Transaction Restrictions on Lending Institutions and Bank Holding Companies

  1. Law
  2. Georgia Code
  3. Insurance
  4. Authorization and General Requirements for Transaction of Insurance
  5. Transaction Restrictions on Lending Institutions and Bank Holding Companies

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  1. For the purposes of this Code section, the term:
    1. "Bank holding company" means the definition as set forth in Code Section 7-1-600 and in Section 2 of an act of Congress entitled the Bank Holding Company Act of 1956, as amended.
    2. "Lending institution" means any domestic institution that accepts deposits from the public and lends money, including banks and savings and loan associations.
  2. A lending institution, bank holding company, or subsidiary or affiliate of either of the foregoing doing business in this state, or any officer or employee of any of the foregoing, may be licensed to sell insurance, including but not limited to credit insurance, in this state and may engage in underwriting and act as an underwriter for credit life insurance and credit accident and sickness insurance subject to the provisions of this title and in conformity with rules and regulations promulgated by the Commissioner.
  3. Nothing in this chapter shall prohibit the purchase of mortgage guaranty insurance, also called credit loss insurance, by a lending institution from a mortgage guaranty insurance company directly or indirectly.
  4. No lending institution, bank holding company, or any subsidiary or affiliate of any of the foregoing doing business in this state that was not in the business of selling title insurance on or before April 1, 2000, shall be permitted to sell title insurance.

(Code 1933, § 56-322, enacted by Ga. L. 1974, p. 1101, §§ 1, 2; Ga. L. 1983, p. 3, § 24; Ga. L. 1989, p. 14, § 33; Ga. L. 2000, p. 1218, § 1; Ga. L. 2019, p. 337, § 1-20/SB 132.)

The 2019 amendment, effective July 1, 2019, deleted "of Insurance" following "Commissioner" at the end of subsection (b).

OPINIONS OF THE ATTORNEY GENERAL

Separation between banking and insurance businesses must be maintained.

- While there is no express prohibition against ownership of insurance agency stock by bank officials and immediate family members, bank board members, or bank holding company members, such ownership must be compatible with this section and subjected to close scrutiny to insure that the separation between the banking and insurance businesses is maintained. 1989 Op. Att'y Gen. U89-18.

"Domestic" institutions.

- The term domestic, as used in this section, should be read to limit this section's coverage to lending institutions doing business in this state. 1983 Op. Att'y Gen. No. 83-41.

Federally chartered banks and savings and loan associations are within the coverage of this section. 1983 Op. Att'y Gen. No. 83-41.

Federally chartered banks within a bank holding company system are covered by this section since such a bank would be an affiliate or subsidiary of a bank holding company. 1983 Op. Att'y Gen. No. 83-41.

Subsidiary of federal savings and loan association.

- A subsidiary of a federal savings and loan association may not engage in the sale of insurance in Georgia in a municipality with a population greater than 5,000 unless it has been licensed and in continuous operation since January 1, 1974. 1983 Op. Att'y Gen. No. 83-72.

Acquisition of domestic company by foreign association.

- A holding company which is a wholly-owned subsidiary of a foreign savings and loan association may not acquire a Georgia domestic insurance company if the foreign savings and loan association is doing business in Georgia. Any determination of whether a foreign savings and loan association, which does not itself have an office in Georgia, is doing business in the state through its Georgia mortgage company subsidiary could only be resolved on a case-by-case basis. 1988 Op. Att'y Gen. No. 88-20.

Employees of newly created subsidiaries or affiliates of lending institutions may not be licensed to sell insurance in Georgia if the subsidiary or affiliate is operating in a municipality which has a population that exceeds 5,000 persons. 1983 Op. Att'y Gen. No. 83-41.

Previously unlicensed employee of institution conducting business since January 1, 1974.

- A previously unlicensed employee of a lending institution that has been conducting business in conformity with all state and federal laws continuously since January 1, 1974, may obtain a license to sell insurance in Georgia. 1983 Op. Att'y Gen. No. 83-41.

Entitlement to former subsection (f) grandfather status.

- Financial institutions and related entities are not entitled to grandfather status under former subsection (f) of this section unless they were engaged in the insurance business on January 1, 1974. 1984 Op. Att'y Gen. No. 84-22.

Preemption by federal law.

- The Gramm-Leach-Bliley Act (Pub. L. No. 106-102, 113 Stat. 1338 (1999)) preempts the provisions of this section restricting lending institutions, bank holding companies, and their subsidiaries and affiliates from selling insurance in municipalities with populations exceeding 5,000. 2000 Op. Att'y Gen. No. 2000-4.


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