F.S.1995 FRATERNAL BENEFIT SOCIETIES Ch. 632

CHAPTER 632

FRATERNAL BENEFIT SOCIETIES

632.601 632.602 632.603 632.604 632.605 632.606 632.607

632.608 632.609 632.611 632.612 632.613 632.614 632.615 632.616

632.617 632.618 632.619 632.621 632.622

632.623 632.624 632.625 632.626 632.627 632.628 632.629 632.631

632.632 632.633

632.634 632.635

632.636 632.637 632.638

"Fraternal benefit society" defined. "Lodge system" defined. "Representative form of government" defined. Terms used. Purposes and powers. Qualifications tor membership. Location of office; meetings; communications

to members; grievance procedures. No personal liability. Waiver. Organization. Amendments to laws. Institutions. Reinsurance. Consolidations and mergers. Conversion of fraternal benefit society into

mutual life insurance company. Benefits. Beneficiaries. Benefits not attachable. The benefit contract. Nonforfeiture benefits, cash surrender values,

certificate loans, and other options. Investments. funds. Exemp lions. Taxation. Valuation. Reports. Annual license.' Examination of societies; no adverse publica­

tions. Foreign or alien society; admission. Additional grounds for suspension, revoca­

tion, or denial of certificate of authority; receivership; insolvency.

Licensing and appointment of agents. Unfair methods of competition and unfair and

deceptive acts and practices. Penalties. Exemption of certain societies. Applicability of other code provisions.

632.601 "Fraternal benefit society" defined.-Any incorporated society, order, or supreme lodge, without capital stock, including one exempted under the provi­sions of s. 632.637(1 )(b), whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge sys­tem with ritualistic form of work, having a representative form of government, and which makes provision for the payment of benefits in accordance with this chapter. is hereby declared to be a "fraternal benefit society.·

Hlstory.-ss. 4. 6, ch. RG 140: :; 4, ch. 91-429.

632.602 "Lodge system" defined.-(1} A society is operating on the lodge system if it

has a supreme governing body and subordinate lodges into which members are elected, initiated, or admitted in accordance with its laws, rules, and ritual. Subordi-

nate lodges shall be required by the laws of the society to hold regular meetings at least once in each month in furtherance of the purposes ot the society.

(2} A society may, at its option, organize and oper­ate lodges for children under the minimum age for adult membership. Initiation in lodges shall not be required of children, nor shall they have a voice or vote in the man­agement of the society.

History.-ss. 4, 6, ch. 86-140; s. 4, ch 91-429

632.603 "Representative form of government" defined.-A society has a "representative form of government" when:

(1) It has a supreme governing body constituted inone of the following ways:

(a) Assemb/y.-The supreme governing body is anassembly composed of delegates elected directly by the members, or at intermediate assemblies or conven­tions of members or their representatives, together with other delegates as may be prescribed by the society's laws. A society may provide for election of delegates by mail. The elected delegates shall constitute a majority in number and shall not have less than two-thirds of the votes and shall not have less than the number of votes required to amend the society's laws. The assembly shall be elected and shall meet at least once every 4 years and shall elect a board of directors to concjuct the business of the society between meetings of the assem­bly. Vacancies on the board of directors between elec­tions may be filled in the manner prescribed by the soci­ety's law.

(b) Direct election.-The supreme governing bodyis a board composed of persons elected by the mem­bers, either directly or by their representatives in inter­mediate assemblies, and any other persons prescribed in the society's laws. A society may provide for election of the board by mail. Each term of a board member may not exceed 4 years. Vacancies on the board between elections may be filled in the manner prescribed by the society's laws. Those persons elected to the board sr1all constitute a majority in number and not less than the number of votes required to amend the society's laws. A person filling the unexpired term of an elected board member shall be considered to be an elected member. The board shall meet at least quarterly to conduct the business of the society. And

(2)(a) The officers of the society are elected either by the supreme governing body or by the board of direc­tors;

(b) Only benefit members are eligible for election tothe supreme governing body, the board of directors, or any intermediate assembly; and

(c) Each voting member shall have one vote; no votemay be cast by proxy.

History.-ss. 4. 6, ch 86 140. s. 4, ch. 9·-429_

632.604 Terms used.-Whenever used in this chap­ter:

( 1) "Benefit contract· means the agreement for pro­vision of benefits authorized by s. 632.617, as that agreement is described in s. 632.621(1 ).

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Ch. 632 FRATERNAL BENEFIT SOCIETIES F.S. 1995

(2) "Benefit member" means an adult member whois designated by the laws or rules of the society to be a benefit member under a benefit contract.

(3) "Certificate" means the document issued as writ­ten evidence of the benefit contract.

(4) "Premiums" means premiums, rates, dues, orother required contributions, by whatever name known, which are payable under the certificate.

(5) "Laws" shall mean the society's articles of incor­poration, constitution and bylaws, however designated.

(6) "Rules" shall mean all rules, regulations, or resolu­tions adopted by the supreme governing body or board of directors which are intended to have general applica­tion to the members of the society.

(7) "Society" shall mean fraternal benefit society,unless otherwise indicated.

(8) "Lodge" shall mean subordinate member units ofthe society, known as camps, courts, councils, branches, or by any other designation.

History.-ss. 4, 6, ch. 86-140; s. 4, ch. 91-429.

632.605 Purposes and powers.-( 1) A society shall operate for the benefit of mem­

bers and their beneficiaries by: (a) Providing benefits as specified in s. 632.617; and(b) Operating for one or more social, intellectual,

educational, charitable, benevolent, moral, fraternal, patriotic, or religious purposes for the benefit of its mem­bers, which may also be extended to others; provided that such purposes do not endanger the solvency of the society. Such purposes as set forth in this paragraph may be carried out directly by the society or indirectly through subsidiary corporations or affiliated organiza­tions.

(2) No subsidiary corporation or affiliated organiza­tion shall transact insurance or engage in any other activity regulated under the Florida Insurance Code or other Florida law unless the subsidiary corporation or affiliated organization complies with all provisions of the applicable law. No society or subsidiary corporation or affiliated organization through which a society carries out its purposes shall own or operate a funeral home or undertaking establishment.

(3) Every society shall have the power to adopt lawsand rules for the government of the society, the admis­sion of its members, and the management of its affairs. The society shall have the power to change, alter, add to, or amend such laws and rules and shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society.

History.-ss. 4, 6, ch. 86-140; s. 4, ch. 91-429.

632.606 Qualifications for membership.-( 1) A society shall specify in its laws or rules:(a) Eligibility standards for each and every class of

membership, provided that if benefits are provided on the lives of children, the minimum age for adult member­ship shall be set at not less than age 15 and not greater than age 21;

(b) The process for admission to membership foreach membership dass; and

(c) The rights and privileges of each membershipclass, provided that only benefit members shall have the right to vote on the management of the insurance affairs of the society.

(2) A society may also admit social members whoshall have no voice or vote in the management of the insurance affairs of the society.

(3) Membership rights in the society are personal tothe member and are not assignable.

History.-ss. 4, 6, ch. 86-140; s. 4, ch. 91-429.

632.607 Location of office; meetings; communica­tions to members; grievance procedures.-

(1) The principal office of any domestic society shallbe located in this state. The meetings of its supreme governing body may be held in any state, district, prov­ince, or territory wherein such society has at least one subordinate lodge, and all business transacted at such meetings shall be as valid in all respects as if such meet­ings were held in this state. The minutes of the proceed­ings of the supreme governing body and of the board of directors shall be in the English language.

(2)(a) A society may provide in its laws for an official publication in which any notice, report, or statement required by law to be given to members, including notice of election, may be published. Such required reports, notices, and statements shall be printed con­spicuously in the publication. If the records of a society show that two or more members have the same mailing address, an official publication mailed to one member is deemed to be mailed to all members at the same address unless a member requests a separate copy.

(b) Not later than June 1 of each year, a synopsis ofthe society's annual statement providing an explanation of the facts concerning the condition of the society thereby disclosed shall be printed and mailed to each benefit member of the society or, in lieu thereof, such synopsis may be published in the society's official publi­cation.

(3) A society shall provide in its laws or rules forgrievance or complaint procedures for members.

History.-ss. 4, 6, ch. 86-140; s. 4, ch. 91-429.

632.608 No personal liability.-(1) The officers and members of the supreme gov­

erning body or of any subordinate body of a society shall not be personally liable for any benefits provided by the society.

(2)(a) Any person may be indemnified and reim­bursed by any society for expenses reasonably incurred by, and for liabilities imposed upon, such person in con­nection with or arising out of any action, suit, or proceed­ing, whether civil, criminal, administrative, or investiga­tive, or threat thereof, in which the person may be involved by reason of the fact that he is or was a direc­tor, officer, employee, or agent of the society or of any firm, corporation, or organization which he served in any capacity at the request of the society.

(b) A person shall not be so indemnified or reim­bursed:

1. In relation to any matter in such action, suit, orproceeding as to which he shall finally be adjudged to be or have been guilty of breach of a duty as a director, officer, employee, or agent of the society, or

2. In relation to any matter in such action, suit, orproceeding, or threat thereof, which has been made the subject of a compromise settlement,

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F.S. 1995 FRATERNAL BENEFIT SOCIETIES Ch.632

unless in either such case the person acted in good faith for a purpose the person reasonably believed to be in, or not opposed to, the best interests of the society and m addition, in a criminal action or proceeding, had no reasonable cause to believe that his conduct was unlaw­ful.

(c) The cleterrninalion as lo whether the conduct ofsuch person met the standard required in order to Justify indemnification and reimbursement in relation to any matter described ;n subparagraph (b)1. or subparagraph (b)2. may only be made by the supreme governing body or board of directors by a majority vote of a quorum consisting of persons who were not parties to such action, suit, or proceeding or by a court of com­petent jurisdiction. The termination of any action, suit, or proceeding as to such person by judgment, order, set­tlement, or conviction, or upon a plea of no contest, shall not in itself create a conclusive presumption that \he person did not meet the standard of conduct required in order to justify indemnification and reimbursement. The foregoing right of indemnification and reimburse­ment shall not be exclusive of other rights to which such person may be entitled as a matter of law and shall inure to the benefit of his heirs, executors, and administrator.

(3) A society shall have power to purchase andmaintain insurance on behalf of any person who is or was a director. officer, employee, or agent of the society, or who is or was serving at the request of the society as a director, officer, employee, or agent of any other firm, corporation, or organization, against any liability asserted against such person and incurred by him in any such capacity or arising out of his status as such, whether or not the society would have the power to indemnify the person against such liability under this section.

History.--ss. 4, E cl1. 86-140. s 4. ch. 91-429

632.609 Waiver.-The laws of the society shall pro­vide that no subordinate body, nor any of its subordinate officers or members, shall have the power or authority to waiw, any of the provisions ot the laws or rules of the society. Such provision shall be binding on the society and every member and beneficiary of a member.

History. •3•; 4, €. cri 86-140. ,; 1. ch 91 -·120

632.611 Organization.-A domestic society orga­nized on or after June 24, 1986, shall be formed as fol· lows:

(1) Seven or more citizens of tt1e United Slates, amajonty of whom are citizens of this state, who desire to form a fraternal benefit society, shall make, sign, and acknowledge before some officer competent to take acknowledgment of deeds, articles ot incorporation, in which shall be stated:

(a) The proposed corporate name of the society,which shall not so clo.sely resemble the name of any society or insurance company as to be misleading or confusing;

(b) The purposes for whict1 1t is being formed andthe mode in which its corporate powern are to be exer­cised. Such purposes shall not include more liberal pow­ers than are granted by this chapter; and

(c) The names and residences of the 1ncorporatorsand the names. residences, and official lilies of all the

officers, trustees, directors. or other persons who are to have and exercise the general control of the manage­ment of the affairs and funds of the society for the first year or until the ensuing election at which all such offi­cers shall be elected by the supreme governing body, which election shall be held not later than 1 year from the date of the issuance of the permanent certificate of authority.

(2) Such articles of incorporation; duly certified cop­ies of the society's bylaws and rules; copies of all pro­posed forms of certificates, applications therefor, and circulars to be issued by the society; and a bond, condi· tioned upon the return to the applicants of the advanced payments if the organization is not completed within 1 year, shall be filed with the department, which may require such further information as it deems necessary. The bond with sureties approved by the department shall be in such amount, not less than $300,000 nor more than $1.5 million, as required by the department. All doc­uments filed are to be in the English language. If the pur­poses of the society conform to the requirements of this chapter and all provisions of the law l1ave been complied with, the department shall so certify, retain, and file the articles of incorporation and shall furnish the 1ncorpora­tors a pre11minary certificate authorizing the society to solicit members as hereinafter provided.

(3) No preliminary certificate granted under the pro­visions of this section shall be valid after 1 year from its date or after such further period, not exceeding 1 year, as may be authorized by the department upon cause shown. The articles of incorporation and all other pro­ceedings thereunder shall become null and void in 1 year from the date ot the preliminary certificate, or at the expiration of the extended period, unless the society shall have completed its organization and received a certificate of authority to clo business as here1natler pro­vided.

(4) Upon receipt of a preliminary certificate ofauthority from the department, the society may solicit members tor the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates, and shall ,ssue to each such applicant a receipt for the amount so collected. No society shall incur any liability other than for the return of sucn advance premium nor issue any certificate, nor pay, allow, or ofter or promise to pay or allow, any benefit, to any person until:

(a) Actual bona fide app1ications for benefits havebeen secured on not less than 500 applicants, and any necessary evidence of insurability has been furnished to and approved by the society;

(b) At least 10 subordinate lodges have been estab­lished into wl1ich the 500 applicants liave been admit­ted;

(c) There has been submitted to the department,under oc1t11 of the president or secretmy, or corr·espond 1ng officer of the society, a list of such applicants, giving their names, addresses, date each was admitted, name and number of the subordinate lodge of which each applicant is a member, amount ot benefits to be granted and the premiums therefor: and

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Ch.632 FRATERNAL BENEFIT SOCIETIES F.S.1995

(d) It shall have been shown to the department, bysworn statement of the treasurer or corresponding offi­cer of such society, that at least 500 applicants have each paid in cash at least one regular monthly premium as herein provided, which premiums in the aggregate shall amount to at least $150,000. Such advance premi­ums shall be held in trust during the period of organiza­tion and if the society has not qualified for a certificate of authority within 1 year, as herein provided, such pre­miums shall be returned to said applicants.

(5) The department may make such examinationand require such further information as it deems advis­able. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, the department shall issue to the society a certificate of authority to that effect and to the effect that the society is authorized to transact business pursuant to the provi­sions of this chapter. The certificate of authority shall be prima facie evidence of the existence of the society at the date of such certificate. The department shall cause a record of such certificate of authority to be made. A certified copy of such record may be given in evidence with like effect as the original certificate of authority.

(6) Any incorporated society authorized to transactbusiness in this state on June 24, 1986, shall not be requi red to reincorporate.

Histoly.-ss. 4, 6, ch. 86-140; s. 4, ch. 91-429.

632.612 Amendments to laws.-(1) A domestic society may amend its laws in

accordance with the provisions thereof by action of its supreme governing body at any regular or special meet­ing thereof or, if its laws so provide, by referendum. Such referendum may be held in accordance with the provisions of its laws by the vote of the voting members of the society, by the vote of delegates or representa­tives of voting members, or by the vote of local lodges. A society may provide for voting by mail. No amendment submitted for adoption by referendum shall be adopted unless, within 6 months from the date of submission thereof, a majority of.the members voting shall have sig­nified their consent to such amendment by one of the method.s herein specified.

(2) No amendment to the laws of any domestic soci­ety shall take effect unless approved by the department, which shall approve such amendment if it finds that the amendment has been duly adopted and is not inconsis­tent with any requirement of the laws of this state or with the character, objects, and purposes of the society. Unless the department shall disapprove any such amendment within 90 days after the filing of same, the amendment shall be considered approved. The approval or disapproval of the department shall be in writing and mailed to the secretary or corresponding offi­cer of the society at its principal office. In case the department disapproves the amendment, the reasons therefor shall be stated in the written notice.

(3) Within 90 days from the approval thereof by thedepartment, all such amendments or a synopsis thereof shall be furnished to all members of the society either by mail or by publication in full in the official publication of the society. The affidavit of any officer of the society or of anyone authorized by it to mail any amendments

or a synopsis thereof, stating facts which show that same have been duly addressed and mailed, shall be prima facie evidence that such amendments or a synop­sis thereof have been furnished the addressee.

(4) Every foreign or alien society authorized to dobusiness in this state shall file with the department a duly certified copy of all amendments of, or additions to, its laws within 90 days after the enactment of same.

(5) Printed copies of the laws as amended, certifiedby the secretary or corresponding officer of the society, shall be prima facie evidence of the legal adoption thereof.

Htstory.-ss. 4, 6, Ch. 86-140; s. 4, ch. 91-429.

632.613 lnstitutions.-A society may create, main­tain, and operate, or may establish organizations to operate, not-for-profit institutions to further the pur­poses permitted by s. 632.605(1)(b). Such institutions may furnish services free or at a reasonable charge. Any real or personal property owned, held, or leased by the society for this purpose shall be reported in every annual statement, but shall not be allowed as an admitted asset of the society.

History.-ss. 4, 6, ch. 86-140; s. 4, ch. 91-429.

632.614 Reinsurance.-(1) A domestic society may, by a reinsurance agree­

ment, cede any individual risk or risks in whole or in part to an insurer, other than another fraternal benefit soci­ety, having the power to make such reinsurance and authorized to do business in this state, or if not so authorized, to an insurer which is approved by the department. However, no domestic society may rein­sure 75 percent or more of its insurance in force without the written permission of the department. The domestic society may take credit for the reserves on such ceded risks to the extent reinsured, but no credit shall be allowed as an admitted asset or as a.deduction from lia­bility, to a ceding society for reinsurance made, ceded, renewed, or otherwise becoming effective after the effective date of this act, unless the reinsurance is pay­able by the assuming insurer on the basis of the liability of the ceding society under the contract or contracts reinsured without diminution because of the insolvency of the ceding society.

(2) Notwithstanding the limitation in subsection (1),a society may reinsure the risks of another society in a consolidation or merger approved by the department under s. 632.615.

Histoly.-ss. 4, 6, eh. 86-140; s. 6, ch. 91-110; s. 4, ch. 91-429.

632.615 Consolidations and mergers.-(1) A domestic society may not consolidate or

merge with any other insurer other than another society. It may consolidate or merge with another society by complying with the provisions of this section. It shall file with the department:

(a) A certified copy of the written contract contain­ing in full the terms and conditions of the consolidation or merger;

(b) A sworn statement by the president and secre­tary or corresponding officers of each society showing the financial condition thereof on a date fixed by the department but not earlier than December 31 next pre­ceding the date of the contract;

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F.S. 1995 FRATERNAL BENEFIT SOCIETIES Ch. 632

(c) A certificate of such officers, duly verified by theirrespective oaths, that the consolidation or merger has been approvcrl by a two-thirds vote of the supreme governing body of each society, such vote being con· ducted at a regular or special meeting of each such body, or, if the society's laws so permit by mail; and

(d) Evidence that at least 60 days prior to the actionof the supreme governing body of each society, the text of the contract has been furnished to all members of each society either by mail or by publication in full in the official publication of each society,

(2) If the department finds that the contract is in con·formity with the provisions of this section, that the finan­cial statements are correct, and that the consolidation or merger is Just and equitable to the members of each society, the department shall approve the contract and issue a certif.cate to such effect Upon such approval, thu contract shall be in full force and effect unless any society which is a party to the contract is incorporated under the laws of any other state or territory. In such event the consolidation or merger shall not become effective unless and until ii has been approved as pro· vided by the iaws of such state or territory and a certifi­cate of such approval ftled with the department or, ,I the laws of such statn or territory contain no s1ich provision, th()n the consolidation or merger st,all not become effec­tive unless and until it has been approved by the insur­ance supervisory official of such state or territory and a certificatu of such approval filed with the department

(3) Upon the consolidation or merger becomingeffective as herein provided, all the rights, liabilities, franchises, and interests of the consolidated or merged societies in and to every species of properly, real or pm· sonal or mixed, and things in action thereunto belonging shall be vested in the society resulting from or remaining after the consolidation or morgor without any other instrument, except that conveyances or real properly may be evidenced by proper deeds, and the title to any real estate or interest therein which is vested under the laws of this state in any of tho societies consolidated or merged shall not revert or be in any way impaired by rea­son of the consolidation or merger, but shall vest abso­lutely in the society resulting from or rP-maining after such consolidation or merger,

(4) The affidavit of any officer of the society or ofanyone authorized by it to mail any notice or document, staling that such notice or doc;ument has been duly addressed and mailed, shall be prima tacie evidence that such notice or document has been furnished the addressees.

History.� ss 4, fi. Hb·-140: ,; 4, ch g 1 4�9

632.616 Conversion of fraternal benefit society into mutual life insurance company.-Any domestic fraternal benefit society may b(, converted and licensed as a mutual life insurance company by compliance with all the requirements of chapter 628, A plan of conversion shall be prepared in writing by the board of directors set­ting forth in full tl,e terms and conditions of conversion, The affirmative vote of two-thirds of all members of the supreme governing body at a regular or special meeting shall be necessary for the approval of such plan. No such conversion shall take etfccl unless and until

651

approved by the department, which may give such approval if it finds that the proposed change is in con­formity with the requirements of law and not prejudicial to the cert1ticateholders of the society.

History.-ss 4, 6, ch, 86-140; S, 4, c 91-429,

632.617 Benefits.- -(1) A society may provide the following contractual

benefits: (a) Death benefits;(b) Endowment benefits;(c) Annuity benefits;(d) Temporary or permanent disability benefits;(e) Hospital, medical, or nursing benefits;(f) Monument or tombstone benefits to the memory

of deceased members; and (g) Such other benefits as authorized for life insurers

and which are not inconsistent with this chapter, (2) A society shall speedy 1n ils rules those members

and their dependents or persons in whom a member has an insurable interest who may be issued, or covered by, thi, contractual ben()fits set forth in sut1sect1on (1), A society may provide benefits on the lives of children under the minimum age tor adult membership upon application of an arlult person.

History, 4, O, ch ec HO, s 4, ,,,, 21 4�9

632.618 Beneficiaries.-(1) The owner of a benPfit contract shall have the

right al all times to change the beneficiary or bencficia· ries in accordance with the laws or rules of the society unless the owner waives this right by specifically requesting in writing that the benof1ciary designation be irrevocable, A society may, through its laws or ruies, limit the scope of beneficiary designations and shall provide that no rnvocable beneficiary shall have or obtain any vested interest 1n lhu proceeds of any certificate until the certifoate has become due and payable in conform­ity with the provisions of the benefit contract

(2) A society may make provision for the payment offuneral benefits to the extent of such portion ot any pay· ment under a certificate as might reasonably appear to be due to any person equitably entitled thereto by rea­son of having incurred expense occas1onnd by the burial of the member, provided the portion so paid shall not exceed the sum of $1,750.

(3) If, at tho death of any person insured under abenefit contract, there is no lawful beneficiary to whom the proceeds sha!I be payable, the amount of such ben· efits, except to the extent that funeral benefits may be paid as h()reinbefom provided, shall be payable to the personal representative of the deceased insured, pro· vided that if the owner of the certificate is other than the insured, such proceeds shall be payable to such owner,

History. ,,,, 4, 6, ch B6-140, " 4, ch :/1-42:1

632.619 Benefits not attachable.-No money or other benefit, charity, relief, or aid to be paid, provided, or rendered by any society, shall be subject to attach· ment, garnishment or other process, nor seized, taken, appropriated, or applied by any legal or equitable proc­ess or operation of law to pay any cfobt or liability of a member or beneficiary, or any other person who may

Ch. 632 FRATERNAL BENEFIT SOCIETIES F.S.1995

have a right thereunder, either before or after payment by the society.

Hi&tory.-ss. 4, 6:ch. 86-140; s. 4, ell. 91-429.

632.621 The benefit contract.-(1) Every society authorized to do business in this

state shall issue to each owner of a benefit contract a certificate with an identifying number specifying the amount of benefits prpvided thereby. The certificate, together with any riders or endorsements, the applica­tion for insurance and declaration of insurability, if any, signed by the applicant, and all amendments to each thereof, shall be attached to and shall constitute the benefit contract as of the date of issuance between the society and the owner, and the certificate shall so state. The certificate shall also incorporate by reference the laws of the society, and the society shall maintain for inspection by the benefit member a copy of such laws at each lodge and shall furnish a copy of such laws to each benefit member upon request. All statements on the application shall be representations and not warran­ties. Any waiver of the provision of this subsection shall be void.

(2) Any changes, additions, or amendments to thelaws of the society duly made or enacted subsequent to the issuance of the certificate shall bind the owner and the beneficiaries and shall govern and control the benefit contract in all respects the same as though such changes, additions, or amendments had been made prior to, and were in force at the time of, the application for insurance, except that no change. addition, or amendment shall destroy or diminish benefits which the society contracted to give the owner as of the date of issuance.

(3) Any person upon whose life a benefit contract isissued prior to attaining the age of majority shall be bound by the terms of the application and certificate and by all the laws and rules of the society to the same extent as though the age of majority had been attained at the time of application.

(4) A society shall provide in its laws that if itsreserves as to all . or any class of certificates become impaired, its board of directors or corresponding body may require that there shall be paid by the owner to the society the amount of the owner's equitable proportion of such deficiency as ascertained by its board or corre­sponding body, and that if the payment is not made, either:

(a) It shall stand as an indebtedness against the cer­tificate and draw interest not to exceed the rate speci­fied for certificate loans under the certificates; or

(b) In lieu of or in combination with the provisions ofparagraph (a), the owner may accept a proportionate reduction in benefits under the certificate.

The society may specify the manner of the election and which alternative is to be presumed if no election is made.

(5) Copies of any of the documents mentioned inthis section, certified by the secretary or corresponding officer of the society, shall be received in evidence of the terms and conditions thereof.

{6) No certificate. shall be delivered or issued for delivery in this state unless a copy of the form has been filed with the department in the manner provided for like policies issued by life insurers in this state. Every life, accident, health, or disability insurance certificate and every annuity certificate issued on or after one year from June 24, 1986, shall meet the standard contract provi­sion requirements not inconsistent with this chapter for like policies issued by life insurers in this state, except that a society may provide for a grace period for pay­ment of premiums of 1 full month in its certificates. The certificate shall also contain a provision stating the amount of premiums which are payable under the certifi­cate and a provision reciting or setting forth the sub­stance of any sections of the society's laws or rules in force at the time of issuance of the certificate which, if violated, will result in the termination or reduction of ben� efits payable· under the certificate. If the laws of the soci­ety provide for expulsion or suspension of a member, the certificate shall also contain a provision that any mem­ber so expelled or suspended, except for nonpayment of a premium or within the contestable period for mate­rial misrepresentation in the application for membership or insurance, shall have the privilege of maintaining the certificate in force by continuing payment of the required premium.

(7) Benefit contracts issued on the lives of personsbelow the society's minimum age for adult membership may provide for transfer of control or ownership to the insured at an age specified in the certificate. A society shall not require approval of an application for member­ship in order to effect this transfer. Ownership rights prior to such transfer shall be specified in the certificate. Nothing contained herein shall be construed to affect the right of fraternal benefit societies to determine eligi­bility requirements for membership.

(8) A society may specify the terms and conditionson which benefit contracts may be assigned.

Hlatory.--ss. 4, 6, ch. 8EH40; s. 4, ch. 91-429.

632.622 Nonforfelture benefits, cash surrender values, certlf�attrloan.s, and other options.-

( 1) For certificates issued prior to October 1, 1982,the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted shall comply with the provisions of law applicable immediately prior thereto.

(2) For certificates issued on. or after October 1,1982, reserves shall be computed utilizing the appropri­ate mortality tables approved by the department for poli­cies containing life insurance benefits made applicable to life insurers under s. 625.121.

Hlstory.-ss. 4. 6. ell. 86-140; s, 4, ch. 91-429.

632.623 tnvestments.-A society shall invest its funds only in such investments as are authorized by the laws of this state for the investment of assets of life insurers and subject to the limitations thereon. Any for­eign or alien society permitted or seeking to do business in this state which invests its funds in accordance with the laws of the state, district, territory, country, or prov­ince in which it is incorporated, shall be held to meet the requirements of this section for the investment of funds.

Hlnory.-ss. 4, 6. ell. 86-140; s. 4, ch. 91-429.

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F.S. 1995 FRATERNAL BENEFIT SOCIETIES Ch.632

632.624 Funds.-(1) All assets shall be held, invested, and disbursed

for the use and benefit of the society, cJnd no member or beneficiary shall have or acquire individual rights therein nor become entitled to any apportionment on the surrender of any part thereof, except as provided in the benefit contract.

(2) A society may create, maintain, invest, disburse,and apply any special fund or funds necessary to carry out any purpose permitted by the laws of such society.

(3) A society may, pursuant to resolution ot itssupreme governing body, establish and operate one or more separate accounts and issue contracts on a vari­able basis, subject to the provisions of law regulating life insurers establishing such accounts and issuing such contracts. To the extent the society deems it necessary in order to comply with any applicable federal or state laws, or any rules issued t11ereunder, the society may:

(a) Adopt special procedures for the conduct of thebusiness and affairs of a separate account;

(b) Provide, with respect to persons having benefi­cial interests t11erein, special voting and other rights, including, without limitation, special rights and proce­dures relating to investment policy, investment advisory services, selection of certified public accountants, and selection of a committee to manage the business and affairs of the account; and

(c) Issue contracts on a variable basis to which s.&'3?.o21(2) and (4) shRII not apply.

History.-ss. 4, ti c11. 86-14': s 4, ch. 91-429

632.625 Exemptions.-Societies shall be governed by lhe provisio11s of this chapter and shall be exempt from all other prov1s1ons of the Florida Insurance Code unless those other provisions are expressly appl!cable to societies or unless those other provisions are specifi­cally made applicable to societies by this chapter.

History_-ss. 4. 6 ch. 86-140. s 4, ch. 91-429

632.626 Taxation.-Except as otherwise provided in tt1is chapter, every society organized or licensed under this chapter is hereby declared to be a charitable and benevolent institution, and all of its funds shall be exempt from all and every state, county, district. munici pal, and school tax other than taxes on real estate and office equipment.

History.-ss. 4, 6 en. 86-140. s. 4, ch. 91-429.

632.627 Valuation.-(1) Standards of valuation for certificates issued

prior to October 1, 1982. shall be those provided by the laws applicable irnmedrately prior to said date.

(2) The minimum standards of valuation for certifi­cates issued on or after October 1, 1982, shall be in accordance with valuation standards utiiizing the appro­priate mortality tables authori1ed by the laws ot this state for the valuation of policies issued by life insurers under s. 625.121. For annuity and pure endowment cer­tificates, for total and permanent disability benefits, for accidental death benefits, and for noncancelable acci­dent and health benefits, societies shall utilize those tables as are authorized for use by life insurers in this state. All of the above shall be under valuation methods and standards, including interest assumptions, in

accordance with the laws of this state applicable to life insurers issuing policies containing like benefits.

(3) The department m;iy, in its discretion, acceptother standards for valuation if it finds that the reserves produced thereby will not be less in the aggregate than reserves computed in accordance with the minimum val­uation standard herein prescribed. Tt1e department may, in its discretion, vary the standards ot mortality applicable to all benefit contracts on substandard lives or other extra hazardous lives by any society authorized to do business in this state

(4) With the consent of the insurance supervisoryofficial of the state of domcile of the society and under such conditions, if any, which such official may impose, any society may establish and maintain reserves on its certificates in excess of the reserves required thereun­der, but the contractual rights of any benefit member shill! not be affected thereby.

History.---ss 4. lJ, ch. 8( 1,w. s 4. 91 12!1

632.628 Reports.-(1) Reports shall be filed in accord;i nee with tt1e pro

v1s1ons of this section. Every society transacting busi· ness in this state shall annually, on or before March 1, unless for cause shown such time has been extended by the department. file with the department a true state ment of its financial condition, transactions, and affairs for the preceding calendar year and pay a fee for filing same, ;is provided in s. 624.501(4). The statement shall t>e in general form and context as approved by the National Association of Insurance Commissioners for fra­ternal benefits societies and as supplemented by addi­tional information required by the department

(2) As part of the annual statement herein required,each society shaii, on or before March 1, file with the department a valuation of its certificates in force on rJecember 31 last preceding. provided the department may, in its discretion tor cause shown, extend the lime for filing such va1uation for not more than 2 calendar months. Such valuation shall be done in accordance with the standards specified in s. 632.o?7. Such valua­tion and underlying data shall be certitied by a qualified actuary or. at the expense of the society, verified by the actuary of the dcoartment of insurance of the state of domicile ot tho society.

(3) A society neglecting to, file the annual statementin the form and within the time provided by th:s section shall be subject lo an administrative fine in an amount up to $100 tor each day during which such neglect con tinues, and, upon notice by the department to that effect, its authority to do business in this state shall cease wh,le such default continues.

(4) The department shall deposit all fees receivedunder this section to the credit of the Insurance Commis­sioner's Regulatory Trust Fund.

History.�'.,:-; 4 6, di BG-110, � 4. c:r1 '.31-4?rJ

632.629 Annual license.-(1) A fraternal benefit society may not transact busi­

ness in this slate unless authorized therefor under ct subsisting license issued to the society by the depart­ment.

(2) A license issued or renewed under this chaptershall continue in force as long as the society is entitled

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Ch. 632 FRATERNAL BENEFIT SOCIETIES F.S. 1995

thereto under this chapter and until suspended or revoked by the department or terminated at the request of the society, provided:

(a) The society pays, prior to June 1, the annuallicense tax provided for in s. 624.501(3); and

(b) The department is satisfied that the society hasmet the applicable requirements of the Florida Insurance Code.

(3) If the license is not continued by the society, tt1elicense shall expire at midnight on May 31 following fail­ure of the society to continue it. The department shall

· promptly notify the society of the impending expirationof its license.

(4) The department may reinstate a license whichthe society has inadvertently permitted to expire, afterthe society has fully cured all its failures which resultedin the expiration and upon payment by the society of thefee for reinstatement in the amount provided in s.624.501(1)(b). Otherwise, the society shall be grantedanother license only after filing application therefor andmeeting all other requirements for an original license inthis state.

(5) A duly certified copy or duplicate of such licenseshall be prima facie evidence that the licensee is a frater­nal benefit society within the meaning of this chapter.

Hlstory.-ss. 4, 6, ch 86-140; s. 43, oh. 88-166; s. 4, ch. 91-429.

632.631 Examination of societies; no adverse pub­lications.-

(1) The department, or any person it may appoint,may examine any domestic, foreign, or alien society transacting or applying for admission to transact busi­ness in this state in the same manner as authorized for examination of domestic, foreign, or alien insurers. Requirements of notice and an opportunity to respond before findings are made public as provided in the laws regulating insurers shall also be applicable to the exc1m1-nation of societies.

(2) The expense of each examination and of eachvaluation, including compensation and actual expense of examiners, shall be paid by the society examined or whose certificates are valued, upon statements fur­nished by the department.

Hlstory.-ss. 4, 6, ch. 86-140, s. 4, ch. 91-429.

632.632 Foreign or alien society; admission.-No foreign or alien society shall transact business in this state without a license issued by the department. Any such society desiring admission to this state shall have the qualifications required of domestic societies orga­nized under this chapter. Any such society may r>e licensed to transact business in this state upon filin�J with the department:

(1) A duly certified copy of its articles of incorpora­tion:

(2) A copy of its bylaws, certified by its secretary orcorresponding officer;

(3) A power of attorney to the department;(4) A copy of its most recent annual statement certi­

fied under oath by its president and secretary or corre­sponding officers in a form prescribed by the depart­ment;

(5) A copy of an examination report conductedwithin the most recent 3-year period by the supervising

insurance official of its homo state or other state, toni­tory. province, or country, satisfactory to the depart­ment;

(6) Certification from the proper official of its homestate, territory, province, or country that the society is legally incorporated and licensed to transact business therein;

(7) Copies of its certificate forms; and(8) Such otr1er information as the department may

deem necessary;

and upon a showing satisfactory to the department that its assets are invested in accordance with the provisions of this chapter.

History.-ss. 4, 6, c:1. 86140, s. 4. ch. 'J1 .. 429,

632.633 Additional grounds for suspension, revo­cation, or denial of certificate of authority; receiver­ship; insolvency.-

( 1) In addition to the grounds set forth in s. 624.418,the department may, in its discretion, suspend, revoke, or deny the certificate of authority of a society, if it finds that the society•

(a) Has exceeded its powers;(b) Has failed to comply with any provision of this

chapter; (c) Is not fulfilling its contracts in good faith;(d) Has a membership of less than 400 after an exist­

ence of 1 year or more; or (e) Is conducting business fraudulently or in a man­

ner hazardous to its members, creditors, the public, or the business.

(2) In addition .to the grounds set forth in s. 626.9571,whenever the department has reason to believe that any society is operating in violation of this chapter or of any provision of the Florida Insurance Code applicable to societies, the provisions of ss. 626.9571, 626.9581, 626.9591, and 626.9601 shell! apply.

(3) Any rehabilitation, liquidation, conservation, ordissolution of a society shall be conducted under the supervision of the department. The department shall have all the powers with respect to such rehabilitation, liquidation, conservation, or dissolution that are granted to the department under the laws governing the rehabili­tation, liquidation, conservation, or dissolution of life insurance companies.

History.-ss. 4, 6, ch. 86-140; s. 4, ch. 91-429.

632.634 Licensing and appointment of agents.-( 1) Agents of societies shall be licensed and

appointed in accordance with the provisions of the Flor­ida Insurance Code regulating the licensing, appoint­ment, examination, revocation, suspension, or termina­tion of the license of resident and nonresident life, health, and variable annuity insurance agents.

(2) No examination, license, or appointment shall berequired of any regular salaried officer, employee, or member of a licensed society who devotes substantially all of his services to activities other than the solicitation of benefit contracts from the public and who receives no commission or other compensation directly dependent upon the amount of business obtained for the solicita­tion of such contracts.

(3) Any agent, representative, or member of a soci­ety who in any preceding calendar year has solicited

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F.S. 1995 FRATERNAL BENEFIT SOCIETIES Ch.632

and procured life insurance benefit contracts on behalf of any society in a total amount of insurance less than $50,000, or, in the case of any other k,nd or kinds of insurance benefit contracts wh;ch the society might write, on not more than 25 individuals, shall be exempt from the agent licensing and appointment requirements of subsection ( 1 ). Every society shall register, on fo,rns prescribed by the department and on or before March 1 of each year, the name and residence address of each agent, representative, or member exempt under the pro­visions ot this subsection and shall, within 30 days of ter minat1on of employment, notify the department of the termination. Any agent, representative, or member for which an exemption is claimed due to employment by the society subsequent to Maren 1 shall be reg1sternd by the society with the department within 10 days of the date of employment.

History.-r,e, 4, 6 C'• 86-140 c, 136. ch. 91-:'.lA. s 4. ch 91 ... 429

632.635 Unfair methods of competition and unfair and deceptive acts and practices.-Every society authorized to do business in this state shall be subject to tt"1e provisions of the Unfair Insurance 1 rade Pract,ces Act as provided in part X of chapter 626; provided, how­ever. that nothing in such provisions shall be construed as applying to or affecting the right of any society to determine its eligtbility requirements for rnembersnip, or be construed as applying to or affecting the offer,ng of benefits exclusively to members or persons eligible for membership n the SOClety.

Hlstory.-ss. 4, 6 ch. 86-140 s 7, ch. 91-1 'G, s. 4, ch. 91-429

632.636 Penalties.-( 1) The provisions of s. 624.15 sha l apply with

respect to: (a) Any person who willfully makes a false or fraudu­

lent statement in or relating to an application for mem· bersh1p or for the purpose of obtaining money from or a benefit in any society;

(b) Any person who solicits membership for, or inany manner assists in procuring membership in, any society not licensed to do business in this state;

(c) Any person guilty of a willful violation of, orneglect or refusal to comply with, the provisions of this chapter for which a penalty is not otherwise prescr,bed.

(2) Any person who willfully makes a false or fraudu­lent statement:

(a) In any verified report or declaration under oathrequired or authorized by this chapter, or

(b) Of any material tact or thing contained in a swornstatement concerning the death or disability of an insured for the purpose of procuring payment of a bene­fit named in the certificate,

shali be guilty of perjury and shall be subject to the pen­alties therefor prescribed by law.

History .-c;::, 4 ,,,, HtH 40 ·. c ch 91 4z2

632.637 Exemption of certain societies.-(1) Nothing contained in this chaptAr snail be so con­

strued as to affect or apply to: (a) Grand or subordinate lodges of societies, orders,

or associations now doing business in this state which provide benefits exclusively through local or subordi nate lodges;

(b) Orders, societies, or associations which admit tomembership only persons engaged in hazardous occu­pations, in tho samf: or similar lines of business. insuring only their own members and their families. and the ladies' societies or ladies· auxiliaries to such order. societies. or associations;

(c) Domestic societies which limit their membershipto employees of a particular city or town, designated km, business house, or corporation which provide for a death benefit of not more than $1,000 or disability bene­l 1ts of not rnore than $1,000 to any person 111 any one year, or both; or

(d) Domestic societies or associations of a purelyreligious, charitable, or benevolent description, which provide tor a deatn benefit of not more than $1,000 or for disability benefits of not more than $1,000 to any one person in any one year, or both.

(2) Any such society or association described inparagrapn (1)(c) or paragraph (l)(d), which provides for death or disability benefits for which benefit certificates are issued. and any such soc,ety or association included 1n paragraph ( 1 )(dJ vmich has more than 1,000 members, shall not be exempted from the provisions of this chap­ter but shafl comply with ail requirements thereof.

(3) No society which, by the provisions of this sec­tion, ts exempt from the requirements of this chapter, except any society described in paragraph (1 )(b), shall give or allow or promise to give or allow to any person any compensation for procuring new members.

(4) Every society which provides for benefits in caseof death or disability resulting solely from ace.dent, and which does not obligate itself to pay natural death or sick benefits, shall have all ot the privileges and be suti­ject to all the applicable provisions and regulations of this chapter, except that the provisions thereof relating to medical examination, valuations of benefit certifi ca\es, and incontestability shall not apply to such soci­ety.

(5) The department may require from any society orassociation. by examination or otherwise, sucr1 informa tion as w1il enable the department to determine whether such soc,ety or association is exempt from the provi­sions of this chapter

(6) Societies exempted under the provisions of thissection shall also be exempt from all other provisions of the insurance laws of this state.

History.-<,,, 4, 6, ch t<F;-140 ,, 4, cc rn-429

632.638 Applicability of other code provisions.-ln addition to the provisions heretofore contained or referred to in this chapter, othm chapters and provisions ot this code st1all apply to fraternal benefit soc1et1es, to the extent applicable and not in conflict with the express provisions of this chapter and the reasonable implica­t,ons thereof, as follows:

( 1) Part I of chapter 624:(2) Part II of chapter 624;(3) Sections 624.404, 624.415. 624.416. 624.418,

624.420, 624.421. 624.4211 624.422. and 624.423; (4) Section 624.501;(5) Part I of chapter 626;(6) Pmt Ill of cnapter 626(7) Part IV of chapter 626;

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Ch.632 FRATERNAL BENEFIT SOCIETIES F.S.1995

(8) Sections 626.901 through 626.912;(9) Part VIII of chapter 626, subject to the limitations

set forth in former s. 632.341; (10) Section 627.424;(11) Section 627.428;

656

(12) Section 627.479; and(13) Part I of chapter 631.

lblory,-ss. 4, 6, ch. 86-140; s. 44, ch. 88-166; s. 20, ch. 90-119; s. 184, ch. 91-108; S, 4, ch. 91-429.