No. 26950 (New Rule): R590-228. Submission of Credit Life and Credit Accident and Health Insurance Form and Rate Filings

DAR File No.: 26950
Filed: 02/17/2004, 04:15
Received by: NL

 

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this rule is to set forth the procedures for submitting credit life and credit accident and health insurance form and rate filings.

 

Summary of the rule or change:

This rule combines an existing rule, Rule R590-86, Filing of Life and Disability Forms and Rates, and Insurance Bulletin 99-7, Procedures for the Submission of Life Form and Rate Filings. The information in Rule R590-86 is being split into three categories (life, credit, and annuities) so that each rule will deal solely with a particular line of insurance to better fit the marketplace. The only changes to what is already required and this rule are: 1) The elimination of the requirement for a cover letter with each form filing; and 2) the change from the use of the department's transmittal form to that of the National Association of Insurance Commissioner's form to provide for uniformity among all companies selling credit insurance within the United States.

 

State statutory or constitutional authorization for this rule:

Sections 31A-2-201, 31A-2-201.1, 31A-2-202, and 31A-22-807

 

This rule or change incorporates by reference the following material:

"NAIC Life, Accident and Health, Annuity, Credit Transmittal Document," dated January 1, 2003; "NAIC Uniform Life, Accident and Health, Annuity and Credit Coding Matrix," dated January 1, 2003; "NAIC Instruction Sheet for Life, Accident and Health, Annuity, Credit Transmittal Document," dated January 1, 2003; "NAIC Instruction Sheet for Life, Accident and Health, Annuity, Credit Transmittal Document Form Filing Attachment," dated January 1, 2003; "Utah Credit Life and Credit Accident and Health Filing Certification," dated January 1, 2004; "Utah Life, Annuity, Credit Life, and Credit Accident and Health Group Questionnaire," dated January 1, 2004; and "Utah Annual Credit Life and Credit Accident and Health Insurance Filing Checklist," dated January 1, 2004

 

Anticipated cost or savings to:

the state budget:

This rule will not add to or eliminate work for the department, nor will it result in a cost or savings to the state's budget since it will not result in an increase or decrease in fees or fines.

 

local governments:

This rule affects the relationship between the department and their licensees and has no affect on local government.

 

other persons:

This rule will have very little, if any fiscal impact on companies selling annuity contracts in Utah. The only change this rule will make that may have a fiscal impact on credit insurance companies is the elimination of the need to file a cover letter with each form and rate filing. These cover letters describe what is in the filing, how the product is marketed and what the form does. It is usually one to two pages long. This will save someone in the company a little time but should not result in the elimination of a position. As a result, there should be no cost shifting to consumers of credit insurance products.

 

Compliance costs for affected persons:

This rule will have very little, if any fiscal impact on companies selling annuity contracts in Utah. The only change this rule will make that may have a fiscal impact on credit insurance companies is the elimination of the need to file a cover letter with each form and rate filing. These cover letters describe what is in the filing, how the product is marketed and what the form does. It is usually one to two pages long. This will save someone in the company a little time but should not result in the elimination of a position. As a result, there should be no cost shifting to consumers of credit insurance products.

 

Comments by the department head on the fiscal impact the rule may have on businesses:

This new rule should have little to no impact on companies selling credit insurance products in Utah.

 

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY UT 84114-1201

 

Direct questions regarding this rule to:

Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

 

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

03/31/2004

 

Interested persons may attend a public hearing regarding this rule:

3/18/2004 at 11:00 AM, State Office Building, Room 3112, Salt Lake City, UT

 

This rule may become effective on:

04/01/2004

 

Authorized by:

Jilene Whitby, Information Specialist

 

 

RULE TEXT

R590. Insurance, Administration.

R590-228. Submission of Credit Life and Credit Accident and Health Insurance Form and Rate Filings.

R590-228-1. Authority.

This rule is promulgated by the insurance commissioner pursuant to Subsection 31A-2-201(3), 31A-2-201.1, 31A-2-202(2), 31A-22-807.

 

R590-228-2. Purpose and Scope.

(1) The purpose of this rule is to set forth the procedures for submitting:

(a) Credit life and credit accident and health insurance filings required by Section 31A-21-201;

(b) Credit life and credit accident and health insurance rate filings required by Section 31A-22-807, R590-91; and

(c) report filings required by R590-91.

(2) This rule applies to all credit life insurance and credit accident and health insurance including group contracts issued to nonresident policyholders, including trusts, when Utah residents are provided coverage by certificates of insurance.

 

R590-228-3. Documents Incorporated by Reference.

(1) The department requires that documents described in this rule must be used for all filings. Actual copies may be used or you may adapt them to your word processing system. If adapted, the content, size, font, and format must be similar.

(2) The following documents are hereby incorporated by reference and are available at www.insurance.utah.gov.

(a) "NAIC Life, Accident and Health, Annuity, Credit Transmittal Document," dated January 1, 2003;

(b) "NAIC Uniform Life, Accident and Health, Annuity and Credit Coding Matrix," dated January 1, 2003;

(c) "NAIC Instruction Sheet for Life, Accident and Health, Annuity, Credit Transmittal Document," dated January 1, 2003;

(d) "NAIC Instruction Sheet for Life, Accident and Health, Annuity, Credit Transmittal Document Form Filing Attachment," dated January 1, 2003;

(e) "Utah Credit Life and Credit Accident and Health Filing Certification," dated January 1,2004;

(f) "Utah Life, Annuity, Credit Life, and Credit Accident and Health Group Questionnaire," dated January 1, 2004;

(g) "Utah Annual Credit Life and Credit Accident and Health Insurance Filing Checklist," dated January 1, 2004.

 

R590-228-4. Definitions.

In addition to the definitions of Section 31A-1-301, the following definitions shall apply for the purpose of this rule:

(1) "Alternate information" means:

(a) a list of the states to which the forms have been filed, the dates submitted, and any state actions;

(b) the reason for not submitting the form to the domicile state; and

(c) identifying any points of conflict between the form and domicile state laws or rules.

(2) "Certification" means a statement that the filing being submitted is in compliance with Utah laws and rules.

(3) "Data page" means the page or pages in a policy and certificate that provide the specific data for the insured detailing the coverage provided and may be titled by the insurer as schedule page, schedule of benefits and premiums, etc.

(4) "Eligible group" means a group that meets the definitions in Sections 31A-22-502 through 31A-22-508.

(5) "Endorsement" means a written agreement attached to a life insurance policy that alters a provision of the policy. An example is a company change of name.

(6) "File and Use" means a filing can be used, sold, or offered for sale after it has been filed with the department.

(7) "File for Approval" means a filing can be used, sold, or offered for sale after it has been filed and the filer has received written confirmation that the filing was approved.

(8) "Filer" means a person or entity that submits a filing.

(9) "Filing," when used as a noun, means an item required to be filed with the department including:

(a) a policy;

(b) a rate, rate methodologies;

(c) a form;

(d) a document;

(e) an application;

(f) a report;

(g) a certificate;

(h) an endorsement;

(i) a rider; and

(j) an actuarial memorandum and certification.

(10) "Issue Ages" means the range of minimum and maximum ages for which a policy or certificate will be issued.

(11) "Letter of Authorization" means a letter signed by an officer of the insurer on whose behalf the filing is submitted that designates filing authority to the filer.

(12) "Market type" means the type of policy that indicates the targeted market such as individual or group.

(13) "Order to Prohibit Use" means an order issued by the commissioner that forbids the use of a filing.

(14) "Rejected" means a filing is:

(a) not submitted in accordance with applicable laws or rules; and

(b) returned to the insurer by the department with the reasons for rejection; and

not considered filed with the department.

(15) "Rider" means a written agreement attached to a life insurance policy or certificate that adds a benefit. An example is a credit accident and health insurance rider.

(16) "Type of insurance" means a specific credit life and credit accident and health insurance product, as defined in the NAIC Coding Matrix, including, but not limited to, gross decreasing term, net decreasing term, level term, or truncated coverage. Refer to the NAIC Coding Matrix.

 

R590-228-5. General Filing Information.

(1) Each filing submitted must be accurate, consistent, and complete and contain all required documents in order for the filing to be processed in a timely and efficient manner. The commissioner may request any additional information deemed necessary.

(2) Insurers and filers are responsible for assuring compliance with Utah laws and rules. Filings not in compliance with Utah laws and rules are subject to regulatory action under Section 31A-2-308.

(3) Filings that do not comply with this rule may be rejected and returned to the filer. Rejected filings are not considered filed with the department.

(4) Prior filings will not be researched to determine the purpose of the current filing.

(5) The department does not review or proofread every filing.

(a) Filings may be reviewed:

(i) when submitted;

(ii) as a result of a complaint;

(iii) during a regulatory examination or investigation; or

(iv) at any other time the department deems necessary.

(b) If a filing is reviewed and is found to be not in compliance with Utah laws and rules, an Order To Prohibit Use will be issued to the filer. The commissioner may require the filer to disclose deficiencies in forms or rating practices to affected insureds.

(6) Filing Correction. A new filing is required if clerical or typographical corrections are made more than 30-days after the filed date of the original filing. The filer will need to reference the original filing.

 

R590-228-6. Filing Submission Requirements.

Filings must be submitted by market type and type of insurance. A filing may not include more than one type of insurance; or request filing for more than one insurer. A complete filing consists of the following documents submitted in the following order:

(1) Transmittal. Note: Based on the use of the NAIC Transmittal Form, a cover letter is not required. The "NAIC Life, Accident and Health, Annuity, Credit Transmittal Document" must be used. It can be found at www.insurance.utah.gov/LH_Trans.pdf.

(a) COMPLETE THE TRANSMITTAL BY USING THE FOLLOWING:

(i) "NAIC Coding Matrix" www.insurance.utah.gov/LifeA&H_Matrix.pdf,

(ii) "NAIC" Instruction Sheet"

www.insurance.utah.gov/LH_Trans_Inst.pdf,

(iii) "Life Content Standards"

www.insurance.utah.gov/Life_STM.html

(iv) Do not submit the documents described in section (a)(i), (ii), and (iii) with a filing.

(b) Filing Description. The following information must be included in the Filing Description section of the transmittal and must be presented in the order shown below.

(i) Domicile Approval. Foreign insurers and filers must first submit filings to their domicile state.

(A) If a filing was submitted to the domicile state, provide a stamped copy of the approval letter from the domicile state for the filing.

(B) If a filing was not submitted to the domicile state, or the domicile state did not provide specific approval for the filing, then alternate information must be provided.

(ii) Marketing Facts.

(A) List the issue ages.

(B) Identify the intended market.

(C) Identify and describe the type of group.

(D) Identify the types and durations of loans to be insured.

(E) Describe the methods of premium charge.

(F) Describe the marketing and advertising in detail, i.e. through mass solicitation, financial institutions, telemarketing, or individually through licensed producers.

(iii)..Description of Filing.

(A)..Provide a detailed description of the purpose of the filing.

(B)..Describe the benefits and features of each form.

(C)..List the types of coverage to be provided, such as gross, net, full term, truncated and critical period.

(D) Identify and describe any new or nonstandard benefits or rating methodologies.

(E) Indicate whether the insurer has a Rating and Benefits Plan on file with the department.

(F) Identify any unresolved previously prohibited provisions and explain why the provisions are included in the current filing.

(G) If the filing is replacing or modifying a previous submission, provide information that identifies the filing being replaced or modified, the Utah filed date, and a detailed description of the changes and highlight the changed provisions.

(H) if the filing includes forms for informational purposes, provide the dates the forms were filed.

(I) if filing a rider, endorsement or application and the filing does not contain a policy, identify the affected policy form number, the Utah filed date, and describe the effect of the submitted forms on the base policy.

(iv) Underwriting Methods. Provide an explanation of the underwriting applicable to the filing.

(2) Certification. In addition to completing the certification on the NAIC transmittal, the filer must complete and submit the "Utah Credit Life and Credit Accident and Health Filing Certification". A filing will be rejected if the certification is missing or incomplete. A certification that is inaccurate may subject the filer to administrative action.

(3) Group Questionnaire. All group filings must include a completed group questionnaire.

(4) Letter of Authorization. When the filer is not the insurer, include a letter of authorization from the insurer. The insurer remains responsible for the filing being in compliance with Utah laws and rules.

(5) Statement of Variability. Any information that is variable must be bracketed in the form and must be explained in a statement of variability. If after filing, the information contained within the brackets changes, the filing must be refiled.

(6) Items being submitted for filing. Include all forms, rates, and reports to be filed. Refer to each applicable subsection of this rule for procedures on how to submit forms, rates, and reports with required filing documents.

(7) Actuarial Memorandum, Demonstration, and Certification of Compliance. An actuarial memorandum with sample rate calculations and a certification of compliance are required in each filing. The memorandum must be currently dated and signed by the actuary representing the insurer.

(8) Rates. All rates must be filed prior to use. All rates must be in compliance with 31A-22-807 and R590-91. A rate filing is required with each form filing.

(9) Return Notification Materials.

(a) Return notification materials are limited to a copy of the transmittal and a self-addressed, stamped envelope.

(b) Notice of filing will not be provided unless return notification materials are submitted.

 

R590-228-7. Procedures for Filings.

(1) Forms in General.

(a) Forms are "File and Use" filings.

(b) Each form must be identified by a unique form number. The form number may not be variable.

(c) Forms must be in final printed form or printer's proof format.

(d) The form must be completed in John Doe fashion to accurately represent the intended market, purpose, and use. All John Doe data in the forms, including the premium rates and benefits, must be accurate and consistent with the actuarial memorandum and rate schedule. Forms may include variable data in brackets. All variable data must be identified within the brackets or a statement of variability must be included with the submission.

(2) Policy Filings. A policy filing consists of one policy form for a single type of insurance and its related forms, including the application, enrollment form, certificate, actuarial memorandum, certification, and rate schedule.

(3) Rider or Endorsement Filings. A rider or endorsement that provides benefits must include all filing documents required for a policy filing including:

(a) a listing of the base policy form number, title and dates filed with the department;

(b) a description of how the rider affects the base policy; and

(c) appropriate actuarial memorandum and rate schedule.

(4) Application Filings. An application or enrollment form may be submitted as a separate filing or filed with its related policy and certificate. If an application has been previously filed or is filed separately, an informational copy of the application must be included with a policy or certificate filing.

(5) Rates. Rates are considered "File for Approval".

 

R590-228-8. Additional Procedures for Credit Life and Credit Accident and Health Form and Rate Filings.

(1) Insurers are advised to review the following code sections and rules prior to submitting a filing:

(a) Section 31A-21 Part III, "Specific Clauses in Contracts;"

(b) Section 31A-22 Part IV, "Life insurance and Annuities;"

(c) Section 31A-22 Part V, "Group Life Insurance;"

(d) Section 31A-22 Part VI, "Accident and Health Insurance;"

(e) Section 31A-22 Part VIII, "Credit Life and Accident and Health;"

(f) R590-91, "Credit Life and Disability;" and

(g) R590-191, "Unfair Life Insurance Claims Settlement Practice;"

(h) R590-192, "Unfair Health and Disability Claims Settlement Practices."

(2) A policy must be included with each certificate filing along with a master application and enrollment form.

(3) Actuarial Memorandum, Demonstration and Certification of Compliance. Each form and rate fling must include an actuarial memorandum, demonstration, and certification of compliance with Utah laws, signed and dated by the actuary representing the insurer.

(a) Actuarial memorandum must include a description of the following:

(i) types of coverage, such as gross or net decreasing, single or joint life, full term or truncated, critical period;

(ii) types of loans to be insured, such as open end, closed end,

(iii) types of premium charge: single premium, monthly outstanding balance, or other method explained in detail;

(iv) durations of loans and durations of coverage. Refer to 31A-22-801(2)(a);

(v) rates per unit, rating and premium methodologies including:

(A) formulas used for each type of coverage and premium method; and

(B) sample calculations for each type of coverage and premium method;

(vi) an explanation of whether the company has a Rating and Benefits Plan on file and if so, whether the submitted rates are consistent with the filed plan;

(vii) demonstration of compliance with applicable code and rules;

(viii) refund methods and calculation including formulas for each type of coverage; and

(ix) reserve bases including methods used.

(b) The actuarial certification must include certification of compliance that formulas and methods used produce rates that are in compliance with applicable Utah laws and rules for each type of coverage and duration in the filing.

(4) Rate Schedules.

(a) Rate schedules must be included for each type of coverage and for representative durations.

(b) Rates must be identified as prima facie rates, rates previously filed for compliance with the Rating and Benefits Plan required in R590-91-10, or deviated rates submitted pursuant to 31A-22-807, or rates on nonstandard coverage pursuant to R590-91-5.

(5) All benefits must be reasonable in relation to the premium charge. Insurers filing for approval of a rate higher than prima facie rates must comply with the requirements of 31A-22-807 and R590-91-10. Include a demonstration that the rates are reasonable in relation to the benefits.

 

R590-228-9. Insurer Annual Reports.

(1) All insurer annual reports must be properly identified and must be filed separately from other filings. Each annual report must be submitted along with the properly completed report checklist.

(2) "Credit Life and Credit Accident and Health Annual Report."

(a) Filings must comply with R590-91-10. Every Credit Life, and Credit Accident and Health insurer marketing must file annually.

(b) The report must include:

(i) Utah Credit Life, and Credit Accident and Health Report Checklist;

(ii) a cover letter along with a self-addressed stamped envelope; and

all required documents.

(iii) Annual report filings are due May 1 each year.

 

R590-228-10. Additional Procedures for Electronic Filings.

Filers submitting electronic filings must follow the requirements for both the electronic system and this rule, as applicable.

 

R590-228-11. Correspondence, Inquiries, and Responses.

(1) Correspondence. When corresponding with the department, filers must provide sufficient information to identify the original filing. Information should include:

(a) type of insurance;

(b) date of filing;

(c) form numbers; and

(d) copy of the original transmittal.

(2) Status Checks. Filers can request the status of their filing by telephone, or email 60 days after the date of submission.

(3) Response to an Order.

(a) A response to an order must include:

(i) a response cover letter identifying the changes made;

(ii) a copy of the Order to Prohibit Use;

(iii) one copy of the revised documents with all changes highlighted; and

(iv) return notification materials, which consist of a copy of the response cover letter and a self-addressed stamped envelope.

(4) Rejected Filings. A rejected filing is NOT considered filed. If resubmitted it is considered a new filing. If resubmitting a previously rejected filing, the new filing must include a copy of the rejection notice.

 

R590-228-12. Penalties.

Persons found, after a hearing or other regulatory process, to be in violation of this rule shall be subject to penalties as provided under Section 31A-2-308.

 

R590-228-13. Enforcement Date.

The commissioner will begin enforcing the provision of this rule May 1, 2004.

 

R590-228-14. Severability.

If any provision of this rule or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of the provision to other persons or circumstances may not be affected by it.

 

KEY: credit insurance filings

2004

31A-2-201

31A-2-201.1

31A-2-202