J. MILLARD TAWES, GOVERNOR 309

VETOES

TITLES AND MESSAGES

House Bill No. 52—Reciprocal Exchanges in Insurance Laws

AN ACT to add new Section 259 (j) to Article 48A of the Annotated
Code of Maryland (1957 Edition), title "Insurance", sub-title
"Reciprocal Exchanges and Interinsurers", to follow immediately
after Section 257 (i) thereof, relating to the necessity of filing
signed insurance applications after a reciprocal insurance company
has been licensed to do business in this State.

April 5, 1960

The Honorable Perry O. Wilkinson
Speaker of the House
State House
Annapolis, Maryland

Dear Mr. Speaker:

After a great deal of deliberation, I have decided to veto House Bill
No. 52 and in accordance with Article II, Section 17 of the Maryland
Constitution, I am returning the same to you, along with my veto
message.

This particular Bill was designed to amend the insurance laws of
our State governing the operation of Reciprocal Exchanges.

A Reciprocal Exchange is an unincorporated body. It is a group of
individuals, partnerships and/or corporations which agree to provide
indemnity among themselves for losses covered by contracts of insur-
ance. These organizations have no charter, constitution or by-laws.

The present Maryland law which would be amended by House Bill
No. 52, under which these Exchanges now operate, is based on model
legislation recommended by the National Association of Insurance
Commissioners. It was first adopted in Maryland in 1918 and was
re-enacted by the Legislature in 1922 when the insurance laws of
Maryland were recodified.

Under the existing State law the cohesive which holds the Exchange
together and permits it to do business is the power of attorney which
each insurer executes. It is this provision requiring the subscriber to
individually execute a power of attorney that House Bill No. 52 is
designed to change.

House Bill No. 52 states, "if it shall imprint upon its policies that
by the acceptance of the policy and the payment of premium there-
under, the subscriber appoints the Attorney-in-fact for the placing
of such policy and accepts the terms and conditions provided in the
power of attorney of such policy. " Therefore, if this bill becomes a
part of the Maryland law it will be unnecessary for each subscriber
to sign an individual power of attorney in order for the organization