PURPOSE: This regulation is designed to
stimulate open competition among insurers to provide insurance coverage in the
credit context at rates which are not unfairly discriminatory or excessive.
Where property insurance is sold by a creditor in connection with the extension
of credit, the regulating forces of open competition may not operate to control
rates and extend benefits. This regulation designates rate levels for certain
coverages above which rates for insurance sold in the credit context will be
presumed excessive and unfairly discriminatory under statutory standards. It is
solely because of the lack of effective price and product controlling
competition that the promulgation of these standards has become necessary to
policyholders and the public interest. This regulation was adopted pursuant to
the provisions of section
374.045, RSMo and to implement
sections 367.170,
374.190,
375.012,
375.158,
375.936,
385.010 to
385.080, and
408.280,
RSMo.
(1) Scope.
This regulation applies to credit property as defined in section
385.020, RSMo.
(2) Definitions. The following terms are
defined for use in this regulation:
(A)
Affiliated insurance producer means any insurance producer of an insurer who
receives any employment remuneration from a dealer or lender or sells insurance
primarily to debtors of a dealer or lender group of associated dealers or
lenders or whose insurance a dealer or lender controls, directly or indirectly,
or regularly designates, recommends, refers, or suggests to the buyer that s/he
purchase in connection with the negotiation, execution, extension, or renewal
of a contract;
(B) Contract
includes any credit transaction for household, personal, or family
use;
(C) Dealer means any person
who extends credit for household, personal, or family use or any successor to a
creditor's rights;
(D) Lender is
any person engaged in the business of making consumer credit loans as defined
in section 367.100.2, RSMo and any assignee of a consumer credit loan agreement
to include registrants under Chapter 367, RSMo, state banking associations,
savings and loan associations, national banking associations to the extent that
federal laws do not preempt this regulation, credit unions, and any director,
officer, employee, or insurance producer of such a person; and
(E) Credit property insurance has the same
meaning as in section 385.020.1(5), RSMo.
(3) Credit Property Insurance Sold by a
Lender (Chapter 367, RSMo).
(A) No insurer may
issue through an affiliated agent a policy covering security for a loan made
under the regulatory authority of Chapter 367, RSMo which exceeds the
replacement value of the property given as security for the loan or covering
security for such a loan which is less than three hundred dollars ($300). If
the insured elects to cancel a policy sold in connection with such a
transaction, the insurer shall remit directly to the insured any premium refund
due.
(B) No insurer shall sell any
coverage through an affiliated insurance producer other than the standard fire
policy with coverage attachment with extended coverage endorsement and
replacement cost provision endorsement.
(4) Credit Property Insurance Sold With
Credit Transactions (Chapter 408, RSMo).
(A)
No insurer may write coverage through an affiliated agent to be sold in this
context in which the amount of coverage exceeds the replacement cost of the
goods insured.
(B) No insurer may
pay a dealer or by contract grant a dealer's interest in the affiliated
property insurance which exceeds the original indebtedness under the
contract.
(C) No insurer may issue
a contract of insurance through an affiliated dealer which covers any goods
other than those sold by that dealer under the terms of the contract secured by
those goods.
(5)
Cancellation Refund Computation. All refunds of any insurance sold subject to
this regulation shall be made upon the pro rata refund
computation tables.
