CHAPTER 38. REGULATION OF DEPOSITORY INSTITUTIONS
IC 27-1-38
Chapter 38. Regulation of Depository Institutions
IC 27-1-38-1
"Affiliate" defined
Sec. 1. As used in this chapter, "affiliate" means a company that
controls, is controlled by, or is under common control with another
company.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-2
"Customer" defined
Sec. 2. As used in this section, "customer" means an individual
who purchases, applies to purchase, or is solicited to purchase
insurance primarily for personal, family, or household purposes.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-3
"Depository institution" defined
Sec. 3. As used in this chapter, "depository institution" means a
depository financial institution (as defined in IC 28-9-2-6).
As added by P.L.130-2002, SEC.2.
IC 27-1-38-4
"Insurance producer" defined
Sec. 4. As used in this section, "insurance producer" has the
meaning set forth in IC 27-1-15.6-2.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-5
"Person that sells, solicits, advertises, or offers insurance on behalf
of a depository institution" defined
Sec. 5. As used in this chapter, "person that sells, solicits,
advertises, or offers insurance on behalf of a depository institution"
means a person to which one (1) of the following applies:
(1) The person represents to a customer that the sale,
solicitation, advertisement, or offer of insurance is by or on
behalf of the depository institution.
(2) The depository institution:
(A) refers a customer to the person; and
(B) has a contractual arrangement with the person to receive
commissions or fees on sales of insurance that result from
referrals to the person.
(3) Documents that provide evidence of the sale, solicitation,
advertisement, or offer of insurance identify or refer to the
depository institution.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-6
Application of chapter
Sec. 6. This chapter does not apply to credit insurance.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-7
Prohibited activities of a depository institution of an affiliate of a
depository institution
Sec. 7. A depository institution or an affiliate of a depository
institution may not do the following:
(1) As a condition precedent to a loan of money, an extension
of credit, or the renewal of a loan of money or an extension of
credit, require a customer to:
(A) purchase; or
(B) renew;
insurance through a particular insurer, insurance producer,
broker, or group of insurers or insurance producers.
(2) When insurance is required in connection with a loan of
money or an extension of credit, reject an insurance policy
solely because the insurance policy was issued by an insurer
that is not associated with the depository institution or an
affiliate of the depository institution.
(3) As a condition precedent to an extension of credit or an
offer of a product or service that is equivalent to an extension
of credit, require a customer to obtain insurance from a
particular depository institution, affiliate of a depository
institution, insurance producer, or insurer. This subdivision
does not prohibit a depository institution or an affiliate of a
depository institution from informing a customer or prospective
customer that:
(A) insurance is required for a loan of money or an extension
of credit;
(B) approval for a loan of money or an extension of credit is
contingent upon the purchase of insurance; or
(C) insurance is available through the depository institution
or affiliate.
(4) Unreasonably reject an insurance policy that is furnished by
a customer for the protection of property that secures a loan of
money or an extension of credit to the customer. For purposes
of this subdivision, a rejection is not unreasonable if the
rejection is based on uniformly applied reasonable standards
that:
(A) relate to the extent of insurance required;
(B) relate to the financial soundness and services of the
insurer issuing the insurance policy;
(C) do not discriminate against a particular kind of insurer;
and
(D) do not require rejection of an insurance policy because
the insurance policy provides coverage in addition to the
coverage required for the loan of money or extension of
credit.
(5) Require a person to pay a separate charge:
(A) in connection with the issuance of insurance that is
required as surety for a loan of money for real estate; or
(B) to substitute insurance issued by one (1) insurer for an
insurance policy issued by another insurer.
For purposes of this subdivision, a separate charge does not
include interest charged on loans of money or advancements for
premiums under the terms of a loan agreement or credit
agreement. This subdivision does not apply to charges that
apply when the insurance producer that provides the insurance
is the depository institution or the affiliate of a depository
institution.
(6) Require of an:
(A) insurance producer; or
(B) insurer;
a condition that is not customarily required of an insurance
producer or insurer that is connected with the depository
institution or the affiliate of a depository institution.
(7) Use advertising or insurance promotional material that
would cause a reasonable person to incorrectly believe that the
federal or state government:
(A) is responsible for the insurance sales activity; or
(B) guarantees the credit;
of the depository institution or the affiliate of a depository
institution.
(8) Use advertising or insurance promotional material that
would cause a reasonable person to incorrectly believe that the
federal or state government:
(A) guarantees a return on an insurance product sold by; or
(B) is a source of payment on an insurance obligation of;
the depository institution or the affiliate of a depository
institution.
(9) Act as an insurance producer, unless the depository
institution or the affiliate of a depository institution is licensed
under IC 27-1-15.6.
(10) Solicit or sell insurance, other than credit insurance or
flood insurance, unless the solicitation or sale is completed
through documents separate from a loan of money or an
extension of credit.
(11) Include the expense of an insurance premium, other than
a credit insurance premium or a flood insurance premium, in a
primary loan of money or extension of credit without the
express written consent of the customer.
(12) Solicit or sell insurance, unless the area in which insurance
sales activities of the depository institution or affiliate occur is,
to the extent practicable, physically separate from the area
where retail deposits are routinely accepted by the depository
institution or affiliate.
(13) Solicit or sell insurance, unless the depository institution
or the affiliate of a depository institution maintains separate
books and records that relate to insurance transactions,
including files related to consumer complaints.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-8
Required disclosure concerning insurance related to a loan or a
credit extension
Sec. 8. (a) A depository institution or the affiliate of a depository
institution that:
(1) lends money or extends credit; and
(2) solicits insurance primarily for personal, family, or
household purposes;
shall disclose in writing to a customer that the insurance related to
the loan or credit extension may be purchased from an insurer or
insurance producer chosen by the customer, subject only to the
ability of the depository institution or affiliate to reasonably reject an
insurer or insurance producer as described in section 7(4) of this
chapter.
(b) A disclosure under subsection (a) must inform the customer
that the customer's choice of insurer or insurance producer does not
affect:
(1) the decision of the depository institution or the affiliate of
a depository institution regarding the loan or credit extension;
or
(2) the terms of the loan or credit extension;
except that the depository institution or the affiliate of a depository
institution may impose reasonable requirements concerning the
creditworthiness of the insurer and the scope of insurance coverage
chosen, as described in section 7(4) of this chapter.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-9
Required disclosures before sale of insurance
Sec. 9. (a) This section applies as follows:
(1) To an affiliate of a depository institution only to the extent
that the affiliate sells, solicits, advertises, or offers insurance at
the office of a depository institution or on behalf of a depository
institution.
(2) To the:
(A) sale of;
(B) solicitation for; or
(C) application for;
insurance by an individual primarily for personal, family, or
household purposes and only to the extent that a disclosure is
accurate.
(b) A depository institution or an affiliate of a depository
institution that solicits, sells, advertises, or offers insurance, and a
person that sells, solicits, advertises, or offers insurance on behalf of
a depository institution, shall disclose to a customer, in writing where
practicable, in a clear and conspicuous manner, and before a sale of
insurance, that the insurance:
(1) is not a deposit;
(2) is not insured by the Federal Deposit Insurance Corporation
or another federal government agency;
(3) is not guaranteed by the depository institution, the affiliate
of a depository institution, or the person that sells, solicits,
advertises, or offers insurance on behalf of a depository
institution; and
(4) involves investment risk including possible loss of value, if
appropriate.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-10
Acknowledgment of receipt of required disclosure
Sec. 10. (a) A depository institution that solicits, sells, advertises,
or offers insurance, a depository institution's affiliate that solicits,
sells, advertises, or offers insurance, or a person that sells, solicits,
advertises, or offers insurance on behalf of a depository institution
shall obtain from a customer to whom a disclosure is made under
section 9 of this chapter a written acknowledgment of receipt of the
disclosure:
(1) when the customer receives the disclosure; or
(2) at the time of the initial purchase of the insurance.
(b) If a solicitation for insurance is conducted by telephone, the
depository institution, the affiliate of a depository institution, or the
person that sells, solicits, advertises, or offers insurance on behalf of
a depository institution shall:
(1) obtain an oral acknowledgment of receipt of the disclosure;
(2) maintain documentation to show that the acknowledgment
was given by the customer; and
(3) make reasonable efforts to obtain a written acknowledgment
from the customer.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-11
Requirements for electronic disclosure
Sec. 11. If:
(1) a customer consents to receive the disclosure required under
section 8 of this chapter electronically; and
(2) the disclosure is provided to the customer in a format that
the customer may retain or obtain at a later time;
the depository institution, the affiliate of a depository institution, or
the person that sells, solicits, advertises, or offers insurance on behalf
of a depository institution may provide the disclosure electronically
and may obtain from the customer acknowledgment of receipt of the
disclosure electronically.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-12
Commissioner examination and investigation
Sec. 12. (a) The commissioner may examine and investigate the
insurance activities of a person that the commissioner believes to be
in violation of this chapter. A person examined or investigated under
this section shall, upon reasonable notice from the commissioner,
make the insurance related books and records of the person available
to the commissioner.
(b) In the case of an examination or investigation of a depository
institution under subsection (a), the commissioner shall, before
performing the examination or investigation:
(1) notify the federal or state banking agency that regulates the
depository institution that the commissioner intends to examine
or investigate the depository institution; and
(2) advise the federal or state banking agency of the depository
institution's suspected violation of this section.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-13
Allowed activities
Sec. 13. This chapter does not prevent a depository institution or
an affiliate of a depository institution that lends money or extends
credit from placing insurance on real or personal property if a
customer fails to provide insurance that is required under terms of a
loan agreement or credit agreement.
As added by P.L.130-2002, SEC.2.
IC 27-1-38-14
Violation of chapter
Sec. 14. A person that violates this chapter commits an unfair and
deceptive act or practice in the business of insurance under
IC 27-4-1-4.
As added by P.L.130-2002, SEC.2.