33-4-504. Cash premium or assessment plans. (1) An insurer may transact business either on the cash premium plan altogether or on the assessment plan altogether, whichever plan is provided for in its articles of incorporation or bylaws.
     (2) If transacting business on the cash premium plan, the insurer shall collect from each member before or at the time of effectuation of the member's insurance the premium in cash in such amount as the insurer deems will be adequate to cover losses and expenses incurred during the term of such insurance.
     (3) If transacting business on the assessment plan, the insurer will depend for the payment of losses and expenses principally upon assessments from time to time levied upon members either before or after such losses or expenses have been incurred. This provision shall not be construed, however, as preventing any such insurer from collecting from each member such initial amount as it may deem proper prior to or at the time of the effectuation of the member's insurance; nor shall it be deemed to prohibit the acquisition, accumulation, and maintenance of surplus or unallocated funds.
     (4) An insurer transacting business on the cash premium plan may nevertheless provide in its bylaws and policies for special assessment of its members in event the cash premium charged is found by it to be inadequate to pay in full losses and expenses currently incurred. The bylaws shall provide a specific limitation as to the amount which can be so assessed in any one policy year, such amount to be not less than one or more than six times the premium charged on each member's policy at the annual rate for a term of 1 year.

     History: En. Sec. 473, Ch. 286, L. 1959; R.C.M. 1947, 40-4806.