J. MILLARD TAWES, Governor                      755

CHAPTER 544
(Senate Bill 244)

AN ACT to repeal and re-enact, with amendments, Section 254 of
Article 48A of the Annotated Code of Maryland (1964 Replace-
ment Volume), title "Insurance Code", sub-title "17. Stock and
Mutual Insurance", to require minimum funds in possession of
persons representing a mutual insurer and to delete bond or deposit
requirements.

Section 1. Be it enacted by the General Assembly of Maryland,
That Section 254 of Article 48A of the Annotated Code of Maryland
(1964 Replacement Volume), title "Insurance Code", sub-title "17.
Stock and Mutual Insurance", be and it is hereby repealed and re-
enacted, with amendments, to read as follows:

254.

(a) No person representing any OR CORPORATION PROPOS-
ING TO FORM A mutual insurer, wherever incorporated, or in
process of organization and not authorized to engage in an insurance
business in this State, shall be permitted to solicit applications or
premiums for prospective policies of such insurer in this State unless
and until such PROSPECTIVE insurer has furnished the Commis-
sioner with full particulars as to the methods and proposed cost of
promotion. Before any such person OR CORPORATION shall solicit
applications or premiums for [prospective] policies [in] of such
PROSPECTIVE insurer, he shall have in his possession funds
acquired in accordance with the provisions of Section 266 in the
amount of $125,000.00 if he is to solicit applications or premiums for
any one kind of business as set out in Section 48 of sub-title 3 of this
Article or $250,000.00 if the solicitation is to be for two or more
kinds of insurance business. Such funds must be held in cash or in
investments authorized for capital and reserve under sub-title 7 and
he shall be required to secure a license from the Commissioner, who,
prior to the issuance of such license, shall investigate the record of
the applicant and if the applicant is honest and trustworthy, the
Commissioner shall issue a license to him. SUCH PERSON OR
CORPORATION.

[(b) The directors and officers of the insurer shall be required
to give the Commissioner a surety bond for ten thousand dollars
($10,000.00), or for not less than twenty-five per cent (25%) of the
minimum capital or assets required by § 48 or 253, for the class of in-
surer proposed to be organized, whichever is greater, with the direc-
tors and officers as principal and a duly authorized surety insurer as
surety. The bond shall be for the use and benefit of the State of
Maryland and all subscribers and creditors. The bond shall be con-
ditioned upon the payment of costs incurred by the State by reason
of any legal proceeding against such insurer and for the full and
complete accounting for all funds and property coming into the
possession of the insurer prior to the issuance of a certificate of au-
thority to such insurer.]

[(c) In lieu of filing such bond, the directors and officers may de-
posit with the Commissioner cash or securities eligible for deposit by
insurers under § 50, having a market value at least equal to the