§ 73.134. Compensation of producers and creditors.
(a) Compensation limits. Premium rates shall be presumed to be excessive if the compensation for writing and handling credit insurance paid to a creditor, producer or any affiliate, associate, subsidiary, director, officer, employe or other representative of the creditor or producer, exceeds:
(1) For credit life insurance and credit life insurance with TPD benefit, 27% of the prima facie premium rates referenced in § 73.106 (relating to life insurance rate standards) or 27% of the actuarially consistent premium rates for insurance for which prima facie rates are not published in the Pennsylvania Bulletin.
(2) For credit A&H insurance or involuntary unemployment insurance, 21% of the prima facie premium rates referenced in § § 73.109 and 73.112 (relating to A and H insurance rate standards; and involuntary unemployment insurance rates standards) or 21% of the actuarially consistent premium rates for insurance for which prima facie rates are not published in the Pennsylvania Bulletin.
(b) Additional compensation. When a licensed producer, general producer, general agency or home office producer, having no direct or indirect affiliation or connection with the creditor, is involved in the solicitation of a credit insurance policy, the compensation of 27% as provided in subsection (a) shall be increased to 30% and the compensation of 21% as provided by subsection (b) shall be increased to 25% provided that the entire amount or any part of additional compensation shall be used solely as commission for the licensed producer, general producer, general agency or home office producer involved in the solicitation. The creditor is prohibited from receiving indirectly or directly all or any portion of the additional 3% or 4% commission.
(c) Compensation defined. For purposes of this chapter, ‘‘compensation’’ means money or anything else of value paid or credited to or on behalf of any group policyholder, producer, or general producer or withheld by any group policyholder producer, broker or general producer within or outside this Commonwealth in relation to business produced or to be produced or written or to be written in this Commonwealth and paid or credited by or on behalf of the insurer or by any affiliate of the insurer or by another person. Compensation includes the following:
(1) Commissions.
(2) Fees, including administrative fees, service fees, consulting fees and expense fees.
(3) Electronic data processing equipment used for purposes other than electronic rate books.
(4) Electronic data processing services other than the programming of existing electronic data processing equipment used in lieu of rate books or charts.
(5) Supplies, other than forms approved by the Commissioner and usual and customary claims and reporting forms and envelopes.
(6) Rental equipment of any type provided by an insurer, its agent or any related person without charge of actual cost or at a charge less than the usual cost.
(7) Advertising provided by an insurer, its agent or a related person without charge of actual cost or at a charge less than the usual cost.
(8) Communication devices provided by an insurer, its agent or a related person without charge of actual cost or at a charge less than the usual cost.
(9) Profit sharing plans.
(10) Experience rating refunds and credits.
(11) Dividends as provided in § 73.129 (relating to dividends).
(12) Dividends received by a producer of credit insurance business who owns in part or whole a reinsurance company which assumes the credit insurance business from the direct insurer, if any of the following criteria are met:
(i) The dividend payment on each share of stock represents more than a reasonable return on the producer’s capital investment.
(ii) The direct insurer has contractually guaranteed to reassume any losses sustained by the reinsurer on the ceded business.
(13) Expense allowances or reimbursement.
(14) Stock plans and bonuses.
(15) Extension of credit.
(16) Reimbursement for expenditures.
Cross References This section cited in 31 Pa. Code § 73.129 (relating to dividends); 31 Pa. Code § 73.135 (relating to licensed producers).
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