2013 -- S 0297 SUBSTITUTE A

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LC00735/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO INSURANCE - FRATERNAL CODE

     Introduced By: Senators Felag, DiPalma, Paiva Weed, and Ciccone

     Date Introduced: February 12, 2013

     Referred To: Senate Special Legislation and Veterans Affairs

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 27-25-38 of the General Laws in Chapter 27-25 entitled "Rhode

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Island Fraternal Code" is hereby amended to read as follows:

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     27-25-38. Exemption of certain societies. -- (a) Nothing contained in this chapter shall

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be construed as to affect or apply to:

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      (1) Grand or subordinate lodges of societies, orders, or associations now doing business

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in this state which provide benefits exclusively through local or subordinate lodges;

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      (2) Orders, societies, or associations which admit to membership only persons engaged

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in one or more crafts or hazardous occupations, in the same or similar lines of business, insuring

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only their own members and their families, and the ladies' societies or ladies' auxiliaries to those

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orders, societies, or associations;

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      (3) Domestic societies which limit their membership to employees of a particular city or

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town, designated firm, business house, or corporation which provide for a death benefit of not

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more than fifteen hundred dollars ($1500) or disability benefits of not more than twelve hundred

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dollars ($1200) to any person in any one year, or both; or

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      (4) Domestic societies or associations of a purely religious, charitable, or benevolent

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description, which provide for a death benefit of not more than fifteen hundred dollars ($1500) or

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for disability benefits of not more than twelve hundred dollars ($1200) to any one person in any

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one year, or both.

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     (5) Any association, whether a fraternal benefit society or not, which was organized

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before 1880 and whose members are officers or enlisted, regular or reserve, active, retired, or

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honorably discharged members of the Armed Forces or Sea Services of the United States, and a

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principal purpose of which is to provide insurance and other benefits to its members and their

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dependents or beneficiaries.

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      (b) Any society or association described in subdivision (a)(3) or (a)(4) of this section

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which provides for death or disability benefits for which benefit certificates are issued, and any

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society or association included in subdivision (a)(4) of this section which has more than fifteen

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hundred (1500) members, shall not be exempted from the provisions of this chapter but shall

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comply with all of its requirements.

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      (c) No society which, by the provisions of this section, is exempt from the requirements

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of this chapter, except any society described in subdivision (a)(2) of this section, shall give or

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allow, or promise to give or allow, to any person any compensation for procuring new members.

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      (d) Every society which provides for benefits in case of death or disability resulting

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solely from accident, and which does not obligate itself to pay natural death or sick benefits, shall

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have all of the privileges and be subject to all the applicable provisions and regulations of this

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chapter except that the provisions of this chapter relating to medical examination, valuations of

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benefit certificates, and incontestability, shall not apply to the society.

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      (e) The commissioner of insurance may require from any society or association, by

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examination or otherwise, any information that will enable the commissioner to determine

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whether the society or association is exempt from the provisions of this chapter.

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     (f) Each association that is exempted from insurance regulation under subdivision (a)(5)

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of this section shall annually, on or before the first day of May, file with the commissioner a true

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and complete financial statement audited by an independent certified public accountant or

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accounting firm of its financial condition, transactions and affairs for the preceding calendar year

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and pay a fee of ten dollars ($10.00) for filing the same. Such an association may be required to

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file quarterly financial statements upon request by the insurance commissioner, due on or before

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forty-five (45) days after the quarter ending. Annual and quarterly statements shall be available

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for inspection by the public. If, in the opinion of the commissioner, such an association has not

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maintained assets sufficient to meet its liabilities and the minimum capital and surplus

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requirements set forth in section 27-2-5, the commissioner may order such association to increase

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its capital and surplus. If the association is unable to satisfy such order, the commissioner may

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order such association to cease and desist from assuming any additional liabilities in this state

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until such time as the association is able to satisfy the capital and surplus requirements ordered by

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the commissioner. Such orders shall be subject to judicial review pursuant to section 27-25-36.

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     (f)(g) Societies exempted under the provisions of this section shall also be exempt from

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all other provisions of the insurance laws of this state.

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     SECTION 2. This act shall take effect upon passage.

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LC00735/SUB A

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE - FRATERNAL CODE

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     This act would exempt certain military associations organized before 1880 from the laws

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regulating fraternal benefit societies; however, it would require them to file annual reports with

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the insurance commissioner along with payment of a ten dollar ($10.00) fee.

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     This act would take effect upon passage.

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LC00735/SUB A

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