California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 4.10 - Rates for Credit Property Insurance and Credit Unemployment Insurance
Article 2 - Definitions
Section 2670.4 - Definitions Applicable to this Subchapter

(a) "Credit property insurance" means insurance that provides coverage (generally coverage to repair or replace) on personal property pledged or offered as collateral for securing a personal or consumer loan, or personal property purchased under an installment sales agreement or through a credit transaction. Credit property insurance provides coverage for loss or damage to personal property caused by the perils set forth in the credit property insurance policy. Credit property insurance does not include creditor-placed insurance which is "force-placed" by a lender or creditor in the event the borrower or debtor fails to maintain insurance as required under the borrower or debtor's agreement with the lender or creditor. Credit property insurance does not include insurance which covers physical damage to an automobile or other motor vehicle, watercraft, or aircraft as a part of or in conjunction with a liability insurance policy.

(b) "Joint credit property insurance" means credit property insurance which insures two persons who are jointly liable to a lender or creditor. For purposes of these regulations, references to "credit property insurance" shall encompass both credit property insurance and joint credit property insurance.

(c) "Credit unemployment insurance" is insurance which provides coverage for periodic payments or payment of an outstanding balance on a specific loan or other credit transaction while the debtor is involuntarily unemployed, as defined in the policy.

(d) "Joint credit unemployment insurance" means credit unemployment insurance which insures two persons who are jointly liable to a lender or creditor. For purposes of these regulations, references to "credit unemployment insurance" shall encompass both credit unemployment insurance and joint credit unemployment insurance.

(e) "Closed end" plan of indebtedness is defined in CCR Section 2248.31(c).

(f) "Earned premium" means gross premium earned, including policy and membership fees, less return premium and premium on policies not taken.

(g) "Experience group" means the experience under a program of insurance of one creditor or more than one creditor. For purposes of defining and using the term "experience group," the following are separate programs of insurance: property; unemployment; open end or closed end; single premium or monthly premium; elimination period for unemployment; and retroactive or nonretroactive for unemployment. The insurance programs of each creditor in a multiple creditor group must be reasonably similar and each creditor's program must contain the same type of coverages and exclusions. If an experience group has experience in more than this State, an insurer may use only the experience of the experience group in California to rate the group or, with the approval of the Commissioner, an insurer may use the multi-state experience of the experience group for this purpose if it is more credible than the California experience and is generated by the same or similar programs of insurance and is adjusted to account for differences in premium rates. Insurers using multiple-creditor groups for the purpose of determining rates shall establish written standards for the inclusion of individual creditor-groups within such multiple creditor groups.

(h) "Experience period" means the most recent period of time for which experience is reported, but not for a period longer than three full years. If an experience group develops a Credibility Factor of 1 from TABLE 1 (the "Credibility Table" in Section 2670.9) in less than three years, the experience period for that case will be the number of full years needed to attain full credibility. Experience incurred in the period immediately preceding the effective date of this regulation may be used to the extent necessary to fill out the experience period. If a new experience group of an insurer has experience in this State with a prior insurer, the new insurer must use the most recent experience of the experience group with the prior insurer to the extent necessary to fill out an experience period. Other data or projections may be used if the Commissioner finds them to be more credible.

(i) "Reported Claim Count", as used in TABLE 1 (Section 2670.9), means the number of claims reported for the experience group during the experience period. This means the total number of claims reported during the experience period, whether paid or in the process of payment excluding claims without payment.

(j) "Open end" plan of indebtedness is defined in CCR Section 2248.31 (l).

(k) "Prima facie rate" means the maximum rate which reasonably can be expected to provide the permissible loss ratio set forth in 2670.6. Prima Facie Rates and Permissible Loss Ratio for Benchmark Programs and which is not excessive, inadequate, unfairly discriminatory or otherwise in violation of Chapter 9 of the Insurance Code