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 thatcontrols, is controlled by, or is under common control with anothercompany.
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 individualwho purchases, applies to purchase, or is solicited to purchaseinsurance 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 adepository 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 themeaning 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 behalfof 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 onbehalf 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 receivecommissions or fees on sales of insurance that result fromreferrals to the person.
(3) Documents that provide evidence of the sale, solicitation,advertisement, or offer of insurance identify or refer to thedepository 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 adepository institution
Sec. 7. A depository institution or an affiliate of a depositoryinstitution may not do the following:
(1) As a condition precedent to a loan of money, an extensionof credit, or the renewal of a loan of money or an extension ofcredit, 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 ofmoney or an extension of credit, reject an insurance policysolely because the insurance policy was issued by an insurerthat is not associated with the depository institution or anaffiliate of the depository institution.
(3) As a condition precedent to an extension of credit or anoffer of a product or service that is equivalent to an extensionof credit, require a customer to obtain insurance from aparticular depository institution, affiliate of a depositoryinstitution, insurance producer, or insurer. This subdivisiondoes not prohibit a depository institution or an affiliate of adepository institution from informing a customer or prospectivecustomer that:
(A) insurance is required for a loan of money or an extensionof credit;
(B) approval for a loan of money or an extension of credit iscontingent upon the purchase of insurance; or
(C) insurance is available through the depository institutionor affiliate.
(4) Unreasonably reject an insurance policy that is furnished bya customer for the protection of property that secures a loan ofmoney or an extension of credit to the customer. For purposesof this subdivision, a rejection is not unreasonable if therejection is based on uniformly applied reasonable standardsthat:
(A) relate to the extent of insurance required;
(B) relate to the financial soundness and services of theinsurer issuing the insurance policy;
(C) do not discriminate against a particular kind of insurer;and
(D) do not require rejection of an insurance policy becausethe insurance policy provides coverage in addition to thecoverage required for the loan of money or extension ofcredit.
(5) Require a person to pay a separate charge: (A) in connection with the issuance of insurance that isrequired as surety for a loan of money for real estate; or
(B) to substitute insurance issued by one (1) insurer for aninsurance policy issued by another insurer.
For purposes of this subdivision, a separate charge does notinclude interest charged on loans of money or advancements forpremiums under the terms of a loan agreement or creditagreement. This subdivision does not apply to charges thatapply when the insurance producer that provides the insuranceis the depository institution or the affiliate of a depositoryinstitution.
(6) Require of an:
(A) insurance producer; or
(B) insurer;
a condition that is not customarily required of an insuranceproducer or insurer that is connected with the depositoryinstitution or the affiliate of a depository institution.
(7) Use advertising or insurance promotional material thatwould cause a reasonable person to incorrectly believe that thefederal 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 depositoryinstitution.
(8) Use advertising or insurance promotional material thatwould cause a reasonable person to incorrectly believe that thefederal 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 depositoryinstitution.
(9) Act as an insurance producer, unless the depositoryinstitution or the affiliate of a depository institution is licensedunder IC 27-1-15.6.
(10) Solicit or sell insurance, other than credit insurance orflood insurance, unless the solicitation or sale is completedthrough documents separate from a loan of money or anextension of credit.
(11) Include the expense of an insurance premium, other thana credit insurance premium or a flood insurance premium, in aprimary loan of money or extension of credit without theexpress written consent of the customer.
(12) Solicit or sell insurance, unless the area in which insurancesales activities of the depository institution or affiliate occur is,to the extent practicable, physically separate from the areawhere retail deposits are routinely accepted by the depositoryinstitution or affiliate.
(13) Solicit or sell insurance, unless the depository institutionor the affiliate of a depository institution maintains separatebooks 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 acredit extension
Sec. 8. (a) A depository institution or the affiliate of a depositoryinstitution that:
(1) lends money or extends credit; and
(2) solicits insurance primarily for personal, family, orhousehold purposes;
shall disclose in writing to a customer that the insurance related tothe loan or credit extension may be purchased from an insurer orinsurance producer chosen by the customer, subject only to theability of the depository institution or affiliate to reasonably reject aninsurer or insurance producer as described in section 7(4) of thischapter.
(b) A disclosure under subsection (a) must inform the customerthat the customer's choice of insurer or insurance producer does notaffect:
(1) the decision of the depository institution or the affiliate ofa 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 depositoryinstitution may impose reasonable requirements concerning thecreditworthiness of the insurer and the scope of insurance coveragechosen, 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 extentthat the affiliate sells, solicits, advertises, or offers insurance atthe office of a depository institution or on behalf of a depositoryinstitution.
(2) To the:
(A) sale of;
(B) solicitation for; or
(C) application for;
insurance by an individual primarily for personal, family, orhousehold purposes and only to the extent that a disclosure isaccurate.
(b) A depository institution or an affiliate of a depositoryinstitution that solicits, sells, advertises, or offers insurance, and aperson that sells, solicits, advertises, or offers insurance on behalf ofa depository institution, shall disclose to a customer, in writing wherepracticable, in a clear and conspicuous manner, and before a sale ofinsurance, that the insurance: (1) is not a deposit;
(2) is not insured by the Federal Deposit Insurance Corporationor another federal government agency;
(3) is not guaranteed by the depository institution, the affiliateof a depository institution, or the person that sells, solicits,advertises, or offers insurance on behalf of a depositoryinstitution; and
(4) involves investment risk including possible loss of value, ifappropriate.
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 institutionshall obtain from a customer to whom a disclosure is made undersection 9 of this chapter a written acknowledgment of receipt of thedisclosure:
(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, thedepository institution, the affiliate of a depository institution, or theperson that sells, solicits, advertises, or offers insurance on behalf ofa depository institution shall:
(1) obtain an oral acknowledgment of receipt of the disclosure;
(2) maintain documentation to show that the acknowledgmentwas given by the customer; and
(3) make reasonable efforts to obtain a written acknowledgmentfrom 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 undersection 8 of this chapter electronically; and
(2) the disclosure is provided to the customer in a format thatthe customer may retain or obtain at a later time;
the depository institution, the affiliate of a depository institution, orthe person that sells, solicits, advertises, or offers insurance on behalfof a depository institution may provide the disclosure electronicallyand may obtain from the customer acknowledgment of receipt of thedisclosure 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 bein violation of this chapter. A person examined or investigated underthis section shall, upon reasonable notice from the commissioner,make the insurance related books and records of the person availableto the commissioner.
(b) In the case of an examination or investigation of a depositoryinstitution under subsection (a), the commissioner shall, beforeperforming the examination or investigation:
(1) notify the federal or state banking agency that regulates thedepository institution that the commissioner intends to examineor investigate the depository institution; and
(2) advise the federal or state banking agency of the depositoryinstitution'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 oran affiliate of a depository institution that lends money or extendscredit from placing insurance on real or personal property if acustomer fails to provide insurance that is required under terms of aloan 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 anddeceptive act or practice in the business of insurance underIC 27-4-1-4.
As added by P.L.130-2002, SEC.2.