Missouri Revised Statutes













Chapter 385

Credit Insurance and Service Contracts

←385.065

Section 385.070.1

385.075→

August 28, 2015

Rates presumed reasonable, when--criteria to be met--policy may be cancelled, when--compensation to creditor for sale of coverage, maximum allowed.

385.070. 1. It shall be presumed in any review of rates filed with the

director that the benefits are reasonable in relation to the premium charged

if the premium rates do not exceed the following standard rates:



(1) Credit life insurance:



(a) The credit life insurance rates filed with the director shall be

considered reasonable by the director if the single premium rate for single

life decreasing term credit life insurance does not exceed fifty-five cents

per annum per one hundred dollars of initial outstanding amount of insured

indebtedness, and the single premium rate for single level term credit life

insurance does not exceed a single premium rate of one dollar and ten cents

per annum per one hundred dollars of initial outstanding amount of insured

indebtedness. If premiums or identifiable charges are paid monthly on

outstanding balances, the monthly premiums shall be ninety-two cents per one

thousand dollars of outstanding indebtedness;



(b) A single premium rate of ninety cents per annum per one hundred

dollars of initial outstanding amount of insured indebtedness for joint life

(two lives) decreasing term credit life insurance or a premium payable monthly

at the rate of one dollar and thirty-eight cents per one thousand dollars of

outstanding indebtedness insured on joint (two lives) level term credit life

basis;



(c) A minimum premium of seventy-five cents shall be considered

reasonable on any policy of credit life insurance. In the event any premium

is unearned and to be returned to the insured, no returned premium calculated

at less than one dollar need be refunded;



(d) The foregoing life insurance rates are presumed reasonable in

relation to benefits only if the credit life insurance contract contains an

incontestable clause which provides that an amount of insurance shall be

contestable only for a period which shall not be in excess of two years and

coverage is provided or offered to all debtors regardless of age, or to all

debtors not older than the applicable age limit, which shall not be less than

attained age seventy if the limit applies to the age when the insurance

attaches, or not less than attained age seventy-one years if the limit applies

to the age on the scheduled maturity date of the debt. Age limits, if used,

must be clearly shown on the individual policies or group certificates;



(2) Credit accident and sickness insurance, per one hundred dollars of

outstanding indebtedness:



(a) No. of months in which NONRETROACTIVE RETROACTIVE

indebtedness



BENEFITS BENEFITS 7-day 14-day 30-day

7-day 14-day 30-day is repayable non- non- non- retro-

retro- retro- retro retro retro active active

active



1 $ .25 $ .12 $ .07 $ .42 $ .18 $ .14



6 1.50 .70 .40 2.50 1.10 .85



12 2.00 1.40 .80 3.00 2.20 1.70



18 2.50 1.80 1.20 3.50 2.60 2.10



24 3.00 2.20 1.60 4.00 3.00 2.50



36 4.00 3.00 2.40 5.00 3.80 3.30



48 5.00 3.50 2.90 6.00 4.30 3.80



60 6.00 3.90 3.30 7.00 4.70 4.20



72 7.00 4.30 3.70 8.00 5.10 4.60



84 8.00 4.70 4.10 9.00 5.50 5.00



96 9.00 5.10 4.50 10.00 5.90 5.40



108 10.00 5.50 4.90 11.00 6.30 5.80



120 11.00 5.90 5.30 12.00 6.70 6.20;



(b) Any rate not specified in this schedule shall be consistent with

this schedule and shall be computed for the actual number of months in which

the indebtedness is repayable. Premiums payable other than on a single

premium basis or for benefits on a basis different than illustrated above

shall be actuarially consistent with the above rates;



(c) No certificate fee, policy issue charge, or any charge other than

the premium herein provided shall be made;



(d) The foregoing accident and sickness rates are presumed to produce

reasonable benefits in relation to premiums only if all of the following

exist:



a. Coverage is provided or offered to all debtors regardless of age or

to all debtors not older than the applicable age limit, which shall not be

less than the attained age of sixty-five if the limit applies to the age when

the insurance attaches, or not less than the attained age of sixty-six if the

limit applies to the age on the scheduled maturity date of the debt. Age

limits, if used, must be clearly shown on the individual policies or group

certificates;



b. Coverage does not contain any exclusions except disabilities

resulting from intentional self-inflicted injury, pregnancy, foreign

residence, flights in nonscheduled aircraft and preexisting illness, disease

or physical condition for which the debtor received or was professionally

advised to obtain medical advice, consultations, or treatment during the

six-month period preceding the effective date of the debtor's coverage and

which caused covered disability commencing within six months following the

effective date of coverage;



c. The credit insurance policy contains a definition of "disability"

which provides coverage during the initial twelve months of disability even

though the insured is able to perform an occupation other than the one he held

at the time disability occurred. After the initial twelve-month period,

coverage must be provided if the insured is unable to perform the duties of

any occupation for which he is suited by education, training or experience,

except this paragraph shall not apply to lump sum disability coverage;



(3) Credit casualty insurance: a premium rate or schedule of premium

rates shall be presumed to be reasonable if the rate or schedule of rates

produces or may reasonably be expected to produce a prospective ratio of at

least seventy-five percent derived by dividing the earned premium into the sum

of the claims incurred plus the maximum allowable creditor compensation.

Maximum allowable creditor compensation refers to creditor compensation

authorized by subsection 2 of this section;



(4) Credit involuntary unemployment insurance:



(a) If the single premium rate does not exceed one dollar and thirty

cents per annum per one hundred dollars of indebtedness;



(b) If the monthly outstanding balance rate does not exceed two dollars

per month per thousand dollars of outstanding indebtedness;



(c) The foregoing involuntary unemployment insurance rates are presumed

reasonable in relation to benefits only if all of the following exist:



a. Coverage is provided or offered to all debtors regardless of age who

are working for salary, wages or other employment income for at least thirty

hours per week and have done so for twelve consecutive months;



b. Coverage sets forth a definition of involuntary unemployment as a

loss of employment income that may include, but is not limited to, loss caused

by layoff, general strike, termination by employer, unionized labor dispute,

or lockout;



c. Coverage does not contain any exclusions except: debts with

irregular monthly payments; voluntary forfeiture of salary, wages or other

employment income; resignation; retirement; loss of income due to disability

caused by accident, sickness, disease, or pregnancy, or loss of income due to

termination as the result of willful misconduct, which is a transgression of

some established and definite rule of conduct, a forbidden act, or a willful

dereliction of duty, or criminal misconduct, which is unlawful behavior as

determined by local, state or federal law;



(d) The debtor shall be provided with a copy of the credit involuntary

unemployment insurance policy or certificate of insurance, describing the

debtor's rights, within thirty days of the extension of credit;



(e) Credit involuntary unemployment insurance shall be cancelled upon

the satisfaction or termination of the underlying indebtedness and, upon such

cancellation, the debtor shall be entitled to a refund of the unearned premium

by a formula approved by the director;



(f) Involuntary unemployment insurance may not exceed in amount the

total amount of the indebtedness or exceed in duration the scheduled term of

the underlying contract; however, the involuntary unemployment insurance plan

of benefits may be for the full term of the underlying contract or for a

limited number of months;



(5) Credit property insurance:



(a) If the monthly outstanding balance rate does not exceed one dollar

and eighty-five cents per month per thousand dollars of outstanding

indebtedness, or the single premium actuarial equivalent;



(b) The foregoing credit property insurance rates are presumed

reasonable in relation to benefits only if the credit property insurance

contract includes standard fire coverage, extended coverage endorsement and

replacement cost provision endorsement, calculates benefits from the date of

loss and provides primary coverage;



(c) The debtor shall be provided with a copy of the credit property

insurance policy or certificate of insurance describing the debtor's rights

within thirty days of the extension of credit;



(d) Whenever credit property insurance is sold by a creditor, the

creditor shall retain a list of the personal property included in the

instrument securing the credit transaction;



(e) If the debtor has or obtains additional personal property coverage,

the debtor may retain such additional coverage or may substitute coverage at

any time and, upon such substitution, shall be entitled to a refund of the

unearned premium on the policy sold under sections 367.100 to 367.200 by a

formula approved by the director; where such insurance was not initially

required by the creditor, the debtor may cancel at any time, without

substituting and shall be entitled to a refund of any premium paid by a

formula approved by the director. If such substitution or cancellation occurs

within thirty days of the making of the loan or other credit transaction, the

entire premium shall be refunded;



(f) Credit property insurance shall be cancelled upon the satisfaction,

or termination, of the underlying indebtedness and, upon such cancellation,

the debtor shall be entitled to a refund of the unearned premium by a formula

approved by the director;



(g) If the creditor requires insurance coverage on the personal property

securing the loan and other credit transaction, a homeowner's or renter's

policy with replacement cost endorsement shall be considered as fulfilling

this requirement;



(h) Credit property insurance may not exceed in amount the total amount

of the indebtedness nor exceed in duration the scheduled term of the

underlying contract;



(i) If credit property insurance is sold by a creditor, the loan

agreement or a separate written disclosure shall contain a written notice, in

ten point type and reasonably designed to notify the debtor, in substantially

the following form:



YOU MAY NOT NEED TO PURCHASE CREDIT PROPERTY INSURANCE, AND



YOU MAY HAVE OTHER INSURANCE WHICH THIS CREDITOR WILL ACCEPT



WHICH COVERS THE PROPERTY SECURING THIS LOAN. YOU SHOULD



EXAMINE ANY OTHER INSURANCE WHICH YOU HAVE IN ORDER TO



DETERMINE



IF THIS COVERAGE IS NECESSARY;



(6) An insurer may receive approval of a different premium rate or

schedule of premium rates to be used in connection with a particular policy

form, or a class or classes of the debtors of a creditor, or under broadened

coverage, if the insurer demonstrates to the satisfaction of the director that

the loss experience which may reasonably be anticipated will develop a

prospective ratio of at least seventy-five percent derived by dividing the

standard rate basis earned premium into the sum of the claims incurred plus

the maximum allowable creditor compensation. For individual deviations, the

letter "P" in the formula in this subdivision shall mean premium earned

adjusted to standard rates for the segment of business for which a deviation

is requested. Maximum allowable creditor compensation refers to creditor

compensation authorized by subsection 2 of this section. Such approval will

be deemed to have been given by the director if he does not disapprove the

rates or policy forms within thirty days from the date of filing. This may be

accomplished as follows:



(a) Development of a life insurance rate based on the actual ages and

amounts of insurance of those insured and based on the mortality and interest

assumptions used for valuation, with evidence that the age distribution is

representative of the composition of the group and can reasonably be expected

to remain at the level so determined. If this method is used, the life

insurance rate must be redetermined and refiled at the discretion of the

director or at any time the policy provisions are changed in such manner as to

affect the rate;



(b) When experience is available, the following method may be used in

the development of credit life insurance rates, credit accident and sickness

insurance rates, credit casualty insurance rates, credit involuntary

unemployment insurance rates or credit property insurance rates under the

following formula:



Let P = Premiums earned (at least three years)



D = Claims incurred (at least three years)



r = premium rate to be determined



s = standard premium for coverage



s D+.4P



Then r = _____ X __________



.75 P If this method is used, approval

will not be given for a period longer than the credibility period utilized in

the filing;



(c) The premiums described in subdivisions (1), (2), (3), (4) and (5) of

this subsection may be revised by regulation by the director, based on the

total Missouri credit insurance experience of all insurers not sooner than

December 31, 1992, and for any three-year period thereafter, but not more

frequently than once every three years; except that any such revision is based

on the above formula; however, once the director elects to revise premiums, he

shall recalculate the premiums by use of the formula without discretion;



(d) If a company proposes to write any type of coverage other than those

described herein, it may request a public hearing to determine, through

credible statistics, the initial rate to be employed, except that no hearing

will be required to establish the need for lump sum disability benefits;



(e) If, after study and hearing, the director determines that the

premiums described in subdivisions (1), (2), (3), (4) and (5) of this

subsection do not accomplish the purposes of this section, he may prescribe by

regulation that all rates be calculated in conformity with the methods

described in this subdivision, except that the director shall not so prescribe

sooner than December 31, 1992; however, once the director elects to revise

premiums, he shall recalculate the premiums by use of the formula without

discretion;



(f) Any debtor may cancel credit insurance within fifteen days of its

purchase and shall receive a complete refund or credit of premium. This right

shall be set forth in the policy or the certificate, or by separate written

disclosure. This right shall be disclosed at the time the debt is incurred in

ten-point type and in a manner reasonably calculated to inform the debtor of

this right. This right is in addition to, and separate from, the right to

cancel credit property insurance.



2. No insurer shall pay any compensation to any creditor for the sale of

any policy, certificate, or other contract of credit insurance which exceeds

forty percent of the rates specified in this section or subsequently

established by the director. This schedule of maximum authorized compensation

shall apply regardless of any deviation in rates filed or approved by the

director. "Compensation" as used herein includes but is not limited to:



(1) Commissions, retrospective rate credits, service fees, expense

allowances or reimbursements, gifts, furnishing equipment, facilities, goods

or services, or any other form of remuneration resulting directly from the

sale of credit insurance;



(2) All commissions paid or allowed to any agent directly or indirectly

connected with the creditor; notwithstanding, an insurer may compensate

independent general agents, not affiliated directly or indirectly with the

creditor, by paying commissions or compensation, but no such commissions or

compensation shall exceed ten percent of the rates specified in this section

in addition to the agent's commission or compensation. Such independent

general agent may not pass on any portion of such compensation to creditors or

other agents or brokers;



(3) All compensation of any kind, direct or indirect, paid or allowed to

the creditor;



(4) All benefits such as items of merchandise, travel, conventions,

vacations, rewards, bonuses, trading stamps, scrip, or other rewards of any

kind given, paid or allowed to the creditor as an inducement or payment for

sales made or volume of sales obtained;



(5) Allowing the creditor to have the use of premiums collected by the

creditor by leaving said funds on deposit with the creditor for undue periods

of time at low or no interest rate. An insurance company may invest in

certificates of deposit with financial institutions which are the purveyors of

its credit insurance if the interest paid on such certificates of deposit is

at least equal to that being paid by the financial institution on certificates

of deposit to other investors on the open market; provided further, that the

total amount of such certificates of deposit shall not exceed the annual gross

premium written. Premiums received by a creditor or an agent must be actually

remitted to and received by the insurance company within forty-five days after

the sale of the insurance. In no event shall compensation be deemed to

include reinsurance premiums paid to, or underwriting profits generated by, an

insurer or reinsurer whether or not such insurer or reinsurer is affiliated

with the creditor or agent.



(L. 1977 H.B. 610 § 13, A.L. 1983 S.B. 107, A.L. 1991 H.B. 385,

et al. merged with H.B. 575, A.L. 1992 S.B. 519)







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