Use or continuation of compensating balances or accounts of special deposits prohibited.
1. The use or the continuation of compensating balances or accounts of special deposits in a financial institution in connection either directly or indirectly with a program for credit insurance is an inducement in violation of NRS 686A.110. This section applies whether the premium is due the insurer on the single premium basis or the outstanding balance basis.
2. This section does not prevent an insurer from making deposits in a financial institution which are not related to a program for credit insurance.
3. As used in this section, “compensating balances or accounts for special deposits” includes the following types of balances, accounts or practices:
(a) The deposit of premiums or money, by the financial institution for which the insurer provides the program of credit insurance, to the account of the insurer in that financial institution, if the account is either noninterest bearing or receiving a rate of interest less than usual or is controlled by the financial institution.
(b) Remitting premiums to the insurer on a regular basis after the expiration of the grace period specified in the policy so that the period of arrearages is constant.
(c) The retention of premiums by an agent to whom the financial institution remits premiums for a period normally expected to be needed for the agent or broker to remit the premium to the insurer, if the delay is a continuing feature of the process for paying premiums.
(d) Any other practice which delays receipt of premiums by the insurer on a regular basis or which involves the use of the financial resources of the insurer for the benefit of the financial institution granting the credit.
Last modified: February 27, 2006