Sec. 187.6. Premiums and identifiable charges

(a) Standard rates are given in or derived from the information provided in subdivision (b) of this section. The actual rates to be charged any account in each experience unit (as defined in subdivision [c] of this section) shall be based upon the procedures as outlined in said subdivision. If not in excess of the standards as set forth in subdivisions (b), (c), (d) and (e) of this section, proposed premium rates or identifiable charges to debtors or creditors will be considered adequate and not unreasonable in relation to the benefits provided for:

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

(2) credit unemployment insurance provided by individual policies distributed on a mass merchandising basis and administered by group methods.

(b) The standard rates for each year shall be based on the expected claim costs of $10 of benefit based on New York Department of Labor statistics as set forth in paragraph (1) of this subdivision, the expense margins set forth in paragraph (2) of this subdivision and the methodology set forth in paragraphs (3), (4) and (5) of this subdivision.

(1) The expected claim costs for each 12-month period running from June 1st of one year to May 31st of the next, shall be based on the following data for the most recently completed calendar years, extracted from the New York State Department of Labor's Current Population Survey Data for the first quarter of the year and Operation and Unemployment Insurance, April edition. The numbers from the current population survey represent statistics for ages 20 and over.

(i) The unemployment rate for ages 20 and over, obtained from Table 1 of the New York State Department of Labor's Current Population Survey Data. The rate for calendar year 1986 is 5.6 percent.

(ii) The percent of job losers for ages 20 and over, obtained from Table 18 of the New York State Department of Labor's Current Population Survey Data. The percentage for calendar year 1986 is 46.3 percent.

(iii) The distribution of unemployed persons by duration of unemployment for ages 20 and over, obtained from Table 19 of the New York State Department of Labor's Current Population Survey Data. The distribution for calendar year 1986 is:

0 – 4.99 weeks	34.0%
5 – 14.99 weeks	32.8%
15 – 25.99 weeks	15.4%
26 – 51.99 weeks	6.3%
52 weeks and over	11.5%

(iv) The mid-month average of worker covered by New York State Unemployment Insurance from page ii of Operations and Job Service and Unemployment Insurance. For calendar year 1986 the mid-month average is 6,487,943.

(v) The number of persons receiving first payment of unemployment insurance during year from page ii of Operations and Job Service and Unemployment Insurance. The number of unemployed receiving their 1st payment in 1986 is 541,382.

(2) The permissible expense margin shall be based on the type of contract and whether the coverage is considered to be packaged as defined in section 187.1(b) of this Part. The standard gross premium per $10 of benefit for a given month shall be the expected claim cost for that month times percent load P plus a fixed amount F given below. The standard gross single premium per $10 of benefit shall be the discounted sum of the standard gross monthly premiums.

	P	F
Single premium contracts not packaged	1.030	.060
Monthly premium contracts not packaged	1.035	.070
Revolving credit contracts not packaged	1.035	.085
Single premium contracts packaged	1.025	.050
Monthly premium contract packaged	1.030	.060
Revolving credit contract packaged	1.030	.075

(3) The standard gross premiums are to be calculated by the following procedures:

UR	= Average annual unemployment rate from Current Population Survey.
JL	= Job losers from the Current Population Survey.
IUR	= JL * UR (involuntary unemployment rate).
n	= Term of loan in months.
m	= Maximum number of months of benefits payable.
v	= 1/(1+.035/12)
TNP	= Total net premium over term of loan per $10 monthly benefit, discounted.
NPt	= Monthly net premium for month t per $10 monthly benefit.
TGP	= Total gross premium over term of loan per $10 monthly benefit, discounted.
GPt	= Monthly gross premium for month t per $10 monthly benefit.
Adj. Fac	= Adjustment factor for anti-selection.
MMA	= Mid-month average of worker covered by New York State Unemployment Insurance for year from Operations Job Service and Unemployment Insurance.
1st Pay	= Number of persons receiving 1st payment of unemployment insurance benefit during year from Operations Job Service and Unemployment Insurance.
IU	= (1st Pay)/MMA/12
Adj. Fac	= 1.00 for open-end loans
	1.15 for closed-end loans
P1U(d)	= The probability an unemployed will find employment on the (d + 1) day of unemployment.

P1U(d) = .340/34 = .010000	0 < d < 35 days
P1U(d) = .328/70 = .004686	35 ≤ d < 105 days
P1U(d) = .154/84 = .001833	105 ≤ d < 189 days
P1U(d) = .063/175 = .000360	189 ≤ d < 364 days
P1U(d) = .115/356 = .000323	364 ≤ d < 720 days
P1U(d) = 0	720 ≤ d days

P2U(d)

= The probability that an unemployed will be unemployed for d days or more.

P2(d) = 1	d = 1 days
P2U(d) = P2U(d-1) - P1U(d)	1 < d ≤ 720 days
P2U(d) = 0	720 < d days

P3U(t)

= The present value of $1 of benefit paid at the end of the month for each day expected to be unemployed for a period of t months for an unemployed.

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where

INT((d-1)/30) = The largest integer smaller than (d-1)/30

P4U(t) = The present value of $1 of benefit paid at the end of the month for each day expected to be unemployed for a period of (t − .5) months for an unemployed.

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where

INT((d-1)/30) = The largest integer smaller than (d-1)/30

(i) For revolving credit loans:

(a) With a 30-day qualification period and retroactive benefits

NP_t= Adj. Fac * 10 * IUR *[(P2U(31) − P2U(30*m + 1)) + (P2U(31) − P2U(61))]

GP_t= P * NP_t+ F

(b) With non-retroactive benefits

NP_t = Adj. Fac.10 * IUR *[P2U(31) − P2U(30*m + 31)]

GP_t = P * NP_t + F

(ii) For closed-end loans:

(a) With a 30-day qualification period and retroactive benefits

for t < n − m months

NP_t = Adj. Fac. * v ^1/2 * IU *[P3U(m) − P3U(1) + v * 30* P2U(31)]/3

GP_t = P * NP_t + F for n − m ≤ t < n months

NP_t = Adj. Fac. * v ^1/2 * IU * [(P4U(n−t + 1) − P3U(1)) + v * 30 * P2U(31)]/3

GP_t = P * NP_t + F

for n = t months

NP_t = O, GP_t = O

(b) With 30-day qualification period and nonretroactive benefits

for t ≤ n-m-1 months

NP_t = Adj. Fac. * v ^1/2 * IU * [P3U(m+ 1) − P3U(1)]/3

GP_t = P * NP_t + F

for n-m-1 < t < n months

NP_t = Adj. Fac. *v ^1/2 * IU * [P4U(n−t + 1) − P3U(1)]/3

GP_t = P * NP_t + F

for t = n months

NP_t = 0, GP_t = 0

Then

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(c) Experience based rates.

Each insurer shall submit for approval a plan for experience rating their policies. Such plan shall include:

(1) A grouping of their accounts into reasonable experience units. They may range from each account representing an experience unit by itself to all accounts combined into one experience unit.

(2) The time period used to calculate rates. The rates for an experience unit shall be based on the claim cost of the most recent experience period and the expense margins in paragraph (b)(1) of this section. The use of rates based on experience may be continued for a two-year period before a review for a downward change is required and then be reviewed annually thereafter. Rates may be increased no more frequently than annually.

(d) Rates for transfer and new accounts.

A transfer account is an account which changes insurance carriers. A new account is an account with no previous credit unemployment experience.

(1) The rates for a new account shall be the rates for the experience unit to which it will be assigned. However, if no such experience unit exists then the standard rates may be used for a one-year period.

(2) The rates for a transfer account with credible experience of its own shall be based on the experience of the prior carrier or at the carrier's election it may be assigned to an existing experience unit if the rates of such experience unit are based on experience.

(3) A transfer account without credible experience of its own shall be treated as a new account, however, the superintendent may approve the use of prior carrier rates.

(e) Claim fluctuation reserve.

An insurer may submit for approval a plan for creation of a claim fluctuation reserve. Such plan may include a procedure for an adjustment to the expected claim cost used for rating purposes based on the size of the claim fluctuation reserve such adjustment to the expected claim cost may not exceed the greater of 105 percent and the ratio of the arithmetic average unemployment rate for the five most recent calendar years to the unemployment rate for the most recent calendar year from Table 1 of the New York State Department of Labor's Current Population Survey Data,reflecting ages 20 and over. Such plan shall include:

(1) a reasonable rate of interest to be credited to the fund;

(2) procedures by which the fund will be used to offset adverse claims experience; and

(3) procedures by which the adjustment to the expected claims will be inversely dependent with the size of the claim fluctuation reserve.

(f) Charging and collection of premium and identifiable charges.

(1) Whenever an identifiable charge is collected from 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. Notwithstanding the preceding sentence, an insurer may include a provision in the policy to allow the policyholder or creditor to accumulate additional sums for future premium payment, not in excess of one modal premium, in an escrow account.

(2) In connection with indebtedness repayable over a period exceeding 63 months, no premium or identifiable charges may be collected from or charged to the account of a debtor for a period of insurance in excess of the shorter of the period between installment payments, if any, and of one year at a time, unless, subject to the approval of the superintendent, a premium or identifiable charge is computed for a period of insurance up to the full term of the indebtedness and is collected from or charged to the account of a debtor no less frequently than the shorter of the period between installment payments, if any, and annually. Notwithstanding the limitation in the preceding sentence, insurers may submit for consideration and approval a plan for the collection of premium or identifiable charges annually or for periods of insurance of one year. Subject to any age restrictions, the insurance must be made available to the debtor for the full term of the indebtedness, without any underwriting subsequent to any initial underwriting. For purposes of this paragraph, collection from a debtor shall include the remittance of amounts to the insurer in accordance with paragraph (1) of this subdivision.

(3) The amount charged to a debtor for any credit unemployment 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.