California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 4.10 - Rates for Credit Property Insurance and Credit Unemployment Insurance › Article 2 - Definitions › Section 2670.4 - Definitions Applicable to this Subchapter

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) "Credit property insurance" means
				  insurance that provides coverage (generally coverage to repair or replace) on
				  personal property pledged or offered as collateral for securing a personal or
				  consumer loan, or personal property purchased under an installment sales
				  agreement or through a credit transaction. Credit property insurance provides
				  coverage for loss or damage to personal property caused by the perils set forth
				  in the credit property insurance policy. Credit property insurance does not
				  include creditor-placed insurance which is "force-placed" by a lender or
				  creditor in the event the borrower or debtor fails to maintain insurance as
				  required under the borrower or debtor's agreement with the lender or creditor.
				  Credit property insurance does not include insurance which covers physical
				  damage to an automobile or other motor vehicle, watercraft, or aircraft as a
				  part of or in conjunction with a liability insurance policy.
(b) "Joint credit property insurance" means
				  credit property insurance which insures two persons who are jointly liable to a
				  lender or creditor. For purposes of these regulations, references to "credit
				  property insurance" shall encompass both credit property insurance and joint
				  credit property insurance.
(c)
				  "Credit unemployment insurance" is insurance which provides coverage for
				  periodic payments or payment of an outstanding balance on a specific loan or
				  other credit transaction while the debtor is involuntarily unemployed, as
				  defined in the policy.
(d) "Joint
				  credit unemployment insurance" means credit unemployment insurance which
				  insures two persons who are jointly liable to a lender or creditor. For
				  purposes of these regulations, references to "credit unemployment insurance"
				  shall encompass both credit unemployment insurance and joint credit
				  unemployment insurance.
(e) "Closed
				  end" plan of indebtedness is defined in CCR Section
				  2248.31(c).
(f) "Earned premium" means gross premium
				  earned, including policy and membership fees, less return premium and premium
				  on policies not taken.
(g)
				  "Experience group" means the experience under a program of insurance of one
				  creditor or more than one creditor. For purposes of defining and using the term
				  "experience group," the following are separate programs of insurance: property;
				  unemployment; open end or closed end; single premium or monthly premium;
				  elimination period for unemployment; and retroactive or nonretroactive for
				  unemployment. The insurance programs of each creditor in a multiple creditor
				  group must be reasonably similar and each creditor's program must contain the
				  same type of coverages and exclusions. If an experience group has experience in
				  more than this State, an insurer may use only the experience of the experience
				  group in California to rate the group or, with the approval of the
				  Commissioner, an insurer may use the multi-state experience of the experience
				  group for this purpose if it is more credible than the California experience
				  and is generated by the same or similar programs of insurance and is adjusted
				  to account for differences in premium rates. Insurers using multiple-creditor
				  groups for the purpose of determining rates shall establish written standards
				  for the inclusion of individual creditor-groups within such multiple creditor
				  groups.
(h) "Experience period"
				  means the most recent period of time for which experience is reported, but not
				  for a period longer than three full years. If an experience group develops a
				  Credibility Factor of 1 from TABLE 1 (the "Credibility Table" in Section
				  2670.9) in less than three years,
				  the experience period for that case will be the number of full years needed to
				  attain full credibility. Experience incurred in the period immediately
				  preceding the effective date of this regulation may be used to the extent
				  necessary to fill out the experience period. If a new experience group of an
				  insurer has experience in this State with a prior insurer, the new insurer must
				  use the most recent experience of the experience group with the prior insurer
				  to the extent necessary to fill out an experience period. Other data or
				  projections may be used if the Commissioner finds them to be more
				  credible.
(i) "Reported Claim
				  Count", as used in TABLE 1 (Section
				  2670.9), means the number of
				  claims reported for the experience group during the experience period. This
				  means the total number of claims reported during the experience period, whether
				  paid or in the process of payment excluding claims without payment.
(j) "Open end" plan of indebtedness is
				  defined in CCR Section
				  2248.31
				  (
l
).
(k) "Prima
				  facie rate" means the maximum rate which reasonably can be expected to provide
				  the permissible loss ratio set forth in 2670.6. Prima Facie Rates and
				  Permissible Loss Ratio for Benchmark Programs and which is not excessive,
				  inadequate, unfairly discriminatory or otherwise in violation of Chapter 9 of
				  the Insurance Code
1. New
					 article 2 (section
					 2670.4) and section filed
					 3-10-2003; operative 4-9-2003. Submitted to OAL for printing only pursuant to
					 Government Code section
					 11343.8 as
					 a regulation that establishes rates in accordance with Government Code section
					 11340.9(g)
					 (Register 2003, No. 11).
2. Change without regulatory effect
					 withdrawing and repealing article 2 (section
					 2670.4) and section pursuant to
					 settlement agreement in Consumer Credit Insurance Association v. John Garamendi
					 (California Superior Court No. 03CS00533) filed 5-27-2004 pursuant to section
					 100, title 1, California Code of
					 Regulations (Register 2004, No. 22).
3. New article 2 (section
					 2670.4) and section filed
					 4-28-2006; operative 5-28-2006. Submitted to OAL for printing only pursuant to
					 Government Code section
					 11343.8 as
					 a regulation that establishes rates in accordance with Government Code section
					 11340.9(g)
					 (Register 2006, No. 17).
4. Change without regulatory effect
					 amending subsection (a) filed 7-14-2021 pursuant to section
					 100, title 1, California Code of
					 Regulations (Register 2021, No. 29). Filing deadline specified in Government
					 Code section
					 11349.3(a)
					 extended 60 calendar days pursuant to Executive Order
					 N-40-20.
Note: Authority cited: Sections
						779.21,
						779.36,
						12921 and
						12926,
						Insurance Code; Credit Insurance General Agents Association v. Payne, 16 Cal.3d
						651 (1976); and 20th Century v. Garamendi, 8 Cal.4th 216 (1994). Reference:
						Sections
						779.36,
						1861.01 and
						1861.05,
						Insurance Code.