
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 12USC2218]

 
                       TITLE 12--BANKS AND BANKING
 
                     CHAPTER 23--FARM CREDIT SYSTEM
 
     SUBCHAPTER IV--PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF 
                       INSTITUTIONS OF THE SYSTEM
 
                        Part F--Sale of Insurance
 
Sec. 2218. Lines of insurance


(a) Regulatory authorization

    (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) of this section. 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) Contents of regulations

    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) 
        of this section; 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) Continuation of existing coverage

    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.

(Pub. L. 92-181, title IV, Sec. 4.29, as added Pub. L. 96-592, title IV, 
Sec. 404, Dec. 24, 1980, 94 Stat. 3448; amended Pub. L. 100-233, title 
IV, Sec. 422(a), Jan. 6, 1988, 101 Stat. 1655; Pub. L. 100-399, title 
IV, Sec. 411, Aug. 17, 1988, 102 Stat. 1003; Pub. L. 101-624, title 
XVIII, Sec. 1834, Nov. 28, 1990, 104 Stat. 3833.)


                               Amendments

    1990--Subsec. (a)(2). Pub. L. 101-624, Sec. 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) of this section'' 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, Sec. 1834(2), inserted before 
semicolon at end ``, if at least two insurers have been approved in 
accordance with subsection (a)(2) of this section''.
    1988--Subsec. (a). Pub. L. 100-233, Sec. 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, Sec. 411(a), substituted 
``subchapters I and II of this chapter'' for ``sections 2019, 2033, 
2076, and 2097 of this title''.
    Subsec. (a)(2). Pub. L. 100-399, Sec. 411(b), substituted ``Farm 
Credit Banks'' for ``Federal intermediate credit banks''.
    Subsec. (b)(2). Pub. L. 100-233, Sec. 422(a)(2), redesignated cls. 
(i) to (iii) as subpars. (A) to (C), respectively, and added subpars. 
(D) and (E).


                    Effective Date of 1988 Amendment

    Amendment 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

    Section 422(b) of Pub. L. 100-233 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.''
