Current through Register Vol. XLI, No. 50, December 13, 2024
Section 114-6-6 - Rates and Refunds of Credit Life Insurance and Credit Accident and Sickness Insurance6.1.6.1.a. Credit life insurance. -- Prima facie reasonable rates. -- W. Va. Code § 33-6-9(e) provides that the Commissioner shall disapprove any form of policy, application, rider or endorsement or withdraw any previous approval if the benefits provided therein are unreasonable in relation to the premium charged. A single premium rate of sixty-five cents ($.65) per annum per one hundred dollars ($100) of decreasing term life insurance discounted at three percent (3%) per annum for interest and mortality after the first twelve (12) months (or its actuarial equivalent if other than single premium) is prima facie reasonable and any rate in this amount or less will be approved without statistical justification. A premium payable monthly at a rate of one dollar ($1.00) per one thousand dollars ($1,000) of outstanding unpaid insured indebtedness or a single premium of one dollar and twenty cents ($1.20) per annum per one hundred dollars ($100) of level term credit life insurance, is the actuarial equivalent of the sixty-five cent ($.65) rate.6.1.b. A single premium rate of one dollar ($1.00) per annum per one hundred dollars ($100) of decreasing term joint life insurance discounted at three percent (3%) per annum for interest and mortality after the first twelve (12) months (or its actuarial equivalent if other than single premium) is prima facie reasonable and any rate in this amount or less will be approved without statistical justification.6.1.c. For dismemberment benefit, the premium rate shall be not more than five cents ($.05) per one hundred dollars ($100) per annum.6.2. Credit life insurance -- Exceptions, exclusions and limitations on coverage. -- The rates referred to in Section 6.1 of this rule, are presumed reasonable only if the policies contain no exceptions, limitations or exclusions other than for suicide and contain no age restrictions, or only age restrictions making ineligible for the coverage, debtors sixty-five (65) or older at the time the indebtedness is incurred, or debtors who will have attained age sixty-six (66) or over on the maturity date of the indebtedness.6.3.6.3.a. Accident and sickness insurance -- Prima facie reasonable rates. -- For credit accident and sickness insurance the following single premium rates per one hundred dollars ($100) of initial insured indebtedness are prima facie reasonable: (See Table 114.6A found at the end of this rule.)6.3.b. Rates for policies of credit accident and sickness insurance on which premiums are paid other than on a single premium basis or for benefits on a basis other than illustrated in this section shall be actuarially consistent with the rates specified in this section.6.4.6.4.a. Credit accident and sickness insurance -- Exceptions, exclusions and limitations on coverage. -- The premium rates referred to in Table 114-6A, Schedule A, Section 6.3 of this rule are for policies which contain no exclusion for preexisting conditions except for those conditions which manifested themselves to the insured by requiring medical diagnosis or treatment within the six (6) months preceding the taking of the application for insurance and which caused loss within six (6) months following the effective date of coverage: Provided, That disability commencing after six months from the application date resulting from preexisting conditions shall be covered.6.4.b. The premium rates referred to in Table 114-6A, Schedule B, Section 6.3 of this rule are for policies which contain no exclusions for preexisting conditions.6.4.c. Any contract to which the foregoing rates apply may contain provisions excluding or restricting coverage in the event of total disability resulting from pregnancy, intentionally self-inflicted injuries, foreign travel or residence, flight in nonscheduled aircraft, war or military service. (Except in unusual cases this insurance should not be sold to military persons, since their pay continues through periods of disability.) The policies may contain the same age limitation for eligibility as set forth for credit life policies.6.5. Premium payment. -- The amount charged to a debtor for credit life or credit accident and sickness insurance shall not exceed the premiums charged by the insurer as computed at the time the charge to the debtor is determined.6.6. Restrictive coverage. -- Separate rate filings required. -- If credit life or credit accident and sickness coverage is offered which is more restrictive than provided in Sections 6.2 and 6.4 of this rule, the insurer shall, by a separate filing, demonstrate to the satisfaction of the Commissioner that the schedule of premium rates applicable to the more restrictive forms will or can reasonably be expected to produce a loss ratio of sixty percent (60%).6.7. Deviations from prima facie reasonable rates. -- An insurer may receive approval of a higher premium rate to be used, on a credible case, or a class of business, or in connection with a particular policy form, for insurance on debtors of creditors if the insurer demonstrates, to the satisfaction of the Commissioner, that the mortality or morbidity experience will or can reasonably be expected to produce a loss ratio of sixty percent (60%).6.8. Refunds. -- With respect to policies issued and certificates subject to this rule: 6.8.a. The refund of an unearned amount paid by or charged to the debtor for insurance in the case of reducing term credit life insurance or of credit accident sickness insurance, on which the charges to the debtor are payable by other than a single sum and of level term credit life insurance shall be no less than the pro rata gross unearned amount charged;6.8.b. The refund of an unearned amount paid by or charged to the debtor for insurance in the case of reducing term credit life insurance or of credit accident and sickness insurance, on which the insurance charges to the debtor are paid in a single sum shall not be less than the amount computed by the "Sum of the Digits" formula, commonly known as the "Rule of 78";6.8.c. A premium refund or credit need not be made if the amount of the refund or credit is less than one dollar ($1.00);6.8.d. A creditor, such as a retailer, lending institution or other entity, that is a creditor in a consumer credit sale or consumer loan and the seller of credit insurance on that loan must automatically cancel the insurance and refund unearned consumer credit insurance premiums when a consumer credit sale or consumer loan, refinancing, or consolidation is paid in full. If credit insurance is sold to a consumer/debtor, the creditor, such as a retailer, lending institution or other entity, that is the creditor in a consumer credit sale or consumer loan, but is not the seller of a credit insurance policy on the sale or loan must notify a consumer debtor/insured of his or her right to cancel his or her credit insurance policy and to receive a refund for any unearned premiums paid when a consumer credit sale or loan, refinancing or consolidation is paid in full. The following forms shall be used by creditors: 6.8.d.1. The form incorporated into this rule as Appendix A, which a retailer, lending institution or other entity that is the creditor on the loan and seller or provider of the consumer credit insurance may use to notify a consumer debtor/insured when his or her insurance coverage has been cancelled and the unearned premiums have been automatically refunded by deducting these premiums from the loan balance; provided, that the retailer, lending institution or other entity may use an alternative notice form, which is consistent with the general course of business of the creditor and which advises the consumer debtor/insured of cancellation of his/her credit insurance and the application of a refund of his/her credit insurance;6.8.d.2. The form incorporated into this rule as Appendix B, which a retailer, lending institution or other entity that is the creditor on the loan and the seller of the insurance policy shall use to notify the insurer that the debtor/insured's policy has been cancelled and that the insurer must refund any unearned premiums to the consumer debtor/insured; and6.8.d.3. The form incorporated into this rule as Appendix C, which a retailer, lending institution or other entity that is the creditor on the loan but not the seller of the insurance policy must use to notify a consumer debtor/insured of his or her right to cancel any credit insurance policy and to receive a refund of any unearned premiums paid for this insurance.6.9. Responsibility for reviewing lender's accounts. -- It is the responsibility of the insurer to review each lender's account at least every eighteen (18) months verifying the accuracy of premium payments, or other identifiable insurance charges, premium refunds, and claims incurred and to be prepared to exhibit the results of the review upon request of the Commissioner. 6.10. Filing of experience information. -- An insurer doing credit life and/or credit accident and sickness insurance business in this State shall annually file with the Insurance Department a report of the insurer's credit life insurance experience and credit accident and sickness insurance experience separately on reporting forms prescribed by the Commissioner.6.11. Separability. -- If any provision of this rule is held invalid, the remainder of the rule shall not be affected by that section's invalidity.