To avoid any coercion or possible misrepresentation of dividends that may be paid to members of organizations or associations of employers insured under group workers' compensation policies, no group policy shall be issued, unless the articles of incorporation, by-laws, agreements of association, or rules and regulations filed pursuant to Insurance Code Section 11656.6 shall provide that (1) any distribution of funds to any member, derived from a dividend, shall not be reduced or forfeited except for reasons set forth in the articles of incorporation, by-laws, agreements of association, or rules and regulations, and (2) no such reduction or forfeiture shall be made effective unless the reasons for such reductions or forfeiture have been made known by written communication to the member prior to inception of his insurance coverage during the policy period for which such dividend adjustment is made.

Note: Authority cited: Section 790.10, Insurance Code. Reference: Sections 780, 781, 790.03 and 11656.6, Insurance Code.

History

1. Change without regulatory effect amending section and adding new Note filed 1-8-2015 pursuant to section 100, title 1, California Code of Regulations (Register 2015, No. 2).

2. Amendment filed 5-31-2016; operative 7-1-2016 (Register 2016, No. 23).