|SB 438 - Insurance Premium Finance Cos. - license requirements
First Reader Summary
A bill to be entitled an Act to amend Chapter 22 of Title 33 of
the Official Code of Georgia Annotated, relating to insurance
premium finance companies, so as to change certain provisions
relating to requirements for license for transaction of business,
fees, change of address, and examination of applicants; to change
certain provisions relating to maintenance of records of
transactions by licensees and examination of records by the
Commissioner of Insurance; to change certain provisions relating
to form, contents, execution, and delivery of premium finance
agreements; to change certain provisions relating to service
charges; to repeal conflicting laws; and for other purposes.
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SB 438 00 LC 25 1632
SENATE BILL 438
By: Senators Brown of the 26th, Madden of the 47th and
Golden of the 8th
A BILL TO BE ENTITLED
1- 1 To amend Chapter 22 of Title 33 of the Official Code of
1- 2 Georgia Annotated, relating to insurance premium finance
1- 3 companies, so as to change certain provisions relating to
1- 4 requirements for license for transaction of business, fees,
1- 5 change of address, and examination of applicants; to change
1- 6 certain provisions relating to maintenance of records of
1- 7 transactions by licensees and examination of records by the
1- 8 Commissioner of Insurance; to change certain provisions
1- 9 relating to form, contents, execution, and delivery of
1-10 premium finance agreements; to change certain provisions
1-11 relating to service charges; to change certain provisions
1-12 relating to notice to insured by premium finance company,
1-13 copy of premium finance agreement, and notice of existence
1-14 of power of attorney; to change certain provisions relating
1-15 to procedure for cancellation of insurance contract upon
1-16 default; to change certain provisions relating to
1-17 disposition of unearned premiums upon cancellation of
1-18 insurance policies; to provide for use of electronic records
1-19 and signatures subject to certain provisions of law; to
1-20 change certain provisions relating to applicability of said
1-21 chapter; to repeal conflicting laws; and for other purposes.
1-22 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
1-23 SECTION 1.
1-24 Chapter 22 of Title 33 of the Official Code of Georgia
1-25 Annotated, relating to insurance premium finance companies,
1-26 is amended by striking subsection (c) of Code Section
1-27 33-22-3, relating to requirements for license for
1-28 transaction of business, fees, change of address, and
1-29 examination of applicants, and inserting in lieu thereof the
1-31 "(c) Before any licensee changes his or her address, he or
1-32 she shall
return his license to the Commissioner who shall
1-33 endorse the license indicating the change inform the
1-34 Commissioner of the change in writing."
2- 1 SECTION 2.
2- 2 Said chapter is further amended by striking subsection (b)
2- 3 of Code Section 33-22-7, relating to maintenance of records
2- 4 of transactions by licensees and examination of records by
2- 5 the Commissioner of Insurance, and inserting in lieu thereof
2- 6 the following:
2- 7 "(b) Every licensee shall preserve its records of its
2- 8 premium finance transactions, including cards used in a
2- 9 card system, for at least three years after making the
2-10 final entry in respect to any premium finance agreement.
2-11 The preservation of records in photographic or electronic
2-12 form shall constitute compliance with this requirement."
2-13 SECTION 3.
2-14 Said chapter is further amended by striking Code Section
2-15 33-22-8, relating to form, contents, execution, and delivery
2-16 of premium finance agreements, and inserting in lieu thereof
2-17 the following:
2-19 (a) A premium finance agreement shall:
2-20 (1) Be dated and signed by or on behalf of the insured,
2-21 and the printed portion of the agreement shall be in at
2-22 least approximately eight-point type and shall be
2-23 readable by an individual with average eyesight;
2-24 (2) Contain the name and place of business of the
2-25 insurance agent or insurance broker negotiating the
2-26 related insurance contract, the name and residence of or
2-27 place of business of the insured as specified by him or
2-28 her, the name and place of business of the premium
2-29 finance company to which payments are to be made, a
2-30 description of the insurance contracts involved, and the
2-31 amount of the premium for the contracts; and
2-32 (3) Set forth the following items, where applicable:
2-33 (A) The total amount of the premiums;
2-34 (B) The amount of the down payment;
2-35 (C) The principal balance (the difference between
2-36 subparagraphs (A) and (B) of this paragraph);
2-37 (D) The amount of the service charge, including the
2-38 additional charge as provided in Code Section 33-22-9;
3- 1 (E) The balance payable by the insured (the sum of
3- 2 subparagraphs (C) and (D) of this paragraph); and
3- 3 (F) The number of payments required, the amount of
3- 4 each payment expressed in dollars, and the due date or
3- 5 period of payment.
3- 6 (b) The items set out in paragraph (3) of subsection (a)
3- 7 of this Code section need not be stated in the sequence or
3- 8 order in which they appear in such clause, and additional
3- 9 items may be included to explain the computations made in
3-10 determining the amount to be paid by the insured.
3-11 (c) The licensee or the insurance agent or insurance
3-12 broker shall deliver to the insured or send by electronic
3-13 means or mail to the insured at his or her address shown
3-14 in the agreement a complete copy of the agreement.
3-15 (d) Whenever an insurance policy has been financed
3-16 pursuant to this chapter, an additional premium to such
3-17 policy or a renewal or extension of such policy may be
3-18 financed with the same premium finance company without the
3-19 execution of a new premium finance agreement. The premium
3-20 finance company or the insurance agent or insurance broker
3-21 shall mail or deliver to the insured deliver to the
3-22 insured or send by electronic means or mail to the insured
3-23 at his or her address shown in the agreement an addendum
3-24 to the existing premium finance agreement in the same
3-25 manner as provided in subsection (c) of this Code section,
3-26 and such addendum shall contain the information required
3-27 under subsection (a) of this Code section."
3-28 SECTION 4.
3-29 Said chapter is further amended by striking Code Section
3-30 33-22-9, relating to service charges, and inserting in lieu
3-31 thereof the following:
3-33 (a) As used in this Code section, the term:
3-34 (1) 'Commercial insurance premium finance agreement'
3-35 means any insurance premium finance agreement other than
3-36 a consumer premium finance agreement.
3-37 (2) 'Consumer insurance premium finance agreement' means
3-38 an insurance premium finance agreement, as defined in
3-39 Code Section 33-22-2, wherein the insurance contracts
3-40 which are the subject of the premium finance agreement
3-41 are for personal, family, or household purposes or where
4- 1 the premiums for those agreements are $3,000.00 or less
4- 2 rather than business or professional purposes.
4- 3 (b) A premium finance company shall not charge, contract
4- 4 for, receive, or collect a service charge other than as
4- 5 permitted by this chapter.
4- 6 (c) The service charge shall be computed on the balance of
4- 7 the premiums due, after subtracting the down payment made
4- 8 by the insured in accordance with the premium finance
4- 9 agreement, from the effective date of the insurance
4-10 coverage for which the premiums are being advanced, to and
4-11 including the date when the final payment of the premium
4-12 finance agreement is payable; provided, however, that
4-13 service charges as specified in the premium finance
4-14 agreement may continue to be charged until such agreement
4-15 is paid in full.
4-16 (d) The service charge per consumer insurance premium
4-17 finance agreement shall be a maximum of $12.00 per $100.00
4-18 per annum plus an additional charge which shall not exceed
4-19 $20.00 per premium finance agreement, which additional
4-20 charge need not be refunded upon prepayment. Any insured
4-21 may prepay his premium finance agreement in full at any
4-22 time before the due date of the final payment and in such
4-23 event the unearned service charge shall be refunded in
4-24 accordance with the Rule of 78 and shall represent at
4-25 least as great a proportion of the service charge, if any,
4-26 as the sum of the periodic balances after the month in
4-27 which prepayment is made bears to the sum of all periodic
4-28 balances under the schedule of payments in the agreement.
4-29 (e) The service charge for a commercial insurance premium
4-30 finance agreement shall be properly agreed upon by the
4-31 parties to the contract. The claim or defense of usury by
4-32 such insureds who enter into such a commercial insurance
4-33 premium finance agreement or their successors or anyone in
4-34 their behalf shall not be valid if such agreement is a
4-35 valid contract in all other respects."
4-36 SECTION 5.
4-37 Said chapter is further amended by striking Code Section
4-38 33-22-12.1, relating to notice to insured by premium finance
4-39 company, copy of premium finance agreement, and notice of
4-40 existence of power of attorney, and inserting in lieu
4-41 thereof the following:
5- 1 "33-22-12.1.
5- 2 Whenever a premium finance company executes a premium
5- 3 finance agreement relative to a personal or family-type
5- 4 policy of insurance, it shall mail or deliver to the
5- 5 insured deliver to the insured or send by electronic means
5- 6 or mail to the insured at his or her address shown in the
5- 7 agreement a copy of the agreement as provided in
5- 8 subsection (c) of Code Section 33-22-8 and a written
5- 9 notice which clearly discloses to the insured the
5-10 existence of the power of attorney contained in such
5-11 agreement. The written notice shall substantially comply
5-12 with the following form:
5-13 Your insurance policy premiums have been financed and
5-14 are payable on a monthly payment basis. If you do not
5-15 pay each payment on or before the date due or within 15
5-16 days of the date due, we have the right to CANCEL your
5-17 insurance policy or policies which are financed under
5-18 the premium finance agreement. To avoid cancellation of
5-19 your policy or policies, MAKE YOUR PAYMENTS ON TIME.'"
5-20 SECTION 6.
5-21 Said chapter is further amended by striking subsection (b)
5-22 of Code Section 33-22-13, relating to procedure for
5-23 cancellation of insurance contract upon default, and
5-24 inserting in lieu thereof the following:
5-25 "(b) Not less than ten days' written notice shall be
5-26 mailed to the insured delivered to the insured or sent by
5-27 electronic means or mailed to the insured at his or her
5-28 address shown in the agreement of the intent of the
5-29 premium finance company to cancel the insurance contract
5-30 unless the default is cured within such ten-day period. A
5-31 copy of said notice shall also be sent to the insurance
5-32 agent or insurance broker indicated on the premium finance
5-34 SECTION 7.
5-35 Said chapter is further amended by striking paragraph (1) of
5-36 subsection (b) of Code Section 33-22-14, relating to
5-37 disposition of unearned premiums upon cancellation of
5-38 insurance policies, and inserting in lieu thereof the
6- 1 "(b)(1) In the event that the crediting of return
6- 2 premiums to the account of the insured results in a
6- 3 surplus over the amount due from the insured, the
6- 4 premium finance company shall refund the excess within
6- 5 ten working days of receipt of the return premium or
6- 6 tender of return premium to the insured via the agent,
6- 7 agency, or broker placing the insurance and shall
6- 8 furnish such agent, agency, or broker, upon a written
6- 9 request, a report setting forth an itemization of the
6-10 unearned finance charge and other charges under the
6-11 premium finance agreement; provided, however, there
6-12 shall be no refund required when the excess due the
6-13 insured is less than $2.00 $5.00."
6-14 SECTION 8.
6-15 Said chapter is further amended by adding a new Code Section
6-16 33-22-14.1 to read as follows:
6-18 Any use or transmission of electronic records or
6-19 electronic signatures for purposes of this chapter shall
6-20 be subject to the provisions of Chapter 12 of Title 10,
6-21 the 'Georgia Electronic Records and Signatures Act.'"
6-22 SECTION 9.
6-23 Said chapter is further amended in Code Section 33-22-16,
6-24 relating to applicability of said chapter, by striking "or"
6-25 at the end of paragraph (5), striking "." at the end of
6-26 paragraph (6) and inserting in lieu thereof "; or", and
6-27 adding a new paragraph (7) to read as follows:
6-28 "(7) A holder in due course of the receivables generated
6-29 by a premium finance company but who is not otherwise
6-30 acting as a premium finance company under the provisions
6-31 of this chapter."
6-32 SECTION 10.
6-33 All laws and parts of laws in conflict with this Act are
Secretary of the Senate
Frank Eldridge, Jr., Secretary
Last Updated on 05/15/00