§ 27-6-6-15 — Loans or advances; purposes; repayment; approval; interest rate; restrictions

Indiana § 27-6-6-15

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 6: REINSURANCE; INTERINSURANCE
• Ch. 6: Interinsurance

Text

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.