PURPOSE: This regulation is designed to stimulate open competition among insurers to provide insurance coverage in the credit context at rates which are not unfairly discriminatory or excessive. Where property insurance is sold by a creditor in connection with the extension of credit, the regulating forces of open competition may not operate to control rates and extend benefits. This regulation designates rate levels for certain coverages above which rates for insurance sold in the credit context will be presumed excessive and unfairly discriminatory under statutory standards. It is solely because of the lack of effective price and product controlling competition that the promulgation of these standards has become necessary to policyholders and the public interest. This regulation was adopted pursuant to the provisions of section 374.045, RSMo and to implement sections 367.170, 374.190, 375.012, 375.158, 375.936, 379.318, 379.356, 379.470 and 408.280, RSMo.

1. (1) Scope. This regulation shall apply to the sale of the designated types of insurance in the credit context, that is, by a creditor to a debtor with a direct charge to the debtor. The manner and method of sale shall be the determining factor of applicability of this regulation.

2. (2) Definitions. The following terms are defined for use in this regulation:

   1. (A) Affiliated insurance producer shall mean any insurance producer of an insurer who receives any employment remuneration from a dealer or lender or sells insurance primarily to debtors of a dealer or lender group of associated dealers or lenders or whose insurance a dealer or lender controls, directly or indirectly, or regularly designates, recommends, refers or suggests to the buyer that s/he purchase in connection with the negotiation, execution, extension or renewal of a contract;
   2. (B) Contract shall include any credit transaction for household, personal or family use;
   3. (C) Dealer shall mean any person who extends credit for household, personal or family use or any successor to a creditor’s rights;
   4. (D) Lender is any person engaged in the business of making consumer credit loans as defined in section 367.100.2, RSMo and any assignee of a consumer credit loan agreement to include registrants under Chapter 367, RSMo, state banking associations, savings and loan associations, national banking associations to the extent that federal laws do not preempt this regulation, credit unions and any director, officer, employee or insurance producer of such a person; and
   5. (E) Property insurance as permitted and regulated under this regulation shall mean coverage upon personal property other than automobiles pledged as collateral or security upon a contract as defined and shall include only the standard fire policy with coverage attachment, extended coverage endorsement and replacement cost provision endorsement. Coverage other than those described previously may be included, but no additional premium may be charged for the additional coverages and the losses sustained as a result of those additional coverages may not be included in the calculation of the loss ratio.
3. (3) Sales Only Through Licensed Insurance Producers. All sales of insurance, within the scope of this regulation, must be made through licensed insurance producers. All remuneration for the sale of insurance must be in the form of commission paid directly to the insurance producer by the insurer. Enrollment of debtors of a creditor under a group contract where a direct charge is made to the debtor for the full insurance premium is declared to be the solicitation of or procurement or making of an insurance contract within the meaning of section 375.012, RSMo.
4. (4) Written Evidence of Insurance Required. The insurer must deliver to the insured within thirty (30) days of the extension of credit a copy of the policy or the certificate of insurance. This may be done directly or through the insurer’s insurance producer in the credit institution.
5. (5) Coverages to be Sold. Only those coverages defined as property insurance in this regulation may be sold by an insurer through an affiliated insurance producer in connection with any contract as defined.

6. (6) Consumers’ Rights. Each insurer shall grant and no insurer or affiliated insurance producer shall deny any insured the full and free exercise of the following rights:

   1. (A) The consumer shall not be required or coerced to obtain insurance from any particular insurer nor through any particular insurance producer or representative of a company as a condition to entering into a contract. No insurer shall participate or knowingly allow its insurance producers to participate in such a scheme or requirements or coercion;
   2. (B) If the debtor has or obtains additional personal property coverage, the debtor may retain the additional coverage or may substitute coverage at any time and, upon this substitution, shall be entitled to a pro rata refund of the unearned premium on the policy. Where this insurance was not initially required by the creditor, the debtor may cancel, at any time, without substituting and shall be entitled to a pro rata refund of any premium paid. If the substitution or cancellation occurs within thirty (30) days of the extension of credit, the entire premium shall be refunded; and
   3. (C) Any insurance written to secure an underlying contract must be cancelled upon the satisfaction or termination of that underlying contract and a pro rata refund of unearned premium made to the insured.
7. (7) Insurance Not to Exceed Contract Terms. No insurance sold within the scope of this regulation may exceed in amount of coverage the amount of indebtedness on the underlying contract nor exceed in duration the scheduled term of the underlying contract. Household contents may be insured at their replacement cost up to the original amount of indebtedness.

8. (8) Insurance Sold by a Lender (Chapter 367, RSMo).

   1. (A) No insurer may issue through an affiliated agent a policy covering security for a loan made under the regulatory authority of Chapter 367, RSMo which exceeds the replacement value of the property given as security for the loan or covering security for such a loan which is less than three hundred dollars ($300). If the insured elects to cancel a policy sold in connection with such a transaction, the insurer shall remit directly to the insured any premium refund due.
   2. (B) No insurer shall sell any coverage through an affiliated insurance producer other than the standard fire policy with coverage attachment with extended coverage endorsement and replacement cost provision endorsement.

9. (9) Insurance Sold With Credit Transactions (Chapter 408, RSMo).

   1. (A) No insurer may write coverage through an affiliated agent to be sold in this context in which the amount of coverage exceeds the replacement cost of the goods insured.
   2. (B) No insurer may pay a dealer or by contract grant a dealer’s interest in the affiliated property insurance which exceeds the original indebtedness under the contract.
   3. (C) No insurer may issue a contract of insurance through an affiliated dealer which covers any goods other than those sold by that dealer under the terms of the contract secured by those goods.
10. (10) Rates. 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 those contained in Exhibit A of this regulation, included herein. Any insurer filing rates in excess of those contained in Exhibit A must demonstrate that its rates produce or may reasonably be expected to produce a loss ratio of at least sixty percent (60%).
11. (11) Cancellation Refund Computation. All refunds of any insurance sold subject to this regulation shall be made upon the pro rata refund computation tables.
12. (12) Insurer’s Reports Required. Each insurance company writing credit property insurance, as defined, shall report on or prior to April 1 all credit property insurance premium and loss information on the credit insurance experience exhibits of its annual statement. The report required by this section will not be used in any manner to determine the financial condition of the company; however, this report shall reconcile to the Missouri supplement to the page of the annual statement on which credit insurance business in the state of Missouri is recorded. Any discrepancies between the report required by this section and the page of the annual statement on which credit insurance business in the state of Missouri is recorded shall be explained by a signed statement attached to the report required by this section.
13. (13) Severability. If any provision of any section of this regulation or application to any person or circumstance is held invalid, the invalidity shall not affect other provisions of that section or application of the regulation which can be given effect without the invalid provision or application and to this end the provisions of this regulation are declared to be severable. EXHIBIT A HOUSEHOLD CONTENTS FIRE INSURANCE

The rate applicable to credit property insurance shall be $1.85 per $1000 of outstanding indebtedness per month. A minimum of $5.00 shall be allowed.

AUTHORITY: sections 367.170, 374.045, 374.190, 375.041, 375.936, 379.356, 379.470 and 408.280, RSMo 2000 and 375.012, 375.158 and 397.318, RSMo Supp. 2001.* This rule was previously filed as 4 CSR 190-16.110. Original rule filed Sept. 11, 1975, effective Nov. 15, 1975. Amended: Filed Sept. 12, 1975, effective Nov. 15, 1975. Amended: Filed Aug 14, 1984, effective Jan. 12, 1985. Amended: Filed Dec. 1, 1997, effective May 30, 1998. Amended: Filed July 12, 2002, effective Jan. 30, 2003. 20 CSR 600-2

*Original authority: 367.170, RSMo 1951, amended 1984; 374.045, RSMo 1967, amended 1993, 1995; 374.190, RSMo 1939, amended 1949, 1967, 1992; 375.012, RSMo 1961, amended 1965, 1967, 1981, 1993, 1997, 2001; 375.041, RSMo 1985, amended 1992; 375.158, RSMo 1939, amended 1965, 1967, 1993, 2001; 375.936, RSMo 1959, amended 1967, 1969, 1971, 1976, 1978, 1983, 1991; 379.318, RSMo 1972, 2001; 379.356, RSMo 1972; 379.470, RSMo 1947; and 408.280, RSMo 1961, amended 1989.