§ 6106. Subscriber's agreement. (a) (1) Every subscriber of an
authorized reciprocal insurer shall have executed a subscriber's
agreement, and every subscriber executing such a subscriber's agreement
containing a provision for contingent liability of subscribers shall
execute and duly acknowledge the same, in a manner sufficient for the
acknowledgment of conveyances of real property to be recorded in the
state in which such subscriber is domiciled.

(2) Every subscriber's agreement shall be identical in terms, except
as to the date and the name and address of the subscriber, with all
other subscriber's agreements currently in force and effect with all
other subscribers of such reciprocal insurers. However, in the case of
any reciprocal insurer authorized pursuant to section six thousand one
hundred eight of this article to issue non-assessable policies or
agreements, or having a corporate attorney-in-fact wholly owned by the
subscribers at such reciprocal insurer, the acceptance of a policy or
binder of insurance containing the subscriber's agreement printed at the
end of the standard policy provisions or the binder, as the case may be,
preceded by the words printed upon the policy or binder:

"The acceptance of this policy or binder shall constitute

that insured designated therein is a subscriber of the

reciprocal insurer and shall constitute the execution and

delivery by the insured of the subscriber's agreement which

is appended to this policy or binder, and hereby made a part

thereof",
shall constitute the execution and delivery of said subscriber's
agreement by that insured as fully and to the same extent as though said
agreement had been signed and acknowledged by that insured.

(3) Every such subscriber's agreement shall contain in substance the
following provisions:

(A) A designation and appointment of the attorney-in-fact to act for
and bind the subscriber in all transactions relating to or arising out
of the operations of such reciprocal insurer, subject to such
limitations as may be lawfully provided.

(B) An agreement that service of summons or other legal process on the
attorney-in-fact or on any other person appointed by the
attorney-in-fact to receive such process, shall, in any action, suit or
proceeding arising out of any contract, agreement or transaction of such
reciprocal insurer, be equivalent to personal service of such summons or
other legal process on each and every subscriber.

(C) Unless the reciprocal insurer is authorized to issue
non-assessable policies under section six thousand one hundred eight of
this article an agreement for the contingent liability of the
subscriber, which shall state that such subscriber agrees to pay on
demand such subscriber's proportionate share of any assessment lawfully
ordered or levied by the advisory committee or by the superintendent
under article seventy-four of this chapter.

(D) A provision that there shall be an annual meeting of the
subscribers, in person or by proxy, at a time and place to be determined
in accordance with such agreement, of which each subscriber shall be
duly notified and at which each subscriber shall have power to vote in
person or by proxy for all members of the advisory committee to be
chosen or appointed at such time, except that in the case of a foreign
reciprocal insurer, the superintendent may permit a modification of such
provision provided that he is satisfied that the interests of the
subscribers are properly protected.

(E) A provision specifying the powers and duties of the advisory
committee, which shall include the power and duty to regulate the
compensation, powers and duties of the attorney-in-fact, if not
specifically provided in the subscriber's agreement, and shall also
include the power to make regulations for the effective control and
custody of the funds and investments of the reciprocal insurer. In
addition, the advisory committee of a municipal reciprocal insurer shall
establish procedures to prevent any conflicts of interest between the
attorney-in-fact and such insurer. Such procedures shall be submitted to
and approved by the superintendent, who shall also approve the
attorney-in-fact for a municipal reciprocal insurer.

(F) Provisions setting forth the rights, privileges and obligations of
the subscriber as an underwriter, and as a policyholder subject to the
terms of insurance contracts required or permitted by law to be issued.

(G) General provisions relating to the operations of the reciprocal
insurer, including the subscriber's operating reserve requirements,
regulations for the return of savings or dividends, for withdrawals and
refunds and such other matters as may be necessary to maintain the
operation of such reciprocal insurer in compliance with the provisions
of this chapter. In the case of a municipal reciprocal insurer, such
agreement shall include procedures to: (i) establish and promote loss
control, safety programs and other methods of risk management; (ii)
establish equitable risk classifications; and (iii) establish uniform
recordkeeping and reporting procedures.

(4) The following provisions shall be contained in either the
subscriber's agreement or a separate management agreement between the
attorney-in-fact and the advisory committee or the attorney-in-fact and
any person to which its functions have been delegated after approval of
the advisory committee:

(A) A provision that the attorney-in-fact shall provide written
notification of, and make all necessary arrangements as provided in the
subscriber's agreement, for the election, in person or by proxy, of the
members of the advisory committee. The cost of notification, ballot, or
proxy for any meeting of the advisory committee and for any meeting
which may be called for the election shall be incurred by the
reciprocal.

(B) A provision that the attorney-in-fact shall provide written
notification to the members of the advisory committee of not less than
ten days for any regular meeting or five days for any special meeting
called pursuant to subsection (k) of section six thousand one hundred
five of this article. The cost of such notification shall be incurred by
the reciprocal.

(C) A provision that the advisory committee may, upon a vote of a
majority of its members at any regular or special meeting thereof and
upon written notice to the superintendent and the attorney-in-fact,
recommend termination of the attorney-in-fact for a stated cause and
appointment of a new attorney-in-fact, subject to the provisions of any
management agreement approved by the superintendent. Termination of the
attorney-in-fact shall require the approval of a two-thirds majority of
the subscribers present in person or by proxy at a special meeting
called for that purpose. The attorney-in-fact shall provide by mail not
less than thirty days prior written notification of such meeting to all
subscribers. The mailing of notification shall include the
recommendation of termination and replacement as prepared by the
advisory committee, and any other appropriate documents submitted by the
attorney-in-fact. A copy of all documents mailed and certification of
their mailing to all subscribers shall be provided to all members of the
advisory committee. The cost of notification and proxy for any such
meeting shall be incurred by the reciprocal. For reciprocals with less
than two thousand five hundred subscribers, at least twenty-five percent
of all subscribers shall be required to constitute a quorum. For all
other reciprocals, the greater of twenty-five hundred subscribers or
five percent of all subscribers shall constitute a quorum.

(D) A provision that the attorney-in-fact shall cause all assets of
the reciprocal and its subscribers to be invested in accordance with
investment guidelines approved by the advisory committee and shall be
properly accounted for on the financial records of the reciprocal as
being held for or on behalf of the subscribers. All cash assets of the
reciprocal and its subscribers, not otherwise invested in short term
securities such as money market funds, covering policy obligations
arising out of policies issued or issued for delivery in the United
States shall be held in one or more appropriately identified accounts in
banks that are members of the federal reserve system. These accounts
shall be drawn on by the attorney-in-fact, or by employees or
representatives of the reciprocal authorized by the attorney-in-fact for
all payments on behalf of the reciprocal.

(E) A provision that if the attorney-in-fact is acting for more than
one reciprocal, separate records and accounts shall be maintained for
each reciprocal.

(F) A provision that the attorney-in-fact may not assign its
responsibilities as detailed in the subscriber's agreement in whole or
part or enter into management agreements delegating its duties in whole
or part to another party without the prior approval of the advisory
committee and the superintendent.

(G) A provision that the attorney-in-fact shall establish and maintain
underwriting procedures and manuals, setting forth the rates and
conditions for the acceptance or rejection of risks.

(H) A provision that the attorney-in-fact shall make a report to the
advisory committee at each regular meeting of the committee on the
financial condition of the reciprocal and all material transactions
during the period since the last meeting.

(I) A provision that the attorney-in-fact shall annually provide to
each member of the advisory committee:

(i) On or before March first of each year, a copy of the reciprocal's
annual statement and the accompanying statement of actuarial opinion
filed with the superintendent pursuant to section three hundred seven of
this chapter; and

(ii) On or before June first of each year, a copy of:

(I) The certified statement filed with the superintendent pursuant to
subsection (f) of section six thousand one hundred five of this article;
and

(II) The certified annual statement of the reciprocal filed with the
superintendent pursuant to section three hundred seven of this chapter.

(J) A provision specifying all forms and amounts (or formulas to
determine the amounts) of compensation the attorney-in-fact will receive
for services rendered and, if all or part of the compensation will be
contingent upon the reciprocal's profits, a provision that such
compensation shall not be paid until at least five years after the
premiums on liability insurance are earned and at least one year after
the premiums are earned on any other kind of insurance and, in no event
shall the compensation be paid until the adequacy of reserves on
outstanding claims has been independently verified by the same actuary
who opined on the latest annual statement filed with the superintendent
pursuant to section three hundred seven of this chapter.

(K) A provision that the independent certified public accountant who
will prepare the annual report required by subsection (f) of section six
thousand one hundred five of this article and the independent actuary
who will prepare the opinion accompanying the annual statement pursuant
to section three hundred seven of this chapter shall be selected by the
attorney-in-fact, subject to the approval of the advisory committee.

(L) A provision that the books, accounts and records of the reciprocal
shall be maintained by the attorney-in-fact to clearly and accurately
disclose the nature and details of all transactions including all
information necessary to determine that the compensation received by, or
owing to, the attorney-in-fact is provided in a manner consistent with
the subscriber's agreement and any management agreement. The books,
accounts and records of the reciprocal shall be the sole property of the
reciprocal.

(M) A provision that the attorney-in-fact shall conduct the affairs of
the reciprocal in accordance with the provisions of this chapter.

(b) (1) The subscriber's agreement may contain such further provisions
as may be necessary or proper; but neither the subscriber's agreement
nor the articles of association, if any, of an authorized reciprocal
insurer shall contain any provisions inconsistent with the provisions of
subsection (a) hereof.

(2) The superintendent may, if he finds it necessary to carry out the
purpose and intent of this article, by regulation prescribe additional
provisions, not inconsistent with any law of this state, to be contained
in the subscriber's agreement of reciprocal insurers.

(c) Every subscriber to a municipal reciprocal insurer shall agree to
participate in a risk management program established by the
attorney-in-fact. The attorney-in-fact of each insurer shall, with the
approval of the advisory committee, establish, promote and manage a risk
management program among the subscribers. Each program shall include
identifying and reducing risks through the implementation of loss
control, safety programs and other methods of risk management. The
attorney-in-fact may enter into contracts with any person, firm, or
corporation for services necessary to perform and administer the risk
management program or to perform or administer other functions deemed
necessary by the advisory committee and approved by the superintendent.
An individual subscriber may enter into contracts with any person, firm
or corporation for services necessary to perform and administer any
function which that subscriber shall deem necessary.