Wash. Admin. Code § 284-34-140 - How will the commissioner determine if benefits are reasonable in relation to premium charges?
(1) Insurers
must provide consumer credit insurance benefits that are reasonable in relation
to the premium charged. This means that debtors must be provided reasonable
benefits in return for their premium payments.
(a) The commissioner presumes that the rates
in WAC 284-34-150 and
284-34-170, as adjusted under WAC
284-34-210, satisfy this
standard. These rates allow:
(i) Sixty
percent of premium for benefits on one debtor; and
(ii) Forty percent of premium for expenses
and profit.
(b) If an
insurer wants to use rates that are different than those in WAC
284-34-150 or
284-34-170, the insurer must file
those rates under WAC
284-34-220.
(i) The commissioner must approve the
alternative rates before they are used; and
(ii) The insurer must provide data that prove
the alternative rates will result in reasonable benefits in relation to premium
charges.
(2)
The commissioner presumes excessive compensation requires premiums that are not
reasonable in relation to benefits provided to debtors. The commissioner
presumes that compensation is excessive if:
(a) Total compensation exceeds thirty percent
of the net written prima facie premium; or
(b) More than twenty-five percent of net
written prima facie premium is paid directly or indirectly to a
creditor.
(3) If an
insurer does not provide coverage to a debtor during a time period, the insurer
may not charge premium for that period.
(4) If an insurer files any form providing
coverage that is different from that described in WAC
284-34-150 through
284-34-180, the insurer must
prove that the rates:
(a) Will develop a loss
ratio of sixty percent; or
Notes
Statutory Authority: RCW 48.02.060, 48.30.010, 48.34.100, and 48.34.110. 05-02-076 (Matter No. R 2002-02), § 284-34-140, filed 1/4/05, effective 4/1/05.
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