Source: https://www.revisor.mn.gov/statutes/?id=59A&view=chapter
Timestamp: 2014-03-11 08:03:53
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59A - INSURANCE PREMIUM FINANCE COMPANIES, 2013 Minnesota Statutes
Print 2013 StatutesChapter 59A
PdfTable of Sections2013 Minnesota Statutes	Chapter 59A. Insurance Premium Finance Companies
59A.01Citation59A.02Definitions59A.03Licenses; Penalty59A.04Action by Commissioner on Application59A.05Revocation and Suspension of Licenses59A.06Books and Records59A.07Power to Make Rules59A.08Premium Finance Agreements59A.09Maximum Finance Charge59A.10Default Charges59A.11Cancellation of Insurance Contract Upon Default59A.12Application of Unearned Premiums59A.13Exemption from Filing59A.14Repealed, 1997 c 157 s 7259A.15Applicability of Chapter 14
59A.01 CITATION.
Sections 59A.01 to 59A.15 may be cited as the "Insurance Premium Finance Company Act."
History: 1974 c 353 s 1
59A.02 DEFINITIONS.
For the purposes of sections 59A.01 to 59A.15, the words, terms and phrases defined in this section have the meanings ascribed to them except where the context clearly indicates a different meaning.
Subd. 2.Insurance premium finance agreement.
"Insurance premium finance agreement" means an agreement by which an insured or prospective insured promises to pay to a premium finance company or to its assignee 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 policy together with a service charge. Any agreement to finance premiums is a premium finance agreement if an insurance policy, other than a life or disability insurance policy, is made the security or collateral for the repayment of the debt incurred under the agreement. Provided, however, an agreement to finance premiums for insurance which is included in a retail installment transaction or purchased in connection with a real estate transaction, mortgage, deed of trust or other security agreement is not a premium finance agreement. Provided further, that an agreement by an insurance company to finance policies written by itself or by companies other than itself or its parent company, its subsidiaries or companies with which it shares a common parent company is not a premium finance agreement.
Subd. 3.Licensee.
"Licensee" means a person licensed by the commissioner to engage in the business of insurance premium financing. The term does not include a person in the business of insurance premium financing exclusively financing premiums for business, agricultural, or corporate purposes.
History: 1974 c 353 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1993 c 257 s 43
59A.03 LICENSES; PENALTY.
No person other than a savings association, bank, savings bank, trust company, regulated lender, industrial loan and thrift company, credit union or resident insurance agent who, within 15 days after entering into an insurance premium finance agreement, transfers such agreement to a licensee or to any of the organizations exempt under this subdivision may engage in the business of entering into, acquiring or holding insurance premium finance agreements unless licensed to do so by the commissioner. A violation of this subdivision is a misdemeanor.
Subd. 2.Required fees.
The applicant at the time of making application, shall pay to the commissioner the sum of $250 as a fee for investigating the application, and the additional sum of $200 as an annual licensee fee for a period terminating on May 31 of each year. In addition to the annual license fee, every licensee shall pay to the commissioner the actual costs of each examination as may be required to be conducted under the terms of sections 59A.01 to 59A.15.
The person to whom the license or the renewal thereof may be issued shall file sworn answers to such interrogatories as the commissioner may require. The commissioner shall have authority, at any time, to require the applicant to fully disclose the identity of all stockholders, partners, officers and employees and may refuse to issue or issue a license in the name of any firm, partnership, or corporation if not satisfied that any officer, employee, stockholder or partner thereof, who may materially influence the applicant's conduct, meets the standards of sections 59A.01 to 59A.15.
History: 1974 c 353 s 3; 1976 c 2 s 34; 1976 c 111 s 1; 1986 c 444; 1994 c 382 s 13; 1995 c 202 art 1 s 25; 1999 c 151 s 37
59A.04 ACTION BY COMMISSIONER ON APPLICATION.
Subdivision 1.Investigation and hearing.
Upon the filing of an initial application and the payment of the license fee, the commissioner shall make an investigation of each applicant. If a license has not been issued within 30 days after receipt of the application the commissioner shall, at the request of the applicant, give the applicant a full hearing.
Subd. 2.License issued.
The commissioner shall issue or renew a license when satisfied that the person to be licensed:
(a) is competent and trustworthy and intends to act in good faith in the financing of insurance premiums;
(b) has a good business reputation and has had experience, training or education so as to be qualified in financing insurance premiums; and
(c) if a corporation, is a corporation incorporated under the laws of this state or a foreign corporation authorized to transact business in this state.
History: 1974 c 353 s 4; 1986 c 444
59A.05 REVOCATION AND SUSPENSION OF LICENSES.
The commissioner may after a hearing revoke, suspend, or refuse to renew the license of any licensee if it appears to the commissioner that:
(a) the license was obtained by fraud;
(c) the holder of the license is untrustworthy or incompetent to finance insurance premiums, or is involved in any fraudulent, dishonest or deceptive practice; or
(d) the licensee has violated any of the provisions of sections 59A.01 to 59A.15 or rules adopted pursuant to sections 59A.01 to 59A.15.
History: 1974 c 353 s 5; 1986 c 444
59A.06 BOOKS AND RECORDS.
Subdivision 1.Licensee duties.
Every licensee shall maintain records satisfactory to the commissioner of its premium finance transactions. The records shall be open to examination and investigation by the commissioner at any time during ordinary business hours. The commissioner may, at any time, require any licensee to bring these records to the commissioner's office for examination.
Subd. 2.Retention requirements.
Every licensee shall preserve its records of premium finance transactions for at least three years after making the final entry in respect to any premium finance agreement. The records may be preserved in photographic form or in a form acceptable to the commissioner under section 46.04, subdivision 3.
Subd. 3.Commissioner's examination authority; recovery of costs.
The commissioner may at any time make an examination of the affairs, business, office, and records of each licensee. Each licensee shall pay to the commissioner the actual costs of examination as well as amounts required under section 46.131, and the commissioner may maintain an action for the recovery of such costs in any court of competent jurisdiction.
Each licensee shall annually before March 15 file a report under oath with the commissioner, in the form prescribed, giving information as required concerning the business and operations of each licensed place of business during the preceding year. The commissioner shall make and publish annually an analysis and recapitulation of the reports.
History: 1974 c 353 s 6; 1976 c 26 s 1; 1986 c 444; 1987 c 349 art 2 s 2; 1995 c 202 art 2 s 24
59A.07 POWER TO MAKE RULES.
The commissioner shall promulgate any rules which may be necessary to the administration of sections 59A.01 to 59A.15.
History: 1974 c 353 s 7; 1985 c 248 s 70
59A.08 PREMIUM FINANCE AGREEMENTS.
Subdivision 1.Contents; specific information.
A premium finance agreement shall:
(a) be dated and signed by or on behalf of the insured, and the printed portion thereof shall be in at least eight point type;
(b) contain the name and place of business of the insurance agent or insurance broker negotiating the related insurance contract, the name and residence or the place of business of the insured as specified, the name and place of business of the premium finance company to which installments or other payments are to be made, the name of the insurer issuing the related insurance contract, a description of the insurance contracts including the term and type of policy, the premiums for which are advanced or are to be advanced under the agreement and the amount of the premiums therefor; and
(1) the total amount of the premiums,
(2) the amount of the down payment,
(3) the balance of premiums due, the amount financed (the difference between items (1) and (2)),
(4) the amount of the finance charge,
(5) the amount of the flat service fee,
(6) the total of payments (sum of items (3), (4) and (5)).
Subd. 2.Contents; sequence or order.
The items set forth in subdivision 1, clause (c) need not be stated in the sequence or order in which they appear and additional items may be included to explain the computations made in determining the amount to be paid by the insured.
Subd. 3.Other premiums.
Additional or subsequent premiums may be added to an insurance premium finance agreement from time to time, provided that:
(a) The additional or subsequent insurance premium to be added results from additional premiums required under policies presently being financed under the insurance premium finance agreement or from a renewal of a policy or from other policies owned or purchased by the insured.
(b) The insurance premium finance company receives written notice or advice from an insurer authorized to do business in this state or from an insurance agent licensed in this state acknowledging that the premium on an existing financed policy has been increased or that a policy has been renewed or that additional policies have or will be issued to the insured. The notice or advice shall contain the amount of the additional premium, the down payment collected by the insurer or agent, if any, and the amount of premium to be added to the insurance premium finance agreement.
(c) If the additional premiums to be added to the insurance premium finance agreement result from additional premiums required on policies presently financed under the agreement or from a renewal of a policy or from other policies owned or purchased by the insured, a written notice must be mailed, faxed, or delivered to the insured outlining any changes to the information required by subdivision 1 along with a conspicuous statement to the insured that the insured may tender the premiums in full or affirm the proposed changes by tendering either an additional down payment or tendering the proposed revised installment amount, or disaffirm the financing of the additional premium by continuing the original payment amount as agreed to in the initial agreement.
If the proposed revisions in paragraph (c) are affirmed by the insured, the finance company may make an additional finance charge according to section 59A.09 for the additional premium financed and added to the open-end agreement; however, no additional flat service fee may be made or charged for adding additional or subsequent premiums to an open-end insurance premium finance agreement for which a flat service fee was previously made or charged.
Subd. 4.Copy.
The premium finance company or the insurance agent shall deliver to the insured, or mail to the insured at the address shown in the agreement, a completed copy of that agreement. Within 15 days of receiving the policy number of the policy being financed, the premium finance company shall mail to the insurer a notice of financed premium, which contains the term, amount of premium, and type of policy being financed.
Subd. 5.Competitive equality.
No insurance agent, insurance broker, or insurer may require a person to use a particular insurance premium finance company or other installment payment plan for which a finance charge or other fee in connection with an installment payment has been or will be imposed or refuse to accept premium payment from a company licensed under sections 59A.01 to 59A.15.
History: 1974 c 353 s 8; 1975 c 309 s 1; 1986 c 444; 1992 c 564 art 1 s 9,10; 1997 c 157 s 52,53
59A.09 MAXIMUM FINANCE CHARGE.
No person engaged in the business of financing insurance premiums may charge, contract for, receive or collect a finance charge plus flat service fee with respect to an insurance premium finance agreement other than as permitted by this section.
Subd. 2.Balance determined.
The finance charge shall be computed on the balance of the premiums due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when final installment of the premium finance agreement is payable.
Subd. 3.How computed.
The finance charge must not exceed five percent in excess of the discount rate on 90-day commercial paper in effect at the Federal Reserve Bank located in the Ninth Federal Reserve District when an insurance premium finance agreement is made or when an additional or subsequent premium is added under an open end agreement. For expenses incurred in servicing the loan including any filing fees, application fee for the examination or investigation of the character of the borrower, comaker or security, and drawing any necessary papers in making the loan, an insurance premium finance company may contract for a flat rate service fee not exceeding the greater of one percent of the amount financed or $20 per premium finance agreement. The flat service fee need not be refunded upon prepayment in full before maturity.
Subd. 4.When computed.
The finance charge shall be computed in advance on the principal balance of a premium finance agreement according to the actuarial method on terms payable in substantially equal successive monthly installments.
Subd. 5.Prepayment.
Notwithstanding the provisions of any premium finance agreement, any insured may prepay the obligation in full at any time. In such event the insured shall receive a refund credit. The amount of such refund credit shall represent at least as great a proportion of the finance 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 is less than $1, no refund need be made. If, in addition to the finance charge, an additional flat service fee was imposed, the flat service fee need not be refunded nor taken into consideration in computing the refund credit.
Subdivision 3 applies only to a premium finance agreement in which the related insurance contract is for personal, family, or household use. The rate charged under an agreement made to finance an insurance policy for business, agricultural, or corporate purposes shall be as agreed to by the parties to the agreement.
History: 1974 c 353 s 9; 1979 c 261 s 1; 1983 c 200 s 1-3; 1986 c 444
59A.10 DEFAULT CHARGES.
Subdivision 1.Delinquencies.
A premium finance agreement may provide for payment by the insured of a delinquency charge. The delinquency charge may not exceed five percent of the delinquent installment. The delinquency charge may be imposed upon any installment which is in default for a period of ten days or more.
Subd. 2.Cancellations and collections.
If the default results in the cancellation or subsequent reinstatement of any insurance contract listed in the agreement, the agreement may provide for payment by the insured of a cancellation charge of $10. A premium finance agreement may also provide for the payment of statutory attorneys fees and statutory court costs if the agreement is referred for collection to an attorney not a salaried employee of the insurance premium finance company.
History: 1974 c 353 s 10; 1991 c 283 s 1
History: 1974 c 353 s 11; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1986 c 444; 1992 c 564 art 1 s 11; 1997 c 157 s 54,55
History: 1974 c 353 s 12; 1983 c 200 s 4,5; 1992 c 564 art 1 s 12; 1994 c 485 s 3
59A.13 EXEMPTION FROM FILING.
No filing of the premium finance agreement or recording of a premium finance transaction shall be necessary to perfect the validity of the agreement as a secured transaction as against creditors, subsequent purchasers, pledgees, encumbrances, successors or assigns.
History: 1974 c 353 s 13
59A.14 [Repealed, 1997 c 157 s 72]
59A.15 APPLICABILITY OF CHAPTER 14.
The provisions of chapter 14, shall apply to sections 59A.01 to 59A.15.
History: 1974 c 353 s 15; 1982 c 424 s 130