Current through Register Vol. 54, No. 44, November 2, 2024
(a)
Compensation limits.
Premium rates shall be presumed to be excessive if the compensation for writing
and handling credit insurance paid to a creditor, producer or any affiliate,
associate, subsidiary, director, officer, employe or other representative of
the creditor or producer, exceeds:
(1) For
credit life insurance and credit life insurance with TPD benefit, 27% of the
prima facie premium rates referenced in §
73.106 (relating to life insurance
rate standards) or 27% of the actuarially consistent premium rates for
insurance for which prima facie rates are not published in the
Pennsylvania Bulletin.
(2) For credit A&H insurance or
involuntary unemployment insurance, 21% of the prima facie premium rates
referenced in §§
73.109 and
73.112 (relating to A and H
insurance rate standards; and involuntary unemployment insurance rates
standards) or 21% of the actuarially consistent premium rates for insurance for
which prima facie rates are not published in the Pennsylvania
Bulletin.
(b)
Additional compensation. When a licensed producer, general
producer, general agency or home office producer, having no direct or indirect
affiliation or connection with the creditor, is involved in the solicitation of
a credit insurance policy, the compensation of 27% as provided in subsection
(a) shall be increased to 30% and the compensation of 21% as provided by
subsection (b) shall be increased to 25% provided that the entire amount or any
part of additional compensation shall be used solely as commission for the
licensed producer, general producer, general agency or home office producer
involved in the solicitation. The creditor is prohibited from receiving
indirectly or directly all or any portion of the additional 3% or 4%
commission.
(c)
Compensation defined. For purposes of this chapter,
"compensation" means money or anything else of value paid or credited to or on
behalf of any group policyholder, producer, or general producer or withheld by
any group policyholder producer, broker or general producer within or outside
this Commonwealth in relation to business produced or to be produced or written
or to be written in this Commonwealth and paid or credited by or on behalf of
the insurer or by any affiliate of the insurer or by another person.
Compensation includes the following:
(1)
Commissions.
(2) Fees, including
administrative fees, service fees, consulting fees and expense fees.
(3) Electronic data processing equipment used
for purposes other than electronic rate books.
(4) Electronic data processing services other
than the programming of existing electronic data processing equipment used in
lieu of rate books or charts.
(5)
Supplies, other than forms approved by the Commissioner and usual and customary
claims and reporting forms and envelopes.
(6) Rental equipment of any type provided by
an insurer, its agent or any related person without charge of actual cost or at
a charge less than the usual cost.
(7) Advertising provided by an insurer, its
agent or a related person without charge of actual cost or at a charge less
than the usual cost.
(8)
Communication devices provided by an insurer, its agent or a related person
without charge of actual cost or at a charge less than the usual
cost.
(9) Profit sharing
plans.
(10) Experience rating
refunds and credits.
(11) Dividends
as provided in §
73.129 (relating to
dividends).
(12) Dividends received
by a producer of credit insurance business who owns in part or whole a
reinsurance company which assumes the credit insurance business from the direct
insurer, if any of the following criteria are met:
(i) The dividend payment on each share of
stock represents more than a reasonable return on the producer's capital
investment.
(ii) The direct insurer
has contractually guaranteed to reassume any losses sustained by the reinsurer
on the ceded business.
(13) Expense allowances or
reimbursement.
(14) Stock plans and
bonuses.
(15) Extension of
credit.
(16) Reimbursement for
expenditures.
This section cited in 31 Pa. Code §
73.129 (relating to dividends); 31
Pa. Code §
73.135 (relating to licensed
producers).
