1997 Minnesota Statutes

CHAPTER 67A. Township mutual companies

     67A.01 Number of members required, property and 
  territory.  

    It shall be lawful for any number of persons, not less than 
 25, residing in adjoining townships in this state, who shall 
 collectively own property worth at least $50,000, to form 
 themselves into a corporation for mutual insurance against loss 
 or damage by the perils listed in section 67A.13.  Any such 
 company shall operate in no more than 150 adjoining townships in 
 the aggregate at the same time; provided, that when any such 
 company confines its operations to one county it may transact 
 business in the whole thereof by so providing in its certificate 
 of incorporation, and provided further that in case of merger of 
 two or more companies having contiguous territories, the 
 surviving company in the merger shall have the right to transact 
 business in the entire territory of the merged companies, but 
 the territory of the surviving company in the merger shall not 
 be larger than 250 townships.  

    HIST: 1967 c 395 art 8 s 1; 1971 c 135 s 1; 1975 c 15 s 1 

     67A.02 Certificate of incorporation.  

    Subdivision 1.    Contents.  The persons who desire to 
 form a township mutual fire insurance company, as defined in 
 section 67A.01, shall make, sign, and acknowledge before some 
 officer competent to take acknowledgments of deeds a certificate 
 of incorporation which shall specify: 

    (1) The name; 

    (2) The location of the principal office; 

    (3) The general nature of the business; 

    (4) The territory in which it desires to transact business; 

    (5) Who may become members; 

    (6) Source from which the corporate funds shall be derived; 

    (7) The class of property it desires to insure; 

    (8) In what board its management shall be vested; 

    (9) The date of its annual meeting; and 

    (10) The corporate existence.  

    It may contain any other lawful provision defining and 
 regulating the powers or business of the corporation, its 
 officers, directors, and members.  

    Subd. 2.    Approval of commissioner required; filing.  
 The certificate of every such corporation shall be presented to 
 the commissioner for approval and, on approving the same, the 
 commissioner shall endorse thereon the approval and the 
 certificate shall then be filed in the commissioner's office and 
 recorded in a book kept therein for that purpose.  Upon the 
 approval of the certificate and the filing of the same with the 
 commissioner, the corporate organization of the incorporation 
 shall be complete.  

    HIST: 1967 c 395 art 8 s 2; 1986 c 444 

     67A.03 Corporate existence.  

    The corporate existence of any township mutual fire 
 insurance company heretofore or hereafter organized may be made 
 perpetual by so providing in its articles of incorporation.  

    HIST: 1967 c 395 art 8 s 3; 1975 c 15 s 2 

     67A.04 Amendments to certificate of incorporation.  

    The certificate of incorporation of any township mutual 
 fire insurance company may be amended in respect to any matter 
 which the original certificate of incorporation might lawfully 
 have contained, or which is authorized by the provisions of 
 sections 67A.01 to 67A.26, by the adoption of a resolution, 
 specifying the proposed amendment, at the regular meeting, or a 
 special meeting called for that expressly stated purpose, by a 
 majority vote of its members present and voting; or by a 
 majority vote of its entire board of directors, within one year 
 after having been thereby duly authorized by a specific 
 resolution duly adopted at such meeting of the members, and by 
 causing the resolution to be embraced in a certificate duly 
 executed by its president and secretary under the corporate seal 
 of the company, if it have one, and approved, filed, and 
 recorded in the manner prescribed by such sections for the 
 approval, filing, and recording of the original certificate.  

    HIST: 1967 c 395 art 8 s 4 

     67A.05 Bylaws. 

    Subdivision 1.    Bylaws required.  The first board of 
 directors shall adopt bylaws, which shall remain effective until 
 and except as amended by the members at any regular or special 
 meeting called therefor.  

    Subd. 2.    Filing of bylaws and amendments thereto.  
 Every township mutual fire insurance company doing business 
 within this state shall be subject to the requirements of 
 section 72A.061, subdivision 2, as to amendments or additions to 
 its bylaws.  

    HIST: 1967 c 395 art 8 s 5; 1987 c 337 s 110 

     67A.06 Powers of corporation. 

    Every corporation formed under the provisions of sections 
 67A.01 to 67A.26, shall have power: 

    (1) to have succession by its corporate name for the time 
 stated in its certificate of incorporation; 

    (2) to sue and be sued in any court; 

    (3) to have and use a common seal and alter the same at 
 pleasure; 

    (4) to acquire, by purchase or otherwise, and to hold, 
 enjoy, improve, lease, encumber, and convey all real and 
 personal property necessary for the purpose of its organization, 
 subject to such limitations as may be imposed by law or by its 
 articles of incorporation; 

    (5) to elect or appoint in such manner as it may determine 
 all necessary or proper officers, agents, boards, and 
 committees, fix their compensation, and define their powers and 
 duties; 

    (6) to make and amend consistently with law bylaws 
 providing for the management of its property and the regulation 
 and government of its affairs; 

    (7) to wind up and liquidate its business in the manner 
 provided by chapter 60B; and 

    (8) to indemnify certain persons against expenses and 
 liabilities as provided in section 300.083.  In applying section 
 300.083 for this purpose, the term "members" shall be 
 substituted for the terms "shareholders" and "stockholders." 

    HIST: 1967 c 395 art 8 s 6; 1969 c 708 s 63; 1975 c 15 s 3; 
 1979 c 152 s 1; 1987 c 337 s 111; 1987 c 384 art 2 s 1; 1989 c 
 209 art 2 s 1 

     67A.07 Principal office.  

    The principal office of a township mutual fire insurance 
 company shall be located in a township or in a city in a 
 township in which the company is authorized to do business.  

    HIST: 1967 c 395 art 8 s 7; 1973 c 123 art 5 s 7; 1975 c 15 s 
 4 

     67A.08 Board of directors.  

    Each company shall choose of its members no less than five, 
 and not more than nine, directors to manage the affairs of the 
 company, who shall hold their office for such period as may be 
 fixed by the bylaws of the company, not exceeding three years, 
 and until their successors are elected and qualified.  

    HIST: 1967 c 395 art 8 s 8 

     67A.09 Officers. 

    Subdivision 1.    How elected or chosen.  The directors 
 shall choose one of their number as president, one as 
 vice-president, and one as secretary; they shall also choose a 
 treasurer, who need not be a member of the board, but must be a 
 member of the company.  They may also choose a manager, who need 
 not be a member of the board, and need not be a member of the 
 company.  The offices of secretary and treasurer may be held by 
 the same person.  

    The board of directors may appoint other officers as it 
 deems necessary for the conduct of business.  

    Subd. 2.    Officers, bond.  The officers and employees 
 of the company shall give such bond to the company in such sum 
 as the directors shall determine.  

    HIST: 1967 c 395 art 8 s 9; 1975 c 15 s 5; 1989 c 130 s 1 

     67A.10 Rights of certain members.  

    Nonresidents owning property in the territory where any 
 such company is authorized to do business may become a member 
 with all the rights thereof except eligibility to office.  

    HIST: 1967 c 395 art 8 s 10; 1975 c 15 s 6 

     67A.11 Annual meeting. 

    Subdivision 1.    Date and fiscal year.  The annual 
 meeting of every such company shall be held before July first in 
 each year, and the fiscal year of the company shall be from the 
 first day of January through the thirty-first day of the 
 following December. 

    Subd. 2.    Annual report.  A full report of the 
 business of the company for the previous fiscal year shall be 
 presented at the annual meeting. 

    Subd. 3.    Annual statement.  (a) On or before March 
 first, following the end of each fiscal year, the president and 
 the secretary shall file with the commissioner a verified 
 statement of the entire business and condition of the company, 
 which statement shall contain such data and information in 
 reference to the business of the preceding fiscal year as shall 
 be required by the commissioner. 

    (b) On or before March 1 of each year, the president and 
 secretary shall also file with the commissioner of revenue a 
 copy of the verified statement required by paragraph (a).  
 Failure to file the statement on or before March 1 will subject 
 the company to a penalty of $10 a day up to a maximum of $200. 

    Subd. 4.    Other statements may be required by 
 commissioner.  The commissioner may at other times require 
 any further statement that the commissioner may deem necessary 
 to be made relating to the business of the company. 

    Subd. 5.    Fees.  Fees to be paid as listed in section 
 60A.14. 

    HIST: 1967 c 395 art 8 s 11; 1975 c 15 s 7,8; 1977 c 244 s 1; 
 1986 c 444; 1987 c 268 art 2 s 18; 1987 c 329 s 21 

     67A.12 Applications. 

    Subdivision 1.    Who may accept.  The president, 
 secretary, treasurer, or chosen manager may accept all 
 applications and sign and issue policies, agreeing in the name 
 of the company to pay all losses and damages, not exceeding the 
 sums named in the policies, sustained by reason of the perils 
 named, for the term therein specified.  

    Subd. 2.    Binders.  Every application for insurance 
 made to any authorized officer or agent, until refused by the 
 proper officer, shall be of the same force and effect as a 
 regularly issued policy and contract of insurance, and from the 
 time of its receipt by an officer or agent, the property 
 specified in the application shall be deemed insured in the same 
 manner and to the same extent as if covered by a regular policy 
 issued according to law and the regulations of the company.  

    Subd. 3.  Repealed, 1975 c 15 s 22 

    Subd. 4.    Policy fee, premium and assessment.  Before 
 the delivery of any policy, the company may collect regular cash 
 premium and policy fee and shall take the written agreement of 
 the insured of even date therewith, which shall be embodied in 
 the application, to pay a pro rata share of losses or damages 
 sustained by any member.  

    Subd. 5.    Term of policy.  The term of policies 
 issued by township mutual fire insurance companies shall not 
 exceed five years.  

    HIST: 1967 c 395 art 8 s 12; 1975 c 15 s 9; 1986 c 444; 1989 c 
 130 s 2 

     67A.13 Types of insurance authorized.  

    A township mutual fire insurance company shall insure only 
 against loss or damage by fire, lightning, explosion, flood, 
 earthquake, theft, vandalism, collapse, upset, overturn, 
 collision, riot, riot attending a strike, civil commotion, 
 aircraft, vehicles, smoke, breakage of glass, weight of ice, 
 snow or sleet, freezing, leakage of water or other substance, 
 electrical power interruption or electrical breakdown from any 
 cause, and as to livestock against loss or damage by 
 electrocution by electrical currents artificially generated, 
 attack by dogs or wild animals, drowning, accidental shooting, 
 loading or unloading, or collision or overturn of conveyances, 
 and consequential losses as a result of damage from any of the 
 perils listed except public liability.  

    HIST: 1967 c 395 art 8 s 13; 1975 c 15 s 10 

     67A.14 Insurable property. 

    Subdivision 1.    Kinds of property.  (a) Township 
 mutual fire insurance companies may insure qualified property.  
 Qualified property means dwellings, household goods, appurtenant 
 structures, farm buildings, farm personal property, churches, 
 church personal property, county fair buildings, community and 
 township meeting halls and their usual contents. 

    (b) Township mutual fire insurance companies may extend 
 coverage to include an insured's secondary property if the 
 township mutual fire insurance company covers qualified property 
 belonging to the insured.  Secondary property means any real or 
 personal property that is not considered qualified property for 
 a township mutual fire insurance company to cover under this 
 chapter.  The maximum amount of coverage that a township mutual 
 fire insurance company may write for secondary property is 25 
 percent of the total limit of liability of the policy issued to 
 an insured covering the qualified property. 

    Subd. 2.  Repealed, 1975 c 15 s 22 

    Subd. 3.  Repealed, 1975 c 15 s 22 

    Subd. 4.  Repealed, 1975 c 15 s 22 

    Subd. 5.    What may not be insured; property outside 
 designated territory; exceptions.  (a) No township mutual 
 insurance company shall insure any property in cities of the 
 first or second class.  

    (b) If by annexation or other growth in population a city, 
 town, township or unorganized territory or any portion thereof 
 is reclassified into a city of the second class, a township 
 mutual insurance company may continue to do business in that 
 portion of the city in which it was authorized to do business 
 prior to the reclassification.  

    (c) A township mutual insurance company may insure any real 
 or personal property, including qualified or secondary property, 
 subject to the limitations in subdivision 1, paragraph (b), 
 located outside of the limits of the territory in which the 
 company is authorized by its certificate or articles of 
 incorporation to transact business, if the company is already 
 covering qualified property belonging to the insured, inside the 
 limits of the company's territory. 

    (d) A township mutual fire insurance company may insure 
 property temporarily outside of the authorized territory of the 
 township mutual insurance company. 

    Subd. 6.  Repealed, 1975 c 15 s 22 

    Subd. 7.    Amount of insurable risk.  No township 
 mutual insurance company shall insure or reinsure a single risk 
 or hazard in a larger sum than the greater of $3,000, or one 
 tenth of its net assets plus two tenths of a mill of its 
 insurance in force; provided that no portion of any such risk or 
 hazard which shall have been reinsured, as authorized by the 
 laws of this state, shall be included in determining the 
 limitation of risk prescribed by this subdivision. 

    HIST: 1967 c 395 art 8 s 14; 1971 c 133 s 1; 1971 c 187 s 1; 
 1973 c 123 art 5 s 7; 1975 c 15 s 11,12; 1977 c 244 s 2,3; 1981 
 c 136 s 1; 1989 c 130 s 3,4 

     67A.15 Classification of property.  

    Every such company may classify property insured under 
 different rates, corresponding as nearly as possible to the 
 greater or less risk from fire by reason of location or 
 construction, and issue its policies in accordance with these 
 differences.  

    HIST: 1967 c 395 art 8 s 15 

  67A.16 Repealed, 1975 c 15 s 22 

     67A.161 Arbitration of disputed losses.  

    If a township mutual fire insurance company and an insured 
 fail to agree on the actual cash value of an item or amount of a 
 loss, on written demand by either party, the insured and the 
 company shall each, within 20 days of the demand, select a 
 competent and disinterested appraiser and notify the other party 
 of the appraiser's identity.  If either party fails to select an 
 appraiser within the time provided, the presiding judge of the 
 district court in the county in which the loss occurred shall 
 appoint an appraiser to represent that party.  The appointment 
 shall be made upon application to the court by the party not 
 failing to make the required selection and upon five days 
 written notice to the other party.  The appraisers appointed 
 pursuant to this section shall make a good faith effort to 
 select a competent and disinterested umpire. If the appraisers 
 fail to agree upon an umpire within 15 days of their 
 appointment, the presiding judge of the district court in the 
 county in which the loss occurred shall appoint an umpire upon 
 application by either party and five days written notice to the 
 other party.  The appraisers shall appraise the loss, stating 
 separately actual value and loss to each item.  If the 
 appraisers fail to agree, they shall submit their differences to 
 the umpire, whose decision shall control to the extent of the 
 differences between the appraisers.  An award in writing, 
 approved by the appraisers or by an appraiser and the umpire, 
 upon being filed with the company shall be conclusive evidence 
 of the actual value and loss to an item.  An appraiser shall be 
 paid by the party represented, and the expenses of the appraisal 
 and the umpire shall be paid in equal shares by the two parties. 

    HIST: 1975 c 15 s 13; 1986 c 444 

     67A.17 Assessments. 

    Subdivision 1.    Determination.  When any loss shall 
 be ascertained which exceeds in amount the cash funds of the 
 company, the secretary, or, in the secretary's absence, the 
 president, shall convene the directors, who shall levy an 
 assessment upon each policyholder for the proportionate amount 
 to be paid to cover this excess; or the company may borrow not 
 to exceed two mills on each dollar of insurance written by it 
 and then in force, and from this fund pay these losses, and 
 afterwards levy assessments to pay the loans.  

    If the fund for the payment of expenses is insufficient, 
 the amount of the deficiency may be added to any assessment.  

    Subd. 1a.    Advance premiums or assessments.  The 
 directors of a company may collect an advance premium or an 
 assessment for the purpose of maintaining surplus funds in its 
 treasury to be used in payment of losses or expenses.  

    Subd. 2.    Secretary's duties.  It shall be the duty of 
 the secretary or chosen manager, after the assessment is 
 completed, to immediately notify every person composing the 
 company, by letter sent to the person's usual post office 
 address, of the amount of the loss, and the sum due as the 
 person's share thereof, and of the time when and to whom the 
 payment is to be made, but this time shall not be less than 60, 
 nor more than 90, days from the date of the notice, and every 
 person designated to receive this money may demand and receive 
 two percent in addition to the amount due on the assessment, as 
 aforesaid, for fees in receiving and paying over the same.  

    Subd. 3.    Member subject to suit and directors' 
 liability.  Suits at law may be brought against any member of 
 the company who refuses or neglects to pay any assessment.  The 
 articles may eliminate or limit a director's personal liability 
 to the company or its members for monetary damages for breach of 
 fiduciary duty as a director.  The articles shall not eliminate 
 or limit the liability of a director: 

    (1) for breach of loyalty to the company or its members; 

    (2) for acts or omissions made in bad faith or with 
 intentional misconduct or knowing violation of law; 

    (3) for transactions from which the director derived an 
 improper personal benefit; or 

    (4) for acts or omissions occurring before the date that 
 the provisions in the articles eliminating or limiting liability 
 become effective. 

    HIST: 1967 c 395 art 8 s 17; 1975 c 15 s 14; 1986 c 444; 1989 
 c 130 s 5,6 

     67A.18 Termination.  

    Subdivision 1.    By member.  Any member may terminate 
 membership in the company by giving written notice or returning 
 the member's policy to the secretary and paying the withdrawing 
 member's share of all existing claims.  

    Subd. 2.    By company.  The company may annul and 
 cancel any policy after giving not less than ten days written 
 notice to the insured by registered or certified mail to the 
 last known address of the insured and to any mortgagee to whom 
 the policy is made payable.  

    Subd. 3.  Repealed, 1975 c 15 s 22 

    HIST: 1967 c 395 art 8 s 18; 1975 c 15 s 15,16; 1986 c 444 

     67A.19 Joint or partial risks.  

    Township mutual fire insurance companies may issue joint or 
 partial risk policies in conjunction with adjoining companies of 
 the same class and, in this case, they are not confined to the 
 townships in which they are otherwise authorized to do business; 
 but no such insurance of a joint or partial risk shall be valid 
 or binding upon the company insuring the same until approved by 
 all the companies holding prior policies on the property so 
 insured, and the total amount of the joint insurance on any one 
 piece of property shall in no case exceed the total percentage 
 of its value for which the property is insurable by the company. 

    HIST: 1967 c 395 art 8 s 19; 1975 c 15 s 17 

     67A.191 Combination policies. 

    Subdivision 1.    Farm risks.  A township mutual fire 
 insurance company may issue an insurance policy for qualified 
 property as defined in section 67A.14, subdivision 1, in 
 combination with a policy issued by an insurer authorized to 
 sell property and casualty insurance in this state.  Except as 
 provided in subdivision 2, the portions of the combination 
 policy issued by a township mutual insurance company are 
 excluded from all provisions of the insurance laws of this state 
 as provided in section 67A.25, subdivision 2. 

    Subd. 2.    Homeowner's risks.  A township mutual fire 
 insurance company may issue policies for homeowner's insurance 
 as defined in section 65A.27, subdivision 4, only in combination 
 with a policy issued by an insurer authorized to sell property 
 and casualty insurance in this state.  All portions of the 
 combination policy providing homeowner's insurance, including 
 those issued by a township mutual insurance company, shall be 
 subject to the provisions of chapter 65A. 

    HIST: 1994 c 564 s 1 

     67A.20 Reinsurance.  

    Subdivision 1.    Among themselves.  Township mutual 
 fire insurance companies may enter into reinsurance agreements 
 with other township mutual fire insurance companies and reinsure 
 a portion of any risk with these companies.  In these cases they 
 shall not be confined to the territory in which they are writing 
 direct business.  

    Subd. 2.    With reinsurance association.  Any township 
 mutual fire insurance company may become a member of a 
 reinsurance association, such as provided for under sections 
 67A.40 to 67A.44, for the purpose of reinsuring any part or all 
 of any risk or risks written by it.  

    HIST: 1967 c 395 art 8 s 20 

     67A.21 Consolidation, merger.  

    Two or more township mutual fire insurance companies which 
 have been or may hereafter be authorized to transact the 
 business of insurance upon insurable property as herein 
 authorized may consolidate or merge as provided herein.  

    To effect this consolidation or merger, it shall be 
 necessary: 

    (1) That the board of directors or managing body of each of 
 the corporations pass a resolution to the effect that the 
 consolidation or merger is advisable and containing the proposed 
 name of the corporation, as consolidated or merged, its 
 principal office, and the names of its first board of directors 
 and officers; 

    (2) That a special meeting of the policyholders of each of 
 the corporations shall be held, a notice of which meeting shall 
 be mailed to each of the policyholders thereof at least 30 days 
 prior to the holding thereof, and which notice shall embody the 
 resolution adopted by the board of directors, as provided in 
 clause (1); 

    (3) That a majority of the policyholders of each of the 
 corporations present or represented at these special meetings 
 shall, by resolution, approve and ratify the action of the 
 directors, as provided for in clause (1); and 

    (4) That the proceedings and resolutions be filed with, and 
 approved of by, the commissioner.  

    When full copies of these proceedings have been filed with 
 the commissioner, which copies shall be certified by the 
 president and secretary of the respective corporations and duly 
 verified by these officers, and approved of by the commissioner, 
 the consolidation or merger of these corporations shall be 
 deemed to be complete, and the company so continuing the 
 business shall be deemed to have fully assumed all of the 
 obligations, liabilities, and risks and to be the owner of all 
 the assets of the companies so consolidating or merging.  

    If this consolidation or merger is made under any new name, 
 the filing of these proceedings and the approval of same by the 
 commissioner shall be sufficient to constitute the consolidated 
 or merged company a corporation, with all the powers and 
 privileges, and subject to all the limitations, of a township 
 mutual fire insurance company under the laws of this state.  

    HIST: 1967 c 395 art 8 s 21; 1975 c 15 s 18; 1986 c 444 

  67A.22 Repealed, 1975 c 15 s 22 

  67A.23 Repealed, 1981 c 127 s 3 

     67A.231 Deposit of funds; investment; limitations. 

    The directors of any township mutual insurance company may 
 authorize the treasurer to invest any of its funds and 
 accumulations in:  

    (a) Bonds, notes, mortgages, or other obligations 
 guaranteed by the full faith and credit of the United States of 
 America and those for which the credit of the United States is 
 pledged to pay principal, interest or dividends, including 
 United States agency and instrumentality bonds, debentures, or 
 obligations; 

    (b) Bonds, notes, evidence of indebtedness, or other public 
 authority obligations guaranteed by this state; 

    (c) Bonds, notes, evidence of the indebtedness or other 
 obligations guaranteed by the full faith and credit of any 
 county, municipality, school district, or other duly authorized 
 political subdivision of this state; 

    (d) Bonds or other interest bearing obligations, payable 
 from revenues, provided that the bonds or other interest bearing 
 obligations are at the time of purchase rated among the highest 
 four quality categories used by a nationally recognized rating 
 agency for rating the quality of similar bonds or other interest 
 bearing obligations, and are not rated lower by any other such 
 agency; or obligations of a United States agency or 
 instrumentality that have been rated in one of the two highest 
 categories established by the Securities Valuation Office of the 
 National Association of Insurance Commissioners.  A company may 
 not invest more than 20 percent of its admitted assets in the 
 obligations of any one corporation.  This is not applicable to 
 bonds or other interest bearing obligations in default as to 
 principal; 

    (e) Investments in the obligations stated in paragraphs 
 (a), (b), (c), and (d), may be made either directly or in the 
 form of securities of, or other interests in, an investment 
 company registered under the Federal Investment Company Act of 
 1940.  Investment company shares authorized pursuant to this 
 subdivision shall not exceed 20 percent of the company's 
 surplus.  These obligations must be carried at the lower of cost 
 or market on the annual statement filed with the commissioner 
 and adjusted to market on an annual basis; 

    (f) Loans upon improved and unencumbered real property in 
 this state worth at least twice the amount loaned thereon, not 
 including buildings, unless insured by property insurance 
 policies payable to and held by the security holder; 

    (g) Real estate, including land, buildings and fixtures, 
 located in this state and used primarily as home office space 
 for the insurance company; 

    (h) Demand or time deposits or savings accounts in 
 federally insured depositories located in this state to the 
 extent that the deposit or investment is insured by the Federal 
 Deposit Insurance Corporation, Federal Savings and Loan 
 Corporation, or the National Credit Union Administration.  An 
 additional deposit not to exceed 50 percent of the township 
 mutual insurance company's policyholder surplus may be located 
 in these depositories if covered by private deposit insurance 
 written by an insurer licensed by the department of commerce; 

    (i) Guarantee fund certificates of a mutual insurer which 
 reinsures the business of the township mutual insurance 
 company.  The commissioner may by rule limit the amount of 
 guarantee fund certificates which the township mutual insurance 
 company may purchase and this limit may be a function of the 
 size of the township mutual insurance company; and 

    (j) Up to $1,500 in stock of an insurer which issues 
 directors and officers liability insurance to township mutual 
 insurance company directors and officers. 

    HIST: 1981 c 127 s 1; 1987 c 337 s 112; 1995 c 214 s 16; 1997 
 c 222 s 8 

  67A.24 Repealed, 1981 c 127 s 3 

     67A.241 Recordkeeping; examination; remedies. 

    Subdivision 1.    Recordkeeping.  The commissioner may 
 prescribe a basis upon which a township mutual insurance company 
 shall maintain its records which shall reflect the true 
 financial condition of the company.  

    Subd. 2.    External examination of company records and 
 accounts.  (a) The board of directors of every township mutual 
 insurance company shall, at least once every three years, cause 
 the records and accounts of the company to be examined by an 
 independent public accountant, auditor, or person who has been 
 certified by the society of financial examiners.  The 
 examination shall cover the financial and business affairs 
 including the treatment of members and claimants of the company 
 during the previous three years ending December 31.  

    (b) A written summary report of the pertinent results of 
 the examination shall immediately be filed with each member of 
 the board of directors following completion of the examination.  
 A complete examination report shall be filed with the board of 
 directors and the commissioner within 60 days following 
 completion of the examination.  

    (c) The accountant, auditor, or certified financial 
 examiner conducting or supervising the examination must have a 
 minimum of five years' experience in public accounting or 
 examining the financial records or statements of financial 
 institutions and shall not be an officer or employee of the 
 company being examined.  The examiner must not be directly 
 involved in maintaining the records being examined, but may 
 advise or counsel management in record keeping, accounting, or 
 management procedures.  

    Subd. 3.    Examination by commissioner.  The 
 commissioner, with due cause based upon information disclosed in 
 any statement or report or upon information from any examination 
 conducted under this section or when requested by five or more 
 members, shall make an examination of the financial and business 
 affairs of any township mutual fire insurance company doing 
 business within this state.  The company examined shall pay the 
 actual expenses of the person or persons making the examination 
 and the fees prescribed in section 60A.03, subdivision 5.  

    Subd. 4.    Remedies.  When, after examination by the 
 commissioner or independent public accountant, auditor, or 
 certified financial examiner, the commissioner is satisfied that 
 a township mutual insurance company has failed to comply with 
 provisions of sections 67A.01 to 67A.26; is exceeding its power; 
 is not carrying out its contracts in good faith; is transacting 
 business fraudulently; or is in such condition as to render 
 further proceedings hazardous to the public or to its 
 policyholders, the commissioner may take action deemed necessary 
 or proceed under the provisions of chapter 60B.  

    HIST: 1981 c 127 s 2; 1984 c 592 s 63; 1986 c 444 

     67A.25 Reference to Laws 1909, chapter 411. 

    Subdivision 1.    What companies may come under Laws 1909, 
 chapter 411.  Any township mutual fire insurance company 
 heretofore organized may exercise, after the passage of Laws 
 1909, chapter 411, all of the rights conferred thereby that are 
 within the powers and privileges of its certificate or articles 
 of incorporation, or it may be reincorporated thereunder.  No 
 such company already organized shall be required to 
 reincorporate thereunder in order to avail itself of the 
 privileges thereof.  

    Every township mutual fire insurance company now doing 
 business in this state shall have the right to continue 
 transacting such business until the first day of March 
 succeeding the passage thereof; and the commissioner , if 
 satisfied that the company is transacting its business in 
 accordance therewith, shall on the first day of each succeeding 
 June issue a license to the company authorizing it to transact 
 business until the May 31 following the date of the license.  

    Subd. 2.    Application of Laws 1909, chapter 411.  
 Except as therein provided, all township mutual fire insurance 
 companies heretofore or hereafter organized in this state shall 
 be governed by Laws 1909, chapter 411, as amended, and excluded 
 from all provisions of the insurance laws of this state, not 
 only in governmental relations with the state, but for every 
 other purpose, and no law heretofore or hereafter passed shall 
 apply to the company unless it shall be expressly designated in 
 the law that it is applicable to township mutual fire insurance 
 companies.  

    HIST: 1967 c 395 art 8 s 25; 1Sp1985 c 10 s 70; 1986 c 444 

     67A.26 Penalties.  

    Subdivision 1.    Fraudulent statements.  Any person, 
 officer, or member who shall knowingly or willfully make any 
 false or fraudulent statement or representation in reference to 
 any application for membership under sections 67A.01 to 67A.26, 
 or any false or fraudulent statement as to the transactions or 
 condition of the company of which the person is a member or 
 officer, shall be guilty of a misdemeanor.  

    Subd. 2.    Noncompliance by officers or employees.  
 Any officer of any such company, or employee thereof, who shall 
 neglect or refuse to comply with, or violates any of the 
 provisions of sections 67A.01 to 67A.26, shall be guilty of a 
 misdemeanor.  

    HIST: 1967 c 395 art 8 s 26; 1971 c 23 s 8,9; 1986 c 444 

     67A.27 Scope.  

    Sections 67A.27 to 67A.39 are limited to such companies as 
 are now in existence.  No such companies shall hereafter be 
 formed.  

    HIST: 1967 c 395 art 8 s 27 

     67A.28 Number of members and property required, 
  territory and types of insurance.  

    The incorporators of a farmers mutual fire insurance 
 company shall not be less than 25 in number and owning in the 
 aggregate movable farm property worth at least $50,000, located 
 anywhere in this state.  Such company may insure like property 
 anywhere in this state against the perils of fire, lightning, 
 explosion, earthquake, theft, vandalism, collapse of bridges, 
 upset, overturn, collision, riot, riot attending a strike, civil 
 commotion, aircraft, vehicles, smoke, breakage of glass, weight 
 of ice, snow or sleet, freezing, leakage of water or other 
 substance, electrical power interruption or electrical breakdown 
 from any cause, and as to livestock against loss or damage by 
 electrocution by electrical currents artificially generated, 
 attack by dogs or wild animals, drowning, accidental shooting, 
 loading or unloading, collapse of buildings or straw or hay 
 stacks, or collision or overturn of conveyances, and 
 consequential losses as a result of damage from any of the 
 perils listed except public liability.  

    HIST: 1967 c 395 art 8 s 28; 1971 c 522 s 1 

     67A.29 Government.  

    Subdivision 1.    Board of directors and officers.  
 Every company so formed shall choose of their number not less 
 than five, nor more than nine, directors to manage the affairs 
 of the company, who shall hold their office for such period as 
 may be fixed by the bylaws of the company not exceeding three 
 years and until their successors are elected and have qualified; 
 and these directors shall choose one of their number president, 
 one vice-president, and one secretary; they shall choose a 
 treasurer, who may or may not be a member of the board, but 
 shall be a member of the company.  The articles of incorporation 
 of the company may provide that the president, the 
 vice-president, the secretary, and the treasurer may be chosen 
 by the direct vote of the members at the annual meeting.  In 
 this case, the election of these persons as president, 
 vice-president, and secretary shall constitute them members of 
 the board of directors and the remaining members of the board 
 shall be elected as provided in subdivision 1.  

    Subd. 2.    Officers, bond.  The officers and employees 
 of the company shall give bond to the company in such sum as the 
 directors shall determine.  

    Subd. 3.    Investments.  The directors may authorize 
 the treasurer to loan on first real estate securities such sums 
 of money on hand as they may determine, or to deposit any or all 
 sums of money on hand in such banks as they may designate.  

    HIST: 1967 c 395 art 8 s 29; 1975 c 15 s 20; 1986 c 444 

     67A.30 Applications and binders.  

    Subdivision 1.    Acceptance.  The president and the 
 secretary of the company may accept all applications and sign 
 and issue policies agreeing, in the name of the company, to pay 
 all losses and damages, not exceeding the sums named in the 
 policies, sustained to property authorized to be insured in 
 section 67A.31 for the term therein specified, and every 
 application for insurance made to any authorized officer or 
 agent, until refused by the proper officer, shall be of the same 
 force and effect as a regularly issued policy and contract of 
 insurance and, from the time of its receipt by an officer or 
 agent, the property specified in the application shall be deemed 
 insured in the same manner and to the same extent as if covered 
 by a regular policy issued according to law and the regulations 
 of the company.  

    Subd. 2.  Repealed, 1975 c 15 s 22 

    Subd. 3.    Cash premium and agreement to assessment.  
 Before the delivery of any policy the company shall collect the 
 regular cash premium and policy fee and take the written 
 agreement of the insured, of even date therewith, which shall be 
 embodied in the application, to pay a pro rata share of losses 
 or damages sustained by any member.  The same shall be kept on 
 file with the secretary.  

    HIST: 1967 c 395 art 8 s 30; 1986 c 444 

     67A.31 Insurable property.  

    Subdivision 1.    Insurable property in rural areas.  
 Farmers mutual fire insurance companies may insure dwellings and 
 their contents, farm buildings and their contents, livestock, 
 farm machinery, automobiles, country store buildings and the 
 household goods therein, threshing machines, farm produce 
 anywhere on the premises, churches and their contents, school 
 houses and their contents, society and town halls and their 
 contents, country blacksmith shops and country garages and their 
 contents, country locker plants and their contents, parsonages 
 and their contents and the barns and contents used in connection 
 therewith, creameries, cheese factories and their equipment and 
 contents and respective operators' dwelling houses and contents 
 and barns and contents used in connection therewith.  

    Subd. 2.    Insurable property in cities.  They may 
 also insure churches and dwellings, together with the usual 
 outbuildings and the usual contents of both those dwellings and 
 churches and outbuildings, in any city except a city of the 
 first or second class.  

    Subd. 3.    County poor farm.  They may also insure any 
 county poor farm together with contents and such personal 
 property as is used in connection therewith, and which real 
 property, contents and personal property are situated in the 
 county wherein these farmers mutual fire insurance companies are 
 operating; provided, when at a duly called special or annual 
 meeting of the policyholders it shall be duly decided by them by 
 a majority vote to do so.  

    Subd. 4.    County fair buildings.  Any such company is 
 hereby authorized to insure county fair buildings whether the 
 same are situated either within or without the limits of a duly 
 incorporated city.  

    Subd. 5.    What may not be insured; property outside 
 designated territory.  No farmers mutual fire insurance 
 company shall insure any property except that specifically 
 authorized under this section nor any such property outside of 
 the state of Minnesota, except personal property temporarily 
 outside of the authorized territory.  

    Subd. 6.    What may not be insured; exceptions.  
 Otherwise than as herein provided, no such company shall insure 
 any property within the limits of any city except that located 
 upon lands actually used for farming or gardening purposes.  

    HIST: 1967 c 395 art 8 s 31; 1973 c 123 art 5 s 7; 1975 c 15 s 
 21 

     67A.32 Policy term.  

    The term of policies issued by farmers mutual fire 
 insurance companies shall not exceed five years.  

    HIST: 1967 c 395 art 8 s 32 

  67A.33 Repealed, 1975 c 15 s 22 

     67A.34 Classification of property.  

    Every such company may classify property insured under 
 different rates, corresponding as nearly as possible to the 
 greater or less risk from fire by reason of location or 
 construction, and issue its policies in accordance with such 
 differences.  

    HIST: 1967 c 395 art 8 s 34 

     67A.35 Nonresident members.  

    Nonresidents owning property in the state of Minnesota may 
 become members, with all rights except eligibility to office.  

    HIST: 1967 c 395 art 8 s 35 

     67A.36 Losses.  

    Subdivision 1.    Procedure in case of loss.  Every 
 member sustaining loss or damage by named perils shall 
 immediately notify the secretary, who, if the claim exceeds 
 $300, may forthwith convene the directors.  The directors shall 
 appoint a committee of three members, of which the secretary 
 shall be one, to ascertain the amount of the loss, with 
 authority to examine witnesses, to whom the secretary is hereby 
 authorized to administer oaths.  When the bylaws so provide, the 
 secretary may act in place of, and with all the authority of, 
 the committee; and when the claim does not exceed $300, the loss 
 may be ascertained by the president and secretary, or either, 
 with like authority.  

    Subd. 2.    Arbitration.  If the parties cannot agree 
 upon the damages, the insured may apply to a judge of the 
 district court of the county, who may appoint three 
 disinterested persons, who shall make an award which shall be 
 final, and deliver the same to the company. 

    Subd. 3.    Assessments.  When any loss shall be 
 ascertained which exceeds in amount the cash funds of the 
 company, the secretary, or, in the secretary's absence, the 
 president, shall convene the directors, who shall levy an 
 assessment upon each policyholder for the proportionate amount 
 to be paid to cover this excess; or the company may borrow not 
 to exceed two mills on each dollar of insurance written by it 
 and then in force, and from that fund pay these losses, and 
 afterwards levy assessments to pay the loans.  If the fund for 
 the payment of expenses is insufficient, the amount of the 
 deficiency may be added to any assessment.  

    HIST: 1967 c 395 art 8 s 36; 1986 c 444 

     67A.37 Termination of membership.  

    Subdivision 1.    By member.  Membership may be 
 terminated at any time by giving written notice to the secretary 
 and paying the withdrawing members' share of all existing claims.

    Subd. 2.    By company.  Membership may also be 
 terminated by the annulment of any policy by a majority of the 
 directors and written notice thereof to the holder.  

    Subd. 3.    Record.  In either case the secretary shall 
 record the same in a separate book.  

    HIST: 1967 c 395 art 8 s 37 

     67A.38 Annual meeting.  

    The annual meeting shall be held before July first each 
 year and the annual report shall then be read in full and within 
 30 days thereafter filed with the commissioner.  

    HIST: 1967 c 395 art 8 s 38 

     67A.39 Emergency fund.  

    The directors of any such company may collect, by advance 
 assessment and maintain in its treasury an emergency fund, not 
 exceeding two mills on a dollar of the total amount of insurance 
 in force, to be used in payment of losses and for other purposes 
 for which assessments may be used.  

    HIST: 1967 c 395 art 8 s 39 

     67A.40 Organization and powers.  

    Subdivision 1.    Organization and purpose.  Not less 
 than six duly licensed township mutual fire insurance companies 
 or farmers mutual fire insurance companies may organize a mutual 
 association for the purpose of reinsuring any part or all of any 
 risk or risks, written by any of the member companies.  

    Subd. 2.    Articles of incorporation, contents and 
 filing.  The incorporation of this association shall be 
 effected by filing with the commissioner and with the secretary 
 of state a certificate of incorporation duly executed and 
 acknowledged by the companies forming the association, these 
 companies having been first duly authorized, by resolution duly 
 adopted at a regular annual meeting, or at a special meeting 
 called for that purpose, which certificate shall state, in 
 substance, such facts as are required to be stated in 
 certificates of incorporation by the general corporation laws of 
 this state and shall have first been approved by the 
 commissioner.  

    Subd. 3.    Corporate powers.  In addition to the 
 powers conferred by sections 67A.40 to 67A.44, every such 
 association shall have the power to reinsure any part or all of 
 any risk or risks assumed by it, and every such association 
 shall have the corporate powers which are granted to 
 corporations under the general corporation laws of this state.  
 Any such association having a surplus of at least $300,000 may, 
 at any regular meeting or at a special meeting called for that 
 purpose, transform itself into a mutual insurance company by 
 amending its articles of incorporation to provide for the doing 
 of one or more of the kinds of business specified in section 
 60A.06, subdivision 1, clauses (1) to (14).  Such transformed 
 company shall be subject to the general corporation laws 
 contained in chapter 300, and subject to the conditions and 
 restrictions as to the kinds of insurance which may be combined 
 by a like stock insurance company and to all restrictions 
 contained in the laws of this state with reference to general 
 mutual insurance companies transacting the same kinds of 
 business.  The bylaws may also provide for voting rights to be 
 based on one vote for each policyholder, plus one vote for each 
 $100 of premium paid within 12 months prior to the meeting at 
 which the votes are cast.  

    Subd. 4.    Perpetual existence.  The corporate 
 existence of any such association may be made perpetual by so 
 providing in its articles of incorporation.  

    Subd. 5.    Directors.  The directors of the 
 association shall be chosen from the officers of its members.  

    Subd. 6.    Bylaws.  The board of directors at its 
 first meeting shall adopt bylaws, which shall be filed with the 
 commissioner and shall not be effective until approved by the 
 commissioner.  

    HIST: 1967 c 395 art 8 s 40; 1969 c 7 s 28; 1986 c 444 

     67A.41 Premiums and assessments.  

    Member companies of any such association shall each year 
 pay to the treasurer thereof such assessments as shall be fixed 
 or authorized by the board of directors of the association, 
 which assessments shall be based upon the amount of insurance of 
 each of its member companies during the calendar year ending 
 December 31st next preceding.  The individual members of the 
 member companies shall be subject to assessment in case the 
 funds of the member companies are insufficient to pay any 
 assessment made by the association to the same extent and in the 
 same manner as though the assessment by the association were to 
 cover a loss for which the member company was liable.  

    HIST: 1967 c 395 art 8 s 41 

     67A.42 Withdrawal by members.  

    Any member of the association may withdraw from membership 
 upon giving 90 days' notice of its intention so to do when the 
 withdrawal has been authorized by a majority vote of its members 
 present and voting at a regular meeting or a special meeting 
 called for that purpose.  This withdrawal shall not in any way 
 affect its liability to contribute to any losses or expenses 
 which may have been incurred prior to the time of withdrawal.  

    HIST: 1967 c 395 art 8 s 42 

     67A.43 Commissioner of commerce. 

    Subdivision 1.    To have supervision.  The certificate 
 of incorporation and bylaws, forms of contracts and policies 
 adopted or issued by every such association, and the general 
 conduct of its affairs shall be subject to the general 
 supervision and jurisdiction of the commissioner, and the 
 commissioner, when requested by five or more members of the 
 association, shall make an examination of the affairs thereof at 
 the expense of the association.  Farmers and township 
 reinsurance or guaranty associations shall be subject to the 
 provisions of chapter 60B.  

    Subd. 2.    Filing of annual statement and license 
 required.  Every such association shall file with the 
 commissioner the annual statement and procure the certificate of 
 authority as required by law pertaining to insurance companies.  

    Subd. 3. Repealed, 1987 c 337 s 131 

    HIST: 1967 c 395 art 8 s 43; 1969 c 708 s 63; 1983 c 289 s 114 
 subd 1; 1984 c 655 art 1 s 92; 1986 c 444 

     67A.44 Commissioner defined.  

    As used in all parts of this chapter the word 
 "commissioner" shall mean the commissioner of commerce of the 
 state of Minnesota and, in the commissioner's absence or 
 disability, a deputy or other person duly designated to act for 
 the commissioner.  

    HIST: 1967 c 395 art 8 s 44; 1983 c 289 s 114 subd 1; 1984 c 
 655 art 1 s 92; 1986 c 444