(a) The commissioner shall examine the plan submitted pursuant to Section 1560.03. As a part of the examination the commissioner shall order a public hearing of the plan after written notice of the hearing to the domestic reciprocal insurer and its subscribers and the public, all of whom shall have the right to appear at the hearing. The hearing shall occur before the policyholder vote. The commissioner may require as a condition of consent that the domestic reciprocal insurer make modifications of the proposed plan that the commissioner finds necessary for the protection of policyholders. The commissioner shall consent to the plan if he or she finds all of the following:
(1) The plan is fair, just, and equitable to the insurer and its policyholders.
Terms Used In California Insurance Code 1560.05
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Commissioner: means the Insurance Commissioner of this State. See California Education Code 25022.5
- Converted insurer: means the incorporated stock insurer into which a domestic reciprocal insurer has been converted in accordance with the provisions of this article. See California Insurance Code 1560.02
- Domestic: means organized under the laws of this State, whether or not admitted. See California Education Code 32031
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- plan: means a plan adopted by a domestic reciprocal insurer in compliance with this article. See California Insurance Code 1560.02
- Policyholder: means the holder of a policy other than a reinsurance contract or a person covered solely under a reporting endorsement to a claims-made policy. See California Insurance Code 1560.02
- Reciprocal holding company: means a corporation organized under the laws of this state subject to the General Corporation Law as set forth in the Corporations Code. See California Insurance Code 1560.02
- Rights in surplus: includes rights of subscribers to a distribution of surplus in liquidation or conservation of the insurer under this code, or in a dissolution or winding up. See California Insurance Code 1560.02
- subscription: includes mark when the signer or subscriber can not write, such signer's or subscriber's name being written near the mark by a witness who writes his own name near the signer's or subscriber's name. See California Education Code 25021
(2) The plan does not violate the law.
(3) The converted insurer will, after the conversion, satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed.
(4) The plan will not require subscribers to pay additional funds to retain their rights in surplus, but nothing herein is intended to prohibit or restrict a reciprocal insurer that is converting to a stock insurer by establishing a reciprocal holding company from offering to its subscribers subscription rights that are in addition to the rights in surplus to be held in the reciprocal holding company.
(5) Any stock issued to officers, directors, employees, or employee benefit plans for their benefit, if any, will be fair, just, and equitable and not hazardous to policyholders, stockholders, or creditors.
(6) The plan provides sufficient means for the accumulated earnings, cash, and/or other non-operating assets held by the reciprocal holding company to inure to the exclusive benefit of its members.
(b) The commissioner may appoint one or more actuarial, financial, or other consultants, including legal counsel, as the commissioner finds necessary to advise the commissioner in making the determination of whether the proposed plan of conversion meets the applicable requirements of this article. The domestic reciprocal insurer is responsible for the reasonable fees and expenses of any actuarial, financial, or other consultants, including legal counsel, appointed, and for the mailing and publication of notices to the domestic reciprocal insurer and its members.
(Added by Stats. 1998, Ch. 421, Sec. 2. Effective January 1, 1999.)