§ 6705. Relevant criteria. (a) In applying this article, the
superintendent shall consider the provisions of paragraph (3) of
subsection (c) of section 501 of the Internal Revenue Code and
subsection (n) of section 501 of the Internal Revenue Code.

(b) Notwithstanding any other provision of law, a nonprofit
property/casualty insurance company shall:

(1) be operated solely to insure risks of its members.

(2) directly provide information to its members with respect to loss
control and risk management.

(3) obtain at least one million dollars in startup capital from
nonmember charitable organizations. Such startup capital may take the
form of subventions as authorized pursuant to section five hundred four
of the not-for-profit corporation law or advancements or borrowings as
authorized pursuant to section one thousand three hundred seven of this
chapter. Startup capital may be used to satisfy the financial
requirements contained in this chapter applicable to a nonprofit
property/casualty insurance company only to the extent the
superintendent determines that it complies with such requirements.
Subventions will qualify as advancements or borrowings authorized
pursuant to section one thousand three hundred seven of this chapter
only if they meet the requirements of advancements or borrowings
authorized pursuant to such section.

(4) be controlled by a board of directors elected by the members of
the nonprofit property/casualty insurance company.

(5) require, in its organizational documents that:

(A) each member of such nonprofit property/casualty insurance company
shall at all times be an organization described in paragraph (3) of
subsection (c) of section 501 of the Internal Revenue Code and exempt
from tax under subsection (a) of section 501 of the Internal Revenue
Code.

(B) any member which receives a final determination that it no longer
qualifies as an organization described in paragraph (3) of subsection
(c) of section 501 of the Internal Revenue Code shall immediately notify
the nonprofit property/casualty insurance company of such determination
and the effective date of such determination.

(C) each policy of insurance issued by the nonprofit property/casualty
insurance company shall provide that such policy will not cover the
insured with respect to events occurring after the date such final
determination was issued to the insured.

(c) A nonprofit property/casualty insurance company shall:

(1) not refuse to issue, renew or cancel a policy of any insurable
nonprofit organization based solely on geographic location,

(2) not refuse to write coverages afforded by such insurer for any
insurable nonprofit organization in accordance with subsection (d) of
this section,

(3) establish and promote a risk management program among its members
to identify and reduce risks by implementation of loss control, safety
programs and other methods of risk management,

(4) establish equitable risk classifications for all types of
nonprofit organizations, and

(5) establish recordkeeping and reporting procedures.

(d) A nonprofit property/casualty insurance company shall, subject to
regulatory standards, offer to provide coverage following application by
an eligible nonprofit organization, provided that the nonprofit
organization has not:

(1) violated applicable laws, regulations and rules;

(2) been involved in financial, management or operational acts,
omissions or conditions that substantially and materially increase the
hazards to the nonprofit insurer, its solvency, its policyholders, its
creditors, or the public;

(3) engaged in fraud or material misrepresentation;

(4) refused to cooperate with reasonable risk management in accordance
with risk management standards, approved by the nonprofit insurer's
board of directors, for the purpose of protecting the nonprofit
organization itself and all participating nonprofit organizations
insured by the nonprofit insurer; or

(5) violated such other standards of insurability as the nonprofit
insurer's board of directors and the superintendent may approve.

The nonprofit property/casualty insurance company, in any instance of
declination of coverage, shall inform the nonprofit organization and the
superintendent of the reasons for such declination.