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General Casualty Bulletin 276

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STATE BOARD OF INSURANCE, AUSTIN, TEXAS
ROBERT W. STRAIN, Member
PENN J. JACKSON, Chairman
J. P. GIBBS, Member
WILLIAM A. HARRISON, Commissioner of Insurance

December 3, 1959

General Casualty Bulletin No. 276

W. C. Circular Letter No. 319
Automobile Series No. 337
Burglary, Robbery & Theft Bulletin No. 75

TO THE HOME OFFICES OF ALL INSURANCE COMPANIES, CORPORATIONS, EXCHANGES, MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS OR OTHER INSURERS WRITING AUTOMOBILE, GENERAL LIABILITY, BURGLARY, ROBBERY AND THEFT, AND WORKMEN'S COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE IN THE STATE OF TEXAS.

Gentlemen:

The State Board of Insurance has entered an Order amending the special policy conditions applicable to Lloyds, Mutuals, Reciprocals and Participating Stock Companies.

The General Instructions containing the Special Conditions for Lloyds, Mutuals, Reciprocals and Participating Stock Companies policy conditions in the portfolio of Automobile, General Liability, Burglary, Robbery and Theft, and Workmen's Compensation policies is withdrawn and the attached revised pages, one through five, are substituted and approved in lieu thereof.

These provisions were approved mandatorily as of January 1, 1960. Companies may continue using the Special Conditions presently prescribed until such time as their present supply of Policy Forms is exhausted; however, in no event may the present Special Conditions be used beyond October 1, 1960. All such Policy Forms issued to be effective on or after that date shall contain the revised language as prescribed.

STATE BOARD OF INSURANCE
By: Paul D. Connor, Chief Clerk

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INSTRUCTIONS FOR PREPARATION OF POLICIES BY COMPANIES

Special Conditions for Lloyds, Mutuals, Reciprocals and Participating Stock Companies

When a policy is issued by a Lloyds, a mutual company, a reciprocal association or a participating Stock company having special provisions applicable to its membership, dividends and/or policyholders, such provisions, when approved, in accordance with the provisions of the Texas Insurance Code, of 1951, as amended, must be inserted in the policy.

LLOYDS

A Lloyds company shall print into the standard policy as a plan of operation before its signature at a place to be selected at its option, either of the following according to its Underwriters' agreement:

(a) "Service of process may be had upon the State Official duly designated for such purpose in the State in which the property insured hereunder is located if __________ Lloyds is licensed in such state; or upon the Commissioner of Insurance of the State of Texas; or upon the duly appointed attorneys in fact for __________ Lloyds at __________, Texas. Underwriters at __________ Lloyds have complied with the laws of the State of Texas regulating Lloyds plan insurance and said statutes are hereby made a part of this policy. The entire assets of Lloyds __________ supports its policies, but each individual underwriter's liability is several and not joint and is limited by law to the amount fixed by his underwriter's contract and subscription and no underwriter is liable as a partner. This policy is made and accepted subject to the foregoing stipulations and conditions together with such other provisions, agreements or conditions as may be endorsed hereon or added hereto, and no agent or other representative of __________ Lloyds shall have the power to waive any provision or condition of this policy. This policy is non-assessable and no contingent liability of any kind and character attaches to the insured named herein."

(b) "Wherever in this policy the word 'Company' appears with reference to the insurance carrier, such word shall be construed to mean 'Underwriters at __________ Lloyds,' herein called the 'Underwriters'; and wherever reference is made to any officer of the insurance carrier, such reference shall be construed to mean the Attorneys-in-Fact. Each of the Underwriters having deposited with the Attorneys-in-Fact a certain sum, which with the several deposits of the other Underwriters constitutes the Guarantee Deposit, said sums to be held severally in trust to guarantee the payment of any losses sustained by these Underwriters on any of their undertakings in excess of the premium collected therefor, it is hereby expressly stipulated and is a condition of this policy that the liability of each or any of these Underwriters to the Insured herein named for or on any one claim or loss shall be limited to that proportion of the adjusted amount which each or any one Underwriter's original deposit shall bear to the aggregate deposit, and it is further expressly stipulated and made a condition of this policy that the total of the individual responsibility of each or any one Underwriter for the payment of losses to the insured herein named and to the insureds named in all other policies shall be limited, after the application of all surplus standing to his credit with the Attorneys-in-Fact, to double the amount of his original Guarantee Deposit as designated in the Articles of Agreement on file with the Attorneys-in-Fact.

"No term or condition of this policy is intended to create, creates, or shall be construed to create a partnership or mutual insurance association, or to give rise to or create any joint or general liability. It is a condition of this policy, and is hereby expressly stipulated, that the liability of the insured hereby assumed by these Underwriters is several and not joint, and in fact no greater or different with respect to any one Underwriter than if each Underwriter had issued to the Insured a separate policy for his proportionate share of the risk undertaken; and it is further expressly stipulated that no action shall lie against any one Underwriter for a greater sum than his proportionate and separate share of any loss sustained as determined by the next preceding paragraph of this policy; but to facilitate the enforcement of the rights of the Insured and to avoid a multiplicity of suits, each of these Underwriters has stipulated, and does hereby agree, that in any suit brought against the Attorneys-in-Fact, or against the Attorneys-in-Fact and any one or more of the other Underwriters, but not otherwise, service of process on the Attorneys-in-Fact, or on any person or officer appointed by the Attorneys-in-Fact for the purpose of accepting service, shall be personal service on himself and that a personal judgment may be rendered against him for his separate proportion of any amount adjudged to be due within the limits provided in the next preceding paragraph of this policy.

"The names and addresses of the Underwriters at __________ Lloyds, for and on behalf of each of whom this policy is signed by the Attorney-in-Fact, the amount of each Underwriter's Guarantee Deposit and the proportion of such Deposit to the aggregate of the Guarantee Deposits of all Underwriters may be obtained from the records on file with __________, Attorneys-in-Fact or their successors, at their office in __________, Texas, where they are subject to inspection by the Insured hereunder or by his duly authorized representative."

A participating Lloyds company shall print into its policy the following:

"The named insured shall be entitled to participate in a distribution of the surplus of the Underwriters as determined by the Underwriters and the Attorneys-in-Fact from time to time after approval in accordance with the provisions of the Texas Insurance Code, of 1951, as amended."

MUTUALS

A Mutual company shall print into its policy, before its signature at a place to be selected at its option, the following:

"MUTUALS - MEMBERSHIP AND VOTING NOTICE
The insured is notified that by virtue of this policy, he is a member of the __________ Mutual __________ Insurance Company of __________, and is entitled to vote either in person or by proxy at any and all meetings of said Company. The Annual Meetings are held in its Home Office __________, on the _____ day of __________, in each year, at __________ o'clock _____."

A Mutual company shall print into its policy, before its signature at a place to be selected at its option, either of the following:

(a) "MUTUALS - PARTICIPATION CLAUSE WITH CONTINGENT LIABILITY
Limit of Liability: The liability of each policyholder of this company is limited to, and by, its By-Laws fixed and determined to be, the Deposit Premium or Premium Paid; and the member by accepting this policy, assumed a contingent liability not exceeding the amount of Deposit Premium or Premium Paid named in the policy, which amount shall not exceed one annual premium.
"Mutual Participation: The insured is, by virtue of this policy, a member of the company, subject to the By-Laws, reference to which is had, and shall be entitled to such unabsorbed Deposit Premium or Dividend as may be declared by the Board of Directors or Executive Committee, subject, however, to approval, as provided by the Texas Insurance Code, of 1951, as amended."

(b) "MUTUALS - PARTICIPATION CLAUSE WITHOUT CONTINGENT LIABILITY
No Contingent Liability: This policy is non-assessable. The policyholder is a member of the company and shall participate, to the extent and upon the conditions fixed and determined by the Board of Directors in accordance with the provisions of law, in the distribution of dividends so fixed and determined."

RECIPROCALS

A Reciprocal shall use as a Plan of Operation, printed in its policy before its signature, the following:

"RECIPROCALS - SPECIAL DEFINITIONS AND PROVISIONS - PLAN OF OPERATION
Wherever the words 'Policy,' 'Insured,' 'Company,' 'Premium,' and 'President,' occur herein they shall be taken and construed to mean 'Contract,' 'Subscriber,' 'Reciprocal or Inter-Insurance Exchange,' 'Deposit,' and 'Attorney-in-Fact,' respectively.

"This policy is issued, as an Inter-Insurance Exchange, by __________ as Attorney-in-Fact for __________ in accordance with the powers vested in him by an agreement, executed by the subscribers.

"LIMIT OF LIABILITY: The liability of each member of this Exchange is limited to, and by its Articles of Agreement fixed and determined to be, the deposit premium or paid premium; and the member by accepting this policy, assumes a contingent liability not exceeding the amount of deposit premium or premium named in the policy, which amount shall not exceed one annual premium."

Or the following paragraph may be substituted for the paragraph immediately preceding if applicable and approved:

"NO CONTINGENT LIABILITY" - No policyholder in this Exchange incurs any liability other than Deposit Premium or Premium Paid, the Exchange having a free surplus in the amount defined by Article 19.03 of the Texas Insurance Code, of 1951, as amended, and in accordance with the Exchange's Articles of Agreement.

A participating reciprocal shall print into its policy the following:

"PARTICIPATION: The insured is by virtue of this policy a member of the Exchange, subject to the Articles of Agreement, reference to which is had and shall be entitled to such unabsorbed premium or dividend as may be declared by the advisory committee, subject, however, to approval in accordance with the provisions of the Texas Insurance Code, of 1951, as amended."

A Reciprocal may print in its policy in the caption at the top of the first page the following:

"The subscribers at __________ do hereby severally agree to insure the subscriber named herein."

Reciprocals shall use the following clause:

"In witness whereof the subscribers at __________ have caused these presents to be signed by their Attorney(s)-in-Fact, ___________ (Attorney(s)-in-Fact.)"

Participating Stock Companies

A participating stock company shall print into its policy before its signature at a place to be selected at its option, the following:

"DIVIDEND PROVISION - PARTICIPATING COMPANIES
The named insured shall be entitled to participate in a distribution of the surplus of the Company, as determined by its Board of Directors from time to time, after approval in accordance with the provisions of the Texas Insurance Code, of 1951, as amended."

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Last updated: 3/16/2018