18 Del. Admin. Code § 204-2.0

Current through Register Vol. 28, No. 5, November 1, 2024

Section 204-2.0 - Specific Disclosures Required

2.1 Prohibitions on "tying"

2.1.1 Any person engaging in the business of insurance in Delaware who has received the name of any actual or potential borrower from any bank or trust company directly or indirectly engaging in any activity authorized by 5 Del.C. § 761(1)(14) in Delaware shall make the following written disclosure (or a substantially equivalent written disclosure) simultaneously with every application for any product or service to be purchased or obtained in Delaware by such actual or potential borrower from such person:

2.1.1.1 'Prohibition on Tying'

2.1.2 What We Cannot Do

2.1.2.1 The insurance laws of this state provide that a lender may not require, directly or indirectly, the borrower to acquire insurance through any particular insurance agent or company.

2.1.2.2 The borrower, subject to the rules adopted by the Insurance Commissioner, has the right to have the insurance placed with an insurance agent or company of his choice. The lender, however, has the right to prescribe reasonable requirements regarding the financial structure and stability of the company, and the adequacy of coverage.

2.1.2.3 You have applied today to [insert name of entity to whom application submitted] for [describe product or service applied for]. We CANNOT condition our approval (if any) of your application upon:

2.1.2.3.1 Your agreement to obtain additional credits, products or services from us or from any company or person affiliated with us;

2.1.2.3.2 Your agreement to provide additional credits, products or services to us or to any company or person affiliated with us; or

2.1.2.3.3 Your agreement not to obtain credits, products or services from any person or company that competes with us or with any company or person affiliated with us."

2.2 Any person engaging in the business of insurance in Delaware who has received the name of any actual or potential borrower from a bank or trust company first authorized to transact the business of insurance in Delaware pursuant to 5 Del.C. § 761(a)(14) shall make the following written disclosure (or a substantially equivalent written disclosure), immediately following that disclosure required by section 2.1.1 of this regulation, in every application for any insurance policy to be purchased or obtained in Delaware from such person by such actual or potential borrower:

2.2.1 "We have received your name from [insert name of bank or trust company]. If you have previously applied for a loan, credit, product or other service from [insert name of bank or trust company], and that application is still pending today, we cannot, until [insert bank or trust company] approves your pending application, accept an application from you for any insurance policy which directly relates to that applied-for loan, credit product or other service."

2.2.2 Notwithstanding the above, however, the Delaware Unfair Practices Act under certain circumstances prohibits use or disclosure of information resulting from any requirement that a borrower, mortgagor or purchaser furnish insurance of any kind on real property being conveyed or used as collateral security to a loan (18 Del.C. Sec. 2305).

18 Del. Admin. Code § 204-2.0