CHAPTER 11.

BANKS ACTING AS INSURANCE AGENTS AND AS BROKERS AND AGENTS MAKING OR PROCURING LOANS ON REAL ESTATE.

117. Statutory provisions.

118. National bank as insurance agent. 119. Regulations governing national banks in acting as insurance agents.

120. Form for certificate covering in

surance agency.

121. National bank as broker or agent in making or procuring loans on real estate.

122. Regulations prescribed by the Comptroller for national banks which may undertake to act as agents or brokers in making or procuring loans on real estate. 123. Application of bank to be permitted to act as broker or agent in procuring loans on real estate.

117. STATUTORY PROVISION.

An amendment to the Federal reserve act approved September 7, 1916, provides:

"That in addition to the powers now vested by law in national banking associations organized under the laws of the United States any such association located and doing business in any place the population of which does not exceed five thousand inhabitants, as shown by the last preceding decennial census, may, under such rules and regulations as may be prescribed by the Comptroller of the Currency, act as the agent for any fire, life, or other insurance company authorized by the authorities of the State in which said bank is located to do business in said State, by soliciting and selling insurance and collecting premiums on policies issued by such company; and may receive for services so rendered such fees or commissions as may be agreeed upon between the said association and the insurance company for which it may act as agent; and may also act as the broker or agent for others in making or procuring loans on real estate located within one hundred miles of the place in which said bank may be located, receiving for such services a reasonable fee or commission: Provided, however, That no such bank shall in any case guarantee either the principal or interest of any such loans or assume or guarantee the payment of any premium on insurance policies issued through its agency by its principal: And provided further, That the bank shall not guarantee the truth of any statement made by an assured in filing his application for insurance."

118. NATIONAL BANK AS INSURANCE AGENT.

In order to avail itself of the provisions of this act relative to acting as agent for an insurance company:

(a) The bank must be located in a place the population of which does not exceed 5,000 as shown by the last preceding decennial census. (b) The insurance company for which the bank acts as agent must have been authorized by the authorities of the State in which the bank is located to do business in that State.

(c) The activities of the bank as such agent must be restricted to the soliciting and selling of insurance and the collection of premiums on policies issued by the insurance company.

(d) The bank may receive for services so rendered such lawful fees or commissions as may be agreed upon between the bank and the insurance company for which it may act as agent.

(e) The bank is prohibited from assuming or guaranteeing the payment of any premium on insurance policies issued, through its agency, by its principal.

(f) The bank is prohibited from guaranteeing the truth of any statement made by an assured in filing his application for insurance. (g) The powers conferrred are to be exercised under such regulations as may be prescribed by the Comptroller of the Currency.

119. REGULATIONS GOVERNING NATIONAL BANKS IN ACTING AS INSURANCE AGENTS.

In pursuance of the act of September 7, 1916, the Comptroller prescribed the following regulations for national banks which may undertake to act as agents for insurance companies:

1. Each contract of agency must be formally accepted by the board of directors of the agent bank by a resolution spread upon the minutes in the following form:

Be it resolved that the contract of agency entered into on between the

by

Insurance Company and the president (or vice president) and

which is on file in this bank, is hereby ratified and approved.

191-,

National Bank of cashier, a copy of

2. A certified copy of such resolution, attested by the president or vice president and by the cashier and by a majority of the directors of the bank, must be forwarded to this office on forms to be furnished by this office.

3. There should be on file in the bank, available for inspection by the examiner, the following documents:

(a) An authoritative statement showing the population of the town according to the last preceding decennial census.

(b) A proper certificate from the authorities of the State in which the bank is located showing as to each insurance company for which the bank is acting as agent that such company has received authority from the said State to transact business in that State.

(c) A proper certificate or other writing of each insurance company for which the bank acts, authorizing the bank to act as its agent, setting forth that the bank does not guarantee the payment of any premium on insurance policies issued through its agency by its principal, and stating that the bank is not to be held responsible for the truth of any statement made by an assured in filing his application for insurance.

(d) Copies of all reports made by the agent bank to each insurance company which it represents.

4. The bank will be required to keep a record as to each company for which it acts as agent, showing: For fire insurance: The amount of each policy, the rate and premium, date of commencement, term, and date of expiration, as well as a description of property insured with name of assured and to whom loss is payable. As to life insurance: Amount and date of policy, with premium, and a statement as to under what form the insurance is written, giving also name of assured and beneficiary. As to any and all other forms of insurance: The fullest possible particulars as to amounts, dates, rates, premiums, and what is insured by the policy, and of collection of all premiums collected for account of the company, refunds made, the proportion of premium credited to the profits of the bank under its agreement with the company, the proportion due the company, the amounts and dates of all remittances made to the insurance company on account of premiums collected, and the balance, if any, due from the bank to the insurance company.

5. The bank will be required to carry on its general ledger an account which will, at all times, show the amount due to insurance companies for which it is acting as agent, on account of premiums collected but not remitted, and this liability must be shown in reports of condition and in the published statements of the bank under the heading "other liabilities-on account of insurance premiums collected and not remitted," unless specifically provided for in the report.

6. The bank should also keep such records as may be required by each insurance company in the manner and under the forms prescribed by the various companies; all of which should be available for inspection by the examiner on request.

7. The agent bank must not assume any responsibility or liability for either the adjustment, settlement, or payment of losses under any policy issued by or through its agency.

8. The records of all profits derived from the insurance agency should be carried in a separate account on the books of the bank, and the records should be so kept as to enable the examiner readily to trace to the source all items of profit derived in this connection.

120. FORM FOR CERTIFICATE COVERING INSURANCE AGENCY.

NATIONAL BANK DESIRING TO ACT AS AGENT FOR INSURANCE COMPANIES.

19

THE COMPTROLLER OF THE CURRENCY,

Washington, D. C.

SIR: The (title and location of bank) being located in a town the population of which does not exceed 5,000, as shown by the last preceding decennial census, desires to act as agent for the Insurance Company, under authority of section 13 of the Federal reserve act, as amended September 7, 1916.

Therefore, we, directors and officers of this bank, in conformity with the rules prescribed by the Comptroller of the Currency, certify that the following is a true and complete copy of resolution adopted by the directors at a meeting held and spread upon the minutes:

“Be it resolved, That the contract of agency entered into on between the

Insurance Company and the

president (or vice president) and

is on file in this bank, is hereby ratified and approved."

19

National Bank of

cashier, a copy of which

Respectfully,

[SEAL OF BANK.]

President or Vice President.

Cashier.

Directors.

(A majority must sign.)

(A certificate must be furnished to this office in connection with each insurance company for which the bank will act as agent.)

121. NATIONAL BANK AS BROKER OR AGENT IN MAKING OR PROCURING LOANS ON REAL ESTATE.

In order to avail itself of this privilege:

(a) The bank must be located in a place the population of which does not exceed 5,000 as shown by the last preceding decennial census. (b) The real estate by which the loans negotiated are secured must be located within 100 miles of the place in which the negotiating bank is located.

(c) The bank may receive for such services a reasonable fee or commission.

(d) The bank shall in no case guarantee either the principal or interest of any such loans.

(e) The powers conferred are to be exercised under such regulations as may be prescribed by the Comptroller of the Currency.

122. REGULATIONS PRESCRIBED BY THE COMPTROLLER FOR NATIONAL BANKS WHICH MAY UNDERTAKE TO ACT AS AGENTS OR BROKERS IN MAKING OR PROCURING LOANS ON REAL ESTATE.

1. A bank intending to avail itself of this provision of the law must adopt by its board of directors a resolution in the following form:

National Bank of

are

Be it resolved, That the officers of the hereby authorized and empowered on behalf of this bank, as broker or agent, to accept from customers of this bank deposits of funds to be invested for account of said customers, in loans secured by real estate, and to procure, as broker or agent, for customers of this bank loans which shall be secured by real estate, under the provisions of the act approved September 7, 1916: Provided, That the investment of such funds as stated, and all such procuring of loans or lending of funds for clients shall be undertaken only under written instructions from the customer for whom this bank, through its officers, may act as broker or agent, such written instructions in each case to be first delivered to an officer of this bank. Such instructions shall, in all cases, state clearly that the bank in acting as broker or agent in no way guarantees payment of either the principal or interest of any loan so negotiated.

2. A certified copy of such resolution, attested by the president or vice president and cashier and by a majority of the directors of the bank, must be forwarded to this office, on forms to be furnished by this office.

3. No bank shall charge more than one commission or brokerage on the making of any loan; that is to say, if it shall charge a brokerage or commission to the party borrowing the money, it shall not charge a brokerage or commission to the party to whom money is so loaned, and vice versa.

4. Each bank acting under this provision of law will be required to keep a record showing as to each loan negotiated by the bank—

(a) The name and address of the principal for whom the bank is acting,

(b) Date of written instructions from the principal,

(c) Name and address of maker of note,

(d) Date of note,

(e) Date of maturity of note,

(f) Brief description of property securing note, showing location and distance from place in which bank is located,

(g) Character of improvements, etc.,