8. A loan insurance agreement shall insure 85 per cent or less of the amount of a loan disbursed pursuant to a loan agreement.

• 9. (1) Where a loan insurance agreement is entered into, an insurance fee is payable in advance by the lender to the Minister in accordance with the following formulae:

  • (a) fee payable at the time of the first disbursement:

    A × B × 0.01

  • (b) fee payable at the time of each subsequent disbursement:

    A × B × C ÷ 365 × 0.01

  • (c) fee payable on each anniversary of the date of the first disbursement until the earlier of the date of formal demand and the date the loan is repaid:

    A × D × 0.01

     where

    “A” 

    is the percentage of the loan that is insured under the loan insurance agreement,

    “B” 

    is the amount of the disbursement,

    “C” 

    is the number of days remaining between the date of the disbursement and the next anniversary date of the first disbursement, and

    “D” 

    is the outstanding amount of the loan under the loan agreement on the anniversary date.

• (2) An insurance fee paid by the lender under subsection (1) is not refundable.

10. The Minister shall not pay a claim made by a lender under a loan insurance agreement unless the lender

• (a) makes a formal demand; and

• (b) submits evidence to the Minister that establishes that the lender has

  • (i) taken all reasonable steps to protect the lender’s rights and realize on the security provided in respect of the loan, and

  • (ii) suffered a loss as referred to in section 11.

• 11. (1) The maximum amount payable to a lender pursuant to a loan insurance agreement shall be the lesser of

  • (a) the amount representing the percentage of insurance, as stipulated in the loan insurance agreement, that is applied to the loss suffered; and

  • (b) the insured amount at the time of the formal demand.

• (2) For the purpose of subsection (1), “loss” means the aggregate of

  • (a) the principal amount of the outstanding loan and the amount of unpaid interest on the loan at the date of the formal demand,

  • (b) reasonable legal fees, costs and other expenses paid by the lender for the purpose of collecting any amount referred to in paragraph (a),

  • (c) costs incurred and paid by the lender to protect any security provided in respect of the loan disbursed under the loan agreement, and

  • (d) interest on the amounts referred to in paragraphs (a), (b) and (c), to be calculated from the date of the formal demand until the date of payment of the lender’s claim by the Minister

    • (i) at the rate charged by the lender under the loan agreement at the date of the formal demand

      • (A) for a period of up to 180 days after the date of the formal demand, and

      • (B) for an additional period not exceeding 180 days where the Minister and the lender agree to realize on the security during that additional period, and

    • (ii) at one-half the rate referred to in subparagraph (i) for any period after the relevant periods referred to in that subparagraph,

  less

  • (e) any amount

    • (i) realized on the security provided in respect of the loan, and

    • (ii) recovered by the lender after the date of the formal demand in excess of the aggregate amount of all other loans granted by the lender to the applicant.