Mutual Insurance

C.R.S. tit. 10, art. 12

in effect

C.R.S. § 10-12-101 Mutual protective associations

10-12-101. Mutual protective associations. (1) One hundred or more persons, desiring to form and be members of a mutual protective association, are authorized to and may insure each other against loss or damage by any peril or perils resulting in physical loss or damage to property, including theft of personal property, situated in this state in which said persons have an insurable interest if said persons first subscribe their names and addresses to articles of association which provide and set forth: (a) The name of said association, which shall contain the words "protective association"; (b) The city or town where the principal office of the association is located and where the books and records are maintained; (c) The names and addresses of directors who shall serve for the first year of existence of the association, which number of directors shall not be less than three nor more than seven and which directors must be members; (d) That members shall be entitled to one vote each and shall elect directors at each annual meeting for a term not to exceed three years, after the first year of existence. The members of said association shall consist of the one hundred or more persons subscribing the articles of association who shall also be policyholders bona fide applicants for insurance at the time their names are subscribed to the articles and, in addition, all other persons becoming policyholders thereafter for the period during the year in which their policies are in full force and effect. The policies of the members shall be effective concurrently with, or within one year from, the granting of a certificate of authority to said association. If the period of insurance coverage is less than a year, each member will be a full-fledged member for a complete year. (e) The specific risks which said association purposes to insure, which shall be one or more of the risks specified in this section; (f) The manner in which premiums will be charged or assessments levied against the members for the purpose of paying losses and expenses of management of said association; except that each association organized on or after April 20, 1949, and authorized to insure against any insurable risks specified in the articles of association and all said associations which charge an advance premium instead of operating on the pure assessment basis shall at all times maintain on deposit with the commissioner a sum equal to twenty-five thousand dollars in cash or convertible securities as a guaranty fund to guarantee faithful performance of the contract. Upon dissolution, such guaranty fund shall become the property of the person who deposits it, subject to all claims provided for in sections 10-12-101 to 10-12-104. (2) County mutual protective associations now operating in Colorado upon a pure assessment plan and such associations which do not write insurance upon growing crops but operate upon an assessment plan with the stated liability of each member set forth in its policies need not maintain any deposit with the commissioner nor maintain any reserves as provided in this section. (3) Each association operating on an advance premium system and authorized to insure against any insurable risks specified in this section shall allocate and set aside at least sixty-five percent of all annual gross premiums received under all policies as a loss reserve to be used only for the payment of losses. In the event said loss reserve is insufficient to meet all adjusted loss claims for the year, an amount not exceeding five percent of the net premiums received shall be taken from the guaranty fund and added to the loss reserve to make up any deficit. The amount of said loss reserve then shall be distributed ratably among all policyholders suffering loss. to be used only for the payment of losses. In the event said loss reserve is insufficient to meet all adjusted loss claims for the year, an amount not exceeding five percent of the net premiums received shall be taken from the guaranty fund and added to the loss reserve to make up any deficit. The amount of said loss reserve then shall be distributed ratably among all policyholders suffering loss. (4) Losses are defined as the actual amount paid the members and do not include any adjusting expenses or other expenses. If all losses are paid in full in any year and there is an excess sum remaining in the loss reserve, such excess sum shall be retained in the loss fund and shall be available for the following purposes in this order: Payment of current losses; recoupment by the company of all sums which have been removed from the guaranty fund in prior years to pay excess losses; as a permanent loss reserve fund.

C.R.S. § 10-12-102 Association to file articles - bylaws

10-12-102. Association to file articles - bylaws. After the articles of association have been subscribed and acknowledged in the manner provided for Colorado corporations, a certified copy thereof shall be filed with the commissioner, who shall obtain the approval of the attorney general and otherwise investigate to determine whether the association has complied with the provisions of sections 10-12-101 to 10-12-104. The association shall adopt bylaws and prepare applications and a list of policyholders, all of which, together with any amendments thereto, shall be filed with the commissioner. The commissioner shall issue a certificate of authority to an association which in his opinion has complied with the provisions of sections 10-12-101 to 10-12-104, and, if any provision has not been complied with, the commissioner shall suspend the certificate of authority until such time as compliance has been effected.

C.R.S. § 10-12-103 Noncompliance a misdemeanor - penalty

10-12-103. Noncompliance a misdemeanor - penalty. (1) Upon failure of any association to comply with the provisions of sections 10-12-101 to 10-12-104, whether or not in possession of a valid certificate of authority, the officers and directors jointly and severally are guilty of a misdemeanor and, upon conviction thereof, each shall be punished by a fine of not less than five hundred dollars nor more than fifteen hundred dollars for each act in violation of sections 10-12-101 to 10-12-104. (2) Any order or decision of the commissioner shall be subject to review, which shall be on the basis of the record of the proceedings before the commissioner and shall not be limited to questions of law, by appeal to the district court of the city and county of Denver at the instance of any party in interest. (3) Such companies, organized and operating under existing laws, shall not be required to reorganize their corporate structure in order to be eligible to operate under sections 10-12-101 to 10-12-104.

C.R.S. § 10-12-104 Fees - annual statement - tax

10-12-104. Fees - annual statement - tax. (1) The association shall pay to the division of insurance the fees as prescribed pursuant to section 10-3-207 (4). (2) (a) Each agent, solicitor, special agent, or salaried representative soliciting business in this state shall be licensed by the division of insurance upon application of the association and shall be subject to the insurance licensing laws of the state. The fee for the initial license is five dollars, and the fee for filing each annual notice of intention to keep the agent's license in force is two dollars. (b) Notwithstanding the amount specified for any fee in paragraph (a) of this subsection (2), the commissioner by rule or as otherwise provided by law may reduce the amount of one or more of the fees if necessary pursuant to section 24-75-402 (3), C.R.S., to reduce the uncommitted reserves of the fund to which all or any portion of one or more of the fees is credited. After the uncommitted reserves of the fund are sufficiently reduced, the commissioner by rule or as otherwise provided by law may increase the amount of one or more of the fees as provided in section 24-75-402 (4), C.R.S. (3) The association shall render an annual statement of accounts and such records of the financial condition of the association as may be required by the commissioner, who shall furnish forms for this purpose. The commissioner shall have the same supervisory authority over such association as is provided by law in the case of other insurance companies and associations, and the commissioner shall collect two and one-fourth percent premium tax from each of the associations or companies as provided in section 10-3-209.

C.R.S. § 10-12-105 Guaranty fund of mutual companies

10-12-105. Guaranty fund of mutual companies. (1) Guaranty fund certificates may be issued to provide a guaranty fund for domestic life and fire insurance companies incorporated upon the mutual plan and for domestic casualty insurance associations incorporated upon the assessment plan, such fund to be held as security for the payment of all losses and other policy liabilities of such companies. Guaranty fund certificates may draw interest or dividends not exceeding in the aggregate eight percent per annum, which shall only be paid from the profits of the company. The certificates may only be retired or redeemed by using the profits of the company for that purpose, but the full fund as required of each kind of mutual and assessment company by this title (except article 15), and article 14 of title 24, C.R.S., shall at all times be maintained. Such guaranty fund shall be a liability until redeemed or retired. It shall only be used to pay policy claims or liabilities when the contingent mutual liability of the policyholders has been drawn upon and found insufficient to meet the losses of policy claims or when the directors for any cause fail to provide for the payment of policy claims. (2) Upon satisfying himself of such failure, the commissioner shall suspend the certificate of authority of such company and apply to the district court for an order restraining said company from doing further business; and the court may appoint a receiver or issue such decrees and orders as may best serve the interests of the members or policyholders and of the public; and the disbursement or distribution of the guaranty fund shall then be made under the court's direction; but the fund shall first be used to pay policy claims or losses, and, if any of the fund then remains, it shall be used to pay creditors, if any, and the then remaining portion of the fund shall be used to redeem outstanding guaranty fund certificates, or, if none are outstanding, it shall be distributed among the members of the company as the court may direct. The profits of a domestic mutual insurance company or association are that portion of its cash funds not required for the payment of losses and expenses and not set apart for the unearned premium reserve or any other purpose required by law.

C.R.S. § 10-12-106 Fees of mutual companies

10-12-106. Fees of mutual companies. Mutual and assessment companies, unless otherwise specified in this title (except article 15), and article 14 of title 24, C.R.S., are required to pay the same fees and be under the same supervision and authority of the commissioner as companies that are engaged in the same kind of insurance business and that are organized upon the joint-stock plan, and they shall comply with the general laws of this title, unless otherwise specified, and be subject to the penalties provided therein.

C.R.S. § 10-12-107 Ownership of profits

10-12-107. Ownership of profits. Every domestic insurance company incorporated upon the mutual or assessment plan shall state clearly in its policies or certificates that the accumulations of profits of such corporations over and above all proper liabilities are the sole property of the members or policyholders in good standing and that the same shall be distributed in a just and equitable manner in case such company is reinsured or ceases to do business.

C.R.S. § 10-12-108 Mutual insurance companies - corporation policyholders

10-12-108. Mutual insurance companies - corporation policyholders. Any public or private corporation, board, or association in this state or elsewhere may make applications and enter into agreements for and hold policies in any domestic or foreign mutual insurance company. Any officer, stockholder, trustee, or legal representative of any such corporation, board, or association or any estate may be recognized as acting for or on its behalf for the purpose of such membership but shall not be personally liable upon such contract of insurance by reason of acting in such representative capacity. The right of any corporation organized under the laws of this state to participate as a member of any such mutual insurance company is declared to be incidental to the purpose for which such corporation is organized and as much granted as the rights and powers expressly conferred.

C.R.S. § 10-12-109 Mutual insurance companies - voting powers

10-12-109. Mutual insurance companies - voting powers. Every member of the company shall be entitled to one vote or to a number of votes based upon the insurance in force, the number of policies held, or the amount of premiums paid, as may be provided in the bylaws.

C.R.S. § 10-12-110 Mutual insurance companies - premiums and premium deposits

10-12-110. Mutual insurance companies - premiums and premium deposits. The policies shall provide for a premium or premium deposit payable in cash and, except as provided in this section, for a contingent premium at least equal to the premium or premium deposit. Such mutual company may issue a policy without a contingent premium while it has a surplus equal to the capital required of a domestic stock insurance company transacting the same kinds of insurance, and in no event shall the holder of any such policy be liable for a greater amount than the premium or premium deposit expressed in the policy. If at any time the admitted assets are less than the reserve and other liabilities, the company shall immediately collect upon policies with a contingent premium a sufficient proportionate part thereof to restore such assets, but no member shall be liable for any part of such contingent premium in excess of the amount demanded within one year after the termination of the policy. The commissioner may, by written order, direct that proceedings to restore such assets be deferred during the time fixed in such order.

C.R.S. § 10-12-111 Mutual life assessment companies prohibited - when

10-12-111. Mutual life assessment companies prohibited - when. No life insurance company which is organized under the mutual assessment plan or which issues contracts, the performance of which is contingent upon the payment of assessments or calls made upon its members, shall do business in this state, except such companies authorized on April 15, 1913, to do business in this state and which value their assessment policies or certificates of membership as yearly renewable term policies, according to the standard of valuation of life insurance policies prescribed by the laws of this state. No such company shall provide in any contract of insurance for any cash or other benefit to accrue to any living member or policyholder or to any beneficiary except a death benefit from life insurance upon the yearly renewable term plan.

C.R.S. § 10-12-112 Validation clause

10-12-112. Validation clause. All transactions, otherwise lawful and not inconsistent with sections 10-12-108 to 10-12-111, are hereby validated as though done pursuant to said sections.

C.R.S. § 10-12-401 Legislative declaration

10-12-401. Legislative declaration. It is the intent of the general assembly by the enactment of this part 4 that the legal existence and status of mutual insurance companies formed under this part 4 and the members thereof be recognized beyond the limits of this state and that, subject to any reasonable registration requirements, any such mutual insurance company transacting business outside this state be granted the protection of full faith and credit under section 1 of article IV of the constitution of the United States.

C.R.S. § 10-12-402 Scope of provisions

10-12-402. Scope of provisions. This part 4 shall apply to all domestic and foreign mutual insurers, including captive insurance companies organized as mutual insurers, transacting or being organized to transact any of the kinds of business for which insurance companies regulated by this title are permitted.

C.R.S. § 10-12-403 Mutual insurer defined

10-12-403. Mutual insurer defined. For purposes of this part 4, a "mutual" insurer is an insurance corporation without capital stock, owned by its policyholders collectively, who have the right to vote in the election of its directors.

C.R.S. § 10-12-404 Company name

10-12-404. Company name. The corporate name of any company organized under this article shall contain the word "mutual" and shall not be the same as and shall be distinguishable on the records of the secretary of state from the name of any domestic company or of any foreign or alien company authorized to transact business in this state.

C.R.S. § 10-12-405 Applicability of other code and corporation code provisions

10-12-405. Applicability of other code and corporation code provisions. Domestic mutual insurers, incorporating or qualifying to transact any or all of the classes of insurance designated in section 10-3-102, shall be subject to all provisions of this title generally applicable to other incorporated insurers, specifically including the provisions of article 3 of this title, and in case of conflict between this part 4 and other provisions of this title, the provisions of this part 4 shall control. Domestic mutual insurers shall be subject to additional articles of this title as they are applicable to the class or classes of insurance made by such domestic mutual insurer. Domestic mutual insurers shall not be required to have or issue capital stock or shares nor shall they be required to distribute an annual report to a member other than at the time of the initial policy issuance or once each year on renewal. Except as otherwise provided in this part 4, incorporated mutual insurers shall be deemed to be incorporated or organized under the general corporation law of this state.

C.R.S. § 10-12-406 Lines of business

10-12-406. Lines of business. When permitted by its articles of incorporation, a company may be organized under this part 4 to make insurance to the same extent and for the same purposes as permitted for domestic insurance companies under section 10-3-102 or for captive insurance companies under section 10-6-107.

C.R.S. § 10-12-407 Bylaws

10-12-407. Bylaws. The bylaws shall provide that each policyholder of the company shall be a member of the company and shall be entitled to one or more votes based upon the amount of insurance in force, the number of policies held, or the amount of premium paid, as shall be stated in such bylaws. The bylaws may permit voting by proxy.

C.R.S. § 10-12-408 Liability of members

10-12-408. Liability of members. (1) A member of a mutual insurance company organized under this article is not liable to any other member, to the company, or to any creditor of the company for the payment of losses or expenses of the company beyond payment of premiums for insurance issued to such member, nor may any member be assessed for any liability of the company. (2) A mutual insurance company may, if permitted by its articles of incorporation or bylaws and if provision therefor is clearly disclosed to its members on the face of the policy, make contingent premium assessments on its members. (3) No person is liable for any obligation arising from membership unless the person was admitted to membership upon the person's application or with the person's consent.

C.R.S. § 10-12-409 Dividends

10-12-409. Dividends. (1) The board of directors or trustees of any company which is subject to the provisions of this part 4 and which writes life, accident, or accident and health insurance may declare dividends to its members. (2) After retaining sufficient funds for the payment by the company of all outstanding policy and other obligations, the board of directors or trustees of any company which is subject to the provisions of this article and which writes casualty, fidelity and surety, fire, elements and marine, or similar insurance may from time to time fix and determine the amount of dividends payable, or of unabsorbed or unused premiums or premium deposits to be returned, to each policyholder, may establish reasonable classifications or groupings of policyholders and plans for the distribution of such dividends or refunds upon each general kind of insurance or groups or classes thereof, and may establish reasonable territorial divisions upon policies expiring during a fixed period. (3) The declaration and payment of dividends by any company subject to the provisions of this part 4 shall be subject to the following conditions: (a) No dividends shall be declared or paid at any time except out of the earned, as distinguished from contributed, surplus nor when the surplus of the company is less than the original surplus required for the kind or kinds of insurance the company is authorized to write nor when the payment of such dividends will reduce its surplus to less than such amount. (b) No dividends shall be declared or paid contrary to any restriction contained in the articles of incorporation.

C.R.S. § 10-12-410 Insolvency or impairment of mutual insurance company

10-12-410. Insolvency or impairment of mutual insurance company. A mutual insurance company is deemed insolvent when its admitted assets are less than all of its liabilities, excluding from such liabilities the aggregate amount of its guaranty fund, and is deemed impaired when its admitted assets are less than its liabilities, including as a liability the aggregate amount of its guaranty fund, or when its surplus is less than the minimum requirements of section 10-3-201.

C.R.S. § 10-12-411 Conversion of domestic mutual insurer to domestic stock or other form of insurer

10-12-411. Conversion of domestic mutual insurer to domestic stock or other form of insurer. (1) Any domestic mutual insurer may submit to the commissioner a petition and plan to convert, without reincorporation, into a domestic stock or other form of insurer pursuant to the requirements of this section. (2) The petition and plan shall set forth with specificity the terms and conditions of the proposed conversion and shall do all of the following: (a) Certify that the plan has been adopted by a majority vote of the board of directors of the insurer; (b) Certify that the plan and the proposed conversion will not be prejudicial to the policyholders of the insurer; (c) Specify the method and basis for the issuance of the capital stock of the converted stock or other form of insurer; and (d) Provide copies of proposed amendments to the insurer's articles of incorporation and bylaws or other documents of organization to effectuate the conversion. (3) The commissioner shall preliminarily approve the conversion after receiving the information provided in subsection (2) of this section. (4) After receiving preliminary approval from the commissioner, the insurer shall do all of the following: (a) Give notice, either personally or through mailing at least twenty-one days before the time fixed for the meeting, to the last-known postal address of each policyholder that the question of the conversion will be voted upon at a regular or special meeting of the policyholders. Such notice shall fairly but briefly describe the proposed conversion plan. (b) Approve the conversion plan and any necessary amendments to the insurer's articles of incorporation and bylaws or other documents of organization, at the regular or a special meeting held in pursuance of the call and notice, by the affirmative vote of not less than two-thirds of the policyholders voting in person or by proxy; and (c) Submit the conversion plan, together with proper proof that it has been approved by the policyholders as provided in this section, to the commissioner for final approval. The conversion plan shall not become effective until the commissioner issues an amended certificate of authority to the petitioner. (5) Upon the issuance of the amended certificate of authority, the conversion shall be effective and the mutual insurer shall immediately become a stock or other form of insurer rather than a mutual insurer. The conversion into a stock or other form of insurer shall not affect any suits, rights, or contracts of the mutual insurer. In all other respects the rights and properties of the mutual insurer shall continue to be the property of the resulting stock or other form of insurer, which shall remain bound by all the obligations and liabilities of the mutual insurer. The stock or other form of insurer shall be deemed to have been organized at the time the converted mutual insurer was originally organized. (6) Notwithstanding the requirements of paragraphs (a) and (b) of subsection (4) of this section, in the event of insolvency of the insurer, its board of directors by a majority vote may, in its petition, request that the commissioner waive the requirements of notice to and approval by the policyholders before submitting the petition and plan of conversion. Such petition shall specify both of the following: (a) The method and basis for the issuance of the converted insurer's shares of its capital stock or other indication of ownership to an independent party in connection with an investment by such independent party in an amount sufficient to restore the insurer to a sound financial condition; and fore submitting the petition and plan of conversion. Such petition shall specify both of the following: (a) The method and basis for the issuance of the converted insurer's shares of its capital stock or other indication of ownership to an independent party in connection with an investment by such independent party in an amount sufficient to restore the insurer to a sound financial condition; and (b) That the conversion shall be accomplished without distribution to the past, present, or future policyholders, if the commissioner finds that the value of the insurer, due to insolvency, is insufficient to warrant any such distribution. (7) If the commissioner, upon review of the plan of conversion and the financial examination, finds that the domestic mutual insurer meets statutory requirements with respect to capital, surplus fund, and assets, the commissioner may, by a written order, waive the requirements of paragraphs (a) and (b) of subsection (4) of this section. (8) A domestic mutual insurer may, by a majority vote of its directors and upon approval of the commissioner, abandon such plan for conversion at any time before the issuance of the final order of the commissioner. Upon such abandonment, all rights and obligations arising out of the plan shall terminate and the insurer shall continue to conduct its business as a domestic mutual insurer as though no such plan had ever been adopted.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://leg.colorado.gov/sites/default/files/images/olls/crs2024-title-10.docxFetched: 10/6/2026