N.H. Code Admin. R. Ins 1201.10 – Actual Premium Rates for Credit Insurance

(a) The actual premium rates applicable upon the effective date of this part shall be those shown in Ins 1201.19. Unless a rate deviation has been granted, beginning on the effective date of this part, it shall be unlawful for any insurer to issue any new business with premium rates that exceed the actual premium rates shown in Table 1200-2. With respect to any group credit insurance policy issued before the effective date of this part, the premium rates charged under such policy shall not exceed the actual premium rates shown in Table 1200-2 beginning with the first anniversary date of such policy occurring on or after the effective date of this part, unless a rate deviation has been approved with respect to such policy for an effective date on or after the effective date of this part.
(b) When there is a change in the actual premium rate for any plan of benefits of any class of business, the new actual premium rate table is to be produced by multiplying the corresponding table of nominal rates by the "actual premium rate factor."
(c) For the purposes of this part, the credibility factor may be based on either the number of claims incurred, the "average number of life years," or these 2 items combined. When reporting its experience for any experience period, an insurer may report credibility data, showing either "claim count" or "life year" data. If "claim count" or "life year" data is not available, reasonable methods of approximation may be used until such data is developed.
(d) The credibility table, cited as table 1200-1, shall be as follows:
Table 1200-1 Credibility Table
Average Number of Life Years
Credit Life
Credit Accident and Health Plans Retroactive and Nonretroactive
Incurred Claim Count
Credibility Factor
Waiting Periods
7 Day
14 Day
30 Day
1
1
1
1
1
.00
1,800
95
141
209
9
.25
2,400
126
188
279
12
.30
3,000
158
234
349
15
.35
3,600
189
281
419
18
.40
4,600
242
359
535
23
.45
5,600
295
438
651
28
.50
6,600
347
516
767
33
.55
7,600
400
594
884
38
.60
9,600
505
750
1,116
48
.65
11,600
611
906
1,349
58
.70
14,600
768
1,141
1,698
73
.75
17,600
926
l,375
2,047
88
.80
20,600
1,084
1,609
2,395
103
.85
25,600
1,347
2,000
2,977
128
.90
30,600
1,611
2,391
3,558
153
.95
40,000
2,106
3,125
4,651
200
1.00
(e) The above integral numbers in table 1200-1 represent the lower end of the bracket for each “Z” factor as defined in (m)(4)d. below. The upper end shall be one less than the lower end for the next highest Z.
(f) Reasonable methods of approximations may be used in arriving at the amount to be reported on Form A or Form B.
(g) Incurred claim count shall be the total number of claims reported during the experience period, whether paid or in the process of payment plus any incurred but not reported (IBNR) at the end of the experience period less the number of claims incurred but not reported at the beginning of the experience period. If a debtor has been issued more than one certificate for the same plan of insurance, only one claim shall be counted. If a debtor receives disability benefits, only the initial claim payment for that period of disability shall be counted.
(h) If the finance or interest charge is computed on an amount which includes the charge for insurance, a single premium shall be deemed to have been paid, regardless of how the creditor pays premiums to the insurer.
(i) The amount of investment income (I) shall be calculated as the amount of interest that would be earned in one year’s time on a fund equal to the average of the beginning premium reserve and the ending premium reserve, as in the following formula:
1. (1)
2. (2) Where “i” means .055;
3. (3) Where “A” means premium reserve, beginning of period; and
4. (4) Where “B” means premium reserve, end of period.
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(j) The actual premium rates shall be as shown in Ins 1201.19. The commissioner shall determine new actual premium rates for each succeeding biennium which shall continue in effect until amended or repealed.
(k) Any change in actual premium rates implemented by the commissioner shall be promulgated as an amendment to this part pursuant to RSA 541-A. First notice of the commissioner's intent to adopt new actual premium rates shall appear in the register of rulemaking proceedings maintained by the director of legislative services of this state. The commissioner shall issue such notice of new actual premium rates at least 90 days before any such new actual premium rates are to be effective.
(l) In determining new actual premium rates, the commissioner shall analyze the experience data for the most recently completed experience period as reported to him or her by the insurers.
(m) The new actual premium rate factor for each class of business and each plan of benefits shall be derived from the following analyses:
1. (1) If CLR is less than TLR for credit life insurance or for credit accident and health insurance then the following formula shall apply:
  APRF(Allowed) = APRF(Current)*(1-(TLR-CLR));
2. (2) If CLR is greater than TLR for credit life insurance then the following formula shall apply:
  APRF(Allowed) = APRF(Current)*(1+1.1*(CLR-TLR));
3. (3) If CLR is greater than TLR for credit accident and health insurance then the following formula shall apply:
  APRF(Allowed) = APRF(Current)*(1+1.2*(CLR-TLR));
4. (4) The symbols used in the above formulas represent the following:
  1. a. “APRF(Allowed)” means actual premium rate factor allowed by formula;
  2. b. “APRF(Current)” means actual premium rate factor currently approved;
  3. c. “CLR” means the credibility adjusted preliminary loss ratio derived from the formula CLR = Z*(PLR) + (1 –Z)*(TLR);
  4. d. “Z” means the credibility factor appropriate to the experience being considered as obtained from the credibility table;
  5. e. “PLR” means the preliminary loss ratio obtained by dividing the incurred claims by a divisor consisting of the earned premiums plus the investment income; and
  6. f. “TLR” means the target loss ratio of 50 percent for all plans of credit life insurance and 60 percent for all credit accident and health insurance plans.
(n) Before implementing new actual premium rates, the commissioner shall consider the overall impact of the indicated new rates and shall modify the actual formula results so that no modification would result in a rate change in excess of 20 percent.
(o) If the application of the formulas in (m) above produces new actual premium rates that differ from the actual premium rates currently in effect by less than 5 percent, the commissioner shall continue the current actual premium rates that are in use.
(p) Insurers shall be prohibited from charging credit insurance premium rates in excess of the actual premium rates that are in effect unless approval for a rate deviation is obtained from the commissioner. Insurers, at their option, may charge an account a premium rate for credit insurance that is less than the actual premium rate in effect.
(q) Whenever new actual premium rates are adopted by the commissioner, the new actual premium rates shall not be applied to existing group credit insurance policies until the first anniversary date of such policy occurring on or after the effective date of the new actual premium rates. The adoption of new actual premium rates shall not void existing rate deviations approved by the commissioner.

Source. #1900, eff 1-1-82; ss by #2441, eff 1-1-84; amd by #3196, eff 2-5-86; ss by #4287, eff 7-1-87; amd by #4369, eff 3-1-88; ss by #5650, eff 7-1-93, EXPIRED 7-1-99 New. #7146, eff 4-1-00, EXPIRED: 4-1-08 New. #9611, eff 1-4-10; ss by #12474, eff 2-2-18