(1) Benefits provided by credit
insurance policies must be reasonable in relation to the premium charged. This requirement is satisfied if the premium
rate charged develops or may be reasonably expected to develop a loss ratio of
not less than the minimum loss ratio required by this rule.
(a) The minimum loss ratio is defined as
(i) Credit disability insurance - 55%;
(ii) Credit life insurance - 38.5%.
(b) The rates established in this subchapter and
rates filed and approved pursuant to ARM 6.6.1107 will be presumed to satisfy
the loss ratio standards set forth in this rule. (2) Creditor, agent and
general agent compensation must not be more than a combined total of 37.5% of
the net written prima facie premium.
This compensation must be apportioned not more than 7.5% to the
producing general agent.
(a) For the purpose of (2) , prima facie premium
means premium using the premium rates set out in ARM 6.6.1101 and 6.6.1103.
(3) If an insurer's loss ratio is less than the
standards set forth in this rule, this will be considered prima facie evidence
that the insurer intends to write credit business at a loss ratio not in
compliance with these rules. The
insurer will then be required to:
(a) Reduce the premium rates as needed to
produce an anticipated loss ratio which satisfies the standards in this rule,
and file these rates with the commissioner; or
(b) Provide to the commissioner an actuarial
justification to demonstrate why the premium rates currently filed should not