1. Except as provided in subsection 2 of this section, no policy of group personal lines property and casualty insurance shall be issued or delivered in this state unless it conforms to one of the following descriptions:

(1) A policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements:

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(a) The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class or classes thereof. The policy may provide that the term “employees” shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships, or partnerships if the business of the employer and of the affiliated corporations, proprietorships or partnerships is under common control. The policy may provide that the term “employees” shall include the individual proprietor or partners if the employer is an individual proprietorship, or partnership. The policy may provide that the term “employees” shall include directors of a corporate employer and retired employees. A policy issued to insure the employees of a public body may provide that the term “employees” shall include elected or appointed officials; and

(b) The premium for the policy shall be paid either from the employer’s funds or from funds contributed by the insured employees, or from both. A policy on which no part of the premium is to be derived from funds contributed by the insured employees shall insure all eligible employees, except those who reject such coverage in writing;

(2) A policy issued to a labor union or similar employee organization, which shall be deemed to be the policyholder, to insure members of the union or organization for the benefit of persons other than the union or organization or any of its officials, representatives or agents, subject to the following requirements:

(a) The members eligible for insurance under the policy shall be all of the members of the union or organization, or all of any class or classes thereof; and

(b) The premium for the policy shall be paid from funds of the union or organization, from funds contributed by the insured members specifically for their insurance, or from both. A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance shall insure all eligible members, except those who reject such coverage in writing;

(3) A policy issued to a trust, or to the trustees of a fund, established or adopted by two or more employers, or by one or more labor unions or similar employee organizations, or by one or more employers and one or more labor unions or similar employee organizations, which trust or trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions or organizations for the benefit of persons other than the employers or the unions or organizations, subject to the following requirements:

(a) The persons eligible for insurance shall be all of the employees of the employers or all of the members of the unions or organizations, or all of any class or classes thereof. The policy may provide that the term “employees” shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships, or partnerships if the business of the employer and of such affiliated corporations, proprietorships, or partnerships is under common control. The policy may provide that the term “employees” shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term “employees” shall include directors of a corporate employer and retired employees. The policy may provide that the term “employees” shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship; and

(b) The premium for the policy shall be paid from funds contributed by the employer or employers of the insured persons, by the union or unions or similar employee organizations, or by both; or from funds contributed by the insured persons; or from both the insured persons and the employers; or unions or similar employee organizations. A policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance shall insure all eligible persons, except those who reject such coverage in writing; and

(4) A policy issued to an association or to a trust or to the trustees of a fund established, created, or maintained for the benefit of members of one or more associations. The association or associations shall have at the outset a minimum of one hundred persons and have been organized and maintained in good faith for purposes other than that of obtaining insurance, shall have been in active existence for at least one year, and shall have a constitution and bylaws that and which provide that:

(a) The association or associations hold regular meetings not less than annually to further purposes of the members;

(b) The association or associations collect dues or solicit contributions from members; and

(c) The members have voting privileges and representation on the governing board and committees.

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Policies under this subdivision shall be subject to the following requirements:

a. The policy may insure members of the association or associations, employees thereof or employees of members, or one or more of the preceding or all of any class or classes thereof for the benefit of persons other than the employees’ employer;

b. The premium for the policy shall be paid from funds contributed by the association or associations, or by employer members, or by both; or from funds contributed by the insured persons or from both the insured persons and the association; associations; or employer members. A policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance shall insure all eligible persons, except those who reject such coverage in writing; and

c. If compensation of any kind will or may be paid to the policyholder in connection with the group policy, the insurer shall cause to be distributed to prospective insureds a written notice that compensation will or may be paid. Such notice shall be distributed:

(i) Whether compensation is direct or indirect; and

(ii) Whether such compensation is paid to or retained by the policyholder, or paid to or retained by a third party at the direction of the policyholder or any entity affiliated with the policyholder by ownership, contract, or employment.

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The notice required by this subparagraph shall be placed on or accompany any document designed for the enrollment of prospective insureds;

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Under this subsection, the definition of an eligible employee or member may include the spouse of the eligible employee or member.

2. Group personal lines property and casualty insurance offered to a resident of this state under a group personal lines property and casualty insurance policy issued or delivered to a group other than one described in subsection 1 of this section shall be subject to the following requirements:

(1) No such group personal lines property and casualty insurance policy shall be issued or delivered in this state unless the director finds that:

(a) The issuance of the group policy is not contrary to the best interest of the public;

(b) The issuance of the group policy would result in economies of acquisition or administration; and

(c) The benefits are reasonable in relation to the premiums charged;

(2) No group personal lines property and casualty insurance coverage shall be offered in this state by an insurer under a policy issued or delivered in another state unless this state or another state having requirements substantially similar to those contained in subdivision (1) of this subsection has made a determination that the requirements have been met;

(3) The premium for a group personal lines property and casualty policy shall be paid from the policyholder’s funds, from funds contributed by the covered persons, or from both; and

(4) If compensation of any kind will or may be paid to the policyholder in connection with the group policy, the insurer shall cause to be distributed to prospective insureds, a written notice that compensation will or may be paid. Notice shall be distributed:

(a) Whether compensation is direct or indirect; and

(b) Whether such compensation is paid to or retained by the policyholder, or paid to or retained by a third party at the direction of the policyholder or any entity affiliated with the policyholder by ownership, contract, or employment.

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The notice required by this subsection shall be placed on or accompany any document designed for the enrollment of prospective insureds.