(2) The director shall make reasonable rules regarding such dividend groupings as an aid to the effectuation and enforcement of the Insurance Code. Such rules shall have as their purpose the prevention of misrepresentation, unfair discrimination and other unfair trade practices, and may among other things require that:
(a) Such a grouping comprises substantially homogeneous risks.
(b) The organization under the auspices of which such a grouping is made has been in existence for at least two years and was formed for purposes other than that of obtaining insurance.
(c) A substantial improvement in loss prevention or claims handling will be a likely result of such a grouping.
(d) Information regarding eligibility for participation in the grouping and the system for allocation of dividends among the participants be filed with the director.
(3) An insurer shall not unfairly discriminate in the allocation of dividends among the participants in such a dividend grouping.
(4) The system for allocation of dividends among the participants may provide for allocation at a fixed percentage of premiums, or may provide for variations in the percentage of premiums paid as dividends, or may provide for other variations in determining the amounts of dividends allocated to participants. The variations may be based on loss or expense factors or on other reasonable considerations, such as risk size, risk location or industry or trade hazard classification, that have a probable effect on losses or expenses.
(5) Failure to apply in a consistent manner the dividend allocation system specified in an insurer’s dividend declaration shall be prima facie evidence of unfair discrimination. [1977 c.405 §4; 1983 c.706 §4; 1999 c.59 §230]