Insurance Premium Finance Companies

KRS tit. XXV, ch. 304, subtit. 30

in effect

KRS 304.30-010 Application

304.30-010. Application The provisions of this subtitle shall not apply with respect to: (1) Any insurer licensed to do business in this state; (2) Any banking institution, trust, loan, mortgage, safe deposit company, or title insurer, building association, credit union, moneylenders, or common trust fund authorized to do business in this state; (3) The inclusion of a charge for insurance in connection with an installment sale of a motor vehicle made in accordance with KRS Chapter 190; and (4) The inclusion of a late charge not to exceed eighteen percent (18%) per annum on insurance premium accounts held by any agent once those accounts remain unpaid for a period of thirty (30) days beyond the date that the original premium was due and owing. Effective: June 19, 1976 History: Amended 1976 Ky. Acts ch. 357, sec. 1, effective June 19, 1976. -- Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 1, effective June 18, 1970.

KRS 304.30-020 Definitions

304.30-020. Definitions For the purpose of this subtitle: (1) The term "insurance premium finance company" or "premium finance company" means a person engaged in the business of entering into insurance premium finance agreements. (2) The term "premium finance agreement" means 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 in payment of premiums on an insurance contract together with a service charge as authorized and limited by this subtitle. (3) The term "licensee" means a premium finance company, holding a license issued by the commissioner under this subtitle. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1407, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 2, effective June 18, 1970.

KRS 304.30-030 Licenses

304.30-030. Licenses (1) No person shall engage in the business of financing insurance premiums in this state without first having obtained a license as a premium finance company from the commissioner. (2) The annual license fee shall be as specified in Subtitle 4 of this chapter. Licenses may be renewed from year to year as of the first day of May of each year upon payment of the fee. (3) The person to whom the license or the renewal thereof may be issued shall file sworn answers, subject to the penalties of perjury, to such interrogatories as the commissioner may require. The commissioner shall have authority, at any time, to require the applicant fully to disclose the identity of all stockholders, partners, officers, and employees and he or she may, in his or her discretion, refuse to issue or renew a license in the name of any firm, partnership, or corporation if the commissioner is not satisfied that any officer, employee, stockholder, or partner thereof who may materially influence the applicant's conduct meets the standards of this subtitle. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1408, effective July 15, 2010. -- Amended 1982 Ky. Acts ch. 320, sec. 32, effective July 15, 1982. -- Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 3, effective June 18, 1970.

KRS 304.30-040 Action by commissioner on application

304.30-040. Action by commissioner on application (1) 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 subtitle. If the commissioner does not so find, he or she shall, within sixty (60) days after he or she has received the application, at the request of the applicant, give the applicant an administrative hearing. Hearings under this subtitle shall be conducted in accordance with KRS Chapter 13B. (2) The commissioner shall issue or renew a license as may be applied for when he or she 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. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1409, effective July 15, 2010. -- Amended 1998 Ky. Acts ch. 483, sec. 26, effective July 15, 1998. -- Amended 1996 Ky. Acts ch. 318, sec. 240, effective July 15, 1996. -- Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 4, effective June 18, 1970.

KRS 304.30-050 Revocation and suspension of licenses -- Hearings and appeals

304.30-050. Revocation and suspension of licenses -- Hearings and appeals (1) The commissioner may revoke or suspend the license of any premium finance company when and if, after investigation, it appears to the commissioner that: (a) Any license issued to the company was obtained by fraud; (b) There was any misrepresentation in the application for the license; (c) The holder of the license has otherwise shown himself or herself untrustworthy or incompetent to act as a premium finance company; (d) The company has violated any of the provisions of this chapter; or (e) The company has been rebating part of the service charge as allowed and permitted by KRS 304.30-090 to any insurance agent or any employee of an insurance agent or to any other person as an inducement to the financing of any insurance policy with the premium finance company, except as provided in subsection (2) of this section. (2) Transactions related to the financing of insurance premiums for personal and commercial lines of insurance shall not be deemed a rebate of the service charge in violation of subsection (1)(e) of this section if: (a) The transaction is arranged by an insurance agent who discloses in writing to the insured: 1. The source of any compensation to be received by the agent as a result of the insured entering into a premium finance agreement; and 2. The amount of compensation, as a percentage of the premiums financed, if the amount of compensation received by the agent exceeds two percent (2%) of the premium amount financed; and (b) The amount of compensation is based only on actual premiums financed and is not paid as: 1. An advance on future premium finance agreements; or 2. A form of bonus for the agent agreeing to place finance agreements with the premium finance company. (3) Before the commissioner shall revoke, suspend, or refuse to renew the license of any premium finance company, he or she shall give to the person an opportunity for a hearing to be conducted in accordance with KRS Chapter 13B. In lieu of or in addition to revoking or suspending the license for any of the causes enumerated in the section, after hearing as provided in this subsection, the commissioner may subject the company to a penalty specified in Subtitle 99 of this chapter when the commissioner determines that the public interest would not be harmed by the continued operation of the company. The amount of any penalty shall be paid by the company through the department of the commissioner to the State Treasurer. (4) If any applicant or licensee is aggrieved by any final order of the commissioner, the applicant or licensee shall have the right to appeal to the Franklin Circuit Court in accordance with KRS Chapter 13B. Effective:June 29, 2017 History: Amended 2017 Ky. Acts ch. 106, sec. 1, effective June 29, 2017. -- Amended 2010 Ky. Acts ch. 24, sec. 1410, effective July 15, 2010. -- Amended 1996 Ky. Acts ch. 318, sec. 241, effective July 15, 1996. -- Amended 1982 Ky. Acts ch. 320, sec. 33, effective July 15, 1982. -- Amended 1970 Ky. Acts ch. 301, subtit. 30, sec. 5, effective June 18, 1970.

KRS 304.30-060 Books and records

304.30-060. Books and records (1) Every licensee shall maintain records of its premium finance transactions and the records shall be open to examination and investigation by the commissioner. (2) Every licensee shall preserve its records of premium finance transactions, including cards used in a card system, for at least five (5) years after making the final entry in respect to any premium finance agreement. The preservation of records in photographic form shall constitute compliance with this requirement. (3) For the purpose of determining market conduct, business practices, financial condition, ability to fulfill and manner of fulfillment of its obligations, the nature of its operations, and compliance with law, the commissioner shall examine the affairs, transactions, accounts, records, and assets of each licensed premium finance company as often as reasonably necessary. (4) Premium finance companies shall be subject to the provisions of KRS 304.2-220, 304.2-230, 304.2-240, 304.2-250, 304.2-260, 304.2-270, 304.2-280, 304.2-290, 304.2-300, and Subtitle 2 of this chapter for determining financial condition, market conduct, and business practices. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1411, effective July 15, 2010. -- Amended 2004 Ky. Acts ch. 24, sec. 35, effective July 13, 2004. -- Amended 1982 Ky. Acts ch. 320, sec. 34, effective July 15, 1982. -- Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 6, effective June 18, 1970.

KRS 304.30-070 Power to make rules

304.30-070. Power to make rules The commissioner shall have the authority to make and enforce such reasonable rules and regulations as may be necessary to make effective the provisions of this subtitle and to establish the manner in which licensees shall conduct their business, but such rules and regulations shall not be contrary to nor inconsistent with the provisions of this subtitle. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1412, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 7, effective June 18, 1970.

KRS 304.30-080 Form of premium finance agreement

304.30-080. Form of premium finance agreement (1) A premium finance agreement shall: (a) Be dated, signed by or on behalf of the insured, and the printed portion thereof shall be in at least eight-point type; (b) Contain the name and place of business of the insurance agent negotiating the related insurance contract, the name and residence or the place of business of the premium finance company to which payments are to be made, a description of the insurance contracts involved and the amount of the premium therefor; and (c) Set forth the following items where applicable: 1. The total amount of the premium, 2. The amount of the down payment, 3. The principal balance (the difference between items 1. and 2.), 4. The amount of the service charge, 5. The balance payable by the insured (sum of items 3. and 4.), and 6. The number of installments required, the amount of each installment expressed in dollars, and the due date or period thereof. (2) The items set out in paragraph (c) of subsection (1) of this section 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. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 8, effective June 18, 1970.

KRS 304.30-090 Maximum service charge

304.30-090. Maximum service charge (1) A premium finance company shall not charge, contract for, receive, or collect a service charge other than as permitted by the subtitle. (2) The service charge is to 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 coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable. (3) The service charge shall be a maximum of twelve dollars ($12) per one hundred dollars ($100) per year plus an additional charge of fifteen dollars ($15) per premium finance contract which need not be refunded upon cancellation or prepayment. Effective: July 15, 1986 History: Amended 1986 Ky. Acts ch. 71, sec. 1, effective July 15, 1986. -- Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 9, effective June 18, 1970.

KRS 304.30-100 Delinquency charges

304.30-100. Delinquency charges A premium finance agreement may provide for the payment by the insured of a delinquency charge of one dollar ($1) to a maximum of five percent (5%) of the delinquent installment which is in default for a period of five (5) days or more. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 10, effective June 18, 1970.

KRS 304.30-110 Cancellation of insurance contract upon default

304.30-110. Cancellation of insurance contract upon default (1) When a premium finance agreement contains a power of attorney enabling the premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be canceled by the premium finance company unless such cancellation is effectuated in accordance with this section. (2) Not less than ten (10) days' written notice shall be mailed to the insured of the intent of the premium finance company to cancel the insurance contract unless the default is cured within such ten (10) day period. (3) After expiration of such ten (10) day period, the premium finance company may thereafter request in the name of the insured, cancellation of such insurance contract or contracts by mailing to the insurer a notice of cancellation, and the insurance contract shall be canceled 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 notice of cancellation to the insured at his last known address. (4) All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be canceled 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 in 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 and shall determine the effective date of cancellation taking into consideration the number of days' notice required to complete the cancellation. (5) Whenever an insurance contract is canceled in accordance with this section, the insurer shall return whatever gross unearned premiums are due under the insurance contract to the premium finance company effecting the cancellation for the account of the insured or insureds. (6) In the event that the 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 one dollar ($1). Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 11, effective June 18, 1970.

KRS 304.30-120 Exemption from any filing requirement

304.30-120. Exemption from any filing requirement 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 purchasers, pledgees, encumbrances, successors or assigns. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 30, sec. 12, effective June 18, 1970.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=38744Fetched: 10/20/2026