RS 3550 - Insurance premium finance companies
A. This Section shall apply to any person engaged in the business of financing insurance premiums for consumers entering into premium finance agreements or otherwise acquiring premium finance agreements.
B. For purposes of this Section:
(1) "Insurance premium finance company" means a person engaged in the business of entering into premium finance agreements.
(2) "License" means an insurance premium finance company holding a license issued under this Section.
(3) "Person" includes an individual, limited liability company, partnership, association, business corporation, nonprofit corporation, common law trust, joint-stock company, or any other group of individuals however organized.
(4) "Premium finance agreement" means an agreement by which an insured or prospective insured promises to pay to an insurance premium finance company the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent or broker in payment of premiums on an insurance contract together with a service charge as authorized and limited by this Section. With respect to qualified homeowners' insurance policies, a premium finance agreement may also include a separate loan agreement with the policyholder for wind mitigation retrofits to the insured property. In order to qualify, the homeowners' insurance policy shall be issued to a homeowner who has financed the cost of wind mitigation retrofits with a consumer finance company licensed pursuant to this Chapter, in part, for the purpose of obtaining wind mitigation and other credits on his homeowners' insurance policy. Upon cancellation, expiration, or nonrenewal of the qualifying homeowners' insurance policy, the wind mitigation loan agreement shall continue to be administered pursuant to its terms until paid in full and any cancellation, expiration, or nonrenewal of the qualifying homeowners' insurance policy shall not accelerate the due date of such wind mitigation loan. A premium finance agreement shall not include an agreement on the part of an extender of credit to finance credit life, credit disability, and credit property insurance coverage as an incident to a consumer credit transaction subject to this Chapter or subject to any other applicable provision of Louisiana or federal law.
C.(1) No person, unless otherwise exempt from the licensing requirement of this Chapter, shall engage in the business of financing insurance premiums in this state or out of this state with Louisiana consumers, enter into premium finance agreements, or otherwise acquire premium finance agreements subject to the Louisiana Consumer Credit Law, without first having obtained a license as an insurance premium finance company from the commissioner as provided in Subsection A of this Section.
(2) The commissioner may in his discretion give prior written approval for an unlicensed person to acquire insurance premium finance agreements in connection with securitized financing arrangements.
(3) The commissioner may issue insurance premium finance licenses for a temporary period, or subject to any restrictions or conditions he deems necessary. The application, license, examination, survey, renewal, and change of name or location fees shall be the same as those for a licensed lender as provided in R.S. 9:3561.1.
D.(1) Premium finance agreements shall:
(a) Be dated and signed by the insured or by its agent under a validly executed power of attorney.
(b) Contain the name and place of business of the insurance agent who negotiated the related insurance contract, and a brief description of the insurance contract involved.
(c) Include, either as part of the insurance premium finance agreement or refer to a separate document which shall be made a part of the insurance premium finance agreement by reference, an itemized listing of the premium cost, and each charge, fee, or other amount that is part of the total cost of obtaining the insurance coverage sought by the insured.
(d) Contain the address of the insured and other persons who are entitled to receive all notices required under this Chapter. The address may be in the form of an electronic address or a physical address.
(2) Upon accepting, funding, or declining a premium finance agreement of a related insurance contract primarily for personal, family, or household use, when the premiums were paid or were to be paid to the providing insurance agent, the premium finance company shall deliver or mail accountable written or electronic notification within five business days advising the insurer, managing general agent, or general agent of its action to accept, fund, or decline the premium finance agreement. The notification shall state the insured's full name and address, the producing insurance agent's full name and address, the total policy cost, and the premiums that were paid to the producing insurance agent, or that the payment of premium was declined. With respect to commercial policies, the insurer, managing general agent, or general agent receiving notification shall deliver or mail accountable written or electronic notification within ten business days advising the premium finance company that an insurance contract or contracts or endorsements listed in and related to the premium finance agreement was not issued.
E. An insurance premium finance company shall not charge, contract for, receive, or collect a loan finance charge or credit service charge, or any other fee or charge other than as provided in this Subsection or in Subsection F:
(1) The loan finance charge or credit service charge shall be computed on the balance of the premium due, less the down payment made by the insured in accordance with the premium finance agreement. Loan finance charges or credit service charges accrue from the effective date of the insurance coverage for which the premiums are being advanced to and including the date when the final installment of the premium finance agreement is paid.
(2) The loan finance charge or credit service charge shall not exceed the charges permitted under this law. The loan finance charge or credit service charge permitted by this Subsection anticipates repayment in consecutive monthly installments equal in amount for a period of one year. For repayment in greater or lesser periods or in unequal, irregular, or other than monthly installments, the credit service charge may be computed at an equivalent effective rate having due regard for the installments as scheduled.
(3) Notwithstanding the provisions of any premium finance agreement, any insured may prepay the obligation in full at any time. In such an event he shall receive a refund credit consisting of precomputed finance charges or credit service charges that shall represent at least as great a proportion of the loan finance charge or credit service charge as the sum of the periodic balances after the month in which prepayment is made bears to the sum of all periodic balances under the schedule of installments in the agreement. Where the amount of the refund credit is less than one dollar, or to the extent provided for by federal law, no refund need be made.
F. A premium finance agreement may provide for the payment by the insured of the delinquency charge in accordance with R.S. 9:3527, the N.S.F. check charge in accordance with R.S. 9:3529, an origination fee in accordance with R.S. 9:3530(A), attorney collection fees in accordance with R.S. 9:3534, and any charges as provided in this Subsection and in Subsection E. If the nonpayment by the consumer results in default and subsequently, results in cancellation of any insurance contract listed in the agreement, the agreement may provide for the payment by the insured of a cancellation charge not to exceed twenty-five dollars, which need not be rebated or credited to the consumer in the event that the premium finance agreement is subsequently reinstated.
G. Insurance contracts may be canceled upon default as follows:
(1) When a premium finance agreement contains a power of attorney enabling the insurance premium finance company to cancel any insurance contract, or contracts, or endorsements listed in the agreement, the insurance contract, or contracts, or endorsements shall not be canceled by the insurance premium finance company unless such cancellation is effectuated in accordance with this Subsection.
(2) Upon default of the insurance premium finance agreement by the debtor, the premium finance company shall mail or send an electronic notice of cancellation to the insured, at his last known mailing or electronic address as shown on the records of the insurance premium finance company. In the event the default is timely cured, the premium finance company shall, within three business days from the time the default was cured, mail or send electronic notice of rescission of the cancellation notice to the insured, at his last known mailing or electronic address as shown on the records of the premium finance company and to all other parties who had previously been sent notice of cancellation. In the event the default is not timely cured as provided herein and the insurance policy is canceled pursuant to the terms of the insurance premium finance agreement, a copy of the notice of cancellation of the insurance contract shall also be sent to the insurance agent negotiating the related insurance contract whose name and place of business appears on the insurance premium finance agreement. Such notice of cancellation shall also state the name of any governmental agency, holder of a security interest in the insured property, or third party also requiring notice of cancellation as shown on the insurance premium finance agreement.
(3)(a) Ten days after notice of cancellation has been mailed to the insured, if the default has not been cured, the insurance premium finance company may thereafter effect cancellation of such insurance contract, or contracts, or endorsements by sending to the insurer, by depositing in the mail or with a private carrier, or via electronic mail, within five business days after the date of cancellation, except when the payment has been returned uncollected, a copy of the notice of cancellation together with a statement certifying that:
(i) The premium finance agreement contains a valid power of attorney as provided in Paragraph (1) of this Subsection.
(ii) The premium finance agreement is in default and the default has not been timely cured.
(iii) Upon default, a notice of cancellation was sent to the insured as provided in Paragraph (2) of this Subsection, specifying the date of sending by the premium finance company to the insured.
(iv) Copies of the notice of cancellation were sent to all persons shown by the premium finance agreement to have an interest in any loss which may occur thereunder, specifying the names and addresses of any governmental agencies, holders of a security interest in the insured property, or third parties to whom the insurance premium finance company has sent notice of cancellation.
(b)(i) Upon receipt of such notice of cancellation and statement from the premium finance company, the insurer shall consider that cancellation of the insurance contract or contracts has been requested by the insured but without requiring the return of the insurance contract or contracts and the insurer may proceed to cancel such contract or contracts as provided in R.S. 22:885. The effective date of cancellation shall be as of 12:01 a.m. on the tenth day after the date of sending of the notice of cancellation as shown in said statement furnished to the insurer by the premium finance company.
(ii) The time period between the date of the late notice and notice of cancellation was sent shall commence upon the date the late notice is sent.
(iii) Payment of an insurance premium installment by the insured, or on behalf of the insured, with a check or other instrument, which is returned to the premium finance company by the financial institution or other entity upon which it is drawn for insufficient funds available in the account, lack of credit, closed account, stopped payment, or for any other reason, shall be deemed grounds for the premium finance company to cancel the insurance policy pursuant to the terms of the power of attorney from the date the insurance policy could have been canceled upon default for nonpayment.
(c) The receipt of such notice of cancellation and statement by the insurer shall create a conclusive presumption that the facts stated in said notice and statement are correct, that the insurer is entitled to rely on such facts and that the cancellation of the insurance contract or contracts is concurred in and authorized by the insured. No liability of any nature whatsoever either in favor of the insured, any governmental agency, holder of a security interest in the insured property, or third party shall be imposed upon the insurer as a result of any misstatement of fact contained in said notice of cancellation or statement furnished by the insurance premium finance company to the insurer, or as a result of failure by the insured, any governmental agency, holder of a security interest in the insured property, or third party to receive the notice of cancellation required by Paragraph (2) of this Subsection, or as a result of failure of the insurance premium finance company to comply with any of the requirements of this Subsection. Upon mailing of any unearned premium and unearned commission to the insurance premium finance company as soon as practicable following such cancellation, the insurer shall be fully discharged from all liability under the insurance contract or contracts for any loss occurring subsequent to the effective date of cancellation.
(4) Upon receipt of the notice of cancellation, the insurer shall give notice to any governmental agency, holder of a security interest in the insured property, or other third party as shown in the records of the insurer requiring statutory, regulation, or contractual notice and which were not given by the premium finance company as provided in Paragraph (3) of this Subsection. The insurer shall give the prescribed notice on behalf of itself or the insured to any governmental agency, holder of a security interest in the insured property, or third party on or before the fifth business day after the day it receives a copy of the notice of cancellation from the insurance premium finance company and shall determine the effective date of cancellation taking into consideration the number of days notice required to complete the cancellation if such notice is given by the insurer, otherwise the effective date of cancellation shall be calculated from the date the premium finance company sent the notice to such governmental agency, holder of a security interest in the insured property, or other third party taking into consideration the number of days notice required to complete the cancellation.
H. Whenever the financed insurance contract, or contracts, or endorsements are canceled, the insurer shall return whatever unearned premiums and unearned commissions that are due under the insurance contract to the insurance premium finance company for the account of the insured or insureds as soon as reasonably possible but in no event shall the period for payment exceed sixty days after the effective date of cancellation. In the event that the crediting of return premiums and commissions to the account of the insured results in a surplus over the amount due from the insured, the insurance premium finance company shall refund such excess to the insured within sixty days of receipt of the proceeds from the insurer unless the commissioner grants, upon a showing of good cause, an extension pursuant to a request for additional time, provided that no such refund shall be required if it amounts to less than one dollar, or to the extent provided by federal law. The parties to an insurance premium finance agreement may agree that the unearned premiums and unearned commissions may be retained by or paid to the insurance company in order to purchase continued coverage under the insurance contract. In such event, the insurance premium finance company shall only retain the funds necessary to pay the amount required to pay the insurance premium finance agreement in full and shall transfer such excess funds to the insurance company in a timely manner to assure that the insurance coverage is not terminated. When the insurance agent provides proof that any check, money order, bank draft, or other means of payment used to pay the down payment was returned by the financial institution for whatever reason, the refund of surplus funds shall be made from the lender to the agent. The refund shall be made payable to both the agent and the insured.
I. No filing of the premium finance agreement shall be necessary to perfect the validity of such agreement as a secured transaction as against creditors, subsequent purchasers, pledges, encumbrances, successors, or assigns.
J. No insurer or its agent may refuse to issue a policy of insurance solely because the premiums therefor have been advanced by a premium finance company licensed in Louisiana. Nor shall any insurer or its agent discriminate, intimidate, or retaliate against a producing agent/broker who uses premium financing by denying him the same rights accorded agents/brokers whose insureds pay their policies in a different manner.
Added by Acts 1980, No. 694, §1; Acts 1985, No. 808, §1, eff. July 22, 1985; Acts 1985, No. 333, §1, eff. July 9, 1985; Acts 1986, No. 584, §4, eff. July 2, 1986; Acts 1988, No. 629, §1; Acts 1988, No. 629, §2; Acts 1991, No. 697, §1; Acts 1992, No. 354, §1; Acts 1992, No. 355, §1; Acts 1995, No. 1184, §2; Acts 1997, No. 237, §1; Acts 1999, No. 941, §1; Acts 2003, No. 633, §1; Acts 2003, No. 645, §1; Acts 2008, No. 415, §2, eff. Jan. 1, 2009; Acts 2010, No. 1016, §1; Acts 2014, No. 359, §1; Acts 2016, No. 202, §1.