Opinion ID: 1931103
Heading Depth: 2
Heading Rank: 2

Heading: The Singletons' Excessive-Premiums Allegation

Text: In response to AmSouth's and Protective's motions for a summary judgment, the Singletons, without amending their complaint, made a new allegation: that they were charged excessive insurance premiums for credit life insurance. In support of this allegation, the Singletons submitted the affidavits of two certified public accountants, Michael Askew and Wray Pearce. It is undisputed that Regulation 4(c) of the State Banking Department Regulations, as amended May 22, 1991, and effective at the time of these loans, provided the applicable rate: 1. The maximum rate for single premium decreasing term credit life insurance shall not exceed eighty cents ($0.80) per hundred ($100) per annum. . . . . 4. Rates for premiums payable on other than single premium basis shall not exceed the actuarial equivalent of the rates specified above. (Emphasis added.) It is also undisputed that the premiums the Singletons paid for the credit-life insurance were payable in other than single premium basis. Therefore, the maximum rate AmSouth and Protective were allowed to charge was the actuarial equivalent of the rates specified in subsection (c)(1) of Regulation 4. However, in neither affidavit relied on by the Singletons did the certified public accountants claim to have determined the actuarial equivalent of the specified rates. In response to the Singletons' new allegation, AmSouth and Protective produced the affidavit of an independent actuary, Steven L. Ostlund, and the affidavit of James Whitehead, a supervisor with the Bureau of Loans of the State Banking Department. Mr. Ostlund's affidavit calculated the actuarial equivalent of the single premium rate of 80 cents per $100 per annum specified in Regulation 4(c)(1) and determined that the actuarial equivalent of that rate was $1.23 per $1,000 per month. Mr. Ostlund testified that, after reviewing the loan documents, he was of the opinion that the credit-life insurance rates applied to the Singleton loans were less than the actuarial equivalent of $.80 per $100 per annum and were therefore in compliance with Regulation 4(c). The affidavit of James Whitehead confirmed Mr. Ostlund's actuarial calculation. Whitehead's affidavit states that the State Banking Department has actually adopted and used this actuarial calculation in the most recent revision of the subject regulation: The Banking Department regulations in effect at the time of the Singleton loans provided that rates for premiums payable on other than a single premium basis, as the Singleton premiums were, should not exceed the actuarial equivalent of eighty cents ($0.80) per hundred per annum and 150 percent of that rate for dual credit life insurance coverage. The actuarial equivalent of eighty cents ($0.80) per annum is $1.23 per month per $1,000.00 of the outstanding insured indebtedness. The Banking Department used this actuarial equivalent ($1.23/month/$1,000.00) when amending its credit life insurance regulations in 1997 and incorporated and adopted the $1.23/month/$1,000.00 as the maximum allowable rate for credit life insurance. See 155-2-2-.12 of the Alabama Consumer Credit Act [Regulations]. Mr. Whitehead also concluded that the credit life insurance premiums charged to the Singletons ... were in compliance with the applicable Banking Department regulations, and were, in fact, less than those allowed by law.