disclosures to commissioner

     Sec. 8. (a) The commissioner may issue a certificate of authority to a limited purpose subsidiary upon a finding by the commissioner of all of the following:

(1) That the proposed plan of operation provides for a viable operation of the limited purpose subsidiary.

(2) That the terms of all proposed reinsurance contracts and related transactions of the limited purpose subsidiary comply with this chapter and any other applicable insurance laws.

(3) That the proposed plan of operation is not hazardous to any ceding insurer.

     (b) The commissioner may, in conjunction with the issuance of a certificate of authority to a limited purpose subsidiary, issue an order containing any terms or conditions applying to the limited purpose subsidiary's authority to engage in the business of reinsurance, including terms or conditions concerning the organization, licensing, or operation of the limited purpose subsidiary, consistent with this chapter and determined necessary by the commissioner.

     (c) A limited purpose subsidiary shall produce or disclose its plan of operation, amendments, and records, books, documents, reports, and other information that the commissioner requires the limited purpose subsidiary to produce or disclose under:

(1) this chapter;

(2) rules adopted under section 15 of this chapter; or

(3) an order under IC 27-1-3.1.

     (d) The commissioner has the powers enumerated in IC 27-1-3.1 with respect to a limited purpose subsidiary.

As added by P.L.11-2011, SEC.7.

 

IC 27-1-12.1-9Authority of limited purpose subsidiary

     Sec. 9. A limited purpose subsidiary that is granted a certificate of authority by the commissioner under this chapter:

(1) is authorized to engage in the business of reinsurance for purposes of IC 27-6-10 only for the lines of insurance for which the:

(A) organizing domestic life insurance company; and

(B) affiliates of the organizing domestic life insurance company;

are authorized;

(2) may reinsure only risks of:

(A) the organizing domestic life insurance company; and

(B) affiliates of the organizing domestic life insurance company; and

(3) may access alternative forms of financing.

As added by P.L.11-2011, SEC.7. Amended by P.L.115-2011, SEC.3.

 

IC 27-1-12.1-10Investment of organizing domestic life insurance company

     Sec. 10. An organizing domestic life insurance company may invest funds from the organizing domestic life insurance company's surplus in a limited purpose subsidiary that is organized by the organizing domestic life insurance company.

As added by P.L.11-2011, SEC.7.

 

IC 27-1-12.1-11Officers and directors

     Sec. 11. The officers and directors of an organizing domestic life insurance company may serve as officers and directors of a limited purpose subsidiary organized by the organizing domestic life insurance company.

As added by P.L.11-2011, SEC.7.

 

IC 27-1-12.1-12Purchase of reinsurance

     Sec. 12. A limited purpose subsidiary may, upon approval of the commissioner, purchase reinsurance to cede the reinsurance risks assumed by the limited purpose subsidiary.

As added by P.L.11-2011, SEC.7.

 

IC 27-1-12.1-13Admitted assets

     Sec. 13. (a) If approved by the commissioner, the following are considered to be and must be reported as admitted assets of a limited purpose subsidiary:

(1) Proceeds from a securitization, premiums, and other amounts payable by an affiliate to the limited purpose subsidiary.

(2) Letters of credit.

(3) Guarantees of the parent.

(4) Other assets.

     (b) If the commissioner determines that the value of admitted assets that:

(1) were previously approved by the commissioner under subsection (a); and

(2) are not assets that are addressed by the Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners;

has decreased, the commissioner may require the limited purpose subsidiary to provide additional security or collateral.

     (c) The commissioner shall, at least thirty (30) days before taking action under subsection (b):

(1) notify the limited purpose subsidiary of the action; and

(2) provide to the limited purpose subsidiary an opportunity to remedy the issues identified by the commissioner.

As added by P.L.11-2011, SEC.7. Amended by P.L.115-2011, SEC.4.

 

IC 27-1-12.1-14Duties of limited purpose subsidiary

     Sec. 14. (a) A limited purpose subsidiary shall do the following:

(1) Provide to the commissioner, not later than forty-five (45) days after the closing date of the transactions of an insurance securitization, a copy of a complete set of executed documentation of the insurance securitization.

(2) Notify the commissioner, not later than two (2) business days after any material change in the financial condition or management of the limited purpose subsidiary, written notice of the material change.

(3) Annually file with the commissioner the actuarial opinion of the limited purpose subsidiary's internal actuary concerning reserves held by the limited purpose subsidiary for all risks assumed by the limited purpose subsidiary under the limited purpose subsidiary's reinsurance contracts.

(4) Biennially file with the commissioner the actuarial opinion of a qualified actuary concerning the methodology and assumptions used by the limited purpose subsidiary in establishing the reserves held by the limited purpose subsidiary.

(5) Immediately notify the commissioner concerning any action by a ceding insurer or other person to foreclose on or otherwise take possession of collateral provided by the limited purpose subsidiary to secure an obligation of the limited purpose subsidiary.

(6) Comply with IC 27-1-23 and IC 27-1-36.

     (b) Unless otherwise required by the commissioner, a limited purpose subsidiary is not required to file a report, notice, or other document with the National Association of Insurance Commissioners.

As added by P.L.11-2011, SEC.7. Amended by P.L.115-2011, SEC.5.

 

IC 27-1-12.1-15Administrative rules; emergency rulemaking

     Sec. 15. (a) The commissioner may adopt rules under IC 4-22-2 to implement this chapter.

     (b) The rules adopted under subsection (a) may specify the following concerning limited purpose subsidiaries:

(1) Requirements for reserves, including actuarial certification.

(2) Requirements for securities.

(3) Authorized investments.

(4) Requirements with respect to reinsurance ceded or assumed by the limited purpose subsidiary.

(5) Requirements for dividends and distributions.

(6) Requirements for operations.

(7) Conditions of, forms for, and approval of the financing of a limited purpose subsidiary.

     (c) The commissioner may adopt emergency rules under IC 4-22-2-37.1 to implement this section if the commissioner determines that:

(1) the need for a rule is so immediate and substantial that rulemaking procedures under IC 4-22-2-23 through IC 4-22-2-36 are inadequate to address the need; and

(2) an emergency rule is likely to address the need.

As added by P.L.11-2011, SEC.7. Amended by P.L.115-2011, SEC.6.

 

IC 27-1-12.3Chapter 12.3. Interest Rates on Insurance Policy Loans
           27-1-12.3-1Definitions
           27-1-12.3-2Required provisions in policies
           27-1-12.3-3Variable interest rate loans; duties of insurer
           27-1-12.3-4Loan value of policy; determination; termination of policy due to increase in interest rate
           27-1-12.3-5Nonapplicability of other laws
           27-1-12.3-6Inapplicability to contracts issued before September 1, 1981; agreement excepted

 

IC 27-1-12.3-1Definitions

     Sec. 1. As used in this chapter:

     (a) "Published monthly average" means:

(1) Moody's corporate bond yield average-monthly average corporates as published by Moody's Investors Service, Inc. or any successor thereto; or

(2) in the event that the Moody's corporate bond yield average-monthly average corporates is no longer published, a substantially similar average, established by regulation issued by the insurance commissioner.

     (b) "Insurer" means an entity issuing a policy.

     (c) "Policy loan" means:

(1) a loan secured by a policy of life insurance under IC 27-1-12-6(8) and IC 27-1-12-19;

(2) any premium loan made under a policy to pay one (1) or more premiums that were not paid to the life insurer as they became due; or

(3) a loan secured by any certificate or annuity contract that provides loans on the security of the certificate or annuity contract.

     (d) "Policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer.

     (e) "Policy" means:

(1) a life insurance policy;

(2) a certificate issued by a fraternal benefit society; or

(3) an annuity contract;

that provides for policy loans.

     (f) "Rate of interest" or "interest rate" means the rate of interest on policy loans, including the rate of interest charged on reinstatement of policy loans for the period during and after any lapse.

As added by Acts 1981, P.L.240, SEC.1.

 

IC 27-1-12.3-2Required provisions in policies

     Sec. 2. Policies issued after August 31, 1983, must contain a provision for policy loan interest rates permitting:

(1) a maximum interest rate of not more than eight percent (8%) per year; or

(2) an adjustable interest rate established from time to time as follows:

(A) The maximum rate of interest shall be the greater of the rate determined by the published monthly average for the calendar month ending two (2) months before the date on which the interest rate is determined or the rate used to compute the cash surrender values under the policy during the applicable loan period as required in IC 27-1-12-7(5), plus one percent (1%) per year.

(B) The maximum interest rate for each policy shall be determined at regular intervals at least once every twelve (12) months, but not more frequently than once every three (3) months. The interval must be specified in the policy.

(C) As of the time of the periodic maximum interest determination, the interest rate on the policy loan will be fixed, not below the minimum rate, as follows:

(i) If the maximum rate is greater than the last previous establishment or change of the interest rate, the interest rate may at the option of the insurer be increased to any rate not in excess of the maximum rate.

(ii) If the maximum rate is less than the last previous establishment or change of the interest rate, the interest rate will be decreased to the new maximum rate.

(iii) Notwithstanding subparts (i) and (ii) of this clause (C), no change in interest rate which is less than one-half percent (1/2%) will be made.

(D) The most recently determined interest rate on a loan made on any policy will apply to the unpaid amount of all policy loans previously made thereon.

As added by Acts 1981, P.L.240, SEC.1. Amended by P.L.260-1983, SEC.6.

 

IC 27-1-12.3-3Variable interest rate loans; duties of insurer

     Sec. 3. With respect to variable interest rate loans under section 2 of this chapter, the insurer shall:

(1) notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;

(2) notify the policyholder as soon as is reasonably practical after a premium loan is made of the initial rate of interest on the loan, except that notice need not be given the policyholder when a further premium loan is added other than the notice required by subdivision (3) of this section;

(3) send to the policyholder reasonable advance notice of any increase in the loan interest rate; and

(4) include in the notices required by this section, whether the rate is fixed or variable and, if variable, the permitted frequency of change.

As added by Acts 1981, P.L.240, SEC.1.

 

IC 27-1-12.3-4Loan value of policy; determination; termination of policy due to increase in interest rate

     Sec. 4. (a) The loan value of a policy shall be determined in accordance with IC 27-1-12-6(8); however, a policy shall not terminate in a policy year as the sole result of an increase in the interest rate and the failure of the policyholder to pay the amount of interest required by that increase during that policy year. In such event, the insurer shall maintain coverage during that policy year until the time at which the policy would otherwise have terminated if there had been no change during that policy year.

As added by Acts 1981, P.L.240, SEC.1.

 

IC 27-1-12.3-5Nonapplicability of other laws

     Sec. 5. No statute other than this chapter applies to policy loan interest rates, except to the extent that a statute enacted after the 1981 regular session of the Indiana general assembly specifically provides otherwise.

As added by Acts 1981, P.L.240, SEC.1.

 

IC 27-1-12.3-6Inapplicability to contracts issued before September 1, 1981; agreement excepted

     Sec. 6. The provisions of this chapter shall not apply to any insurance contract issued before September 1, 1981, unless the policyholder agrees in writing to the applicability of such provisions.

As added by Acts 1981, P.L.240, SEC.1.

 

IC 27-1-12.4Chapter 12.4. Charitable Gift Annuities
           27-1-12.4-1"Internal Revenue Code" defined
           27-1-12.4-2Annuities exempt from regulation

 

IC 27-1-12.4-1"Internal Revenue Code" defined

     Sec. 1. As used in this chapter, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended and in effect on January 1, 1994.

As added by P.L.131-1994, SEC.1.

 

IC 27-1-12.4-2Annuities exempt from regulation

     Sec. 2. An annuity is not subject to regulation by the department under IC 27 if the annuity:

(1) is established under a transaction that, for federal income tax purposes, is treated:

(A) in part as a charitable contribution under Section 170 of the Internal Revenue Code; and

(B) in part as an investment in an annuity contract under Section 72 of the Internal Revenue Code; and

(2) meets the requirements for exclusion from the definition of "acquisition indebtedness" under Section 514(c)(5) of the Internal Revenue Code.

As added by P.L.131-1994, SEC.1.

 

IC 27-1-12.5Chapter 12.5. Nonforfeiture Provisions of Annuity Contracts
           27-1-12.5-0.1Application of certain amendments to chapter
           27-1-12.5-1"Annuity contract" defined
           27-1-12.5-2Provisions of contract
           27-1-12.5-3Minimum nonforfeiture amounts
           27-1-12.5-4Paid-up benefits
           27-1-12.5-5Cash surrender benefits
           27-1-12.5-6Paid-up annuity benefit available as nonforfeiture option where no cash surrender benefits
           27-1-12.5-7Maturity date determination
           27-1-12.5-8Statement of benefits not provided
           27-1-12.5-9Allowance for lapse of time and payment of scheduled considerations
           27-1-12.5-10Life insurance; additional benefits
           27-1-12.5-11Rules

 

IC 27-1-12.5-0.1Application of certain amendments to chapter

     Sec. 0.1. The amendments made to sections 2 and 3 of this chapter by P.L.59-2004 apply to an annuity contract issued after June 30, 2004.

As added by P.L.220-2011, SEC.422.

 

IC 27-1-12.5-1"Annuity contract" defined

     Sec. 1. The term "annuity contract" as used in this chapter means:

(1) any individual deferred annuity contract; and

(2) any group annuity contract delivered or issued in connection with a plan providing individual retirement accounts or individual annuities under Section 408 of the Internal Revenue Code;

but does not refer to any other group annuity or to any reinsurance, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, and any annuity contract delivered outside this state through an agent or other representative of the company issuing the contract.

As added by Acts 1977, P.L.286, SEC.1. Amended by P.L.2-1987, SEC.36.

 

IC 27-1-12.5-2Provisions of contract

     Sec. 2. (a) No annuity contract shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions, which in the opinion of the insurance commissioner are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract:

(1) Upon:

(A) cessation of payment of considerations under an annuity contract; or

(B) the written request of the contract holder;

the company shall grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in sections 4, 5, 6, 7, and 9 of this chapter.

(2) If an annuity contract provides for a lump sum settlement at maturity, or at any other time, that upon surrender of the contract at or prior to the commencement of any annuity payments, the company shall pay in lieu of any paid-up annuity benefit a cash surrender benefit of such amount as is specified in sections 4, 5, 7, and 9 of this chapter. The company may reserve the right to defer the payment of such cash surrender benefit for a period of not more than six (6) months after demand therefor with surrender of the contract but only after:

(A) submitting to the commissioner a written request that addresses the:

(i) necessity of the deferral; and

(ii) equitability of the deferral for all the company's contract holders; and

(B) receiving the commissioner's written approval to defer.

(3) A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of such benefits.

(4) A statement that any paid-up annuity, cash surrender or death benefits that may be available under the annuity contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which such benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract or any prior withdrawals from or partial surrenders of the contract.

     (b) Notwithstanding the requirements of this chapter, any annuity contract may provide that if no considerations have been received under a contract for a period of two (2) full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to such period would be less than twenty dollars ($20.00) monthly, the company may at its option terminate such contract by payment in cash of the then present value of such portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by such payment shall be relieved of any further obligation under such contract.

As added by Acts 1977, P.L.286, SEC.1. Amended by P.L.59-2004, SEC.1.

 

IC 27-1-12.5-3Minimum nonforfeiture amounts

     Sec. 3. (a) The minimum values as specified in sections 4, 5, 6, 7, and 9 of this chapter of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section.

     (b) With respect to any annuity contract, the minimum nonforfeiture amounts at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at an annual rate of interest determined under subsections (d) and (e) of the net considerations as set forth in subsection (c) paid prior to such time, decreased by the sum of the following:

(1) Any prior withdrawals from or partial surrenders of the annuity contract accumulated at an annual rate of interest determined under subsections (d) and (e).

(2) The amount of any indebtedness to the company on the annuity contract, including interest due and accrued.

(3) An annual contract charge of fifty dollars ($50), accumulated at the annual rate of interest determined under subsections (d) and (e).

     (c) The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to eighty-seven and one-half percent (87.5%) of the gross considerations credited to the annuity contract during that contract year.

     (d) Except as provided in subsection (e), the interest rate used in determining minimum nonforfeiture amounts is an annual rate of interest determined under either of the following methods:

(1) The five-year constant maturity treasury rate, rounded to the nearest five-hundredths of one percent (0.05%), as reported by the Federal Reserve as of a date specified in the annuity contract. Reduce this amount by one hundred twenty-five (125) basis points.

(2) An average of the five-year constant maturity treasury rate as reported by the Federal Reserve, rounded to the nearest five-hundredths of one percent (0.05%), over a specified period as set forth in the annuity contract. Reduce this amount by one hundred twenty-five (125) basis points.

The date under subdivision (1) or the average period used under subdivision (2) may not be longer than fifteen (15) months before the annuity contract issue date or the redetermination date as determined under subsection (f).

     (e) If the rate of interest determined under subsection (d) is:

(1) less than one percent (1%), the interest rate used in determining minimum nonforfeiture amounts is one percent (1%); or

(2) greater than three percent (3%), the interest rate used in determining minimum nonforfeiture amounts is three percent (3%).

     (f) The interest rate determined under subsections (d) and (e) applies for an initial period and may be redetermined for subsequent periods. The redetermination date, basis, and period, if any, must be specified in the annuity contract. The basis is:

(1) the date; or

(2) an average calculated over a specified period;

that produces the value of the five-year constant maturity treasury rate reported by the Federal Reserve to be used at each redetermination date.

     (g) During the period or term that an annuity contract provides substantive participation in an equity index benefit, the contract may increase the basis point reduction described in subsection (d) by not more than an additional one hundred (100) basis points to reflect the value of the equity index benefit. The present value at the annuity contract issue date, and at each redetermination date after the annuity contract issue date, of the additional reduction may not exceed the market value of the benefit. The commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. If the demonstration is not acceptable to the commissioner, the commissioner may disallow or limit the additional reduction.

     (h) The commissioner may adopt rules under IC 4-22-2 to provide for further adjustments to the calculation of minimum nonforfeiture amounts for:

(1) annuity contracts that provide participation in an equity index benefit; and

(2) other annuity contracts for which the commissioner determines adjustments are justified.

As added by Acts 1977, P.L.286, SEC.1. Amended by P.L.130-2002, SEC.1; P.L.59-2004, SEC.2.

 

IC 27-1-12.5-4Paid-up benefits

     Sec. 4. Any paid-up annuity benefit available under any annuity contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. Such present value shall be computed using the mortality table, if any, and the interest rate specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract.

As added by Acts 1977, P.L.286, SEC.1.

 

IC 27-1-12.5-5Cash surrender benefits

     Sec. 5. If an annuity contract provides cash surrender benefits, the amount of these benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit which would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, such present value being calculated on the basis of an interest rate not more than one percent (1%) higher than the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, decreased by the amount of any indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under such an annuity contract shall be at least equal to the cash surrender benefit.

As added by Acts 1977, P.L.286, SEC.1.

 

IC 27-1-12.5-6Paid-up annuity benefit available as nonforfeiture option where no cash surrender benefits

     Sec. 6. If an annuity contract does not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, such present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, and increased by any existing additional amounts credited by the company to the contract. The present values for an annuity contract, not providing any death benefits prior to the commencement of any annuity payments, shall be calculated on the basis of the interest rate and mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.

As added by Acts 1977, P.L.286, SEC.1.

 

IC 27-1-12.5-7Maturity date determination

     Sec. 7. For the purpose of determining the benefits calculated under sections 5 and 6, in the case of an annuity contract under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later.

As added by Acts 1977, P.L.286, SEC.1.

 

IC 27-1-12.5-8Statement of benefits not provided

     Sec. 8. Any annuity contract which does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that such benefits are not provided.

As added by Acts 1977, P.L.286, SEC.1.

 

IC 27-1-12.5-9Allowance for lapse of time and payment of scheduled considerations

     Sec. 9. Under any annuity contract with fixed scheduled considerations, any paid-up annuity, cash surrender or death benefits available at any time, other than on the contract anniversary, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs.

As added by Acts 1977, P.L.286, SEC.1.

 

IC 27-1-12.5-10Life insurance; additional benefits

     Sec. 10. If any annuity contract provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of sections 4, 5, 6, 7, and 9, additional benefits payable (i) in the event of total and permanent disability, (ii) as reversionary annuity or deferred reversionary annuity benefits, or (iii) as other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits that may be required by this chapter. The inclusion of such additional benefits shall not be required in any paid-up benefits unless such additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits.

As added by Acts 1977, P.L.286, SEC.1.

 

IC 27-1-12.5-11Rules

     Sec. 11. The commissioner may adopt rules under IC 4-22-2 to implement this chapter.

As added by P.L.59-2004, SEC.3.

 

IC 27-1-12.6Chapter 12.6. General Provisions of Annuity Contracts
           27-1-12.6-1Application of law
           27-1-12.6-2Calculation of paid-up nonforfeiture benefits
           27-1-12.6-3Cash surrender value table
           27-1-12.6-4Automatic payments
           27-1-12.6-5Right to return contracts
           27-1-12.6-6Disclosures
           27-1-12.6-7Rules and regulations
           27-1-12.6-8Form of contracts
           27-1-12.6-9Disapproval of benefits

 

IC 27-1-12.6-1Application of law

     Sec. 1. Each annuity contract, as defined in IC 27-1-12.5, whether in a separate instrument, or in a separate provision in or as a rider to a life insurance policy, shall be subject to the limitations and disclosures set out in this chapter.

As added by Acts 1977, P.L.286, SEC.2.

 

IC 27-1-12.6-2Calculation of paid-up nonforfeiture benefits

     Sec. 2. Each annuity contract shall contain a brief and general statement of the method to be used in calculating the paid-up nonforfeiture benefits available under the contract.

As added by Acts 1977, P.L.286, SEC.2.

 

IC 27-1-12.6-3Cash surrender value table

     Sec. 3. Each annuity contract providing for single or fixed scheduled considerations shall contain a table showing the cash surrender value, if any, available under the contract on each contract anniversary date, during the first twenty (20) contract years or during the term of the contract, whichever is shorter. Such table shall be calculated upon the assumptions that there are no additional amounts credited by the company to the contract, that there is no indebtedness to the company on account of or secured by the contract and that there are no prior withdrawals from or partial surrender of the contract.

As added by Acts 1977, P.L.286, SEC.2.

 

IC 27-1-12.6-4Automatic payments

     Sec. 4. An annuity contract shall not contain a provision wherein life insurance premium or annuity consideration payments may be automatically made by the company by withdrawing from or placing a loan against annuity nonforfeiture values provided under the contract.

As added by Acts 1977, P.L.286, SEC.2.

 

IC 27-1-12.6-5Right to return contracts

     Sec. 5. Each annuity contract shall contain a provision giving the purchaser an unrestricted right to return the contract to the company or to the insurance producer through whom it was purchased, on or before the tenth day after it is received by the purchaser, such return entitling the purchaser to a return of the value of a variable annuity account or the monies paid by the purchaser to a fixed account in connection with the issuance of the contract. This provision shall be conspicuously placed on the face of the contract. This provision does not apply to contracts issued in connection with a pension, annuity, or profit-sharing plan qualified or exempt under Sections 401, 403, 404, or 501 of the Internal Revenue Code, if participation in the plan is a condition of employment.

As added by Acts 1977, P.L.286, SEC.2. Amended by P.L.2-1987, SEC.37; P.L.116-1994, SEC.26; P.L.178-2003, SEC.17.

 

IC 27-1-12.6-6Disclosures

     Sec. 6. If an annuity contract does not provide a cash surrender benefit or a death benefit prior to the commencement of any annuity payments at least equal to the minimum nonforfeiture amounts provided in IC 27-1-12.5, the company shall, in addition to the disclosures provided in IC 27-1-12.5-8, make such disclosures as the commissioner by regulation shall provide, including, but not limited to, the following:

(1) The execution by the purchaser of a statement in such form as the commissioner may approve, stating specifically the following, as appropriate:

(i) the only nonforfeiture value provided by the contract is a paid-up benefit;

(ii) the contract provides no cash surrender value;

(iii) the contract provides no benefit should the purchaser die before maturity.

(2) The form shall be made a part of the application or may be executed separately from and attached to the application. It shall be executed at or prior to the time of executing the application and shall be filed with the application in the company's office.

As added by Acts 1977, P.L.286, SEC.2.

 

IC 27-1-12.6-7Rules and regulations

     Sec. 7. The commissioner is authorized to promulgate rules and regulations to provide disclosure of (1) the pertinent facts concerning annuity contracts to purchasers of these contracts in advertising and sales literature, (2) practices connected with their issuance, and (3) their annual nonforfeiture and related values.

As added by Acts 1977, P.L.286, SEC.2.

 

IC 27-1-12.6-8Form of contracts

     Sec. 8. An annuity contract shall not be issued or delivered in this state until the form has been filed with the department, and not thereafter if the department within thirty (30) days after this filing gives a written notice to the company setting out the reasons why the form of the contract does not comply with the laws of this state.

As added by Acts 1977, P.L.286, SEC.2.

 

IC 27-1-12.6-9Disapproval of benefits

     Sec. 9. The commissioner may disapprove any individual annuity contract or contracts issued for delivery in Indiana which do not provide a cash surrender value in accordance with IC 27-1-12.5 upon cessation of the payment of considerations under the contract, if in his opinion the annuity would otherwise be misleading, deceptive or unfair to the purchaser. This provision does not, however, apply (i) to such contract delivered in connection with a pension, profit-sharing or employee benefit plan funded in whole or in part by employer contributions, (ii) to annuities purchased in connection with the termination or winding up of a pension, profit-sharing, or employee benefit plan, or (iii) to an individual annuity contract issued by a company organized and operated without profit to any private shareholder or individual, exclusively for the purpose of aiding nonproprietary education and scientific institutions, and providing a nationwide pension system featuring full funding and full and immediate vesting of benefits.

As added by Acts 1977, P.L.286, SEC.2.

 

IC 27-1-12.7Chapter 12.7. Funding Agreements
           27-1-12.7-1"Funding agreement"
           27-1-12.7-2"Holder"
           27-1-12.7-3"Life insurance company"
           27-1-12.7-4"Optional modes of settlement"
           27-1-12.7-5Issuance or issuance for delivery of funding agreements
           27-1-12.7-6Funding agreements interpretation
           27-1-12.7-7Guaranteed or credited amounts under funding agreements
           27-1-12.7-8Segregated asset accounts
           27-1-12.7-9Commissioner; conditions; rules
           27-1-12.7-10Regulation; funding agreement not a covered policy; claim for payments; assets in segregated asset account

 

IC 27-1-12.7-1"Funding agreement"

     Sec. 1. As used in this chapter, "funding agreement" means an agreement that:

(1) is issued by a life insurance company to a holder;

(2) authorizes a life insurance company to accept funds; and

(3) provides for an accumulation of the funds for the purpose of making one (1) or more payments at future dates in amounts that are not based on mortality or morbidity contingencies of the holder of the funding agreement.

As added by P.L.178-2003, SEC.18.

 

IC 27-1-12.7-2"Holder"

     Sec. 2. As used in this chapter, "holder" means a person described in section 5 of this chapter that is issued a funding agreement by a life insurance company.

As added by P.L.178-2003, SEC.18.

 

IC 27-1-12.7-3"Life insurance company"

     Sec. 3. As used in this chapter, "life insurance company" means a life insurance company authorized to issue a product described in Class 1(c) of IC 27-1-5-1.

As added by P.L.178-2003, SEC.18.

 

IC 27-1-12.7-4"Optional modes of settlement"

     Sec. 4. As used in this chapter, "optional modes of settlement" means the manner in which the funding agreement is structured to repay interest and principal to the holder.

As added by P.L.178-2003, SEC.18.

 

IC 27-1-12.7-5Issuance or issuance for delivery of funding agreements

     Sec. 5. A life insurance company may issue or issue for delivery in Indiana a funding agreement to the following:

(1) A person authorized by a state or foreign country to engage in an insurance business or a subsidiary of an insurance business.

(2) A person who uses the funding agreement for the purpose of funding:

(A) benefits under an employee benefit plan (as defined in the federal Employee Retirement Security Act of 1974, 29 U.S.C. 1001 et seq.);

(B) the activities of a nonprofit organization exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code or a similar nonprofit organization domiciled in a foreign country;

(C) a program of:

(i) the United States government;

(ii) a state government;

(iii) a political subdivision;

(iv) a foreign country; or

(v) an agency or instrumentality of the United States or a state government, a political subdivision, or a foreign country;

(D) an agreement providing for periodic payments in satisfaction of a claim;

(E) a program of an institution with assets exceeding twenty-five million dollars ($25,000,000);

(F) a program in which a business entity, including a trust:

(i) purchases and holds funding agreements; and

(ii) issues securities by using the funding agreement to finance or collateralize the securities; or

(G) any program or activity substantially similar to a program or an activity described in clauses (A) through (F) that is first authorized by the commissioner.

As added by P.L.178-2003, SEC.18.

 

IC 27-1-12.7-6Funding agreements interpretation

     Sec. 6. The issuance of a funding agreement:

(1) constitutes an activity necessary, convenient, or expedient to the business of a life insurance company under IC 27-1-7-2;

(2) is not insurance under IC 27-1-5-1;

(3) is not a security (as defined in IC 23-19-1-2(28)); and

(4) does not constitute gross premium for taxation purposes under IC 27-1-18-2.

As added by P.L.178-2003, SEC.18. Amended by P.L.27-2007, SEC.25.

 

IC 27-1-12.7-7Guaranteed or credited amounts under funding agreements

     Sec. 7. An amount may not be guaranteed or credited under a funding agreement except:

(1) upon reasonable assumptions as to investment income and expenses; and

(2) on a basis equitable to all holders of funding agreements of a given class.

As added by P.L.178-2003, SEC.18.

 

IC 27-1-12.7-8Segregated asset accounts

     Sec. 8. An amount paid to a life insurance company and proceeds applied to amounts paid under optional modes of settlement under a funding agreement may be allocated by the insurer to one (1) or more segregated asset accounts in the manner described in Class 1(c) of IC 27-1-5-1.

As added by P.L.178-2003, SEC.18.

 

IC 27-1-12.7-9Commissioner; conditions; rules

     Sec. 9. The commissioner may establish reasonable conditions or adopt rules under IC 4-22-2 regarding:

(1) reserve amounts to be maintained by a life insurance company for funding agreements;

(2) accounting and reporting of funds credited under funding agreements; and

(3) other matters regarding funding agreements the commissioner considers necessary, proper, and advisable.

As added by P.L.178-2003, SEC.18.

 

IC 27-1-12.7-10Regulation; funding agreement not a covered policy; claim for payments; assets in segregated asset account

     Sec. 10. Notwithstanding any other provision of law:

(1) the commissioner has the sole authority to regulate the issuance and sale of funding agreements;

(2) a funding agreement is not considered a covered policy under IC 27-8-8-2.3(d);

(3) a claim for payments under a funding agreement must be treated as a loss claim described in Class 2 of IC 27-9-3-40; and

(4) assets supporting a funding agreement in a segregated asset account under section 8 of this chapter are subject to IC 27-9-3-40.5 and Class 1(c) of IC 27-1-5-1.

As added by P.L.178-2003, SEC.18. Amended by P.L.193-2006, SEC.2; P.L.173-2007, SEC.8; P.L.1-2010, SEC.109.

 

IC 27-1-12.8Chapter 12.8. Standard Valuation Law
           27-1-12.8-1"Accident and sickness insurance"
           27-1-12.8-2"Appointed actuary"
           27-1-12.8-3"Change in fund basis"
           27-1-12.8-4"Company"
           27-1-12.8-5"Confidential information"
           27-1-12.8-6"Contract"
           27-1-12.8-7"Contractholder behavior"
           27-1-12.8-8"Deposit type contract"
           27-1-12.8-9"Issue year basis"
           27-1-12.8-10"Life insurance"
           27-1-12.8-11"NAIC"
           27-1-12.8-12"Plan type"
           27-1-12.8-13"Principal based valuation"
           27-1-12.8-14"Qualified actuary"
           27-1-12.8-15"Reserves"
           27-1-12.8-16"Tail risk"
           27-1-12.8-17"Valuation manual"
           27-1-12.8-18Net reserve value of contracts issued before transition date or January 1, 1948; mortality tables
           27-1-12.8-19Valuation of contracts, annuities, and endowment contracts after transition date or January 1, 1948, and before operative date of valuation manual
           27-1-12.8-20Annual reserve valuation
           27-1-12.8-21Annual submission of qualified actuary opinion; requirements
           27-1-12.8-22Supporting memorandum; confidentiality and privilege
           27-1-12.8-23Annual submission of appointed actuary opinion; supporting memorandum; requirements
           27-1-12.8-24Minimum standard for valuation of contracts; mortality tables
           27-1-12.8-25Minimum standard for valuation of annuities and pure endowment contracts; mortality tables
           27-1-12.8-26Interest rates in determining minimum standard for valuation
           27-1-12.8-27Reserves according to commissioners reserve valuation method
           27-1-12.8-28Reserves according to commissioners annuity reserve method
           27-1-12.8-29Aggregate reserves
           27-1-12.8-30Reserves; calculation
           27-1-12.8-31Minimum reserve requirement related to gross premium
           27-1-12.8-32Minimum reserve requirement for certain contracts
           27-1-12.8-33Accident and sickness insurance contracts
           27-1-12.8-34Minimum standard of valuation for contracts issued on or after operative date of valuation manual; operative date determination; changes to valuation manual; requirements
           27-1-12.8-35Principal based valuation for contracts on and after operative date of valuation manual
           27-1-12.8-36Submission of data prescribed by valuation manual
           27-1-12.8-37Confidential information
           27-1-12.8-38Confidential information; release
           27-1-12.8-39Exemptions of certain products from requirements
           27-1-12.8-40Conflict of laws; application of chapter

 

IC 27-1-12.8-1"Accident and sickness insurance"

     Sec. 1. (a) Before the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "accident and sickness insurance" means insurance described in Class 1(b), Class 1(c)(2), or Class 2(a) of IC 27-1-5-1.

     (b) On and after the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "accident and sickness insurance" means insurance described in Class 1(b), Class 1(c)(2), or Class 2(a) of IC 27-1-5-1 and as may be specified in the valuation manual.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-2"Appointed actuary"

     Sec. 2. (a) Before the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "appointed actuary" means a qualified actuary who is appointed to prepare an actuarial opinion required by sections 21 and 22 of this chapter.

     (b) On and after the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "appointed actuary" means a qualified actuary who is appointed in accordance with the valuation manual to prepare an actuarial opinion required by section 23 of this chapter.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-3"Change in fund basis"

     Sec. 3. As used in this chapter, "change in fund basis" refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under an annuity or a guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-4"Company"

     Sec. 4. As used in this chapter, "company" is limited to a company that has:

(1) issued, delivered, or reinsured at least one (1):

(A) policy of insurance described in Class 1(a) or Class 1(c)(1) of IC 27-1-5-1; or

(B) policy of insurance or contract described in Class 1(b), Class 1(c)(2), or Class 2(a) of IC 27-1-5-1;

in Indiana that is in force or subject to at least one (1) outstanding claim; or

(2) issued, delivered, or reinsured a policy or contract described in subdivision (1)(A) or (1)(B) in another state and is required to hold a certificate of authority to issue, deliver, or reinsure a policy or contract described in subdivision (1)(A) or (1)(B) in Indiana.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-5"Confidential information"

     Sec. 5. As used in sections 37 and 38 of this chapter, "confidential information" means the following:

(1) A supporting memorandum submitted under section 21, 22, or 23 of this chapter and any other documents, materials, and other information, including all working papers and copies of working papers that are created, produced, or obtained by or disclosed to the commissioner or another person in connection with the supporting memorandum.

(2) All documents, materials, and other information, including all working papers and copies of working papers that are created, produced, or obtained by or disclosed to the commissioner or another person in the course of an examination made under section 34(f) of this chapter. However, if an examination report or other material prepared in connection with an examination made under IC 27-1-3.1 is not maintained as private and confidential information under IC 27-1-3.1, an examination report or other material prepared in connection with an examination made under section 34(f) of this chapter is not confidential to the same extent as if the examination report or other material had been prepared under IC 27-1-3.1.

(3) A report, document, material, or other information developed by a company in support of or in connection with an annual certification by the company under section 35(c)(2) of this chapter evaluating the effectiveness of the company's internal controls with respect to a principle based valuation and any other document, material, or other information, including all working papers and copies of working papers that are created, produced, or obtained by or disclosed to the commissioner or another person in connection with the report, document, material, or other information.

(4) A principle based valuation report developed under section 35(c)(3) of this chapter and any document, material, or other information, including all working papers and copies of working papers that are created, produced, or obtained by or disclosed to the commissioner or another person in connection with the report.

(5) A document, material, data, or other information submitted by a company under section 36 of this chapter and any other document, material, data, or other information, including all working papers and copies of working papers that are created or produced in connection with the document, material, data, or other information in each case that:

(A) includes any potentially company identifying or personally identifiable information;

(B) is provided to or obtained by the commissioner with the document, material, data, or other information; and

(C) any other document, material, data, or other information, including all working papers and copies of working papers that are created, produced, or obtained by or disclosed to the commissioner or another person in connection with a document, material, data, or other information described in this subdivision.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-6"Contract"

     Sec. 6. As used in this chapter, "contract" means a contract or a policy.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-7"Contractholder behavior"

     Sec. 7. (a) As used in this chapter, "contractholder behavior" means an action taken by a contract holder, certificate holder, or another person possessing the right to elect options, including:

(1) lapse;

(2) withdrawal;

(3) transfer;

(4) deposit;

(5) premium payment;

(6) loan;

(7) annuitization;

(8) benefit elections; and

(9) other options;

under the contract.

     (b) As used in this chapter, "contractholder behavior" does not include events of mortality or morbidity resulting in benefits prescribed according to the terms of the contract.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-8"Deposit type contract"

     Sec. 8. (a) Before the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "deposit type contract" means a contract that does not incorporate mortality or morbidity risk.

     (b) On and after the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "deposit type contract" means a contract that does not incorporate mortality or morbidity risk and as may be specified in the valuation manual.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-9"Issue year basis"

     Sec. 9. As used in this chapter, "issue year basis" refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of an annuity or a guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-10"Life insurance"

     Sec. 10. (a) Before the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "life insurance" means insurance under a contract that incorporates mortality risk, including annuity and pure endowment contracts.

     (b) On and after the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "life insurance" means insurance under a contract that incorporates mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-11"NAIC"

     Sec. 11. As used in this chapter, "NAIC" refers to the National Association of Insurance Commissioners.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-12"Plan type"

     Sec. 12. As used in this chapter, "plan type" refers to the following:

(1) "Plan Type A" means a plan type for which a contractholder:

(A) may not withdraw funds; or

(B) at any time may withdraw funds only:

(i) with an adjustment to reflect changes in interest rates or asset values occurring after receipt of the funds by the company;

(ii) without an adjustment, but with installments over at least five (5) years; or

(iii) as an immediate life annuity.

(2) "Plan Type B" means a plan type for which:

(A) before expiration of the interest rate guarantee, a contractholder may not withdraw funds, or may withdraw funds only:

(i) with an adjustment to reflect changes in interest rates or asset values occurring after receipt of the funds by the company; or

(ii) without an adjustment, but in installments over at least five (5) years; and

(B) at the expiration of the interest rate guarantee, funds may be withdrawn without an adjustment in a single sum or installments over less than five (5) years.

(3) "Plan Type C" means a plan type for which a contractholder may withdraw funds before expiration of the interest rate guarantee in a single sum or installments over less than five (5) years:

(A) without adjustment to reflect changes in interest rates or asset values occurring after receipt of the funds by the company; or

(B) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-13"Principal based valuation"

     Sec. 13. On and after the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "principal based valuation" means a reserve valuation that:

(1) uses at least one (1) method or assumption determined by the insurer; and

(2) is required to comply with section 35 of this chapter as specified in the valuation manual.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-14"Qualified actuary"

     Sec. 14. (a) Before the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "qualified actuary" means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards.

     (b) On and after the operative date of the valuation manual specified in section 34 of this chapter, as used in this chapter, "qualified actuary" means an individual who:

(1) is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards; and

(2) meets the requirements specified in the valuation manual.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-15"Reserves"

     Sec. 15. As used in this chapter, "reserves" means reserve liabilities.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-16"Tail risk"

     Sec. 16. As used in this chapter, "tail risk" means a risk that occurs where:

(1) the frequency of low probability events is higher than expected under a normal probability distribution; or

(2) there are observed events of very significant size or magnitude.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-17"Valuation manual"

     Sec. 17. As used in this chapter, "valuation manual" refers to the manual of valuation instructions adopted by the NAIC.

As added by P.L.276-2013, SEC.10.

 

IC 27-1-12.8-18Net reserve value of contracts issued before transition date or January 1, 1948; mortality tables