Sec. 185.7. Premiums and identifiable charges

(a) Premium rates in connection with any indebtedness where there are no identifiable charges to the debtor will be considered not unreasonable in relation to the benefits provided.

(b) Prima facie identifiable charges are as given in or derived from information provided in subdivisions (d) through (h) of this section. The actual rates to be charged any account in each experience unit, as defined in subdivision (i) of this section, shall be based upon the procedures as outlined in subdivisions (j) through (l) of this section. If not in excess of the standards of this section, proposed premium rates or identifiable charges to debtors or creditors for:

(1) credit insurance provided by a group term policy; or

(2) credit insurance provided by individual term policies distributed on a mass merchandising basis and administered by group type methods;

shall be considered not unreasonable in relation to the benefits provided.

(c) Premiums paid to the insurer specifically for credit life insurance or credit accident and health insurance for any account in each experience unit as described in subdivision (i) of this section at least equal to those produced by the procedures outlined in subdivisions (j) through (l) of this section shall be considered adequate.

(d) Credit life insurance.

(1) Prima facie monthly outstanding balance rates per $1,000 of insurance shall be based on the following formula:

^(ECC+F)/_.95

where, for other than small loans, ECC is the expected claim cost per month per $1,000 of insurance as set forth in paragraph (2) of this subdivision and F is the fixed expense margin per month per $1,000 of insurance as set forth in paragraph (3) of this subdivision. For small loans, ECC and F shall be 125 percent of the corresponding values for other than small loans.

(2) The prima facie premium rates and identifiable charges are based on the following expected claim cost (ECC) per month per $1,000 of insurance:

Certificates issued	Without questions as to specific medical conditions	With questions as to specific medical conditions
Without any age limits	0.513	0.467
With age limits of age 70 and greater	0.446	0.416
with age limits between ages 65 and 69	0.380	0.362

(3) The prima facie premium rates and identifiable charges are based on the following fixed expense margin (F) per month per $1,000 of insurance:

	Packaged	F
Single Premium Contract	NO	$0.170
Monthly Premium Contract	NO	$0.210
Single Premium Contract	YES	$0.153
Monthly Premium Contract	YES	$0.185

(4) Single identifiable charges.

(i) The maximum single identifiable charge wherein the creditor imposes a finance charge thereon, shall be equal to the sum of the monthly premiums discounted for interest and, at the insurer's election, mortality. The discount for interest shall be at interest rate J. If the insurer elects to discount for mortality, then discount MD equal to.0004 should be used, otherwise MD should be set equal to 0. The maximum single identifiable charge shall be computed by the following formula or other formula approved by the superintendent.

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Where: SPL is the single identifiable charge for credit life insurance for the period of insurance;

MLR is the monthly premium per $1.00 of insured indebtedness;

m is the term of the period of insurance in months; and

^I _t is the scheduled amount of insurance for month t.

(ii) The amount of insurance I_t may approximate, subject to the approval of the superintendent, the amounts of insurance assuming repayment of loan on schedule, without any delinquent payments.

(iii) The interest rate J shall be determined from the maximum reserve valuation interest rate (MRVIR) for ordinary life insurance with a guarantee period of less than 10 years, expressed as a decimal, J = (MRVIR)12, rounded down to 5 decimal places.

(iv) The determination of J shall be done every three years starting in the year 2002 and shall be based on the MRVIR for the first calendar year in that three-year period. For calendar years 1999, 2000 and 2001, J is equal to.00458.

(5) As an alternative to the foregoing provisions of this subdivision, an insurer may, where credible age data applicable to the insured persons is available, determine, under a plan approved by the superintendent, identifiable charges on the basis of such age data.

(6) Notwithstanding anything to the contrary, the superintendent may require that the premium rates and identifiable charges for mutual funds, margin accounts, farm loans (including loans by production credit associations), home equity loans, second or junior mortgage loans, and such other loans so designated, shall be graded by age. The premium and identifiable charges for credit life insurance on first mortgage loans, other than home equity loans, are subject to the standards in section 185.14 of this Part. The superintendent may require that age- graded rates be used either with the initial writing of a group or upon renewal if the experience indicates it is appropriate.

(7) The rates and identifiable charges for when coverage is available on two lives shall be:

(i) If there is a choice whether one life or both lives are insured, then the rate for joint life coverage shall be no greater than 160 percent of the rates for single life coverage; otherwise

(ii) the rate will be the weighted average of the one life rate and the two life rate based on the best estimate available as to the portion of the coverage that will involve one life versus two lives.

If single life rates vary by age, the insurer shall submit for approval its rules for determining joint life rates and/or the joint life rates themselves.

(e) Credit accident and health insurance—single premiums.

(1) Prima facie premium rates or identifiable charges of this subdivision shall apply where:

(i) a single identifiable charge is made for either the entire term of insurance or for a period of insurance in excess of 12 months;

(ii) the policy has provisions which are not less favorable to insured debtors than those set forth in section 185.5(e) and (f) of this Part; and

(iii) eligibility for coverage is limited to debtors who are attained age 64 years or less on the effective date of coverage.

(2) Where the benefits are payable in an equal amount each month for the term of the insurance and the amount of insurance decreases by an equal amount each month, the prima facie premium and identifiable charge is the product of the appropriate rate from the following table times the initial insured indebtedness.

Rates per $100.00 of initial insured indebtedness.

Number of equal monthly benefits	After 14th day of disability retroactive to first day of disability	After 14th day of disability	After 30th day of disability retroactive to first day of disability	After 30th day of disability
6	1.74	1.15	1.37	0.76
12	2.30	1.65	1.97	1.25
18	2.64	1.96	2.34	1.55
24	2.89	2.19	2.60	1.78
30	3.09	2.37	2.83	1.98
36	3.27	2.54	3.02	2.15
42	3.43	2.68	3.19	2.30
48	3.57	2.81	3.34	2.43
54	3.70	2.93	3.49	2.56
60	3.82	3.05	3.62	2.68
66	3.94	3.15	3.74	2.79
72	4.04	3.25	3.86	2.89
78	4.14	3.34	3.96	2.99
84	4.23	3.42	4.06	3.08
90	4.31	3.50	4.15	3.16
96	4.39	3.57	4.24	3.24
102	4.47	3.64	4.33	3.32
108	4.54	3.71	4.40	3.39
114	4.60	3.77	4.48	3.46
120	4.66	3.83	4.54	3.52
Anticipated loss ratio
(EOLR)	68.8%	64.9%	67.8%	62.0%

(3) The prima facie identifiable charges for other benefit plans subject to this subdivision shall be actuarially consistent with the above rates, and shall be submitted to the superintendent for approval.

(f) Credit accident and health insurance—periodic premiums—periodic benefits.

(1) Prima facie premium rates or identifiable charges of this subdivision shall apply where:

(i) the identifiable charge is made for less than the entire term of insurance and for a period of insurance of 12 months or less;

(ii) the policy has provisions that are not less favorable to insured debtors than those set forth in section 185.5(e) and (f) of this Part;

(iii) eligibility for coverage is limited to debtors who are attained age 64 years or less on the effective date of coverage or where coverage terminates upon the attainment of age 65; and

(iv) the benefits are payable in equal monthly installments.

(2) The monthly identifiable charges per $10.00 of monthly benefit are:

Number of equal monthly benefits	After 14th day of disability retroactive to first day of disability	After 14th day of disability	After 30th day of disability retroactive to first day of disability	After 30th day of disability
6	0.330	0.275	0.289	0.196
12	0.409	0.356	0.374	0.274
18	0.464	0.413	0.433	0.328
24	0.512	0.460	0.482	0.374
30	0.556	0.505	0.529	0.416
36	0.596	0.547	0.572	0.455
42	0.635	0.585	0.612	0.493
48	0.671	0.621	0.650	0.528
54	0.704	0.656	0.686	0.560
60	0.737	0.689	0.720	0.591
66	0.767	0.721	0.752	0.621
72	0.797	0.751	0.784	0.650
78	0.826	0.779	0.814	0.678
84	0.852	0.806	0.842	0.704
90	0.878	0.833	0.870	0.729
96	0.904	0.859	0.896	0.753
102	0.928	0.883	0.922	0.776
108	0.950	0.906	0.947	0.799
114	0.973	0.929	0.971	0.820
120	0.995	0.952	0.994	0.841
126	1.016	0.973	1.016	0.863
132	1.037	0.995	1.037	0.883
138	1.057	1.015	1.057	0.903
144	1.078	1.035	1.078	0.923
150	1.098	1.056	1.098	0.941
156	1.117	1.076	1.117	0.960
162	1.136	1.095	1.136	0.979
168	1.154	1.114	1.154	0.996
174	1.172	1.131	1.172	1.014
180	1.190	1.150	1.190	1.031
Anticipated loss ratio
(EOLR)	66.1%	60.0%	60.5%	58.6%

(3) For periods of insurance subject to this subdivision and greater than a month, the identifiable charge shall be the sum of the monthly identifiable charges discounted at 0.3 percent per month.

In lieu of the rates appearing in paragraph (2) of this subdivision, composite rates may be developed based on average loan amounts, loan terms, loan interest rates to be applied to the actual outstanding indebtedness. The assumptions as to average loan amount, loan term and loan interest rate must be reviewed at any time rate changes are considered. The calculation of the actual premium charged to debtors shall take into account the insurance maximum adjusted to reflect the premium rate being applied to the actual indebtedness.

(g) Credit accident and health insurance—periodic premiums—lump sum benefits.

(1) Prima facie premium rates or identifiable charges of $1.65 per month per $1,000 of insurance shall apply where:

(i) the policy has provisions that are not less favorable to insured debtors than those set forth in section 185.5(e) and (f) of this Part;

(ii) eligibility for coverage is limited to debtors who are attained age 64 years or less on the effective date of coverage or where coverage terminates upon the attainment of age 65; and

(iii) the benefits are payable in a lump sum.

(2) The expected loss ratio is 76.5 percent.

(h) The prima facie premiums set forth in subdivisions (e) through (g) of this section are expected to produce the indicated overall loss ratios (EOLR) where the credit accident and health insurance is provided on one life and is not packaged with any other coverage.

(1) In the case where the credit accident and health insurance is written as part of a package, the following adjustments shall apply:

	After 14th day of disability retroactive to first day of disability	After 14th day of disability	After 30th day of disability retroactive to first day of disability	After 30th day of disability
Rates decreased by	4.6%	5.3%	4.8%	6.0%
EOLR increased by (+)	3.4%	3.6%	3.4%	3.8%

(2) In the case where the credit accident and health insurance is available on two lives and there is a choice whether one life or both lives are insured, the following adjustments shall apply:

	After 14th day of disability retroactive to first day of disability	After 14th day of disability	After 30th day of disability retroactive to first day of disability	After 30th day of disability
Rates increased by	90.0%	90.0%	90.0%	90.0%
EOLR increased by (+)	6.9%	6.4%	6.7%	6.1%

In the case where the credit accident and health insurance is available on two lives and there is not a choice whether one life or both lives are insured, where the same rate is to used for the coverage of either one life or two lives, then the prima facie rates will be the weighted average of the one life rate and the two life rate based on the best estimate available as to the portion of the coverage which will involve one life versus two lives. The EOLR will be actuarially consistent with the calculation of the rates.

(3) The adjustments to the prima facie premium for coverage subject to subdivision (g) of this section shall be the same as those for a plan with benefits payable after the 30th day of disability.

(i) The definitions of experience units and experience period for premium determination purposes for credit life insurance and credit accident and health insurance, for other than vendor business with periods of insurance in excess of 12 months shall be in accordance with this subdivision.

(1) Unless an insurer files and receives approval by the superintendent for an alternative plan for determining experience units, each insurer shall consider all of its credit life insurance business subject to this subdivision one experience unit and all of its credit accident and health insurance business subject to this subdivision as another unit. The experience period for each, shall be the most recent period of full calendar years for which experience is available, but not more than three such years without specific approval of the superintendent, which shall be sufficient to be considered at least 85 percent credible if less than three years are used. Notwithstanding the preceding, the superintendent may require a period of more than three years be used.

(2) An insurer may submit for approval an alternative plan for determining alternative experience units. The alternative plan should be consistent with the following:

(i) An experience unit may be defined as an account which, based on the standards set forth in subdivision (n) of this section, has experience that is considered at least 75 percent credible.

(ii) An experience unit may be defined as any combination of all the insurer's credit insurance accounts of the same plan, classification of business and type of loan, as defined by the insurer and approved by the superintendent, having at least one year's experience, excluding all accounts which meet the definition in subparagraph (i) of this paragraph.

(iii) An experience unit may be defined as, any other combination or combinations of credit insurance accounts, as defined by the insurer and approved by the superintendent.

(iv) Account means the aggregate credit life insurance or credit accident and health insurance coverage for a single plan of benefits, a single classification of business, a single rate classification and/or a single type of loan, written through a single creditor by the insurer whether coverage is written on a group or individual policy basis.

(v) The experience period for each experience unit shall be the most recent period of full calendar years for which experience is available, but not more than three such years without specific approval of the superintendent, which will be sufficient to be considered at least 85 percent credible, based on the standards appearing in subdivision (n) of this section, if less than three years are used.

(vi) Credit life insurance and credit accident and health insurance experience or experience units shall not be combined for rate determination purposes, unless specifically approved by the superintendent. An insurer may use additional requirements for considering an account as an experience unit based on combined credit life insurance and credit accident and health insurance as long as the standards set forth in this subdivision are also applied separately.

(j) Rate determination for an experience unit shall be by the following:

(1) The prima facie adjusted earned premiums (PFAEP) for each year in the experience period to be used for rate determination purposes, shall be as follows:

(i) the actual premiums written during the year adjusted to the most recent prima facie rates; minus

(ii) any refunds made during the year adjusted to the most recent prima facie rates; plus

(iii) the difference produced by subtracting the refund liability at the end of the year adjusted to the most recent prima facie rates from the refund liability at the beginning of the year adjusted to the most recent prima facie rates; plus

(iv) for periods of insurance in excess of one month, the premium discount rate applicable to the next full calendar year divided by two applied to the sum of actual premiums written, the refund liability at the beginning of the year and refund liability at the end of the year minus any refunds made during the year, all adjusted to the most recent prima facie rates. In the case of credit accident and health insurance in the absence of any specified discount, the same discount as would apply to credit life insurance should be used. In lieu of the formula outlined in this subparagraph, an insurer may for any year develop a more exact estimate of their investment earnings on the refund liabilities, assuming the discount rate indicated above.

(2) The experience unit loss ratio (EULR) shall be the incurred losses divided by such prima facie adjusted earned premiums as defined in paragraph (1) of this subdivision.

(3) The expected overall loss ratio (EOLR) for an experience unit shall be the expected loss ratio underlying the most recent prima facie rates. If more than one loss ratio is anticipated, then the weighted average shall be used.

(4) The experience shall be limited to New York State transactions, or, if approved by the superintendent, may be based upon transactions of any combination of states.

(5) Consistency must be maintained from year to year in the definition and composition of experience, experience units, experience periods and any factors affecting the adjustment of rates. Changes therein shall be specifically filed with and approved by the superintendent.

(6) Upward rate changes shall not be allowed more frequently than annually. Downward rate changes shall be considered at the earlier of at least every 36 months and a year after there has been a change in discount rate that is not reflected in the current rates.

(7) The new maximum monthly outstanding balance rate for credit life insurance for each account in an experience unit shall be equal to:

(ECC+F)/.95+Z × 1.100 × (ACC-ECC), if ACC is greater than or equal to ECC; and

(ECC+F)/.95+Z × 1.025 × (ACC-ECC), if ACC is less than ECC.

Where:

Z is the credibility factor as defined in subdivision (n) of this section;

ACC is incurred claims × PFR/PFAEP

PFAEP are the prima facie adjusted earned premiums as defined in paragraph (1) of this subdivision;

PFR is the prima facie rate in subdivision (d) of this section;

ECC are the expected claim costs set forth in paragraph (d)(2) of this section; and

F is the expense factor set forth in paragraph (d)(3) of this section.

(8) New maximum rates for credit accident and health insurance for each account in an experience unit shall be equal to:

PFR × (1+ Z × 1.120 × (EULR - EOLR)), if EULR is greater than or equal to EOLR; and

PFR × (1+ Z × 1.070 × (EULR - EOLR)), if EULR is less than EOLR.

Where:

PFR is the prima facie rate in subdivision (e), (f), or (g) of this section;

Z is the credibility factor as defined in subdivision (n) of this section;

EULR is the experience unit loss ratio calculated in accordance with paragraph (2) of this subdivision; and

EOLR is the expected overall loss ratio for the experience unit as defined in paragraph (3) of this subdivision.

(k) Vendor business with periods of insurance in excess of 12 months.

(1) By July 1st of the year end prior to the calendar year for which the interest discount rate is to be recalculated according to subparagraph (d)(4)(iv) of this section, the superintendent shall publish rates to be used in conjunction with vendor business with periods of insurance in excess of 12 months. Such rates shall be based on the aggregate of all vendor business with periods of insurance in excess of 12 months written in this State during the preceding three full calendar years and shall be based on the formulas set forth in paragraphs (j)(7) and (8) of this section. These rates must be implemented by the end of year in which they are published. For single premium business, the revised interest discount rate must be used.

(2) Insurers may use the rates specified in paragraph (1) of this subdivision at any time after the effective date of this Part and shall implement such rates by January 1, 2000.

(3) In lieu of the use of the rates specified in paragraph (1) of this subdivision an insurer may request to calculate rates for selected vendors in accordance with the provisions of subdivision (j) of this section provided that any experience unit under paragraph (i)(2) of this section has:

(i) for credit life insurance, at least $200,000 in prima facie earned premium during the experience period; or

(ii) for credit accident and health insurance, at least $400,000 in prima facie earned premium during the experience period.

(l) Calculation of rates for accounts in force on the effective date of this Part and for any new accounts other than those subject to subdivision (k) of this section shall be determined in accordance with this subdivision.

(1) With respect to each account in each experience unit existing on the effective date of this Part and established pursuant to this Part, new maximum rates shall be determined for each account in accordance with subdivisions (i) and (j) of this section. Actual account rates not exceeding such new rates shall be implemented not later than January 1, 1999. Until such new rates are implemented, actual rates not exceeding the rates in effect on the effective date of this Part shall be used for new indebtedness insured.

(2) For any new account issued after the effective date of this Part that was not previously insured, the current rate for an account of the experience unit to which the account is expected to be assigned, may be charged. However, if no such experience unit exists then the prima facie rates shall be used.

(3) If an account changes insurers after the effective date of this Part, the rate approved for the account for the prior insurer is the maximum rate that may be used by the succeeding insurer for the remaining period of time for which such rate had been approved for the prior insurer or until a new rate is approved for use with the account.

(4) Subsequent to the implementation of the rates for existing and for new business in accordance with paragraphs (1) through (3) of this subdivision, rates may be implemented by the insurer without specific approval of the superintendent, if they are in accordance with any plan approved under subdivisions (i) and (j) of this section. Rate increases shall not occur more frequently than annually for any one experience unit without specific approval of the superintendent.

(5) Subsequent to the implementation of rates in accordance with paragraphs (1) through (3) of this subdivision, each experience unit shall be considered by the insurer for possible downward rate change no less frequently than once in every 36 months, including period of coverage with previous insurers.

(6) Each insurer shall calculate new rates in accordance with the plan approved under subdivisions (i) and (j) of this section whenever the experience unit loss ratio, as defined in paragraph (j)(2) of this section for the most recent experience period is less than the expected overall loss ratio for the experience unit, as defined in paragraph (j)(3) of this section. Whenever the calculated new rates are within seven percent of the current rates, no change need be made. Any calculated new rates more than seven percent below the current rates shall be implemented within the later of six months from the end of the period of experience or within 36 months from the implementation of the current rates. Each insurer shall file annually with the superintendent a report detailing compliance with the above downward rate change requirements, showing appropriate experience figures, including experience unit loss ratios for each experience unit and the calculated new rates for accounts within each experience unit. Such new rates may be shown on a representative unit basis rather than in their entirety (e.g., single sum rate per $100 of initial insured indebtedness for a 12-month loan for credit accident and health insurance).

(m) Charging and collecting of premium and identifiable charges.

(1) Whenever an identifiable charge is collected from the debtor, charged to the account of the debtor or whenever the creditor advances the identifiable charge to the debtor and assesses finance charges thereon, the group credit insurance policy shall contain a provision that the policyholder or creditor must remit such amount without undue delay to the insurer.

(2) In connection with indebtedness longer than 123 months, no premium or identifiable charges collected from or charged to the account of a debtor providing coverage beyond the 120th month may have a period of insurance in excess of one year.

(3) The amount charged to a debtor for any credit life or credit accident and health insurance shall not exceed the premiums charged by the insurer, as computed at the time the charge to the debtor is determined. This shall not prohibit the determination of the aggregate premium to be remitted by the creditor from being calculated by approximate methods.

(4) The total premium remitted by the creditor shall be assumed to provide coverage for those insured debtors whose payments are not more than two months overdue, regardless of whether or not the debtor has paid a charge for such two months' coverage; provided, however, that with regard to an insured debtor who does not make a timely premium payment and can demonstrate financial hardship as a result of the COVID-19 pandemic, the total premium remitted by the creditor shall be assumed to provide coverage for the insured debtor whose payments are not more than three months overdue, regardless of whether or not the debtor has paid a charge for such three months’ coverage.

(n) The credibility factor Z shall be determined from the following table:

Number of incurred claims	Z
8 or less	0
9 through 11	.25
12 through 14	.30
15 through 17	.35
18 through 22	.40
23 through 27	.45
28 through 32	.50
33 through 37	.55
38 through 47	.60
48 through 57	.65
58 through 72	.70
73 through 87	.75
88 through 102	.80
103 through 12	.85
128 through 152	.90
153 through 199	.95
200 or more	1.00

(o) No insurer shall charge a premium rate for new indebtedness after the effective date of this Part in excess of the rate approved pursuant to this section.