§2218 — Title 12 Banks and Banking | U.S. Code

Summary

Banks and associations in the Farm Credit System may offer optional insurance to their members and borrowers. That can include credit life and disability and insurance to protect a farm or aquatic business, such as hail and multi-peril crop insurance, title insurance, and insurance for aquatic facilities and equipment. Borrowers must be free to accept or reject these offers without pressure. When selling insurance through private companies, banks must approve more than two insurer programs for each type if more than two good candidates apply. Banks can share cost and quality comparisons. Associations must offer at least two bank-approved insurers for each type if two or more were approved. If insurance is required for a loan, borrowers must be told they can buy it elsewhere. Insurance may be offered only if the bank or association can handle it well, expects it to cover costs, and it won’t hurt operations. Insurers must meet financial and service standards and be state-licensed. No discrimination is allowed against unaffiliated agents, brokers, insurers, or people who use them. Any coverages being sold on December 24, 1980 that were not allowed by these rules could keep being sold for up to one year after that date and be serviced until they expire.

Title 12, §2218

Banks and Banking — Source: USLM XML via OLRC

(a)(1)The regulations of the Farm Credit Administration governing financially related services that the banks and associations of the Farm Credit System may provide under subchapters I and II of this chapter may authorize the sale to any member of or borrower from any such bank or association, on an optional basis, of credit or term life and credit disability insurance appropriate to protect the loan commitment in the event of death or disability of the debtors and other insurance necessary to protect the member’s farm or aquatic unit, but limited to, hail and multiple-peril crop insurance, title insurance, and insurance to protect the facilities and equipment of aquatic borrowers. A member or borrower shall have the option, without coercion from the bank or association of such member or borrower, to accept or reject such insurance.

(2)In making insurance available through private insurers, the banks shall approve the programs of more than two insurers for each type of insurance offered in the district, if more than two insurers for each type of insurance have proposed programs to a bank that will, in all likelihood, have long-term viability and meet the requirements of subsection (b)(2)(D). The banks may provide comparative information relating to costs and quality of approved programs and the financial conditions of approved companies. Associations shall offer at least two insurers for each program from among those approved by the Farm Credit Banks, if at least two insurers have been approved in accordance with this paragraph.

(b)Such regulations shall provide that—

(1)in any case in which insurance is required as a condition for a loan or other financial assistance from a bank or association, notice be given that it is not necessary to purchase the insurance from the bank or association and that the borrower has the option of obtaining the insurance elsewhere;

(2)such insurance services may be offered only if—

(A)the bank or association has the capacity to render insurance service under this chapter in an effective and efficient manner;

(B)there exists the probability that any insurance program under this chapter will generate sufficient revenue to cover all costs;

(C)rendering insurance service will not have an adverse effect on the bank’s or association’s credit or other operations;

(D)the insurance program has been approved by the bank or association from among specific programs made available to it by insurers—

(i)meeting reasonable financial and quality of service standards; and

(ii)licensed under State law to do business in the State; and

(E)in making insurance available through approved insurers, the board of directors of the association or bank selects and offers at least two approved insurers for each type of insurance made available to the members and borrowers, if at least two insurers have been approved in accordance with subsection (a)(2); and

(3)no bank or association shall directly or indirectly discriminate in any manner against any agent, broker, or insurer that is not affiliated with such bank or association, or against any party who purchases insurance through any such nonaffiliated insurance agent, broker, or insurer.

(c)Notwithstanding any provision of this section to the contrary, any bank or association that on December 24, 1980, is offering insurance coverages not authorized by this section may continue to sell such coverages for a period of not more than one year from such date and may continue to service such coverages until their expiration.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1990—Subsec. (a)(2). Pub. L. 101–624, § 1834(1), inserted “, if more than two insurers for each type of insurance have proposed programs to a bank that will, in all likelihood, have long-term viability and meet the requirements of subsection (b)(2)(D)” before period at end of first sentence, and “, if at least two insurers have been approved in accordance with this paragraph” before period at end of third sentence. Subsec. (b)(2)(E). Pub. L. 101–624, § 1834(2), inserted before semicolon at end “, if at least two insurers have been approved in accordance with subsection (a)(2)”. 1988—Subsec. (a). Pub. L. 100–233, § 422(a)(1), designated existing provisions as par. (1), struck out “of this Act” to conform to style of original enactment, resulting in no change in text, inserted “or borrower from” before “any such bank”, inserted provision at end giving a member or borrower the option, without coercion from the bank or association of such member or borrower, to accept or reject such insurance, and added par. (2). Subsec. (a)(1). Pub. L. 100–399, § 411(a), substituted “subchapters I and II of this chapter” for “section 2019, 2033, 2076, and 2097 of this title”. Subsec. (a)(2). Pub. L. 100–399, § 411(b), substituted “Farm Credit Banks” for “Federal intermediate credit banks”. Subsec. (b)(2). Pub. L. 100–233, § 422(a)(2), redesignated cls. (i) to (iii) as subpars. (A) to (C), respectively, and added subpars. (D) and (E).

Statutory Notes and Related Subsidiaries

Effective Date

of 1988 AmendmentAmendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see section 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title. Continuation of Program Pub. L. 100–233, title IV, § 422(b), Jan. 6, 1988, 101 Stat. 1656, provided that: “Notwithstanding the

Amendments

made to section 4.29 [12 U.S.C. 2218] by subsection (a), any insurance program offered by any bank or association of the Farm Credit System on the date of the enactment of this Act [Jan. 6, 1988] that does not meet the requirements of section 4.29, as so amended, may be continued until July 1, 1988.”

§2218 Lines of insurance

Summary

Title 12, §2218

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Amendments

Citations & Metadata