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| Home > Statutes > Usa Missouri |
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USA Statutes : missouri
Title : BUSINESS AND FINANCIAL INSTITUTIONS
Chapter : Chapter 385 Credit Insurance
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The purpose of sections 385.010 to 385.080 is to promote the
public welfare by regulating credit life insurance and credit accident
and sickness insurance, credit casualty insurance, credit involuntary
unemployment insurance and credit property insurance. Nothing in sections
385.010 to 385.080 is intended to prohibit or discourage reasonable
competition. The provisions of sections 385.010 to 385.080 shall be
liberally construed. (L. 1977 H.B. 610 § 1, A.L. 1992 S.B. 519)
All life insurance, accident and sickness insurance, involuntary
unemployment insurance, credit casualty insurance and property insurance
written in connection with loans or other credit transactions shall be
subject to the provisions of sections 385.010 to 385.080, except
insurance for which no identifiable charge is made to the debtor and
insurance written in connection with a loan or other credit transaction
of more than ten years duration; nor shall insurance be subject to the
provisions of sections 385.010 to 385.080 if the issuance of the
insurance is an isolated transaction on the part of the insurer not
related to an agreement or a plan for insuring debtors of the creditor or
where the issuance of such insurance is in connection with a residential
real estate secured credit transaction commitment exceeding twenty-five
thousand dollars, which may be accessed on a discretionary basis by the
debtor. (L. 1977 H.B. 610 § 2, A.L. 1987 H.B. 510, A.L. 1992 S.B. 519)
1. As used in sections 385.010 to 385.080, the following words
and phrases mean:
(1) "Credit accident and sickness insurance", insurance on a debtor to
provide indemnity for payments becoming due on a specific loan or other
credit transaction while the debtor is disabled as defined in the policy;
(2) "Credit casualty insurance", insurance other than credit life
insurance, credit accident and sickness insurance, credit involuntary
unemployment insurance, or credit property insurance, by which the
satisfaction of a debt in whole or in part is a benefit provided upon the
occurrence of any unknown or contingent event whatever, when such
insurance is sold to individual consumers and written as part of a credit
transaction, but only insofar as it applies to personal debt incurred by
individual consumers and not debt incurred in any business, trade or
profession of the debtor;
(3) "Credit involuntary unemployment insurance", insurance on a debtor to
provide indemnity for payments becoming due on a specific loan or other
credit transaction while the debtor is involuntarily unemployed as
defined in the policy;
(4) "Credit life insurance", insurance on the life of a debtor pursuant
to or in connection with a specific loan or other credit transaction;
(5) "Credit property insurance", insurance against loss of or damage to
personal property, covering a creditor's security interest in such
property, when such insurance is written as part of a loan or other
credit transaction, but only insofar as it applies to property sold to
individual consumers for personal use, or pledge by them, and not used in
any business, trade or profession of the purchaser, except that such
insurance shall not mean homeowners', renters' or lessees' insurance;
(6) "Creditor", the lender of money or vendor or lessor of goods,
services, property, rights, or privileges for which payment is arranged
through a credit transaction, or any successor to the right, title, or
interest of any such lender, vendor, or lessor, and any affiliate,
associate, or subsidiary of any of them, or any director, officer, or
employee of any of them, or any other person in any way associated with
any of them, including a holding company;
(7) "Debtor", a borrower of money or a purchaser or lessee of goods,
services, property, rights, or privileges for which payment is arranged
through a credit transaction;
(8) "Decreasing term life coverage", credit life insurance decreasing
over the term of the coverage to correspond with the scheduled or actual
amount of unpaid indebtedness, whichever is greater;
(9) "Director", director of the Missouri department of insurance;
(10) "Identifiable charge", the amount a creditor charges a debtor or
collects from him specifically for credit insurance in addition to any
other stated charges, including interest or discount, permitted by law;
(11) "Indebtedness", the total amount payable by a debtor to a creditor
in connection with a loan or other credit transaction;
(12) "Insurer", an insurance company authorized to write credit life
insurance, credit accident and sickness insurance, credit casualty
insurance, credit involuntary unemployment insurance or credit property
insurance;
(13) "Joint life coverage", credit life insurance covering two or more
lives, the entire sum insured being payable upon the death of the first
insured debtor to die while the insurance is in force;
(14) "Level term life coverage", credit life insurance remaining level
over the term of the coverage.
2. As used in sections 385.010 to 385.080, the following technical terms
shall have the indicated meanings:
(1) "Claims", benefits payable on death, disability, debt default,
involuntary unemployment or property damage, excluding loss adjustment
expense, claims settlement costs, or other additions of any kind;
(2) "Claims incurred", claims actually paid during the reporting year
plus the estimated reserves at the end of the year for reported claims in
the process of settlement and for unreported claims, less the
corresponding estimated reserves at the end of the preceding year. All
reserves are to be determined in a consistent manner from year to year;
(3) "Credibility period", as of any point of time the period of at least
three years immediately prior thereto;
(4) "Premiums earned", the total gross premiums which become due the
insurer, without reduction of any kind, except the premiums refunded or
adjusted on account of termination of coverage, appropriately adjusted
for changes in gross unearned premiums in force upon a pro rata basis or
a "sum of the digits" basis, where applicable. Where premiums are payable
monthly on the basis of outstanding insured balances, "premiums earned"
means the total premiums paid the insurer during the reporting year plus
premiums due the insurer but unpaid at the end of that year, less
premiums due the insurer but unpaid at the end of the previous year. As
defined under either system, premiums are without reduction of any kind
except for those refunded or adjusted because of termination of coverage.
(L. 1977 H.B. 610 § 3, A.L. 1992 S.B. 519)
Credit life insurance and credit accident and sickness insurance
shall be issued only in the following forms:
(1) Individual policies of life insurance issued to debtors on a term
plan;
(2) Individual policies of accident and sickness insurance issued to
debtors on a term plan or disability benefit provisions in individual
policies of credit life insurance;
(3) Group policies of life insurance issued to creditors providing
insurance upon the lives of debtors on the term plan;
(4) Group policies of accident and sickness insurance issued to creditors
on a term plan insuring debtors or disability benefit provisions in group
credit life insurance policies to provide such coverage. (L. 1977 H.B.
610 § 4)
1. The initial amount of credit life insurance shall not exceed
the total amount repayable under the contract of indebtedness and, where
an indebtedness is repayable in substantially equal installments, the
amount of insurance shall at no time exceed the scheduled or actual
amount of unpaid indebtedness, whichever is greater.
2. Notwithstanding the provisions of subsection 1 of this section,
insurance on agricultural credit transaction commitments, not exceeding
forty-eight months in duration, may be written up to the amount of the
loan commitment on a nondecreasing or level term plan.
3. Notwithstanding any other provision of this section, insurance on
educational credit transaction commitments may be written for the amount
of the portion of the commitment that has not been advanced by the
creditor.
4. The total amount of periodic indemnity payable by credit accident and
sickness insurance in the event of disability, as defined in the policy,
shall not exceed the aggregate of the periodic scheduled unpaid
installments of the indebtedness, and the amount of each periodic
indemnity payment shall not exceed the original indebtedness divided by
the number of periodic installments or divided by the number of months of
its term in the case of an agricultural loan commitment insured under
subsection 2 of this section.
5. Notwithstanding any other provision of this section, insurance on
residential real estate secured credit transaction commitments may be
written up to the amount of the loan commitment. (L. 1977 H.B. 610 § 5,
A.L. 1987 H.B. 510, A.L. 1991 S.B. 352)
Effective 7-10-91
The term of any credit life insurance or credit accident and
sickness insurance, subject to acceptance by the insurer, shall commence
on the date when the debtor becomes obligated to the creditor, except
that, where a group policy provides coverage with respect to existing
obligations, the insurance on a debtor with respect to such indebtedness
shall commence on the effective date of the policy. Where evidence of
insurability is required and such evidence is furnished more than thirty
days after the date when the debtor becomes obligated to the creditor,
the term of the insurance may commence on the date on which the insurance
company determines the evidence to be satisfactory, and in such event
there shall be an appropriate refund or adjustment of any charge to the
debtor for insurance. The term of such insurance shall not extend more
than thirty days beyond the scheduled maturity date of the indebtedness
except when extended without additional cost to the debtor. If the
indebtedness is discharged due to renewal or refinancing prior to the
scheduled maturity date, the insurance in force shall be terminated
before any new insurance may be issued in connection with the renewed or
refinanced indebtedness. In all cases of loan termination prior to
scheduled maturity, all credit life and credit accident and sickness
insurance shall be terminated and a refund shall be paid or credited as
provided in section 385.050. (L. 1977 H.B. 610 § 6)
1. All credit life insurance and credit accident and sickness
insurance shall be evidenced by an individual policy, or in the case of
group insurance by a certificate of insurance, which individual policy or
group certificate of insurance shall be delivered to the debtor.
2. Each individual policy or group certificate of credit life insurance,
or credit accident and sickness insurance, or both, shall, in addition to
other requirements of law, set forth the name and home office address of
the insurer, the name or names of the debtor, the premium or amount of
payment by the debtor separately for credit life insurance and credit
accident and sickness insurance, a description of the coverage including
the amount and term thereof, and any exceptions, limitations and
restrictions, and shall state that the benefits shall be paid to the
creditor to reduce or extinguish the unpaid indebtedness and, wherever
the amount of insurance may exceed the unpaid indebtedness, that any
excess shall be payable to a beneficiary, other than the creditor, named
by the debtor or to his estate.
3. The individual policy or group certificate of insurance shall be
delivered to the insured debtor at the time the indebtedness is incurred
except as hereinafter provided.
4. If the individual policy or group certificate of insurance is not
delivered to the debtor at the time the indebtedness is incurred, a copy
of the application for the policy or a notice of proposed insurance,
signed by the debtor and setting forth the name and home office address
of the insurer, the name or names of the debtor, the premium or amount of
payment by the debtor, if any, separately for credit life insurance and
credit accident and sickness insurance, the amount, term and a brief
description of the coverage provided, shall be delivered to the debtor at
the time the indebtedness is incurred. The copy of the application for or
notice of proposed insurance, shall also refer exclusively to insurance
coverage, and shall be separate and apart from the loan, sale or other
credit statement of account, instrument or agreement, unless the
information required by this subsection is prominently set forth therein.
Upon acceptance of the insurance by the insurer and within thirty days of
the date upon which the indebtedness is incurred, the insurer shall cause
the individual policy or group certificate of insurance to be delivered
to the debtor. The application or notice of proposed insurance shall
state that, upon acceptance by the insurer, the insurance shall become
effective as provided in section 385.035. (L. 1977 H.B. 610 § 7)
1. All policies, certificates of insurance, notices of proposed
insurance, applications for insurance, endorsements, and riders delivered
or issued for delivery in this state, and the schedules of premium rates
pertaining thereto, shall be filed with the director prior to use.
2. The director shall within sixty days after the filing of the schedule
of premium rates, policies, certificates of insurance, notices of
proposed insurance, applications for insurance, endorsements, and riders,
disapprove any form if the benefits provided therein are not reasonable
in relation to the premium charge in accordance with the provisions of
section 385.070, or if it contains provisions which are unjust, unfair,
inequitable, misleading, deceptive, or encourage misrepresentation of the
coverage, or are contrary to any provision of the insurance code or of
any rule or regulation promulgated thereunder. No rule or portion of a
rule promulgated under the authority of sections 385.010 to 385.080 shall
become effective unless it has been promulgated pursuant to the
provisions of section 536.024, RSMo. A premium rate or schedule of
premium rates shall be deemed reasonable for all purposes under sections
385.010 to 385.080 if the rate or schedule produces or reasonably may be
expected to result in claims incurred of not less than fifty percent of
earned premium. To assist his decision, the director may extend the
stipulated time up to an additional sixty days.
3. If the director notifies the insurer that the form is disapproved, it
is unlawful for the insurer to issue or use the form. In the notice, the
director shall specify the reason for his disapproval and state that a
hearing will be granted within twenty days after receipt of request in
writing by the insurer. No such policy, certificate of insurance, notice
of proposed insurance, nor any application, endorsement, or rider, shall
be issued or used until the expiration of sixty days after it has been so
filed, unless the director shall give his prior written approval thereto.
The director may, at any time after a hearing held not less than twenty
days after written notice to the insurer, withdraw his approval of any
such form on any ground set forth in subsection 2 of this section. The
written notice of the hearing shall state the reason for the proposed
withdrawal. It is unlawful for the insurer to issue such forms or use
them after the effective date of the withdrawal.
4. If a group policy of credit life insurance or credit accident and
sickness insurance has been delivered in this state before September 28,
1977, the insurer shall be required to file only the group certificate
and notice of proposed insurance delivered or issued for delivery in this
state as specified in subsections 2 and 4 of section 385.040. Such forms
shall be approved by the director if they conform with the requirements
specified in said subsections and if the schedules of premium rates
applicable to the insurance evidenced by the certificate or notice are
not in excess of the insurer's schedules of premium rates filed with the
director; provided, however, the premium rate in effect on existing group
policies may be continued until the first policy anniversary date
following September 28, 1977. If a group policy has been or is delivered
in another state insuring citizens of this state, the forms to be filed
by the insurer with the director are the group certificates and notice of
proposed insurance. He shall approve them only if:
(1) They provide the information that would be required if the group
policy were delivered in this state;
(2) The applicable premium rates or charges do not exceed those approved
by the director.
5. Any order or final determination of the director under the provisions
of this section shall be subject to judicial review. (L. 1977 H.B. 610 §
8, A.L. 1981 S.B. 200, A.L. 1995 S.B. 3)
1. Any insurer may revise its schedules of premium rates from
time to time and shall file the revised schedules with the director. No
insurer shall issue any credit life insurance policy or credit accident
and sickness insurance policy for which the premium rate exceeds that
determined by the schedules of the insurer as then approved by the
director.
2. Each individual policy or group certificate shall provide that in the
event of termination of the insurance prior to the scheduled maturity
date of the indebtedness, any refund of an amount paid by the debtor for
insurance shall be paid or credited promptly to the person entitled
thereto; provided, however, that no refund of less than one dollar need
be made. The formula to be used in computing the refund shall be the
actuarial method of calculating refunds which produces a refund equal to
the original premium multiplied by the ratio of the sum of the remaining
insured balances divided by the sum of the original insured balances as
of the due date nearest the date of prepayment in full.
3. If a creditor requires a debtor to make any payment for credit life
insurance or credit accident and sickness insurance and an individual
policy or group certificate of insurance is not issued, the creditor
shall immediately give written notice to the debtor and shall promptly
make an appropriate credit to the account.
4. The amount charged to a debtor for any credit life or credit accident
and sickness insurance shall not exceed the premiums charged by the
insurer, as computed at the time the charge to the debtor is determined.
5. Nothing in sections 385.010 to 385.080 shall be construed to authorize
any payments for insurance now prohibited under any statute, or rule
thereunder, governing credit transactions. (L. 1977 H.B. 610 § 9, A.L.
2002 S.B. 895)
Effective 7-1-03
All policies and certificates of credit life insurance and
credit accident and sickness insurance shall be delivered or issued for
delivery in this state only by an insurer authorized to do an insurance
business herein and shall be issued only through holders of licenses
issued by the director. No person shall solicit, negotiate, or procure
debtors to become insured under individual or group or any other form of
policy unless such person is licensed as an agent, agency or broker by
the director. (L. 1977 H.B. 610 § 10)
1. All claims shall be promptly reported to the insurer or its
designated claims representative, and the insurer shall maintain adequate
claim files. All claims shall be settled promptly and in accordance with
the terms of the insurance contract.
2. All claims shall be paid either by draft drawn upon the insurer or by
check of the insurer to the order of the claimant to whom payment of the
claim is due pursuant to the policy provisions, or upon direction of the
claimant to one specified.
3. No plan or arrangement shall be used whereby any person, firm or
corporation other than the insurer or its designated claims
representative shall be authorized to settle or adjust claims. The
creditor shall not be designated as claims representative for the insurer
in adjusting claims. (L. 1977 H.B. 610 § 11)
When life insurance or accident and sickness insurance is
required or requested as additional security for any indebtedness, the
debtor shall be informed of the option of furnishing the required amount
of insurance, or any portion thereof, through existing policies of
insurance owned or controlled by him or of procuring and furnishing the
required coverage through any insurer authorized to transact such
insurance business within this state. (L. 1977 H.B. 610 § 12)
1. It shall be presumed in any review of rates filed with the
director that the benefits are reasonable in relation to the premium
charged if the premium rates do not exceed the following standard rates:
(1) Credit life insurance:
(a) The credit life insurance rates filed with the director shall be
considered reasonable by the director if the single premium rate for
single life decreasing term credit life insurance does not exceed
fifty-five cents per annum per one hundred dollars of initial outstanding
amount of insured indebtedness, and the single premium rate for single
level term credit life insurance does not exceed a single premium rate of
one dollar and ten cents per annum per one hundred dollars of initial
outstanding amount of insured indebtedness. If premiums or identifiable
charges are paid monthly on outstanding balances, the monthly premiums
shall be ninety-two cents per one thousand dollars of outstanding
indebtedness;
(b) A single premium rate of ninety cents per annum per one hundred
dollars of initial outstanding amount of insured indebtedness for joint
life (two lives) decreasing term credit life insurance or a premium
payable monthly at the rate of one dollar and thirty-eight cents per one
thousand dollars of outstanding indebtedness insured on joint (two lives)
level term credit life basis;
(c) A minimum premium of seventy-five cents shall be considered
reasonable on any policy of credit life insurance. In the event any
premium is unearned and to be returned to the insured, no returned
premium calculated at less than one dollar need be refunded;
(d) The foregoing life insurance rates are presumed reasonable in
relation to benefits only if the credit life insurance contract contains
an incontestable clause which provides that an amount of insurance shall
be contestable only for a period which shall not be in excess of two
years and coverage is provided or offered to all debtors regardless of
age, or to all debtors not older than the applicable age limit, which
shall not be less than attained age seventy if the limit applies to the
age when the insurance attaches, or not less than attained age
seventy-one years if the limit applies to the age on the scheduled
maturity date of the debt. Age limits, if used, must be clearly shown on
the individual policies or group certificates;
(2) Credit accident and sickness insurance, per one hundred dollars of
outstanding indebtedness:
(a) No. of months in which NONRETROACTIVE RETROACTIVE indebt- BENEFITS
BENEFITS edness 7-day 14-day 30-day 7-day 14-day 30-day is repay- non-
non- non- retro- retro- retro- able retro retro retro active active
active 1 $ .25 $ .12 $ .07 $ .42 $ .18 $ .14 6 1.50 .70 .40 2.50 1.10 .85
12 2.00 1.40 .80 3.00 2.20 1.70 18 2.50 1.80 1.20 3.50 2.60 2.10 24 3.00
2.20 1.60 4.00 3.00 2.50 36 4.00 3.00 2.40 5.00 3.80 3.30 48 5.00 3.50
2.90 6.00 4.30 3.80 60 6.00 3.90 3.30 7.00 4.70 4.20 72 7.00 4.30 3.70
8.00 5.10 4.60 84 8.00 4.70 4.10 9.00 5.50 5.00 96 9.00 5.10 4.50 10.00
5.90 5.40 108 10.00 5.50 4.90 11.00 6.30 5.80 120 11.00 5.90 5.30 12.00
6.70 6.20;
(b) Any rate not specified in this schedule shall be consistent with this
schedule and shall be computed for the actual number of months in which
the indebtedness is repayable. Premiums payable other than on a single
premium basis or for benefits on a basis different than illustrated above
shall be actuarially consistent with the above rates;
(c) No certificate fee, policy issue charge, or any charge other than the
premium herein provided shall be made;
(d) The foregoing accident and sickness rates are presumed to produce
reasonable benefits in relation to premiums only if all of the following
exist:
a. Coverage is provided or offered to all debtors regardless of age or to
all debtors not older than the applicable age limit, which shall not be
less than the attained age of sixty-five if the limit applies to the age
when the insurance attaches, or not less than the attained age of
sixty-six if the limit applies to the age on the scheduled maturity date
of the debt. Age limits, if used, must be clearly shown on the individual
policies or group certificates;
b. Coverage does not contain any exclusions except disabilities resulting
from intentional self-inflicted injury, pregnancy, foreign residence,
flights in nonscheduled aircraft and preexisting illness, disease or
physical condition for which the debtor received or was professionally
advised to obtain medical advice, consultations, or treatment during the
six-month period preceding the effective date of the debtor's coverage
and which caused covered disability commencing within six months
following the effective date of coverage;
c. The credit insurance policy contains a definition of "disability"
which provides coverage during the initial twelve months of disability
even though the insured is able to perform an occupation other than the
one he held at the time disability occurred. After the initial
twelve-month period, coverage must be provided if the insured is unable
to perform the duties of any occupation for which he is suited by
education, training or experience, except this paragraph shall not apply
to lump sum disability coverage;
(3) Credit casualty insurance: a premium rate or schedule of premium
rates shall be presumed to be reasonable if the rate or schedule of rates
produces or may reasonably be expected to produce a prospective ratio of
at least seventy-five percent derived by dividing the earned premium into
the sum of the claims incurred plus the maximum allowable creditor
compensation. Maximum allowable creditor compensation refers to creditor
compensation authorized by subsection 2 of this section;
(4) Credit involuntary unemployment insurance:
(a) If the single premium rate does not exceed one dollar and thirty
cents per annum per one hundred dollars of indebtedness;
(b) If the monthly outstanding balance rate does not exceed two dollars
per month per thousand dollars of outstanding indebtedness;
(c) The foregoing involuntary unemployment insurance rates are presumed
reasonable in relation to benefits only if all of the following exist:
a. Coverage is provided or offered to all debtors regardless of age who
are working for salary, wages or other employment income for at least
thirty hours per week and have done so for twelve consecutive months;
b. Coverage sets forth a definition of involuntary unemployment as a loss
of employment income that may include, but is not limited to, loss caused
by layoff, general strike, termination by employer, unionized labor
dispute, or lockout;
c. Coverage does not contain any exclusions except: debts with irregular
monthly payments; voluntary forfeiture of salary, wages or other
employment income; resignation; retirement; loss of income due to
disability caused by accident, sickness, disease, or pregnancy, or loss
of income due to termination as the result of willful misconduct, which
is a transgression of some established and definite rule of conduct, a
forbidden act, or a willful dereliction of duty, or criminal misconduct,
which is unlawful behavior as determined by local, state or federal law;
(d) The debtor shall be provided with a copy of the credit involuntary
unemployment insurance policy or certificate of insurance, describing the
debtor's rights, within thirty days of the extension of credit;
(e) Credit involuntary unemployment insurance shall be canceled upon the
satisfaction or termination of the underlying indebtedness and, upon such
cancellation, the debtor shall be entitled to a refund of the unearned
premium by a formula approved by the director;
(f) Involuntary unemployment insurance may not exceed in amount the total
amount of the indebtedness or exceed in duration the scheduled term of
the underlying contract; however, the involuntary unemployment insurance
plan of benefits may be for the full term of the underlying contract or
for a limited number of months;
(5) Credit property insurance:
(a) If the monthly outstanding balance rate does not exceed one dollar
and eighty-five cents per month per thousand dollars of outstanding
indebtedness, or the single premium actuarial equivalent;
(b) The foregoing credit property insurance rates are presumed reasonable
in relation to benefits only if the credit property insurance contract
includes standard fire coverage, extended coverage endorsement and
replacement cost provision endorsement, calculates benefits from the date
of loss and provides primary coverage;
(c) The debtor shall be provided with a copy of the credit property
insurance policy or certificate of insurance describing the debtor's
rights within thirty days of the extension of credit;
(d) Whenever credit property insurance is sold by a creditor, the
creditor shall retain a list of the personal property included in the
instrument securing the credit transaction;
(e) If the debtor has or obtains additional personal property coverage,
the debtor may retain such additional coverage or may substitute coverage
at any time and, upon such substitution, shall be entitled to a refund of
the unearned premium on the policy sold under sections 367.100 to
367.200, RSMo, by a formula approved by the director; where such
insurance was not initially required by the creditor, the debtor may
cancel at any time, without substituting and shall be entitled to a
refund of any premium paid by a formula approved by the director. If such
substitution or cancellation occurs within thirty days of the making of
the loan or other credit transaction, the entire premium shall be
refunded;
(f) Credit property insurance shall be canceled upon the satisfaction, or
termination, of the underlying indebtedness and, upon such cancellation,
the debtor shall be entitled to a refund of the unearned premium by a
formula approved by the director;
(g) If the creditor requires insurance coverage on the personal property
securing the loan and other credit transaction, a homeowner's or renter's
policy with replacement cost endorsement shall be considered as
fulfilling this requirement;
(h) Credit property insurance may not exceed in amount the total amount
of the indebtedness nor exceed in duration the scheduled term of the
underlying contract;
(i) If credit property insurance is sold by a creditor, the loan
agreement or a separate written disclosure shall contain a written
notice, in ten point type and reasonably designed to notify the debtor,
in substantially the following form: YOU MAY NOT NEED TO PURCHASE CREDIT
PROPERTY INSURANCE, AND YOU MAY HAVE OTHER INSURANCE WHICH THIS CREDITOR
WILL ACCEPT WHICH COVERS THE PROPERTY SECURING THIS LOAN. YOU SHOULD
EXAMINE ANY OTHER INSURANCE WHICH YOU HAVE IN ORDER TO DETERMINE IF THIS
COVERAGE IS NECESSARY;
(6) An insurer may receive approval of a different premium rate or
schedule of premium rates to be used in connection with a particular
policy form, or a class or classes of the debtors of a creditor, or under
broadened coverage, if the insurer demonstrates to the satisfaction of
the director that the loss experience which may reasonably be anticipated
will develop a prospective ratio of at least seventy-five percent derived
by dividing the standard rate basis earned premium into the sum of the
claims incurred plus the maximum allowable creditor compensation. For
individual deviations, the letter "P" in the formula in this subdivision
shall mean premium earned adjusted to standard rates for the segment of
business for which a deviation is requested. Maximum allowable creditor
compensation refers to creditor compensation authorized by subsection 2
of this section. Such approval will be deemed to have been given by the
director if he does not disapprove the rates or policy forms within
thirty days from the date of filing. This may be accomplished as follows:
(a) Development of a life insurance rate based on the actual ages and
amounts of insurance of those insured and based on the mortality and
interest assumptions used for valuation, with evidence that the age
distribution is representative of the composition of the group and can
reasonably be expected to remain at the level so determined. If this
method is used, the life insurance rate must be redetermined and refiled
at the discretion of the director or at any time the policy provisions
are changed in such manner as to affect the rate;
(b) When experience is available, the following method may be used in the
development of credit life insurance rates, credit accident and sickness
insurance rates, credit casualty insurance rates, credit involuntary
unemployment insurance rates or credit property insurance rates under the
following formula:
Let P = Premiums earned (at least three years)
D = Claims incurred (at least three years)
r = premium rate to be determined
s = standard premium for coverage
s D+.4P Then r = .... X ......
.75 P If this method is used, approval will not be given for a period
longer than the credibility period utilized in the filing;
(c) The premiums described in subdivisions (1), (2), (3), (4) and (5) of
this subsection may be revised by regulation by the director, based on
the total Missouri credit insurance experience of all insurers not sooner
than December 31, 1992, and for any three-year period thereafter, but not
more frequently than once every three years; except that any such
revision is based on the above formula; however, once the director elects
to revise premiums, he shall recalculate the premiums by use of the
formula without discretion;
(d) If a company proposes to write any type of coverage other than those
described herein, it may request a public hearing to determine, through
credible statistics, the initial rate to be employed, except that no
hearing will be required to establish the need for lump sum disability
benefits;
(e) If, after study and hearing, the director determines that the
premiums described in subdivisions (1), (2), (3), (4) and (5) of this
subsection do not accomplish the purposes of this section, he may
prescribe by regulation that all rates be calculated in conformity with
the methods described in this subdivision, except that the director shall
not so prescribe sooner than December 31, 1992; however, once the
director elects to revise premiums, he shall recalculate the premiums by
use of the formula without discretion;
(f) Any debtor may cancel credit insurance within fifteen days of its
purchase and shall receive a complete refund or credit of premium. This
right shall be set forth in the policy or the certificate, or by separate
written disclosure. This right shall be disclosed at the time the debt is
incurred in ten-point type and in a manner reasonably calculated to
inform the debtor of this right. This right is in addition to, and
separate from, the right to cancel credit property insurance.
2. No insurer shall pay any compensation to any creditor for the sale of
any policy, certificate, or other contract of credit insurance which
exceeds forty percent of the rates specified in this section or
subsequently established by the director. This schedule of maximum
authorized compensation shall apply regardless of any deviation in rates
filed or approved by the director. "Compensation" as used herein includes
but is not limited to:
(1) Commissions, retrospective rate credits, service fees, expense
allowances or reimbursements, gifts, furnishing equipment, facilities,
goods or services, or any other form of remuneration resulting directly
from the sale of credit insurance;
(2) All commissions paid or allowed to any agent directly or indirectly
connected with the creditor; notwithstanding, an insurer may compensate
independent general agents, not affiliated directly or indirectly with
the creditor, by paying commissions or compensation, but no such
commissions or compensation shall exceed ten percent of the rates
specified in this section in addition to the agent's commission or
compensation. Such independent general agent may not pass on any portion
of such compensation to creditors or other agents or brokers;
(3) All compensation of any kind, direct or indirect, paid or allowed to
the creditor;
(4) All benefits such as items of merchandise, travel, conventions,
vacations, rewards, bonuses, trading stamps, scrip, or other rewards of
any kind given, paid or allowed to the creditor as an inducement or
payment for sales made or volume of sales obtained;
(5) Allowing the creditor to have the use of premiums collected by the
creditor by leaving said funds on deposit with the creditor for undue
periods of time at low or no interest rate. An insurance company may
invest in certificates of deposit with financial institutions which are
the purveyors of its credit insurance if the interest paid on such
certificates of deposit is at least equal to that being paid by the
financial institution on certificates of deposit to other investors on
the open market; provided further, that the total amount of such
certificates of deposit shall not exceed the annual gross premium
written. Premiums received by a creditor or an agent must be actually
remitted to and received by the insurance company within forty-five days
after the sale of the insurance. In no event shall compensation be deemed
to include reinsurance premiums paid to, or underwriting profits
generated by, an insurer or reinsurer whether or not such insurer or
reinsurer is affiliated with the creditor or agent. (L. 1977 H.B. 610 §
13, A.L. 1983 S.B. 107, A.L. 1991 H.B. 385, et al. merged with H.B. 575,
A.L. 1992 S.B. 519)
The director may, after notice and hearing, pursuant to section
374.045, RSMo, issue the rules and regulations that he deems necessary to
effectuate the purposes of sections 385.010 to 385.080, or to eliminate
devices or plans designed to avoid or render ineffective the provisions
of sections 385.010 to 385.080. The director may require such information
as is reasonably necessary for the enforcement of sections 385.010 to
385.080. (L. 1977 H.B. 610 § 14)
Credit life and credit accident and health insurance may be
written or issued in Missouri only when placed directly in insurance
companies duly granted certificate of authority to do such business in
this state. (L. 1977 H.B. 610 § 15)
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