HB430 By Representatives Sessions, Wilcox, Faust, Buskey, Bracy and Williams (JW) RFD Insurance Rd 1 17-MAR-16

SYNOPSIS: Under existing law, insurance premium finance companies finance insurance premiums.

This bill would authorize insurance premium finance companies to also provide financing for the charges for wind mitigation construction subject to approval by the Commissioner of Insurance.

A BILL TO BE ENTITLED AN ACT

Relating to insurance premium finance companies; to amend Sections 27-40-1 and 27-40-8 of the Code of Alabama 1975, to authorize the companies to provide wind mitigation construction financing, subject to approval by the Commissioner of Insurance.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. Sections 27-40-1 and 27-40-8 of the Code of Alabama 1975, are amended to read as follows:

§27-40-1.

"For the purposes of this chapter, the following words and phrases shall have the following meanings:

"(1) INSURANCE PREMIUM FINANCE COMPANY. A person engaged in the business of entering into premium finance agreements.

"(2) PREMIUM FINANCE AGREEMENT. An agreement by which an insured or prospective insured promises to pay to a 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 chapter.

"(3) LICENSEE. A premium finance company holding a license issued under this chapter, and charges for wind mitigation construction financing subject to approval by the commissioner.

"(4) PERSON. An individual, partnership, association, business corporation, nonprofit corporation, common law trust, joint-stock company, or any other group of individuals however organized.

"(5) INSURANCE CONTRACT. The policy or contract of insurance which is the subject of premium financing under this chapter.

"(6) WIND MITIGATION CONSTRUCTION FINANCING. A construction loan agreement between the homeowner/policyholder under the policy or contract of homeowner insurance that is the subject of premium financing under this chapter, and an authorized lender for the purpose of wind mitigation upgrades to the insured home.

§27-40-8.

"(a) The contents and style of the premium finance agreement shall be as follows:

"(1) It shall be dated, signed by the insured or an authorized representative and the printed portion thereof shall be in at least eight-point type.

"(2) It shall contain the name and place of business of the insurance agent negotiating the related insurance contract, the name and residence, or place of business, of the insured as specified by the insured, the name and place of business of the premium finance company to which payments are to be made, a description of the insurance contracts or wind mitigation construction financing involved, and the amount of the premium or other charges therefor.

"(3) It shall set forth the following items where applicable:

"a. The total amount of the premiums and other approved charges.

"b. The amount of the down payment.

"c. The principal balance, that being the difference between items a. and b.

"d. The amount of the service charge.

"e. The balance payable by the insured, that being the sum of items c. and d.

"f. The number of installments required, the amount of each installment expressed in dollars, and the due date or period thereof.

"g. The annual percentage rate (APR) charged.

"(b) The items set out 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."

Section 2. This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.

Insurance

Insurance Department

Insurance Premium Finance Companies

Banks and Banking

Code Amended