§ 73.106. Life insurance rate standards.
(a) Prima facie rates. Premium rates for credit life insurance and credit life insurance with TPD benefit, as described in § 73.104(a) (relating to life insurance and life insurance with TPD benefit), may not exceed the prima facie premium rates referenced in this section and published in the Pennsylvania Bulletin, unless higher premium rates are approved under § 73.122 (relating to deviated rates). Premium rates for benefits that differ from those benefits described in § 73.104(a) may not exceed premium rates that are actuarially consistent with the prima facie premium rates referenced in this section and published in the Pennsylvania Bulletin.
(b) Symbols. The symbols used in this section shall have the following meanings.
(1) Et = amount at risk in month t per $1 of initial insured indebtedness.
(2) i = 4.5%, consisting of an interest discount of 4% and a mortality discount of .5%.
(3) LSPn = single premium prima facie premium rate per $100 of a level amount of insured indebtedness.
(4) n = coverage period in months.
(5) Op = monthly outstanding balance prima facie premium rate per $1,000 of outstanding balance.
(6) SPn = single premium prima facie premium rate per $100 of initial insured gross indebtedness, as defined in § 73.103 (relating to definitions), repayable in n equal monthly installments.
(7) NSPn = single premium prima facie premium rate per $100 of initial insured net indebtedness, as defined in § 73.103, repayable in n equal monthly installments.
(c) Debtor insurance charge. The amount charged a debtor by a creditor for credit life insurance or credit life with TPD benefit may not exceed the premium amount charged by the insurer, as computed at the time the charge to the debtor is determined.
(d) Monthly outstanding balance rates. If premiums are payable on a monthly outstanding balance basis, the monthly prima facie premium rate for credit life insurance on a single life shall be $.705 per $1,000 of outstanding balance, and shall be $.844 per $1,000 of outstanding balance for credit life insurance with TPD benefit on a single life.
(e) Gross single premium rates for full term coverage period.
(1) If premiums for decreasing insurance on the gross unpaid indebtedness for a full term coverage period are payable on a single premium basis, the single premium prima facie premium rates for credit life insurance on a single life and for credit life insurance with TPD benefit on a single life shall be calculated, except as provided in subsection (i), in accordance with the following formula:
(2) Gross single premium rates for full term coverage period calculated in accordance with the formula in paragraph (1) are published in the Pennsylvania Bulletin, for single life coverage and for single life coverage with TPD benefit.
(f) Gross single premium rates for limited term coverage period. If premiums for decreasing insurance on the gross unpaid indebtedness for a limited term coverage period are payable on a single premium basis, the single premium rates for credit life insurance on a single life and for credit life insurance with TPD benefit on a single life may not exceed premium rates that are actuarially consistent with the single premium prima facie premium rates published in the Pennsylvania Bulletin, except as provided in subsection (i).
(g) Net single premium rates. If premiums for decreasing insurance on the net unpaid indebtedness for a full term or limited period coverage period are payable on a single premium basis, the single premium prima facie premium rates for credit life insurance on a single life and for credit life insurance with TPD benefit on a single life shall be calculated, except as provided in subsection (i), in accordance with the following formula:
(h) Level single premium rates. If premiums are payable on a single premium basis for level term insurance, the single premium prima facie premium rates for credit life insurance on a single life shall be calculated, except as provided in subsection (i), in accordance with the following formula:
(i) Alternative single premium formula. Prima facie premium rates may be calculated for credit life insurance and credit life insurance with TPD benefit in accordance with the following formula:
(j) Joint rates. Prima facie premium rates for credit life insurance on a joint life with or without TPD benefit shall equal 175% of the prima facie premium rates for a single life benefit plan which is identical to the joint life benefit plan.
(k) Actuarially consistent rates. For credit life insurance or credit life insurance with TPD benefit offered on any other basis, prima facie premium rates shall be actuarially consistent with the rate standards of subsections (d)—(i).
(l) The adjustment of prima facie rates and loss ratio standards. By June 19, 2001, and at least every 3 years thereafter, the Department will review the appropriateness of the prima facie premium rates referenced in this section based upon Commonwealth experience data for the preceding 3-calendar years. The nonclaim element of the prima facie premium rates will not be adjusted unless an adjustment is necessary under subsection (m). An adjustment to the prima facie premium rates will not be made if the change in prima facie premium rates so determined would be less than 5%. If an adjustment to the prima facie premium rates is indicated, the Department will publish the new prima facie premium rates in the Pennsylvania Bulletin. If an adjustment to the loss ratio standards is indicated, the Department will propose regulatory amendment to § 73.123 (relating to loss ratio standards) to reflect the change.
(m) Review of non-claim elements. By June 19, 2007, and at least every 9 years thereafter, the Department will review the changes in the average term and amount of coverage, the changes in the fixed and variable expenses and the reasonable profit margin for insurance companies writing credit life insurance in this Commonwealth. If this review indicates that a change in the nonclaim elements of the premium rates is necessary, the Department will propose a regulatory amendment to the loss ratio standards in § 73.123 and thereafter publish new prima facie premium rates in the Pennsylvania Bulletin.
Cross References This section cited in 31 Pa. Code § 73.103 (relating to definitions); 31 Pa. Code § 73.104 (relating to life insurance and life insurance with TPD benefit); 31 Pa. Code § 73.134 (relating to compensation of producers and creditors); 31 Pa. Code § 73.136 (relating to filing of forms and rates); and 31 Pa. Code § 73.134 (relating to compensation of producers and creditors).
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