Insurance Loan Agreement

The credit agreements of commercial banks, savings banks, financial companies, insurance companies and investment banks are very different and all have a different purpose. “Commercial banks” and “savings banks”, because they accept deposits and benefit from FDIC insurance, generate credits that incorporate the concepts of “public trust”. Prior to intergovernmental banking, this “public trust” was easily measured by public banking supervisors, who were able to see how local deposits were used to finance the working capital needs of local industry and businesses and the benefits of using this organization. “Insurance institutions” that collect premiums for the provision of life or claims/accident insurance have established their own types of credit agreements. Credit agreements and documentation standards for “banks” and “insurances” were developed from their individual cultures and were governed by guidelines that in one way or another addressed the debts of each organization (in the case of “banks”, the liquidity needs of their depositors; in the case of insurance organizations, liquidity must be linked to their expected “claims”). “investment banks” create credit agreements that meet the needs of the investors whose funds they wish to attract; “Investors” are always demanding and accredited organizations that are not subject to bank supervision and are subject to the need to respect public trust. Investment banking activities are supervised by the SEC and the focus is on whether the information is properly or correctly disclosed to the parties providing the funds. Credit agreements, like any agreement, reflect an “offer”, “acceptance of the offer”, a “counterparty” and can only include “legal” situations (a credit agreement with the sale of heroin drugs is not “legal”). Credit agreements are documented through their declarations of commitment, agreements that reflect the agreements concluded between the parties, a claim voucher and a guarantee contract (for example. B a mortgage or personal guarantee). The credit agreements offered by regulated banks are different from those offered by financial companies by giving banks a “bank charter” that is granted as a privilege and that contracts “public trust”. Credit agreements are usually in writing, but there is no legal reason why a credit agreement should not be a purely oral agreement (although oral agreements are more difficult to enforce).

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