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CHAPTER 512BFRATERNAL BENEFIT SOCIETIESReferred to in 87.4, 296.7, 331.301, 364.4, 505.28, 505.29, 507.1, 507C.3, 508C.3, 513C.10, 514A.1, 514G.103, 515.1, 515B.2, 521A.1, 521E.1, 522B.1, 669.14, 670.7
SUBCHAPTER ISTRUCTURE AND PURPOSE512B.1Scope of chapter.Except as otherwise provided in this chapter, societies are governed by this chapter and are exempt from all other insurance laws of this state unless expressly included in this chapter, or unless specifically made applicable by this chapter.1990 Acts, ch 1148, §1512B.2Definitions.As used in this chapter, unless the context otherwise requires:1. “Alien society” means an association organized under the laws of another country.2. “Benefit contract” means the agreement for provision of benefits authorized by section 512B.16, as that agreement is described in section 512B.19, subsection 1.3. “Benefit member” means an adult member who is designated by the laws or rules of the society to be a benefit member under a benefit contract.4. “Certificate” means the document issued as written evidence of the benefit contract.5. “Commissioner” means the commissioner of insurance or the commissioner’s designee.6. “Domestic society” means an association organized under the laws of this state.7. “Foreign society” means an association organized under the laws of another state or territory of the United States.8. “Laws” means the society’s articles of incorporation, constitution, and bylaws, however designated.9. “Lodge” means a subordinate member unit of the society, whether known as a camp, court, council, branch, or by any other designation.10. “Premium” means a premium, rate, dues, or other required contribution by whatever name known, which is payable under the certificate.11. “Regulations” means all regulations, or resolutions adopted by the supreme governing body or board of directors which are intended to have general application to the members of the society.12. “Society” means a fraternal benefit society, unless otherwise indicated.1990 Acts, ch 1148, §2512B.3Fraternal benefit societies — defined.An incorporated society, order, or supreme lodge, without capital stock, including one exempted under section 512B.36, subsection 1, paragraph “b”, whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with a ritualistic form of work, having a representative form of government, and which provides benefits in accordance with this chapter, is a fraternal benefit society.1990 Acts, ch 1148, §3Referred to in 10A.519512B.4Lodge system.1. A society is operating on the lodge system if it has a supreme governing body and subordinate lodges into which members are elected, initiated, or admitted in accordance with its laws, regulations, and ritual. Subordinate lodges shall be required by the laws of the society to hold regular meetings at least once in each month in furtherance of the purposes of the society.2. A society may organize and operate lodges for children under the minimum age for adult membership. Membership and initiation in local lodges shall not be required of children, nor shall children have a voice or vote in the management of the society.1990 Acts, ch 1148, §4512B.5Representative form of government.A society has a representative form of government if all of the following apply:1. It has a supreme governing body constituted in one of the following ways:a. Assembly. The supreme governing body is an assembly composed of delegates elected directly by the members or at intermediate assemblies or conventions of members or their representatives, together with other delegates as prescribed in the society’s laws. A society may provide for election of delegates by mail. The elected delegates must constitute a majority of the delegates in number and have not less than two-thirds of the votes and not less than the number of votes required to amend the society’s laws. The assembly must be elected and meet at least once every four years and must elect a board of directors to conduct the business of the society between meetings of the assembly. Vacancies on the board of directors between elections may be filled in the manner prescribed by the society’s laws. The board of directors may appoint the officers of the society if authorized to do so by the articles or bylaws of the society. A board of directors elected by an assembly shall have such powers authorized the board by the articles or bylaws of the society, and may or may not be a supreme governing body as described in paragraph “b”, depending upon the powers authorized by the articles or bylaws.b. Direct election. The supreme governing body is a board of directors composed of persons elected by the members, either directly or by their representatives in intermediate assemblies, and any other persons prescribed in the society’s laws. A society may provide for election of the board by mail. Each term of a board member must not exceed four years. Vacancies on the board between elections may be filled in the manner prescribed by the society’s laws. The elected board members must constitute a majority of the board members in number and have not less than the number of votes required to amend the society’s laws. A person filling the unexpired term of an elected board member shall be considered to be an elected member. The board must meet at least quarterly to conduct the business of the society.2. The officers of the society are elected by the supreme governing body or board of directors.3. Only benefit members are eligible for election to the supreme governing body, board of directors, or any intermediate assembly.4. Each voting member has one vote.5. A voting member is not entitled to cast a vote by proxy.1990 Acts, ch 1148, §5512B.6Purposes and powers.1.a. A society shall operate for the benefit of members and their beneficiaries by fulfilling both of the following purposes:(1) Providing benefits as specified in section 512B.16.(2) Operating for one or more social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic, or religious purposes for the benefit of its members, which may also be extended to others.b. The purposes listed in this subsection may be carried out directly by the society, or indirectly through subsidiary corporations or affiliated organizations.2. A society may adopt laws and regulations for the government of the society, the admission of its members, and the management of its affairs. A society may amend its laws and regulations, and has other powers as necessary and incidental to carrying into effect the objects and purposes of the society.90 Acts, ch 1148, §6, 2012 Acts, ch 1023, §112Referred to in 512B.13SUBCHAPTER IIMEMBERSHIP512B.7Qualifications for membership.1. In its laws or regulations, a society shall at minimum specify all of the following:a. Eligibility standards for each membership class. If benefits are provided on the lives of children, the minimum age for adult membership shall be set at not less than age fifteen and not greater than age twenty-one.b. The process for admission to membership for each membership class.c. The rights and privileges of each membership class. Only benefit members shall have the right to vote on the management of the insurance affairs of the society.2. A society may also admit social members. A social member shall have no voice or vote in the management of the insurance affairs of the society.3. Membership rights in a society are personal to the member and are not assignable.1990 Acts, ch 1148, §7512B.8Location of office, meetings, communications to members, grievance procedures.1. The principal office of a domestic society shall be located in this state. The meetings of its supreme governing body may be held anywhere the society has at least one subordinate lodge, or in another location as determined by the supreme governing body, and all business transacted at a meeting held out of state shall be as valid in all respects as if the meeting were held in this state. The minutes of the proceedings of the supreme governing body and of the board of directors shall be in the English language.2.a. A society may provide in its laws for an official publication in which any notice, report, or statement required by law to be given to members, including notice of election, may be published. Such required reports, notices, and statements shall be printed conspicuously in the publication. If the records of a society show that two or more members have the same mailing address, an official publication mailed to one member is deemed to be mailed to all members at the same address unless a member requests a separate copy.b. Not later than June 1 of each year, a synopsis of the society’s annual statement providing an explanation of the facts concerning the condition of the society disclosed in the annual statement shall be printed and mailed to each benefit member of the society or, in lieu of mailing, the synopsis may be published in the society’s official publication.3. A society may provide in its laws or regulations for grievance or complaint procedures for members.1990 Acts, ch 1148, §8512B.9Personal liability.1. The officers and members of the supreme governing body or any subordinate body of a society are not personally liable for any benefits provided by a society.2.a. A person may be indemnified and reimbursed by a society for expenses reasonably incurred by, and liabilities imposed upon, the person in connection with or arising out of a proceeding, whether civil, criminal, administrative, or investigative, or a threat of action in which the person is or may be involved by reason of the person being a director, officer, employee, or agent of the society or of any other legal entity or position which the person served in any capacity at the request of the society.b. However, a person shall not be so indemnified or reimbursed for either of the following:(1) In relation to any matter to which the person is finally adjudged to be or have been guilty of breach of a duty as a director, officer, employee, or agent of the society.(2) In relation to any matter which has been made the subject of a compromise settlement.c. However, if the person acted in good faith for a purpose the person reasonably believed to be in or not opposed to the best interests of the society and, in addition, in a criminal proceeding, had no reasonable cause to believe that the conduct was unlawful, paragraph “b”, subparagraphs (1) and (2), do not apply. The determination whether the conduct of the person met the standard required in order to justify indemnification and reimbursement in relation to any matter described in paragraph “b”, subparagraph (1) or (2), may only be made by the supreme governing body by a majority vote of a quorum consisting of persons who were not parties to the proceeding or by a court of competent jurisdiction. The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of no contest, as to a person, does not in itself create a conclusive presumption that the person met or did not meet the standard of conduct required in order to justify indemnification and reimbursement. The right of indemnification and reimbursement is not exclusive of other rights to which a person may be entitled as a matter of law and shall inure to the benefit of the person’s heirs, executors, and administrators.3. A society may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the society, or who is or was serving at the request of the society as a director, officer, employee, or agent of any other legal entity affiliated with the society against any liability asserted against the person and incurred by the person in any such capacity or arising out of the person’s status in relation to the society, whether or not the society would have the power to indemnify the person against such liability under this section.4. A volunteer serving without compensation, a director, officer, employee, or member of a society, is not liable, and no cause of action may be brought, for damages resulting from the exercise of judgment or discretion in connection with the duties or responsibilities of that person for the society unless the act or omission alleged to be an exercise of judgment or discretion involved willful or wanton misconduct.1990 Acts, ch 1148, §9; 2008 Acts, ch 1032, §66512B.10Waiver.The laws of the society may provide that a subordinate body, or any of its subordinate officers or members, do not have the power or authority to waive any of the provisions of the laws of the society. A waiver prohibition provision is binding on the society and every member and beneficiary of a member.1990 Acts, ch 1148, §10SUBCHAPTER IIIGOVERNANCE512B.11Organization.A domestic society organized on or after January 1, 1991, shall be formed as follows:1. Seven or more citizens of the United States, a majority of whom are citizens of this state, who desire to form a fraternal benefit society, may sign and file with the secretary of state and commissioner of insurance an original or copy of a document containing, at minimum, the following:a. The proposed corporate name of the society, which shall not so closely resemble the name of any other society or insurance company as to be misleading or confusing.b. The purposes for which the society is being formed and the mode in which its corporate powers are to be exercised. The purposes shall not include more liberal powers than are granted by this chapter.c. The names and residences of the incorporators.d. The names, residences, and official titles of all the officers, trustees, directors, or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which officers shall be elected by the supreme governing body, or board of directors, which election shall be held not later than one year from the date of issuance of the permanent certificate of authority.2. The articles of incorporation, duly certified copies of the society’s regulations and laws, copies of all proposed forms of certificates, applications, and circulars to be issued by the society, and a bond conditioned upon the return to applicants of the advance premiums if the organization is not completed within one year shall be filed with the commissioner of insurance, who may require further information as the commissioner deems necessary. The bond with sureties approved by the commissioner shall be in an amount, not less than three hundred thousand dollars nor more than one million five hundred thousand dollars, as required by the commissioner. All documents filed are to be in the English language. If the purposes of the society conform to the requirements of this chapter and all provisions of the law have been complied with, the commissioner shall so certify, retain and file the articles of incorporation, and furnish the incorporators a preliminary certificate of authority authorizing the society to solicit members as provided in this chapter.3. A preliminary certificate of authority granted under this section is not valid after one year from its date or after a further period, not exceeding one year, as may be authorized by the commissioner upon cause shown, unless the five hundred applicants required in this section have been secured and the organization has been completed as provided in this chapter. The articles of incorporation and all other proceedings become void in one year from the date of the preliminary certificate of authority, or at the expiration of the extended period, unless the society has completed its organization and received a certificate of authority to do business as provided in this chapter.4. Upon receipt of a preliminary certificate of authority from the commissioner, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates, and shall issue to each applicant a receipt for the amount so collected. A society shall not incur a liability other than for the return of advance premiums, shall not issue a certificate, nor pay, allow, offer, or promise to pay or allow, a benefit to any person until all of the following conditions are satisfied:a. Actual bona fide applications for benefits have been secured on not less than five hundred applicants, and any necessary evidence of insurability has been furnished to and approved by the society.b. At least ten subordinate lodges have been established into which the five hundred applicants have been admitted.c. A list of the applicants has been submitted to the commissioner, under oath of the president or secretary, or corresponding officer of the society, giving the applicants’ names and addresses, the date each applicant was admitted, the name and number of the subordinate lodge of which each applicant is a member, the amount of benefits to be granted, and the premiums for the benefits.d. It has been shown to the commissioner, by sworn statement of the treasurer, or corresponding officer of the society, that at least one thousand applicants have each paid in cash at least one regular monthly premium, which premiums in the aggregate shall amount to at least three hundred thousand dollars. Advance premiums shall be held in trust during the period of organization and if the society has not qualified for a certificate of authority within the time permitted by this section, each premium shall be returned to the respective applicant.5. The commissioner may make an examination and require further information as the commissioner deems advisable. Upon presentation of satisfactory evidence that the society has complied with all applicable provisions of law, the commissioner shall issue to the society a certificate of authority and the society is then authorized to transact business pursuant to this chapter. A certificate of authority is prima facie evidence of the existence of the society at the date of the certificate. The commissioner shall cause a record of each certificate of authority to be made. A certified copy of the record shall be accepted in evidence with like effect as the original certificate of authority.6. An incorporated society authorized to transact business in this state on January 1, 1991, is not required to reincorporate. A certified copy of the current articles of incorporation of an existing society shall be filed with the commissioner and the commissioner may request additional records as the commissioner deems necessary before issuing a certificate of authority to an existing society.90 Acts, ch 1148, §11, 2013 Acts, ch 90, §153512B.12Amendments to laws.1. A domestic society may amend its laws in accordance with the provisions of its laws by action of its supreme governing body at any regular or special meeting or, if its laws so provide, by referendum. A referendum may be held in accordance with the provisions of the society’s laws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members, or by the vote of local lodges. A society may provide for voting by mail. An amendment submitted for adoption by referendum shall not be adopted unless, within six months from the date of submission of the referendum, a majority of the members voting have signified their consent to the amendment by one of the methods specified in this subsection.2. An amendment to the laws of a domestic society shall not take effect unless approved by the commissioner. The commissioner shall approve an amendment if the commissioner finds that it has been duly adopted and is not inconsistent with the laws of this state or with the character, objects, and purposes of the society. An amendment shall be considered approved, unless the commissioner disapproves the amendment in writing, within thirty days after the filing of the amendment. The disapproval of the commissioner shall be in writing and mailed to the secretary or corresponding officer of the society at its principal office. If the commissioner disapproves an amendment, the reasons for disapproval shall be stated in the written notice.3. Within ninety days from the approval of an amendment by the commissioner, the amendment, or a synopsis of it, shall be furnished to all members of the society either by mail or by publication in full in the official publication of the society. The affidavit of an officer of the society or of anyone authorized by the society to mail an amendment or synopsis of an amendment, stating facts which demonstrate compliance with this subsection, is prima facie evidence that the amendment or synopsis has been furnished to the addressees.4. A foreign or alien society authorized to do business in this state shall file with the commissioner a duly certified copy of all amendments of its laws within ninety days after their enactment.5. Printed copies of the laws as amended, certified by the secretary, or corresponding officer of the society, are prima facie evidence of the legal adoption of the laws and amendments.1990 Acts, ch 1148, §12512B.13Institutions.A society may create, maintain, and operate, or may establish organizations to operate, not-for-profit institutions to further the purposes permitted by section 512B.6, subsection 1, paragraph “a”, subparagraph (2). The institutions may furnish services free or at a reasonable charge. Any real or personal property owned, held, or leased by the society for this purpose shall be reported in every annual statement. A not-for-profit institution so established is a charitable institution with all the rights, benefits, and privileges given to charitable institutions under the Constitution and laws of the State of Iowa. The commissioner may adopt appropriate rules and reporting requirements.90 Acts, ch 1148, §13, 2006 Acts, ch 1010, §139, 2012 Acts, ch 1023, §153512B.14Reinsurance.1. A domestic society may, by a reinsurance agreement, cede any individual risk or risks in whole or in part to an insurer, other than another fraternal benefit society, having the power to make such reinsurance agreements and authorized to do business in this state, or if not so authorized, one which is approved by the commissioner; but a society shall not reinsure substantially all of its insurance in force without the written permission of the commissioner. It may take credit for the reserves on ceded risks to the extent reinsured, but credit shall not be allowed as an admitted asset or as a deduction from liability, to a ceding society for reinsurance made, ceded, renewed, or otherwise becoming effective after January 1, 1991, unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding society under the contract or contracts reinsured without diminution because of the insolvency of the ceding society.2. Notwithstanding the limitation in subsection 1, a society may reinsure the risks of another society in a consolidation or merger approved by the commissioner under section 512B.15.1990 Acts, ch 1148, §14512B.15Consolidations and mergers.1. A domestic society may consolidate or merge with a domestic society, foreign society, or society chartered under the laws of Canada or a Canadian province or territory, by complying with this section. The society shall file with the commissioner all of the following:a. A certified copy of the written contract containing in full the terms and conditions of the consolidation or merger.b. A sworn statement by the president and secretary, or corresponding officers of each society, showing the financial condition of the society on a date fixed by the commissioner.c. A certificate of each officer submitting a sworn statement pursuant to paragraph “b”, duly verified, that the consolidation or merger contract has been approved by a two-thirds vote of the supreme governing body of each society, the vote having been conducted at a regular or special meeting of each such body, or, if the society’s laws so permit, by mail.d. Evidence that at least sixty days prior to the action of the supreme governing body of each society to approve the consolidation or merger contract, the text of the contract has been furnished to all members of each society either by mail or by publication in full in the official publication of each society.2. If the commissioner finds that the contract is in conformity with this section, that the financial statements are correct, and that the consolidation or merger is just and equitable to the members of each society, the commissioner shall approve the contract and issue a certificate to that effect. Upon the commissioner’s approval, the contract shall be in full force and effect unless a society which is a party to the contract is incorporated under the laws of another state. In that event the consolidation or merger shall not become effective unless and until it has been approved as provided by the laws of the other state and a certificate of approval has been filed with the commissioner of this state or, if the laws of the other state contain no equivalent provision for issuing a certificate of consolidation or merger, then the consolidation or merger shall not become effective unless and until it has been approved by the commissioner of the other state and a certificate conforming with the laws of this state has been filed with the commissioner. If the contract is not approved it shall be inoperative, and the fact of submission and its contents shall not be disclosed by the commissioner. For the purposes of this subsection, “state” includes Canada and Canadian provinces and territories.3. Upon the consolidation or merger becoming effective, all the rights, franchises, and interests of the consolidated or merged societies in and to every kind of property, real, personal, or mixed, belonging to the societies shall be vested in the successor society without any other instrument, except that conveyances of real property may be evidenced by proper deeds. The title to real property or an interest in real property, vested under the laws of this state in any of the societies consolidated or merged, shall not revert or be in any way impaired by reason of the consolidation or merger, but shall vest absolutely in the successor society.4. The affidavit of an officer of the society or of a person authorized by the society to mail a notice or document, stating that the notice or document has been duly addressed and mailed, is prima facie evidence that the notice or document has been furnished the addressees.1990 Acts, ch 1148, §15; 1991 Acts, ch 97, §56Referred to in 512B.14512B.15AConversion of fraternal benefit society into a mutual life insurance company.A domestic fraternal benefit society may be converted and licensed as a mutual life insurance company by compliance with all the requirements of the general insurance laws for mutual life insurance companies. A plan of conversion shall be prepared in writing by the board of directors setting forth in full the terms and conditions of conversion. The affirmative vote of two-thirds of all members of the supreme governing body at a regular or special meeting is necessary for the approval of the plan of conversion. A conversion shall not take effect unless and until approved by the commissioner. The commissioner may give approval for the conversion if the commissioner finds that the proposed change is in conformity with the requirements of law and not prejudicial to the certificate holders of the society.1990 Acts, ch 1148, §16SUBCHAPTER IVCONTRACTUAL BENEFITS512B.16Benefits.1. A society may provide any or all of the following contractual benefits in any form:a. Death benefits.b. Endowment benefits.c. Annuity benefits.d. Temporary or permanent disability benefits.e. Hospital, medical, or nursing benefits.f. Monument or tombstone benefits to the memory of deceased members.g. Other benefits authorized for life insurers and which are not inconsistent with this chapter.2. A society shall specify in its regulations those persons who may be issued, or covered by, the contractual benefits in subsection 1, consistent with providing benefits to members and their dependents. A society may provide benefits on the lives of children under the minimum age for adult membership upon application of an adult person.1990 Acts, ch 1148, §17Referred to in 512B.2, 512B.6512B.17Beneficiaries.1. The owner of a benefit contract may change the beneficiary or beneficiaries in accordance with the laws or regulations of the society unless the owner waives this right by specifically requesting in writing that the beneficiary designation be irrevocable. A society may, through its laws or regulations, limit the scope of beneficiary designations and shall provide that a revocable beneficiary shall not have or obtain a vested interest in the proceeds of a certificate until the certificate has become due and payable in conformity with the benefit contract.2. A society may make provision for the payment of funeral benefits to the extent of the portion of a payment under a certificate which reasonably appears to be due to a person equitably entitled to the benefit by reason of having incurred expense occasioned by the burial of the member. However, the portion so paid shall not exceed the sum of one thousand dollars.3. If, at the death of a person insured under a benefit contract, there is no lawful beneficiary to whom the proceeds are payable, the amount of the benefit, except to the extent that funeral benefits may be paid pursuant to subsection 2, shall be payable to the estate of the deceased insured the same as other property not exempt. However, if the owner of the certificate is other than the insured, the proceeds are payable to the owner.1990 Acts, ch 1148, §18512B.18Benefits not attachable.Money or other benefit, charity, relief, or aid to be paid, provided, or rendered by a society, is not liable to attachment, garnishment, or other process, or to be seized, taken, appropriated, or applied by any legal or equitable process or operation of law to pay a debt or liability of a member or beneficiary, or any other person who may have a derivative right, either before or after payment by the society, except as provided in sections 627.11 and 627.12.1990 Acts, ch 1148, §19512B.19The benefit contract.1. A society authorized to do business in this state shall issue to each owner of a benefit contract a certificate specifying the amount of benefits provided pursuant to the benefit contract. The certificate, together with any riders or endorsements attached to the certificate, the laws of the society, the application for membership, the application for insurance and declaration of insurability, if any, signed by the applicant, and all amendments, constitute the benefit contract, as of the date of issuance, between the society and the owner, and the certificate shall so state. A copy of the application for insurance and declaration of insurability, if any, shall be endorsed upon or attached to the certificate. Statements on the application are representations and not warranties. A waiver of this provision is void.2. Additions or amendments to the laws of a society duly made or enacted subsequent to the issuance of the certificate, bind the owner and the beneficiaries, and govern and control the benefit contract in all respects the same as though the additions or amendments had been made before and were in force at the time of the application for insurance, except that an addition or amendment shall not destroy or diminish benefits which the society contracted to give the owner as of the date of issuance.3. A person upon whose life a benefit contract is issued before the person attains the age of majority is bound by the terms of the application and certificate and by all the laws and regulations of the society to the same extent as though the person had attained the age of majority at the time of application.4.a. A society shall provide in its laws that if its reserves as to all or any class of certificates become impaired, its supreme governing body or board of directors may require that there be paid by the owners to the society the amount of the owners’ equitable proportion of the deficiency as ascertained by its governing body or board, and that if the payment is not made either of the following will apply:(1) The required payment or assessment shall stand as an indebtedness against the certificate and draw interest not to exceed the rate specified for certificate loans under the certificates.(2) In lieu of or in combination with subparagraph (1), the owner may accept a proportionate reduction in benefits under the certificate.b. The society may specify the manner of the election and which alternative is to be presumed if no election is made.5. Copies of any of the documents mentioned in this section, certified by the secretary or corresponding officer of the society, shall be received in evidence of the terms and conditions of the documents.6. A certificate shall not be delivered or issued for delivery in this state unless a copy of the form has been filed with the commissioner in the manner provided for like policies issued by life insurers in this state. A life, accident, health, or disability insurance certificate and an annuity certificate issued on or after one year from January 1, 1991, shall meet the standard contract provision requirements not inconsistent with this chapter for like policies issued by life insurers in this state, except that a society may provide for a grace period for payment of premiums of one full month in its certificates. The certificate shall also contain a provision stating the amount of premiums which are payable under the certificate and a provision reciting or setting forth the substance of any sections of the society’s laws or regulations in force at the time of issuance of the certificate which, if violated, will result in the termination or reduction of benefits payable under the certificate. If the laws of the society provide for expulsion or suspension of a member, the certificate shall also contain a provision that any member expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentation in the application for membership or insurance, may maintain the certificate in force by continuing payment of the required premium.7. A benefit contract issued on the life of a person below the society’s minimum age for adult membership may provide for transfer of control of ownership to the insured at an age specified in the certificate. A society may require approval of an application for membership in order to effect this transfer, and may provide in all other respects for the regulation, government, and control of such certificates and the rights, obligations, and liabilities incident to, or connected with, the benefit contract. Ownership rights prior to a transfer shall be specified in the certificate.8. A society may specify the terms and conditions on which benefit contracts may be assigned.90 Acts, ch 1148, §20, 2012 Acts, ch 1023, §113Referred to in 512B.2, 512B.22512B.20Nonforfeiture benefits, cash surrender values, certificate loans, and other options.1. For certificates issued before January 1, 1991, the value of every paid-up nonforfeiture benefit and the amount of any cash surrendered value, loan, or other option granted shall comply with chapter 512, Code 1989.2. For certificates issued on or after January 1, 1991, for which reserves are computed on the commissioner’s 1980 standard mortality table, or any more recent table made applicable to life insurers, every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted shall not be less than the corresponding amount ascertained in accordance with the laws of this state applicable to life insurers issuing policies containing like benefits based upon the same tables.1990 Acts, ch 1148, §21SUBCHAPTER VFINANCIAL REQUIREMENTS512B.21Investments.A society shall invest the society’s funds only as authorized by the laws of this state for the investment of assets of life insurers and subject to the same limitations. A foreign or alien society permitted or seeking to do business in this state which invests its funds in accordance with the laws of the state or nation in which the foreign or alien society is incorporated, shall be held to meet the requirements of this section for the investment of funds. 1990 Acts, ch 1148, §222023 Acts, ch 36, §7Referred to in 512B.21A
| SUBCHAPTER I | |
| STRUCTURE AND PURPOSE | |
| 512B.1 | Scope of chapter. |
| 512B.2 | Definitions. |
| 512B.3 | Fraternal benefit societies — defined. |
| 512B.4 | Lodge system. |
| 512B.5 | Representative form of government. |
| 512B.6 | Purposes and powers. |
| SUBCHAPTER II | |
| MEMBERSHIP | |
| 512B.7 | Qualifications for membership. |
| 512B.8 | Location of office, meetings, communications to members, grievance procedures. |
| 512B.9 | Personal liability. |
| 512B.10 | Waiver. |
| SUBCHAPTER III | |
| GOVERNANCE | |
| 512B.11 | Organization. |
| 512B.12 | Amendments to laws. |
| 512B.13 | Institutions. |
| 512B.14 | Reinsurance. |
| 512B.15 | Consolidations and mergers. |
| 512B.15A | Conversion of fraternal benefit society into a mutual life insurance company. |
| SUBCHAPTER IV | |
| CONTRACTUAL BENEFITS | |
| 512B.16 | Benefits. |
| 512B.17 | Beneficiaries. |
| 512B.18 | Benefits not attachable. |
| 512B.19 | The benefit contract. |
| 512B.20 | Nonforfeiture benefits, cash surrender values, certificate loans, and other options. |
| SUBCHAPTER V | |
| FINANCIAL REQUIREMENTS | |
| 512B.21 | Investments. |
| 512B.21A | Required reserves. |
| 512B.22 | Funds. |
| SUBCHAPTER VI | |
| REGULATION | |
| 512B.23 | Valuation. |
| 512B.24 | Reports. |
| 512B.25 | Annual license — renewal. |
| 512B.26 | Examination of societies — no adverse publications. |
| 512B.27 | Foreign or alien society — admission. |
| 512B.28 | Injunction — liquidation — receivership of domestic society. |
| 512B.29 | Suspension, revocation, or refusal of license of foreign or alien society. |
| 512B.30 | Standing. |
| 512B.31 | Licensing of agents. Repealed by 2001 Acts, ch 16, §36, 37. |
| 512B.32 | Unfair methods of competition and unfair and deceptive acts and practices. |
| SUBCHAPTER VII | |
| MISCELLANEOUS | |
| 512B.33 | Service of process. |
| 512B.34 | Review. |
| 512B.35 | False or fraudulent statements. |
| 512B.36 | Exemption of certain societies. |
Section amended
512B.21ARequired reserves.A society incorporated on or after July 1, 1993, shall have in cash, or in securities which are authorized for investment purposes for insurance companies pursuant to section 512B.21, surplus in an amount not less than five million dollars.1993 Acts, ch 88, §14512B.22Funds.1. All assets shall be held, invested, and disbursed for the use and benefit of the society and a member or beneficiary shall not have or acquire individual rights in the society’s assets or become entitled to an apportionment on the surrender of any part of the society’s assets, except as provided in the benefit contract.2. A society may create, maintain, invest, disburse, and apply any special fund or funds necessary to carry out any purpose permitted by the laws of the society.3. A society may, pursuant to resolution of its supreme governing body, establish and operate one or more separate accounts and issue contracts on a variable basis, subject to the law regulating life insurers establishing equivalent accounts and issuing equivalent contracts. To the extent the society deems it necessary in order to comply with any applicable federal or state laws, regulations, or rules, the society may adopt special procedures for the conduct of the business and affairs of a separate account; may, for persons having beneficial interests in the account, provide special voting and other rights, including without limitation, special rights and procedures relating to investment policy, investment advisory services, selection of certified public accountants, and selection of a committee to manage the business and affairs of the account; and may issue contracts on a variable basis to which section 512B.19, subsections 2 and 4 shall not apply.1990 Acts, ch 1148, §23SUBCHAPTER VIREGULATION512B.23Valuation.1. Standards of valuation for certificates issued before January 1, 1991, are those provided by chapter 512, Code 1989.2.a. The minimum standards of valuation for certificates issued on or after January 1, 1991, shall be based on the following tables:(1) For certificates of life insurance, the commissioner’s 1980 standard ordinary mortality table or any more recent table made applicable to life insurers.(2) For annuity and pure endowment certificates, for total and permanent disability benefits, for accidental death benefits and for noncancelable accident and health benefits, the tables authorized for use by life insurers in this state.b. Paragraph “a”, subparagraphs (1) and (2) are under valuation methods and standards, including interest assumptions, in accordance with the laws of this state applicable to life insurers issuing policies containing like benefits.3. The commissioner may, in the commissioner’s discretion, accept another standard for valuation if the commissioner finds that the reserves produced by the other standard will not be less in the aggregate than reserves computed in accordance with the minimum valuation standards prescribed by subsection 2. The commissioner may, in the commissioner’s discretion, vary the standards of mortality applicable to all benefit contracts on substandard lives or other extra hazardous lives by any society authorized to do business in this state.4. A society, with the consent of the commissioner of insurance of the state of domicile of the society and under conditions which the commissioner may impose, may establish and maintain reserves on its certificates in excess of the reserves otherwise required, but the contractual rights of a benefit member shall not be affected by the excess reserves.90 Acts, ch 1148, §24, 2012 Acts, ch 1023, §114Referred to in 512B.24512B.24Reports.Reports shall be filed in accordance with this section.1. A society transacting business in this state, on or before March 1 annually, unless for cause shown the time has been extended by the commissioner, shall file with the commissioner a true statement of its financial condition, transactions, and affairs for the preceding calendar year and shall pay a fee of fifty dollars. The statement may be in general form and content as approved by the national association of insurance commissioners for fraternal benefit societies and shall be supplemented by additional information as adopted by rule of the commissioner.2. As part of the annual statement, a society shall, on or before March 1, file with the commissioner of insurance a valuation of its certificates in force on the last preceding December 31. However, the commissioner may, for cause shown, extend the time for filing the valuation for not more than two calendar months. The valuation shall be done in accordance with the standards specified in section 512B.23. The valuation and underlying data shall be certified by a qualified actuary or, at the expense of the society, verified by the actuary of the department of insurance of the state of domicile of the society.3. A society failing to file the annual statement in the form and within the time provided by this section shall forfeit one hundred dollars for each day during which the default continues, and, upon notice by the commissioner to that effect, the society’s authority to do business in this state shall cease while the default continues.1990 Acts, ch 1148, §25; 1992 Acts, ch 1162, §17512B.25Annual license — renewal.The authority of a society to transact business in this state may be renewed annually. A license terminates on the first day of June following issuance or renewal. A society shall submit annually on or before March 1 a completed application for renewal of its license. For each license or renewal the society shall pay the commissioner a fee of fifty dollars. A society that fails to timely file an application for renewal shall pay an administrative penalty of five hundred dollars to the treasurer of state for deposit as provided in section 505.7. A duly certified copy or duplicate of the license is prima facie evidence that the licensee is a fraternal benefit society within the meaning of this chapter.1990 Acts, ch 1148, §26; 1992 Acts, ch 1162, §18; 2006 Acts, ch 1117, §55; 2007 Acts, ch 126, §90; 2009 Acts, ch 181, §71512B.26Examination of societies — no adverse publications.1. The commissioner, or the commissioner’s designee, may examine a domestic, foreign, or alien society transacting or applying for admission to transact business in this state in the same manner as authorized for examination of a domestic, foreign, or alien insurer. Requirements of notice and an opportunity to respond before findings are made public as provided in the laws regulating insurers are also applicable to the examination of a society.2. The expense of each examination and of each valuation, including compensation and actual expense of examiners, shall be paid by the society examined or whose certificates are valued, upon statements furnished by the commissioner.1990 Acts, ch 1148, §27512B.27Foreign or alien society — admission.A foreign or alien society shall not transact business in this state without a license issued by the commissioner. A society desiring admission to this state shall substantially comply with the requirements and limitations of this chapter applicable to domestic societies. A society may be licensed to transact business in this state upon filing with the commissioner all of the following:1. A duly certified copy of its articles of incorporation.2. A copy of its bylaws, certified by its secretary or a corresponding officer.3. A power of attorney to the commissioner of insurance as prescribed in section 512B.33.4. A statement of its business under oath of its president and secretary or corresponding officers in a form prescribed by the commissioner, duly verified by an examination made by the supervising insurance official of its state of domicile, satisfactory to the commissioner.5. Certification from the proper official of its state of domicile that the society is legally incorporated and licensed to transact business in that state.6. Copies of its certificate forms.7. Other information the commissioner requires.8. A showing that its assets are invested in accordance with this chapter.1990 Acts, ch 1148, §28512B.28Injunction — liquidation — receivership of domestic society.1. When the commissioner upon investigation finds that a domestic society has exceeded its powers; failed to comply with a provision of this chapter; failed to fulfill a contract in good faith; failed to maintain a membership of not less than four hundred after an existence of one year or more; or conducted business fraudulently or in a manner hazardous to its members, creditors, the public, or the business, the commissioner shall notify the society of the deficiency or deficiencies and state in writing the reasons for the commissioner’s dissatisfaction. The commissioner shall at once issue a written notice to the society requiring that the deficiency or deficiencies which exist be corrected. After the notice of deficiency the society has a thirty-day period in which to comply with the commissioner’s request for correction, and if the society fails to comply the commissioner shall notify the society of a finding of noncompliance and require the society to show cause on or before a date named why it should not be enjoined from carrying on any business until the violation complained of has been corrected, or why an action seeking other legal or equitable relief should not be commenced against the society.2. If by the date named to show cause the society does not present good and sufficient reasons why it should not be so enjoined or why an action should not be commenced, the commissioner may present the facts relating to the society to the attorney general who shall commence an action to enjoin the society from transacting business or other action requested by the commissioner.3. The court in which an action is commenced pursuant to subsection 2 shall notify the officers of the society of a hearing. If after a full hearing it appears that the society should be enjoined or liquidated or a receiver appointed, or other legal or equitable relief awarded, the court shall enter the necessary order. A society so enjoined does not have the authority to do business unless and until all of the following conditions are satisfied:a. The commissioner finds that the violation complained of has been corrected.b. The costs of the action, including reasonable attorney fees for the state’s attorneys and expenses related to the case in which the injunction was entered, have been paid by the society if the court finds that the society was in default as alleged.c. The court has dissolved its injunction.d. The commissioner has reinstated the certificate of authority of the society.4. If the court orders the society liquidated, it shall be enjoined from carrying on any further business, and the receiver of the society shall proceed at once to take possession of the books, papers, money, and other assets of the society and, under the direction of the court, proceed to close the affairs of the society and to distribute its funds to those entitled to them.5. If a receiver is to be appointed for a domestic society, the court shall appoint the commissioner of insurance as the receiver.6. The provisions of this section relating to hearing by the commissioner, action by the attorney general at the request of the commissioner, hearing by the court, injunction, and receivership are applicable to a society which voluntarily determines to discontinue business.1990 Acts, ch 1148, §29512B.29Suspension, revocation, or refusal of license of foreign or alien society.1. When the commissioner upon investigation finds that a foreign or alien society transacting or applying to transact business in this state has exceeded its powers; failed to comply with a provision of this chapter; failed to fulfill a contract in good faith; or conducted its business fraudulently or in a manner hazardous to its members or creditors or the public, the commissioner shall notify the society of the deficiency or deficiencies and state in writing the alleged facts or circumstances constituting a deficiency. The commissioner shall at once issue a written notice to the society requiring that the deficiency or deficiencies which exist be corrected on or before thirty days from entry of the notice of deficiency. After notice the society has a thirty-day period in which to comply with the commissioner’s request for correction, and if the society fails to comply the commissioner shall notify the society of a finding of noncompliance and require the society to show cause on or before a date named why its license should not be suspended, revoked, or refused. If, on or before the date named, the society does not present good and sufficient reason why its license to do business in this state should not be suspended, revoked, or refused, the commissioner may suspend or refuse the license of the society to do business in this state until evidence satisfactory to the commissioner is furnished to the commissioner that the suspension or refusal should be withdrawn or the commissioner may revoke the license of the society to do business in this state.2. A society whose license to do business in this state is suspended, revoked, or refused pursuant to subsection 1 shall continue in good faith all contracts made in this state during the time the society was legally authorized to transact business in this state. Lack of authority to transact business within the state is not a defense to an action by a person against the society to enforce a contract entered into by the society without compliance with this chapter, or prior applicable law.1990 Acts, ch 1148, §30512B.30Standing.A petition or complaint for injunction against a domestic, foreign, or alien society, or lodge shall not be recognized in a court of this state unless made by the attorney general upon request of the commissioner.1990 Acts, ch 1148, §31512B.31Licensing of agents.Repealed by 2001 Acts, ch 16, §36, 37. See chapter 522B. 512B.32Unfair methods of competition and unfair and deceptive acts and practices.A society is subject to chapter 507B relating to unfair insurance trade practices. However, chapter 507B does not apply to or affect the right of a society to determine its eligibility requirements for membership, and does not apply to or affect the offering of benefits exclusively to members or persons eligible for membership in the society by a subsidiary corporation or affiliated organization of a society.1990 Acts, ch 1148, §33SUBCHAPTER VIIMISCELLANEOUS512B.33Service of process.1. A society authorized to do business in this state shall file in the office of the commissioner a power of attorney and an agreement in writing that service of process in any action or proceeding against the society may be served on the commissioner and shall be of the same legal force and validity as if served upon the society, and that the authority shall continue in force so long as any liability remains outstanding in this state. A copy of the power of attorney, certified by the commissioner, shall be deemed sufficient evidence of the appointment and shall be admitted in evidence with the same force and effect as the original.2. Service of process made on the commissioner as the agent for service of process shall be made as provided in section 505.30. A society shall not be required to file its answer, pleading, or defense in less than thirty days from the date the commissioner sends a copy of the service of process to the society by certified mail as provided in section 505.30. Legal process shall not be made upon a society except in the manner provided in this section.90 Acts, ch 1148, §34, 2003 Acts, ch 91, §23, 2018 Acts, ch 1018, §6Referred to in 512B.27512B.34Review.All decisions and findings of the commissioner made under this chapter are subject to review pursuant to chapter 17A.1990 Acts, ch 1148, §35512B.35False or fraudulent statements.1. It shall be unlawful for a person knowingly to make a false or fraudulent statement or representation in or relating to an application for membership or for the purpose of obtaining money from or a benefit in a society.2. It shall be unlawful for a person to willfully make a false or fraudulent statement in a verified report or declaration under oath required or authorized by this chapter, or of a material fact or thing contained in a sworn statement concerning the death or disability of an insured for the purpose of procuring payment of a benefit named in the certificate.3. It shall be unlawful for a person to solicit membership for, or in any manner to assist in procuring membership in, a society not licensed to do business in this state.1990 Acts, ch 1148, §36; 2004 Acts, ch 1110, §34512B.36Exemption of certain societies.1. This chapter does not affect or apply to any of the following:a. Grand or subordinate lodges of societies, orders, or associations now doing business in this state which provide benefits exclusively through local or subordinate lodges.b. Orders, societies, or associations which admit to membership only persons engaged in one or more crafts or hazardous occupations, in the same or similar lines of business, insuring only their own members and their families, and the spouses’ societies or spouses’ auxiliaries to such orders, societies, or associations.c. Domestic societies which limit their membership to employees of a particular city or town, designated firm, business house, or corporation which provide for a death benefit of not more than four hundred dollars or disability benefits of not more than three hundred fifty dollars to any person in any one year, or both.d. Domestic societies or associations of a purely religious, charitable, or benevolent description, which provide for a death benefit of not more than four hundred dollars or for disability benefits of not more than three hundred fifty dollars to any one person in any one year, or both.2. A society or association described in subsection 1, paragraph “a” or “d”, which provides for death or disability benefits for which benefit certificates are issued, and any such society or association included in paragraph “d” which has more than one thousand members, is not exempt from this chapter but shall comply with all requirements of this chapter.3. A society which is exempt from the requirements of this chapter, except a society described in subsection 1, paragraph “b”, shall not give or allow, or promise to give or allow to any person any compensation for procuring new members.4. A society which provides for benefits in case of death or disability resulting solely from accident, and which does not obligate itself to pay natural death or sick benefits, has all of the privileges and is subject to all the applicable provisions of this chapter and rules adopted by the commission pursuant to this chapter except that the provisions relating to medical examination, valuations of benefit certificates, and incontestability, do not apply to such a society.5. The commissioner may require from a society, by examination or otherwise, information that will enable the commissioner to determine whether the society is exempt from this chapter.6. A society exempt under this section, is also exempt from all other provisions of the general insurance laws of this state.1990 Acts, ch 1148, §37Referred to in 512B.3