ALABAMA STAmE LEGISLATURE
Laws and Amendments Regulating
The Business of Insurance
HG8521
A2
1923
EMORY UNIVERSITY
LIBRARY
LAWS AND AMENDMENTS
REGULATING THE BUSINESS OF
INSURANCE
ENACTED BY THE LEGISLATURE OF ALABAMA
SESSION OF 1923.
BROWN PRINTING COMPANY
State Printers and Binders.
Montgomery, Ala.
1923
INSURANCE LAWS, 1923
No. 464.) (S. 243. Duncan.
AN ACT
To create a Bureau of Insurance for the State of Alabama, in lieu of the
Department of Insurance; defining: the duties and powers of such
Bureau; providing for the necessary officers and employees for such
Bureau, and fixing their compensation; defining their duties and
powers; and vesting such Bureau and officers with all the authority
now exercised by any other department and any other officers per-
taining to the Insurance business in this State, thereby relieving such
other Departments and officers of all duties and responsibilities re-
lating or pertaining to the Insurance business in the State of Alabama,
Be it enacted by the Legislature of Alabama:
Section 1. There is hereby created, in lieu of the Depart-
ment of Insurance, a Bureau of Insurance for the State of Ala-
bama, separate and distinct from any other department or
office of the said State of Alabama; and the Bureau of Insur-
ance be, and is, hereby charged with the administration of all
laws, now in force, or, which may hereafter be enacted relating
to insurance, insurance companies, associations, exchanges and
societies, and their agents and representatives doing business
in the State of Alabama.
Section 2. The chief officer of the Bureau of Insurance
shall be known as the Superintendent of Insurance and shall
be appointed by the Governor; the term of office of the Superin-
tendent of Insurance shall be as follows; Immediately upon
the passage of this Act, and its approval by the Governor, he
shall appoint a person of practical knowledge and experience
and executive ability in the business of general insurance as
such Superintendent of Insurance; said Superintendent of In-
surance shall hold office from the date of his appointment until
the first day of October, 1927, and until his successor is ap-
pointed and qualified as hereinafter provided. On the first day
of October, 1927, and every four years thereafter, the Governor
shall appoint a person of practical knowledge and experience
and executive ability in the business of general insurance as
Superintendent of Insurance, who shall hold office for a term
of four years and until his successor is appointed and qualified.
In case of a vacancy in the office of Superintendent of Insurance
by death or otherwise, the Governor shall, as soon thereafter as
is consistent with proper information, appoint some person with
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practical knowledge and experience and executive ability in the
business of general insurance to fill the unexpired term. Be-
fore entering upon the discharge of his duties the Superinten-
dent of Insurance shall subscribe to the constitutional oath of
office, which shall be filed with the Secretary of State; he shall
give bond in some authorized guaranty, or surety company, in
the sum of twenty-five thousand dollars ($25,000.00) ; said
bond to be approved by the Governor and when approved to be
filed in the office of the Secretary of State; the premium for
said bond shall be paid out of the funds of the State upon a
warrant drawn by the State Auditor upon the State Treasurer.
The Superintendent of Insurance shall receive an annual salary
of four thousand dollars ($4,000.00) to be paid monthly as the
salaries of other State officials are paid.
Section 3. The Superintendent of Insurance may appoint
a Deputy Superintendent of Insurance to assist him in the dis-
charge of his duties; the said Deputy Superintendent shall re-
ceive an annual salary of three thousand dollars ($3,000.00)
to be paid as the salaries of other State officials, and he shall
be removable at the pleasure of the Superintendent of Insurance.
The Deputy Superintendent shall give bond to the State of Ala-
bama in some authorized guaranty, or, surety, company in the
sum of twenty-five thousand dollars ($25,000.00) for the faith-
ful performance of his duties; the bond to be approved by the
Governor and filed with the Secretary of State; the premium
for the said bond shall be paid out of the funds of the State by
the State Auditor upon warrant drawn on the State Treasurer.
Section 4. The Superintendent of Insurance may also ap-
point the following clerical assistants to assist him in the dis-
charge of the Bureau of Insurance; A chief clerk, whose salary
shall be eighteen hundred dollars ($1800.00) per annum; a
workman's compensation clerk, whose salary shall be twenty-
four hundred dollars ($2400.00) per annum; a license clerk and
stenographer, whose salary shall be fifteen hundred dollars
($1500.00) per annum; a record and filing clerk, whose salary
shall be twelve hundred dollars ($1200.00) per annum; the
salaries of the clerks herein named to be paid as the salaries of
other State officials and employees are paid. The chief clerk
shall give bond in some authorized guaranty, or, surety company
in the sum of five thousand dollars ($5,000.00) said bond to be
approved by the Governor and filed with the Secretary of
State; the premium for said bond shall be paid out of the funds
of the State by the State Auditor upon warrant drawn on the
State Treasurer.
Section 5. There is hereby authorized, and made, a con-
tinual annual appropriation for the salaries of the several
officers, clerks and employees of the Bureau of Insurance.
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Section 6. The Governor of the State shall assign to the
Superintendent of Insurance suitable rooms in the capitol build
ing for conducting therein the business of the Bureau of Insur-
ance, and this Bureau shall be provided with the necessary
furniture, stationery, postage, lights and other proper con-
veniences in the same manner and way as is furnished to other
State departments; provided, however, that the furniture and
fixtures now in use by the Insurance Department shall be as-
signed to the Bureau of Insurance.
Section 7. The powers, duties and jurisdiction now con-
ferred upon the Department of Insurance, and upon the Com-
missioner of Insurance, are hereby conferred upon, and trans-
ferred to, the Bureau of Insurance, and the Superintendent of
Insurance. The Superintendent of Insurance shall possess and
have all the powers, and perform all the duties of supervision,
regulation and control of the business of insurance in this State,
which powers and authority are now exercised by the Commis-
sioner of Insurance. And the Superintendent of Insurance
shall exercise the same control over the insurance companies
or associations, mutual aid companies, fraternal societies, inter-
insurance exchanges, their officers, agents and representatives,
and shall collect from them all taxes, fees, and penalties as are
required by law, or may hereafter be required by law. The
Superintendent of Insurance shall have exclusive control, man-
agement and supervision of the Bureau of Insurance and shall
be vested with the authority now conferred by law on the Com-
missioner of Insurance, and shall have full power and authority
to do and perform all acts necessary to the carrying out and
effectuating the purposes and ends for which said Department
was created. And the Superintendent of Insurance is hereby
authorized and empowered, from and after the date of his ap-
pointment and qualification as such Superintendent of Insur-
ance, to perform all duties now required, or that may be re-
quired by law, in relation to the supervision, regulation and
control of the business of insurance in this State. The Superin-
tendent of Insurance is charged with the duty of administration
of all laws of whatsoever nature that are now, and have hereto-
fore been, provided by law to be administered by the Commis-
sioner of Insurance.
Section 8. The Superintendent of Insurance shall be com-
pensation Commissioner ex-officio and shall possess and have
all the powers and authority, and perform all the duties now
conferred on the director of the Department of Archives and
History as ex-officio compensation commissioner of the State
of Alabama.
Section 9. All books, papers, letters, and records, and office
equipment belonging to the Department of Insurance shall be
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delivered to the Superintendent of Insurance immediately upon
his qualifying under this Act.
Section 10. All books, papers, letters, records, and office
equipment now in possession of, and belonging to, the director
of the Department of Archives and History as ex-officio com-
pensation commissioner shall be delivered to the Commissioner
of Insurance immediately upon his qualifying under this Act.
Section 11. The Superintendent of Insurance shall make
settlement with the State treasurer as now, or hereafter, re-
quired by law.
Section 12. The Superintendent of Insurance shall be pro-
vided by the State of Alabama with an official seal. Every
paper executed by him as Superintendent of Insurance under
the authority conferred on him by law, and sealed with his
official seal, shall be received in evidence and may be recorded
in the proper recording office in this State in the same manner
and with the same effect as a deed regularly acknowledged or
proven. The Superintendent of Insurance shall collect such
fees and charges for the use of his official seal as are now, or
may hereafter be, provided to be collected by the Superintendent
of Insurance.
Section 13. All laws and parts of laws in conflict with the
provisions of this Act are hereby repealed.
Section 14. This Act shall go into effect immediately upon
its approval by the Governor.
Approved Oct. 1, 1923.
No. 485.) (S. 388. Craft.
AN ACT
To regulate corporations engaged in the business of issuing guaranties of
title to land.
Be it enacted by the Legislature of Alabama:
Section 1. Every corporation engaged in the State of Ala-
bama in the business of issuing guaranties of title to land shall
have a paid up capital of not less than one hundred thousand
dollars and must be examined by the Commissioner of Insurance
when and as often as he may deem advisable, but at least once
every two years, and shall be examined by him at any time that
a request for such examination is made in writing by the cor-
poration and also when such request, if he believes it is made in
good faith, is made by any ten stockholders thereof who shall
make affidavit of their belief, with specifications of their reasons
therefor, that said corporation is in unsound condition. Such
corporation shall pay the proper charges incurred in such exam-
ination, including the expenses of the Commissioner of Insur-
ance or his deputy, and the expenses and compensation of his
assistants employed therein, provided, however, that such cor-
poration shall not be required to pay for more than two exami-
nations in any one calendar year.
Section 2. The funds of such corporation may be invested
in real property, personal property, title plants (that is books,
papers, maps, and all things incident to abstract or title books),
stocks, bonds, mortgage or other liens, and such other assets
or investments as the corporation may see fit; provided that the
corporation shall, at all times, have not less than Fifty Thousand
($50,000.00) Dollars of its capital or surplus and undivided
profits in investments other than its title plant, and provided
further that if any investment of the corporation, in the opinion
of the insurance commissioner, is in unsafe or insecure invest-
ments, and such investments, if a loss, in whole or in part, would
impair the capital stock of the corporation, then the Commis-
sioner of Insurance may require the corporation to dispose of
such unsafe or insecure investment in such reasonable time as
he may prescribe and make good the impairment, if any, of the
capital stock, and provided further that the corporation shall not
make loans on its own capital stock as collateral.
Section 3. Such corporation shall on or before March 1st. in
each year make to the Commissioner of Insurance a report of
its condition at the close of the preceding calendar year, said
report to be made in such form and detail as may be prescribed
from time to time by the Commissioner of Insurance, to be
sworn to by some officer of such corporation and to be accom-
panied by a filing fee of ten dollars. And such corporation may
on its own motion file other reports with the Commissioner of
Insurance at any time it may desire.
Section 4. Should the capital of such corporation become
impaired the Commissioner of Insurance shall notify it to make
good the impairment within sixty days from the date of such
notice and if this is not done the corporation shall cease to do
business.
Section 5. Should the Commissioner of Insurance, upon
examination be of the opinion that such corporation is insolvent,
or has failed to make good the impairment of its capital as pro-
vided for in the preceding section or has exceeded its powers, or
has failed to comply with any provision of the law, or that its
condition is such as to render its further proceedings hazardous
to the public, or to its guaranty holders, he may in his discretion
instruct such corporation to desist, in whole or in part, from
further proceedings with its business, or may instruct such cor-
poration to wind up its business under his supervision and con-
trol. He may also in his discretion apply to a court of compe-
tent jurisdiction, through the Attorney General of the State, to
issue an injunction restraining such corporation, in whole or in
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part, from further proceedings with its business; and such court
may, in its discretion, issue the injunction forthwith, or upon
notice and hearing thereof, and after a full hearing of the mat-
ter, may dissolve or modify such injunction or make it perpet-
ual. He may also in his discretion so apply to said court to ap-
point, and said court may thereupon in its discretion appoint, a
receiver to take possession of the property and effects of such
corporation and wind up its affairs.
Section 6. Such corporation shall not reduce its capital or
wind up its business or distribute its capital assets or dissolve,
without in some way providing for the protection of the holders
of its guaranties of title by reguaranteeing its risks, or by de-
positing funds or securities or otherwise, ■ and such way as is
provided must be approved by the Commissioner of Insurance;
but, other than the deposit for the purpose just mentioned, such
corporation shall not, unless it be a foreign corporation, be re-
quired to make or maintain for any purpose any deposit of
money or bonds or securities with any officer of the State of
Alabama.
Section 7. If such corporation be a foreign corporation, it
shall before being authorized to do business in this State, in ad-
dition to procuring from the Secretary of State a permit admit-
ting it to do business in this State, satisfy the Commissioner of
Insurance that it is fully and legally organized under the laws
of the State or government to guarantee titles to land, and shall,
for the better protection of its guaranty holders and creditors in
the State of Alabama, keep at all times the sum of fifty thousand
dollars invested in stocks, bonds, notes, liens, mortgages and
other securities worth not less than said sum, and subject to the
approval of the Commissioner of Insurance, and deposited with
a bank or trust company in the State of Alabama, approved by
the Commissioner of Insurance, having a capital and surplus of
not less than five hundred thousand dollars; and the corporation
making such deposit shall be entitled to the income thereof, and
may, from time to time, change in whole or in part the securities
which compose the deposit, for other competent securities of
equal value. And the Commissioner of Insurance must author-
ize the return to such corporation of the whole or any portion of
said securities when he is satisfied that they are subject to no
liability, and not required to be longer held by any provision of
law, or purpose of the original deposit; provided that if any
such foreign corporation re-incorporates under the incorpora-
tion laws of the State of Alabama and qualifies under this act as
a domestic corporation, said deposit shall be returned to such
corporation on its application; provided further, that domestic
corporations may, at their election, make for the benefit of their
guaranty holders, a deposit of fifty thousand dollars in the same
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manner and under the same conditions as required of foreign
corporations under this Act.
Section 8. All laws and parts of laws in conflict with this
act are hereby repealed.
Section 9. If any section or provision of this act be held
unconstitutional it shall not invalidate any other section or pro-
vision of this Act.
Approved Sept. 29, 1923.
No. 359.) (S. 244. Duncan.
AN ACT
To repeal Sections 4594, 4595 and 4596 of the Code of Alabama, and also
an Act entitled "An Act to amend Sections 4594 and 4595 of the Code
of Alabama," approved April 7th, 1911.
Section 1: Be it enacted by the Legislature of Alabama,
that Sections 4594, 4595 and 4596 of the Code of Alabama, and
also an Act entitled "An Act to amend Sections 4594 and 4595
of the Code of Alabama," approved April 7, 1911, be and hereby
are repealed.
Approved Sept. 24, 1923.
No. 593.) (S. 417. Foster.
AN ACT
To authorize and provide a fund to be known as the State Insurance Fund
which is to be carried by the State Treasurer for the purpose of insur-
ing against loss by fire or tornado all State-owned buildings or build-
ings in which the State has appropriated monies for the erection or
equipment thereof, or which may have been deeded to the State, and all
property equipment, furniture and fixtures or supplies belonging to or
stored in such buildings and any and all properties of such nature as
may be acquired by the State, and to this end to establish a basis for
assessment and collection of premiums, to provide for a sinking fund
with which to pay losses, to provide an emergency appropriation to be
used only in case of loss by fire or tornado in excess of collection of
premiums, to provide for a division of the State's property into groups,
to provide for return of surplus for maintenance purposes, to provide
for inspection and valuation of State property and promulgate rules
and regulations necessary for the operation of the Act.
Be it enacted by the Legislature of Alabama:
Section 1. A fund is hereby created to be known as the
State Insurance Fund to be carried by the State Treasurer for
the purpose of insuring against loss by fire or tornado all state
owned buildings, or buildings in which the state has appro-
priated monies for erection or equipment thereof, or property
which may have been deeded to the State, and all property,
equipment, furniture, fixtures or supplies belonging to or stored
in said buildings, and any and all properties of such nature as
hereafter may be acquired by the state.
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Section 2. That the State Board of Convict Supervisors, or
its successors, the legal and official custodians of all physical
property belonging to the State, is hereby constituted and desig-
nated as the Board through which this Act shall be administered,
and is empowered with such authority as may be necessary to
carry out its purposes.
Section 3. That the said board shall, by the first of October,
after the passage of this Act, or as soon thereafter as possible,
make, or cause to be made, an inspection and appraisal of all
property, the value of which has not already been satisfactorily
established, for the purpose of determining the amount of insur-
ance necessary to be carried on the several properties, and to
classify all property and give it the current rating of commercial
fire and tornado insurance companies.
Section 4. That all state property shall be insured for 75
per cent of its actual value, and may at the option of the board
be insured up to 100 per cent of said value, except as to rural
school houses and equipment, which shall be insured for not
more than 75 per cent of their value.
Section 5. That the premium charged shall be based on
sixty per cent of the current commercial rate and all of the said
premiums shall be paid to the said Board not later than Novem-
ber 15th, of each fiscal year by the treasurers of the several in-
stitutions, the heads of several executive departments, and
county superintendents of education of several counties, and
that all such funds shall be promptly transmitted to the State
Treasurer who shall place same to the credit of the State Insur-
ance Fund.
Section 6. That the county superintendents of education of
the several counties shall be required to place the said board on
the regular pay roll for the amount of premiums, as shown by
the schedule of state owned buildings in said county, so that this
premium may be paid not later than November 15th. of each
year, and that in case of failure or refusal to comply with the
provisions of this section on the part of any county superinten-
dents or county board of education, that a penalty of ten per cent
shall be added to the premium and that the Attorney General
be instructed to proceed in the collection of said premium to-
gether with the penalty and all costs incident to said collection
by due process of law.
Section 7. That the premiums collected under the pro-
visions of this Act shall constitute a trust fund, to be applied
only to the purposes of the Act. That all such funds shall be
placed in such depositaries as may be approved by the Governor
at the best rate of interest obtainable for time deposits, such
depositaries to give suitable bond or securities for such deposits
such bonds or securities to be approved by the Governor; or such
funds may be invested in bonds of the United States Govern-
11
ment or in bonds of the State of Alabama with the approval of
the Governor. That the funds accruing under the operation of
this Act shall constitute a sinking fund and surplus which shall
be subject to the requisition of the President of the said Board,
with the approval of the Governor, for the payment of losses,
the necessary expense of the administration and refunds for
maintenance.
Section 8. That there is hereby appropriated from the
State Treasury the Sum of One Hundred Thousand Dollars
($100,000.00) to be available only in case the loss by fire or
tornado in any year during the accumulation of the sinking fund
shall exceed the premiums collected, and then only in such
amount as may be required to pay such loss in addition to the
amount of funds on deposit at the time of said loss, less the
amounts hereinafter set aside for the purposes of administra-
tion, and that when the sinking fund shall have reached the sum
of $500,000 the first surplus above this amount shall be used to
reimburse the state treasury for any amount which may have
been drawn from this appropriation.
Section 9. That it shall be the duty of the said Board to
divide the property of the State into related groups and a strict
accounting kept by groups as to amount of premiums collected
and losses sustained, and that losses sustained in any group shall
be charged to said group and shall not affect the refunds for
maintenance to other groups unless the loss exceeds the amount
to the credit of any group, in which case such excess shall be
paid from the balances appearing in other groups but such ex-
cesses to be adjusted in subsequent years. This grouping to be
as follows: 1. Administrative departments. 2. Institutions,
Eleemosynary, and Correctional. 3. Educational Institu-
tions, University, Auburn, Schools for Deaf and Blind, Monte-
vallo and Normal Schools. 4. Convict Department. 5. Sec-
ondary Agricultural Schools Rural School Houses and Equip-
ment including County High Schools.
Section 10. That when a sinking fund of $500,000 has been
established, on the first day of July of each year, or as soon
thereafter as practicable, a balance sheet shall be prepared
showing the amount of such surplus to the credit of each group
—in the case of institutions and other state property this state-
ment shall show also the amount of surplus due each institution
and in the case of rural school houses the statement shall show
the amount of surplus due counties and that such surpluses shall
be refunded to each group in accordance with said statement
upon a requisition of the President of said board on the State
Auditor, with the approval of the Governor. Such refunds in
the hands of treasurers of institutions or treasurers of county
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school funds, or heads of executive departments, shall be ex-
pended for maintenance purposes only.
Section 11. That said Board shall cause to be inspected an-
nually all institutional property to ascertain if the hazard on
any property has been increased or reduced, and that sworn
statements shall be required of all county superintendents of
education annually giving a description of all rural school houses
and equipment coming under the provisions of this act, on pre-
scribed forms which shall show the character of risk and deter-
mine the rate of premium.
Section 12. That no part of these funds shall be used to in-
crease the salary of any state employee and only such clerical
force, inspection and adjustment expense as may be necessary
for the economical administration of the Act shall be paid from
said funds, and that such expenditures shall be limited to 10 per
cent of the total premiums collected for the first two year of
operation, when additional expenses of inspection and valuation
will be necessary, and after two years the expenses of adminis-
tration shall be limited to 6 per cent of the amount of premiums
collected, or so much thereof as may be required.
Section 13. That, to avoid duplication of work and in the
interest of economical operation, the state architect or official
inspector of rural school house construction in the Department
of Education is hereby made an official inspector of rural school
houses and equipment coming under the provisions of this Act,
so long as his services in such capacity are satisfactory to the
President of said Board. That the State Board of Education
shall be reimbursed for this service from the expense fund on
voucher of the President of said Board approved by the Gov-
ernor in such amount as shall be agreed upon between the presi-
dent of said Board and the State Superintendent of Education
with the approval of the Governor.
Section 14. That in the event a disagreement arises between
the president of the Board and any person or persons in charge
of any state property as to its true value, or the amount payable
under a claim for loss, or the proper premium rate or rates, the
matter in disagreement shall be determined by a third person to
be agreed upon by the President of the Board and the person or
persons disagreeing with him. In case of inability to agree as
to the third party the Governor shall appoint same, and the de-
cision of such party so selected shall be final and binding on all
parties concerned.
Section 15. That the administrative board under the pro-
visions hereof shall be and is hereby empowered to prescribe
such forms, including forms of proof of loss, such rules and
regulations as may be found necessary for the proper adminis-
tration of the provisions of this Act. Furthermore, the said
13
Board shall be authorized to decrease the premium rate after
the sinking fund herein provided has been established to such
an extent as in their judgment is warranted.
Section 16. That all policies on state property now in force
shall not be cancelled or affected by the passage of this Act until
expiration dates are reached and that premiums shall be assessed
only upon the uninsured amount until the expiration of said in-
surance now in force. That in case of the expiration of any
policy before October 1st. of any year, then in such event, the
Board shall assume the risk and assess the premium for that
year in that proportion of an annual premium as the number of
unexpired days before the next October 1st bears to a year.
And in case of all such prorata premiums same shall be due and
payable on or before the fifteenth day of the next succeeding
month, and if not paid shall be subject to the penalty prescribed
in Section six of this Act. Provided, that nothing in this Act
shall prevent the extending or renewing of any insurance policy
or contract until sufficient funds are accumulated under the Act
to carry adequate insurance in accordance with the provisions
of the Act.
Section 17. That all laws and parts of laws in conflict with
the provisions of this Act are hereby repealed.
Approved Oct. 2, 1923.
No. 574.) (H. 527. Goodwyn.
AN ACT
"To Limit The Amount Of Licenses Or License Tax To Be Paid By Fire
Insurance Companies To Municipalities Having A Population Of Less
Than 100,000, According To The Last Preceding Federal Census In-
eluding Payments Or Contributions Required To Be Made To Any
Firemen's Compensation Or Relief Funds In Such Municipalities."
Be it enacted by the Legislature of Alabama as follows:
Section 1: That no fire insurance company doing business
in any municipality in this State having a population of less
than 100,000, according to the last preceding Federal Census
shall be required to pay to such municipality for any license or
license tax, a sum greater than four per centum of its gross pre-
miums, less return premiums, received by such company on risks
in such municipality, including any sum, or sums, required to
be paid or contributed by such insurance company to any Fire-
men's Compensation, or Relief Fund in such municipality. Pro-
vided that no license or privilege tax, or other charge for the
privilege of doing business, shall be imposed by any municipal
corporation on any fire insurance company writing industrial
insurance.
Section 2: That all laws and parts of laws in conflict here-
with be and are hereby repealed.
Approved October 1, 1923.
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No. 32.) (S. 22. Inzer.
AN ACT
To provide for the withdrawal of any deposit of mutual aid or industrial
association or corporation with the State when such corporation or
association ceases to do business in the State and re-insures its policy
holders in this State.
Be it enacted by the Legislature of Alabama:
Section 1. That when any Mutual Aid or Industrial Associa-
tion or Corporation shall cease to do business in this state, and
re-insures all its policy contracts with policy holders in this state,
with some insurance company authorized to do business in this
state, and having on deposit in this state the deposit required by
law of insurance companies to do such business, or has the neees-
sary deposit in some other State and has furnished to the Com-
missioner of Insurance the required certificate of such deposit,
and shall have paid all its outstanding obligations to citizens in
this state, it shall be permitted to withdraw any deposit it may
have with this state.
Section 2. Any corporation or association desiring to with-
draw its deposit under the provisions of this Act, shall file with
the Insurance Commissioner a copy of its re-insurance contract,
which re-insurance contract must be approved by the Insurance
Commissioner, and in addition thereto shall file a statement, un-
der oath, of its President or managing officer, stating that all its
policy contracts issued to policy holders in this state have been
re-insured and all its debts to the citizens of this state have been
paid. Upon the filing and approval of such re-insurance con-
tract and the statement under oath of such President or other
Managing Officer, the Insurance Commissioner shall issue to
such corporation or association a certificate that it is authorized
to withdraw deposit with the state and such certificate shall be
sufficient warrant to any officer of the state having the custody
of such deposits to deliver the same to such association or cor-
poration or its duly authorized agent. The Insurance Commis-
sioner before issuing such certificate may demand other proof
of the facts set forth in statement of the President or Managing
Officer of such association or corporation, and when demanded
must be furnished so as to reasonably satisfy him of the truth-
fulness of such statement.
Section 3. This Act shall take effect immediately after its
approval, and all laws and parts of laws in conflict herewith are
hereby repealed.
Approved Feb. 7, 1923.
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No. 596.^ (S. 302. Teasley.
AN ACT
To provide how Fraternal Societies organized under the laws of this State
may consolidate, merge or reinsure its Insurance Risks, with any
other Fraternal Benefit Society, or assume or reinsure the risks of any
other Fraternal Benefits Society, and to provide Penalties for the
violation of the Provisions hereof.
Be it enacted by the Legislature of Alabama that:—
Section 1. No Fraternal Benefit Society organized under
the laws of this State to do the business of life, accident, or
health insurance, shall consolidate or merge with any other
Fraternal Benefit Society or reinsure its insurance risks, or any
part thereof, with any other Fraternal Benefit Society or as-
sume or reinsure the whole or any portion of the risks of any
other Fraternal Benefit Society, except as herein provided.
No Fraternal Benefit Society or subordinate body thereof shall
merge, consolidate with or be reinsured by any company or as-
sociation not licensed to transact business as a Fraternal Bene-
ficiary Society.
Section 2. When any such Fraternal Benefit Society shall
propose to consolidate or merge its business or to enter into any
contract of reinsurance, or to assume or reinsure the whole or
any portion of the risks of any other Fraternal Benefit Society
the proposed contract in writing setting forth the terms and
conditions of such proposed consolidation, merger or reinsur-
ance shall be submitted to the legislative or governing bodies of
each of said parties to said contract after due notice, and if ap~
proved such contract as so approved, shall be submitted to the-
commissioner of Insurance of this State for his approval and
the parties to said contract shall at the same time submit a,
sworn statement showing the financial condition of each of suchi
Fraternal Benefit Societies as of the thirty-first day of Decern-
ber preceding the date of such contract, provided that such In-
surance Commissioner shall require such financial statement to
be submitted as of the last day of the month preceding the date
of such contract. Such financial statement shall be the basis
of such contract of consolidation, merger, or reinsurance and
the Commissioner of Insurance shall consider such contract of
consolidation, merger or reinsurance together with such finan-
cial statement and if satisfied that the consolidation, merger or
reinsurance is based upon and is to be consummated in accord-
ance with such financial statement; that the interests of the
certificate holders of such Fraternal Benefit Societies are
properly protected and that said contract of consolidation,
merger or reinsurance is just and equitable to the members of
such societies, and that no reasonable objection exists thereto,
16
he shall approve said contract as submitted. In case the parties
corporate to such contract shall have been incorporated in sep-
arate states, or territories, such contract shall be submitted as
herein provided to the Commissioner of Insurance of each of
such incorporating states, or territories, to be considered and
•approved separately by each of such Commissioners of Insur-
ance. When said contract of consolidation, merger or reinsur-
ance shall have been approved as hereinabove provided, such
Commissioner or Commissioners of Insurance shall issue a cer-
tificate to that effect, and thereupon the said contract of con-
solidation, merger or reinsurance shall be in full force and
effect. In case such contract is not approved the fact of its
submission and its contents shall not be disclosed by the Com-
missioner of Insurance.
Section 3. All necessary and actual expenses and compensa-
tion incident to the proceedings provided hereby shall be paid
as provided by such contract of consolidation, merger or rein-
ance, provided, however, that no brokerage or commission shall
foe included in such expenses and compensation or shall be paid
to any person by either of the parties to any such contract in
-connection with the negotiation therefor or execution thereof,
nor shall any compensation be paid to any officer or employee
of either of the parties to such contract for directly or indirectly
aiding in effecting such contract of consolidation, merger or
reinsurance. An itemized statement of all . such expenses shall
be filed with the Insurance Commissioner or Commissioners, as
the case may be subject to approval, and when approved the
same shall be binding on the parties thereto. Except as fully
-expressed in the contract of consolidation, merger or reinsur-
ance or itemized statement of expenses as approved by the Com-
missioner or Commissioners of Insurance as the case may be,
no compensation shall be paid to any person or persons, and no
officer or employee of the state shall receive any compensation,
directly or indirectly, for in any manner aiding, promoting or
assisting any such consolidation, merger or reinsurance.
Section 4. Any person violating the provisions of this act
shall be guilty of a felony, and upon conviction shall be liable to
a fine of not more than five thousand dollars, or to imprison-
ment for not more than five years, or to both fine and imprison-
ment.
Section 5. The provisions of this act shall take effect upon
its approval by the Governor.
Approved October 1, 1923.