[Rev. 11/22/2013 10:30:13 AM--2013]
[NAC-690A Revised Date: 3-12]
CHAPTER 690A - CREDIT INSURANCE
690A.002 Definitions.
690A.005 “Actuarially consistent” defined.
690A.010 “Full-time” defined.
690A.012 “Indebtedness” defined.
690A.014 “Outstanding balance basis” defined.
690A.016 “Prima facie rate” defined.
690A.018 “Single premium basis” defined.
690A.020 Disclosures to debtors: Requirement; filing of form for approval.
690A.025 Disclosures to debtors: Approved form.
690A.030 Disclosures to debtors: Notice concerning benefits payable under truncated consumer credit insurance coverage; application of adjustment factors to rates.
690A.040 Credit unemployment insurance: Benefits; eligibility for coverage.
690A.050 Credit life insurance: Written standards for processing claims; records substantiating compliance.
690A.055 Credit life insurance: Written certification.
690A.060 Processing of certain claims: Search for and action on additional policies issued by insurer on life of decedent; applicability.
690A.070 Rights and treatment of debtors: Termination of group policy; refinancing of debt; prepayment of debt.
690A.080 Refund of unearned premium; fulfillment of contract.
690A.090 Calculation of refunds.
690A.105 Credit life insurance: Calculation and use of prima facie rates; use of different rates.
690A.107 Credit life insurance: Limitation on benefits if indebtedness is repayable in substantially equal installments.
690A.115 Credit life insurance: Use of different rate for coverage of preexisting condition.
690A.125 Credit accident and health insurance: Calculation and use of prima facie rates; outstanding balance rate; conversion to closed-end credit rate; use of different rates.
690A.135 Credit accident and health insurance: Applicability of prima facie rates.
690A.145 Credit accident and health insurance: Rates for policy that excludes coverage for preexisting condition.
690A.155 Credit unemployment insurance: Rates; eligibility for benefits; age restrictions.
690A.165 Use of rates that differ from prima facie rates; documentation required; maximum rate after change of insurer.
690A.170 Limitation on term of application of different rate to closed-end loan.
690A.175 Annual reports of experience data; review of prima facie rates by Commissioner.
690A.185 Audits of payments for claims and reviews of accounts for creditors.
NAC 690A.002 Definitions. (NRS 679B.130, 690A.277) As used in this chapter, unless the context otherwise requires, the words and terms defined in NAC 690A.005 to 690A.018, inclusive, have the meanings ascribed to them in those sections.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007)
NAC 690A.005 “Actuarially consistent” defined. (NRS 679B.130, 690A.277) “Actuarially consistent” means the present value of two patterns of cash flow that when measured using the same assumptions are approximately equivalent.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007)
NAC 690A.010 “Full-time” defined. (NRS 679B.130, 690A.277) “Full-time” means a workweek of 30 hours or more.
(Added to NAC by Comm’r of Insurance by R131-05, eff. 10-31-2005)
NAC 690A.012 “Indebtedness” defined. (NRS 679B.130, 690A.277) “Indebtedness” means the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction and includes the finance charge that is or will be assigned to the transaction.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007)
NAC 690A.014 “Outstanding balance basis” defined. (NRS 679B.130, 690A.277) “Outstanding balance basis” means premiums that are paid monthly using a rate per $1,000 of monthly outstanding insured indebtedness.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007)
NAC 690A.016 “Prima facie rate” defined. (NRS 679B.130, 690A.277) “Prima facie rate” means a rate that is deemed to be reasonable in relation to the benefits provided for credit insurance and may be used without filing additional actuarial information with the Commissioner.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007)
NAC 690A.018 “Single premium basis” defined. (NRS 679B.130, 690A.277) “Single premium basis” means the present value of the monthly premiums that are charged over the term of a policy.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007)
NAC 690A.020 Disclosures to debtors: Requirement; filing of form for approval. (NRS 679B.130, 690A.073, 690A.087, 690A.277) Before a debtor elects to purchase consumer credit insurance in connection with a credit transaction, the information found in the form NDOI-915, as specified in subsection 2 of NAC 690A.025, must be disclosed to the debtor in writing. The insurer is not required to file the form he or she uses for this disclosure with the Commissioner for approval if:
1. The insurer elects to use form NDOI-915 and notifies the Commissioner of its use; or
2. If an officer of the insurer submits a written certification to the Commissioner that the forms used by the insurer are identical to form NDOI-915.
(Added to NAC by Comm’r of Insurance by R131-05, eff. 10-31-2005)
NAC 690A.025 Disclosures to debtors: Approved form. (NRS 679B.130, 690A.073, 690A.087, 690A.277)
1. Except as otherwise provided in NAC 690A.020, an insurer that issues a policy of consumer credit insurance must disclose the limitations set forth in subsection 2 in the manner set forth in subsection 2.
2. The form of the disclosure statement shall be deemed approved by the Commissioner if it is written as follows:
CONSUMER CREDIT DISCLOSURE FORM
NDOI-915
1. The purchase of consumer credit insurance from the creditor is not mandatory and is not a condition for obtaining credit approval;
2. If more than one type of consumer credit insurance is made available to you, your creditor will advise you that you may purchase each separately or only as a package;
3. Please refer to your certificate of coverage for the specific information regarding the conditions of eligibility;
4. If you have other insurance that covers the risk, you may not want or need consumer credit insurance;
5. You may cancel the insurance at any time, or if evidence of insurance is required for the extension of credit, upon proof of insurance that is acceptable to the creditor, and obtain a refund of or credit for:
(a) If the cancellation is not more than 30 days after you receive the individual policy or certificate of insurance, any premium paid by you; or
(b) If the cancellation is more than 30 days after you receive the individual policy or certificate of insurance, any unearned premium paid by you;
6. Please refer to your certificate of coverage for the specific information regarding these items: a description of the coverage, including a description of the amount, term, exceptions, limitations and exclusions, the insured event, any waiting or elimination period, any deductible, any applicable waiver of premium, the person who would receive any benefits, and the premium or premium rate for the consumer credit insurance; and
7. If the premium or insurance charge is financed, it will be subject to finance charges at the rate applicable to the credit transaction.
(Added to NAC by Comm’r of Insurance by R131-05, eff. 10-31-2005)
NAC 690A.030 Disclosures to debtors: Notice concerning benefits payable under truncated consumer credit insurance coverage; application of adjustment factors to rates. (NRS 679B.130, 690A.087, 690A.093, 690A.277)
1. In addition to any disclosure required pursuant to NAC 690A.020 or 690A.025, each policy of truncated consumer credit insurance coverage or certificate of coverage for that policy must include a notice in substantially the following form set forth in not less than 10-point bold type on the face of the policy or certificate:
NOTICE
(a) The benefits payable under this policy of insurance may not completely pay off your loan. If the term of your loan is longer than the term of this policy of insurance, the benefit is payable only if death, disability or unemployment, as applicable, occurs during the term of this policy of insurance.
(b) The benefits under a policy of credit accident and health insurance are not payable for any period of disability continuing after the date of termination for the policy specified in the schedule.
(c) The benefits under a policy of credit unemployment insurance are not payable for any period of unemployment continuing after the date of termination for the policy specified in the schedule.
2. Each insurer wishing to provide critical period consumer credit insurance coverage or truncated consumer credit insurance coverage shall apply adjustment factors to the prima facie rates. The adjustment factors must be approved by the Commissioner before being applied pursuant to this subsection.
3. As used in this section:
(a) “Critical period consumer credit insurance coverage” means a policy of credit life insurance, credit accident and health insurance or credit unemployment insurance under which, regardless of the term of the coverage, a limited number of monthly benefits are payable as a result of any single occurrence of disability or involuntary unemployment.
(b) “Truncated consumer credit insurance coverage” means a policy of credit life insurance, credit accident and health insurance or credit unemployment insurance for which the scheduled term of the insurance is less than the scheduled term of the loan for which the policy is issued.
(Added to NAC by Comm’r of Insurance by R145-08, eff. 9-18-2008)
NAC 690A.040 Credit unemployment insurance: Benefits; eligibility for coverage. (NRS 679B.130, 690A.277)
1. Credit unemployment insurance policies must contain benefits at least as favorable to insureds as the following provisions:
(a) A provision for coverage for unemployment for any reason, except that coverage may be excluded for:
(1) Voluntary forfeiture of salary, wage or other employment income;
(2) Resignation;
(3) Retirement;
(4) General strike;
(5) Illegal walk out;
(6) War;
(7) Separation from the military;
(8) Willful misconduct or criminal misconduct or unlawful behavior; and
(9) Disability caused by injury, illness or pregnancy.
(b) For credit unemployment insurance which provides for a monthly benefit in the event of unemployment, a provision that benefits will be payable after a waiting period of not longer than 30 days, but need not be retroactive to the first day of unemployment, and that the maximum benefit period is 6 months or longer.
2. Credit unemployment insurance policies may not contain eligibility requirements more restrictive than the following provisions:
(a) Exclusion of the following persons from qualification for coverage:
(1) Self-employed individuals;
(2) Workers in seasonal or temporary jobs, defined as jobs designed to last not longer than 6 months; and
(3) Debtors who have been notified either orally or in writing of any layoff or employment termination immediately or within 60 days after such notification. This exclusion must be disclosed to all prospective insureds.
(b) A requirement that the debtor be employed full-time on the effective date of coverage and for at least 12 consecutive months before the effective date of coverage.
(Added to NAC by Comm’r of Insurance by R131-05, eff. 10-31-2005)
NAC 690A.050 Credit life insurance: Written standards for processing claims; records substantiating compliance. (NRS 679B.130)
1. Each insurer issuing a policy of credit life insurance shall adopt a written standard for processing a claim for a benefit under a policy of credit life insurance that provides for the search of all policies issued by the insurer for other policies covering the life of the same person.
2. The written standard must provide that the insurer shall:
(a) Ask the person submitting a claim for a benefit under a policy of credit life insurance for any other names by which the person covered under the policy was known; and
(b) Search all policies issued by the insurer to determine whether the insured was covered under a policy issued by the insurer under another name.
3. The insurer shall maintain records substantiating compliance with the standard for processing a claim for a benefit under a policy of credit life insurance adopted pursuant to subsection 1.
(Added to NAC by Comm’r of Insurance by R177-03, eff. 12-16-2003)
NAC 690A.055 Credit life insurance: Written certification. (NRS 679B.130, 690A.277)
1. Each insurer wishing to provide coverage under a policy of credit life insurance shall, before offering that coverage in this State, certify in writing that the policy:
(a) Complies with the provisions of NRS 690A.045; and
(b) Does not include a provision for the payment of unearned interest.
2. The written certification required pursuant to subsection 1 must be:
(a) Signed by an officer of the insurer and a qualified actuary; and
(b) Filed with the Commissioner.
3. An insurer may provide coverage under any policy of credit life insurance, including, without limitation, credit life insurance using a balloon payment, that is consistent with the provisions of this section and approved by the Commissioner.
(Added to NAC by Comm’r of Insurance by R145-08, eff. 9-18-2008)
NAC 690A.060 Processing of certain claims: Search for and action on additional policies issued by insurer on life of decedent; applicability. (NRS 679B.130)
1. Except as otherwise provided in subsection 4, upon the submission of a claim for a benefit under a policy of credit life insurance, the insurer issuing the policy shall conduct a search pursuant to the standard adopted pursuant to NAC 690A.050 of all the policies issued by the insurer to determine if any other policy issued by the insurer provides coverage on the life of the decedent.
2. If the person filing a claim provides information identifying other names by which the insured may have been known, the insurer shall search all the policies issued by the insurer to determine if the insured was covered by another policy under a different name.
3. If the insurer determines that it has issued another policy on the life of the insured, the insurer shall:
(a) Notify the policy owner and beneficiaries of the discovery of the policy; and
(b) Within 6 months after discovering the policy, determine whether the insurer has liability to pay a claim on the policy.
4. The provisions of this section do not apply to an insurer that does not maintain records of the individual holders of a certificate issued under a policy of credit life insurance.
(Added to NAC by Comm’r of Insurance by R177-03, eff. 12-16-2003)
NAC 690A.070 Rights and treatment of debtors: Termination of group policy; refinancing of debt; prepayment of debt. (NRS 679B.130, 690A.277)
1. If a debtor is covered by a group policy of consumer credit insurance that requires the payment of single premiums to the insurer, or any other premium payment method that prepays coverage beyond 1 month, the insurer shall provide that in the event of termination of the policy for any reason, insurance coverage with respect to any debtor insured under the policy continues for the entire period for which the premium has been paid.
2. If a debt that is covered by a policy of consumer credit insurance is refinanced, the effective date of the coverage by any provision of the policy shall be deemed to be the first date on which the debtor became insured under the policy with respect to the debt which was refinanced, at least to the extent of the amount and term of the debt outstanding at the time the debt was refinanced.
3. If a debt is prepaid in full as the result of death or any other lump-sum payment under a policy of consumer credit insurance:
(a) No refund of a premium paid by the debtor for coverage of the debt is required.
(b) If a claim under credit accident and health coverage or credit unemployment coverage is in progress at the time of prepayment, the refund of a premium paid by the debtor may be determined as if the prepayment did not occur until the payment of benefits terminates.
(c) No refund of a premium paid by a debtor is required for any period of disability for which credit accident and health benefits are payable or during any period of unemployment for which credit unemployment benefits are payable. A refund of a premium paid by a debtor must be computed as if prepayment occurred at the end of the period of disability or unemployment.
(Added to NAC by Comm’r of Insurance by R131-05, eff. 10-31-2005)
NAC 690A.080 Refund of unearned premium; fulfillment of contract. (NRS 679B.130, 690A.097, 690A.277) A person is entitled to a refund of any unearned premium of $5 or more if the person’s policy or contract is cancelled for any reason, other than death or any other lump-sum payment, before the scheduled date of termination. A contract is considered fulfilled if a lump-sum payment has been made and there are no unearned premiums.
(Added to NAC by Comm’r of Insurance by R131-05, eff. 10-31-2005)
NAC 690A.090 Calculation of refunds. (NRS 679B.130, 690A.277)
1. If, pursuant to subsection 3, an insurer specifies the formula for a refund in an individual policy or certificate of group insurance filed for approval by the Commissioner and the filing is acknowledged and not disapproved by the Commissioner, the formula may be used. A formula for a refund which is the sum of the amounts for each remaining period for payment of the obligation, calculated by multiplying the amount paid as the premium by a fraction which has a denominator equal to the sum of the total number of periods for payment of the obligation and a numerator equal to the sum of the remaining number of periods, may be referred to as the “sum-of-the-digits” formula.
2. The following methods may be used to determine the amount of a refund for the following types of insurance:
(a) For a premium for credit insurance, if the premium is paid on a single premium basis, the refund must be calculated by the sum-of-the-digits formula.
(b) For a premium for credit insurance, if the premium is payable other than on the single premium basis, the refund must equal the prorated unearned gross premium.
3. An insurer may calculate a refund on a daily or monthly basis. The insurer shall indicate the basis used when the insurer files the formula for calculating refunds for approval by the Commissioner. A refund may be calculated on an approximate daily basis by interpolating proportionately between the values at the beginning and at the end of the month. Each month shall be deemed to have 30 days. If a refund is calculated on a monthly basis, a charge may not be made for a period which is less than 16 days after the date the last monthly installment was due, but may be made for the entire month if the period is 16 days or more.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007; A by R145-08, 9-18-2008)
NAC 690A.105 Credit life insurance: Calculation and use of prima facie rates; use of different rates. (NRS 679B.130, 690A.093, 690A.277)
1. Except as otherwise provided in subsection 5 of NAC 690A.165, the prima facie rate for credit life insurance shall be deemed reasonable in relation to the benefits provided and may be used without filing additional actuarial information with the Commissioner if the rate complies with the provisions of this section.
2. If the premium for credit life insurance is charged on a single premium basis and the premium is based on a premium rate per $100 per annum of actual or scheduled net debt, the premiums must be calculated according to the formula set forth in this subsection or according to a formula approved by the Commissioner that produces a rate that is actuarially consistent with the rates set forth in this section:
NSPn,t = (0.94/13) X (t - an + an-t)/(i X an)
Where:
“NSPn,t” = Single premium net balance rate per $100 of initial insured indebtedness for “t” months.
“n” = Term of loan.
“t” = Term of insurance.
“i” = Monthly interest rate.
“an” = Present value of an annuity immediate of $1 for a period of “n” months at interest rate “i.”
“an-t” = Present value of an annuity immediate of $1 for a period of “n-t” months at interest rate “i.”
3. For single credit life insurance, if the premium is charged on a monthly outstanding balance basis, the rate must be 72 cents per month per $1,000 of outstanding insured indebtedness.
4. If credit life insurance is sold on a joint basis, the rate for the coverage must be calculated by multiplying the applicable rate for single coverage by 1.54.
5. For dismemberment insurance, if the premium is charged on:
(a) A single premium basis, the rate must be 5 cents per $100 of insurance per annum for single life insurance and 10 cents per $100 of insurance per annum for joint life insurance.
(b) A monthly outstanding balance basis, the rate must be 8 cents per month per $1,000 of outstanding insured indebtedness on single life insurance and 16 cents per month per $1,000 of outstanding insured indebtedness on joint life insurance.
6. If the benefits provided are different from the benefits described in this section, the premium rates for those benefits must be actuarially consistent with the rates set forth in subsections 2 to 5, inclusive, and must be approved by the Commissioner before those rates may be used.
7. The rates in this section may be used only if the coverage issued in conjunction with those rates does not include an exception for a preexisting condition. If the coverage includes an exception for a preexisting condition as specified in NAC 690A.115, an insurer may file for approval for lower rates in the manner prescribed in NAC 690A.165.
8. The rates set forth in this section apply to a policy of credit life insurance that is offered to a debtor if the policy includes:
(a) Coverage for death caused by any means, except that coverage may exclude death resulting from:
(1) War or any act of war; or
(2) Suicide within 2 years after the effective date of the coverage.
(b) For the exclusions set forth in paragraph (a), the effective date of coverage for each part of the insurance attributable to a different advance or a charge to the plan account that is the date on which the advance or charge occurs.
(c) A provision that prohibits coverage from becoming effective after the debtor attains:
(1) The age of 66 years and requires that all insurance for the debtor will terminate when the debtor attains the age of 70 years; or
(2) The age of 68 years and requires that all insurance for the debtor will terminate when the debtor attains the age of 72 years. If such a provision is included, prima facie rates for credit life insurance may be increased by 5.9 percent and shall be deemed reasonable in relation to the benefits provided and may be used without filing additional actuarial information with the Commissioner.
9. As used in this section:
(a) “Dismemberment insurance” means insurance which, at a minimum, provides benefits for the actual loss of use of a hand or foot or the irrecoverable loss of sight in an eye.
(b) “Joint life insurance” means credit life insurance issued to two debtors who are jointly and severally liable for the indebtedness.
(c) “Single life insurance” means credit life insurance issued to one debtor who is liable for the indebtedness.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007; A by R145-08, 9-18-2008)
NAC 690A.107 Credit life insurance: Limitation on benefits if indebtedness is repayable in substantially equal installments. (NRS 679B.130, 690A.277) If any indebtedness is repayable in substantially equal installments, the amount of the benefit provided under a policy of credit life insurance for which the premium is charged on a single premium basis must not exceed the amount financed and the premium for the policy must be calculated in accordance with subsection 2 of NAC 690A.105.
(Added to NAC by Comm’r of Insurance by R145-08, eff. 9-18-2008)
NAC 690A.115 Credit life insurance: Use of different rate for coverage of preexisting condition. (NRS 679B.130, 690A.093, 690A.277) If a policy of credit life insurance includes coverage for a preexisting condition, the policy may not include a different rate for coverage of a preexisting condition unless the preexisting condition:
1. Required medical diagnosis or treatment within the 6 months immediately preceding the effective date of coverage; and
2. Causes death within 6 months after the effective date of coverage.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007)
NAC 690A.125 Credit accident and health insurance: Calculation and use of prima facie rates; outstanding balance rate; conversion to closed-end credit rate; use of different rates. (NRS 679B.130, 690A.093, 690A.277)
1. Except as otherwise provided in NAC 690A.030 and 690A.165, a prima facie rate for credit accident and health insurance shall be deemed reasonable in relation to the benefits provided and may be used without filing additional actuarial information with the Commissioner if the prima facie rate complies with the provisions of this section.
2. If the premium is charged on a single premium basis, the prima facie rate per $100 of initial insured debt for credit accident and health insurance must comply with the provisions of this subsection. Rates for monthly periods that are different from the rates set forth in this subsection must be extrapolated.
|
Term of Loan in Months |
Prospective Benefits |
Retroactive Benefits |
|||
|
|
14-Day |
30-Day |
7-Day |
14-Day |
30-Day |
|
|
|
|
|
|
|
|
1 to 12 |
0.96 |
0.55 |
2.06 |
1.51 |
1.17 |
|
13 to 24 |
1.51 |
1.10 |
2.75 |
2.06 |
1.72 |
|
25 to 36 |
2.06 |
1.65 |
3.44 |
2.61 |
2.27 |
|
37 to 48 |
2.40 |
1.99 |
4.12 |
2.95 |
2.61 |
|
49 to 60 |
2.68 |
2.27 |
4.81 |
3.23 |
2.89 |
|
61 to 72 |
2.95 |
2.54 |
5.50 |
3.50 |
3.16 |
|
73 to 84 |
3.23 |
2.82 |
6.18 |
3.78 |
3.44 |
|
85 to 96 |
3.50 |
3.09 |
6.87 |
4.05 |
3.71 |
|
97 to 108 |
3.78 |
3.37 |
7.56 |
4.33 |
3.98 |
|
109 to 120 |
4.05 |
3.64 |
8.24 |
4.60 |
4.26 |
|
121 to 132 |
4.33 |
3.92 |
8.93 |
4.88 |
4.53 |
|
133 to 144 |
4.60 |
4.19 |
9.62 |
5.15 |
4.81 |
|
145 to 156 |
4.88 |
4.47 |
10.31 |
5.43 |
5.08 |
|
157 to 168 |
5.15 |
4.74 |
10.99 |
5.70 |
5.43 |
|
169 to 180 |
5.43 |
4.88 |
11.66 |
6.05 |
5.70 |
3. For single credit accident and health insurance, if the premium is charged on the basis of a premium rate per month per $1,000 of outstanding insured debt, the prima facie rate per $1,000 must comply with the provisions of this subsection. Rates for monthly periods that are different from the rates set forth in this subsection must be extrapolated.
|
Term of Loan in Months |
Prospective Benefits |
Retroactive Benefits |
|||
|
|
14-Day |
30-Day |
7-Day |
14-Day |
30-Day |
|
|
|
|
|
|
|
|
1 to 12 |
1.48 |
0.85 |
3.17 |
2.32 |
1.80 |
|
13 to 24 |
1.21 |
0.88 |
2.20 |
1.65 |
1.37 |
|
25 to 36 |
1.11 |
0.89 |
1.85 |
1.41 |
1.22 |
|
37 to 48 |
0.98 |
0.81 |
1.68 |
1.21 |
1.06 |
|
49 to 60 |
0.88 |
0.74 |
1.58 |
1.06 |
0.95 |
|
61 to 72 |
0.81 |
0.69 |
1.50 |
0.96 |
0.87 |
|
73 to 84 |
0.76 |
0.66 |
1.46 |
0.89 |
0.81 |
|
85 to 96 |
0.72 |
0.64 |
1.42 |
0.84 |
0.76 |
|
97 to 108 |
0.69 |
0.62 |
1.39 |
0.80 |
0.73 |
|
109 to 120 |
0.67 |
0.60 |
1.36 |
0.76 |
0.70 |
4. If the coverage provided is a constant maximum indemnity for a specific period, the actuarial equivalent of subsections 2 and 3 must be used.
5. If the coverage provided is a combination of a constant maximum indemnity for a specific period after which the maximum indemnity begins to decrease in even amounts per month, an appropriate combination of the premium rate for a constant maximum indemnity for a specific period and the premium rate for a maximum indemnity which decreases in even amounts per month must be used.
6. The outstanding balance rate for credit accident and health insurance may be a term-specified rate or a rate paid on an outstanding balance basis for an average of the single rates if the Commissioner finds that the single rate is actuarially consistent with the rates set forth in subsection 3.
7. The prima facie rates and the formulas used to calculate the rates for credit accident and health insurance set forth in subsection 3 shall be deemed reasonable in relation to the benefits provided and may be used without filing additional actuarial information with the Commissioner if the insurance is issued for an open-end credit agreement. Any formula used to convert from an open-end credit rate to a closed-end credit rate may be used if approved by the Commissioner.
8. If the maximum benefit of the credit accident and health insurance equals the net debt on the date of disability, the term of the loan must be calculated according to the following formula:
n = 1/(minimum payment percent)
Where “n” = Term of the loan.
The prima facie rate must be determined by applying the calculated term to the rates set forth in subsections 2 and 3. A composite percentage may be used in place of the minimum payment percentage for a specific credit transaction.
9. If the maximum benefit of the credit accident and health insurance equals the outstanding balance of the loan on the date of disability plus any interest accruing on that amount during the period of disability, the term of the insurance is calculated by using the following formula:
n = ln{1-(1000i/x)}/ln(v)
Where:
“i” = Interest rate on the account or a composite interest rate used for the type of policy.
“n” = Term of the insurance.
“x” = Monthly payment per $1,000 of coverage that is established for a term of insurance calculated in this subsection.
“v” = 1/(1 + i).
The calculated value of the term of insurance must be used to determine an initial rate set forth in subsections 2 and 3. The final prima facie rate must be calculated by multiplying the initial rate by the adjustment by using the following formula:
n/an
Where:
“n” = Term of insurance calculated in this subsection.
“an” = (1 - vn)/i.
10. If the credit accident and health insurance is sold on a joint basis, the rate for the coverage must be calculated by multiplying the applicable rate for single coverage by 1.85.
11. If the benefits provided under a policy of credit accident and health insurance are different from the benefits described in this section, the rates for those benefits must be actuarially consistent with the rates set forth in this section.
12. As used in this section:
(a) “Composite interest rate” means an average of all interest rates offered by a creditor of an insurer.
(b) “Composite percentage” means the average of all minimum payment percentages for a specific credit transaction.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007; A by R145-08, 9-18-2008)
NAC 690A.135 Credit accident and health insurance: Applicability of prima facie rates. (NRS 679B.130, 690A.093, 690A.277) The rates set forth in subsections 2 and 3 of NAC 690A.125 apply to a policy of credit accident and health insurance that is offered to a debtor if the policy includes:
1. Coverage for disability caused by any means, except that coverage may be excluded for disabilities resulting from:
(a) Normal pregnancy;
(b) War or any act of war;
(c) Elective surgery;
(d) Intentionally self-inflicted injury;
(e) Sickness or injury caused by or resulting from the use of alcoholic beverages or controlled substances unless they are administered on the advice of, and taken as directed by, a licensed physician other than the insured;
(f) Flight in any aircraft other than a commercially scheduled aircraft; or
(g) A preexisting condition.
2. For the exclusion set forth in paragraph (g) of subsection 1, the effective date of coverage for each part of the insurance attributable to a different advance or a charge to the plan account is the date on which the advance or charge occurs.
3. A definition of disability providing that:
(a) For the first 12 months of disability, total disability means the inability to perform the essential functions of the insured’s occupation.
(b) After the first 12 months of disability, total disability means the inability of the insured to perform the essential functions of any occupation for which he or she is reasonably suited because of education, training or experience.
4. A provision that is not more restrictive than a provision that requires the debtor to be employed full-time on the effective date of coverage and for at least 12 consecutive months before the effective date of coverage.
5. A provision that prohibits coverage from becoming effective for a debtor after the debtor attains:
(a) The age of 66 years and requires that all insurance for the debtor will terminate when the debtor attains the age of 70 years; or
(b) The age of 68 years and requires that all insurance will terminate when the debtor attains the age of 72 years. If such a provision is included, prima facie rates for credit accident and health insurance may be increased by 1.8 percent and shall be deemed reasonable in relation to the benefits provided and may be used without filing additional actuarial information with the Commissioner.
6. A daily benefit of not less than one-thirtieth of the monthly benefit payable under the policy.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007)
NAC 690A.145 Credit accident and health insurance: Rates for policy that excludes coverage for preexisting condition. (NRS 679B.130, 690A.093, 690A.277)
1. The rates for a policy of credit accident and health insurance set forth in NAC 690A.125 may be used only if the policy issued using those rates excludes coverage for a preexisting condition that:
(a) Required medical diagnosis or treatment within the 6 months immediately preceding the effective date of coverage; and
(b) Causes disability that begins within 6 months after the effective date of coverage.
2. If the policy issued using the rates set forth in NAC 690A.125 does not exclude coverage for a preexisting condition as specified in paragraphs (a) and (b) of subsection 1, an insurer may file for approval for higher rates in the manner prescribed in NAC 690A.165.
3. If a policy of credit accident and health insurance includes a provision authorizing an increase in the amount of coverage, including, without limitation, coverage for an outstanding monthly balance, after the initial effective date of the policy or group certificate for the policy, any exclusion in the policy or certificate for a preexisting condition may be applied separately for each increase beginning on the date of the increase. The provisions of this subsection do not authorize the application of a new exclusion for a preexisting condition to coverage that is effective immediately before any such increase.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007; A by R145-08, 9-18-2008)
NAC 690A.155 Credit unemployment insurance: Rates; eligibility for benefits; age restrictions. (NRS 679B.130, 690A.093, 690A.277)
1. Each insurer who files rates with the Commissioner for credit unemployment insurance must include in its filing the formula upon which its rates are based.
2. Except as otherwise provided in NAC 690A.030, the rates shall be deemed reasonable if:
(a) On a single premium basis, the rates do not exceed 95 cents for $100 of insurance per annum for the term of the loan for which the insurance is issued;
(b) On a monthly outstanding balance basis, the rates do not exceed 79 cents for $1,000 of remaining principal balance;
(c) On a monthly outstanding balance basis, the rates do not exceed 67 cents for $1,000 of remaining payments;
(d) On a single premium basis for 90-day lump-sum benefits, the rates do not exceed $1.23 for $100 of initial gross indebtedness per year;
(e) On a monthly outstanding balance basis for 90-day lump-sum benefits, the rates do not exceed $1.03 for $1,000 of remaining principal balance; and
(f) On a monthly outstanding balance basis for 90-day lump-sum benefits, the rates do not exceed 86 cents for $1,000 of remaining payments.
3. If an insurer files rates graduated according to the size of the group, the rates shall be deemed reasonable if the rates approximate the standards set forth in subsections 2 to 5, inclusive. The insurer must submit an actuarial memorandum in support of the claim of the insurer that the rates approximate those standards.
4. If the credit unemployment insurance is sold on a joint basis, the rate for the coverage must be calculated by multiplying the applicable rate for single coverage by 1.85.
5. A policy of credit unemployment insurance must include a requirement that:
(a) To be eligible to receive payments under a claim for loss of employment income, the debtor must provide proof that he or she has:
(1) Filed a claim for unemployment benefits with the state agency that administers unemployment benefits in the state where the debtor is eligible to file the claim; or
(2) Registered with a state-licensed employment agency and the registration:
(I) Begins not later than 30 days after the date of involuntary unemployment; and
(II) Continues for the entire period of the claim; and
(b) The debtor is reeligible for unemployment benefits after the completion of payments under a claim for loss of employment income if he or she was employed:
(1) On a full-time basis in a nonseasonal occupation;
(2) For 30 consecutive days; and
(3) By the same employer.
6. A policy of credit unemployment insurance must not include:
(a) Eligibility requirements more restrictive than an age restriction providing that no insurance will become effective for a debtor after the debtor attains:
(1) The age of 66 years and that all insurance for the debtor will terminate when the debtor attains the age of 70 years; or
(2) The age of 68 years and that all insurance for the debtor will terminate when the debtor attains the age of 72 years. If such a provision is included, a premium adjustment is not required and the prima facie rates for credit unemployment insurance shall be deemed reasonable in relation to the benefits provided and may be used without filing additional actuarial information with the Commissioner.
(b) Coverage for unemployment resulting from leave taken in accordance with the Family and Medical Leave Act of 1993, 29 U.S.C. §§ 2601 et seq.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007; A by R145-08, 9-18-2008)
NAC 690A.165 Use of rates that differ from prima facie rates; documentation required; maximum rate after change of insurer. (NRS 679B.130, 690A.277)
1. An insurer may file for approval by the Commissioner to use rates that are higher than the prima facie rates set forth in NAC 690A.105 to 690A.155, inclusive, if the rates are reasonable in relation to the benefits provided. If rates higher than the prima facie rates set forth in NAC 690A.105 to 690A.155, inclusive, are filed for approval, the filing must specify the account to which the rates apply. The rates must be:
(a) Applied uniformly to all accounts of the insurer;
(b) Applied on an equitable basis, as approved by the Commissioner, to any account of the insurer for which the experience has been less favorable than expected; or
(c) Applied according to the insurer’s application for approval of rates filed with the Commissioner.
2. A rate that is different from the prima facie rate may be in effect for a period not longer than the experience period used to establish the rate. An insurer may file for a new rate before the end of a rate period but may not file more than once during any 12-month period.
3. Each filing for a rate that is higher than the prima facie rates set forth in NAC 690A.105 to 690A.155, inclusive, must be accompanied by sufficient documentation to support the rate, including, without limitation:
(a) Experience of earned premiums, incurred losses and calculated loss ratios for the immediately preceding 3 years, or all available experience if less than 3 years, based on credible data obtained in this State;
(b) Information supporting the development of the rate;
(c) An analysis of credibility and use of collateral data, including, without limitation:
(1) The experience of the insurer in another state for a similar policy of insurance;
(2) Industry experience; and
(3) Mortality or morbidity tables; and
(d) Certification by a qualified actuary.
4. If an account changes insurers, the rate approved for the account by the prior insurer is the maximum rate that may be used by the succeeding insurer for the remainder of the rate period approved for the prior insurer or until a new rate is approved for use on the account, whichever occurs earlier.
5. An insurer may use a rate for an account that is lower than its filed rate without notifying the Commissioner unless the rate applies to credit life insurance. If the rates for credit life insurance are lower than the prima facie rates set forth in NAC 690A.105, an insurer may file for approval for lower rates in the manner prescribed in subsections 1 and 2.
6. Rates for benefits that are substantially different than those set forth in NAC 690A.105 to 690A.155, inclusive, must be approved by the Commissioner. In determining whether a benefit or plan is substantially different pursuant to this subsection, the Commissioner will consider any information submitted by the insurer, including, without limitation:
(a) The amount of the benefit in relation to the amount of the balance of the insured loan;
(b) The use or nonuse of any exclusionary or retroactive waiting period;
(c) The age of the debtor;
(d) The amount of underwriting used by the insurer; and
(e) Any coverage for or exclusion of causes of loss.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007; A by R145-08, 9-18-2008)
NAC 690A.170 Limitation on term of application of different rate to closed-end loan. (NRS 679B.130, 690A.093, 690A.277) Any deviation from a rate for credit life insurance, credit accident and health insurance or credit unemployment insurance approved by the Commissioner must not be applied to a closed-end loan having a term of 24 months or less for which coverage is in effect on the effective date of the deviation.
(Added to NAC by Comm’r of Insurance by R145-08, eff. 9-18-2008)
NAC 690A.175 Annual reports of experience data; review of prima facie rates by Commissioner. (NRS 679B.130, 690A.093, 690A.277) An insurer that provides consumer credit insurance shall, on or before June 30 of each year, report its experience data annually to the Commissioner, on a form prescribed by the Commissioner. The initial such report must be submitted by the insurer on or before September 1, 2008. The Commissioner will use this data to determine annually whether the prima facie rates for credit life insurance, credit accident and health insurance and credit unemployment insurance set forth in NAC 690A.105 to 690A.155, inclusive, are reasonable in relation to the benefits provided. If the Commissioner determines that the rates are not reasonable, the Commissioner will adopt new rates.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007; A by R145-08, 9-18-2008)
NAC 690A.185 Audits of payments for claims and reviews of accounts for creditors. (NRS 679B.130, 690A.277)
1. Each insurer who engages in the business of credit insurance in this State shall conduct:
(a) An annual audit of all payments for claims made on its behalf by an administrator, claim representative or group policyholder.
(b) A review of each of its accounts for creditors with respect to the business of credit insurance of the creditor to ensure compliance with the Nevada Insurance Code and the regulations adopted pursuant thereto. The initial review must be conducted not later than March 1, 2008, or the date of the initial credit transaction between the creditor and the insurer, whichever is later. After the initial review, the review must be conducted every 24 months.
2. The audit or review must include, if applicable, a determination that:
(a) The proper charges to debtors for premiums are made by the creditor and remitted to the insurer in a timely manner.
(b) The refunds are being calculated accurately and paid promptly by the creditor.
(c) All claims and inquiries concerning claims are filed promptly and handled properly.
(d) Amounts of insurance payable on death, in excess of the amounts necessary to extinguish the indebtedness, are properly calculated and reported to the secondary beneficiary of the policy.
(e) The creditor is promptly and fairly processing complaints concerning its business of credit insurance and is maintaining proper procedures for and records of the complaints processed.
3. The insurer shall retain the written results of the audit or review at its home office for at least 7 years after the date of the completion of the audit or review by the insurer.
4. The insurer shall pay the cost of the audit or review, and the cost may not be chargeable against any creditor, producer or other entity.
5. In addition to any other authority granted to the Commissioner pursuant to chapter 679B of NRS, if the Commissioner determines that an audit or review required pursuant to this section is not being conducted or that there is reason to believe that the audit or review is not complete or is deficient, the Commissioner may cause an audit or review to be conducted by the Division of Insurance of the Department of Business and Industry or an independent auditor. The insurer shall pay the cost of the audit or review.
(Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007)