Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                        CHAPTER 200--S.F.No. 598
           An act relating to insurance premium finance companies;
          authorizing finance charges based on the federal 
          discount rate; amending Minnesota Statutes 1982, 
          sections 59A.09, subdivisions 3, 4 and 6; and 59A.12, 
          subdivisions 1 and 4. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 59A.09, 
subdivision 3, is amended to read: 
    Subd. 3.  The finance charge shall be a maximum of $8 per 
$100 per year for amounts financed of $300 or less and $6 per 
$100 per year on that amount financed over $300 plus must not 
exceed five percent in excess of the discount rate on 90-day 
commercial paper in effect at the federal reserve bank located 
in the Ninth Federal Reserve District when an insurance premium 
finance agreement is made or when an additional or subsequent 
premium is added under an open end agreement.  For expenses 
incurred in servicing the loan including any filing fees, 
application fee for the examination or investigation of the 
character of the borrower, comaker or security, and drawing any 
necessary papers in making the loan, an insurance premium 
finance company may contract for a flat rate service fee of $10 
not exceeding the greater of one percent of the amount financed 
or $20 per premium finance agreement.  The flat service fee need 
not be refunded upon prepayment in full before maturity. 
    Sec. 2.  Minnesota Statutes 1982, section 59A.09, 
subdivision 4, is amended to read:  
    Subd. 4.  The finance charge shall be computed in advance 
on the principal balance of a premium finance agreement 
according to the actuarial method on terms payable in 
substantially equal successive monthly installments over a 
period of one year.  On a premium finance agreement providing 
for installments extending for a period of less than or greater 
than one year, the finance charge shall be computed 
proportionately. 
    Sec. 3.  Minnesota Statutes 1982, section 59A.09, 
subdivision 6, is amended to read: 
    Subd. 6.  The maximum rate limitations of this section 
shall not apply to finance charges under an insurance premium 
finance agreement, if the rate does not exceed the maximum rate 
permissible under section 334.011 and the agreement was made to 
finance an insurance policy for business or agricultural 
purposes, as defined by section 334.011.  The maximum rate 
limitations of this section shall not apply to an insurance 
premium finance agreement, if the insured is a corporation or 
cooperative.  Subdivision 3 applies only to a premium finance 
agreement in which the related insurance contract is for 
personal, family, or household use.  The rate charged under an 
agreement made to finance an insurance policy for business, 
agricultural, or corporate purposes shall be as agreed to by the 
parties to the agreement.  
    Sec. 4.  Minnesota Statutes 1982, section 59A.12, 
subdivision 1, is amended to read:  
    Subdivision 1.  Whenever a financed insurance contract is 
canceled, within 30 days of the effective date of cancellation 
the insurer shall return whatever gross unearned premiums, 
computed pro rata, are due under the insurance contract to the 
premium finance company for the account of the insured or 
insureds.  This action by the insurer shall be deemed to satisfy 
satisfies the insurer's obligations under the insurance contract 
which relate to the return of the unearned premiums.  
    Sec. 5.  Minnesota Statutes 1982, section 59A.12, 
subdivision 4, is amended to read:  
    Subd. 4.  In the event that If the crediting of returned 
premiums to the account of the insured results in a surplus over 
the amount due from the insured, the premium finance company 
shall must refund such the excess to the insured within 30 
days after receipt of the returned premium; provided, that but 
no refund shall be is required if it amounts to less than $1. 
    Sec. 6.  [EFFECTIVE DATE.] 
    This act is effective June 1, 1983. 
    Approved May 20, 1983