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Title 3 . Commerce, Community, and Economic Development
Chapter 28 . Miscellaneous
Section 330. Determination of reasonableness of benefits in relation to premium charge for credit life and credit disability insurance

3 AAC 28.330. Determination of reasonableness of benefits in relation to premium charge for credit life and credit disability insurance

(a) The benefits provided by a credit life or credit disability insurance policy must be reasonable in relation to the premium charged. The director will consider the rate charged reasonable

(1) for a credit life or credit disability insurance policy with standard coverage as described in 3 AAC 28.335 if the premium rate charged complies with 3 AAC 28.340 and 3 AAC 28.350; and

(2) for a credit life or credit disability insurance policy with coverage that would be standard coverage except that evidence of individual insurability is required or requested within 30 days after the date the debtor becomes eligible, if the premium rate charged is the applicable rate in 3 AAC 28.340 and 3 AAC 28.350 multiplied by 0.9.

(b) An insurer shall file each rate the insurer intends to use in accordance with 3 AAC 31.200 - 3 AAC 31.240, and shall include in each rate filing a full description of the benefits provided and any other information the director may require to determine whether the rates are reasonable in relation to the benefits provided. Except as provided in (a) of this section, an insurer shall demonstrate to the satisfaction of the director that a premium rate to be charged will not be excessive in relation to the benefits provided. A premium rate must reflect the benefit level and the expected term of the benefits to be provided under a policy. An insurer may file a composite premium rate for approval if the rate is computed to reflect the actual distribution by benefit level and the expected term of benefits to be provided under the policy.

(c) An insurer may not file a rate for approval for a credit life or credit disability insurance policy with standard coverage that is higher than the applicable prima facie rates shown in 3 AAC 28.28.340 and 3 AAC 28.350 unless the expected claims costs are higher than those set out in Appendix A of this section. The rates must be applied

(1) uniformly to all accounts of the insurer;

(2) on an equitable basis approved by the director to only one or more accounts of the insurer for which the experience has been less favorable than expected; or

(3) according to a case-rating procedure approved by the director as being based upon commonly accepted actuarial assumptions and being in conformance with sound actuarial principles.

(d) The director will approve a deviated rate for a period of time as follows:

(1) an insurer may have a deviated rate in effect for no longer than the experience period used to establish the rate; an insurer may file for a new rate before the end of the rate period, but not more often than once during any 12-month period;

(2) if the insurer for an account changes, the succeeding insurer shall use the rate approved for the former insurer's use on that account for each insured debtor for the remainder of the existing rate period or until the succeeding insurer files and obtains the director's approval of a new rate.

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History: Eff. 3/29/81, Register 77; am 6/6/93, Register 126; am 7/2/2001, Register 158

Authority: AS 21.06.090

AS 21.57.080

AS 21.57.130


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Last modified 7/05/2006