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6.6.1110    DETERMINATION OF REASONABLENESS OF BENEFITS IN RELATION TO PREMIUM CHARGED

(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 follows:

(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 be reduced.

History: 33-21-111, MCA; IMP, 33-21-205, MCA; NEW, Eff. 4/4/75; AMD, 1978 MAR p. 887, Eff. 10/15/78; AMD, 1996 MAR p. 1646, Eff. 6/21/96; AMD, 2000 MAR p. 453, Eff. 2/11/00.

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