Section 1704.10  Authorization of Fraternal Benefit Societies to Write Accident and Health Insurance

No domestic, foreign or alien fraternal benefit society (except a society providing exclusively for benefits in case of death or disability resulting solely from accident and which does not obligate itself to pay natural death or sick benefits), shall write accident and health insurance under Article XX of the Illinois Insurance Code pursuant to the authority granted by Section 288 (2) of Article XVII of said Code unless authorized to do so by its articles of incorporation, constitution or by-laws.

Section 1704.20  Establishment and Maintenance of Separate Accounts

Every society which writes accident and health insurance shall establish and maintain entirely separate accounts for all transactions pertaining to its accident and health business, to which accounts shall be credited all moneys collected for accident and health insurance contracts and the accretions thereon and to which accounts shall be charged or allocated all losses and expenses incurred in connection with such contracts and all dividends paid, if any.

Section 1704.30  Provision for Payment

Every society must provide for the payment on accident and health contracts of premiums, assessments or contributions which together with the accretions thereon shall be sufficient to provide for the claims, reserves, expenses and other liabilities attributable to such accident and health contracts.

Section 1704.40  Prohibition of Transfer of Money Collected to Pay for Losses

No part of the money collected for any purposes other than accident and health contracts and no part of the accretions thereon shall be transferred to the accident and health accounts or be used to pay any losses or expenses of the accident and health business or to maintain the required reserves thereon except that before any society commences the writing of accident and health insurance, the supreme legislative and governing body may authorize the transfer of a reasonable amount from the unassigned funds of the society to the accident and health fund.  This transfer shall be for the purpose of defraying the necessary and incidental expenses of setting up the accident and health fund and for a period not in excess of three years may be drawn upon, if necessary, to maintain such fund in a solvent condition, after which period the residue, if any, shall be returned to the fund from which transferred.

Section 1704.50  Deficiency in Accounts

Any deficiency in the accident and health accounts shall be apportioned only to the accident and health contracts, except only as provided in Section 1704.40 above, and prompt action shall be taken to eliminate such deficiency.

Section 1704.60  Transferral of Accounts to Other Societies

Any society may provide that all or any part of the surplus in the accident and health accounts may be transferred to and become a part of any other accounts of the society.