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CHAPTER 58-35

FARM MUTUAL INSURERS

58-35-1      Application of chapter.
58-35-2      Farm mutual insurers subject to chapter.
58-35-3      "State mutual insurer" defined.
58-35-4      "County mutual insurer" defined--Continuation of prior business in noncontiguous counties.
58-35-5      Incorporators--Number and property ownership required for state mutual insurer.
58-35-6      Incorporators--Number and property ownership required for county mutual insurer.
58-35-7      Declaration of intent to incorporate, filing--Proposed articles of incorporation, execution.
58-35-8      Articles of incorporation--Contents.
58-35-9      Fee for filing articles of incorporation.
58-35-10      Articles of incorporation--Approval and endorsement by attorney general.
58-35-11      Misleading name of proposed corporation--Rejection by director.
58-35-12      Repealed.
58-35-13      Transaction of business without certificate of authority as misdemeanor.
58-35-14      Amendment of articles of incorporation.
58-35-15      Qualifications of state mutual insurer for certificate of authority.
58-35-16      Qualifications of county mutual insurer for certificate of authority.
58-35-17      Certificate of authority to insure against hail--Required qualifications to obtain.
58-35-18      Issuance of certificate of authority--Continuation--Termination.
58-35-19      Fees for certificate of authority.
58-35-20      Suspension or revocation of certificate of authority--Grounds.
58-35-21      Bylaws--Making and approval--Modification.
58-35-22      Contents of bylaws.
58-35-23      Filing of bylaws--Disapproval by director.
58-35-24      Minimum number of members.
58-35-25      Directors--Election--Term of office.
58-35-26      Qualification of directors.
58-35-27      Officers--Election--Term of office.
58-35-28      Bonds of treasurer and secretary.
58-35-29      Property insurable by farm mutual.
58-35-29.1      Living expenses and fire department service charges incidental to casualty insurance.
58-35-30      Insurance of property not owned by member or spouse prohibited--Exceptions.
58-35-31      Repealed.
58-35-32      Insurance on churches, schools, and community buildings.
58-35-32.1      Liability insurance issued by state insurers--Medical and disability benefits--Snowmobiles.
58-35-33      Withdrawal from membership--Surrender of policy for cancellation--Payment of obligations.
58-35-34      Repealed.
58-35-35      Maximum amount of insurance on single risk.
58-35-36      "Single risk" defined.


58-35-37      Cash premium or assessment plan for transacting business.
58-35-38      Cash premium plan--Collection of premiums.
58-35-39      Cash premium plan--Special assessment in case of inadequacy.
58-35-40      Assessment plan insurance--Levy of assessments before or after liability incurred--Collection of initial amount before effective date of insurance.
58-35-41      Application for insurance to be in writing--Advance cash payments.
58-35-42      Application and policy forms filed with director--Disapproval.
58-35-43      Rates--Filing with director not required--Discrimination prohibited.
58-35-44      Reinsurance.
58-35-45      Reinsurance corporation formed by insurers--Procedure.
58-35-46      Risk limitation inapplicable to organization of county mutual insurers for reinsurance purposes.
58-35-47      Investment of funds authorized.
58-35-48      Funds expended for educational purposes--Maximum amount--Statement in annual report.
58-35-49      Claim for loss--Notice in writing--Arbitration.
58-35-50      Directors' and officers' liability for failure to pay claims.
58-35-51 to 58-35-53.      Repealed.
58-35-54      Annual statement of affairs--Contents and filing.
58-35-55      Failure to file annual statement--Suspension or revocation of certificate of authority.
58-35-56      Annual statement--Presentation at meeting of members.
58-35-57      Application of other provisions.
58-35-58      Provisions exclusive.
58-35-59      Financial reporting standards.
58-35-60      Merger of farm mutual insurers--Plan of merger.
58-35-61      Policyholders to vote on merger plan--Notice of vote.
58-35-62      Approval of plan of merger by majority of voters.
58-35-63      Execution and acknowledgment of articles of merger--Contents of articles.
58-35-64      Filing plan of merger and articles of merger--Approval by director--Reasons for denying hearing.
58-35-65      Notification of disapproval of plan.
58-35-66      Examination of articles of merger by attorney general--Submission to secretary of state.
58-35-67      Approval of articles of merger by secretary of state--Endorsement--Filing--Certificate of merger.
58-35-68      Merger effective upon issuance of certificate.
58-35-69      Surviving corporation exists separate from parties to merger.
58-35-70      Rights, privileges, immunities, and franchises of surviving or new corporation.
58-35-71      Liabilities and obligations of surviving or new corporation.
58-35-72      Articles of incorporation of surviving corporation amended by plan of merger.
58-35-73      Dissolution of farm mutual insurer.
58-35-74      Rights of dissenting members and proxy voters not applicable to mergers.
58-35-75      Division of farm mutual insurers--Plan.
58-35-76      Members to vote on plan of division.
58-35-77      Articles of division of farm mutual--Articles of incorporation--Filing--Application of chapter provisions.
58-35-78      Annual audit--Independent audit--Report--Extension.


     58-35-1.   Application of chapter. This chapter applies to:
             (1)      All domestic mutual hail, fire, and other casualty insurers of farm property and stock and rural buildings formed before July 1, 1966, and immediately prior to said date lawfully transacting business under sections 31.2701 through 31.2812, 31.2918, 31.3001 through 31.3010, and amendments thereto, of the South Dakota Code of 1939; and
             (2)      All insurers formed after June 30, 1966, under this chapter.

Source: SL 1966, ch 111, ch 17, § 1 (1).


     58-35-2.   Farm mutual insurers subject to chapter. All insurers described in § 58-35-1 may be referred to as "farm mutual insurers."

Source: SL 1966, ch 111, ch 17, § 1 (2).


     58-35-3.   "State mutual insurer" defined. An insurer authorized to insure property throughout the state, but including personal property temporarily removed therefrom, is a "state mutual insurer."

Source: SL 1966, ch 111, ch 17, § 2 (1).


     58-35-4.   "County mutual insurer" defined--Continuation of prior business in noncontiguous counties. An insurer authorized to insure only property located in the county of its principal office and in those counties contiguous to the county of its principal office in this state, but including personal property temporarily removed therefrom, is a "county mutual insurer." However, those county farm mutuals insuring property located in noncontiguous counties as of August 25, 1978, may continue to insure property located in those noncontiguous counties served as of August 25, 1978, upon registration prior to January 1, 1980, with the director. The director of the Division of Insurance may permit a county farm mutual which otherwise does not meet the requirements of this section to insure property located in counties which would be considered noncontiguous to its home office subsequent to August 25, 1978, if, after a hearing, he finds that the violation of this section occurs because of a merger or consolidation consummated subsequent to August 25, 1978, as a result of bona fide negotiations begun prior to August 25, 1978, provided that the hearing is held prior to January 1, 1980.

Source: SL 1966, ch 111, ch 17, § 2 (2); SL 1979, ch 341, § 22.


     58-35-5.   Incorporators--Number and property ownership required for state mutual insurer. One hundred or more individuals residing in this state, each of whom is at least twenty-one years of age, who collectively own farm property as referred to in § 58-35-29 valued at not less than five hundred thousand dollars which they desire to insure, and each of whom owns farm or ranch land situated in this state valued at not less than five thousand dollars, may incorporate as a state mutual insurer.

Source: SL 1966, ch 111, ch 17, § 7 (1).


     58-35-6.   Incorporators--Number and property ownership required for county mutual insurer. Twenty-five or more individuals residing in this state, each of whom is an adult and owns farm or ranch land valued at not less than five thousand dollars located in the county of the principal office of the proposed insurer, or any county contiguous to the county of the principal office and who collectively own, in such counties, farm property referred to in § 58-35-29 valued at not less than one hundred twenty-five thousand dollars which they desire to insure, may incorporate as a county mutual insurer.

Source: SL 1966, ch 111, ch 17, § 7 (2); SL 1979, ch 341, § 23.


     58-35-7.   Declaration of intent to incorporate, filing--Proposed articles of incorporation, execution. The individuals proposing to form a farm mutual insurer as referred to in § 58-35-5 or 58-35-6 shall file with the director:
             (1)      A declaration of their intention to form such a corporation signed by at least one hundred incorporators if a proposed state mutual insurer, or by at least twenty-five incorporators if a proposed county mutual insurer; and
             (2)      The original and two copies with original signatures of the proposed articles of incorporation signed by three or more of the incorporators and notarized.

Source: SL 1966, ch 111, ch 17, § 8 (1); SL 1993, ch 369, § 1.


     58-35-8.   Articles of incorporation--Contents. The articles of incorporation required by § 58-35-7 shall state:
             (1)      The name of the corporation, which shall include the words "farm mutual" and if a county mutual insurer the name of the county of its principal place of business;
             (2)      If a county mutual insurer, the name of the counties in which the corporation intends to do business and the address of its principal business office;
             (3)      If a state mutual insurer, the location of its principal business office, which must be located in this state;
             (4)      The purposes for which the corporation is formed;
             (5)      If it will transact business on a cash premium plan or an assessment plan;
             (6)      The duration of its existence, which may be perpetual;
             (7)      The number of its directors, which shall be not less than five nor more than eleven; the names and addresses of the persons constituting the initial board of directors who shall serve until the first annual meeting of the members, and until their successors are elected and qualified; and
             (8)      The names, residences and addresses of the incorporators and the value of their property desired to be insured.

Source: SL 1966, ch 111, ch 17, § 8 (2).


     58-35-9.   Fee for filing articles of incorporation. At the time of filing the proposed articles of incorporation, the incorporators shall submit a fee of twenty-five dollars payable to the division and the applicable filing fee payable to the secretary of state.

Source: SL 1966, ch 111, ch 17, § 8 (3); SL 1993, ch 369, § 2.


     58-35-10.   Articles of incorporation--Approval and endorsement by attorney general. After the director approves the articles of incorporation, he shall submit the proposed articles of incorporation to the attorney general for examination. If the attorney general finds that the articles comply with the provisions of this chapter, and the Constitution and laws of the United States and of this state, he shall endorse his approval thereon and return the proposed articles to the director. The director shall submit the original and two copies to the secretary of state for approval. If the secretary of state finds that the articles of incorporation comply with the corporate laws, he shall endorse his approval thereon, retain the original and return a copy to the incorporators and a copy to the division.

Source: SL 1966, ch 111, ch 17, § 9 (1); SL 1993, ch 369, § 3.


     58-35-11.   Misleading name of proposed corporation--Rejection by director. If the director deems the name of the proposed corporation to be so similar to one already appropriated by another company as to be likely to mislead the public, he shall reject the name applied for and shall notify the incorporators thereof.

Source: SL 1966, ch 111, ch 17, § 9 (2).


     58-35-12.   Repealed by SL 1993, ch 369, § 4


     58-35-13.   Transaction of business without certificate of authority as misdemeanor. The corporation shall not transact business as an insurer until it has received a certificate of authority as provided in this chapter. Violation of this section is a Class 2 misdemeanor.

Source: SL 1966, ch 111, ch 17, § 9 (4); SL 1978, ch 359, § 2.


     58-35-14.   Amendment of articles of incorporation. A farm mutual insurer may, by a two-thirds vote of those present in person or, if authorized by the bylaws, by proxy, at any annual meeting, or at any special meeting of members called for that purpose, amend its articles of incorporation to extend its corporate existence or in any particular within the scope of this chapter, by causing amended articles to be filed in the same form and manner as required for original articles of incorporation. The amended articles of incorporation shall be signed only by the president and secretary of the corporation. Notice of the proposed amendment, or a summary of the changes to be effected thereby, shall be contained in the notice given of such annual or special meeting, and any number of amendments may be submitted to the members, and voted upon by them, at one meeting.

Source: SL 1966, ch 111, ch 17, § 10; SL 1967, ch 129, § 4.


     58-35-15.   Qualifications of state mutual insurer for certificate of authority. When applying for an original certificate of authority, a state mutual insurer must be otherwise qualified therefor under this title, and it must have received acceptable applications from one hundred persons, each for substantial insurance, aggregating at least five hundred thousand dollars; and such applicants must have given to the insurer the obligations referred to in § 58-35-41, or paid the premium required, subject to the insurer qualifying to transact insurance.

Source: SL 1966, ch 111, ch 17, § 11 (2).


     58-35-16.   Qualifications of county mutual insurer for certificate of authority. When applying for an original certificate of authority, a county mutual insurer must be otherwise qualified therefor under this title, and it must have received acceptable applications from twenty-five persons for substantial insurance, aggregating at least one hundred thousand dollars; and such applicants must have given to the insurer the obligations referred to in § 58-35-41, or paid the premium required, subject to the insurer qualifying to transact insurance.

Source: SL 1966, ch 111, ch 17, § 11 (1).


     58-35-17.   Certificate of authority to insure against hail--Required qualifications to obtain. When applying for an original certificate of authority to insure growing crops against loss by hail, the insurer must be otherwise qualified therefor under this title, and it must have received applications for such insurance from not less than one hundred persons owning in the aggregate not less than five thousand acres of grain; and each such applicant must have given to the insurer the obligations referred to in § 58-35-41, or paid the premium required subject to the insurer qualifying to transact insurance.

Source: SL 1966, ch 111, ch 17, § 11 (3).


     58-35-18.   Issuance of certificate of authority--Continuation--Termination. Upon application, the director shall issue such a certificate of authority to every insurer qualified therefor under this chapter. The certificate of authority shall continue, unless revoked or otherwise terminated.

Source: SL 1966, ch 111, ch 17, § 12 (1); SL 2004, ch 297, § 2.


     58-35-19.   Fees for certificate of authority. The insurer shall pay to the director the fees specified in § 58-2-29 for each issuance and renewal of its certificate of authority.

Source: SL 1966, ch 111, ch 17, § 12 (2).


     58-35-20.   Suspension or revocation of certificate of authority--Grounds. A certificate of authority shall be subject to suspension or revocation by the director for violation of or noncompliance with any law of this state.

Source: SL 1966, ch 111, ch 17, § 12 (3).


     58-35-21.   Bylaws--Making and approval--Modification. The initial board of directors of a farm mutual insurer shall adopt such bylaws as may be deemed necessary for the management of its affairs. The bylaws shall be subject to the approval of the insurer's members at their next succeeding meeting by a two-thirds vote of those present in person or, if authorized by the bylaws, by proxy. The members shall otherwise have the power to make, modify, and revoke bylaws.

Source: SL 1966, ch 111, ch 17, § 13.


     58-35-22.   Contents of bylaws. The bylaws of a farm mutual insurer shall provide:
             (1)      The extent of liability of each member for payment of the expenses and losses of the insurer;
             (2)      The time when obligations of members for losses and expenses become due;
             (3)      The terms of office of the directors; at least part of the directors shall be elected at each annual meeting of members, and the term of any director shall not be longer than three years;
             (4)      The date of the annual meeting of the members. Each member shall be permitted to cast at least one vote, either in person or, if authorized by the bylaws, by proxy, for each director to be elected and upon any other matter;
             (5)      The method of selecting directors in event of resignation, disability, or death; and
             (6)      The method of giving notice of annual and special meetings of members.

Source: SL 1966, ch 111, ch 17, § 14 (1).


     58-35-23.   Filing of bylaws--Disapproval by director. The insurer shall promptly file with the director two certified copies of its bylaws and all amendments thereto. The director at the time of filing or at any time thereafter may disapprove any bylaw provision deemed by him to be unlawful, unreasonable, inadequate, unfair, or detrimental to the proper interests or protection of the insurer's members or any class thereof.

Source: SL 1966, ch 111, ch 17, § 14 (2); SL 1993, ch 369, § 5.


     58-35-24.   Minimum number of members. The total membership of the insurer shall at all times be not less than the number of persons required by § 58-35-5 or 58-35-6 to incorporate such an insurer.

Source: SL 1966, ch 111, ch 17, § 15.


     58-35-25.   Directors--Election--Term of office. Directors of a farm mutual insurer shall be elected by its members by ballot for terms not to exceed three years, and shall hold office until their respective successors are elected and qualified.

Source: SL 1966, ch 111, ch 17, § 18 (1).


     58-35-26.   Qualification of directors. No individual shall serve as a director of a farm mutual insurer unless a member of the insurer.

Source: SL 1966, ch 111, ch 17, § 18 (2).


     58-35-27.   Officers--Election--Term of office. The board of directors of an insurer shall elect from their number a president and vice-president. The board shall also elect a secretary and treasurer or a secretary-treasurer of the insurer. Officers shall hold their offices for one year, and until their successors are elected and qualified.

Source: SL 1966, ch 111, ch 17, § 19.


     58-35-28.   Bonds of treasurer and secretary. The treasurer and secretary of an insurer shall each give bond to the insurer for the faithful performance of his duties, in such amount as is designated by the board of directors. Any such bond shall be issued by an authorized corporate surety.

Source: SL 1966, ch 111, ch 17, § 20.


     58-35-29.   Property insurable by farm mutual. A farm mutual insurer shall only insure the following described property against loss or damage by fire or other casualty:
             (1)      Farm dwellings and buildings, including the usual contents therein, livestock, farm machinery, growing crops, and other forms of farm property;
             (2)      Dwellings designed for occupancy by not over two families, including the usual contents thereof, and private structures;
             (3)      Churches, schools, and community buildings including the usual contents thereof;
             (4)      The usual and customary possessions of the occupants of multi-family dwellings; and
             (5)      Personal property used in a solely-owned business activity conducted on the insured premises, including property held for resale if the insured property is covered by reinsurance.
     For purposes of this chapter any policy written by a farm mutual insurer is considered a personal lines policy.

Source: SL 1966, ch 111, ch 17, § 3 (1); SL 1979, ch 341, § 24; SL 1992, ch 60, § 2; SL 1993, ch 370, § 1; SL 2004, ch 297, § 3.


     58-35-29.1.   Living expenses and fire department service charges incidental to casualty insurance. A farm mutual insurer may, in connection with policies covering property insured under § 58-35-29, afford coverage for additional expenses or loss of use resulting from fire or other casualty rendering the insured property unusable, and coverage for an insured's liability, assumed by contract or agreement, for fire department service charges.

Source: SL 1972, ch 267; SL 1993, ch 370, § 2.


     58-35-30.   Insurance of property not owned by member or spouse prohibited--Exceptions. No insurer may insure any property not owned by a member or by his spouse except for the following:
             (1)      Property described in subdivision 58-35-29(3); and
             (2)      Personal property in the care, custody, and control of a member or his spouse.

Source: SL 1966, ch 111, ch 17, § 3 (2); SL 1992, ch 356.


     58-35-31.   Repealed by SL 1993, ch 370, § 3


     58-35-32.   Insurance on churches, schools, and community buildings. No contract of insurance covering any church, school, or community building referred to in § 58-35-29 shall be invalid because any director or officer of the insurer was or is a trustee, director, agent, custodian, or manager or in any way in control, supervision, or management of any or all of the property so insured.

Source: SL 1966, ch 111, ch 17, § 29.


     58-35-32.1.   Liability insurance issued by state insurers--Medical and disability benefits--Snowmobiles. A state mutual insurer may issue policies of insurance insuring against legal liability for the death, injury, or disability of any human being, or for damage to property, excluding liability, loss, or expense resulting from or incidental to the ownership, maintenance, or use of aircraft or motor vehicles normally operated, intended to be operated, or designed primarily for use upon highways, roads, or streets; and provision may be included in such policies for medical, hospital, surgical, and disability benefits to injured persons and funeral and death benefits to dependents, beneficiaries, or personal representatives of persons killed, irrespective of legal liability of the insured, when issued as incidental coverage with or supplemental to such liability insurance. A state mutual insurer may insure snowmobiles whether used on or off premises, but the insurance covering off premises usage shall comply with chapter 32-35 and must be offered at a limit specified in a separately written and approved endorsement or policy.

Source: SL 1970, ch 272; SL 1991, ch 406.


     58-35-33.   Withdrawal from membership--Surrender of policy for cancellation--Payment of obligations. Any member of an insurer may withdraw therefrom by surrendering his policy to the insurer for cancellation and paying all obligations then owing by him to the insurer.

Source: SL 1966, ch 111, ch 17, § 17 (1).


     58-35-34.   Repealed by SL 2004, ch 297, § 6


     58-35-35.   Maximum amount of insurance on single risk. The maximum amount of insurance which an insurer shall retain on a single risk, after deduction of applicable reinsurance, shall not exceed ten percent of the admitted assets of the insurer or ten thousand dollars, whichever is the larger amount.

Source: SL 1966, ch 111, ch 17, § 4 (1).


     58-35-36.   "Single risk" defined. For the purposes of § 58-35-35, a "single risk" as to insurance against fire and hazards other than windstorm, earthquake, or other catastrophic perils, includes all properties insured by the same insurer which are reasonably susceptible to loss or damage from the same fire or the same occurrence of such other hazard insured against.

Source: SL 1966, ch 111, ch 17, § 4 (2).


     58-35-37.   Cash premium or assessment plan for transacting business. An insurer may transact business on either a cash premium plan or on an assessment plan as provided for in its articles of incorporation or bylaws.

Source: SL 1966, ch 111, ch 17, § 6 (1).


     58-35-38.   Cash premium plan--Collection of premiums. If transacting business on the cash premium plan, the insurer shall collect from each member before or at the effective date of the member's insurance the premium in such amount as the insurer deems will be adequate to cover losses and expenses incurred during the term of such insurance, or for a period of one year from the inception date of the policy, if same be written for a longer period than one year.

Source: SL 1966, ch 111, ch 17, § 6 (2).


     58-35-39.   Cash premium plan--Special assessment in case of inadequacy. An insurer transacting business on the cash premium plan shall provide in its bylaws and policies for special assessment of its members if the cash premium charged is found to be inadequate to pay losses and expenses currently incurred. The bylaws shall provide that the amount which can be so assessed in any one policy year shall not be less than one nor more than six times the premium charged on each member's policy at the annual rate for a term of one year.

Source: SL 1966, ch 111, ch 17, § 6 (4).


     58-35-40.   Assessment plan insurance--Levy of assessments before or after liability incurred--Collection of initial amount before effective date of insurance. If transacting business on the assessment plan, the insurer will depend for the payment of losses and expenses principally upon assessments levied upon members either before or after such losses or expenses have been incurred. This provision shall not be construed to prevent any such insurer from collecting from each member such initial amount as it may deem proper on or before the effective date of the member's insurance; nor to prohibit the accumulation of surplus or unallocated funds.

Source: SL 1966, ch 111, ch 17, § 6 (3).


     58-35-41.   Application for insurance to be in writing--Advance cash payments. An insurer shall require a written application from each person desiring insurance. If the insurer is transacting business on the assessment plan, the applicant shall at the time of application give his obligation to the insurer for the payment of losses and expenses as provided in the insurer's bylaws, and make such advance payment in cash as the insurer may require.

Source: SL 1966, ch 111, ch 17, § 26.


     58-35-42.   Application and policy forms filed with director--Disapproval. All forms of application for insurance and of policies proposed to be used by an insurer shall be filed with the director at least thirty days in advance of any such use. The director shall disapprove any such form found by him to be unlawful, illegible, or misleading. An insurer shall not use any such form after it has received the director's notice of disapproval setting forth the reasons therefor.

Source: SL 1966, ch 111, ch 17, § 27.


     58-35-43.   Rates--Filing with director not required--Discrimination prohibited. A farm mutual insurer is not required to file any of its insurance rates with the director. No such rate shall discriminate between subjects of insurance having substantially the same insuring, exposure, and underwriting characteristics.

Source: SL 1966, ch 111, ch 17, § 28.


     58-35-44.   Reinsurance. A farm mutual insurer may cede reinsurance to any other farm mutual insurer authorized to insure the risks ceded and to other authorized property insurers or reinsurers, and may accept reinsurance from other farm mutual insurers. A farm mutual insurer may also reinsure with a reinsurer authorized pursuant to chapter 58-14.

Source: SL 1966, ch 111, ch 17, § 5; SL 1993, ch 371.


     58-35-45.   Reinsurance corporation formed by insurers--Procedure. Any number, not less than five, of farm mutual insurers organized under this chapter may form a corporation for the purpose of reinsuring the risks of the members, on the mutual plan. The insurers proposing to form such reinsurance company shall file with the director a declaration of their intention to form such a corporation, together with proposed articles of incorporation, substantially in the manner and form provided by §§ 58-35-7 to 58-35-9, inclusive, which proposed articles of incorporation, and amendments thereof, shall be treated substantially in the manner and form provided by §§ 58-35-10 to 58-35-14, inclusive. The bylaws of such reinsurance company shall contain provisions for the government of such company and the conduct of its business substantially in the manner and form provided by §§ 58-35-22 and 58-35-23.

Source: SL 1966, ch 111, ch 17, § 32; SL 1976, ch 318.


     58-35-46.   Risk limitation inapplicable to organization of county mutual insurers for reinsurance purposes. The risk limitations set forth in §§ 58-35-35 and 58-35-36 shall not apply to reinsurance companies formed under § 58-35-45. All reinsurance contracts of such reinsurer shall be submitted to the director for his approval, and he shall disapprove any reinsurance contracts which he finds would be contrary to the interests of the policyholders of the ceding insurers.

Source: SL 1966, ch 111, ch 17, § 32.


     58-35-47.   Investment of funds authorized. The directors of a farm mutual insurer may invest the insurer's funds or any part of the insurer's funds in any of the following:
             (1)      Bonds or other securities issued by the United States government or by any agency or instrumentality of the United States government, or by any United States government-sponsored enterprise;
             (2)      Bonds or other obligations the payment of the interest and principal of which is assumed or guaranteed by the United States government or any agency or instrumentality of the United States government, or by any United States government-sponsored enterprise;
             (3)      General obligation bonds or warrants of this state or of any other state of the United States, or of any of the political subdivisions or other taxing districts of this state or any other state;
             (4)      Certificates of deposit in any bank wherein the deposits are insured by the federal deposit insurance corporation up to the amount to which such insurance protection applies;
             (5)      Shares or savings accounts of savings and loan and building and loan associations to the extent that such an account is insured by the federal savings and loan insurance corporation;
             (6)      When authorized by a majority vote of its members present at a duly called and held meeting of members, and with the consent of the director, in a home office building and the land on which such building is situated;
             (7)      With the approval of the director of the Division of Insurance, in the preferred stock of any solvent corporation existing under the laws of the United States of America, or any state of the United States and in the common stock of any other solvent insurer;
             (8)      Bonds, notes, or other obligations issued by any federal land bank, federal intermediate credit bank, bank for cooperatives, or any or all of the federal farm credit banks;
             (9)      With the approval of the director of the Division of Insurance, in common stocks, mutual funds and exchange traded funds consisting of common stocks, not to exceed twenty percent of the company's admitted assets. No individual common stock may exceed five percent of the company's admitted assets;
             (10)      Money market funds which would qualify as an investment pursuant to § 58-27-101;
             (11)      With the approval of the director of the Division of Insurance, in an insurance agency;
             (12)      Investments set forth in § 58-27-103 if the aggregate value of the investments pursuant to that section do not exceed ten percent of the farm mutual's total admitted assets and do not exceed the limitation set forth in § 58-27-53;
             (13)      With the approval of the director of the Division of Insurance, in corporate bonds, convertible bonds, preferred stocks, or other fixed income mutual funds, or exchange traded funds consisting of income securities issued by corporations. No issuer may exceed five percent of admitted assets and no one mutual fund or exchange traded fund may exceed twenty percent of admitted assets. All individual holdings must be rated A3 or better by Moody's Investor Service or rated A- or better by Standard & Poor's Corporation. All mutual funds or exchange traded funds must have an average credit quality of A3 or better as rated by Moody's Investor Service or A- or better as rated by Standard & Poor's Corporation.
If a farm mutual insurer has invested its funds or any part of its funds pursuant to subdivisions 58-35-47(9) or (13) and the farm mutual insurer is determined to be in a financially hazardous condition, the director may order the farm mutual insurer to reinvest those funds pursuant to chapters 58-4 or 58-29B.

Source: SL 1966, ch 111, ch 17, § 23; SL 1967, ch 135, §§ 1, 2; SL 1974, ch 320; SL 1979, ch 37, § 8; SL 1986, ch 423; SL 1987, ch 383; SL 1990, ch 409; SL 1993, ch 372; SL 1994, ch 388; SL 2004, ch 297, § 4; SL 2014, ch 243, § 1.


     58-35-48.   Funds expended for educational purposes--Maximum amount--Statement in annual report. An insurer may spend earnings of the preceding year for educational purposes. A complete and itemized report of such expenditures shall be filed by the insurer as part of its annual report required under § 58-35-54.

Source: SL 1966, ch 111, ch 17, § 24; SL 1993, ch 373.


     58-35-49.   Claim for loss--Notice in writing--Arbitration. Every member who shall sustain loss or damage for which the company is liable, shall immediately notify in writing the secretary, or in his absence the president, of the company specifying the property destroyed or damaged and the time and cause thereof. The secretary, or in his absence the president, of the company shall forthwith inspect and adjust the loss or cause it to be inspected and adjusted in such manner as may be provided by the bylaws. In case of the inability of the parties to agree upon the amount of such loss or damage, the claimant and the company shall each choose a disinterested party who shall constitute a board of arbitration to settle such loss, and in case the arbitrators cannot agree they shall choose a third person to act with them and such board of arbitration shall have power to administer oaths, examine witnesses, and determine all matters in dispute and the decision of such board shall be final unless an interested party thereto appeals to a court within sixty days thereafter.

Source: SL 1966, ch 111, ch 17, § 30.


     58-35-50.   Directors' and officers' liability for failure to pay claims. The directors or officers of an insurer are liable in their individual capacity to the person sustaining an insured loss, if they willfully refuse or neglect to make an assessment and collect the obligations owing to the insurer in accordance with the provisions of this chapter.

Source: SL 1966, ch 111, ch 17, § 31.


     58-35-51 to 58-35-53.   Repealed by SL 2004, ch 297, §§ 7 to 9


     58-35-54.   Annual statement of affairs--Contents and filing. The president and secretary of every insurer, on or before the first day of March of each year, shall prepare, affirm under oath, affix the corporate seal thereto, and file with the director, on forms furnished by the director, an annual statement as of December thirty-first of the preceding calendar year including:
             (1)      The names of the president and secretary;
             (2)      The date of the annual meeting;
             (3)      The amount of insurance in force;
             (4)      The number of members;
             (5)      The number of assessments made during the year;
             (6)      The amount paid in losses during the year;
             (7)      The amount of the losses claimed and not paid, with the reason for nonpayment;
             (8)      The number of members cancelled or nonrenewed during the year;
             (9)      The number of new members admitted during the year;
             (10)      The expenses during the year;
             (11)      The amount of money on hand;
             (12)      The amount and character of the insurer's assets;
             (13)      The amount of the insurer's liabilities; and
             (14)      Such other information as the director may require.

Source: SL 1966, ch 111, ch 17, § 21 (1); SL 2004, ch 297, § 5.


     58-35-55.   Failure to file annual statement--Suspension or revocation of certificate of authority. The director may suspend or revoke the certificate of authority of any insurer failing to file its annual statement.

Source: SL 1966, ch 111, ch 17, § 21 (2).


     58-35-56.   Annual statement--Presentation at meeting of members. The annual statement of the insurer, as required to be filed with the director under § 58-35-54, shall be presented at the next annual meeting.

Source: SL 1966, ch 111, ch 17, § 16.


     58-35-57.   Application of other provisions. The following chapters and sections of this title apply to farm mutual insurers to the extent not inconsistent with the express provisions of this chapter and the reasonable implications of the express provisions:
             (1)      Chapter 58-1. Definitions and General Provisions;
             (2)      Chapter 58-2. Division of Insurance;
             (3)      Chapter 58-3. Examination of Insurers and Insurance Producers;
             (4)      Chapter 58-4. Enforcement Powers and Proceedings (except § 58-4-7);
             (5)      Chapter 58-4A. Insurance Fraud;
             (6)      Sections 58-5-134 to 58-5-140, inclusive. Organization and General Powers of Insurers;
             (7)      Chapter 58-10. Insurable Interest;
             (8)      Chapter 58-11. Form and Contents of Insurance Policies;
             (9)      Chapter 58-12. Insurance Claims and Benefits (except § 58-12-3);
             (10)      Chapter 58-17D. Standards for Utilization Review for Property and Casualty Insurers;
             (11)      Chapter 58-33. Unfair Trade Practices;
             (12)      Chapter 58-30. Insurance Producers;
             (13)      Chapter 58-29B. Insurers Supervision, Rehabilitation and Liquidation;
             (14)      Chapter 58-43. Independent Audit of Insurers (except § 58-43-2).

Source: SL 1966, ch 111, ch 17, § 33; SL 1967, ch 129, § 5; SL 1977, ch 417; SL 1979, ch 341, § 14; SL 1991, ch 407, § 1; SL 2001, ch 286, § 216; SL 2001, ch 288, § 1; SL 2003, ch 255, § 1; SL 2008, ch 274, § 1.


     58-35-58.   Provisions exclusive. Nothing in the insurance laws of this state shall be deemed to apply to or govern either directly or indirectly domestic farm mutual insurers except as contained or referred to in this chapter.

Source: SL 1966, ch 111, ch 17, § 1 (3).


     58-35-59.   Financial reporting standards. The financial reporting standards, procedures and accounting principles for farm mutuals are those set forth in the following National Association of Insurance Commissioners' manuals as amended as of December 31, 1993: Annual Statement Instructions, Property and Casualty; Examiner's Handbook; and Accounting Practices and Procedures Manual, Fire and Casualty Insurance Companies. The director may waive any standard, procedure, or accounting principle which the director determines is inapplicable to a farm mutual. The director shall establish a date by which the farm mutuals shall comply with financial reporting standards, procedures, and accounting principles or any amendment to them. The director may promulgate rules, pursuant to chapter 1-26, for the enforcement of this section.

Source: SL 1991, ch 407, § 2; SL 1993, ch 357, § 6.


     58-35-60.   Merger of farm mutual insurers--Plan of merger. Any two or more farm mutual corporations authorized to transact business pursuant to this chapter may merge into one farm mutual corporation pursuant to a plan of merger as provided in this section and §§ 58-35-61 to 58-35-74, inclusive. The board of directors of each corporation, shall, by resolution adopted by each such board, approve a plan of merger setting forth:
             (1)      A statement that the merger is advisable;
             (2)      The names of the corporations proposing to merge, and the name of the corporation into which they propose to merge, to be known as the surviving corporation;
             (3)      The terms and conditions of the proposed merger;
             (4)      The names of the surviving corporation's first board of directors;
             (5)      The surviving corporation's principal office;
             (6)      The manner and basis of converting the assets and liabilities of each corporation into the assets, liabilities, or obligations or other securities of the surviving corporation or of any other corporation, or, in whole or in part, into cash or other property;
             (7)      A statement of any changes in the articles of incorporation of the surviving corporation to be affected by the merger;
             (8)      That the board of directors approves the merger of the corporation into the surviving corporation; and
             (9)      Any other provisions with respect to the proposed merger that are necessary or desirable.

Source: SL 1995, ch 293, § 1.


     58-35-61.   Policyholders to vote on merger plan--Notice of vote. Following the adoption of the resolution approving the plan of merger required by § 58-35-60, a meeting of the policyholders of each of the corporations shall be held to vote upon the proposed merger plan. Written notice of the meeting of the policyholders shall be given to all policyholders, which may be either an annual or special meeting. Written notice shall be given to each policyholder of record whether or not entitled to vote at the meeting, not less than twenty days before the meeting, in the manner provided in §§ 47-1A-701 to 47-1A-747, inclusive, and §§ 47-1A-1601 to 47-1A-1621.3, inclusive, for the giving of notice of meetings of shareholders. Whether the meeting is an annual or special meeting, the notice shall state that the purpose or one of the purposes of the meeting is to consider the proposed plan of merger. A copy of the resolution passed by the board of directors shall be included in or enclosed with the notice.

Source: SL 1995, ch 293, § 2; SL 2005, ch 202, § 26.


     58-35-62.   Approval of plan of merger by majority of voters. At the meeting of the policyholders, the policyholders shall vote on the proposed plan of merger. The plan of merger is approved if the majority of the policyholders present at the meeting vote for the proposed plan of merger. No policyholder may vote by proxy.

Source: SL 1995, ch 293, § 3.


     58-35-63.   Execution and acknowledgment of articles of merger--Contents of articles. If the plan of merger is approved, an original and one exact or conforming copy of the articles of merger shall be executed by each corporation by the chairman of the board of directors of the corporation or by its president or by another of its officers. The articles shall be acknowledged and shall set forth:
             (1)      The plan of merger;
             (2)      The number of votes voted for and against the merger;
             (3)      The terms and conditions of the proposed merger;
             (4)      The names of the surviving corporation's first board of directors;
             (5)      The surviving corporation's principal office;
             (6)      The manner and basis of converting the assets and the liabilities of each corporation into assets, liabilities, obligations, or other securities of the surviving corporation or of any other corporation or, in whole or in part, into cash or other property.

Source: SL 1995, ch 293, § 4.


     58-35-64.   Filing plan of merger and articles of merger--Approval by director--Reasons for denying hearing. If two or more companies propose to merge under the provisions of § 58-35-63 and their membership has approved the plan of merger, the plan of merger shall be filed with the director of the Division of Insurance, accompanied by the articles of merger, and a request for the approval of the plan of merger. The plan shall be approved by the director after a hearing on the plan within a reasonable time unless the director finds that the plan:
             (1)      Is contrary to law;
             (2)      Is inequitable to the policyholders of any domestic insurer involved; or
             (3)      Would substantially reduce the security of and service to be rendered to the policyholders of the domestic insurer.
     The director shall review the plan of merger and may waive any hearing if the director finds the proposed merger does not prejudice the interests of the policyholders of the companies.

Source: SL 1995, ch 293, § 5.


     58-35-65.   Notification of disapproval of plan. If the director of the Division of Insurance does not approve any such plan and agreement, the director shall notify the corporations in writing, specifying the reasons.

Source: SL 1995, ch 293, § 6.


     58-35-66.   Examination of articles of merger by attorney general--Submission to secretary of state. The director of the Division of Insurance, after approving the articles of merger, shall submit the proposed articles of merger to the attorney general for examination. If the attorney general finds that the articles of merger comply with the provisions of §§ 58-35-60 to 58-35-74, inclusive, and the constitution and laws of the United States and of this state, the attorney general shall endorse and return the proposed articles to the director. The director shall submit the original and two copies to the secretary of state for approval.

Source: SL 1995, ch 293, § 7.


     58-35-67.   Approval of articles of merger by secretary of state--Endorsement--Filing--Certificate of merger. Following the delivery of the articles of merger from the director of the Division of Insurance to the secretary of state, the secretary shall, on finding that the articles conform to law, if all required fees have been paid:
             (1)      Endorse the word "filed" on the original and the copy and the month, day, and year of filing;
             (2)      File the original in the secretary's office; and
             (3)      Issue a certificate of merger to which the secretary shall affix the copy.
     The certificate of merger, together with a copy, shall be returned to the surviving corporation or its representative.

Source: SL 1995, ch 293, § 8.


     58-35-68.   Merger effective upon issuance of certificate. Upon the issuance of the certificate of merger by the secretary of state, the merger is effective.

Source: SL 1995, ch 293, § 9.


     58-35-69.   Surviving corporation exists separate from parties to merger. If a merger has been effected pursuant to §§ 58-35-60 to 58-35-74, inclusive:
             (1)      The several corporations to the plan of merger are a single corporation which is that corporation designated in the plan of merger as the surviving corporation;
             (2)      The separate existence of all corporations parties to the plan of merger, except the surviving or new corporation shall cease; and
             (3)      The surviving or new corporation has all the rights, privileges, immunities, and powers and is subject to all the duties and liabilities of a corporation organized under §§ 58-35-60 to 58-35-74, inclusive, and §§ 47-1A-101 to 47-1A-863.3, inclusive, §§ 47-1A-1001 to 47-1A-1021, inclusive, and §§ 47-1A-1201 to 47-1A-1202.6, inclusive.

Source: SL 1995, ch 293, § 10; SL 2005, ch 202, § 27.


     58-35-70.   Rights, privileges, immunities, and franchises of surviving or new corporation. If a merger or consolidation has been effected pursuant to §§ 58-35-60 to 58-35-74, inclusive:
             (1)      The surviving or new corporation thereupon and thereafter possesses all the rights, privileges, immunities, and franchises, of a public as well as of a private nature, of each of the merging corporations;
             (2)      All property, real, personal, and mixed and all debts due on whatever account and any other chose in action and all and every other interest, of or belonging to or due to each of the corporations so merged or consolidated, shall be taken and considered transferred to and vested in the single corporation without further act or deed; and
             (3)      The title to any real estate, or any interest in the real estate, vested in any of the corporations may not revert or be in any way impaired by reason of such merger.

Source: SL 1995, ch 293, § 11.


     58-35-71.   Liabilities and obligations of surviving or new corporation. If a merger or consolidation has been effected pursuant to this chapter:
             (1)      The surviving or new corporation is thenceforth responsible and liable for all the liabilities and obligations of each of the corporations so merged; and
             (2)      Any claim existing or action or proceeding pending by or against any of the corporations may be prosecuted as if the merger had not taken place, or the surviving or new corporation may be substituted in its place.
     Neither the rights of creditors nor any liens upon the property of any such corporation may be impaired by the merger or consolidation.

Source: SL 1995, ch 293, § 12.


     58-35-72.   Articles of incorporation of surviving corporation amended by plan of merger. If a merger has been effected pursuant to §§ 58-35-60 to 58-35-74, inclusive, the articles of incorporation of the surviving corporation shall be deemed to be amended to the extent, if any, the changes in its articles of incorporation are stated in the plan of merger.

Source: SL 1995, ch 293, § 13.


     58-35-73.   Dissolution of farm mutual insurer. A farm mutual insurer may dissolve under the applicable procedures prescribed by the statutes of this state applying to corporations for profit and be subject to any additional requirements found in chapter 58-35.

Source: SL 1995, ch 293, § 14.


     58-35-74.   Rights of dissenting members and proxy voters not applicable to mergers. The provisions of §§ 47-1A-1101 to 47-1A-1108, inclusive, regarding the rights of dissenting members and proxy voting do not apply to mergers of farm mutual insurers pursuant to §§ 58-35-60 to 58-35-74, inclusive.

Source: SL 1995, ch 293, § 15; SL 2005, ch 202, § 28.


     58-35-75.   Division of farm mutual insurers--Plan. Any farm mutual may divide itself into two or more farm mutuals. A written plan of division shall be prepared by the board of directors or by a committee selected by the board for that purpose. The plan of division shall set forth all the terms of the division and the proposed effect of the division on all members of the farm mutual. The plan shall also contain the articles of each new farm mutual being formed, if applicable, and any amendments to the articles of the remaining farm mutual. The applicable provisions of § 58-35-60 apply to the plan of division and to the merger or integration of the divided farm mutual into another farm mutual or farm mutuals.

Source: SL 2005, ch 277, § 1.


     58-35-76.   Members to vote on plan of division. The members of the farm mutual shall vote on the proposed plan of division in the manner provided in §§ 58-35-61 and 58-35-62.

Source: SL 2005, ch 277, § 2.


     58-35-77.   Articles of division of farm mutual--Articles of incorporation--Filing--Application of chapter provisions. The articles of division of a farm mutual, if approved, shall set forth the approved plan and such other information as required by § 58-35-63 and shall be filed and approved as provided for by § 58-35-64. Each part of the plan that contains the articles of a new farm mutual shall be separately filed and recorded as articles of incorporation for such new farm mutual. Any new farm mutual formed pursuant to §§ 58-35-75 to 58-35-77, inclusive, is subject to the provisions of this chapter in the same manner as any other farm mutual.

Source: SL 2005, ch 277, § 3.


     58-35-78.   Annual audit--Independent audit--Report--Extension. Any farm mutual insurer having direct premiums written in this state of more than two million dollars in any calendar year and more than two thousand policyholders or certificate holders of directly written policies nationwide at the end of a calendar year shall have an annual audit by an accountant of the financial statements reporting the financial position and the results of operations. This section also applies to insurers having assumed premiums pursuant to contracts or treaties of reinsurance of two million dollars or more. The director may require insurers with less than two million dollars in direct premiums and less than two thousand policyholders or certificate holders to have independent audits to determine the financial status of the insurer.
     The insurer shall file an audited financial report with the director on or before June first for the year that ended on the immediately preceding December thirty-first. The director may require an insurer to file an audited financial report earlier than June first with ninety days advance notice to the insurer.
     Extensions of the June first filing date may be granted by the director for thirty-day periods upon a showing by the insurer and its accountant to the director that there is good cause for an extension. The request for extension shall be submitted in writing to the director not less than ten days prior to the due date in sufficient detail to permit the director to make an informed decision.

Source: SL 2008, ch 274, § 2.


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