[27 Pa.B. 3796]
[Continued from previous Web Page] § 73.111. Involuntary and voluntary unemployment insurance requirements.
A plan of credit involuntary unemployment insurance and a group policy and group certificate or an individual policy describing the plan shall comply with the follow ing:
(1) Joint coverage basis. If joint unemployment coverage is provided, it shall be provided either on the basis of each debtor being insured for 100% of the monthly unemployment payment or on the basis of each debtor being insured for a specified portion of the monthly unemployment payment, with the total of these portions equal to 100% of the monthly unemployment payment.
(2) Joint contract.
(i) If joint unemployment coverage is provided, a group certificate or individual policy providing joint unemployment coverage shall be issued. Insurers may not issue two single unemployment coverage group certificates or two single individual policies.
(ii) The benefit payable in the case of simultaneous unemployment of both insureds may not exceed the benefit that would be payable if coverage were provided on only one debtor.
(3) Continuation of coverage. If joint unemployment coverage is provided and coverage on one of the insured debtors is terminated or voided for any reason other than for termination of the indebtedness, any remaining eligible debtor's coverage shall continue and an equitable adjustment of premium shall be made. The remaining eligible debtor's coverage shall continue under a single unemployment coverage group certificate or individual policy.
(4) Voiding coverage for ineligible employment. If a debtor who is not gainfully employed correctly stated employment status information in an application signed by the debtor, and if a group certificate or individual policy is issued, the insurer has the right to void coverage on the debtor, but only within 60 days from the date of issue of the group certificate or individual policy. This action shall be without prejudice to any claim for unemployment that commenced before the termination date.
(5) Voiding coverage for ineligible age. If a debtor exceeds the eligibility age for coverage and has correctly stated age information in an application signed by the debtor, and if a group certificate or individual policy is issued, the insurer has the right to void coverage on the debtor, but only within 60 days from the date of issue of the group certificate or individual policy. This action shall be without prejudice to any claim for unemployment that commenced before the termination date.
(6) Terminating coverage for ineligible age. When premiums are payable monthly based on the actual monthly outstanding balance, if a debtor who exceeds the age at which coverage is to terminate under a group certificate or individual policy has correctly stated age information in an application signed by the debtor, and premiums continue to be erroneously charged to the debtor, the insurer has the right to terminate coverage as of the next billing date. This action shall be without prejudice to any claim for unemployment that commenced before the termination date.
(7) Reducing excess coverage. If an identifiable charge is erroneously made to a debtor for an amount of coverage that exceeds the maximum dollar amount of coverage specified in the group policy and group certificate or individual policy, the insurer has the right to reduce the amount of coverage to the appropriate amount specified in the group policy and group certificate or individual policy, but only within 60 days from the date the identifiable charge is made to the debtor. If coverage is reduced, a refund shall be made of the difference between the actual amount charged and the appropriate amount that should have been charged.
(8) Contestability. A contestability provision may not be more restrictive than to provide that coverage on a debtor shall be incontestable after the group certificate or individual policy has been in force during the lifetime of the debtor for 2 years from the date of issue. Coverage shall be contested only based upon information contained in an insurance application signed by the debtor, a copy of which is furnished, not later than when coverage is contested, to the debtor, a secondary beneficiary or other claimant.
(9) Equitable premium or benefit adjustment. A provision specifying an adjustment of premiums or of benefits or of both to be made if information relating to the age of a debtor has been fraudulently misstated shall be considered to be equitable if it places the debtor and the insurer in the position they would have been in had the age information been correctly stated. An adjustment may not be made unless the age information is contained in an application signed by the debtor, a copy of which is furnished, not later than the time the adjustment is made, to the debtor, a secondary beneficiary or other claimant.
(10) Renewal or refinancing. With respect to the renewal or refinancing of an existing insured indebtedness, the effective date of coverage on the renewed or refinanced indebtedness shall be the date on which the insurer originally insured the debtor with respect to the indebtedness that is renewed or refinanced.
(11) Truncated unemployment coverage.
(i) Truncated credit unemployment insurance may be provided only in connection with loans or credit transactions that are for a term greater than 60 months.
(ii) The truncated coverage period shall be at least 60 months.
(iii) If truncated coverage is elected by a debtor, at the time of the election of the insurance coverage the debtor shall be informed in writing of the term of the insurance coverage and that the coverage will terminate prior to the scheduled maturity date of the indebtedness.
(iv) A group certificate or individual policy providing truncated credit insurance coverage shall disclose both the term of the truncated insurance coverage and that the term of insurance coverage will terminate prior to the scheduled maturity date of the indebtedness. The termination disclosure shall appear in prominent type on the first page of the group certificate or individual policy.
(12) Cancellation notice. A group certificate or individual policy providing involuntary unemployment or voluntary unemployment insurance shall contain a disclosure that the benefit provided by the group certificate or individual policy is related to unemployment and that if the insured debtor retires or no longer plans to work, the insured debtor has the right to contact the insurer or creditor to cancel the insurance coverage. This disclosure shall appear in prominent type on the first page of the group certificate or individual policy.
(13) Proof of unemployment. For involuntary unemployment coverage, proof of involuntary unemployment may not be limited to eligibility for unemployment compensation benefits.
§ 73.112. Involuntary unemployment insurance rate standards.
(a) Prima facie involuntary unemployment rates. Premium rates for credit involuntary unemployment insurance benefits, as described in § 73.110(a) (relating to involuntary unemployment insurance benefits), 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 § 73.110(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) Debtor insurance charge. The amount charged a debtor by a creditor for credit involuntary unemployment insurance may not exceed the premium amount charged by the insurer, as computed at the time the charge to the debtor is determined.
(c) Single premium rates for a 12-month benefit period and a full term coverage period. If premiums are payable on a single premium basis for insurance with a 12-month benefit period for a full term coverage period, the single premium prima facie premium rates for credit involuntary unemployment insurance on a single life shall be as published in the Pennsylvania Bulletin.
(d) Single premium rates for a 12-month benefit period and a limited term coverage period. For insurance with a limited term coverage period and a 12-month benefit period, the single premium prima facie premium rates shall be the prima facie premium rates published in the Pennsylvania Bulletin, for an installment period equal to the number of monthly installment payments in the limited term coverage period. The single premium shall be determined by multiplying the prima facie rate by the monthly installment payment, by the number of months in the limited term coverage period, divided by 100.
(e) Monthly outstanding balance rates for a 12-month benefit period and a full term coverage period. If premiums are payable on a monthly outstanding balance basis for insurance with a 12-month benefit period for a full term coverage period, the monthly prima facie premium rates for credit involuntary unemployment insurance on a single life shall be as published in the Pennsylvania Bulletin.
(f) Monthly outstanding balance rates for a 12-month benefit period and a limited term coverage period. For insurance with a limited term coverage period and a 12- month benefit period, the monthly prima facie premium rates shall be as published in the Pennsylvania Bulletin, for an installment period equal to the number of monthly installment payments in the limited term coverage period. The monthly premium shall be determined by multiplying the prima facie rate by the monthly installment payment, by the remaining number of months in the limited term period, divided by 1,000.
(g) Joint rates.
(1) When each debtor is insured for 100% of the monthly unemployment payment, the prima facie premium rates for joint credit involuntary unemployment insurance shall equal 180% of the prima facie premium rates for single involuntary unemployment coverage.
(2) When each debtor is insured for a specific portion of the monthly unemployment payment, the prima facie premium rates for joint credit involuntary unemployment insurance shall equal 100% of the prima facie premium rates for single involuntary unemployment coverage.
(h) Actuarially consistent rates. For credit involuntary unemployment insurance on any other basis, prima facie premium rates shall be actuarially consistent with the rate standards of subsections (c)--(f).
(i) Adjustment of prima facie rates and loss ratio standards. By ____(Editor's Note: The blank refers to a date 3 years after the effective date of the adoption of this proposal) 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 may not be adjusted unless an adjustment is necessary under subsection (j). No adjustment to the prima facie premium rates will 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 appropriate amendments to § 73.123 (relating to loss ratio standards) to reflect the change.
(j) Review of nonclaim elements. By ____(Editor's Note: The blank refers to a date 9 years after the effective date of adoption of this proposal) and at least every 9 years thereafter, the Department will review the changes in the average term and amount of coverage, the changes in fixed and variable expenses, and the reasonable profit margin for insurance companies writing credit involuntary unemployment 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 amendments to the loss ratio standards in § 73.123 and thereafter publish new prima facie premium rates in the Pennsylvania Bulletin.
§ 73.113. Voluntary unemployment insurance rate standards.
(a) Debtor insurance charge. The amount charged a debtor by a creditor for credit voluntary unemployment insurance may not exceed the premiums charged by the insurer, as computed at the time the charge to the debtor is determined.
(b) Premium rates based on loss ratio. The premium rates shall be based on a loss ratio not less than the loss ratio standard in § 73.123 (relating to loss ratio standards).
(c) Actuarial memorandum filing. The insurer shall include, with the rate filing made under § 73.136(a) (relating to filing of forms and rates), an actuarial memorandum which contains the basis of the claim costs used in computing the premium rates.
(d) Joint rates.
(1) When each debtor is insured for 100% of the monthly unemployment benefit, the premium rates for joint credit voluntary unemployment insurance shall equal 180% of the premium rates for single voluntary unemployment coverage.
(2) When each debtor is insured for a specific portion of the monthly unemployment benefit, the premium rates for joint credit voluntary unemployment insurance shall equal 100% of the premium rates for single voluntary unemployment coverage.
(e) Adoption of prima facie rates. If, in the opinion of the Commissioner, there is sufficient credit voluntary unemployment insurance experience data in this Commonwealth, the Commissioner may establish and adopt prima facie premium rates for voluntary unemployment and procedures for adjusting the prima facie premium rates.
(f) Review of nonclaim elements. By ____(Editor's Note: The blank refers to a date 9 years after the effective date of adoption of this proposal) and at least every 9 years thereafter, the Department will review the changes in the average term and amount of coverage, changes in fixed and variable expenses, and the reasonable profit margin for insurers writing credit voluntary unemployment insurance in this Commonwealth. If this review indicates that a change in the loss ratio standard is necessary, the Department will propose appropriate amendments to § 73.123 to reflect the change.
§ 73.114. Insurability requirements.
Plans of credit insurance as provided in §§ 73.104(a), 73.107(a) and 73.110(a) (relating to life insurance and life insurance with TPD benefit; A and H insurance benefits; and involuntary unemployment insurance benefits) may provide for either:
(1) An evidence of insurability requirement.
(2) No evidence of insurability requirement.
§ 73.115. Benefit exclusions.
Exclusions may be contained in a credit insurance plan as provided in §§ 73.104(a), 73.107(a) and 73.110(a) (relating to life insurance and life insurance with TPD benefit; A and H insurance benefits; and involuntary unemployment insurance benefits).
(1) The following exclusions may be contained in a life insurance plan or a life insurance with TPD benefit plan:
(i) Death due to suicide within 1 year of the effective date of coverage.
(ii) TPD due to intentionally self-inflicted injury.
(iii) A preexisting conditions exclusion due to a condition for which the insured debtor received medical advice, consultation, diagnosis or treatment from a physician within 6 months before the effective date of coverage and due to which death occurs or TPD commences within 6 months after the effective date of coverage. This exclusion applies only if and to the extent that the total amount of all insurance that would otherwise be subject to the preexisting conditions exclusion exceeds $1,000.
(iv) For the application of the exclusions contained in subparagraphs (i)--(iii), the effective date of coverage for each portion of the insurance attributable to a different advance under an open end loan, is the date on which the advance or charge occurs, or if later, the date on which coverage is elected.
(2) The following exclusions may be contained in an A and H insurance plan:
(i) Normal pregnancy.
(ii) Intentionally self-inflicted injury.
(iii) Nonscheduled aircraft flight.
(3) The following exclusions may be contained in an involuntary unemployment insurance plan:
(i) Voluntary resignation of employment.
(ii) Voluntary leave of absence.
(iii) Voluntary forfeiture of salary, wages or income.
(iv) Retirement.
(v) Injury or disease.
(vi) Disability.
(vii) Strike or unionized labor dispute.
(viii) Discharge by employer for cause.
(ix) Involuntary unemployment for which severance pay is received by the debtor.
§ 73.116. Age requirements.
(a) Debtor age provisions. Plans of credit insurance as provided in §§ 73.104(a), 73.107(a) and 73.110(a) (relating to life insurance and life insurance with TPD benefit; A and H insurance benefits; involuntary unemployment insurance benefits) may provide for debtor age provisions not less favorable than any of the following:
(1) An age restriction making the debtor ineligible for coverage when one of the folowing applies:
(i) The debtor will have attained 65 years of age at the time the indebtedness is incurred.
(ii) The debtor will have attained 66 years of age on the scheduled maturity date of the indebtedness.
(2) A provision for coverage to terminate when the debtor attains a specified age not less than 66 years. If coverage is written on a single premium basis, the term of the insurance coverage on which the premium is based may not extend beyond the termination age.
(i) A debtor electing coverage that terminates when a specified age is attained shall be provided, at the time of election of insurance coverage, with a written disclosure specifying both the term of insurance coverage and whether the coverage will terminate prior to the scheduled maturity date of the indebtedness.
(ii) A group certificate or individual policy providing coverage that terminates when a specified age is attained shall disclose the term of insurance coverage and shall contain a disclosure whether the term of insurance coverage will terminate prior to the scheduled maturity date of the indebtedness. The termination disclosure shall appear in prominent print on the first page of the group certificate or individual policy.
(b) Eligibility determination using age. An age restriction shall be used only to determine initial eligibility for coverage and may not be used as a basis for denying claims or terminating existing coverage, except as provided in subsection (a)(2) and in § 73.105(3) and (4), § 73.108(5) and (6) or § 73.111(5) and (6) (relating to life insurance and life insurance with TPD benefits requirements; A and H insurance requirements; and involuntary and voluntary unemployment insurance requirements).
§ 73.117. Employment eligibility requirements.
Plans of credit accident and health insurance as provided in § 73.107(a) (relating to accident and health insurance benefits) may provide for either:
(1) Any evidence of gainful employment requirement.
(2) No evidence of gainful employment requirement.
§ 73.118. Initial eligibility requirements.
Plans of credit involuntary unemployment insurance as provided in § 73.110 (a) (relating involuntary unemployment insurance benefits) may provide for initial eligibility requirements, whereby an insurer may choose to exclude from credit involuntary unemployment coverage, one or more of the following:
(1) Unemployed individuals.
(2) Self-employed individuals.
(3) Military personnel.
(4) Workers in seasonal or temporary jobs which are designed to last 6 consecutive months or less.
(5) Debtors who have been notified of a layoff or of employment termination occurring within 60 days of the termination notification.
§ 73.119. Combination coverage rate.
If an insurer combines two or more insurance coverages which are provided under separate and distinct policy forms, and if the debtor may purchase only a package of insurance coverages, the premium rate for the package shall be the sum of the separate approved premium rates for the applicable insurance coverages less a discount of 5% of the sum of the separate approved premium rates.
§ 73.120. Composite term premium rate.
Composite term premium rates may be used under the following conditions:
(1) The insurer shall include in the filing of the composite term premium rates a demonstration that the expected total premium to be collected by the insurer will not exceed the total premium that would be collected if term specific rates were charged.
(2) The composite term premium rates may not exceed by more than 5% any term specific rates within the composite term period.
§ 73.121. Maximum rates.
An insurer may use a rate for an account that is lower than the filed rate applicable to that account without notice to the Department.
§ 73.122. Deviated rates
An insurer may file for approval of and upon approval may use rates that are higher than the prima facie premium rates if the use of the higher rates will result in a loss ratio which is not less than the loss ratio standard in § 73.123 (relating to loss ratio standards). If rates higher than the prima facie rates are filed, the filing shall specify the account to which the rates apply. These rates may be:
(1) Applied uniformly to all accounts of the insurer.
(2) Applied on an equitable basis to only one or more accounts of the insurer for which the actual prima facie loss ratio was higher than the applicable loss ratio standard.
(3) Applied on an equitable basis in accordance with an account rating procedure. The account rating procedure shall be filed with and approved by the Department prior to use.
§ 73.123. Loss ratio standards.
Unless revised loss ratio standards are adopted, the loss ratio standards for the coverages specified shall be as follows:
Loss Ratio Standard Credit Life 55% Credit Life with TPD 55% Credit Accident and Health 14-Day Retroactive 65% 14-Day Nonretroactive 65% 30-Day Retroactive 60% 30-Day Nonretroactive 60% Credit Involuntary Unemployment 30-Day Retroactive 60% 30-Day Nonretroactive 60% Credit Voluntary Unemployment 60% § 73.124. Duration of deviation.
Deviated rates may not be in effect for a period longer than 3 years. An insurer may file for a new rate before the end of the 3 years, but not more often than once during any 12 month period.
§ 73.125. Portability of rates.
If an account for which a higher (deviated) rate is approved changes insurers, the rate approved for use for that account by the prior insurer shall be the maximum rate that may be used by any succeeding insurer for the remainder of the applicable rate period, applicable to the prior insurer, or until a new rate is filed for use in connection with the account, if sooner.
§ 73.126. Voluntary unemployment experience reports.
The Commissioner may require on advance notice that each insurer doing credit voluntary unemployment insurance business in this Commonwealth file a report of credit voluntary unemployment insurance written on a calendar year basis. The report shall follow the format specified for credit unemployment insurance of the Credit Insurance Experience Exhibit as required by the annual statement instructions and shall contain separate specific data for this Commonwealth, rather than an allocation of the company's countrywide experience.
§ 73.127. Refunds.
(a) Refund provision. If insurance terminates prior to the scheduled maturity date of the indebtedness, a refund of any unearned premium shall be made as follows:
(1) If the indebtedness is discharged due to prepayment, renewal or refinancing prior to the scheduled maturity date, credit insurance shall be terminated and a refund of the unearned premium shall be made.
(2) A refund of any unearned credit A and H insurance premium, credit involuntary unemployment insurance premium or credit voluntary unemployment insurance premium shall be made if the indebtedness is prepaid by the proceeds of credit life insurance or credit life insurance with TPD benefit. The refund of the unearned credit insurance premium shall be in addition to any credit life insurance or TPD benefit proceeds.
(3) A refund of the total premium charged for credit insurance coverage shall be made if coverage is voided ab initio for any reason other than termination of the indebtedness.
(4) If joint coverage on one of the debtors is voided ab initio, a refund of the difference between the premium actually charged for the joint coverage, and the premium that would have been charged if only single coverage had been provided shall be made.
(b) Refund time frame. Refunds of premiums paid by or charged to the debtor shall be remitted to the debtor or credited to the debtor's outstanding indebtedness within 10 working days after the agent or group policyholder receives the refund from the insurer.
(c) Refund notice. A refund payment shall be accompanied by an explanation that the payment is a refund of premium. If the refund amount has been deducted from the debtor's outstanding indebtedness, the debtor shall be notified in writing that the refund was applied toward the outstanding indebtedness.
(d) Refund formulas. Insurers shall file for approval all refund formulas intended for use. A reference to the Rule of 78 shall be acceptable, in lieu of filing the actual formula.
(1) The refund of premiums on a single premium basis shall be calculated by multiplying the original single premium charged, by the appropriate refund factor.
(i) In determining the refund, if fewer than 15 days of insurance coverage has been provided during the loan month, no charge shall be made for that month. If 15 or more days of coverage have been provided during the loan month, a full month may be charged.
(ii) For gross decreasing credit life insurance with or without TPD benefits, the refund shall be computed based on the Rule of 78.
(iii) For level term credit life insurance with or without TPD benefits, the refund shall be computed based on a pro rata basis.
(iv) For full benefit period credit A and H insurance and full benefit period credit involuntary unemployment insurance, the refund shall be computed based on the Rule of 78.
(v) For any coverage not listed in subparagraphs (ii)--(iv), the refund factor shall equal the sum of remaining insured balances divided by the sum of the original insured balances.
(2) Except as provided in § 73.139 (j) (relating to credit insurance on open end loans), the refund of any unearned premiums calculated and remitted to the insured on a monthly outstanding balance basis shall be equal to the monthly premium charged if fewer than 15 days of insurance coverage has been provided during that loan month. If coverage has been provided for 15 or more days of the loan month, no refund of premium is required.
(e) Minimum refund. Insurers need not issue refunds for less than $10.
(f) Termination and refund disclosures. The group policy and group certificate or individual policy issued to provide insurance coverage shall disclose the conditions under which the coverage will terminate and under which a premium refund is required. This refund disclosure shall also describe the method used to calculate the premium refund.
§ 73.128. Terminations.
(a) Individual policy termination. An individual policy of credit insurance may not be terminated by an insurer, except for nonpayment of premium, prior to the scheduled expiration date of the policy, unless the indebtedness is sooner discharged due to renewal, refinancing or prepayment.
(b) Continuation of coverage. If a debtor is insured under a single premium group credit insurance policy, the insurer shall provide that in the event of termination of the policy, insurance coverage with respect to the debtor shall continue with either the original insurer or a new insurer for the entire period for which the single premium has been paid.
(c) Notice of termination. If a debtor is insured under a group credit insurance policy providing for the payment of premiums to the insurer on a monthly premium basis, the insurer shall, in the event of termination of the policy, cause a notice of termination to be provided to the insured debtor at least 30 days prior to the effective date of termination. A termination notice is not required if replacement coverage, of at least equal value, takes effect on the effective date of termination. The terminating insurer shall be responsible for assuring that any required termination notice is provided.
(d) Assumption of coverage. If an existing group policy is assumed by another insurer, the assuming insurer shall issue to the group policyholder a certificate of assumption for attachment to the group policy. If the entity to which the insured debtor is indebted is other than the group policyholder, the assuming insurer shall make reasonable efforts to notify the entity of the assumption.
§ 73.129. Dividends.
(a) Dividend payment. Dividends on participating individual policies of credit insurance may be payable to the owners of the individual policies. Payment of dividends may be deferred until the policy is terminated.
(b) Nonparticipating policies. Experience refunds or retrospective premium rate adjustments may not be applied to nonparticipating individual credit insurance policies.
(c) Dividends or retrospective rate credits as compensation. Dividends or retrospective rate credits on group policies may be paid or credited to the group policyholder. Dividends or retrospective rate credits, less the policyholder's own contributions, if any, and less any amounts of the dividends or retrospective rate credits paid or credited to the benefit of debtors insured under the group policy, shall be considered compensation for the purpose of § 73.134 (relating to compensation of producers or creditors).
§ 73.130. Election of coverage and disclosure requirements.
(a) Separate purchase of coverages. If more than one type of credit insurance coverage is offered for purchase in connection with an indebtedness and each coverage is provided under separate and distinct policy forms, the debtor shall be allowed to separately purchase each credit insurance coverage, unless the premium rate for a package policy is provided under to § 73.119 (relating to combination coverage rate).
(b) Election of coverage. If an identifiable charge is made to the debtor for credit insurance coverage, no coverage may be provided unless the debtor is liable under the credit agreement and the coverage is elected and signed for by the proposed insured debtor in the insurance application. If joint life, joint life with TPD benefit, joint A and H, joint involuntary unemployment, or joint voluntary unemployment coverage is offered, and an identifiable charge is made for the joint coverage, each proposed insured debtor shall be liable under the credit agreement, and shall elect the coverage by signing the insurance application. An insurer may require that only one of the joint debtors elect the credit insurance coverage if the following exist:
(1) The insurance application is mailed or electronically transmitted to the debtor and returned to the insurer or creditor by mail or electronically.
(2) The insurance application credit is completed after the application for the indebtedness is completed.
(c) Single life designation. In situations where two debtors are each liable for repayment of an indebtedness and insurance coverage on only one life is offered, both debtors shall be provided with the option to elect the coverage, if there is an identifiable charge to the debtor for the coverage. Only one of the debtors must be provided with the opportunity to elect the single coverage if the following exist:
(1) The insurance application is mailed or electronically transmitted to the debtor and returned to the insurer or creditor by mail or electronically.
(2) The credit insurance election is completed after the application for the indebtedness is completed.
(d) Notice of proposed insurance. With respect to section 6(4) of the act (40 P. S. § 1007.6(4)), the application and notice of proposed insurance shall be deemed to be prominently set forth in the financial instrument if set forth in a separate provision on the face or reverse side of the financial instrument in type at least equal in size and prominence to the type used for other provisions of the financial instrument.
§ 73.131. Choice of insurer.
If insurance is required as additional security for an indebtedness, the debtor shall be informed by the creditor prior to completion of an application for credit insurance of the right to provide alternative insurance coverage through existing policies or by procuring and purchasing insurance coverage through an authorized insurer.
§ 73.132. Collection of premiums.
(a) Collecting premiums as a representative. If the creditor or its representative collects premiums or an identifiable charge for credit insurance from a debtor, it does so as a representative of the insurer and the moneys so collected shall be deemed received by the insurer for purposes of this chapter.
(b) Remittance of premiums. Premiums collected by the creditor from the debtor shall be remitted by the creditor to the insurer on a timely basis. For premiums collected on a single premium basis, premiums shall be remitted not later than 60 days from the last day of the month in which the insurance coverage was purchased. For premiums collected on a monthly outstanding premium basis, premiums shall be remitted not later than 60 days after the last day of the month or billing cycle in which the premiums from the debtor were charged or collected.
§ 73.133. Claims and examination procedures.
(a) Claim procedures. Every insurer shall be responsible for the settlement, adjustment and payment of all claims and shall establish and maintain adequate claim files.
(b) Claim reporting.
(1) Claims shall be promptly reported by the group policyholder or its representatives to the insurer or its designated claim representative, and all claims shall be settled as soon as practical and in accordance with the terms of the insurance contract.
(2) In the case where both A and H insurance benefit and life insurance with TPD benefit coverages are provided in connection with the same indebtedness, the group policyholder shall report the claim to the insurer for the appropriate coverage prior to or at the end of any applicable elimination period, subject to the group policyholder having received appropriate claim information from the insured debtor.
(c) Payment of claims. In addition to the payment of a claim by a draft drawn upon the insurer or by a check of the insurer, claims may also be paid by electronic transfer drawn by the insurer to the order of the claimant to whom payment of the claim is due. If the amount of the insurance payable exceeds the balance which the debtor is obligated to pay to the creditor, the creditor shall pay the excess directly to the beneficiary designated by the debtor or the estate entitled to the excess.
(d) Settlement of claims. If a group policyholder has made arrangements with an insurer to draw drafts or checks or make electronic transfers for payment of claims due to the group policyholder, the parties making the draws or electronic transfers may not be directly involved in making loans for the policyholder.
(e) Creditor examination. An insurer shall be responsible for conducting a thorough examination of creditors with respect to its credit insurance business during the first policy year and at least annually thereafter to assure compliance with this chapter and other applicable insurance laws and regulations of the Commonwealth. The examination shall verify the accuracy of premiums or other identifiable insurance charges, premium refunds, claim payments which have been reported to the insurer and any other pertinent information necessary for the insurer to determine that debtors are being afforded proper coverage. Examinations performed by an insurer shall be subject to review by the Department. The group policy shall contain a provision explaining that the account will be examined annually.
(f) Inspection of examination procedures. Each insurer shall make available for Department inspection upon request its creditor examination procedures.
(g) Record of examination. The insurer shall establish and maintain a written record of each creditor examination. This record shall be maintained for at least 3 years from the date of examination or until the conclusion of the next succeeding regular examination by the Department of its domicile, whichever is later.
(h) Record of coverage. An insurer or, at the option of the insurer, the creditor shall establish and maintain adequate credit insurance records for at least 2 years after the termination of an individual debtor's insurance coverage. The records shall identify each individual debtor, the amount insured, the term of the insurance, the charge for the insurance and any refunds of unearned premiums. The records shall be made available for Department review upon request.
§ 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 an 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 and 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 the 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 a group policyholder, producer, or general producer or withheld by a 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, but is not limited to, 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 not met:
(i) The dividend payment on each share of stock represents no more than a reasonable return on the producer's capital investment.
(ii) The direct insurer has not 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.
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