SECTIONS 4010-4019 - California Statutes

INSURANCE CODE

SECTION 4010-4019

4010. A "mutual" insurer is an insurance corporation without
capital stock owned by its policyholders collectively, who have the
right to vote in the election of its directors.

4011. The provisions of Section 36 shall apply to domestic mutual
insurers as well as foreign mutual insurers.

4012. Domestic mutual insurers, incorporating or qualifying to
transact any or all of the classes of insurance designated in
Sections 100 through 123 and 700. 01, shall be subject to all
provisions of this code applicable to other incorporated insurers,
except where otherwise provided. Domestic mutual insurers shall not
be required to have or issue capital stock or shares nor shall they
be required to distribute an annual report to a member other than at
the time of the initial policy issuance or once each year on renewal.
The provisions of Section 1140 shall apply to such an insurer except
that the provisions of the Corporation Law referring to shareholders
or members shall be applied as though such provisions referred to
the policyholders or members of a mutual.

4013. (a) Each policyholder of a domestic mutual insurer, other
than the holder of a reinsurance contract, is a member of the insurer
during the policy period, as defined in the policy or the
declarations page of the policy, with all rights and obligations of
that membership, and the policy shall so specify.
(b) A "tail" or extended reporting policy or endorsement
permitting claims to be reported after the expiration or termination
of the policy period shall not extend the policy period of a "claims
made" policy and all rights and obligations of membership shall cease
upon the expiration or termination of the policy period. If an
insurer has allowed or does allow, by contract, conduct, or
otherwise, the holder of a "tail" or extended reporting policy or
endorsement to have privileges, in whole or in part, identical, or
similar to some or all of the rights of membership, the holder is
nevertheless not deemed a member.
(c) Subdivision (b) and the modifications to subdivision (a) made
by the act adding this subdivision, are declaratory of existing law
and do not affect any existing contract rights.

4014. Any person, government or governmental agency, state or
political subdivision thereof, public or private corporation, board,
association, estate, trustee or fiduciary may be a policyholder
member of a mutual insurer.

4015. With respect to the management, records, and affairs of a
domestic mutual insurer qualified to transact any or all of the
classes of insurance designated in Section 700.01, and except as
otherwise provided in this chapter, a member of such mutual insurer
shall have the same character of rights and relationship as a
stockholder has toward a domestic stock insurer subject to the
provisions of this code.

4016. Each member of a domestic mutual insurer is entitled to one
vote upon each matter coming to a vote at meetings of members.

4016.1. Notice of all meetings of members whether annual or special
shall be given in writing to the members entitled to vote by the
secretary, or an assistant secretary, or other persons charged with
that duty, or if there be no such officer, or in case of his or her
neglect or refusal, by any director or member. At the option of the
insurer the notice may be imprinted on premium notices or receipts or
on both.
A notice may be given by the insurer to any member either
personally, or by mail, or other means of written communication,
charges prepaid, addressed to the member at his or her address
appearing on the books of the insurer, or given by him or her to the
insurer for the purpose of notice. If a member gives no address,
notice shall be deemed to have been given him or her if sent by mail
or other means of written communication addressed to the place where
the principal office of the insurer is situated, or if published at
least once in a newspaper of general circulation in the county in
which the office is located.
Notice of any meeting of members shall be sent to each member
entitled thereto not less than seven days before a meeting, unless
the bylaws provide otherwise.
Notice of any meeting of members shall specify the place, the day,
and the hour of the meeting and the general nature of the business
to be transacted.
Notice of an annual meeting to be held at the time and place
specified shall be sufficiently given if published at least once in
each of four successive weeks in a newspaper of general circulation
in the county in which the principal office of the insurer is
located, and if so published no other notice of the meeting shall be
required.

4016.2. (a) The presence in person or by proxy of 5 percent of the
members of a domestic mutual insurer entitled to vote at any meeting
shall constitute a quorum for the transaction of all business of the
insurer, including but not limited to, the amendment of the articles
of incorporation or bylaws of the insurer, unless otherwise provided
in the articles of incorporation or bylaws of such insurer.
(b) Any required member approval shall be by the affirmative vote
of a number of members which, as to a stock corporation, would
constitute approval of the shareholders (Section 153 of the
Corporations Code) rather than approval of the outstanding shares
(Section 152 of the Corporations Code).

4017. A member shall have the right to vote in person or by his
written proxy filed with the corporate secretary not less than five
days prior to the meeting. No such proxy shall be made irrevocable,
nor be valid beyond the earliest of the following dates:
(a) The date of expiration set forth in the proxy; or
(b) The date of termination of membership; or
(c) Eleven months from the date of execution of the proxy; or
(d) Such time as may be specified in the bylaws, not to exceed
eleven months.

4018. No member's vote upon any proposal to divest the insurer of
its business or assets, or the major part thereof, shall be
registered or taken except in person or by proxy newly executed and
specific as to the matter to be voted upon.

4019. This chapter does not apply to a mutual insurer that has
converted to a mutual legal reserve insurer pursuant to former
Chapter 9 (commencing with Section 10810) of Part 2 of Division 2.
Except for Section 4016.2, this chapter does not apply to (a) a
mutual insurer that has completed proceedings for voluntary
mutualization pursuant to Chapter 13 (commencing with Section 11525)
of Part 2 or (b) a stock life insurer that has converted from a
mutual life insurer, or a mutual holding company or a stock holding
company formed, pursuant to proceedings under Chapter 14 (commencing
with Section 11535) of Part 2.