Sec. 15. The attorney for the subscribers at a reciprocal or interinsurance exchange organized under this law may on behalf of the subscribers borrow or assume a loan or advance for the repayment of a sum of money sufficient to defray the reasonable expenses in the establishment of such an exchange or to enable the attorney for the subscribers at the exchange to comply with any requirement of the law or as a guarantee fund upon agreement. The borrowing or assumption shall first be submitted to and approved by the department, and shall be repaid only out of the surplus, earnings or profits at the exchange with the approval of the department. The department shall withhold its approval of any repayment whenever in its judgment the financial condition of the attorney for the subscribers at such exchange shall warrant, but shall not withhold its approval if after the repayment the attorney-in-fact for subscribers at the exchange shall have and be in possession of a surplus equal to ten percent (10%) or more of the gross annual premium of the subscribers. Any such loan or advance shall not form a part of the legal liabilities of the attorney for the subscribers at the exchange but until repaid, all statements published by the attorney for the subscribers or filed with the department, shall show the amount thereof then remaining unpaid. However, this section shall not be construed as an extension of the liability of any subscriber beyond that expressly provided for in the subscribers' agreement or power of attorney. The per annum interest rate on any loan or advance shall not exceed three-quarters of one percent (.75%) above the prevailing prime bank rate charged by national banks and banks chartered by the state of Indiana with their principal offices in Indiana, or ten percent (10%), whichever is less. The department shall establish the prevailing prime bank rate for each calendar quarter equal to this rate for the first working day of the subsequent calendar quarter. The prime bank rate for any bank on a given day is the rate of interest it charges on unsecured loans made that day to its most credit-worthy customers. In establishing the prevailing prime bank rate the department may use the prime bank rate charged by the fifteen (15) largest banks with their principal offices in Indiana, or such other number as the department deems adequate. The total amount of interest shall be calculated on a three hundred sixty (360) day basis.
Formerly: Acts 1919, c.102, s.14a; Acts 1967, c.232, s.11. As amended by Acts 1977, P.L.287, SEC.1.