§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.