PURPOSE: Chapter 385, RSMo 1986 authorizes the director to prescribe that all rates charged for credit life and credit accident and sickness insurance in Missouri be reasonable. The director may prescribe that all rates be calculated in a manner so that claims incurred are not less than fifty percent of the premiums earned under these policies. This rule would implement the provisions of sections 385.045.1 and .2 and 385.070.1(3)(e), RSMo by requiring that credit life and credit accident and sickness insurance be calculated in conformity with the methods prescribed in section 385.070.1(3), RSMo 1986. (1) After a study of the loss ratios incurred under the rates prescribed in section 385.070.1(1), RSMo 1986, the director has reason to believe that the rates prescribed in many cases, do not accomplish the purposes of section 385.070, RSMo 1986 namely a ratio of claims incurred to premiums earned of not less than fifty percent (50%).

1. (2) If the presumptively reasonable rates contained in 20 CSR 600-2.110 become unenforceable for any reason, all rates charged for credit life insurance shall be calculated in conformity with the methods described in section 385.070.1(3), RSMo 1986. This may be accomplished by use of either of the following two (2) methods:

   1. (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 a manner as to affect the rate; and
   2. (B) When experience is available, the following method be used:

Let P=premiums earned (one to three (1–3) years) D=claims incurred (one to three (1–3) years) r=premium rate to be determined s=standard premium for coverage

Then r = s D × = _______ .5 P

1. (3) If the method in subsection (2)(B) is used, approval will not be given for a period longer than the credibility period utilized in the filing.

AUTHORITY: sections 374.045, RSMo Supp. 1993, 385.045 and 385.070, RSMo Supp. 1992 and Chapter 536, RSMo 1986.* This rule was previously filed as 4 CSR 190- 13.200. Original rule filed June 12, 1981, effective Nov. 1, 1981. *Original authority: see Missouri Revised Statutes, 1986 and Cumulative Supplement to the Revised Statutes of Missouri, 1993.