California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 2 - Policy Forms and Other Documents › Article 6.8 - Credit Life and Credit Disability Insurance: Premium Rates › Section 2248.40 - Calculation of the New Case Rate

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) As used in §§
										2248.39 through
				  2248.42:
(1) "Experience group" means the experience
				  under a plan of insurance of one creditor or more than one creditor. For the
				  purpose of defining and using experience group for life insurance and for
				  disability insurance the separate plans of insurance are: Class, as defined in
				  §
											2248.33; life/disability; single
				  life/joint life; open end/closed end; and, single premium/monthly premium. In
				  addition, for disability insurance separate plans also include elimination
				  period and retroactive/nonretroactive for disability. The insurance plans of
				  each creditor in a multiple creditor group must be reasonably similar and each
				  creditor-plan must provide the same type of life or disability coverage (from
				  §
											2248.31) and be in the same Class
				  of Business (from §
											2248.33).
For purposes of determining deviated rates, the
					 Commissioner may allow a combination of experience groups for single life/joint
					 life for life and disability insurance, and elimination period,
					 retroactive/nonretroactive for disability insurance to maintain an appropriate
					 relationship between rates, where such combination is justified by the carrier
					 to the satisfaction of the Commissioner.
If an experience group has experience in more than this
					 State, an insurer may use only the experience of the experience group in the
					 State 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 plans of insurance and is adjusted to account for differences in
					 premium rates.
Insurers using multiple-creditor groups for the purpose of
					 determining downward or upward deviated rates shall establish written standards
					 for the inclusion of individual creditor-groups within such multiple creditor
					 groups. Such standards shall be applied uniformly regardless of the type of
					 deviation contemplated.
(2)
				  "Experience period" means the most recent period of time for which experience
				  is reported, but not for a period longer than three full years. An experience
				  period shall end on December 31st of each calendar year.
(A) If an experience group develops a
				  Credibility Factor of 1 from TABLE 4 ("Rate Deviation Credibility Table" in
				  §
												2248.47) in less than three years,
				  the experience period for that case will be the number of full years needed to
				  attain that Credibility Factor.
(B)
				  An insurer may elect a level of credibility within the range of TABLE 4 for an
				  experience group. If an experience group develops the minimum credibility
				  elected by the insurer in less than three years, the experience period for that
				  group may be, at the option of the insurer, either the number of full years
				  needed to develop the elected minimum credibility or three full years. If an
				  experience group fails to attain such minimum credibility within three full
				  years, the credibility actually attained in that period shall be used for
				  determining downward deviated rates.
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.
(C) 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.
(3) "Incurred
				  Claim Count", as used in TABLE 4, means the number of claims incurred 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 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 policy or
				  certificate for the same plan of insurance, only one claim is counted. If a
				  debtor receives disability benefits, only the initial claim payment for that
				  period of disability is counted.
(4) "Average Number of Life years", as used
				  in TABLE 4, means the average number of group certificates or individual
				  policies in force during the experience period (without regard to multiple
				  coverage) times the number of years in the experience period, or some
				  equivalent calculation.