2006 Code of Virginia § 38.2-3727 - Credit accident and sickness insurance rates

38.2-3727. Credit accident and sickness insurance rates.

A. The Commission shall, based on a morbidity study, promulgate seven-,fourteen- and thirty-day retroactive and nonretroactive credit accident andsickness insurance premium rates which will reasonably be expected to producethe loss ratio as required by subsection E of 38.2-3725. These prima facierates will be published by the Commission no later than September 1, 1992,and will be effective on or after January 1, 1993. After this date, thepremium charged in connection with any credit accident and sickness insurancepolicy or certificate issued in this Commonwealth may not exceed thethen-published prima facie rate as set forth in this section and as may beadjusted pursuant to 38.2-3730.

The morbidity study shall be based on policies and certificates issued inthis Commonwealth for the past three years, the premiums charged for thosecontracts and the experience produced by those contracts. The Commission mayalso take into consideration the reserves held on these contracts and themethods used to produce those reserves and any other information which theCommission in its discretion may consider necessary to produce a crediblemorbidity study.

B. The benefits provided by any credit accident and sickness insurance formshall be deemed reasonable in relation to the premium charged or to becharged if the rates do not exceed the rates initially published by theCommission pursuant to subsection A of this section, except as such rates aremodified pursuant to the requirements of 38.2-3730.

C. If premiums are paid on the basis of a premium rate per month per $1,000of outstanding insured indebtedness, they shall be computed according to thefollowing formula or according to a formula approved by the Commission whichproduces rates actuarially equivalent to the single premium rates:

Opn=20Spn
n+1

Where Spn = Single Premium Rate per $100 of initial insured indebtednessrepayable in n equal monthly installments.

Op = Monthly Outstanding Balance Premium Rate per $1,000.

n = Original repayment period, in months.

D. A credit accident and sickness insurance form may not be issued with awaiting period, retroactive or nonretroactive, which differs from the waitingperiods set forth in this section.

E. The premium rates in subsection B shall apply to policies providing creditaccident and sickness insurance to be issued with or without evidence ofinsurability, to be offered to all eligible debtors, and containing:

1. No provision excluding or denying a claim for disability resulting frompreexisting conditions except for those conditions for which the insureddebtor received medical advice, diagnosis or treatment within six monthspreceding the effective date of the debtor's coverage and which caused losswithin the six months following the effective date of coverage. The effectivedate of coverage for each part of the insurance attributable to a differentadvance or charge to an open-end credit account is the date on which theadvance or charge is posted to the plan account.

2. No other provision which excludes or restricts liability in the event ofdisability caused in a specific manner except that it may contain provisionsexcluding or restricting coverage in the event of normal pregnancy andintentionally self-inflicted injuries.

3. No actively-at-work requirement more restrictive than one requiring thatthe debtor be actively at work at a full-time gainful occupation on theeffective date of coverage. "Full-time" means a regular work week of notless than thirty hours. A debtor shall be deemed to be actively at work ifabsent from work due solely to regular day off, holiday or paid vacation.

4. No age restrictions, or only age restrictions making ineligible forcoverage debtors sixty-five or over at the time the indebtedness is incurredor debtors who will have attained age sixty-six or over on the maturity dateof the indebtedness.

5. A daily benefit equal in amount to one-thirtieth of the monthly benefitpayable under the policy for the indebtedness.

6. A definition of "disability" which provides that during the first twelvemonths of disability the insured shall be unable to perform the duties of hisoccupation at the time the disability occurred, and thereafter the duties ofany occupation for which the insured is reasonably fitted by education,training or experience.

7. A provision written in connection with an open-end credit plan which mayprovide for the cessation of insurance or reduction in the amount ofinsurance upon attainment of an age not less than sixty-five.

F. Joint coverage on any of the bases in this section shall not exceed 165percent of the rates applicable to that type of coverage.

(1992, c. 586; 1995, c. 167.)