California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 2 - Policy Forms and Other Documents
Article 6.8 - Credit Life and Credit Disability Insurance: Premium Rates
Section 2248.41 - Application of Downward Deviated Rates

Universal Citation: 10 CA Code of Regs 2248.41

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

(a) For life insurance and disability insurance, an insurer shall submit, for the Commissioner's approval, proposed downward deviated rates for an experience group subject to § 2248.39(a) within 180 days after the end of an experience period during which the credibility adjusted loss ratio for the group was equal to or less than PLR less .05.

(b) Credibility adjusted loss ratios using prima facie rates and new case rates shall be redetermined on each anniversary of the effective date of downward deviated rates for an experience group.

(1) For life insurance and disability insurance, if the credibility adjusted loss ratio for the experience group as of the time of redetermination equals at least PLR less .05, the insurer may submit, for the Commissioner's approval, a proposal for termination of downward deviated rates for the experience group.

(2) If the rates in effect as of such redetermination exceed by 10% or more the new case rates, then the insurer shall submit for the Commissioner's approval, proposed reduced rates which shall not exceed the new case rates. This submission shall be made within 180 days of the date as of which the new case rates were determined.

(3) If the new case rates exceed the rates in effect as of such redetermination, then the insurer may submit, for the Commissioner's approval, increased rates not to exceed the new case rates.

(c) The Commissioner shall disapprove submissions of proposed reduced rates pursuant to subsections (a) and (b)(2) if it is not demonstrated to him or her that they have been determined in accordance with applicable statutes and regulations. The Commissioner may approve modifications of downward deviated rates computed in accordance with §§ 2248.40 if it is demonstrated to his satisfaction that the rates so computed provide inadequate allowances for expenses, reserves or profits or are inconsistent with other reasonable actuarial considerations.

Approved downward deviated rates shall become effective for the experience group within 60 days of the Commissioner's approval. The Commissioner may approve a later effective date if it is demonstrated to him or her that the approved rates cannot reasonably be implemented within 60 days of his approval.

(d) The Commissioner may disapprove proposed increased deviated rates if it is not demonstrated to him or her that they have been determined in accordance with applicable statutes and regulations. The Commissioner may disapprove the termination of downward deviated rates for an experience group if it is not demonstrated to him or her that the credibility-adjusted loss ratio was calculated in accordance with applicable statutes or regulations. Increased downward deviated rates or the termination of downward deviated rates may become effective at any time after the Commissioner's approval or upon the 120th day following the submission of such proposals if they have not been disapproved by that day.

(e) An insurer assuming the business of some or all of the creditors comprising an experience group subject to downward deviated rates shall not use rates exceeding such deviated rates except as provided in subsection (b), above.

(f) An insurer may transfer a creditor from an experience group subject to downward deviated rates to another experience group only if transfer would not result in a higher rate for the remainder of the former group.

(g) Calculations for new case rates or deviated rates under Class A shall use two adjustments, before and after applying the formulas. First, adjust the earned premiums by deducting 10 cents per 1000. Apply the formulas and then add back 10 cents per 1000 to obtain the final new case or deviated rate.

1. New section filed 4-14-94; operative 5-16-94. Submitted to OAL for printing only pursuant to Government Code section 11343(a)(1) (Register 94, No. 15).
2. Amendment of section and NOTE filed 10-2-2001; operative 10-1-2001. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2001, No. 40).
3. Amendment of subsections (b)(1) and (g) filed 1-9-2002; operative 1-9-2002. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2002,, No. 2).

Note: Authority cited: Sections 779.21 and 779.36, Insurance Code. Reference: Sections 779.9, 779.13, 779.16 and 779.36, Insurance Code; Sections 18191, 18290- 18292, 22314, 22315 and 22455, Financial Code; and Credit Insurance General Agents Association v. Payne, (1976) 16 Cal. 3d 651.

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