Disposition of Unearned Premiums Upon Cancellation of Insurance Policy

1. Law
2. Georgia Code
3. Insurance
4. Insurance Premium Finance Companies
5. Disposition of Unearned Premiums Upon Cancellation of Insurance Policy

1. Whenever an insurance policy is canceled and the premiums have been paid by an insurance premium finance company on behalf of the insured, if the insurer has been notified of the existence of the insurance premium finance agreement as required in Code Section 33-22-12, the insurer shall return whatever unearned premiums are due to the insurance premium finance company for the account of the insured. Whenever an insurer, after receiving notification of the existence of the insurance premium finance agreement, returns any unearned premium to anyone other than the insurance premium finance company named in the agreement, the insurer shall be directly responsible to such insurance premium finance company for any and all unearned premiums due as a result of the cancellation. The insurer shall furnish to the agent, agency, or broker placing the insurance a report setting forth an itemization of the unearned premiums under the policy.
2. 1. In the event that the crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured, the premium finance company shall refund the excess within ten working days of receipt of the return premium or tender of return premium to the insured via the agent, agency, or broker placing the insurance and shall furnish such agent, agency, or broker, upon a written request, a report setting forth an itemization of the unearned finance charge and other charges under the premium finance agreement; provided, however, there shall be no refund required when the excess due the insured is less than $5.00.
   2. Any insurance premium finance company failing to tender refunds or to furnish any report requested by the agent, agency, or broker as required in paragraph (1) of this subsection shall pay to the insured via the agent, agency, or broker a penalty equal to 25 percent of the amount of the refund and interest equal to 18 percent per annum until such time as the refund is made; provided, however, the maximum amount of such penalty and interest shall not exceed 50 percent of the amount of the refund due.
   3. Upon receipt of the refund from the insurance premium finance company, the agent, agency, or broker shall return any unearned premiums to the insured either in person or by depositing such refund in the mail within ten working days of receipt of the refund.
   4. Any agent, agency, or broker failing to tender any unearned premium as prescribed in paragraph (3) of this subsection shall be subject to the penalties prescribed in paragraph (3) of subsection (c) of Code Section 33-24-44.
3. Failure to refund any surplus or return any unearned premium or to furnish any reports requested by the agent, agency, or broker under subsection (b) of this Code section shall not invalidate a notice of cancellation given in accordance with this chapter.

(Ga. L. 1969, p. 561, § 13; Ga. L. 1971, p. 324, § 1; Ga. L. 1976, p. 1564, § 1; Ga. L. 1984, p. 1345, § 3; Ga. L. 1985, p. 149, § 33; Ga. L. 2002, p. 1192, § 8.)

Law reviews.

- For article surveying recent legislative and judicial developments regarding Georgia's insurance laws, see 31 Mercer L. Rev. 117 (1979).

JUDICIAL DECISIONS

Construction of finance agreement.

- O.C.G.A. § 33-22-14(a) does not create an exclusive remedy for a premium finance company for a claim against an insured pursuant to the finance agreement; rather the statute creates a chose in action or statutory lien right in the unearned premiums in favor of the premium finance company, and the premium financing agreement with the insured constitutes an account receivable entitling the finance company to recapture the company's principal one way or the other, as well as any fees and penalties. Burke v. Prime Rate Premium Fin. Corp., 325 Ga. App. 760, 754 S.E.2d 802 (2014).

No recovery when premiums not actually paid over to insurer.

- When premiums paid by a premium finance company to an insurance agency were never actually paid over to the insurer, O.C.G.A. § 33-22-14, considered in light of the common law, does not entitle premium finance company to recover from insurer. International Indem. Co. v. Bakco Acceptance, Inc., 172 Ga. App. 28, 322 S.E.2d 78 (1984).

When insurance agency not "insurer".

- When insurance agency is not licensed as an insurance company but operates under a local agent's license and when all policies prepared by the agency are issued in the name of a licensed insurance company, agency is not the "insurer" under O.C.G.A. § 33-22-14 despite evidence that agency performed many functions on behalf of insurance companies. International Indem. Co. v. Bakco Acceptance, Inc., 172 Ga. App. 28, 322 S.E.2d 78 (1984).

Unlicensed premium finance company.

- The failure of a premium finance company to obtain a license in its own name foreclosed any claim the company had under O.C.G.A. § 33-22-14 for the return of unearned premiums. Paulsen St. Investors v. EBCO Gen. Agencies, 237 Ga. App. 116, 514 S.E.2d 904 (1999).

After premium finance company accepted late premium tendered by insured, the court found that no coverage existed on the date of the accident and reversed the judgment of the superior court affirming the award of the state board of workers' compensation and the administrative law judge, since the premium finance company had notified insured of policy cancellation and forwarded unearned premiums to insured in compliance with the requirements of O.C.G.A. § 33-22-14. Georgia Ins. Co. v. White, 190 Ga. App. 208, 378 S.E.2d 523 (1989).

Return of unearned premiums to agent or broker insufficient compliance.

- That the insurance company may return such premiums either directly or by way of the agent does not support the contention that the return of unearned premiums to the agent, agency, or broker placing the insurance constituted return to the premium finance company and fulfilled the insurance company's statutory obligations. Perry & Co. v. Knight Ins. Underwriters, Inc., 149 Ga. App. 128, 253 S.E.2d 808 (1979).

Twenty-year limitation of actions applies.

- When action was brought on the independent statutory remedy afforded by subsection (a) of Ga. L. 1976, p. 1564, § 1 (see O.C.G.A. § 33-22-14), and the claim for relief was predicated on the statutory obligation contained therein, and the statutory remedy is not a codification of a remedy existing at common law, but is one arising solely from the statute, former Code 1933, § 3-704 (see O.C.G.A. § 9-3-22), providing a 20-year limitation period, applies rather than the statute of limitations of four years contained in former Code 1933, § 3-706 (see O.C.G.A. § 9-3-25). Perry & Co. v. Knight Ins. Underwriters, Inc., 149 Ga. App. 128, 253 S.E.2d 808 (1979).

Insured obligated to pay balance of financed amount upon cancellation of insurance policy.

- Trial court properly granted an insurance premium finance corporation summary judgment on the company's claim against the insured for unpaid premiums because O.C.G.A. § 33-22-14(a) was not the corporation's exclusive remedy based on the finance agreement obligating the insured to pay the balance remaining once the policy was canceled. Burke v. Prime Rate Premium Fin. Corp., 325 Ga. App. 760, 754 S.E.2d 802 (2014).

Cited in Cochran v. Paco, Inc., 409 F. Supp. 219 (N.D. Ga. 1975); Balboa Ins. Co. v. Hunter, 165 Ga. App. 273, 299 S.E.2d 91 (1983); Perry & Co. v. New S. Ins. Brokers of Ga., Inc., 182 Ga. App. 84, 354 S.E.2d 852 (1987).

RESEARCH REFERENCES

Am. Jur. 2d.

- 43 Am. Jur. 2d, Insurance, § 909.

C.J.S.

- 45 C.J.S., Insurance, §§ 664 et seq., 720 et seq.

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