Section 27-1-7-21 - Mutual companies; statement of maximum premium in policy; limitation of liability for single risk; reinsurance requirements(a) The maximum premium shall be expressed in the policy of a mutual company and shall be solely a cash premium without contingent premium but no such company other than a life insurance company shall issue any policy providing limits of liability for any one (1) risk under any one (1) line of insurance in an amount exceeding five percent (5%) of its surplus, including contingent reserves, if any, until and unless it either possesses a surplus, including contingent reserves, if any, of at least four hundred thousand dollars ($400,000), or has reinsured in a reinsurer (or reinsurers) admitted to do business in this state and authorized to make such kind or kinds of reinsurance in this state all of such liability in excess of such amount or such greater amount as the commissioner may authorize and such reinsurance contract or contracts shall have been submitted to and approved by the commissioner. Such reinsurance contract or contracts shall be in such form as to enable the insured under such policy or the holder of a judgment against the insured for which such company is liable under such policy to maintain an action on such reinsurance contract or contracts against such reinsured company jointly with the reinsurer and, upon recovering judgment, to have recovery against such reinsurer or reinsurers for payment to the extent to which it or they may be liable under such reinsurance contract (or contracts) and in discharge thereof. In no event shall the unreinsured liability assumed under this section on any one (1) risk exceed the amount otherwise authorized by this article to be written upon any one (1) risk.(b) Any determination of permissible limits of liability and amount of surplus pursuant to the provisions of subsection (a) shall be made as of December 31 immediately preceding except that in the case of a newly formed company such determination shall be made as of the date it receives the certificate of the department authorizing it to commence business.(c) Any reinsurance contract submitted to and approved by the commissioner in accordance with the requirements of this section shall continue in full force and effect until notice of its termination or amendment has been filed with the commissioner, and in the case of an amendment has been approved by the commissioner.(d) Subsection (a) shall apply only to companies organized under this article after July 26, 1967, except that any company in existence on July 26, 1967, under any of the insurance statutes of this state and to which subsection (a) would otherwise apply may, by appropriate action of its policyholders and board of directors, elect to comply with subsection (a).(e) This section shall not affect nor invalidate any policy of any mutual insurance company in existence on July 26, 1967, issued pursuant to Acts 1935, c.162, s.98. Any such policy issued on or after July 26, 1967, by a mutual insurance company in existence on July 26, 1967, and the rights and obligations under the policy shall continue to be subject to the provisions of Acts 1935, c.162, s.98 until such company has exercised the right of election provided in this section and has complied with the provisions of this section.Amended by P.L. 136-2018,SEC. 150, eff. 7/1/2018.(Formerly: Acts 1935, c.162, s.98; Acts 1967, c.233, s.1.) As amended by P.L. 252-1985, SEC.31.