TITLE XXXVII
INSURANCE
Chapter 415-B
PREMIUM FINANCE COMPANIES
Section 415-B:1
415-B:1 Definitions. –
In this chapter:
I. "Commissioner" means the insurance commissioner.
II. "Insurance premium finance company" means a person engaged in whole or in part in the business of entering into premium finance agreements.
III. "Licensee" means an insurance premium finance company holding a license issued under this chapter.
IV. "Person" means an individual, partnership, association, business corporation, nonprofit corporation, common law trust, joint-stock company, or any other group of individuals however organized.
V. "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 of an insurance contract, together with interest or discount and a service charge as authorized and limited by this chapter, and in which as security for the amount advanced the premium finance company receives an assignment of the gross unearned premiums of such insurance contract.
VI. "Default" means the failure of the named insured to discharge when due any of his obligations in connection with the payment of premiums on a policy, or any installment of such premium, whether the premium is payable directly to the insurer or its agent or indirectly under any premium finance plan or extension of credit.
Source. 1981, 118:1, eff. July 3, 1981.
Section 415-B:2
415-B:2 License Required. –
I. No person shall engage in the business of a premium finance company in this state without having first obtained a premium finance company license from the commissioner, except as provided in paragraph IV.
II. The annual license fee shall be $200. Licenses may be renewed from year to year as of July 1 of each year upon payment of the license fee to the commissioner. Additionally, a premium finance company established in this state shall file with the commissioner proof of minimum capital and surplus in an amount equal to or greater than $250,000, or shall file with the commissioner a surety bond or equivalent acceptable to the commissioner in the amount of $250,000.
III. The commissioner may, at any time, require the applicant to disclose fully the identity of all stockholders, partners, officers, and employees; and he may, in his discretion, refuse to issue or renew a license in the name of any person, firm, partnership, or corporation if he is not satisfied that any officer, employee, stockholder, or partner thereof, who may materially influence the applicant's conduct, meets the standards of RSA 415-B:3, II.
IV. This section shall not require any insurance company, agent, broker, association, exchange, building or savings and loan association, bank, thrift institution, trust company, small loan company, industrial loan company or credit union authorized to do business in this state financing premiums on policies to be additionally licensed under this chapter; provided, however, that all other provisions of this chapter shall apply to such persons.
Source. 1981, 118:1. 2001, 224:7, eff. Sept. 9, 2001.
Section 415-B:3
415-B:3 Issuance and Renewal of License. –
I. Upon the filing of an application and the payment of the license fee, the commissioner shall make an investigation of each applicant and shall issue a license if the applicant is qualified in accordance with this chapter. If the commissioner does not find the applicant qualified, he shall, within 30 days after he has received such application, at the request of the applicant, give the applicant a full hearing.
II. The commissioner shall issue or renew a license when he is satisfied that the person to be licensed:
(a) Is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for;
(b) Has a good business reputation and has had experience, training or education so as to be qualified in the business for which the license is applied for; 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.
Source. 1981, 118:1, eff. July 3, 1981.
Section 415-B:4
415-B:4 Revocation or Suspension of License; Appeal. –
I. The commissioner may revoke or suspend the license of any premium finance company when, after investigation, the commissioner finds that:
(a) The license issued to such company was obtained by fraud;
(b) There was any misrepresentation in the application for the license;
(c) The holder of such license has shown himself untrustworthy or incompetent to act as a premium finance company; or
(d) Such company has violated any of the provisions of this chapter.
II. In lieu of revoking or suspending the license for any of the causes stated in paragraph I, after hearing as provided in paragraph III, the commissioner may subject such company to a penalty of not more than $1,500 for each offense when, in his judgment, he finds that the public interest would not be harmed by the continued operation of such company. The amount of any such penalty shall be paid by the company to the commissioner.
III. Before the commissioner shall penalize, revoke, suspend, or refuse to renew the license of any premium finance company, the aggrieved person shall be entitled to a hearing in accordance with RSA 541.
IV. If the commissioner refuses to issue a license as a premium finance company to any person, or if he revokes, suspends or refuses to renew the license of any premium finance company, or imposes a penalty on such company, after a hearing as provided under paragraph III, the applicant or licensee may appeal from such refusal to issue a license or from such adjudication in accordance with RSA 541.
Source. 1981, 118:1, eff. July 3, 1981.
Section 415-B:5
415-B:5 Licensee's Books and Records. –
I. Every licensee shall maintain records of its premium finance transactions. Such records shall be open to examination and investigation by the commissioner at any time during regular business hours at any location at which such records are maintained.
II. Every licensee shall preserve its records of such premium finance transactions, including cards used in a card system, if any, for at least 2 years after making the final entry in respect to any premium finance agreement. The preservation of records in photographic or microfilm form shall constitute compliance with this requirement.
III. Within 120 days after the completion of the fiscal year, each licensee shall file a report with the commissioner giving such information as the commissioner may require concerning the business operations during the preceding fiscal year of each licensee. Such information shall include but not be limited to a financial statement prepared according to generally accepted accounting principles and certified by a certified public accountant.
IV. Any licensee neglecting to make an annual report required by paragraph III or failing to amend such report within 15 days after notice from the commissioner shall, unless such neglect or failure is due to justifiable cause and not willful neglect, pay the state $25 for each day during which such neglect or failure continues.
V. If the licensee's records are located out of this state, the licensee at the licensee's option shall make such records available within 72 hours to the commissioner at a convenient location within the state, or pay the reasonable and necessary expenses for the commissioner or his representative to examine them at a place where they are maintained. The commissioner may designate representatives, including comparable officials of the state in which they are maintained, to inspect them on his behalf.
VI. The commissioner shall have the power to issue subpoenas to compel the attendance of witnesses and the production of documents, papers, books, records, and other evidence before him in any matter pertaining to this chapter.
Source. 1981, 118:1. 1985, 343:2, eff. July 1, 1985.
Section 415-B:6
415-B:6 Form of Premium Finance Agreement. –
I. A premium finance agreement shall:
(a) Be dated and signed by or on behalf of the insured; and the printed portion of the agreement shall be in at least 8-point type;
(b) Contain the name and place of business of the insurance agent or broker negotiating the related insurance contract; the name and residence or the place of business of the insured as specified by him; the name and place of business of the premium finance company to which payments are to be made; a brief description of the insurance contracts involved and the amount of the premium; and
(c) Set forth the following items where applicable:
(1) The total amount of the premiums,
(2) The amount of the down payment,
(3) The principal balance (the difference between (1) and (2)),
(4) The amount of the interest or discount,
(5) The balance payable by the insured (sum of (3) and (4)), and
(6) The number of installments required, the amount of each installment expressed in dollars, and the due date or period of each installment.
II. The items set out in subparagraph I(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.
III. A premium finance agreement may contain any provision not prohibited by this chapter or by order of the commissioner.
Source. 1981, 118:1, eff. July 3, 1981.
Section 415-B:7
415-B:7 Limitation on Interest and Other Charges. –
I. A premium finance company shall not charge, contract for, receive, or collect an interest or discount charge other than as permitted by this chapter.
II. The interest or discount shall be agreed upon by the parties and 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 policy for which the premiums are being advanced, up to and including the date when the final installment of the premium finance agreement is payable.
III. Notwithstanding the provisions of any premium finance agreement, any insured may repay the obligation in full at any time. If the insured voluntarily prepays, he shall receive a refund credit, which shall represent at least as great a proportion of the interest or discount 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 $1, no refund need be made.
Source. 1981, 118:1, eff. July 3, 1981.
Section 415-B:8
415-B:8 Delinquency and Cancellation Charges. –
I. A premium finance agreement may provide for the payment by the insured of a delinquency charge on any installment which is in default for a period of 5 consecutive days or more, of $1 to a maximum of 5 percent of the delinquent installment. If the default results in the cancellation of any insurance contract listed in the agreement, the agreement may provide for the payment by the insured of a cancellation charge equal to the difference between any delinquency charge imposed with respect to the installment in default and $15.
II. A premium finance agreement may provide for payment of collection costs, attorney's fees equal to 20 percent of the outstanding indebtedness, and any other charges which arise because one party breaches the contract.
III. None of the charges referred to in this section shall be considered directly or indirectly in determining whether a violation of the usury laws has occurred under a premium finance agreement.
Source. 1981, 118:1, eff. July 3, 1981.
Section 415-B:9
415-B:9 Cancellation of Insurance Contract Upon Default. –
I. When a premium finance agreement contains a power of attorney enabling the premium finance company to cancel upon default any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the premium finance company unless such cancellation is effected in accordance with this section.
II. After default, the premium finance company may cancel such insurance contract or contracts by mailing to the insurer a notice of cancellation, stating the effective date of cancellation. Such date shall be not less than 10 days from the date of mailing the notice. The insurance contract shall be cancelled as if such notice of cancellation had been submitted by the insured himself but without requiring the return of the insurance contract or contracts. The premium finance company shall also mail a copy of the notice of cancellation to the insured at his last known address as shown on the records of the premium finance company, and to the insurance agent or broker. Termination of workers' compensation policies shall be made pursuant to the provisions set forth in RSA 281-A:9.
III. All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be cancelled unless notice is given to a governmental agency, mortgagee, or other third party shall apply where cancellation is effected under the provisions of this section. The insurer shall give the prescribed notice on behalf of itself or the insured to any governmental agency, mortgagee, or other third party on or before the second business day after the day it receives the notice of cancellation from the premium finance company. The insurer shall determine the effective date of cancellation taking into consideration the number of days' notice required to complete the cancellation.
IV. The notice of cancellation shall state the date, not less than 10 days after its mailing, on which such cancellation shall become effective.
Source. 1981, 118:1. 1993, 210:5, eff. Jan. 1, 1994.
Section 415-B:10
415-B:10 Return Premiums. –
Whenever a financed insurance contract is cancelled, the insurer shall return whatever gross unearned premiums are due under the insurance contract to the premium finance company for the account of the insured or insureds as soon as reasonably possible, but in any event, within 30 days after the effective date of cancellation. On auditable policies, gross unearned premiums shall be returned within 30 days after the date of the completed audit of the insured. In the event that a crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured, the premium finance company shall refund such excess to the insured provided that no such refund shall be required if it amounts to less than $1. This section shall not apply to retrospectively rated policies.
Source. 1981, 118:1. 1988, 221:3. 1993, 210:6, eff. Jan. 1, 1994.
Section 415-B:11
415-B:11 Exemption From Filing Requirements. –
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 purchases, pledges, encumbrancers, successors, or assigns.
Source. 1981, 118:1, eff. July 3, 1981.
Section 415-B:12
415-B:12 Rulemaking Authority. –
The commissioner may adopt rules pursuant to RSA 541-A for the purposes of this chapter.
Source. 1981, 118:1, eff. July 3, 1981.
Section 415-B:13
415-B:13 Penalty. –
Any premium finance company, insurer, agent, or broker who willfully and knowingly violates any provision of this chapter shall be guilty of a misdemeanor.
Source. 1981, 118:1, eff. July 3, 1981.