CHAPTER 52
INSURANCE DEPARTMENT
AN ACT to amend, revise and consolidate the Laws regulating the business of Insurance in this State, and for this purpose to repeal certain existing Laws relating to the business of Insurance, and to substitute for the same the revision and consolidation set forth in this Act, such revision and consolidation to become and be Chapter 20 of Title Six of the Revised Code of the State of Delaware of 1915.
Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:
Section 1. For the purpose of amending, revising and consolidating the laws regulating the business of insurance in this State, and of consolidating the same under one complete law, all of Chapter 20 of Title Six of the Revised Code of 1915 as the same has been heretofore amended, and also 3051. Sec. 19, 4232. Sec. 22, 4233. Sec. 23, and 4234. Sec. 24, of said Revised Code of 1915, and all other laws in conflict with or superseded by this Act, are hereby repealed, and the Insurance Laws hereinafter set forth in Section 2 of this Act are substituted and adopted and enacted in lieu thereof.
Nothing in this Act or in the repeal of said prior Laws, shall affect any act done, or any cause of action accruing or accrued or established, or any suit or proceeding had or commenced in any civil cause, or any plea, defense, bar or matter subsisting prior to this time; and all the provisions of said Laws shall be deemed to have remained in force from the time they began to take effect, so far as they may apply to any office or trust or any transaction or event or limitation or any right or obligation already affected by such Laws, notwithstanding this repeal of them.
No offense committed or penalty or forfeiture hereto- fore incurred under any of said Laws shall be affected by said repeal; nor shall any suit or prosecution, pending at the present time, for any offense committed or for the recovery of any penalty or forfeiture, be affected by said by repeal.
All unexpired Certificates of Authority to insurance Certificates of companies and Licenses and Certificates of Authority to insurance agents, issued prior to the date when this Act becomes a Law, shall be and continue valid and in full force and effect until the date of expiration fixed therein, and during such period shall be in lieu of any similar Licenses or Certificates of Authority under this Act; and all taxes, fees and charges due and payable under existing law prior to the date when this Act becomes a Law, shall be payable and collected under the present existing Laws instead of under this Act.
Nothing in this Act shall affect the present Insurance Commissioner as to the term of his office or the times and methods of the election of the Insurance Commissioner not affected as now existing and established, but the Office of Insurance Commissioner in all such respects shall continue as now established.
Section 2. In lieu of the Insurance Laws repealed in Section 1 of this Act, the Laws regulating the business of insurance in this State are hereby revised and consolidated and amended and enacted as Chapter 20 of Title Six of the Revised Code of 1915, in manner and form as follows :
ARTICLE 1
INSURANCE COMMISSIONER
572. Sec. 1. INSURANCE DEPARTMENT AND INSURANCE COMMISSIONER: There shall be a department charged with the execution of the laws relating to Insurance to be known as the Insurance Department, the chief officer of which shall be denominated the "Insurance Commissioner" of Delaware, who shall be chosen by the qualified electors of the State at general elections and be commissioned by the Governor to serve a term of four years.
He shall assume the duties of his office on the first Tuesday of January after his election. The Insurance Commissioner shall not be a Director, Officer or Agent of, or directly or indirectly interested in any insurance company, except as an insured.
The principal office of the Insurance Commissioner shall be in the State House at Dover. When any vacancy occurs in the office of Insurance Commissioner, it shall be filled in accordance with the provisions of the Constitution of this State.
The Insurance Commissioner shall, before entering upon the duties of his office, give a bond in the penal sum of fifty thousand dollars, with surety or sureties to be approved by the Governor, such bond to be filed with the Secretary of State and conditioned as follows: "that if the above named who has been duly elected (or appointed) to be Insurance Commissioner shall and do well and diligently execute his office of Insurance Commissioner as aforesaid and duly and faith- Bond of fully fulfill and perform all the trusts and duties to the said office appertaining, and truly and without delay deliver to his successor in office the seal and all the books, records and papers belonging to said office safe and undefaced, and if the said shall truly and without delay pay over to the State Treasurer all the fees, taxes and money which it shall be his duty to collect, and which are to be paid to the State Treasurer, then this obligation shall be void and of no effect, or else shall remain in full force and virtue."
Before entering upon the duties of his office, said Insurance Commissioner shall also take and subscribe the oath or affirmation prescribed by Article XIV of the Constitution.
573. Sec. 2. OFFICIAL SEAL OF INSURANCE COMMISSIONER; PAPERS UNDER SEAL TO BE EVI- DENCE: The Insurance Commissioner shall have a seal of office surrounded by the words "Insurance Commissioner of the State of Delaware." All certificates and other official papers shall be authenticated with an impression of this seal. Any instrument duly executed by the Insurance Papers under Commissioner, and authenticated by his seal of office, shall be received in evidence in the courts of this State, and copies of papers and records in his office, so authenticated, shall be received as evidence with the same effect as the originals.
574. Sec. 3. GENERAL POWERS AND DUTIES OF COMMISSIONER: The Insurance Commissioner shall have general supervision, control and regulation of the business General of insurance of every kind within this State, and shall carry out and enforce the laws of this State relating to the business of insurance and shall have power to make all reasonable rules and regulations necessary therefor. Ile shall have full power and control, under the provisions of this Chapter, over the issuance of Certificates of Authority for the transaction of the business of insurance of any kind within this State, and may refuse such Certificate of Authority in proper cases, and may revoke any Certificate of Authority on cause shown.
He shall carefully examine the affairs of each domes- tic company as to its financial ability and condition at least once in three years. He shall also make an examination of any such company whenever he deems it prudent or advisable to do so. Such examination shall be made by the Commissioner personally or by his deputy or other ac- credited representative, and all proper charges incurred in making such examination, inclusive of expert assistance, shall be paid by the company examined.
Whenever he deems it prudent for the protection of policyholders in this State, he shall in like manner visit and examine, or cause to be visited and examined, by some competent person or persons he may appoint for that purpose, any foreign or alien insurance company applying for admission or already admitted to do business in this State and such company shall pay the proper charges incurred by company such examination including the expenses of the Commissioner or his deputy and the expenses of his assistants, May accept including expert assistance, employed therein. In lieu of such examination, the Commissioner may accept the report authorities of other states of the examination made by or upon the authority of the supervisory insurance official of any other State.
For the purpose of such examinations, the Commissioner or his deputy or person making examination shall have free access to all the books and papers of the insurance company that relate to its business, and to the books and papers kept by any of its agents, and may summon and qualify as witnesses under oath and examine the directors, officers, agents and trustees of any such company or other insurer and any other persons in relation to its affairs, transactions and conditions. The refusal of any such Company to submit to and provide for such examination or to exhibit its books and records for inspection, shall be presumptive evidence that it has violated the provisions of this Chapter, and its Certificate of Authority shall be forthwith revoked, and it shall be subject to the penalties prescribed and imposed by this Chapter. If from such examination, after notice and hearing before the Commissioner, it appears that it has violated the provisions of this Chapter, its Certificate of Authority shall be forthwith revoked.
Whenever the Insurance Commissioner shall have reason to believe, after notice and hearing before the Commissioner, that any insurance company is insolvent, or fraudulently conducted, or that its assets are not sufficient for carrying on the business of the same, or that it has failed to comply with the provisions of this Chapter, or that its condition is such as to render its further proceeding hazardous to its policyholders or to the public, notwithstanding any special provision granted in its charter or certificate of incorporation, the Insurance Commissioner shall revoke its ,certificate of authority to do business; and, if a domestic corporation, he shall take charge of its affairs and communicate the fact to the Attorney General, whose duty it shall then become to file a bill or petition in Chancery, in the name of the State, setting forth the facts, and thereupon to apply to the Court of Chancery of any County in which said company may be doing business, or to the Chancellor in vacation, for an Order requiring said company to show cause Why its business should not be closed. In a proper case made, the said Court, or the Chancellor in vacation, shall have power to appoint a Receiver to take charge of, settle and close up the affairs of said company under the direction of the said Court, to enjoin it from doing business, and to make such Order and decree as may be necessary or proper.
At the request of any person, and on the payment of owing the fee, the Insurance Commissioner shall give certified copies of any record or papers in his office when he deems it not prejudicial to public interests so to do, and shall give other certificates as provided by law. He shall also carefully preserve in permanent form all papers and records relating to the business of his Department, and shall hand successor the same over to his successor in office.
He shall report to each regular session of the General Assembly, on the first Tuesday of January, the receipts and expenses of this Department for the two years previous; all of his official acts whenever specially required by the General Assembly, and in the absence of any special requirement, such portion of his official acts as he may deem necessary to make public; the condition of all companies doing the business of insurance in this State; and such other information as will correctly exhibit the affairs of his Department; and send a copy of his report when printed to the insurance Commissioner, or other similar tiir:nroar7t%s officer, of every other State, and to each company doing business in this State.
He shall communicate on request of any Insurance Commissioner or other similar officer, of any State, any facts which by law it is his duty to ascertain respecting companies doing business in this state.
He shall enforce the payment of all fees, charges and taxes which by law are required to be paid to him.
575. Sec. 4. CERTIFICATES OF AUTHORITY; BLANKS FOR, HOW ISSUED TO INSURANCE COMMISSIONER BY SECRETARY OF STATE; HOW ACCOUNTED FOR: The Secretary of State shall charge and deliver to the said Insurance Commissioner a certain number of Certificates of Authority to insurance companies and insurance agents and insurance brokers to do business in this State, which in his judgment he may deem necessary, and which may be increased from time to time upon the request of the said Insurance Commissioner, which Certificates of Authority shall be bound in book form, with stubs, and numbered consecutively. It shall be the duty of the Auditor of Accounts in auditing the accounts of the Auditor of said Insurance Commissioner, to compare the stubs aforesaid with the report of the said Insurance Commissioner, and make him, the said Insurance Commissioner, account for all Certificates of Authority issued and charged to him Authority but not issued by him.
576. Sec. 5. INSURANCE ON STATE PROPERTY: The Governor of the State of Delaware, the State Auditor, and the Insurance Commissioner shall, from time to time, determine the amount of fire or other insurance to be effected and to be carried upon the property of the State, and it shall be the duty of the said Insurance Commissioner to have insured, and to keep insured, all State property in such manner as shall have been determined as aforesaid.
The Insurance Commissioner shall keep all insurance policies in some safe and secure place, and shall keep in a proper book record thereof showing:
(a) The property insured;
(b) The insuring Company;
(c) The number of the insurance policy;
(d) The date of expiration of the policy;
(e) The amount of the insurance as set forth in each policy;
(f) The premiums thereon.
The Insurance Commissioner shall demand and receive Bill for all bills for premiums to be paid, and after approval by himself, the State Auditor and the Governor, shall present the same for payment to the State Treasurer, who shall pay the same. Each year the Insurance Commissioner shall make to the Governor a detailed report of the insurance in force upon State property, and at each session of the General Assembly the Governor shall transmit such report to the Senate and to the House of Representatives.
ARTICLE 2
GENERAL PROVISIONS
577. Sec. 6. DEFINITIONS: In this Chapter, unless the context otherwise requires:
"Insurance Company", means a corporation or association duly incorporated or formed in conformity with the laws of the state or country of its domicile and place of creation, which is engaged as principal in the business of insurance or of guaranteeing the obligations of others, including life insurance, fire insurance, marine insurance, guarantee and casualty insurance, suretyship, workmen's compensation insurance, title insurance, and other insurance or guarantee.
"Domestic Company", means an insurance company organized under the laws of this State.
"Foreign Company", means an insurance company organized under the laws of any state of the United States other than this State, or of any territory or insular possession of the United States or of the District of Columbia.
"Alien Company", means a company organized under the laws of any country other than the United States or a territory or insular possession thereof or of the District of Columbia.
"Insurance Agent", means a person, firm or corporation which, on behalf of any insurance company, solicits, negotiates or effects contracts of insurance or guarantee with any insured.
"Insurance Broker", means a person, firm or corporation which, on behalf of any insured, solicits, negotiates or effects contracts of insurance with any insurance company.
578. Sec. 7. NO COMPANY TO DO BUSINESS WITHOUT CERTIFICATE OF AUTHORITY: No Insurance Company of any kind shall directly or indirectly issue policies, cover risks or engage in or transact insurance business of any kind in this State without having a valid and unrevoked Certificate of Authority therefor, agreeably to the provisions of this Chapter.
All such Certificates of Authority shall be issued by the Insurance Commissioner under his seal of office, and shall bear the date of actual issuance, and shall expire on March First next following, but no abatement in fees or charges expire shall be made on account of the date of issuance.
579. Sec. 8. FOREIGN OR ALIEN COMPANY TO FILE COPY OF CHARTER AND APPOINTMENT OF INSURANCE COMMISSIONER AS ATTORNEY FOR SERVICE OF PROCESS: No Certificate of Authority shall be issued to any Foreign or Alien Insurance Company until it shall have filed with the insurance Commissioner:
(a) A copy of its Charter, Certificate of Incorporation or Articles of Association, duly certified by the proper official in the state or country of its organization.
(b) A copy of its By-Laws and regulations duly certified by its Secretary.
(c) Copies of the forms of policies which it is issuing or proposes to issue, and all the forms of applications therefor.
(d) Evidence that it has been duly authorized to transact the business of insurance in the state or country of its incorporation or organization.
(e) A duly executed appointment in writing of the Insurance Commissioner of this State to be its attorney in this State, upon whom all lawful process, in any action or of process proceeding against it, may be served with the same effect as if the company, corporation, or association existed in this State. Said Power of Attorney shall stipulate and Poser of agree on the part of the company, corporation or association that any lawful process against the same which is long as there is liability of served on said attorney shall be of the same legal force and company validity as if served on the company, corporation, or association, and that the authority shall continue in force so long as any certificate of membership, policy, or liability remains outstanding against the company, corporation or Certificate of association, in this State. A certificate of such appointment, duly certified and authenticated, shall be filed in the Insurance Commission" office of the Insurance Commissioner, and copies certified by him shall be sufficient evidence. Service upon such attorney shall be sufficient upon the principal.
Whenever lawful process against an insurance company, corporation, or association shall be served upon the Insurance Commissioner, he shall forthwith send by registered mail a copy of such process to the secretary of the company, or in the case of the companies of foreign count- tries, to the resident manager or last appointed general agent of the company in this country. Service of such process shall not be complete until the same shall have been so mailed and received, and the registry receipt shall be prima facie evidence of the completion of such service.
Whenever service of process on any insurance company Insurance may be made, by law, on the Insurance Commissioner of this State, such Commissioner may from time to time someone e Into designate some person in his office upon whom, in his absence, service of such process may be made; and such service shall be of the same force and effect as though made on the Commissioner personally.
580. Sec. 9. ADDITIONAL REQUIREMENTS FOR CERTIFICATE OF AUTHORITY: No original or renewed Certificate of Authority shall be issued to any Insurance Company, unless:
1. It has furnished a full and complete statement of its financial condition and business, in form as prescribed in the next succeeding Section of this Chapter for the annual statements of Insurance Companies, attested as prescribed for such annual statements, and unless it has also fully complied with all the requirements of this Chapter which apply to Companies of its class; and unless it has paid all fees and charges required of it, and has also paid all taxes levied against it.
2. The Insurance Commissioner finds that it is in sound condition and has good and available assets in excess of its liabilities, and is financially able to carry on the business which it offers itself to undertake.
3. It also complies with the following requirements:
(a) If a capital stock company, it shall have a full and paid capital stock of at least One Hundred Thousand Dollars and a surplus of at least Fifty Thousand Dollars; provided, however, that if its charter or certificate of incorporation permits it to transact what is commonly known as marine insurance, or title insurance, or workmen's compensation surplus necessary or insurance, or public liability insurance, or to guarantee the fidelity of persons holding positions of trust, it shall have a full paid capital stock of at least Two Hundred and Fifty Thousand Dollars and a surplus of at least One Hundred and Twenty-five Thousand Dollars.
(b) If a mutual company, it shall have in force, or bona fide applications for, insurance covering not less than one hundred separate risks in not less than one hundred policies issued or to be issued to not less than one hundred members and shall have collected in cash at least one full annual premium on such policies, and if a foreign or alien mutual company it shall also have a cash or invested surplus of at least One Hundred Thousand Dollars in excess of all an liabilities; provided, however, that no mutual company shall issue policies guaranteeing the fidelity of persons holding invested surplus positions of trust unless such company shall have a cash or invested surplus of at least Three Hundred and Seventy-five Thousand Dollars in excess of all liabilities.
(c) If an alien company, it shall have a surplus of assets invested according to the laws of this State or of the state of the United States where it has its deposit in the United States, held in the United States in trust for the benefit and security of all its policyholders and creditors to in the United States, over all its liabilities in the United States, of an amount equal to the surplus of assets required for of a like foreign company; and shall have on deposit with the Insurance Commissioner of this state securities of the amount and value of One Hundred Thousand Dollars and of the classes in which like insurance companies are permitted by this law to invest, or satisfy the Insurance Commissioner that it has on deposit with the official of a state of the United States authorized by the law of such state to accept such deposit, securities of the amount and value of One Hundred Thousand Dollars of the classes in which like insurance companies of such state are permitted to invest, for the benefit and security of all policyholders of such company in the United States, and shall file with the Insurance Commissioner the Certificate of such Official of such deposit.
4. It shall furnish such other information respecting its business or affairs as may be required of it by the furnished Insurance Commissioner.
581. Sec. 10. ANNUAL STATEMENT: Every insurance company doing business in this State shall file with the Commissioner on or before March First in each year a financial statement for the year ending December Thirty-first immediately preceding, on forms furnished by the Commissioner in accordance with this Section. Such statement shall be verified by the oaths of the President and Secretary of the Company or, in their absence, by two other principal officers. The statement of an alien company shall embrace its condition and transactions in the United States and shall be verified by the oath of its resident manager or principal representative in the United States; provided that an alien company may also file a business statement embracing its entire business.
The Commissioner shall, annually, in the month of December, furnish to each insurance company authorized to do business in this State and required to make an annual statement to the Commissioner, two or more blanks in form adapted for such statements, and which shall conform as nearly as may be to the form of statement from time to time adopted by the National Convention of Insurance Commissioners.
582. Sec. 11. REVOCATION OF CERTIFICATE OF AUTHORITY: The Insurance Commissioner shall have the right and power, after notice and hearing, to revoke any certificate of Authority issued to any Insurance Company for any violation of the law of this State, or whenever for good cause he shall deem it necessary or advisable.
583. Sec. 12. NO CERTIFICATE TO COMPANIES OF THE SAME OR SIMILAR NAMES: No certificate of Authority to transact the business of insurance in this State shall be granted to any Insurance Company applying therefor, if such Company has the same name as another Company authorized to transact such business in this State at the time of applying for such certificate, or a name so nearly resembling it as to be calculated to deceive; unless such other Company shall have previously filed with the Commissioner written consent to the use of such name.
584. Sec. 13. BUSINESS TO BE CONDUCTED IN CORPORATE NAME: Every Insurance Company, foreign or domestic, shall conduct its business in this State in its own proper and corporate name and the policies and contracts of insurance issued by it shall be headed or entitled by its proper and corporate name.
Every Domestic Insurance Corporation, other than life insurance corporations, doing business on the mutual plan shall contain in its name, which shall be upon the first page in every policy and renewal receipt, the word "mutual".
585. Sec. 14. DEPOSITS WITH INSURANCE COMMISSIONER: When any insurance company is required by Commissioner the laws of this Stat 2 or of any state or country, or by other competent authority, to make a deposit with an insurance supervising official or other financial officer and the company desires to make such deposit in this State the Commissioner shall accept such deposit, if made in securities recognized by this law as lawful investments of the Company, and hold the same as Trustee upon such trust as shall be designated by the company and approved by the Commissioner. The State shall be responsible for the safekeeping of all securities deposited or delivered under authority of this law. So long as the company continues to be solvent and complies with the laws of the State it may collect the income on such securities. The company may therefor other securities recognized by this law as lawful investments of the company, provided such substituted securities are of the amount and value required by the law of this State or of such other state or country or by the instrument of agreement under which the deposit was made. If the value of securities deposited by any company shall decline below the amount so required, the company shall make a further deposit and maintain a deposit in the amount and value so required.
586. Sec. 15. WITHDRAWAL OF DEPOSITS: When 56- s. 15 an insurance company determines to discontinue its business or to cease to do business in this State and desires to withdraw its deposit made in this State pursuant to this law, the Commissioner shall upon the application of the company and at its expense give notice of such intention Publication in a newspaper of general circulation in the State once a week for four weeks. After such publication he shall deliver to such company or its assigns the securities so deposited when he is satisfied upon examination and investigation made by him or under his authority and upon the oaths of the President and Secretary or other chief liabilities officers of the company that all debts and liabilities of every kind due and to become due which the deposit was made to secure are paid and extinguished.
The Commissioner may also from time to time and upon like notice and proof deliver to a company or its assigns any portion of securities so deposited when satisfied that all debts and liabilities of the company due or to become due which the deposit was made to secure are less than the amount and value of the securities to be retained by the Commissioner.
Upon a company being reinsured, the Commissioner securities may deliver to it or to its assigns all securities deposited by it upon compliance with the following conditions: The reinsured reinsuring company shall assume and agree to discharge all liabilities of every kind due and to become due which the deposit of the reinsured company was made to secure. Such liabilities reinsuring company shall have a deposit in the State or with some state official in the United States in securities recognized by this law as lawful investments of the company in an amount and value not less than the deposit required of the reinsured company. The deposit of the reinsuring company shall be such that it will subsist for the security of the obligations of the reinsured company assumed by the reinsuring company. The Commissioner shall give notice of such reinsurance agreement and of the application for the deposit once a week for four weeks in a newspaper of general circulation in the State before the delivery of such securities to the reinsuring company.
587. Sec. 16. REINSURANCE: Any Insurance Company authorized to do business in this State may reinsure all or any part of an individual risk or all or any part of a particular class of risks in any other Insurance Company, or accept such reinsurance from any other Insurance Company; and, with the consent of the Insurance Commissioner, may reinsure all of its risks in any other Insurance Company authorized to transact business in this State, or reinsure all of the risks of any other company. But no credit shall be taken for the reserve or unearned premium liability on any such reinsurance, unless the company accepting the reinsurance is authorized to do business in this State or in another state or territory of the United States conforming to the same standards of solvency which would be required of such company if, at the time such reinsurance is effected, it was authorized in this State.
588. Sec. 17. POLICIES TO BE COUNTERSIGNED BY RESIDENT AGENT: No Foreign or Alien Insurance Company, other than a life insurance company, shall make, write, place or cause to be made, written or placed, any policy, duplicate policy, or contract of insurance of any kind or character, or any general or floating policy upon property situated or located in this State, except after the said risk has been approved in writing by an agent who is a resident of this State, regularly commissioned and licensed to transact insurance business herein, who shall countersign all policies or contracts so issued, and who shall receive the full premium paid thereon and the State shall receive the taxes required by law to be paid on the premiums collected for insurance on all property located in this State. No person other than the owner shall pay or forward any premiums, application for insurance, or, in any manner secure help or aid in the placing of any insurance or effect any contract of insurance upon real or Certificate of Authority personal property within this State, directly or indirectly, necessary If aid furnished with a Foreign or Alien Insurance Company, unless such in Placing Insurance person or persons shall first secure a Certificate of Authority from the Insurance Commissioner of this State, as provided by law. Nothing in this Chapter shall be construed to prevent any such Insurance Company, authorized to transact business in this State, from issuing policies at its principal office or department offices covering property by in this State, provided, that such policies are issued upon applications procured and submitted to such Company by agents who are residents of this State, and authorized to transact the business of insurance herein, and who shall countersign all policies so issued and receive the commission thereon when paid ; provided, that no part of this Section is intended to or shall apply to direct insurance covering the rolling stock of railroad corporations or property in transit, while in the possession and custody of said class of railroad corporations or other common carriers, or to the property of said class of common carriers used or employed by them in their business as common carriers of freight, merchandise or passengers.
589. Sec. 18. REQUIREMENTS ON FILING CERTIFICATE OF INCORPORATION IN OFFICE OF SECRETARY OF STATE: The Secretary of State shall not file a certificate of incorporation for any stock Insurance Company, unless such certificate shall be accompanied by State an affidavit made by the majority of the signers of such certificate setting forth that there have been bona fide subscriptions made to the capital stock of said proposed to Cap stock Company to the amount of at least One Hundred Thousand Dollars, and that five per cent of said subscriptions have been paid in cash and deposited with the Insurance Com- missioner of this State ; and in further proof that said deposit has been made the Secretary of State shall require to be filed with him before the filing of said Certificate of Certificate Incorporation a certificate from the Insurance Commissioner of this State setting forth that the said deposit has been made with him ; provided, however, that when such made Company in whose behalf the said deposit has been made, has organized, and has secured the certificate of authority Withdrawal of the Insurance Commissioner required by this Chapter, of deposits it may withdraw the said amount deposited with the Insurance Commissioner, and commence business ; and further provided, that said Company shall not be authorized to commence business, within the State of Delaware or elsewhere, until it has conformed to all of the requirements of this Chapter.
The Secretary of State shall file a Certificate of In- corporation for any mutual insurance company, when the same shall conform to the requirements of the General Corporation Law of this State, but no such mutual insurance company as above described shall be authorized to issue any policies of insurance whatever until it shall have been duly granted a Certificate of Authority by the Insurance Commissioner in conformity with the provisions of this Chapter.
590. Sec. 19. DOMESTIC INSURANCE COMPANY TO OBTAIN DELAWARE CERTIFICATE OF AUTHORITY BEFORE TRANSACTING BUSINESS ELSEWHERE: No Domestic. Insurance Company shall transact any kind of insurance business in any state, territory, district or foreign country, unless it holds a valid and unrevoked Certificate of Authority from the Insurance Commissioner to transact insurance business in this State. Any officer, manager, employee or agent of any insurance company violating the provisions of this Section shall upon conviction thereof be punished by a fine not exceeding Five Hundred Dollars and by imprisonment not exceeding six months or by both in the discretion of the Court.
Any violation of the provisions of this Section shall constitute misuse of the corporate powers of such corporation, and proceedings for forfeiture of the Charter of such corporation shall be taken by the Attorney General under the provisions of Section 67 of Chapter 65 of the Revised Code of 1915, being the General Corporation Law of the State of Delaware.
591. Sec. 20. POLITICAL CONTRIBUTIONS PROHIBITED: No Insurance Company doing business in this State shall, directly or indirectly, pay or use or offer, consent or agree to pay or use any money or property for or prohibited in aid of any political party, committee or organization, or for or in aid of any corporation or association organized or maintained for political purposes or for or in aid of any candidate for political office, or for nomination for such office, or for any political purpose whatsoever, or for the reimbursement or indemnification of any person for money or property so used. Any officer, director, stockholder, attorney or agent of any company which violates any of the provisions of this Section, who participates in, aids, abets, or advises or consents to any such violation, and Penalty for any person who solicits or knowingly receives money or violations property in violation of this Section, shall be guilty of a misdemeanor and be punished by imprisonment for not more than one year and a fine of not more than One Thou- sand Dollars, and any officer aiding or abetting in any contribution made in violation of this Section, shall be liable to the Company for the amount so contributed. No person shall be excused from attending and testifying, or producing evidence any books, papers or other documents before any court or magistrate, upon any investigation, proceeding or trial for a violation of any of the provisions of this Section, upon that evidence may the ground or for the reason that the testimony or evidence, incriminate documentary or otherwise, required of him may tend to incriminate or degrade him ; but no person shall be prosecuted or subject to any penalty or forfeiture for or on used against person testifying account of any transaction, matter or thing concerning which he may testify or produce evidence, documentary or otherwise, and no testimony so given or produced shall be used against him in any criminal investigation or proceedings.
592. Sec. 21. FALSE SWEARING: If any person making an oath or affirmation required by this Chapter, shall swear falsely, or make a false affirmation, he shall be guilty of the crime of perjury and shall be subject to the punishment prescribed for perjury under the laws of this State.
593. Sec. 22. DEFAMATION OF RIVAL COM- Defamation of PANIES: It shall be unlawful for any Insurance Company now or hereafter doing business in this State, or any officer, director, clerk, employee or agent thereof, or for any insurance broker, to make verbally or otherwise, publish, print, distribute or circulate, or cause the same to be done, or in any way to aid, abet or encourage the making, printing, publishing, distributing or circulating of, any pamphlet, circular, article, literature or statement of any kind which is defamatory of any other insurance company now or hereafter doing business in this State, which contains any false and malicious criticism or false and malicious statement calculated to injure such company in its reputation or business. Any officer, director, clerk, employee or agent violation of any insurance company or any insurance broker violating the provisions of this Section shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine of not more than Five Hundred Dollars ($500), or by imprisonment for a term of not more than six months, or by both such fine and imprisonment.
594. Sec. 23. UNLAWFUL TO TRANSACT INSURANCE WITHOUT AUTHORITY: No Insurance Company, directly or by brokers, agents, solicitors, surveyors, canvassers or other representatives of whatever designation, authority nor any such broker, agent, solicitor, surveyor, canvassers, or other representatives, shall solicit, negotiate or effect any contract of insurance of any kind, or sign, deliver or transmit, by mail or otherwise, any policy, certificate of membership or certificate of renewal thereof, or receive any premium, commission, fee or other payment thereon, on any property or thing, or on the life, health or safety of any person, or maintain or operate any office in this State for the transaction of the business of insurance, or in any manner, directly or indirectly, transact the business of insurance of any kind whatsoever within this State, unless such Company, person or firm, shall be duly authorized to do the same under the provisions of the Laws of this State.
595. Sec. 24. REBATES AND DISCRIMINATIONS 595' S. 24 PROHIBITED: No insurance company doing business in this State shall make or permit any distinction or discrimination in favor of individuals between risks of the same class and equal probability of loss or equal. expectation of life in the amount or payment of premiums or rates charged for policies of insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes; nor, except as otherwise expressly provided by law, shall any such company or agent thereof make any contract of insurance or agreement as to such contract, other than as plainly ex- pressed in the policy issued thereon; nor shall any company or agent or broker pay or allow, or offer to pay or allow, as inducement to insurance, any rebate of premiums payable on the policy, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement not specified in the policy contract of insurance; or give, or sell, or purchase or offer to give, sell, or purchase as inducement to insurance or in connection therewith, any stocks, bonds, or other securities of any insurance company or other corporation, association, or Commissions partnership, or any dividends or profits accrued thereon, or except with anything of value whatsoever not specified in the policy ; nor shall any agent or broker divide commissions with any person other than a duly licensed agent or broker.
No person shall receive or accept from any company shall accept rebates or agent, sub-agent, broker, or any other person any such rebate of premium payable on the policy, or any special favor or advantage in the dividend or other benefits to accrue thereon, or any valuable consideration or inducement Incrimination no excuse for not specified in the policy of insurance. No person shall be excused from testifying or from producing any books, papers, contracts, agreements, or documents at the trial of any other person charged with violation of any provisions of this section, on the ground that such testimony or evidence may tend to 'incriminate, but no person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he may so testify or produce evidence, documentary or otherwise, and no testimony so given or produced shall be received against him upon any criminal investigation or proceeding, except for perjury committed in so testifying.
Nothing in this Section shall be so construed as to prohibit any company issuing non-participating life insurance from paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from non-participating insurance; nor to prohibit any company transacting industrial insurance on the weekly payment plan from returning to policyholders who have made premium payments for a period of at least one year directly to the company at its home or district offices, a percentage of the premium which the company would have paid for the weekly collection of such premiums.
Any company or any agent or other person who violates any of the provisions of this Section shall, upon conviction, forfeit and pay a fine not exceeding Five Hundred Dollars (5OO) for each offense, and the Insurance Commissioner shall have authority in his discretion to revoke the Certificate of Authority to transact business in this State theretofore issued to such company or agent or broker.
596. Sec. 25. MISREPRESENTATIONS PROHIBITED: No insurance company doing business in this State, and no officer, director, solicitor, or other agent thereof, and no insurance broker, shall make, issue, or circulate, or par: 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 any such corporation or officer, director, solicitor or agent thereof or any person, firm, or corporation 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.
The penalty for any violation of this Section shall be a fine of not more than One Hundred Dollars or imprisonment for not exceeding six months, or both, in the discretion of the Court.
597. Sec. 26. PROCESS AGAINST FOREIGN COMPANIES IN CERTAIN CASES: In case any foreign or alien insurance company, not having a Certificate of Authority to do business in this State, shall transact any business or issue policies of insurance within this State, certain cases suit may be brought on any such policy of insurance within any County in this State, and process may be served upon the President, Director or Agent of the Company within the State, and such service shall be good and valid in law. For the purpose of such process, the collection and receiving of a premium on insurance for transmission to such company shall constitute the Receiver thereof to be agent of the Company for service of such process.
598. Sec. 27. GENERAL PENALTIES: Any insurance company or insurance agent or insurance broker who shall violate or fail to observe and comply with any of the provisions of this Chapter for which a penalty is not specifically provided, shall, upon conviction thereof, pay a fine of not more than One Thousand Dollars or be imprisoned for a term of not more than one year, or both, in the discretion of the Court. Any officer, manager or agent of such corporation wilfully violating or failing to observe or comply with the provisions of this Chapter, shall be punishable under this Section. All penal proceedings for the punishment of offenses against the provisions of this Chapter may be brought in the Court of General Sessions in any of the Counties of this State.
599. Sec. 28. PROCEEDINGS IN COURT OF CHANCERY: The Insurance Commissioner may, through the Attorney General of this State, invoke the aid of the Court Chancery of Chancery to enforce any order made or action taken by him in pursuance of law, which proceedings may be instituted in any County of the State as may seem most convenient. In such proceedings, the Chancellor may make such orders, either preliminary or final, as he shall deem right and proper under the facts as presented and established before him.
600. Sec. 29. APPEAL FROM DECISIONS OF INSURANCE COMMISSIONER: Any insurance company or insurance agent or insurance broker, shall have the right of appeal from any decision of the Insurance Commissioner to the Court of Chancery of this State, such appeal to be filed within sixty days from notice of such decision, and the Chancellor shall have authority to stay any order of the Insurance Commissioner pending the proceedings before him in case he shall deem it right and proper to do so.
601. Sec. 30. REAL ESTATE; RESTRICTIONS: Every domestic life, fire, marine, casualty or workmen's compensation insurance company may acquire, hold, and test Estate of convey real estate only for the following purposes and in Companies the following manner:
First. The building in which it has its principal office and the land upon which it stands.
Second. Such as shall be requisite for convenient accommodation to the transaction of its business.
Third. Such as shall have been acquired for the accommodation of its business.
Fourth. Such as shall have been mortgaged to it in good faith by way of security for loans previously contracted or for money due.
Fifth. Such as shall have been conveyed to it in satisfaction of debts previously contracted in course of its debts dealings.
Sixth. Such as shall have been purchased at sales on judgments, decrees, or mortgages obtained or made for such debts.
All such real property specified in subdivisions three, four, five and six of this Section, which shall not be necessary for its accommodation in the convenient transaction of five its business, shall be sold and disposed of within five years after the company shall have acquired the title to the same, or within five years after the same shall have ceased to be necessary for the accommodation of its business, and it Certificate shall not hold such property for a longer period unless it shall procure a certificate from the Insurance Commissioner that its interests will suffer materially by the forced sale thereof, in which event the time for the sale may be extended to such time as the Insurance Commissioner shall direct in such certificate.
602. Sec. 31. INVESTMENT OF FUNDS BY DOMESTIC COMPANIES: A domestic life, fire, marine, casualty or workmen's compensation insurance company Domestic Companies may invest its funds only as follows:
(1). In the purchase and acquisition of real estate extent to the extent, and only to the extent, as such company is authorized to hold real estate under the terms of this Chapter.
(2). In any of the securities designated for the investment of trust funds by "3875. Sec. 32" of Chapter 117 of the Revised Code of 1915, or by any alteration or amendment of such designation, whether such securities are included within the securities hereinafter authorized in this Section or not.
(3). In bonds or other evidences of indebtedness of United States, States of the United States or of any state of the United States or of U. S. or of Dominion of the Dominion of Canada or of any province thereof.
(4) In bonds or other evidences of indebtedness of any county, city, town, village, school district or other municipal district within the United States or Dominion of Canada which shall be a direct obligation of the county, city, town, village or district issuing same.
(5) In bonds or notes secured by mortgages or deeds of trust of unincumbered real estate or perpetual leases thereon in the United States or Dominion of Canada worth not less than fifty per cent more than the amount loaned thereon. Where improvements on the land constitute a part of the value on which the loan is made, the improvements shall be insured against fire for the benefit of the mortgagee in an amount not less than the difference between two-thirds of the value of the land and the amount of the loan ; provided, that for the purposes of this Section real estate shall not be deemed to be encumbered within encumbered the meaning of this Section, by reason of the existence of taxes or assessments that are not delinquent, instruments creating or reserving mineral, oil, or timber rights, rights of way, joint driveways, sewer rights, rights in walls, nor by reason of building restrictions, or other restrictive covenants, nor when such real estate is subject to lease in whole or in part whereby rents or profits are reserved to the owner.
(6) In mortgage bonds of the Farm Loan Banks Mortgage authorized under the Federal Farm Loan Act or Acts RP: gen Banks amendatory thereof or supplementary thereto.
(7) In bonds of any railroad or other public service Railroad corporation of any state or territory of the United States or of the District of Columbia or of the Dominion of Canada or of any province thereof.
(8) In stocks and bonds and other evidence of indebtedness of any solvent corporation of any state or territory of the United States or of the District of Columbia or of any province of the Dominion of Canada, including stock in its own corporation to the extent permitted under the Dividends general incorporation law of this State; provided that no necessary such investment shall be made in or loan made upon the security of any such stocks or bonds upon which stocks dividends in cash during the period of five years next pre- ceding such purchase amounting to not less than four per centum on all of such corporation's outstanding capital stocks in each fiscal year for said five years shall not have been paid and upon which bonds any regular interest payment shall have been defaulted any time within five years defaulted prior to such purchase or loan; and provided further that no life insurance company shall invest in, loan upon the security of, or acquire, directly or indirectly more than ten per centum of the stock of any Corporation, and that the total amount which may be invested in and loaned upon the security of stock of any one corporation shall not exceed ten per centum of the capital and surplus of any such life insurance company, and that no such life insurance company Invested in one Company shall invest or loan any of its funds in or upon the security of any stock, other than bank or trust company stock, on Except bank and trust account of which the owners or holders thereof may in any Company stock event be or become liable to any assessment, except for taxes ; and provided further that the total amount invested in and loaned upon the stocks of other corporations in by any life insurance company, shall not exceed a sum equal to the amount of its assets in excess of the amount required for its legal reserve.
(9). In loans upon the pledge of any of the securities aforesaid, not exceeding ninety per cent of the market value thereof.
(10). In bankers' acceptances and bills of exchange of the kinds and maturities made eligible by law for rediscount with Federal Reserve Banks, provided that the same are accepted by a bank or trust company incorporated under the Laws of the United States or of this State or any other bank or trust company which is a member of the Federal Reserve System.
(11). A life insurance company may also purchase for its own benefit any policy of life insurance or other obligation of the company and claims of the holders thereof and may lend to the holders of its life insurance policies not to exceed reserve value sums not exceeding in any case the reserve value of the policy at the time the loan is made and, for the payment of any such loan, the policy and all profits thereon shall be pledged.
(12). A company doing business in a foreign country may invest the funds required to meet its obligations in such country and in conformity to the laws thereof in the same kinds of securities in such foreign country that such company is allowed by law to invest in the United States.
(13) No loan or investment shall be made by any such company, unless the same shall have been authorized by the Board of Directors or by a committee thereof charged with the duty of supervising loans or investments.
(14) No such company shall subscribe to or participate in any 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 the control of the company.
(15) Nothing in this law shall prohibit a company from accepting in good faith, to protect its interests, securities or property, other than herein referred to, in payment of or to secure debts due or to become due the company.
ARTICLE 3
PROVISIONS RELATING PARTICULARLY TO LIFE INSURANCE
603. Sec. 32. INSURANCE COMMISSIONER TO VALUE POLICIES: The Insurance Commissioner shall Insurance annually make valuations as of December 31 of the previous year of all outstanding policies, additions thereto, and "net" all other life insurance and annuity obligations of every life insurance corporation doing business in this State. All valuations made by him, or by his authority, shall be made upon the net premium basis; and he may require every Company to furnish him on or before March First with a complete calculation of valuations on this basis.
The legal minimum standard for the valuation of life insurance contracts issued before the first day of January next following the passage and approval of this Act shall following approval of be the method and basis of valuation heretofore applied this Act by this State in the valuation of such contracts, and for life insurance contracts issued on and after said date shall be the one year preliminary term method of valuation, except preliminary term method as hereinafter modified, on the basis of the American Experience Table of Mortality with interest at three and one half per centum per annum.
If the premium charged for term insurance under a limited payment life preliminary term policy providing for the payment of all premiums thereon in less than twenty years from the date of the policy, or under an endowment preliminary term policy, exceeds that charged for like insurance under twenty payment life preliminary term policies of the same company, the reserve thereon at the end of any year, including first, shall not be less than the reserve on a twenty payment life preliminary term policy issued in the same year and at the same age, together with an amount which shall be equivalent to the, accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium payment period, equal to the difference between the value at the end of such period of such a twenty payment life preliminary term policy and the full net level premium reserve at such time of such a limited payment life or endowment policy. The premium payment period is the period during which premiums are concurrently payable, under such twenty payment life preliminary term policy and such limited payment life or endowment policy.
Policies issued on the preliminary term method shall contain a clause specifying that the reserve thereon shall be computed in accordance with the modified preliminary term method of valuation provided for herein.
The legal minimum standard for the valuation of annuities issued on and after the first day of January next annuities following the passage and approval of this Act shall be McClintock's "Table of Mortality Among Annuitants" with interest at four per centum per annum, but annuities deferred ten or more years and written in connection with life insurance shall be valued on the same basis as that used in computing the consideration or premiums therefor, or upon any higher standard at the option of the company.
The Commissioner may vary the standards of interest and mortality in the case of alien companies as to contracts issued by such companies in other countries than the United mortality States, and in particular cases of invalid lives and other extra hazards; may value policies in groups, use approximate averages for fractions of a year and otherwise, and valuations of shall accept the Valuation of the Insurance Department of any other state or country, if made upon a basis and according to standards producing a reserve not lower than herein required or authorized, instead of the valuation If valuation of herein required, if the insurance official of such state or country accepts as sufficient and valid for all purposes the accepted certificate of valuation of the Commissioner of this State.
Provided, that this section shall not apply to organizations operating on the assessment plan.
604. Sec. 33. VALUATION OF FIXED TERM SECURITIES; AMORTIZATION: All bonds or other evidences of debt having a fixed term and rate held by any life insurance company authorized to do business in this Securities State 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; provided that the purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase; and provided further, that the Insurance Commissioner shall have full discretion in determining the method of calculating values according to the foregoing rule.
605. Sec. 34. WHEN COMPANY MUST CEASE BUSINESS: In case it is found, after notice and hearing by the Commissioner, that any life insurance company doing business in this State has not assets of a net cash value equal to the net value of all its policies in force computed by the rule of valuation established in this Chapter, after all other debts of the company and claims against it, inclusive of capital stock, if a stock company, have been provided for, it shall be the duty of the Insurance Commissioner to at once withdraw the authority of said company to do business in this State; provided that this action to organization operating shall not apply to organizations operating on the assessment plan.
606. Sec. 35. STANDARD PROVISIONS REQUIRED: From and after the first day of January next following the date when this Act becomes a Law, no policy of life insurance other than industrial insurance, annuities and pure endowments with or without return of premiums or of premiums and interest shall be issued or delivered in this State or be issued by a life insurance company organized under the laws of this State, unless the same shall contain in substance the following provisions:
(1) A provision that all premiums after the first 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 or more of the officers who shall be designated in the policy.
(2) A provision that the insured is entitled to a grace either of thirty days or of one month within which the payment of any premium after the first year may be made, subject at the option of the Company to an interest charge not in excess of six per centum per annum for the number of days of grace elapsing before the payment of the premium, during which period of grace the policy shall continue in full force, but in case the policy becomes a claim during the said period of grace before the overdue premium or the deferred premiums of the current policy year, if any, are paid, the amount of such premiums, with interest on any overdue premium, may be deducted from any amount payable under the policy in settlement. Grace shall date from the premium-paying date stated in the policy.
(3) A provision that except as otherwise expressly Policy entire provided by law, the policy shall constitute the entire con- contract tract between the parties and shall be incontestable after it has been in force during the lifetime of the insured for a period of not more than two years from its date, except for non-payment of premiums and except for violations of the conditions of the policy relating to naval or 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; that all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties ; and that no such statement or statements shall be used in defense of a claim under the policy unless contained in a written application and unless a copy of such statement or statements be endorsed upon or attached to the policy when issued.
(4) A provision that if it shall be found at any time before final settlement under the policy, that the age of the of age insured (or the age of the beneficiary, if considered in determining the premium) has been misstated, the amount payable under the policy shall be such as the premium would have purchased at the correct age, according to the company's published rate at date of issue.
(5) A provision that the policy shall participate in participate in surplus of the surplus of the company, and any policy containing provision for participation at the end of the first policy year, and annually thereafter, may also provide that each dividend shall be paid subject to the payment of the premiums for the next ensuing year ; and the insured under any Payment of annual dividend policy shall have the right each year to dividends have the dividend arising from such participation paid in cash, and if the policy shall provide other dividend options, it shall further provide which of said options shall be effective if the insured shall not elect any such other option on or before the expiration of the period of grace allowed Not to apply for the payment of the premium. This provision shall not apply to any form of paid-up insurance or temporary insurance or pure endowment insurance, issued or granted in exchange for lapsed or surrendered policies, or to non- participating policies.
(6) A provision that after the policy has been in force three full years, the company at any time, while the policy is in force, will advance, on proper assignment or pledge 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 reserve at the end of the current policy year on the policy and on the dividend additions thereto, if any, exclusive of the reserve on account of return premium insurance and of total and permanent disability and additional accidental death benefits, less a sum not more than two and one-half per centum of the amount insured by the policy and of any dividend additions thereto (the policy to specify the mortality table and rate of interest adopted for computing such reserve) ; and that the company will deduct from such loan value any existing indebtedness on the policy and any unpaid balance of the premium for the current policy year, and may collect interest in advance on the loan to the end of the current policy year ; which provision may further provide that such loan may be deferred for not exceeding six months after the application therefor is made. A company may, Loans on in lieu, of the provision hereinabove permitted for the policies deduction from a loan on the policy of a sum not more than two and one-half per centum of the amount insured by the policy and of any dividend additions thereto, insert in the policy a provision that one-fifth of the said reserve may be deducted in case of a loan under the policy, or may provide therein that the deduction may be the said two and one-half per centum or the one-fifth of the said reserve at the option of the company. This provision shall not be required in term insurance, nor shall it apply to temporary insurance or pure endowment insurance, issued or granted in exchange for lapsed or surrendered policies. The policy may further provide that if the interest on the loan is not paid when due, it shall be added to the existing loan, and shall bear interest at the same rate.
(7) A provision that in event of default in premium payments, after premiums shall have been paid for three years, the insured shall be entitled to a stipulated form of Insured insurance, effective from the due date of the defaulted premium, the net value of which shall be at least equal to the reserve at the date of default on the policy and on dividend additions thereto, if any, exclusive of the reserve on account of return premium insurance and on total and permanent disability and additional accidental death benefits (the policy to specify the mortality table and rate of interest adopted for computing such reserve), less a specified percentage (not more than two and one-half) of the amount insured by the policy and of existing dividend additions thereto, if any, and less any existing indebtedness to the company on or secured by the policy : Provided a company may, in lieu of the provision herein permitted for the deduction from the reserve of a sum not more than two and one-half per centum of the amount insured by the policy, and of any dividend additions thereto, insert in the policy a provision that one-fifth of said reserve may be deducted, or may provide therein that a deduction may be made of said two and one-half per centum or one-fifth of said reserve, at the option of the company: Provided further, that the policy may be surrendered to the company at its home office within one month of the due date of defaulted premium for a specific cash value at least equal to the sum which would otherwise be available for the purchase of insurance as aforesaid; and provided, further, that the company may defer payment for not more than six months after the application therefor is made. This provision shall not be required in term insurance of twenty years or less.
(8) A provision specifying the options to which the policyholder is entitled in the event of default in a premium payment after three full annual premiums shall have been paid. This provision shall not be required in term insurance of twenty years or less. A provision may also be inserted in the policy that in event of default in a premium payment before such options become available the reserve on any dividend additions then in force may at the option of the company be paid in cash or applied as a net premium to the purchase of paid-up term insurance for any amount not in excess of the face of the original policy.
(9) A table showing in figures the loan values and the options available under the policy each year upon default in premium payments, during at least the first twenty years of the policy or during the premium paying period if less than twenty years.
(10) A provision that if in event of default in premium payments the value of the policy shall have been applied to the purchase of other insurance as provided for in this Section, and if such insurance shall be in force and the original policy shall not have been surrendered to the company and canceled, the policy may be reinstated within three years from such default, upon evidence of insurability satisfactory to the company and payment of arrears of premiums and the payment or reinstatement of any other indebtedness to the company upon said policy, with interest Reinstated on said premium and indebtedness at the rate of not exceeding six per centum per annum payable annually, and that such reinstated policy shall be contestable, on account of fraud or misrepresentation of material facts pertaining to the reinstatement, for the same period after reinstatement as provided in the policy with respect to original issue.
(11) A provision 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.
(12) A table showing the amount of installments, if any, in which the policy may provide its proceeds may be payable.
(13) Title on the face and on the back of the policy, briefly describing its form.
Any of the foregoing provisions or portions thereof not applicable to single premium or non-participating or term policies shall to that extent not be incorporated there-in; and any such policy may be issued or delivered in this State which in the opinion of the Insurance Commissioner contains provisions on any one or more of the several fore-going requirements more favorable to the policyholder than hereinbefore required. The provisions of this Section shall not apply to policies of reinsurance, or to policies issued or granted in exchange for lapsed or surrendered policies or to group insurance, or to policies issued by an organization operating on the assessment plan.
607. Sec. 36. PROVISIONS PROHIBITED: From 607. S. 36 and after the First day of January next following the date when this Act becomes a Law, no policy of life insurance other than industrial insurance, annuities and pure endowments with or without return of premiums or of premiums and interest, shall 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. A provision limiting the time within which any actions action at law or in equity may be commenced to less than three years after the cause of action shall accrue.
2. A provision by which the policy shall purport to be issued or take effect more than six months before the original application for the insurance was made.
3. A provision for 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, including interest, is less than the loan value thereof.
4. A provision to the effect that the agent soliciting solicit inn not to be agent of the insurance is the agent of the person insured under said the insured policy, or making the acts or representations of such agent binding upon the person so insured under said policy.
608. Sec. 37. PROVISIONS REQUIRED BY THE LAWS OF A COMPANY'S OWN STATE MAY BE INCLUDED IN POLICIES: The policies of a life insurance company not organized under the laws of this State may contain any provision which the law of the state, territory, district, or country under which the company is organized prescribes shall be in such policies when issued in this State, and the policies of a life insurance company organized under the law of this State, may, when issued or delivered in another State may in any other state, territory, district, or country, contain any provisions required by the laws of the state, territory, district or country, in which the same are issued or delivered, anything in this Act to the contrary notwithstanding.
609. Sec. 38. POLICY FORMS TO BE FILED WITH COMMISSIONER: 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 Insurance Commissioner, nor if the Insurance Commissioner gives written notice within thirty 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.
610. Sec. 39. EXTENSION OF TIME FOR PAYMENT OF PREMIUMS: A life insurance company may enter into subsequent agreements with the insured, which need not be attached to the policy, to extend the time for payment 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.
Sec. 40. INTEREST ON LOANS MAY BE ADDED TO PRINCIPAL: 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.
612. Sec. 41. FALSE STATEMENT BY SOLICITOR OR AGENT: Any solicitor, agent, examining physician, or other person who shall knowingly or wilfully make any false or fraudulent statement or representation in or with reference to any application for life insurance or who shall make any such statement for the purpose of obtaining any fee, commission, money, or benefit from or in any company transacting business under this Act shall be guilty of a misdemeanor and upon conviction shall be punished by a fine of not more than Five Hundred Dollars ($500) or imprisonment for not more than one year or both at the discretion of the court ; and any person who shall wilfully make a false statement of any material fact or thing in a sworn statement as to death or disability for the purpose make false statement to of procuring payment of a benefit named in a policy or certificate shall be guilty of perjury.
613. Sec. 42. SOLICITOR OF LIFE INSURANCE THE AGENT OF THE COMPANY: Any person who solicit an application for insurance upon the life of another shall in any controversy between the assured or his beneficiary and the company issuing any policy upon such application be regarded as the agent of the company and not the agent of the assured.
614. Sec. 43. RIGHTS OF CREDITORS AND BENE- FICIARIES UNDER POLICIES OF LIFE INSURANCE: If a policy of insurance, whether heretofore or hereafter issued, is effected by any person on his own life or on another life, in favor of a person other than himself, or, except in cases of transfer with intent to defraud creditors, if a policy of life insurance is assigned or in any way made payable to any such person, the lawful beneficiary or as- signee thereof, other than the insured or the person so effecting such insurance, or his executors or administrators, shall be entitled to its proceeds and avails against the creditors and representatives of the insured and of the person effecting the same, whether or not the right to change the beneficiary is reserved or permitted, and whether or not the policy is made payable to the person whose life is insured if the beneficiary or assignee shall predecease such person; provided, that, subject to the statute of limitations, the amount of any premiums for said insurance paid with intent to defraud creditors, with interest thereon, shall ensure to their benefit from the proceeds of the policy ; but the company issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms, unless before such payment the company shall have written notice, by or in behalf of a creditor, of a claim to recover for transfer made or premiums paid with intent to defraud creditors, with specification of the amount claimed.
615. Sec. 44. TO HOLD PROCEEDS OF CERTAIN 515 s. 44 POLICIES IN TRUST: 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.
616. Sec. 45. REGISTERED POLICIES AND BONDS OF DOMESTIC LIFE INSURANCE COMPANIES; DEPOSIT OF SECURITIES TO PROTECT: Any domestic life insurance company may deposit with the Insurance Commissioner securities of the kind required and authorized by law for the investment of life insurance funds, to any amount not less than Ten Thousand Dollars, which shall be legally transferred by it to him as Insurance Commissioner and his successors, for the common benefit of the holders of its "registered" policies and bonds issued, which shall be held by him and his successors in office, in trust for the purposes and objects specified therein.
No such company shall issue a policy or bond known or designated as "registered" unless it bears a certificate in the following words: "This policy (or bond, as the case may be) is registered and secured by a deposit of approved Signed by securities with this department as provided by law," and unless such certificate shall be signed by the Insurance Commissioner or a duly authorized deputy and sealed with the seal of his office. Such policies and bonds shall be known as "registered" policies and bonds and a sample copy of each kind, class and issue shall be kept in the office of the Insurance Commissioner. All policies or bonds of each kind and class issued shall have imprinted thereon some Policies or appropriate designating letter, combination of letters or bonds designated by terms identifying the special forms of contract, and whenever any change or modification is made in the forms of contracts, policy or bond, the designating letters or terms thereon shall be correspondingly changed.
The Insurance Commissioner shall prepare and keep such records of all "registered" policies and bonds as will roistered enable him to ascertain the reserve required thereon at any time according to the American Table of Mortality and three and one-half per cent interest. Upon sufficient proof, attested by the President or Vice-President and Secretary of a company which shall have issued such "registered" policies or bonds, that any of them have been commuted or terminated, the Insurance Commissioner shall commute or Annual cancel them upon his records. On the Thirty-first day of December in every year, or within sixty days thereafter, registered policies and the Insurance Commissioner shall cause the registered policies and bonds in force in each company to be carefully valued and the net reserve thereon ascertained according to the American Table of Mortality and three and one-half per cent interest, and he shall thereupon furnish a certificate of the aggregate amount of such reserve to the respective companies. The Insurance Commissioner may employ competent actuary to make such computation, who shall be paid by the company for which the services are rendered, or the Insurance Commissioner may accept the computations of any of the companies upon such proof as he may determine.
Each company which shall have made the deposit so provided for, shall make additional deposits from time to time, as the Insurance Commissioner may prescribe, in amounts of not less than Five Thousand Dollars, and of such securities as domestic life insurance companies are authorized by law to invest in, so that the market or amortized value of the securities on deposit shall always at least equal the net reserve required by the American Table of Mortality and three and one-half per cent interest, on all the registered policies and bonds in force in said company.
The Insurance Commissioner shall keep a careful record of the securities deposited by each company, and when to keep record of securities furnishing the annual certificates of value, he shall enter thereon the amount and value of the securities deposited by such company. If at any time it shall appear from such certificates or otherwise that the value of the securities held on deposit is less than the reserve required by the American Table of Mortality and three and one-half per cent interest on all the registered policies and bonds in force in such company, it shall not be lawful for the Insurance Commissioner to execute certificates on any additional policies or bonds of such company, until it shall have made good the deficit. If any company fails or neglects to make good such deficit for sixty days it shall be deemed insolvent and shall be proceeded against in the manner provided by law in such cases.
Any company whose deposits exceed the net reserve required on all the registered policies and bonds it has in deposits, force, may withdraw such excess, or it may withdraw any of such deposits at any time by depositing other securities equal in value to those withdrawn and of the character authorized by law; and so long as such company shall remain solvent and keep its deposits as herein required, it may collect the interest and coupons on the securities deposited as the same accrue.
The Insurance Commissioner shall receive the securities to be transferred to and deposited with him, and shall give vouchers for same to the companies so depositing.
It shall be his duty, upon receipt of securities from any Insurance Company, to forthwith deposit the same in the presence of the president, vice-president or authorized agent of that company, in a strong metal box, which shall require two distinct and different keys to unlock the same, one key to be kept by the Insurance Commissioner and the other by the company ; and the box shall not be opened except in the presence of the Insurance Commissioner or a duly authorized deputy, and said president, vice-president or authorized agent of the company. Provided, however, that in case a company having securities on deposit shall be adjudged insolvent or be dissolved, the proper Court shall make and enforce the necessary orders to place said securities, or any part of them, at the sole disposal of the Insurance Commissioner.
The boxes in which the securities are deposited shall kept in the vaults of the Farmers Bank at Dover, or like depository to be selected by the Insurance Commissioner. If said Insurance Commissioner or his deputy shall wilfully fail, or refuse or neglect to faithfully keep, deposit, account or surrender, in the manner authorized or required by law, any such securities as aforesaid, transferred to and received by him or into his custody, under the provisions aforesaid, such Insurance Commissioner shall be responsible upon his official bond, and suit may be brought upon said bond by the person injured ; and the said Insurance Commissioner or his Deputy so offending shall, upon conviction thereof, be adjudged guilty of a felony, and punished by a fine not exceeding Ten Thousand Dollars and by imprisonment for not less than two years or more than ten years.
617. See. 46. INSURANCE WITHOUT THE CONSENT OF THE INSURED PROHIBITED; MINORS: No policy or agreement for insurance, other than a policy of group life insurance, shall be issued upon the life or health of another or against loss by disablement by accident except upon the application of the person insured ; except that, a Exceptions wife may take a policy of insurance upon the life or health of her husband or against loss by his disablement by accident; an employer may take out a policy of insurance covering his employees collectively for the benefit of such as may suffer loss from injury, death or disablement resulting from sickness ; a parent or guardian of a student or a college, school or other institution of learning, or the head or principal thereof, may take a policy of insurance against loss caused by the sickness or injury of a student or other person ; and a person liable for the support of a child may take a policy of insurance thereon, the amount payable under which may be made to increase with advancing age and which, as to the ages specified in the following table, shall not exceed the sums specified, the ages wherein specified being the age at time of death:
Under the age of one year $ 100
Between the ages of one and two years 200
Between the ages of two and three years 300
Between the ages of three and four years 400
Between the ages of four and five years 500
Between the ages of five and six years 600
Between the ages of six and seven years 700
Between the ages of seven and eight years 800
Between the ages of eight and nine years 900
Between the ages of nine and ten years 1000
Between the ages of ten and eleven years 1100
Between the ages of eleven and twelve years 1200
Between the ages of twelve and thirteen years 1300
Between the ages of thirteen and fourteen years 1400
Between the ages of fourteen years and fourteen years and six months 1500
618. Sec. 47. INSURANCE OF HUSBAND'S LIFE FOR WIFE'S USE; MARRIED WOMAN MAY EFFECT; LIMITATION; IN CASE OF HER PRIOR DEATH; INSURANCE FOR BENEFIT OF CHILDREN OR GRANDCHILDREN: A married woman may, in her own name, or husband for benefit of otherwise, effect insurance for her sole use, on the life of wife her husband, for any definite period, or for the term of his life; and if she survive him, the sum due upon such insurance shall be payable to her, for her own use, and in case of the wife's death before the husband, the amount of such insurance may be made payable to her children, or grandchildren; and all proceeds and avails of such insurance shall be free from the claims of the representatives of the husband, or any of his creditors, whether or not the right to change the beneficiary is reserved or permitted; provided that, subject to the statute of limitations, the amount of any premiums for said insurance paid out of the funds or property of the husband with intent to defraud creditors, with interest thereon, shall ensure to their benefit from the proceeds of the policy ; but the company issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms, unless before such payment the company shall have written notice, by or in behalf of a creditor, of a claim to recover for premiums paid with intent to defraud creditors, with specifications of the amount claimed.
619. Sec. 48. WARRANTIES IN APPLICATIONS AND EFFECT OF; WRONG AGE GIVEN; COPY OF AP- Warranties in PLICATION TO ACCOMPANY POLICY: Whenever the applications application for a policy of life insurance contains a clause of warranty of the truth of the answers therein contained, no misrepresentation or untrue statement in such application made in good faith by the applicant, shall effect a forfeiture or be a ground of defense in any suit brought upon any policy of insurance issued upon the faith of such application, unless such misrepresentation or untrue statement relate to some matter material to the risk.
Whenever it shall be made to appear that a wrong age Payments has been given in good faith in any application for a policy of life insurance, the company shall not be required to pay the face value of the policy, but such sum as the premium paid would have purchased at the applicant's real age at the time of effecting the insurance.
There shall be delivered with, incorporated in, or attached to each policy of life insurance issued in this State, a copy of the application for said policy made by the insured, so that the entire insurance contract may appear in or with said policy; in default of which, no defense shall be allowed to said policy on account of or by reason of anything contained in or omitted from such application and contained in the policy issued thereon.
It is declared to be the intent and meaning of this &leaning and Section that the same shall effect and have to do only with the remedy and procedure in the enforcing of claims for insurance upon life insurance policies.
ARTICLE 4
PROVISION RELATING PARTICULARLY TO FIRE AND MARINE INSURANCE
620. Sec. 49. JOINT POLICIES: Two or more stock, fire or marine insurance companies duly authorized to transact business in this State may issue a combination policy, using a distinctive title therefor, which title shall follow the titles of the several companies obligated thereby, and which policy shall be executed by the officers of each of such companies. Such policy shall state that it is a joint contract, and that each company is only liable for a specific percentage of any loss or damage occurring there-under. Before any such companies shall issue such combination policy, they shall receive the express permission of the Insurance Commissioner to issue the same, and the title shall be approved by him.
621. Sec. 50. VALUED POLICIES; FIRE; TORNADO; LIGHTNING; LIABILITY UNDER; ENTRY THEREON; TO WHAT POLICIES APPLICABLE; JUDGMENT THEREON: Whenever any policy of insurance shall be issued to insure any real property in this State against loss by fire, tornado, or lightning, and the property insured shall be wholly destroyed without criminal fault on the part of the insured, or his assigns, the amount of the insurance stated in such policy shall be taken conclusively to be the true value of the property insured and the true amount of loss and measure of damages, subject to the proviso herein; and every such policy, whether hereafter issued or renewed, shall have endorsed across the face of it the following: "It is agreed between insurer and insured that the value of the insured property is the sum of $ ;" and this estimate shall be binding on both parties as to value; provided, however, that nothing herein contained shall, in case of loss, prevent the company insuring from adjusting the loss by replacing the property destroyed. And in case any owner shall effect any subsequent insurance on the same property, upon any larger value than so agreed, all such insurance, that then existing as well as that subsequently obtained, shall become void.
This Section shall apply to all policies of insurance made or issued upon real property in this State, and also to the renewal which shall be made, of all policies issued in this State, and the contracts made by policies and renewals shall be construed to be contracts made under the laws of this State.
The Court upon rendering judgment against any insurance company upon any such policy of insurance, shall allow the plaintiff a reasonable sum as attorney's fee to lie taxed as part of the costs.
ARTICLE 5
SURETYSHIP AND TITLE INSURANCE
622. Sec. 51. CORPORATE SURETYSHIP SUFFICIENT; WHEN: Whenever any bond, undertaking, recognizance or other obligation is by law or the charter, ordinances, rules or regulations of any municipality, board, body, organization or public officer, required or permitted to be made, given, tendered or filed with surety or securities, and whenever the performance of any act, duty or obligation, or the refraining from any act, is required or permitted to be guaranteed, such bond, undertaking, obligation, recognizance or guarantee may be executed by a company qualified to act as surety or guarantor as hereinafter provided; and such execution by such company of such bond, undertaking, obligation, recognizance or guarantee shall be in all respects a full and complete compliance with every requirement of every law, charter, ordinance, rule or regulation that such bond, undertaking, obligation, recognizance or guarantee shall be executed by one surety or by one or more sureties, or that such sureties shall be residents or freeholders, either or both, or possess any other qualification, and shall be accordingly accepted and treated.
Every such corporation; qualified to act as surety or Surety guarantor as herein provided, is fully invested with power to execute and deliver bonds insuring the fidelity of persons holding positions of responsibility and trust, public or private, and of becoming sole surety in any case where by law a bond or bonds with one or more sureties may be required or permitted for any legal purpose whatsoever, including the case of surety upon contracts, public and private official bonds, including bonds of all State, County and Municipal officers, and cases pending in any of the Courts of this State.
Any public officer or department of State, County or officer or Municipal government, whose duty it may or shall hereafter be to approve the surety upon any bond or bonds, bonds may in his or their discretion, accept and approve such bonds when executed by the principal therein and by any surety company qualified to act as surety or guarantor as herein provided. The Levy Court, of the several Counties of this State, is authorized in its discretion to accept such bonds as security for Collectors of County Taxes in lieu of the security provided for by the Laws of this State.
Provided that every such bond, undertaking, obligation, recognizance or guarantee, shall be executed on behalf of the said surety company, either by its regularly authorized officer, or its regularly authorized agent in that behalf, and, in case of a Foreign or Alien Company, counter- signed by its regularly authorized resident agent in the State of Delaware, and all premiums due to said surety company therefor shall be paid to said resident agent and shall be subject to any and all taxes levied upon such premiums under the laws of the State of Delaware.
623. Sec. 52. DOMESTIC SURETY COMPANIES; REQUIREMENTS: Every domestic corporation authorized by its Certificate of Incorporation to act as surety or guarantor, before transacting any surety or guaranty business in this State, shall file with the Insurance Commissioner a certified copy of its Certificate of Incorporation, Other copies of its By-Laws and regulations duly certified, and Requirements shall fully comply with the requirements in Sec. 9 of this Chapter, and shall also file a report signed by its President or Vice-President and its Secretary stating the amount of its paid-up capital stock, its assets, particularizing each' item of investment, the amount of the current premium or existing bonds upon which it is surety or guarantor, the amount of liability for insured portions thereof estimated at the rate of fifty per centum of the current annual premiums, stating also the amount of its outstanding debts of all kinds, and such further information as may be prescribed by the Insurance Commissioner.
No such corporation shall act as surety or guarantor Certificate of until it shall have made application for and secured a certificate of Authority from the, Insurance Commissioner authorizing it to do business, after having fully complied with the provisions of Sec. 9 of this Chapter and the provisions of this Section. Before obtaining such Certificate Requirements of Authority it shall pay the annual State Fees provided by law, and in the case of a renewed Certificate of Authority, shall have paid the taxes levied against it for the year ending on December Thirty-first preceding. It must also have on deposit with the Insurance Commissioner of Delaware good interest-bearing and dividend-paying securities worth at market value at least Ten Thousand Dollars, to be held for the benefit of the holders of the obligations of Deposit of such company ; said securities deposited with said Insurance Commissioner shall remain with him in trust to answer any default of such company as surety upon such bond, undertaking, recognizance or other obligation established by final judgment upon which execution may lawfully be issued against said company, said Insurance Commissioner and his successors in office being hereby directed to so receive and thereafter retain such deposit under this Chapter in trust for the purposes hereof, such company, however, at all times to collect the interest, dividends and profits upon such securities, and from time to time withdraw said securities or portions thereof substituting therefor others of equally good character and value to the satisfaction of the Insurance Commissioner, and such securities and substitutes therefor shall, at all times be attachment exempt from and not subject to levy under any writ of attachment ; and further, shall not be subject to any process against such company without at least thirty days' notice to said company, specifying the time, place and manner of such sale and the process under which and purposes for process which said securities are to be sold, accompanied by a copy of such process.
624. Sec. 53. FOREIGN OR ALIEN SURETY COMPANIES; REQUIREMENTS: Every Foreign or Alien Surety Company applying to be qualified to act as surety or guarantor under this Chapter must be authorized under State of Incorporation the laws of the state or country where it is incorporated and under its charter to transact the surety or guarantee business for which it is applying for a Certificate of Authority, and it must have been duly authorized to transact such business in the state or country of its incorporation. It must have complied with the requirements of the laws of this State applicable to such companies in doing business herein, and it must apply for and obtain from the Must obtain Insurance Commissioner of this State a Certificate of Authority to do business in this State, and have paid the fees and taxes required by law. It must comply with the requirements set forth in Sections 8, 9 and 10 of this Chapter. It must comply with the minimum capital requirements for Surety Companies set forth in Sec. 9 of this Chapter, and must have good and valuable assets in excess of its liabilities, which said liabilities shall be taken to be its capital stock, its outstanding debts and a premium reserve at the rate of fifty per cent of the current annual premium on all outstanding risks in force. It must file a statement under oath of its President or Vice-President and its Secretary, stating the amount of its paid-up cash capital, particularizing each item of investment, the amount of the current premium on existing bonds upon which it is surety, the amount of liability for unearned portion thereof estimated at the rate of fifty per cent of the current annual premiums, stating also the amount of its outstanding debts of all kinds, and such further statements as may be required by the Insurance Commissioner or by the law of this State. It must also have good interest bearing or dividend Securities paying securities with a market value of at least One Hundred Thousand Dollars and of the character in which it is Incorporation allowed under the of the State where it is incorporated to invest its capital, or in which like companies under the laws of this State are allowed to invest their capital, which said securities shall be deposited with and held by the Insurance Commissioner or other corresponding officer of the state where such company is incorporated or has its principal office in the United States, in trust for the benefit of the policyholders of such company within the United States. It must also have on deposit with the Insurance Deposit with Commissioner of Delaware securities at least Ten Thousand Dollars in value, in full accordance with the requirements of Delaware required of domestic companies in the preceding Section.
When any Foreign or Alien Surety Company shall of have complied with the requirements in this Section, and shall have in all respects complied with the provisions of this Chapter and shall have satisfied the Insurance Commissioner that it should receive a Certificate of Authority to act as surety and guarantor in this State, the Insurance Commissioner shall issue a Certificate of Authority to said company authorizing it to become and be accepted as sole surety on all bonds, undertakings and obligations, required or permitted by law, or the charter, ordinances, rules and regulations of any municipality, board, body, organization or public officer, which said Certificate shall be prima facie evidence of such company's right to do business in this State ; provided, however, that no such company shall within the limits of this State, by implication or construction, Companies to be deemed to possess the power to act in the capacity of executor, administrator, guardian, trustee, receiver, as- signee, or agent, or in any other capacity than that of surety, anything in its charter or articles of incorporation to the contrary hereof notwithstanding.
625: Sec. 54. ANNUAL STATEMENT: All Surety Companies shall file with the Insurance Commissioner the annual statement provided for in Sec. 10 of this Chapter and such further statement as may be required by the Insurance Commissioner or by the laws of this State, and shall also furnish him with a certificate from the officer with whom the deposit mentioned in Section 57 is required to be made, describing such securities so deposited and the manner in which they are held by him and stating that he is satisfied that such securities are fully worth the amount so required to be deposited, and shall also furnish the Insurance Commissioner such other information touching its condition and credit as he may require.
626. Sec. 55. DISCONTINUANCE OF BUSINESS; REQUISITES UPON; BOND; CONDITION OF; RETURN OF DEPOSITED SECURITIES: Any such surety company may at any time surrender to the Insurance Com- missioner said Certificate of Authority, and shall thereafter cease to engage in said business of suretyship and indemnity in this State; such company shall thereupon be entitled to the release and return of any securities deposited by it, in the manner following: Said company shall file with said Commissioner a statement in writing, under oath, giving the date, name and amount of all its then existing obligations of suretyship or indemnity in this State, setting down the facts of each case, and said Commissioner after an examination of the facts, shall require said company Bond for fulfillment or to file with said Commissioner a bond to the State in the obligations penalty of not less than Ten Thousand- nor more than Twenty Thousand Dollars, executed by said company and two or more responsible Freeholders of this State, or a responsible surety company qualified as aforesaid, conditioned for the prompt fulfillment by said company of all its said outstanding obligations of suretyship or indemnity in this State and stipulating that the makers of said bond may be joined as to any action upon any of the aforesaid obligations of suretyship or indemnity of said company, and that if judgment in such action be rendered against said company it may at the same time be rendered and enforced against the makers of said bonds without further or other action against the same, and such bond shall stand for the security and benefit of all persons interested in said outstanding obligations of suretyship and indemnity. Upon approving and filing such bond, the Insurance Commissioner shall deliver said securities to said Company.
627. Sec. 56. DEPOSIT OF MONEY AND ASSETS 627 S. 56 BY PERSON GIVING BOND; WITHDRAWAL ONLY UPON CONSENT OF SURETY: Any party of whom a Deposit of bond or undertaking is required may agree with his sureties `ans°,1:2 air for the deposit for safe keeping of any and all moneys and other depositable assets for which such sureties are or may be held responsible with a trust company, safe deposit company or bank authorized by law to transact business as such in this State, if such deposit is otherwise proper, withdrawal in such manner as to prevent the withdrawal of such moneys and assets or any part thereof, except with the written consent of such sureties, or an order of the court, made on such notice to them as such court may direct.
628. Sec. 57. RELEASE OF SURETY FROM LIABILITY; HOW: The surety or representatives of any surety upon the bond of any trustee, committee, guardian, assignees, receiver, executor or administrator or other fiduciary, may apply by petition to the Court wherein said bond is filed or which may have jurisdiction of such trustee, tow committee, guardian, assignee, receiver, executor or administrator or other fiduciary or to a judge of said court, praying to be relieved from further liability as such surety, for the acts or omissions of the trustee, committee, guardian, assignee, receiver, executor or administrator or other fiduciary, which may occur after the date of the order relieving such surety, to be granted as herein provided for; and to require such trustee, committee, guardian, receiver, assignee, executor or administrator or other fiduciary, to show cause why he should not account and such surety be relieved from any such further liability as aforesaid, and such principal be required to give a new bond; and thereupon the filing of such petition, the court or judge thereof, shall issue such order, returnable at such time and place and to be served in such manner, as such court or judge may direct, and may restrain such trustee, committee, guardian, assignee, receiver, executor or administrator or other fiduciary from acting except in such manner as it may direct to preserve the trust estate, and, upon the return of such order to show cause, if the principal in the bond account in due form of law and file a new bond duly approved, then such court or judge shall make an order re- leasing such surety filing the petition from liability upon the bond for any subsequent act or default of the principal; and in default of such principal thus accounting and Order of filing such bond, such court or judge shall make an order Court directing such trustee, committee, guardian, assignee, receiver, executor or administrator, or other fiduciary to count in due form of law, and if the trust fund or estate shall be satisfactorily accounted for and delivered or properly secured, such surety shall be discharged from any Discharge and all further liability as such for the subsequent acts or omissions of the trustee, guardian, committee, assignee, receiver, executor or administrator, or other fiduciary, after the day of such surety being so relieved and discharged.
629. Sec. 58. SURETY COMPANY MAY NOT DENY ITS CORPORATE POWER: No company having signed corporate power any such bond, undertaking or obligation shall be permitted to deny its corporate power to execute such instrument or incur such liability, in any proceeding to enforce liability against it thereunder.
630. Sec. 59. SURETY COMPANIES NOT TO BE CONSTRUED AS HAVING POWER TO GUARANTEE TITLES TO REAL ESTATE: Nothing herein shall be construed as conferring any power or right upon such surety companies to guarantee titles to real estate, except as expressly provided in 640. Sec. 69 of this Chapter.
631. Sec. 60. CORPORATE SURETYSHIP; LIMITATION OF AMOUNT: No company qualified under the laws of this State to transact the business of executing bonds of suretyship, shall execute any bond, undertaking, recognizance or guarantee when the amount of said bond, undertaking, recognizance or guarantee is in excess of ten per cent of the aggregate of its paid-up capital stock and surplus, or its surplus if a mutual company, determined in accordance with the last annual report by it filed as pro- vided by law ; unless it be secured for the excess of its Exceptions liability thereunder above such percentage by the deposit with it, or pledge to it, of good and sufficient security ; or by the deposit specified in Sec. 60, or by reinsurance in a corporation authorized to transact the fidelity or surety business in this State, provided that such reinsurance is in such form as to enable the Obligee or Beneficiary to maintain an action thereon against the company reinsured jointly with such reinsurer, and, upon recovering judgment against such reinsured, to have recovery against such reinsurer for payment to the extent in which it may be liable under such reinsurance and in discharge thereof ; or by the co-suretyship of such a corporation similarly authorized.
632. Sec. 61. BONDS EXECUTED MAY BE ACCEPTED; BY WHOM: Whenever. any bond, undertaking, recognizance, or guarantee has been duly executed in compliance with the terms of this Chapter by the principal or principals therein, and by a company, duly authorized under the law of the State of Delaware to transact the business of executing bonds of suretyship, then any officer, judge or any Department of the State, or of any County, or Municipal Government, whose duty it may be to approve of the surety upon the bond, undertaking, recognizance, or guarantee, may accept and approve such bond, undertaking, recognizance, or guarantee.
633. Sec. 62. EXPENSES FOR BONDS; HOW PAID; MAXIMUM COST: The expenses incurred by any public officer for suretyship upon any bond required by law of him, as well as the expenses for suretyship upon any bond required of any of his assistants or clerks shall, where the bond or bonds are required for the protection of the State, be paid for by the State, and where the bond or bonds are required for the protection of any 'of the several Counties, be paid for by the Levy Court of the said County, and where the bond or bonds are required for the protection of a Municipality, be paid for by the Municipality, and shall be charged to and considered a part of the expenses of the office held by the said official; Provided, however, that in no instance shall the cost of said bond exceed one-half of one per centum per annum of the penal sum named in the bond, with a permitted minimum premium of Ten Dollars.
634. Sec. 63. CORPORATE BONDS TO BE ACCEP- TED WITHOUT WARRANT OF ATTORNEY: In all in- stances where corporate suretyship is offered in accordance with the provisions of this Chapter, and where the form of bond as now required by law contains a Warrant of Attorney, the said bond shall be accepted without said Warrant of Attorney being written therein.
635. Sec. 64. DOMESTIC TRUST COMPANIES MAY ACT AS TRUSTEE WITHOUT ADDITIONAL SURETY: Any court, judge or officer authorized by law to appoint any person or corporation to any office of trust or fiduciary position, may, in its or his discretion, appoint to such office or position any Trust Company incorporated under the laws of this State, and having its principal office or place of business in this State, provided the said Court, judge, or officer, shall be satisfied that the capital stock of such corporation shall have been fully paid in cash, and that such corporation is authorized by its charter to perform the duties of the said office.
Whenever such corporation may be so appointed to Without such office of trust, the court, judge or officer making the appointment may, in its or his discretion, not require the said corporation to give surety on any bond given by it for the faithful performance of its duties, but all of the capital stock, surplus and property owned by such corporation shall be specially and primarily liable for the obligation of the said corporation while acting in such trust capacity. It is further declared that all liabilities and obligations arising from or growing out of any such trusts shall be made liens upon its real estate, prior and paramount to any other lien or incumbrance the said corporation may create or suffer respecting the same.
636. Sec. 65. TITLE INSURANCE COMPANIES; CHARTER POWERS; CAPITAL; SECURITIES DEPOSITED; LICENSE FEES: A company to be qualified to act Title as a guarantor to owners of property, or mortgagees, or others interested therein, against loss by defective title or, incumbrance, or adverse claim to title, either together with or without examination of title, or furnishing information relative thereto, must be authorized under the laws of the State where incorporated and by its Certificate of Incorporation to guarantee title and certify to the ownership of title to real property and insure the owners of or mortgagees or other persons interested in such property, against loss by reason of defective title thereto, or incumbrance comply with thereon, and must comply with the requirements of the laws of this State applicable to such companies doing such business herein, and obtain a Certificate of Authority from the Insurance Commissioner to do business in this State, pursuant to this Chapter.
If incorporated under the Laws of any other State than the State of Delaware, such company must file with the Insurance Commissioner of this State a statement signed state and sworn to by its President, or one of its Vice-Presidents, and its Secretary, or one of its Assistant Secretaries, showing the amount of its paid-up cash capital, each item of investment, the amount of the current annual premiums in all outstanding risks in force and the amount of its outstanding debts of all kinds, and such further statements as are by this Chapter required of Foreign Insurance Companies for transacting business herein ; and must have good interest-bearing and dividend-paying securities of the character in which it is allowed under the Laws of the State wherein incorporated to invest its capital, of the market value of at least One Hundred Thousand Dollars, deposited with or held by the Insurance Commissioner or other competent officer of the State where such company is incorporated, in trust for the benefit of the holders of the obligations of such company, and a certificate from such Insurance Commissioner, or such other officer of the State, must be filed with the statement provided herein to be filed with the copy of the Certificate of Incorporation.
If incorporated under the Law of the State of Delaware, such company must deposit with the Insurance Commissioner of this State good interest-bearing dividend- paying securities with a market value of at least Twenty-five Thousand Dollars, to be held for the benefit of the holders of the obligations of such company; said securities deposited with the said Insurance Commissioner To answer shall remain with him in trust to answer any default of default such company as guarantor of any title to real property, or encumbrances thereon, said Insurance Commissioner and all his successors in office being hereby directed to receive and thereafter retain such deposit in trust for the purposes hereof ; such company, however, at all times to collect the interest, dividends and profits upon such securities, and from time to time withdraw said securities or profits thereof and substitute therefor others of equal character and value to the satisfaction of the Insurance Commissioner ; but such securities and substitutes therefor shall certain legal process at all times be exempt from and not subject to levy under any writ of attachment and, further, shall not be subject to any process against such company within at least thirty days notice to said company specifying the time, place and manner of such rule and the process under which and purposes for which said securities are to be sold, accompanied by a copy of such process.
637. Sec. 66. WORKMEN'S COMPENSATION INSURANCE : Insurance Companies transacting the business of Workmen's Compensation Insurance shall be subject to the provisions of this Chapter, including the requirements on the part of foreign and alien companies to appoint the Insurance Commissioner as attorney for the service of process in this State, and shall file such certificates and reports as are required of other insurance companies doing a surety business, and shall obtain a Certificate of Authority to do business in this State and shall pay the fees and taxes required by law. Such companies shall also be subject to the regulations and provisions of Article 6, Chapter 90 of the Revised Code of 1915, published as Chapter 204, Volume 30, Laws of Delaware, as now existing or hereafter amended.
No Certificate of Authority shall authorize any Surety Companies Company to transact the business of Workmen's Compensation Insurance, until such 'Company has been duly approved by the Industrial Accident Board of this State under the provision of said Article 6 of Chapter 90 of the Revised Code of Delaware.
ARTICLE 6
ASSESSMENT AND FRATERNAL ORGANIZATIONS
638. Sec. 67. ASSESSMENT ORGANIZATIONS: Companies, associations, societies and other organizations Assessment issuing or proposing to issue insurance on the assessment plan, providing for the payment of sick, accident, or death tor goat torn s benefits through the collection of dues or charges assessed against their members, although insurance companies Exceptions within the meaning of this Chapter, shall not be subject to any provisions of this Chapter which are not applicable to such assessment plan of operation; but before doing business in this State, each such organization shall first obtain a Certificate of Authority to do so from the Insurance Commissioner. No such Certificate of Authority shall necessary be issued until such organization has filed with the Insurance Commissioner:
(a) A duly certified copy of its charter, certificate of incorporation or articles of association.
(b) A duly certified copy of its by-laws and regulations.
(c) A full statement of its organization and plan of operation and forms of agreements with its members. (d) A full statement of the dues and charges required to be paid by its members.
(e) A full statement of its financial condition.
(f) If a foreign or alien organization, a certificate that it has been duly authorized to transact such business in the state of its incorporation or organization.
(g) If a foreign or alien organization, a duly executed appointment in writing of the Insurance Commissioner of this State to be its attorney in this State upon whom all legal process in any action or proceeding against it may be served, as provided for in Paragraph (e) of Section 8 of this Chapter.
(h) Such further information and data as the Insurance Commissioner may require.
No Certificate of Authority shall be issued to any such organization until the Insurance Commissioner is fully satisfied that it is in sound financial condition and that the plan which it proposes to use will protect its members in accordance with its agreements with them.
After the issuance of the original Certificate of Authority, every such organization shall file with the Insurance Commissioner, on the forms 'furnished by him, on or before March First in each year, a financial statement for the year ending December Thirty-first immediately preceding. The form of said statement shall be prescribed by the Insurance Commissioner and shall conform as nearly as may be to the form of statement from time to time adopted for such organizations by the National Convention of Insurance Commissioners. No renewed Certificate of Authority shall be issued until such statement has been filed with the Insurance Commissioner and until he is fully satisfied that the organization is in sound financial condition and that its further operation will not be prejudicial to the interests of its members or to the interest of the public.
639. Sec. 68. FRATERNAL ORGANIZATIONS: This Chapter shall not apply to fraternal orders, societies, associations or organizations, having a lodge system with a ritualistic form of work and a representative form of organizations government, which provide sick, accident or death benefits for their members, but which do not operate for profit or employ paid solicitors ; nor to beneficial or relief associations formed by churches, societies or employers, which provide sick, accident or death benefits, the privileges, benefits and membership in which are limited to the members of such churches or societies or to such employers and their employees ; nor to any railroad relief association now operating in this State.
ARTICLE 7
AGENTS AND BROKERS
640. Sec. 69. CERTIFICATES OF AUTHORITY TO AGENTS AND BROKERS: Every insurance agent doing business in this State shall be required to have a valid and unrevoked Certificate of Authority to act as agent for each certificate of company represented by such agent. Such Certificate of authority shall be issued by the Insurance Commissioner on the written application of the company to be represented by such agent and upon payment of the fee fixed by law. Such Certificate of Authority may be revoked by request of companies the Insurance Commissioner on the written request of the company employing the holder thereof.
Every insurance broker doing business in this State shall be required to have a valid and unrevoked Certificate of Authority to do so. Such Certificate of Authority shall be issued by the Insurance Commissioner on the written application of the person, firm or corporation to which such Certificate is to be issued, and upon payment of the fee fixed by law.
No person, firm or corporation, shall engage in or to carry on within the limits of this State, the business or occupation of insurance agent or insurance broker, without having a valid and unrevoked Certificate of Authority to do so as provided in this Section.
641. Sec. 70. ISSUANCE OF CERTIFICATE OF AUTHORITY: Before issuing any Certificate of Authority certificate of authority to an insurance agent or insurance broker, the Insurance Commissioner shall be satisfied that such proposed insurance agent or insurance broker resides in this State, or is duly incorporated under the law of this State, and is properly qualified and equipped to carry on such business; provided that residence or incorporation in this State shall not be required in order to act as the agent of a life insurance company.
Every such Certificate of Authority shall set forth the name and principal place of business of the person, firm or corporation to which it is issued, and, in case of an Agent's Certificate of Authority, the name and the place of the principal office of the insurance company for which it is granted. All such Certificates of Authority shall be issued by the When to Insurance Commissioner under his seal of office, and shall expire bear the date of actual issuance, and shall expire on March First next following, but no abatement in fees or charges Fees shall be made on account of the date of issuance.
Sec. 71. REVOCATION OF CERTIFICATE OF AUTHORITY: The Insurance Commissioner shall have the power to revoke or suspend the Certificate of Authority Revocation of any insurance agent or insurance broker if investigation authority by him shows that such Certificate was obtained by fraud or misrepresentation or that the holder has misrepresented the provisions, terms or conditions contained in any contract of insurance, or has rebated the whole or any part of any insurance premium to the applicant for such insurance, or has made any misleading representations or incomplete comparisons of policies to any person for the purpose of inducing or tending to induce such person to lapse, forfeit or surrender insurance then in force, or if the interests of the insurer or the insurable interests of the public are not properly served under said Certificate; provided, however, that before revoking or suspending any such Certificate of Authority, the Insurance Commissioner shall give to such agent or broker and the company, companies, person or persons represented by such agent or broker, reasonable notice of a hearing to be held by the Insurance Commissioner, at which hearing such agent or broker and the company, companies, person or persons represented by such agent or broker shall be given full opportunity to present such evidence as they deem pertinent to the issue involved.
Sec. 72. FIDUCIARY CAPACITY OF AGENTS: Every person appointed or acting in this State as agent of Fiduciary any insurance corporation, who receives or collects any moneys as such agents shall be responsible in a trust or fiduciary capacity to such corporation therefor.
644. Sec. 73. NO COMMISSIONS EXCEPT TO AGENTS OR BROKERS: No insurance company, insurance agent, or insurance broker shall pay or allow, either directly or indirectly, any commission for soliciting, negotiating or effecting contracts of insurance or guarantee within this State to any person, firm or corporation, unless such person, firm or corporation holds a valid and unrevoked Certificate of Authority to act within this State as an insurance agent for the insurance company effecting such insurance or as an insurance broker; nor shall any person, firm or corporation, other than such duly authorized insurance agent or insurance broker, accept any such commission.
645. Sec. 74. NON-RESIDENT BROKERS: Insurance brokers of any other state shall be permitted to solicit, negotiate and effect contracts of insurance within this State in companies authorized to do business in this State, but only if brokers of this State are permitted to transact business in such other state and then upon the payment of the same fees and under the same conditions, restrictions and requirements as are demanded of Delaware Brokers in such other state; provided that this Section shall not be construed to authorize such brokers to transact any business in this State which could not be transacted by an Insurance Broker of this State.
646. Sec. 75. NO AGENT TO ACT FOR UNAUTHORIZED COMPANY: No person, firm or corporation shall in this State procure or solicit any citizen or resident of this State to take out a policy of insurance in any insurance company not authorized to transact business within this State, nor act within this State as agent for such company, or otherwise in any manner, directly or indirectly, aid in the transaction of the business of or in the collection of any premiums, dues or assessments by or for such company or association, except in the prosecution of defense of suits at law.
647. Sec. 76. PENALTY: The penalty for any violation of this Article shall, upon conviction thereof, be a Penalty for fine not exceeding Five Hundred Dollars.
Approved March 30, 1931.