(a) Before soliciting any applications for insurance required under Section 27-27-15, as qualification for the original certificate of authority, the incorporators of the proposed mutual insurer shall file with the commissioner a corporate surety bond in the penalty of $15,000.00 in favor of the State of Alabama and for the use and benefit of the state and of applicant members and creditors of the corporation. The bond shall be conditioned as follows:
Terms Used In Alabama Code 27-27-16
Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
United States: includes the territories thereof and the District of Columbia. See Alabama Code 1-1-1
year: means a calendar year; but, whenever the word "year" is used in reference to any appropriations for the payment of money out of the treasury, it shall mean fiscal year. See Alabama Code 1-1-1
(1) Upon payment of any loss suffered by applicants who have cancelled or lapsed existing insurance policies due to misrepresentation by the incorporators or by persons soliciting such applications under authorization by the corporation, to the effect that the making of such application for insurance and prepayment of premiums in such proposed insurer provides insurance protection prior to issuance of a certificate of authority to such insurer by the commissioner; and(2) That in event the corporation fails to complete its organization and secure a certificate of authority issued by the commissioner within one year after the date of its certificate of incorporation, all premiums collected in advance from applicant members will be promptly returned to them, all other indebtedness of the corporation, other than any compensation to directors, officers, or solicitors of insurance applications, will be paid and for payment of costs incurred by the state in event of any legal proceedings for liquidation or dissolution of the corporation.(b) In lieu of such a bond, the incorporators may deposit with the commissioner $15,000.00 in cash, or its equivalent, or in United States government bonds at par value, to be held in trust upon the same conditions as required for the bond.(c) Any such bond filed or deposit, or remaining portion thereof, held under this section shall be released and discharged upon settlement and termination of all liabilities against it under this section.
