# COMAR Title 31 — Maryland Insurance Administration ## Subtitle 13 — Credit Life and Credit Health Insurance ### Chapter 01 — Standards for Credit Life and Credit Health Insurance **Authority:** Commercial Law Article, §12-312 and Title 12, Subtitle 3; Insurance Article, §§2-109, 13-110, 13-111, and 13-112; Annotated Code of Maryland **Administrative History:** Effective date: January 1, 1978 (4:25 Md. R. 1940) **Administrative History:** Chapter revised at 7:11 Md. R. 1035 **Administrative History:** Regulations .04 and .21 amended as an emergency provision effective September 1, 1980 (7:14 Md. R. 1345); adopted permanently effective December 30, 1980 (7:24 Md. R. 2256) **Administrative History:** Regulations .13 and .17 amended effective January 28, 1985 (12:2 Md. R. 139) **Administrative History:** Regulation .13 amended effective August 8, 1988 (15:16 Md. R. 1914) **Administrative History:** Regulation .15 amended effective August 8, 1988 (15:16 Md. R. 1914) **Administrative History:** Regulation .24D adopted effective August 8, 1988 (15:16 Md. R. 1914) **Administrative History:** Regulation .27 amended as an emergency provision effective June 24, 1980 (7:14 Md. R. 1345); adopted permanently effective December 30, 1980 (7:24 Md. R. 2256) This amendment changed the effective date given in the Notice of Final Adoption (see 7:11 Md. R. 1035) from July 1, 1980 to September 1, 1980 **Administrative History:** Annotation: Regulations .04F(14), .20, and .21, concerning the regulation of maximum commissions, held valid and within the legislative grant of authority to the Insurance Commissioner. Agency quasi-legislative actions are not limited by a recorded administrative record. These regulations and their enabling statute do not violate the Contract Clause of the U.S. Constitution. Automobile Trade Association v. Insurance Commissioner, 292 Md. 15, 437 A. 2d 199 (1981). **Administrative History:** Chapter recodified from COMAR 09.30.51 to COMAR 31.13.01 effective September 7, 1998 (25:18 Md. R. 1439) **Administrative History:** Regulation .04B amended effective May 15, 2000 (27:9 Md. R. 860) **Administrative History:** Regulation .06A amended effective May 15, 2000 (27:9 Md. R. 860) **Administrative History:** Regulation .08A, B repealed effective May 15, 2000 (27:9 Md. R. 860) **Administrative History:** Regulation .29 adopted effective May 15, 2000 (27:9 Md. R. 860) **Administrative History:** Chapter revised effective March 1, 2001 (27:22 Md. R. 2062) **Administrative History:** Regulation .04B amended effective October 12, 2015 (42:20 Md. R. 1266); November 7, 2016 (43:22 Md. R. 1223) **Administrative History:** Regulation .09A amended effective October 12, 2015 (42:20 Md. R. 1266) **Administrative History:** Regulation .13 amended effective October 12, 2015 (42:20 Md. R. 1266) **Administrative History:** Regulation .15A, E amended effective June 1, 2016 (43:5 Md. R. 387) **Administrative History:** Regulation .17 amended effective October 12, 2015 (42:20 Md. R. 1266) **Administrative History:** Regulation .21A amended effective November 7, 2016 (43:22 Md. R. 1223) **Administrative History:** Regulation .22C amended effective February 27, 2017 (44:4 Md. R. 256) #### Regulation .01 Purpose. *COMAR 31.13.01.01* The purpose of this chapter is to: A. Establish standards for premium rates for credit life and credit health insurance which are neither excessive nor inadequate in relation to benefits, giving due consideration to past and expected loss experience within and outside of this State, to underwriting practice and judgement, to past and prospective expense factors, to a reasonable margin for profit and contingencies, and to other relevant factors; and B. Regulate certain other aspects of the credit life and credit health insurance business in order to assure that the credit life and credit health insurance operations of an insurer do not endanger the solvency of the insurer so as to render its transaction of business hazardous to its policyholders or the public, and do not adversely affect other classes of business of the insurer. #### Regulation .02 Regulation of Commissions. *COMAR 31.13.01.02* To assure that credit life and credit health insurance operations of insurers do not result in rates which are excessive in relation to benefits, do not endanger the solvency of insurers rendering their transaction of business hazardous to policyholders or the public, and do not adversely affect other classes of business of insurers, the Commissioner has found it necessary to establish maximum rates of commission which may be paid to agents or brokers and maximum benefits payable to creditor group policyholders in the form of dividends, retrospective rate credits, or in any other form. #### Regulation .03 Applicability. *COMAR 31.13.01.03* This chapter applies to all authorized life insurers and all authorized health insurers delivering or issuing for delivery or proposing to deliver or issue for delivery credit life insurance or credit health insurance in Maryland under individual policies, group policies, or group certificates which are required to be filed in accordance with the provisions of Insurance Article, §13-110, Annotated Code of Maryland. #### Regulation .04 Definitions. *COMAR 31.13.01.04* A. In this chapter the following terms have the meanings indicated. B. Terms Defined. (1) “Account” means the coverage for a single plan of benefits for either credit life insurance or credit health insurance under one premium payment method offered to a single class of business in Maryland by one creditor whether written on a group or individual basis, or both. (2) “Advance loan payment” means the payment of a scheduled loan installment before the installment's scheduled due date on a loan repayable in substantially equal installments. (3) “Agent” means a person who sells a group or individual policy of credit life or credit health insurance, or who receives any form of commission compensation, remuneration, or other benefit based on his enrolling individuals or issuing certificates under group credit life or credit health insurance. (3-1) “Balloon loan” means an indebtedness, the initial amount of which includes both: (a) An amount that decreases by substantially equal periodic payments; and (b) A final installment amount that is larger than any one of the periodic payments. (4) “Case” means an account, or, at the option of the insurer, a combination of some or all of the insurer's accounts written under an identical plan of benefits where the gross premiums before refunds and at prima facie rates, whether consisting of one or more accounts, exceed or may reasonably be expected to exceed $50,000 in a policy year. (5) “Class of business” means every one of the following: (a) Cash loans not secured by real estate made by banks; (b) Cash loans made by credit unions; (c) Cash loans not secured by real estate made by creditors other than banks and credit unions; (d) Cash loans secured by real estate made by banks; (e) Cash loans secured by real estate made by creditors other than banks and credit unions; (f) Production credit association and other agricultural loans; (g) Installment sales finance contracts; or (h) Revolving charge agreements, credit card accounts, and open-end credit other than credit union accounts. (6) “Commission” means all forms of compensation or remuneration including dividends, retrospective rating credits, or any other form of benefit, including but not limited to: (a) Commissions as a percentage of, or otherwise based on, premiums or amounts of insurance sold. (b) Retrospective or refund rate credits, except credits on creditor paid insurance. (c) Dividends, except dividends on creditor paid insurance. (d) Commissions or any other form of compensation or remuneration for reinsurance ceded or assumed. (e) Service fees or administrative fees. (f) Consulting fees. (g) Expense allowances. (h) Gifts. (i) Expense for vacations or travel other than travel for training purposes or attendance at conventions. (j) Value of electronic data-processing equipment or services furnished. (k) Allowances or subsidies for rent, payroll, advertising, telephone, or other purposes. (l) Advertising provided by the insurer. (m) Supplies, excluding application, reporting and claim forms, envelopes for transmitting the forms, and brochures, rate books, and rate charts related to the insurer's credit life or credit health insurance. (n) Dividends, profits, capital gains, commissions, or other benefits which may be reasonably anticipated under reinsurance agreements with any unauthorized reinsurer affiliated with or controlled by a licensed agent or broker, a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor or the licensed insurance agent. An unauthorized reinsurer does not include any insurer authorized to do business in this State or any insurer qualified under Insurance Article, §13-116, Annotated Code of Maryland, or any insurer meeting the qualifications of a nonadmitted accredited reinsurer. (o) Services, including an amount paid to an employee of the insurer specifically for services provided to a creditor or affiliate of the creditor if the services are normally performed outside the home office of the insurer, but not including services performed by account executives or liaison personnel of the insurer who visit the offices of the creditor at occasional intervals and who are regular salaried officers or employees of the insurer and who receive no commission or other compensation directly dependent upon the amount of business obtained. (p) Value of training programs for employees of the creditor or agent, excluding training of employees provided solely in connection with a program of credit life or credit health insurance for the purpose of acquainting the creditor's employees with administrative procedures of the insurer when the salary of the employees during the training period is paid by the creditor. (q) Rental by the insurer of space or equipment from the agent or creditor, excluding rentals not related to any insurance transaction on terms approved by the Commissioner; (r) Commission or some other form of compensation or remuneration in excess of what otherwise would be payable in connection with the sale of allied lines of insurance or other business, such as credit property insurance and maintenance warranties. (s) Profit sharing plans. (t) Bonuses. (u) Finders fees. (v) Offers of share ownership in an agency or corporation at less than the fair market value. (7) “Commissioner” means the Maryland Insurance Commissioner. (8) “Consumer loans” means loans issued by lenders licensed under the provisions of Financial Institutions Article, Title 11, Subtitle 2, Annotated Code of Maryland, and made pursuant to Commercial Law Article, Title 12, Subtitle 3, Annotated Code of Maryland. (9) “Creditor-paid insurance” means insurance in which the creditor pays the insurance premium without separate charge to the debtor. A transaction will not be regarded as creditor-paid insurance if the debtor is required to pay an identifiable charge or premium for credit life or credit health insurance or if there is a differential in finance, interest, carrying, service, or other similar charge made to debtors who are in similar circumstances except for their insured or non-insured status. (9-1) “Critical period disability insurance” means insurance on a debtor that provides indemnity for payments that are due on a specific loan or other credit transactions: (a) For a period less than the entire term of the loan; and (b) If the debtor is disabled as defined by the policy. (10) “Decreasing term insurance” means insurance sold in connection with loans repayable in substantially equal installments and for which a single premium is paid in advance. (10-1) “Earned premiums at prima facie” means the premiums that would have been earned if all earned premiums had been written at prima facie rates. (11) “Enroller” means a person who enrolls individuals or issues certificates under group credit life or credit health insurance and who does not receive any form of commission, compensation, remuneration, or other benefit based on this activity and whose salary scale is not dependent on the volume of insurance. (12) “Experience period” means 2 consecutive calendar years or, at the option of the insurer, 2 consecutive policy years under a group policy issued to one creditor, or under one case. (12-1) “Joint health insurance” means health insurance issued to two co-debtors when both are jointly and severally liable for the debt. (13) “Joint life insurance” means insurance issued to two co-debtors with an insurable interest, as defined in Insurance Article, §12-201(b), Annotated Code of Maryland, when both are jointly and severally liable for the debt. (14) “Level term insurance” means insurance sold in connection with loans repayable in a single sum. Insurance covering a balloon loan is considered a combination of level term insurance and decreasing term insurance. (15) “Loss ratio” means the ratio of incurred claims to premiums earned during a specified period. (15-1) “Lump sum disability insurance” means insurance on a debtor that pays the insured outstanding debt that is due on a specific loan or other credit transaction after the debtor has been disabled as defined in the policy for a period specified in the policy. (16) “Net payoff balance method” means decreasing term insurance sold to cover the unpaid insured principal amount of a loan plus current interest and charges as they fall due. (16-1) “New case” means an account where the gross premiums before refunds and at prima facie premium rates exceed or may reasonably be expected to exceed $50,000 in the most recent policy year, but did not exceed $50,000 in the prior policy year. (17) “Outstanding balance insurance” means insurance for which a separate identifiable insurance premium is paid each month based on the insured indebtedness then outstanding. (18) Policy Year. (a) “Policy year”, in the case of a group policy, means the period between a policy anniversary and the next succeeding policy anniversary. (b) “Policy year”, in the case of individual policies, means a calendar year, or a period of 12 consecutive months beginning from an anniversary of the opening of an account, as the insurer may elect. (18-1) “Prima facie loss ratio” means the ratio of incurred claims to earned premiums at prima facie during a specified period. (18-2) “Prima facie premium rates” means maximum applicable premium rates as authorized and promulgated by the Commissioner from time to time in accordance with and listed in Regulations .10—.12 and .14—.16 of this chapter. (19) “Single premium insurance” means insurance in which the debtor pays or finances the entire required premium in advance. If the creditor adds identifiable insurance charges or premiums for credit insurance to the indebtedness and a direct or indirect finance, carrying, credit, or service charge is made to the debtor on the insurance charges or premiums, the insurance shall be considered single premium. (20) “Total-of-payments method” means decreasing term insurance sold to cover the entire schedule of payments under a loan, subject to policy limitations. #### Regulation .05 Loss Ratio. *COMAR 31.13.01.05* Benefits for policies issued under these regulations shall be deemed reasonable in relation to premiums if claims incurred under the policies result in, or may reasonably be expected to result in, a loss ratio of not less than 55 percent when premiums do not exceed prima facie premium rates. When the prima facie loss ratio exceeds 55 percent, the premiums shall be determined in accordance with the methods of Regulation .18 of this chapter. #### Regulation .06 Statistics and Reporting Forms. *COMAR 31.13.01.06* A. Filing with Commissioner. (1) To permit the Commissioner to review the basis of prima facie premium rates and the basis of premium rates being charged on the case method, each insurer writing credit life or credit health insurance shall: (a) Maintain statistics relating to the insurer's Maryland business; and (b) File the statistics with the Commissioner in the form required by the Commissioner. (2) An insurer shall file the statistics for each: (a) Account that has qualified as a case for the 2 most recent policy years, not later than 120 days after the end of the second calendar year to which the statistics relate; and (b) New case and for all other business, not later than June 30 following the close of the calendar year to which the statistics relate. (3) Each insurer writing credit life or credit health insurance also shall file with the Commissioner: (a) Notice of each account that is a new case; (b) The identity of the creditor for each new case, including: (i) The corporate name of the creditor, (ii) Any “trading as” name used by the creditor, (iii) The address and phone number of the creditor, and (iv) The name of a contact person for insurance matters at the creditor; and (c) The statistics for the most recent calendar year, certified by a responsible officer of the insurer, that would have been required under this regulation if the new case had been a case for each of the 2 most recent policy years. (4) An insurer shall file the information on a new case with the Commissioner not later than the June 30 following the close of the calendar year in which the account became a new case. (5) Use of Code Numbers. (a) In filing the information required by this section, an insurar may use a code number instead of the name and address of a creditor. (b) If an insurer uses a code number instead of the name and address of a creditor, the insurer shall submit a separate list that identifies the name and address of each creditor with the creditor's code number. (c) The list that identifies the name and address of each creditor with the creditor's code number is confidential commercial information under State Government Article, §10-617(d), Annotated Code of Maryland. B. Reports for business other than on a case method shall be submitted under these regulations on a calendar year basis for the calendar year 1980 and every year after that. Reports for business for the calendar year 1979 shall be submitted in accordance with the corresponding regulations in effect on December 31, 1979. C. All reports, both those on a calendar year basis and those on the case method, shall be submitted separately for each class of business of credit life insurance and for each class of business of credit health insurance written, and shall be submitted separately for each premium payment method (single premium decreasing total-of-payments, single premium decreasing net payoff balance, single premium level, monthly outstanding balance), and shall be submitted separately for each pattern of benefits (for example, 7-day retro, 14-day retro), and shall be submitted separately for single life and joint life credit life insurance, and shall be submitted separately for single health and for joint health credit health insurance. D. Every report filed with the Commissioner shall contain the following information: (1) Gross premiums written; (2) Refunds of premiums on terminated insurance; (3) Net premiums written; (4) Unearned premium reserve at beginning of period; (5) Unearned premium reserve at end of period; (6) Earned premiums (1-2) minus (5-4); (7) Earned premiums at prima facie; (8) Claims paid; (9) Claim reserve at beginning of period; (10) Claim reserve at end of period; (11) Claims incurred (7) plus (9-8); (12) Loss ratio (10) divided by (6); (13) Prima facie loss ratio (rounded to two decimal places); (14) Dividends and experience rating refunds; (15) All other commissions, compensation, and remuneration to creditors or agents; (16) Total of items (12) and (13); (17) Ratio (14) divided by (3); (18) Combined ratio, sum of (11) and (15); (19) Year-end amount of insurance in force; (20) Year-end number of individual policies and certificates in force; and (21) Minimum and maximum rates charged. E. Every statistical report shall be certified by a responsible officer of the insurer and shall be accompanied by a statement certified by the president or other responsible officer of the insurer that the insurer has not paid or credited or provided commission as defined in these regulations in excess of the applicable maximum amounts specified in Regulation .20 of this chapter. #### Regulation .07 Rate Changes and Creditor-Paid Insurance. *COMAR 31.13.01.07* A. Premium rates under a group policy of credit life or credit health insurance may not be increased more than once during the first policy year, and a subsequent increased rate may not be charged within 12 months of any prior change in rates. B. In a policy of outstanding balance insurance, a change in rates may not be made effective until 31 days after all existing debtors in the group have been notified of any increased charge that they will be required to pay as a result of the change in rates. If the insurer is unable to identify the existing debtors, notice required by this section shall be deemed to be satisfied if the insurer notifies the creditor and provides necessary forms to be mailed by the creditor to the debtors advising them of the increased charge. C. An insurer may file for approval of policy forms and premium rates for creditor-paid insurance on a basis other than that established by these regulations upon a showing satisfactory to the Commissioner that the forms and rates meet the requirements of Insurance Article, Title 13, Subtitle 1, Annotated Code of Maryland, and that the rates are actuarially consistent with rates prescribed by these regulations for other forms of credit life and credit health insurance. #### Regulation .08 Premium Rates by Case Method. *COMAR 31.13.01.08* A. Vacant. B. Vacant. C. Case Comprised of Two or More Accounts. (1) If an insurer has combined two or more accounts to establish a case, it may not add additional accounts or remove accounts from that case except with the permission of the Commissioner and under conditions which the Commissioner may specify. (2) When submitting an experience report for a case comprised of two or more accounts, the insurer shall include a list of the names of each account included in the case. D. Premium rates for each case shall be established by the insurer to afford a loss ratio of at least 55 percent if the resulting rates do not exceed prima facie premium rates, and may be established in accordance with the methods of Regulation .18 of this chapter if the substitution of prima facie premium rates would result in a loss ratio in excess of 55 percent. E. If an insurer acquires an existing account for which rates were established by another insurer by the case method, the new insurer shall use the same rates or rates not greater than those which were approved for use by the former insurer until the end of the existing experience period established by the former insurer. In reporting this account at the end of the experience period, the new insurer shall combine the experience of the former insurer with its own experience for the term of the experience period in order to determine subsequent rates for the account. F. Reports for each case shall be submitted by the insurer at the end of each experience period, together with a statement of the then applicable premium rates proposed by the insurer. If the premium rates proposed by the insurer for the case do not meet the loss ratio standards of §D of this regulation, the insurer shall make an appropriate premium reduction, to be effective on or before 45 days after the date of filing of the experience report, unless, for good cause shown, the Commissioner approves a higher premium rate. If the insurer does not propose to reduce premium rates in accordance with these regulations, the Commissioner shall notify the insurer and afford it a hearing. The Commissioner shall notify the insurer in writing within 60 days of the filing of the experience report of the Commissioner's findings in regard to the premium rate which the Commissioner determines should be charged. The insurer shall implement the rates determined by the Commissioner not later than 45 days after receipt of the Commissioner's notice of the rates which the Commissioner authorizes for the case. G. Credit Health Insurance — Case Experience and Application of Rate Adjustment Factor. (1) If a plan of benefits for credit health insurance qualifies as a case, whether consisting of accounts of one or more creditors, the case experience submitted by the insurer at the end of the experience period shall include the experience of all plans of benefits for credit health insurance written by creditors comprising the case. (2) If the experience of the case results in a downward rate adjustment, the insurer shall apply the rate adjustment factor to all plans of benefits for credit health insurance written by the creditors comprising the case. (3) If the experience of the case results in an upward rate adjustment, the insurer may apply the rate adjustment factor to all plans of benefits for credit health insurance written by the creditors comprising the case. #### Regulation .09 General Premium Rate Standards and Increased Rates. *COMAR 31.13.01.09* A. With respect to all premium rates not eligible for filing in accordance with the case method, the Commissioner will accept as meeting the standards of Insurance Article, §13-110(b)(1) and (2), Annotated Code of Maryland, those premium rate filings which do not exceed prima facie premium rates stated in Regulations .10—.11 and .14—.15 of this chapter for the several categories of insurance described in those regulations. The prima facie premium rates in those regulations are based on the assumption that a policy fee, policy issue fee, certificate fee, or other additional charge will not be made. B. Premium rates for use with forms which have more restrictive provisions than those described in Regulation .13 or .17 of this chapter, whichever is applicable, shall reflect those restrictions in a reduction in rates commensurate with the differences in claim costs which can reasonably be anticipated by reason of the restrictions. Filings in connection with a policy containing those restrictions shall be accompanied by credible statistics applicable to the policy form and shall require an application for specific approval as in the case of a filing made for increased rates. C. Unless specific reference is made in these regulations to joint life insurance, all prima facie premium rates and standards and formulas for increased rates refer to individual policies and group certificates insuring single lives. D. With respect to premium rates not eligible for filing in accordance with the case method, an insurer may file with the Commissioner an application for approval of rates higher than the prima facie premium rates for a single creditor or for one or more classes of business. The application shall specify the basis for the increased rate requested and shall be accompanied by credible statistics applicable to the business under consideration and by a demonstration that the requested rates are in conformity with, or less than, rates which would meet the guidelines for increased rates set forth in Regulation .18 of this chapter. E. The Commissioner may grant approval of an increased rate for a stated period, or for an indefinite period until revoked by him on 90 days' notice. If a period is not specified in the Commissioner's notice of approval, an approval by the Commissioner of an increased rate shall be effective for a period of 1 year. #### Regulation .10 Prima Facie Premium Rates for Credit Life Insurance. *COMAR 31.13.01.10* A. Except as specified in Regulation .11 of this chapter, the premiums charged for credit life insurance policies having all policy provisions not less favorable to the insured debtor than those permitted by Regulation .13 of this chapter, may not exceed the following: (1) For single premium decreasing term policies insuring one life, issued on the total-of-payments method, $0.43 per annum per $100 of initial amount of insured indebtedness; (2) For outstanding balance term policies insuring one life, $0.66 per month per $1,000 of the amount of insured outstanding indebtedness; or (3) For single premium level term policies insuring one life, $0.71 per annum per $100 of the amount of insured indebtedness. B. For a credit life insurance policy or certificate of insurance issued to cover a husband and wife jointly, the face amount of the policy or certificate form being payable upon the death of the first to die during the term of the coverage, the premium for the life insurance benefits may not exceed 1.80 times the premium which would be charged if one debtor was insured under a comparable single life policy or certificate of insurance. To determine a unit rate for joint lives, the insurer may use the unit rates specified in these regulations for single lives, with the product of the single life unit rate times 1.80 being rounded to the nearest cent. C. For all other types of credit life insurance policies and premium rating methods, the premium shall be subject to approval by the Commissioner and may not exceed rates which are actuarially consistent with those specified in this chapter. D. Rounding Rate Calculations. Single premium credit life insurance rates that are determined by interpolation of the rates stated in this regulation or required to be reduced in accordance with Regulation .08 of this chapter shall be rounded to two decimal places. E. The prima facie premium rates for credit life insurance in this regulation apply to all premiums charged on or after March 1, 2001, for every class of business. #### Regulation .11 Prima Facie Premium Rates — Credit Life Insurance — Net Payoff Balance Method. *COMAR 31.13.01.11* A. The premium charged for credit life insurance policies issued under the net payoff balance method and having all policy provisions not less favorable to the insured debtor than those permitted by Regulation .13 of this chapter, may not exceed the following: (1) For single premium decreasing term policies insuring one life, a premium based on $0.66 per $1,000 of the sum of the scheduled insured outstanding principal indebtedness each month over the term of insurance coverage; or (2) For joint life policies, the premium determined in accordance with Regulation .10D of this chapter. B. The prima facie premium rates for credit life insurance in this regulation apply to all premiums charged on or after March 1, 2001 for every class of business. #### Regulation .12 Repealed. *COMAR 31.13.01.12* #### Regulation .13 Underwriting Requirements for Credit Life Prima Facie Premium Rates. *COMAR 31.13.01.13* A. The prima facie premium rates used in Regulations 10—.11 of this chapter assume that contracts providing credit life insurance do not require evidence of individual insurability from any eligible debtor electing to purchase coverage within 30 days of the date the debtor becomes eligible. B. If an insurer requires evidence of insurability from debtors electing to purchase coverage within 30 days of the date they become eligible and the initial amount of credit life insurance or the insurable maximum revolving credit account limit of an insured debtor does not exceed $15,000, the insurer shall reduce the premium rates stated in Regulations .10—.11 of this chapter by 10 percent on all: (1) Individual policies of credit life insurance issued through the same creditor, regardless of whether the initial amount of credit life insurance or the insurable maximum revolving credit account limit exceeds $15,000; or (2) Certificates of credit life insurance issued under the group policy through the same credit or creditor, regardless of whether the initial amount of credit life insurance or the insurable maximum revolving credit account limit exceeds $15,000. C. Subject to the conditions and requirements of Regulations .08, .09, and .18 of this chapter, the maximum premium rates shall be the rates stated in Regulations .10—.11 of this chapter if the: (1) Insurer requires evidence of insurability only from debtors whose initial amount of insurance or insurable maximum revolving credit account limit exceeds $15,000; or (2) Debtor elects to purchase coverage more than 30 days after the date the debtor became eligible. D. For individual policies or for certificates of insurance issued under group policies insuring open lines of credit, the insurer may require evidences of insurability for: (1) Advances which increase the outstanding indebtedness over $15,000; or (2) Increases in the insured debtor's insurable maximum revolving credit account limit that increase the limit over $15,000. E. Underwriting Limitations. (1) Regardless of policy or certificate amounts, the underwriting limitations specified in this section apply. (2) The policy contains no provision which excludes or restricts liability for death caused in a certain specific manner or occurring while the insured has a specified status, except that the policy may exclude death resulting from suicide within 6 months after the effective date of coverage. (3) There are no age restrictions, or the only age restrictions are those which comply with this regulation and the insured acknowledges on the application that he is aware of the age restriction. (4) The insurer, at its option, may adopt any one of the following provisions with regard to age limitations: (a) The policy may provide that the insurer may terminate the insurance within 60 days after the effective date and refund all premiums paid by the debtor if the debtor's true age is greater than the limiting age stated in the policy. The notice of termination shall state that the premium paid by the debtor shall be refunded to the person entitled to it. Under this provision, an insurer using this method shall pay the claim in full if the insurer does not terminate the coverage within 60 days or if the debtor dies within the 60-day period but before notification by the insurer of termination. (b) The policy may provide that debtors who have reached age 65 on the effective date of the insurance are not eligible for insurance. However, if an individual policy or a certificate of insurance issued under a group policy is issued beyond the age limits established in the policy due to misstatement of age of the debtor, §E(4)(d) of this regulation shall apply. On policies issued on the outstanding balance insurance basis, the policy may exclude from the classes eligible for insurance, debtors who have reached age 65, and provide for the termination of insurance or reduction in the amount of insurance upon the debtor's attaining a stated age not less than 65. If premium charges continue to be made beyond the stated age due to misstatement of age of the debtor, §E(4)(d) of this regulation applies. If premium charges continue to be made beyond the stated age even though the correct age of the debtor is known to the insurer or to the creditor, the insurer shall pay in full any claim for loss occurring during any period for which a premium has been charged. (c) The policy may provide that debtors who will have reached age 69 on the scheduled maturity date of the indebtedness or, at the option of the insurer, on the expiration date of the insurance, are not eligible for insurance. However if an individual policy or a certificate of insurance issued under a group policy is issued beyond the age limits established in the policy due to misstatement of age of the debtor, §E(4)(d) of this regulation applies. (d) In the case of a single premium policy issued in accordance with §E(4)(b) or (c) of this regulation and in the case of an outstanding balance policy issued in accordance with §E(4)(b) of this regulation, the policy shall contain a provision that if the debtor misstates the debtor's age, the benefit shall be such as the premium paid would have purchased at the correct age. For purposes of administering this requirement, the reduction in benefits for persons over the limiting age stated in the policy where the limiting age is age 65 on the effective date of the insurance shall be not less favorable to the insured debtor than a benefit provided in accordance with the following table: (5) In the case of a policy providing joint life coverage: (a) If the first death to occur during the term of insurance is that of an insured debtor whose age has been correctly stated, there may not be a reduction in the amount otherwise payable under the policy; (b) If the first death to occur during the term of insurance is that of an insured debtor whose age has been incorrectly stated, adjustment may be made in accordance with the procedure stated in this regulation. (6) When the age of the debtor has been misstated and the debtor's true age on the effective date of the insurance is beyond the limiting age or if premium charges continue to be made beyond the termination age in the case of outstanding balance insurance due to misstatement of age of the debtor, instead of the adjustments for payment of benefits provided in §E(4) of this regulation, the insurer, at its option, may void the insurance within 2 years from the effective date (or at any time after that date if the debtor dies within the 2-year period) and refund the premium paid if at the time of the debtor's application the insurer has obtained a separate statement signed by the debtor that the debtor is aware that no insurance will be provided beyond the stated limiting age. This separate statement shall be printed in 18-point boldface capital letters. A copy of the statement shall be given to the applicant at the time of the application and the original shall be kept on file by the insurer until at least 1 year beyond the date the indebtedness is satisfied in the case of single premium insurance, or until at least 1 year beyond the date that the debtor's insurance is cancelled in the case of outstanding balance insurance. When the limiting age stated in the policy is other than age 65 the effective date of the insurance or when the limiting age is stated on a basis of the insured attaining a particular age on the scheduled maturity date of the indebtedness, or, at the option of the insurer, on the expiration date of the insurance, the insurer shall file with the Commissioner an appropriate table similar to the one above for reduction in benefits in the event of misstatement of age. #### Regulation .14 Disability Benefit Provisions. *COMAR 31.13.01.14* A. If a credit life insurance policy, otherwise meeting the requirements of Regulation .13 of this chapter provides for payment of the policy proceeds in the event of the loss of two limbs or in the event of the complete loss of eyesight, the insurer may charge a rate not to exceed 1 percent more than the rates in Regulation .10 or .11 of this chapter, whichever is applicable. If the policy provides for payment of the policy proceeds in event of loss of a single limb or in event of the loss of the sight of one eye, the insurer may charge a rate not to exceed 3 percent more than the rates in Regulation .10 or .11 of this chapter, whichever is applicable. B. If a credit life insurance policy otherwise meeting the requirements of Regulation .13 of this chapter provides for payment of the policy proceeds in event of total and permanent disability, other than the benefit described in §A of this regulation, the Commissioner shall determine an appropriate increase in the premium rates on application of the insurer. #### Regulation .15 Prima Facie Premium Rates for Credit Health Insurance. *COMAR 31.13.01.15* A. The premiums charged for credit health insurance policies having all policy provisions not less favorable to the insured debtor than those required by Regulation .17 of this chapter may not exceed, on policies of credit health insurance for which a single premium is charged in advance for the entire duration of the insurance and the indebtedness is repayable in equal installments, the amount shown in the table below for each $100 of the initial amount of insured indebtedness: B. On policies of credit health insurance with elimination or waiting periods of 7, 14, or 30 days, and with modes of premium payment other than single premium, the prima facie premium rates may not exceed rates which are actuarially consistent with those in §A of this regulation. C. Other Types of Credit Health Insurance. (1) With respect to critical period disability insurance and lump sum disability insurance, the premium rate charged by an insurer may not exceed a rate that is determined by adjusting the applicable prima facie premium rate set by §A of this regulation to an actuarially equivalent rate approved by the Commissioner. (2) For all other types of credit health insurance, the prima facie premium rates shall be subject to approval by the Commissioner and may not exceed rates which are actuarially consistent with those specified in §§A and B of this regulation. D. Credit health insurance premiums for elimination or waiting periods of 7, 14, or 30 days may not be approved for policy terms less than the shortest term for which a premium rate is shown under the respective columns in §A of this regulation. E. On policies of group credit health insurance issued on the outstanding balance, a composite monthly outstanding balance premium rate shall be used instead of the rates referred to in §C of this regulation. The rates under this plan may not exceed those shown in the schedule immediately below, with the rates being based on the amount of insured indebtedness currently being repaid. The composite rate shall be applied to all outstanding balances under the plan each month irrespective of the duration of the loans. Application for a higher rate under this type of plan may be made upon a showing of need for an increased rate on a basis actuarially consistent with Regulation .18D of this regulation. F. Joint Credit Health Insurance. (1) For credit health insurance issued to cover two debtors jointly, the monthly benefit payable upon the total disability of the first to be totally disabled during the term of the coverage, the premium for the health insurance benefits may not exceed 1.80 times the premium that would be charged if one debtor alone were insured. (2) To determine a unit rate for joint health coverage, the insurer may use the unit rates specified in this chapter for single health coverage, with the product of the single unit rate times 1.80 being rounded to the nearest cent. G. The prima facie premium rates for credit health insurance in this regulation apply to all premiums charged on or after March 1, 2001, for every class of business. #### Regulation .16 Repealed. *COMAR 31.13.01.16* #### Regulation .17 Underwriting Requirements for Credit Health Prima Facie Premium Rates. *COMAR 31.13.01.17* A. The prima facie premium rates in Regulation .15 of this chapter assume that contracts providing credit health insurance do not require evidence of individual insurability from any eligible debtor electing to purchase coverage within 30 days of the date the debtor becomes eligible. B. If an insurer requires evidence of insurability from debtors electing to purchase coverage within 30 days of the date they become eligible and the total amount of insured periodic indemnity payable in event of disability of the debtor or the insurable maximum revolving credit account limit of an insured debtor does not exceed $15,000, the insurer shall reduce the premium rates stated in Regulation .15 of this chapter by 10 percent on all: (1) Individual policies of credit health insurance issued through the same creditor; or (2) Certificates of credit health insurance issued under the group policy through the same creditor. C. Subject to the conditions and requirements of Regulations .08, .09, and .18 of this chapter, the maximum premium rates shall be the rates stated in Regulation .15 of this chapter if: (1) The insurer requires evidence of insurability only from debtors whose total amount of insured periodic indemnity payable in the event of disability or insurable maximum revolving credit account limit exceeds $15,000; or (2) The debtor elects to purchase coverage more than 30 days after the date the debtor became eligible: D. For policies insuring open lines of credit, the insurer may require evidence of insurability for advances or for increases in the insured debtor's maximum revolving credit account limit which increase the insurable outstanding indebtedness or the debtor's insurable maximum revolving credit account limit over $15,000. E. Regardless of individual policy or certificate amounts, the following underwriting assumptions apply: (1) The policy contains no exclusions for preexisting conditions except conditions which, within 6 months before the effective date of the coverage, manifested themselves to the insured debtor by requiring medical consultation, diagnosis, or treatment, provided the preexisting conditions cause loss commencing within 6 months following the effective date of the coverage, and provided further that the preexisting conditions would ordinarily be expected to affect materially the health of the debtor during that period. Loss due to total disability shall include loss of time from work, and, in the case of persons not employed, the inability of the insured to engage in the insured's usual and customary activities. In the case of disability by reason of loss of time from work, total disability for which benefits may become due and payable shall be defined as “inability by reason of injury or sickness to substantially perform the duties pertaining to the insured's occupation” for at least the first 12 months for which a claim may be made, and after that may be defined as “inability to substantially perform the duties of any business or occupation for which the insured is reasonably fitted by education, training, and experience.” Disability commencing 6 months or more after the effective date of the coverage may not be excluded regardless of whether the disability results from any preexisting condition. The policy shall provide that if the indebtedness covered by the policy results from the refinancing in whole or in part of a prior debt with the same creditor, the period of exclusion for preexisting conditions shall be reduced by the period that creditor-debtor disability coverage was in force in connection with the prior indebtedness. However, if the resulting period of exclusion for preexisting conditions is less than the period that would normally be applicable, and if, as a result, a claim for disability benefits which would not otherwise be allowed is payable, the benefits for the claim need not be greater than those which would have been paid under the prior coverage if it had not terminated. (2) The policy contains no other exclusions except for disability resulting from pregnancy. (3) There are no age restrictions, or, at the option of the insurer, the only age restrictions are those which make ineligible for coverage debtors who have reached age 65 at the time the indebtedness is incurred, or, alternately, debtors who will have reached age 69 on the scheduled maturity date of the indebtedness. On policies issued on the outstanding balance insurance basis in connection with open-end or revolving credit transactions, the policy may exclude from the classes eligible for insurance, debtors who have reached age 65, and provide for the termination of insurance or reduction in the amount of insurance upon the debtor's attaining a stated age not less than 65. (4) Except as provided in this chapter, the policy contains no provision which excludes or restricts liability for disability caused in a certain specific manner or occurring while the insured debtor has a specified status. (5) If an insurer acquires an existing account providing disability benefits on an outstanding balance basis or on another basis for which the debtor is charged monthly, the new insurer shall honor all claims for periods of disability commencing on or after the date of takeover and all claims after that which would have been paid under the former policy. The original insurer shall honor all claims for periods of disability commencing before the date of takeover. #### Regulation .18 Guidelines for Increased Rates. *COMAR 31.13.01.18* A. Applications to the Commissioner for higher than prima facie premium rates shall be accompanied by credible statistics. Approval of applications for increased rates will depend on whether the requested rates are not greater than rates based on the standards in this regulation. B. Decreasing Term Credit Life Insurance. On policies of decreasing term credit life insurance for which a single premium is charged in advance providing coverage for the outstanding amount of insured indebtedness in connection with a loan repayable in 12 equal monthly installments, when the prima facie loss ratio exceeds 58 percent, the rate shall be determined by the formula: ((Prima Facie Loss Ratio - .55) × 1.41 + 1) × Prima Facie Rate. For terms other than 12 months under single premium decreasing term credit life policies, and for other modes of premium payment under decreasing term credit life insurance, this formula shall be the basis of determining actuarially consistent rates. C. Level Term Credit Life Insurance. On policies of level term credit life insurance for which a single premium is charged in advance providing a level amount of life insurance coverage for 12 months, when the prima facie loss ratio exceeds 58 percent, the rate shall be determined by the formula: ((Prima Facie Loss Ratio - 0.55) × 1.41 + 1) × Prima Facie Rate. For terms other than 12 months under single premium level term credit life policies and for other modes of premium payment under level term credit life insurance, this formula shall be the basis of determining actuarially consistent rates. D. Outstanding Balance Credit Life Insurance. On policies of outstanding balance credit life insurance for which an insurance premium is charged each month based on the insured loan amount then outstanding, where the prima facie loss ratio exceeds 58 percent, the rate shall be determined by the formula: ((Prima Facie Loss Ratio - 0.55) × 1.41 + 1) × Prima Facie Rate. E. Credit Health Insurance. On policies of credit health insurance for which the prima facie loss ratio exceeds 58 percent, the rate shall be determined by the formula: ((Prima Facie Loss Ratio - 0.55) × 1.41 + 1) × Prima Facie Rate. F. Rounding Rate Calculations. Premium rates for credit life insurance or credit health insurance determined under this regulation shall be rounded to: (1) Two decimal places per hundred dollars of initial amount of single premium insurance; and (2) Three decimal places per thousand dollars of monthly outstanding balance insurance. #### Regulation .19 Refunds. *COMAR 31.13.01.19* A. In event of termination of the insurance before the scheduled maturity date of the indebtedness, other than by performance of the insurance contract, the insurer shall promptly refund or credit to the person entitled to it the appropriate portion of any premiums paid for the insurance. B. In the case of decreasing term credit life insurance or of credit health insurance on which premiums are charged to the debtor other than as a single premium payable in advance, or in the case of level term credit life insurance, the amount of the refund or credit shall be not less than the pro rata gross unearned premium. C. In the case of decreasing credit life insurance on which premiums are charged to the debtor in a single sum payable in advance, the amount of the refund or credit shall be not less than the amount computed by the “sum of the digits” method commonly known as the Rule of 78. D. In the case of credit health insurance on which premiums are charged to the debtor in a single sum payable in advance, the amount of the refund or credit shall be not less than the amount computed by the “sum of the digits” method, commonly known as the Rule of 78. E. At the option of the insurer, refunds under §§C and D of this regulation may be calculated on a daily or on a monthly basis, as may be elected in the filing made by the insurer. Refunds may be calculated on an approximate daily basis by interpolating pro rata between the values at the beginning and at the end of the month. For this purpose, the insurer shall assume that every month has 30 days. If refunds are calculated on a monthly basis, a charge may not be made for a period less than 15 days elapsing since the last monthly installment due date, but if the period is 15 days or more, a charge may be made for the full month. F. A premium refund need not be made under §A of this regulation if the sum of the refunds on all insurance issued to the debtor by an insurer in connection with the loan would be less than $1. G. If a refund or credit is due the debtor in accordance with Insurance Article, §13-107(b), Annotated Code of Maryland, or in accordance with Insurance Article, §13-112(b), Annotated Code of Maryland, the amount of refund or credit shall be not less than the amount paid by the debtor less the amount payable under any substituted or delayed coverage issued to the debtor. H. In the event of the death of a debtor who is covered for both credit life and credit health insurance, the credit health insurance may not be deemed to have terminated by the performance of the insurance contract by reason of the debtor's death. In this case, the insurer shall make the appropriate refund for the health insurance coverage which terminated at the date of death. #### Regulation .20 Commission to Agents and Creditors. *COMAR 31.13.01.20* A. Maximum Commission. (1) On all loans originating in Maryland, an insurer may not directly or indirectly pay, allow, or offer to pay any form of commission, as defined in Regulation .04B(6) of this chapter, in excess of the limits stated in these regulations on a form of credit life or credit health insurance regardless of whether the payment is made to a licensed agent, a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor or the licensed insurance agent. (2) The maximum commission payable to all payees on each policy of credit life or credit health insurance may not exceed a total of 36 percent of prima facie premium rates. (3) Commission paid to a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor, regardless of whether the payee is a licensed agent, may not exceed 32 percent of prima facie premium rates. (4) Payment as described in §A(3) of this regulation will not preclude payment of commission to a licensed agent not listed in §A(3) of this regulation, provided the total commission paid under §A(3) of this regulation and under this subsection does not exceed the maximum rate stated in §A(2) of this regulation. (5) A licensed agent proposing to pay commission to any payee listed in §A(3) of this regulation shall first inquire of the insurer whether any commission is being paid by the insurer to that payee on the same business. The agent may not pay that payee an amount which, when added to the amount paid by the insurer for the same business, would cause the payment to exceed the maximum rate stated in §A(3) of this regulation. The insurer shall cooperate with the agent in providing the information called for by this subsection. B. Excluded from Commission. The following will not be deemed commission to an agent or creditor: (1) The cost to the insurer of conducting a review performed in accordance with Regulation .26 of this chapter. (2) Services performed by account executives or liaison personnel of the insurer who visit the offices of the creditor at occasional intervals and who are regular salaried officers or employees of the insurer and who receive no commission or other compensation directly dependent upon the amount of business obtained. #### Regulation .21 Reinsurance Treaties. *COMAR 31.13.01.21* A. To permit the Commissioner to enforce the provisions of Regulation .20 of this chapter with respect to that portion of commission defined by Regulation .04B(6)(n) of this chapter and to permit the Commissioner to ascertain that there are no violations of Insurance Article, Title 27, Annotated Code of Maryland, and other applicable sections of Insurance Article, Annotated Code of Maryland, a contract of reinsurance of credit life or credit health insurance on loans originating in Maryland may not be entered into, or continued, after the effective date of these regulations unless approved by the Commissioner and unless the reinsurer is licensed in Maryland, or qualifies under Insurance Article, §13-116, Annotated Code of Maryland, or is an accredited reinsurer. B. A person proposing to enter into a reinsurance treaty as described in this regulation or a person proposing to continue a treaty entered into before the effective date of this chapter shall submit the treaty to the Commissioner for his approval. C. If the Commissioner does not approve or disapprove the proposed or existing reinsurance treaty within 90 days after the date it is filed with him, the treaty shall be deemed to be approved. D. The Commissioner may withdraw approval of a reinsurance treaty after a hearing held not less than 20 days after written notice to the insurer and the reinsurer. #### Regulation .22 Prohibited Transactions. *COMAR 31.13.01.22* A. A person may not solicit or sell a group or individual policy of credit life or credit health insurance unless the person is then licensed as an agent in accordance with Insurance Article, Title 10, Subtitle 1, Annotated Code of Maryland. A person possessing a restricted license in accordance with Insurance Article, §10-105(e)(2)(i), Annotated Code of Maryland, shall be deemed appropriately licensed for this purpose. B. Enroller. (1) An enroller may not receive any form of commission, compensation, remuneration, or other benefit based on the enrollee's activity in enrolling persons in group policies of credit life or credit health insurance. (2) An enroller who is not also licensed as an agent may not engage in solicitation or selling or assist in solicitation or selling of an individual policy of credit life or credit health insurance. C. Joint life credit insurance may not be issued on a consumer loan for an amount of less than $700. D. Repealed. E. Level term credit life insurance may not be written for a term exceeding 18 months unless written in combination with decreasing term credit life insurance in connection with a balloon loan. F. Level term credit life insurance may not be written under group policies on loans repayable in installments unless: (1) Written in combination with decreasing term credit life insurance in connection with balloon loans; and (2) Limited to the balloon payment portion of balloon loans. G. Disability Benefits. (1) If credit health insurance is provided, disability benefits of the types stated in Regulation .14 of this chapter may not be issued to insure the same loan. (2) This section does not prohibit the disability benefits coverage from being included in a policy or certificate of insurance covering a loan that is insured for credit health coverage as long as both coverages are not in force at the same time. H. An insurer or agent may not engage in any of the following practices in connection with the solicitation or sale of credit life or credit health insurance as an inducement to the sale of the insurance, and each of these practices shall be considered an unfair trade practice in accordance with Insurance Article, Title 27, Annotated Code of Maryland: (1) The offer or grant by an insurer or by any insurance agent to a creditor or to any person connected or affiliated with the creditor of any special advantage or any service not specified in the insurance contract. (2) Agreement by an insurer or by an insurance agent to deposit with a bank or financial institution money or securities of the insurer or the agent with the design or intent that the deposit shall reduce or take the place of a deposit of money or securities which otherwise would be required of the creditor or an affiliate of the creditor by the bank or financial institution as a compensating balance or offsetting deposit for a loan or other advance. (3) Allowing the creditor to retain premiums on credit life and credit health insurance on policies issued to the creditor or on policies sold or collected by the creditor for more than 60 days beyond the due date of the premiums. Premiums shall be remitted to the insurer within 60 days of their due dates and for purposes of these regulations, the deposit of premiums to any demand deposit account with the creditor or affiliate and the continued retention of the premiums in the deposit account for more than 60 days may not be deemed remittance to the insurer. (4) Deposit with the creditor or an affiliate of the creditor by an insurer or by an insurance agent of money or securities without interest or at a lesser rate of interest than is generally being paid by the creditor bank or financial institution to other depositors of like amounts. This subsection may not be construed to prohibit the maintenance by an insurer or agent of demand deposits or premium deposit accounts which are reasonably necessary for use in the ordinary course of the insurer's or the agent's business. I. If the beneficiary or the estate of a debtor or any other person makes payments on the loan after the death of the debtor, the insurer may not reduce the amount of credit life insurance payable which would otherwise have been payable on the date of the debtor's death. J. If advance loan payments are made before the date of total disability of the debtor on a loan covered by single premium credit health insurance, or if the debtor or the beneficiary or any other person makes payments on a loan after the date the debtor is first entitled to receive a benefit for disability, the insurer may not reduce the amount of payments which were scheduled to be paid under the provisions of the credit health insurance policy because of these loan payments. K. Accidental Death Benefit Coverage. (1) If credit life insurance is provided, accidental death benefit coverage may not be issued to insure the same loan. (2) This section does not prohibit accidental death benefit coverage from being included in a policy or certificate of insurance covering a loan that is insured for credit life coverage as long as both coverages as not in force at the same time. L. Credit life insurance sold on the net payoff basis may not be written for an amount in excess of the scheduled principal indebtedness. #### Regulation .23 Combinations of Coverages. *COMAR 31.13.01.23* A. In General. (1) If an individual policy of credit life insurance or a certificate of group credit life insurance is used to provide more than one type of coverage, the policy or certificate shall include, for each type of coverage, a box that is: (a) Prominently placed in the schedule of benefits; and (b) Clearly and prominently labeled with the name of the type of coverage. (2) Before an insurer issues an individual policy of credit life insurance or a certificate of group credit life insurance that is used to provide more than one type of coverage, the insurer shall check the appropriate box to indicate the type of coverage that is being provided. B. Individual Credit Life and Credit Health. Credit life insurance and credit health insurance may not be combined in a single individual policy. #### Regulation .24 Notice to Debtors. *COMAR 31.13.01.24* A. If a debtor is covered by a group credit life or credit health insurance policy providing for payment of premiums to the insurer on a monthly outstanding balance basis, the policy shall provide that in the event of termination of the policy for any reason the insured debtor shall be given written notice of termination, and that coverage will continue for at least 31 days from the date of notice, except when replacement of the coverage by the same or another insurer in the same or greater amount takes place without interruption of coverage and a new certificate reflecting the replacement coverage is delivered to the insured debtor. The notice of termination required by this section shall be given by the insurer unless the insurer is unable to identify the debtors, in which case it shall be given by the creditor. There shall be a prominent notice printed or stamped close to the schedule of benefits in the certificate form that the insurance coverage will terminate if the group policy terminates. An insurer also may include notice of additional events that would lead to termination of insurance coverage. B. If a credit life insurance policy is issued under which the benefit upon death may not completely extinguish the total principal indebtedness even if the loan account and the insurance premiums are paid on a current basis, or if a credit health insurance policy is so written that in event of disability the monthly benefit may not cover payment of the entire scheduled monthly loan installment or the total benefit may not cover payment of all of the unpaid scheduled installments under the loan, even if the loan account and the insurance premiums are paid on a current basis, then there shall be a notice to this effect in the individual policy or in certificates of insurance issued under a group policy. This notice shall be prominently printed or stamped close to the schedule of benefits in the policy and in the certificate form. C. If a policy or certificate of credit life or credit health insurance contains any age limitations, there must be printed in, or close to, the schedule of benefits, language clearly calling attention to the limitation. D. If a policy or certificate of credit life or credit health insurance insuring open lines of credit requires evidence of insurability for advances of credit, there shall be printed in, or close to, the schedule of benefits, language clearly calling attention to the evidence of insurability requirement. #### Regulation .25 Benefits. *COMAR 31.13.01.25* A. When a debtor has filed in accordance with the policy provisions a claim for benefits for which the insurer is liable under a credit health insurance policy, the insurer shall pay any late charges accruing on the amount payable under the claim after the date the claim has been filed. B. The amount of the claim payable under a credit life insurance policy shall be determined as of the date of death of the debtor or in the case of benefits described in Regulation .14 of this chapter, as of the date of the loss. C. For purposes of these regulations a claim shall be deemed to be filed if it is transmitted to the creditor, to the insurer, or to an agent of the insurer. D. The benefit at death under a policy of net payoff credit life insurance shall include earned but unpaid interest to date of death and any past-due installments of principal and late charges. E. An amount due under a credit life or credit health insurance policy in excess of the amount due to the creditor shall be paid by the insurer directly to the debtor, the designated second beneficiary, or the estate of the debtor, whichever is entitled to the payment. If the insurer does not have the address of the person entitled to the excess amount, the insurer shall send a check payable to that person to the creditor for transmittal. F. Claims shall be paid either by a check of the insurer or by a draft drawn upon the insurer. The creditor may not be authorized to settle or adjust claims or to act as a claim representative for the insurer. #### Regulation .26 Review of Credit Operations. *COMAR 31.13.01.26* A. Every insurer transacting credit life or credit health insurance in Maryland shall conduct a review of each of its creditor accounts with respect to the credit life and credit health insurance business of the creditor to assure compliance with the insurance laws and regulations of Maryland. Unless a satisfactory review has been made within 2 years before the effective date of these regulations, the first review shall be made not later than 15 months after the effective date of these regulations or of the date of the initial credit life or credit health insurance transaction between the creditor and the insurer, whichever is later. After that, a review shall be made not later than 36 months following the last preceding review. B. The review shall include but need not be limited to a determination that: (1) The proper premium charges to debtors are made by the creditor and remitted in a timely manner to the insurer; (2) The proper refunds are being accurately calculated and promptly made by the creditor; (3) All claims are being filed promptly and properly handled; (4) Amounts of insurance payable on death in excess of the amounts necessary to extinguish the indebtedness are properly calculated and reported to the insurer in proofs of loss; (5) The creditor is promptly and fairly processing complaints concerning its credit insurance operations and is maintaining proper procedures for and records of the complaints processed. C. Insurers shall retain copies of the reviews in their home offices for a period of at least 5 years. #### Regulation .27 Effective Date. *COMAR 31.13.01.27* This chapter shall take effect September 1, 1980. An individual policy or group policy or group certificate of credit life or credit health insurance not in conformity with this chapter may not be issued or continued to be used in connection with any loan made on or after the effective date of this chapter. A premium in excess of that permitted by these regulations may not be charged for credit life or credit health insurance, and a commission or other form of benefit may not be paid to agents or creditors, in excess of the premium and commission rates permitted under this chapter for credit life or credit health insurance which is issued in connection with any loan made on or after the effective date of this chapter. #### Regulation .28 Clerical Errors. *COMAR 31.13.01.28* A. Excess Insurance. (1) If a policy of credit life or credit health insurance limits the life or health insurance benefits to stated policy maximums, the policy and certificates of insurance issued under a group policy shall provide that if the insured has been charged premiums for insurance in excess of the stated maximums the insurer may terminate the excess insurance and refund all premiums paid by the debtor for the excess insurance. (2) The notice of termination of the excess insurance shall state that the premium paid by the debtor for the excess coverage shall be refunded to the person entitled to it. (3) A single premium credit life or credit health insurance policy and certificate shall further provide that excess insurance shall remain in force if the insurer does not terminate the excess insurance within 60 days after the effective date of coverage or if the debtor suffers a covered loss within the 60-day period but before notification by the insurer of termination of the excess coverage. (4) An outstanding balance credit life or credit health insurance policy and certificate shall further provide that the excess insurance shall be in force for the period for which a premium was charged unless the excess insurance is cancelled before the occurrence of a loss. B. Ineligible Debtor. (1) Misstatement of Age. (a) The policy or certificate provisions required by this section do not apply to an ineligible debtor who has misstated the debtor's age. (b) An ineligible debtor who has misstated the debtor's age is subject to: (i) For credit life insurance, the policy or certificate provisions required by Regulation .13 of this chapter; or (ii) For credit health insurance, the policy or certificate provisions required by Regulation .17 of this chapter. (2) If a debtor's eligibility for credit life or credit health insurance is subject to restrictions based on health, employment, age, or other factors, the policy and certificates of insurance issued under a group policy shall provide that if insurance is issued to an ineligible debtor, including a debtor who has correctly stated the debtor's age as exceeding the stated maximum eligibility age, the insurer may terminate the insurance and refund all premiums paid by the debtor. (3) The notice of termination of the insurance shall state that the premium paid by the debtor shall be refunded to the person entitled to it. (4) A single premium credit life or credit health insurance policy and certificate shall further provide that the insurance shall remain in force if the insurer does not terminate the coverage within 60 days after the effective date of coverage or if the debtor suffers a covered loss within the 60-day period but before notification by the insurer of termination of the insurance. (5) An outstanding balance credit life or credit health insurance policy and certificate shall provide that the insurance shall be in force for the period for which a premium was charged unless the insurance is cancelled with no less than 31 days notice before the occurrence of a loss. #### Regulation .29 Change of Insurers — Reporting Requirements — Coverage and Rates. *COMAR 31.13.01.29* A. Insurers That Cease to Offer Credit Insurance. Within 90 days after an insurer ceases to offer credit insurance through a case, the insurer shall notify the Commissioner of: (1) The name of the creditor; (2) Each coverage no longer offered; (3) he date on which the coverage ceased to be offered; and (4) The current approved premium rate applicable to each coverage no longer offered. B. Insurers That Begin to Offer Credit Insurance. (1) At the end of a calendar year in which an insurer has begun to offer credit insurance for which premium rates have not yet been established by the case method but for which a prior insurer submitted notification of a new case required by Regulation .06A(3) and (4) of this chapter, the insurer shall: (a) File the report for the case required by Regulation .06A(2) of this chapter; and (b) Submit the insurer's experience and the experience of the prior insurer for the experience period even if the account did not qualify as a case for the most recent policy year. (2) An insurer that is required to submit its experience and the experience of a prior insurer under §B(1) of this regulation shall submit the experience of each insurer: (a) Separately by year; and (b) As a total for a 2-year period. (3) The Commissioner shall notify an insurer if a report for a case is required to be filed under §B(2) of this regulation. (4) If an insurer begins to offer credit insurance through a case during an experience period for which premium rates were established for a prior insurer by the case method, the insurer shall certify to the Commissioner that the insurer will not charge premium rates that exceed the rates permitted under Regulation .08E of this chapter. (5) If an insurer begins to offer credit insurance for a case after the end of a previously established experience period but before the effective date of new premium rates approved by the Commissioner based on that experience period, the: (a) Commissioner shall, when new premium rates are established, send written notice of the new premium rates to the insurer, stating an effective date that provides the insurer at least 30 days notice; and (b) Insurer shall: (i) Beginning not later than the effective date established by the Commissioner, use premium rates not greater than the new premium rates approved by the Commissioner; and (ii) At the end of the experience period stated by the Commissioner, file the report for the case required by Regulation .06A(2) of this chapter, submitting the experience of the former insurer and the insurer's own experience for the term of the experience period in order to determine subsequent rates for the account. (6) An insurer that is required to submit its experience and the experience of a former insurer under §B(5)(b)(ii) of this regulation shall submit the experience of each insurer: (a) Separately by year; and (b) As a total for a 2-year period. (7) On the request of a succeeding insurer, a prior insurer shall provide the succeeding insurer with any experience information of the prior insurer that the succeeding insurer needs to meet the requirements of this section. ### Chapter 02 — Credit Life and Credit Health Reinsurance **Authority:** Insurance Article, §§2-109, 4-105, 4-116, and 13-116, Annotated Code of Maryland **Administrative History:** Effective date: December 12, 1980 (7:25 Md. R. 2334) **Administrative History:** Regulation .03A amended effective October 29, 1990 (17:21 Md. R. 2527) **Administrative History:** Regulation .03E amended effective October 29, 1990 (17:21 Md. R. 2527) **Administrative History:** Regulation .05 adopted effective October 29, 1990 (17:21 Md. R. 2527) **Administrative History:** Chapter recodified from COMAR 09.30.52 to COMAR 31.13.02 effective September 7, 1998 (25:18 Md. R. 1439) **Administrative History:** Regulation .02B amended effective November 7, 2016 (43:22 Md. R. 1223) **Administrative History:** Regulation .03I amended effective November 7, 2016 (43:22 Md. R. 1223) **Administrative History:** Regulation .04 Exhibit A amended effective November 7, 2016 (43:22 Md. R. 1223) #### Regulation .01 Purpose. *COMAR 31.13.02.01* In connection with credit life and credit health insurance written in Maryland by an authorized insurer, Insurance Article, §13-116, Annotated Code of Maryland, permits a fronting agreement between the authorized insurer writing the business and an otherwise unauthorized insurer if the unauthorized insurer maintains certain deposits with the Commissioner. The purpose of these regulations is to establish rules with regard to the deposits which are to be held by the Commissioner for the protection of affected authorized insurers, policyholders, certificate holders, and creditors in Maryland. #### Regulation .02 Definitions. *COMAR 31.13.02.02* A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) “Acceptable securities” means any one of or a combination of the following, provided the securities are not in default as to payment of principal or interest at the time of deposit with the Commissioner: (a) Cash; (b) General obligations of, or obligations guaranteed by, the federal government; (c) General obligations of, or obligations guaranteed by this State or any of its political subdivisions; or (d) General obligations of the District of Columbia or of any state of the United States. (2) “Commissioner” means the Insurance Commissioner of the State of Maryland. (3) “Fronting agreement” means an agreement by reinsurance or otherwise under which an authorized insurer transfers to one or more unauthorized insurers substantially the entire risk of loss under substantially: (a) All of the insurance written by the authorized insurer in this State; (b) All of one or more kinds, lines, types, or classes of insurance; (c) All of the business produced through one or more agents or agencies; (d) All of the business in a designated geographical area; or (e) All of the business written on one or more policy forms. (4) “Insurer”, unless the context indicates otherwise, means an insurer not licensed to do life and health insurance business in Maryland and not an accredited reinsurer but qualified or proposing to qualify as a fronting reinsurer under Insurance Article, §13-116, Annotated Code of Maryland. #### Regulation .03 Deposit. *COMAR 31.13.02.03* A. Securities on Deposit with the Commissioner. (1) In order to qualify as an insurer in accordance with Insurance Article, §13-116, Annotated Code of Maryland, the insurer at all times shall keep on deposit with the Commissioner acceptable securities with a total value at least equal to the sum of §A(1)(a) and (b) of this regulation: (a) $500,000 reduced by the amount of the insurer's actual capital; and (b) $750,000 at the time of initial qualification and, after that, $500,000, in either case reduced by the amount of the insurer's actual surplus. (2) If the insurer's actual capital exceeds $500,000, the excess may be used by the insurer to reduce the amount required by §A(1)(b) of this regulation. (3) If the insurer's actual surplus exceeds the amount required under §A(1)(b) of this regulation, the excess may not be used to reduce the amount required by §A(1)(a), of this regulation, except as provided in §A(4) of this regulation. (4) If, after deducting investments which qualify under Insurance Article, §5-510(a) and (b), Annotated Code of Maryland, in the amount of the insurer's actual capital, the insurer's remaining investments which qualify under Insurance Article, §5-511, Annotated Code of Maryland, exceed the amount of the insurer's liabilities as defined in Insurance Article, §5-103, that part of the excess assets which also qualifies under Insurance Article, §5-510(a) and (b), Annotated Code of Maryland, may be used, at the insurer's option, as a credit against either §A(1)(a) or A(1)(b) of this regulation, but not both. B. In determining the amount of the insurer's actual capital, only the type of investments listed in Insurance Article, §5-510(a) and (b), Annotated Code of Maryland, shall be considered. C. The requirements of Insurance Article, Title 5, Subtitle 5, shall be used to determine the amount of the insurer's actual surplus. D. In determining the value of the deposit, securities shall be valued at market but not in excess of par value. E. In order to ascertain that the value of the securities on deposit is sufficient to meet the requirements of Insurance Article, §13-116, Annotated Code of Maryland, and of this regulation, the insurer shall: (1) File with the Commissioner not later than March 1 in each calendar year a certified copy of its NAIC Convention Blank form of Annual Statement as of the preceding December 31; and (2) Require the custodian to supply the Commissioner not later than January 31 in each calendar year with a proper accounting of the securities on deposit as of the preceding December 31. This accounting shall include a listing of the securities on deposit showing the par value and the market value of each, together with a statement as to whether any are in default. F. If an insurer which has previously qualified under Insurance Article, §13-116, Annotated Code of Maryland, no longer meets the requirements of that section, the Commissioner shall notify the insurer in writing of the additional amount of deposit required to restore the insurer's qualification. If the insurer does not satisfy the requirements by making the additional deposit within 30 days after the date of the Commissioner's notice, the insurer shall forthwith cease to accept any reinsurance under any fronting agreement to which Insurance Article, §13-116, Annotated Code of Maryland, applies. G. Unless the Commissioner liquidates a deposit for the purpose of paying claims to Maryland policyholders, certificate holders, authorized insurers, or creditors and for providing for the expenses incurred in connection with the payment of these claims, a deposit made by an insurer for the purpose of qualifying under Insurance Article, §13-116, Annotated Code of Maryland, shall remain on deposit with the Commissioner until: (1) The insurer notifies the Commissioner that it no longer wishes to qualify; and (2) All policies issued in Maryland and reinsured by the insurer are terminated. H. If the insurer is adjudged insolvent, or, if for any reason the Commissioner, after a hearing, determines that the rights of authorized insurers, policyholders, certificate holders, or creditors may be in jeopardy, the Commissioner may direct the custodian to immediately deliver to him the securities then held on deposit, or at the Commissioner's option, he may direct the custodian to sell the securities and remit the proceeds of the sale to the Commissioner. I. An authorized insurer desiring to make a fronting agreement shall first ascertain that the reinsurer is appropriately licensed in Maryland, or is an accredited reinsurer, or is qualified as a fronting reinsurer under Insurance Article, §13-116, Annotated Code of Maryland. An authorized insurer shall be subject to the penalties provided in Insurance Article, §4-113, Annotated Code of Maryland, as well as any other applicable penalties if: (1) The authorized insurer makes a fronting agreement with a reinsurer which is not licensed, or is not an accredited reinsurer, or has not qualified in accordance with Insurance Article, §13-116, Annotated Code of Maryland; or (2) The authorized insurer continues in a fronting agreement after having been notified by the Commissioner that the reinsurer has ceased to be qualified as a fronting reinsurer. J. The deposit required by these regulations may be made either by the insurer, or by another person on behalf of the insurer. If the deposit is made by another person, the custodian agreement shall provide the Commissioner all the rights of access to the deposit which these regulations require. If any agreement with reference to the deposit is made between the insurer and the person making the deposit, the insurer shall submit the agreement to the Commissioner for his approval at the time the insurer requests the Commissioner to accept the custodian agreement under which the deposit is kept. #### Regulation .04 Custodian Agreement. *COMAR 31.13.02.04* A. The deposit of acceptable securities shall be maintained under a custodian agreement acceptable to the Commissioner. If the deposit is made by a person other than the insurer, the Commissioner will require that person to also become a party to the custodian agreement. B. The custodian shall be a bank located in Maryland, which has deposits insured by the Federal Deposit Insurance Corporation, and which is not affiliated with the insurer. C. Not later than January 31 in each calendar year, the custodian shall give the accounting referred to in Regulation .03E(2) of this chapter to the Commissioner and to the insurer. At the Commissioner's request at any other time, the custodian also shall give an accounting to the Commissioner and to the insurer within 15 days of the Commissioner's request. D. The expense of maintaining the deposit under the custodian agreement and of making the reports required of the custodian shall be borne by the insurer. E. The custodian agreement shall provide that the custodian shall promptly return the deposit to the Commissioner at the Commissioner's request, or at the Commissioner's option the custodian shall sell all or a portion of the deposit and remit the net proceeds of the sale to the Commissioner. (a) Cash, (b) General obligations of, or obligations guaranteed by, the federal government, (c) General obligations of, or obligations guaranteed by this State or any of its political subdivisions, or (d) General obligations of the District of Columbia or of any state of the United States, provided in any case that the obligations are not in default as to payment of principal or interest at the time of deposit with the Commissioner. WHEREAS the reinsurance of credit life and credit health insurance written in Maryland is prohibited unless the reinsurer is an authorized insurer or is an accredited reinsurer, or unless the reinsurer makes a deposit of securities with the Commissioner in accordance with Insurance Article, §13-116, Annotated Code of Maryland, NOW, THEREFORE, in consideration of these covenants, the parties agree as follows: 1. The Insurer agrees to pledge securities and deliver them to the custodian as directed by the Commissioner in accordance with the provisions of Insurance Article, Annotated Code of Maryland. The total value of the securities shall be not less than required by Insurance Article, §13-116, Annotated Code of Maryland, and by regulations under COMAR 31.13.02. The insurer has assigned, transferred, and delivered to the Commissioner, and the Commissioner has received securities which have been accepted and approved by the Commissioner to the aggregate amount in value prescribed by the Commissioner, which are to be held by the custodian for the Commissioner in accordance with Insurance Article, Annotated Code of Maryland, the securities being as follows: _________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 2. The custodian agrees, at the expense of the insurer, to hold all of the securities received by it from the insurer in accordance with the terms of this agreement. The custodian also agrees not later than January 31 in each calendar year to give a proper accounting of the securities as of the preceding December 31 to the Commissioner and to the insurer, and to give anaccounting to the Commissioner and to the insurer at other times at the Commissioner's request within 15 days of the request. The accounting shall include a listing of the securities on deposit, showing the par value and the market value of each, together with a statement as to whether any are in default. 3. The custodian assumes no responsibility for the character of the securities held by it under this agreement nor for the sufficiency of the value of the securities. 4. The insurer shall have the right, from time to time, to deliver to the custodian additional securities as prescribed by Insurance Article, §13-116, Annotated Code of Maryland, and by regulations under COMAR 31.13.02 to be held by the custodian, subject to the terms of this agreement and to substitute other securities in the place and stead of the securities then held by the custodian, provided that every addition, substitution, or withdrawal shall first be approved in writing by the Commissioner. 5. The insurer shall be entitled to all interest which may become due and payable on the securities, and the custodian shall permit the insurer to remove and withdraw the interest unless otherwise directed by the Commissioner. 6. If the insurer becomes insolvent, or, if for any reason the Commissioner determines that the rights of policyholders, certificate holders, authorized insurers, or creditors may be in jeopardy, the Commissioner may issue a written order briefly stating his determination and directing the custodian immediately to deliver to the Commissioner the securities then held by the custodian under the terms of this agreement. This order shall be effective upon delivery to the custodian. A copy of the order shall also be delivered to the insurer. Upon receipt of the order, the custodian shall promptly deliver to the Commissioner the securities then held by the custodian under the terms of this agreement. 7. Instead of requesting that the securities be delivered to him, the Commissioner may direct the custodian to sell, assign and deliver all or any portion of the securities at any public or private sale within or without the State of Maryland. If the custodian is directed by the Commissioner to sell securities, the custodian is authorized to deduct from the proceeds of the sale the amount necessary for the payment of costs and expenses incident to the sale. The custodian shall promptly pay the balance of the proceeds of the sale to the Commissioner. 8. This agreement may be terminated by either the insurer or the custodian 60 days following delivery of written notice of intention to terminate to each of the other parties, including the Commissioner, provided, however, that the custodian may not release or return to the insurer any of the securities held by it under this agreement without first having received written authority from the Commissioner to do so. 9. The Commissioner may at any time terminate this agreement by written notice to each of the other parties. Upon receipt of the notice, the custodian shall immediately deliver all securities held under this agreement to the Commissioner. IN WITNESS WHEREOF, the Insurance Commissioner of the State of Maryland has affixed his hand and seal, and XYZ Life Insurance Company and ABC Bank have caused this agreement to be executed on their behalf by their president or vice president and have caused their corporate seals to be affixed, and duly attested, all as of the day and year first above written. ATTEST: ________________________________________________ ______________________________________________________ Secretary Insurer Corporate Seal By:___________________________________________________ President-Vice President ________________________________________________ ______________________________________________________ Secretary Custodian Corporate Seal By:___________________________________________________ President-Vice President (SEAL) ______________________________________________________ Insurance Commissioner State of Maryland #### Regulation .05 Letter of Credit. *COMAR 31.13.02.05* A. To the extent that the securities on deposit with the Commissioner and the other assets of the fronting reinsurer are insufficient to qualify in accordance with Insurance Article, §13-116, Annotated Code of Maryland, and these regulations, the insurer may provide the Commissioner with an irrevocable letter of credit in an amount at least equal to the shortfall. B. In order to be acceptable for the purpose of this regulation, the letter of credit shall be issued by a bank located in Maryland, which has deposits insured by the Federal Deposit Insurance Corporation, and which is not affiliated with the insurer. C. The letter of credit shall be automatically renewable from time to time, and may only be terminated by the issuing bank upon 30 days' written notice sent to the Commissioner by certified or registered mail. ### Chapter 03 — Standards for Credit Involuntary Unemployment Benefit Insurance **Authority:** Insurance Article, §2-109 and Title 13, Annotated Code of Maryland **Administrative History:** Effective date: January 1, 2003 (29:12 Md. R. 934) **Administrative History:** Regulation .04B amended effective November 7, 2016 (43:22 Md. R. 1223) **Administrative History:** Regulation .16A amended effective November 7, 2016 (43:22 Md. R. 1223) #### Regulation .01 Purpose. *COMAR 31.13.03.01* The purpose of this chapter is to promote the public welfare by regulating credit involuntary unemployment benefit insurance and to establish standards for premium rates. #### Regulation .02 Regulation of Commissions. *COMAR 31.13.03.02* The Commissioner finds it necessary to establish maximum rates of commission that may be paid to insurance producers and maximum benefits payable to creditor group policyholders in the form of dividends, retrospective rate credits, or any other form, to ensure that credit involuntary unemployment benefit insurance operations of insurers do not: A. Result in rates that are excessive in relation to benefits; B. Endanger the solvency of insurers rendering their transaction of business hazardous to policyholders or the public; and C. Adversely affect other classes of business of insurers. #### Regulation .03 Applicability. *COMAR 31.13.03.03* This chapter applies to all authorized insurers delivering, issuing for delivery, or proposing to deliver or issue for delivery, credit involuntary unemployment benefit insurance in Maryland under individual policies, group policies, or group certificates that are required to be filed under Insurance Article, §13-110, Annotated Code of Maryland. #### Regulation .04 Definitions. *COMAR 31.13.03.04* A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) “Account” means the coverage for a single plan of benefits for credit involuntary unemployment benefit insurance under one premium payment method offered to a single class of business in Maryland by one creditor, whether written on a group or individual basis, or both. (2) “Advance loan payment” means the payment of a scheduled loan installment before the installment's scheduled due date on a loan repayable in substantially equal installments. (3) “Balloon loan” means an indebtedness, the initial amount of which includes both: (a) An amount that decreases by substantially equal periodic payments; and (b) A final installment amount that is larger than any one of the periodic payments. (4) “Case” means an account or, at the option of the insurer, a combination of some or all of the insurer's accounts written under an identical plan of benefits in which the gross premiums before refunds and at prima facie rates, whether consisting of one or more accounts, exceed or may reasonably be expected to exceed $50,000 in a policy year. (5) “Case method” means the filing and rate requirements stated in this chapter for business that meets the definition of a case. (6) “Class of business” includes: (a) Cash loans not secured by real estate and made by banks; (b) Cash loans made by credit unions; (c) Cash loans not secured by real estate and made by creditors other than banks and credit unions; (d) Cash loans secured by real estate and made by banks; (e) Cash loans secured by real estate and made by creditors other than banks and credit unions; (f) Production credit association and other agricultural loans; (g) Installment sales finance contracts; and (h) Revolving charge agreements, credit card accounts, and open-end credit other than credit union accounts. (7) Commission. (a) “Commission” means all forms of compensation or remuneration including dividends, retrospective rating credits, or any other form of benefit. (b) “Commission” includes, but is not limited to: (i) Commissions as a percentage of, or otherwise based on, premiums or amounts of insurance sold; (ii) Retrospective or refund rate credits, except credits on creditor paid insurance; (iii) Dividends, except dividends on creditor paid insurance; (iv) Commissions or any other form of compensation or remuneration for reinsurance ceded or assumed; (v) Service fees or administrative fees; (vi) Consulting fees; (vii) Expense allowances; (viii) Gifts; (ix) Expense for vacations or travel other than travel for training purposes or attendance at conventions; (x) Value of electronic data-processing equipment or services furnished; (xi) Allowances or subsidies for rent, payroll, advertising, telephone, or other purposes; (xii) Advertising provided by the insurer; (xiii) Supplies, excluding application, reporting and claim forms, envelopes for transmitting the forms, and brochures, rate books, and rate charts related to the insurer's credit involuntary unemployment benefit insurance; (xiv) Dividends, profits, capital gains, commissions, or other benefits that may be reasonably anticipated under reinsurance agreements with any unauthorized reinsurer affiliated with or controlled by a licensed insurance producer, a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor or the licensed insurance producer; (xv) Services, including an amount paid to an employee of the insurer specifically for services provided to a creditor or affiliate of the creditor if the services are normally performed outside the home office of the insurer, but not including services performed by account executives or liaison personnel of the insurer who visit the offices of the creditor at occasional intervals, are regular salaried officers or employees of the insurer, and receive no commission or other compensation directly dependent upon the amount of business obtained; (xvi) Value of training programs for employees of the creditor or insurance producer, excluding training of employees provided solely in connection with a program of credit involuntary unemployment benefit insurance for the purpose of acquainting the creditor's employees with administrative procedures of the insurer when the salary of the employees during the training period is paid by the creditor; (xvii) Rental by the insurer of space or equipment from the insurance producer or creditor, excluding rentals not related to any insurance transaction on terms approved by the Commissioner; (xviii) Commission or some other form of compensation or remuneration in excess of what otherwise would be payable in connection with the sale of allied lines of insurance or other business, such as credit property insurance and maintenance warranties; (xix) Profit sharing plans; (xx) Bonuses; (xxi) Finders' fees; and (xxii) Offers of share ownership in an agency or corporation at less than the fair market value. (c) “Commission” does not include: (i) The cost to the insurer of conducting a review performed under Regulation .21 of this chapter; or (ii) Services performed by account executives or liaison personnel of the insurer who visit the offices of the creditor at occasional intervals, are regular salaried officers or employees of the insurer, and receive no commission or other compensation directly dependent upon the amount of business obtained. (8) “Commissioner” means the Maryland Insurance Commissioner. (9) “Consumer loans” means loans issued by lenders licensed under Financial Institutions Article, Title 11, Subtitle 2, Annotated Code of Maryland, and made under Commercial Law Article, Title 12, Subtitle 3, Annotated Code of Maryland. (10) “Credit involuntary unemployment benefit insurance” means insurance on a debtor that provides indemnity for payments that are due on a specific loan or other credit transaction while the debtor is involuntarily unemployed. (11) Creditor-Paid Insurance. (a) “Creditor-paid insurance” means insurance in which the creditor pays the insurance premium without separate charge to the debtor. (b) “Creditor-paid insurance” does not include a transaction if: (i) The debtor is required to pay an identifiable charge or premium for credit involuntary unemployment benefit insurance; or (ii) There is a differential in finance, interest, carrying, service, or other similar charge made to debtors who are in similar circumstances except for their insured or noninsured status. (12) “Earned premiums at prima facie” means the premiums that would have been earned if all earned premiums had been written at prima facie rates. (13) “Enroller” means a person: (a) Who enrolls individuals or issues certificates under group credit involuntary unemployment benefit insurance; (b) Who does not receive any form of commission, compensation, remuneration, or other benefit based on this activity; and (c) Whose salary scale is not dependent on the volume of insurance. (14) “Experience period” means 2 consecutive calendar years or, at the option of the insurer, 2 consecutive policy years under a group policy issued to one creditor or under one case. (15) “Family leave” means an employer-approved temporary leave of absence due to one of the following: (a) The birth of a child; (b) The placement of a child for adoption or foster care; (c) The need to care for a spouse, child, or parent, if the spouse, child, or parent has a serious health condition; or (d) Any other event as may be defined in the policy and approved by the Commissioner. (16) “Full time” means working for wages or salary for at least 30 hours per week. (17) Insurance Producer. (a) “Insurance producer” has the meaning stated in Insurance Article, §1-101(u), Annotated Code of Maryland. (b) “Insurance producer” includes a person who: (i) Sells a group or individual policy of credit involuntary unemployment benefit insurance; or (ii) Receives any form of commission, compensation, remuneration, or other benefit based on enrolling individuals or issuing certificates under group credit involuntary unemployment benefit insurance. (18) Involuntary Unemployment. (a) “Involuntary unemployment” means involuntary loss of employment. (b) “Involuntary unemployment” includes a loss of employment as a result of individual or mass layoff, termination by employer, organized labor dispute including general strike and lockout, or any other event defined by the policy. (19) “Joint involuntary unemployment insurance” means credit involuntary unemployment benefit insurance issued to two codebtors if both are jointly and severally liable for the debt which pays a full benefit as defined in the policy if either or both of the codebtors becomes eligible for benefits under the policy. (20) “Loss ratio” means the ratio of incurred claims to premiums earned during a specified period. (21) “New case” means an account in which the gross premiums before refunds and at prima facie premium rates exceed or may reasonably be expected to exceed $50,000 in the most recent policy year, but did not exceed $50,000 in the prior policy year. (22) “Monthly premium insurance” means insurance for which a separately identifiable insurance premium is paid each month. (23) Plan of Benefits. (a) “Plan of benefits” means credit involuntary unemployment benefit insurance that provides benefits after either a 30-day elimination period or a 30-day retroactive waiting period, on either a single premium or monthly premium basis, and provides a maximum number of 6, 9, 12, 18, or 24 monthly benefits. (b) “Plan of benefits” includes: (i) Each possible combination of waiting period, premium method, and maximum number of benefits; and (ii) Any other plan of benefits approved by the Commissioner. (24) Policy Year. (a) “Policy year” means, in the case of a group policy, the period between a policy anniversary and the next succeeding policy anniversary. (b) “Policy year” means, in the case of an individual policy, a calendar year or a period of 12 consecutive months beginning from an anniversary of the opening of an account, as the insurer may elect. (25) “Prima facie loss ratio” means the ratio of incurred claims to earned premiums at prima facie during a specified period. (26) “Prima facie premium rates” means maximum applicable premium rates as authorized and promulgated by the Commissioner from time to time under Regulation .10 of this chapter. (27) Single Premium Insurance. (a) “Single premium insurance” means insurance for which the debtor pays or finances the entire required premium in advance. (b) “Single premium insurance” includes insurance if: (i) The creditor adds identifiable insurance charges or premiums for credit insurance to the indebtedness; and (ii) A direct or indirect finance, carrying, credit, or service charge is made to the debtor on the insurance charges or premiums. (28) Unauthorized Reinsurer. (a) “Unauthorized reinsurer” means any insurer meeting the qualifications of a nonadmitted accredited reinsurer. (b) “Unauthorized reinsurer” does not include any insurer authorized to do business in this State or any insurer qualified under Insurance Article, §13-116, Annotated Code of Maryland. #### Regulation .05 Loss Ratio. *COMAR 31.13.03.05* A. Benefits for policies issued under these regulations shall be deemed reasonable in relation to premiums if claims incurred under the policies result in, or may reasonably be expected to result in, a loss ratio of not less than 55 percent when premiums do not exceed prima facie premium rates. B. When the prima facie loss ratio exceeds 58 percent, the premiums shall be determined in accordance with the methods of Regulation .12 of this chapter. C. Rate Reduction. (1) When the prima facie loss ratio is less than 52 percent: (a) A reduced premium rate shall be used that is calculated by dividing the prima facie loss ratio by 0.55 and multiplying the result by the prima facie premium rate; but (b) Except as provided in §C(2) of this regulation, the reduced premium rate may not be less than 40 percent of the prima facie premium rate. (2) At the option of the insurer, a premium rate less than 40 percent of the prima facie premium rate may be used. #### Regulation .06 Statistics and Reporting Forms. *COMAR 31.13.03.06* A. General Requirements. To permit the Commissioner to review the basis of prima facie premium rates and the basis of premium rates being charged on the case method, each insurer writing credit involuntary unemployment benefit insurance shall: (1) Maintain statistics relating to the insurer's Maryland business; and (2) File the statistics with the Commissioner in the form required by the Commissioner. B. Case Filing Requirements. (1) An insurer shall file with the Commissioner the statistics: (a) For each account that has qualified as a case for the 2 most recent policy years, not later than 120 days after the end of the second calendar year to which the statistics relate; and (b) For all other business, including new cases, not later than June 30 following the close of the calendar year to which the statistics relate. (2) Each insurer writing credit involuntary unemployment benefit insurance also shall file with the Commissioner: (a) Notice of each account that is a new case; (b) The identity of the creditor for each new case, including: (i) The corporate name of the creditor; (ii) Any “trading as” name used by the creditor; (iii) The address and phone number of the creditor; and (iv) The name of a contact person for insurance matters at the creditor; and (c) The statistics for the most recent calendar year, certified by a responsible officer of the insurer, that would have been required under this regulation if the new case had been a case for each of the 2 most recent policy years. (3) An insurer shall file the information on a new case with the Commissioner not later than the June 30 following the close of the calendar year in which the account became a new case. (4) Use of Code Numbers. (a) In filing the information required by this section, an insurer may use a code number instead of the name and address of a creditor. (b) If an insurer uses a code number instead of the name and address of a creditor, the insurer shall submit a separate list that identifies the name and address of each creditor with the creditor's code number. (c) The list that identifies the name and address of each creditor with the creditor's code number is confidential commercial information under State Government Article, §10-617(d), Annotated Code of Maryland. C. Reports required under §B(1)(b) of this regulation shall be submitted on a calendar year basis. D. All reports, both those on a calendar year basis and those on the case method, shall be submitted separately for: (1) Each class of business; (2) Each premium payment method, single premium or monthly premium; (3) Each plan of benefits; (4) Single credit involuntary unemployment benefit insurance and joint credit involuntary unemployment benefit insurance; and (5) Family leave. E. Every report filed with the Commissioner shall contain the following information: (1) Gross premiums written; (2) Refunds of premiums on terminated insurance; (3) Net premiums written; (4) Unearned premium reserve at beginning of period; (5) Unearned premium reserve at end of period; (6) Earned premiums, which equal §E(1) of this regulation minus §E(2) of this regulation, minus the result of §E(5) of this regulation minus §E(4) of this regulation; (7) Earned premiums at prima facie; (8) Claims paid; (9) Claim reserve at beginning of period; (10) Claim reserve at end of period; (11) Claims incurred, which equal §E(8) of this regulation plus the result of §E(10) of this regulation minus §E(9) of this regulation; (12) Loss ratio, which equals §E(11) of this regulation divided by §E(6) of this regulation; (13) Prima facie loss ratio, which equals §E(11) of this regulation divided by §E(7) of this regulation, rounded to two decimal places; (14) Dividends and experience rating refunds; (15) All other commissions, compensation, and remuneration to creditors or insurance producers; (16) Total of §E(14) and (15) of this regulation; (17) Ratio of §E(16) of this regulation divided by §E(3) of this regulation; and (18) Combined ratio, which equals the sum of §E(12) of this regulation and §E(17) of this regulation. F. Every statistical report shall be certified by a responsible officer of the insurer and shall be accompanied by a statement certified by the president or other responsible officer of the insurer that the insurer has not paid or credited or provided commission as defined in this chapter in excess of the applicable maximum amounts specified in Regulation .15 of this chapter. #### Regulation .07 Rate Changes and Creditor-Paid Insurance. *COMAR 31.13.03.07* A. Premium rates under a group policy of credit involuntary unemployment benefit insurance may not be increased more than once during the first policy year, and a subsequent increased rate may not be charged within 12 months of any prior change in rates. B. Monthly Premium Insurance. (1) In a policy of monthly premium insurance, a change in rates may not be made effective until 31 days after all existing debtors in the group have been notified of any increased charge that they will be required to pay as a result of the change in rates. (2) The notice required by §B(1) of this regulation shall be deemed to be satisfied if the insurer: (a) Notifies the creditor of the increased charge; (b) Provides the creditor with the necessary forms to be mailed by the creditor to the debtors advising them of the increased charge; and (c) Verifies that the creditor has mailed the notices to the debtors. C. An insurer may file for approval of policy forms and premium rates for creditor-paid insurance on a basis other than that established by these regulations upon a showing satisfactory to the Commissioner that the: (1) Forms and rates meet the requirements of Insurance Article, Title 13, Subtitle 1, Annotated Code of Maryland; and (2) Rates are actuarially consistent with rates prescribed by this chapter for other forms of credit involuntary unemployment benefit insurance. #### Regulation .08 Premium Rates by Case Method. *COMAR 31.13.03.08* A. Case Comprising Two or More Accounts. (1) If an insurer has combined two or more accounts to establish a case, it may not add additional accounts or remove accounts from that case except with the permission of the Commissioner and under conditions that the Commissioner may specify. (2) When submitting an experience report for a case comprising two or more accounts, the insurer shall include a list of the names of each account included in the case. B. Premium rates for each case shall be established by the insurer to afford a loss ratio of at least 55 percent if the resulting rates do not exceed prima facie premium rates, and may be established in accordance with the methods of Regulation .12 of this chapter if the substitution of prima facie premium rates would result in a loss ratio in excess of 55 percent. C. Existing Account with Rate Established by Case Method. (1) If an insurer acquires an existing account for which rates were established by another insurer by the case method, the new insurer shall use the same rates or rates not greater than those which were approved for use by the former insurer until the end of the existing experience period established by the former insurer. (2) In reporting this account at the end of the experience period, the new insurer shall combine the experience of the former insurer with its own experience for the term of the experience period in order to determine subsequent rates for the account. D. Reports. (1) Reports for each case shall be submitted by the insurer at the end of each experience period, together with a statement of the then-applicable premium rates proposed by the insurer. (2) If the premium rates proposed by the insurer for the case do not meet the loss ratio standards of §B of this regulation, the insurer shall make an appropriate premium reduction, to be effective on or before the 45th day after the date of filing of the experience report, unless, for good cause shown, the Commissioner approves a higher premium rate. (3) If the insurer does not propose to reduce premium rates in accordance with these regulations, the Commissioner shall notify the insurer and afford it a hearing to show cause to the Commissioner why the premium rate should not be reduced. (4) The Commissioner shall notify the insurer in writing within 60 days after the filing of the experience report of the Commissioner's findings in regard to the premium rate which the Commissioner determines should be charged. (5) The insurer shall implement the rates determined by the Commissioner not later than 45 days after receipt of the Commissioner's notice of the rates that the Commissioner authorizes for the case. E. Credit Involuntary Unemployment Benefit Insurance Case Experience and Application of Rate Adjustment Factor. (1) If a plan of benefits for credit involuntary unemployment benefit insurance qualifies as a case, whether consisting of accounts of one or more creditors, the case experience submitted by the insurer at the end of the experience period shall include the experience of all plans of benefits for credit involuntary unemployment benefit insurance written by creditors comprising the case. (2) If the experience of the case results in a downward rate adjustment, the insurer shall apply the rate adjustment factor to all plans of benefits for credit involuntary unemployment benefit insurance written by the creditors comprising the case. (3) If the experience of the case results in an upward rate adjustment, the insurer may apply the rate adjustment factor to all plans of benefits for credit involuntary unemployment benefit insurance written by the creditors comprising the case. F. Rounding Rate Calculations. Premium rates for credit involuntary unemployment benefit insurance determined under this regulation shall be rounded to three decimal places per $10 of monthly benefit payable. #### Regulation .09 General Premium Rate Standards and Increased Rates. *COMAR 31.13.03.09* A. General. (1) With respect to all premium rates not eligible for filing in accordance with the case method, the Commissioner shall accept as meeting the standards of Insurance Article, §13-110(b)(1), Annotated Code of Maryland, those premium rate filings that do not exceed prima facie premium rates stated in Regulation .10 of this chapter for the several categories of insurance described in Regulation .10 of this chapter. (2) The prima facie premium rates in Regulation .10 of this chapter are based on the assumption that a policy fee, policy issue fee, certificate fee, or other additional charge will not be made. B. Premium rates for use with forms that have less restrictive provisions than those described in this chapter may not exceed the prima facie rates specified in Regulation .10 of this chapter. C. All prima facie premium rates and standards and formulas for increased rates refer to individual policies and group certificates insuring single lives. D. Joint Credit Involuntary Unemployment Benefit Insurance. For credit involuntary unemployment benefit insurance issued to cover two debtors jointly, the premium for the involuntary unemployment insurance benefits may not exceed 1.80 times the premium that would be charged if one debtor alone were insured. E. Application for Approval of Higher Rates. (1) With respect to premium rates not eligible for filing in accordance with the case method, an insurer may file with the Commissioner an application for approval of rates higher than the prima facie premium rates for a single creditor or for one or more classes of business. (2) The application shall specify the basis for the increased rate requested and shall be accompanied and supported by: (a) Credible statistics applicable to the business under consideration; and (b) A demonstration that the requested rates are in conformity with, or less than, rates that would meet the guidelines for increased rates set forth in Regulation .12 of this chapter. F. Notice of Increased Rate. (1) The Commissioner may grant approval of an increased rate for a stated period. (2) If a period is not specified in the Commissioner's notice of approval, an approval by the Commissioner of an increased rate shall be effective for a period of 1 year. #### Regulation .10 Prima Facie Premium Rates for Credit Involuntary Unemployment Insurance. *COMAR 31.13.03.10* A. Prima Facie Single Premium Rates. The premiums charged for credit involuntary unemployment insurance policies having all policy provisions not less favorable to the insured debtor than those required by Regulation .l1 of this chapter may not exceed, on policies of credit involuntary unemployment insurance for which a single premium is charged in advance for the entire duration of the insurance and the indebtedness is repayable in equal installments, the amount shown in the table below for each $10 of the monthly benefit insured: (1) Prima Facie Single Premium Rates per $10 of Monthly Benefit Payable (2) Prima Facie Single Premium Rates per $10 of Monthly Benefit Payable B. Prima Facie Monthly Premium Rates. (1) On policies of group credit involuntary unemployment insurance issued as monthly premium insurance, a monthly premium rate shall be used instead of the rates referred to in §A of this regulation. (2) The rates under this plan may not exceed those shown in the schedule immediately below. (3) The rate shall be applied to the amount of the monthly payment insured in that month regardless of the duration of the loan. Prima Facie Monthly Premium Rates per $10 of Monthly Benefit Payable C. If a credit involuntary unemployment policy, otherwise meeting the requirements of Regulation .11 of this chapter, provides for payment of benefits in the event of family leave as defined in Regulation .04B(15) of this chapter, the insurer may charge a rate not to exceed 4 percent more than the rates in Regulations .09E, .10A or B, or .12B of this chapter. D. The prima facie premium rates for credit involuntary unemployment benefit insurance in this regulation apply to all premiums charged on or after the effective date of this chapter, for every class of business. E. Rates Per $100 Outstanding Balance Per Month. (1) Rates stated as $0.xx per $100 outstanding balance per month shall be consistent with the above rates. (2) For example, if a credit card requires a minimum payment of 5 percent of the balance, a rate of $0.40 per $10 of monthly benefit may also be stated as $0.20 per $100 of outstanding balance because $10 is 5 percent of $200. (3) As another example, if the minimum required payment is 3 percent of the outstanding balance, the $0.40 per $10 of monthly benefit rates translates to $0.12 per $100 of outstanding balance. (4) For purposes of this section, the following formula may be used: If: M = monthly rate per $100 of outstanding balance, #### Regulation .11 Underwriting Requirements for Insurance Prima Facie Premium Rates. *COMAR 31.13.03.11* A. The prima facie premium rates in Regulation .10 of this chapter assume that contracts providing credit involuntary unemployment benefit insurance do not require evidence of individual insurability from any eligible debtor electing to purchase coverage except: (1) A requirement that the debtor has been employed full-time for not more than 30 days before the effective date of coverage; (2) A requirement that the debtor has not received notice of impending termination or layoff within 60 days before the effective date of coverage; and (3) That there are no age restrictions, except that coverage may be restricted based on age if: (a) There is credit health insurance coverage or credit life insurance coverage on the same debt; (b) The credit health insurance coverage or credit life insurance coverage is subject to an age restriction; and (c) The credit involuntary unemployment benefit insurance is: (i) Subject to the same age restriction that applies to the credit health insurance coverage; or (ii) If no age restriction applies to the credit health insurance, subject to the same age restriction that applies to the credit life insurance. B. Regardless of individual policy or certificate amounts, for underwriting purposes it is assumed that the policy contains no exclusions except the following: (1) Voluntary forfeiture of salary, wages, or employment income; (2) Resignation; (3) Retirement; (4) Loss of employment as a result of willful or criminal misconduct; (5) Loss of employment as a result of seasonal employment; (6) Loss of employment as a result of disability; (7) Discharge from military; or (8) Loss of self-employment without a declaration of bankruptcy, either of the debtor or of the debtor's business. C. Acquisition of Existing Account. (1) If an insurer acquires an existing account providing involuntary unemployment benefits on a monthly premium basis or on another basis for which the debtor is charged monthly, the new insurer shall honor all claims for periods of involuntary unemployment commencing on or after the date of takeover and all claims after that which would have been paid under the former policy. (2) The original insurer shall honor all claims for periods of involuntary unemployment commencing before the date of takeover. #### Regulation .12 Guidelines for Increased Rates. *COMAR 31.13.03.12* A. Applications to the Commissioner for higher than prima facie premium rates shall be accompanied and supported by credible statistics. B. Approval of applications for increased rates shall depend on whether the requested rates are not greater than rates based on the standards in this chapter. C. On policies of credit involuntary unemployment benefit insurance for which the prima facie loss ratio exceeds 58 percent, the rate shall be determined by the formula: D. Premium rates for credit involuntary unemployment benefit insurance determined under this regulation shall be rounded to three decimal places per $10 of monthly benefit payable. #### Regulation .13 Remittance of Premiums to Insurer. *COMAR 31.13.03.13* A. Premiums shall be remitted to the insurer within 60 days of their due dates. B. For purposes of this chapter, the deposit of premiums to any demand deposit account with the creditor or affiliate and the continued retention of the premiums in the deposit account for more than 60 days may not be deemed remittance to the insurer. #### Regulation .14 Refunds. *COMAR 31.13.03.14* A. In event of termination of the insurance before the scheduled maturity date of the indebtedness, the insurer promptly shall refund or credit to the person entitled to it the appropriate portion of any premiums paid for the insurance. B. In the case of monthly premium credit involuntary unemployment benefit insurance, the amount of the refund or credit may not be less than the pro rata gross unearned premium. C. Single Premium Credit Insurance. (1) In the case of single premium credit involuntary unemployment benefit insurance, the amount of the refund or credit may not be less than the refund computed by the sum of the digits method commonly known as the Rule of 78. (2) The insurer may not reduce the amount of the refund based on the amounts of benefit paid. D. Calculation. (1) At the option of the insurer, refunds under §C of this regulation may be calculated on a daily or on a monthly basis, as may be elected in the filing made by the insurer. (2) Refunds may be calculated on an approximate daily basis by interpolating pro rata between the values at the beginning and at the end of the month. (3) For a calculation under §D(2) of this regulation, the insurer shall assume that every month has 30 days. (4) If refunds are calculated on a monthly basis, a charge may not be made for a period less than 15 days elapsing since the last monthly installment due date. If the period elapsing since the last monthly installment due date is 15 days or more, a charge may be made for the full month. E. A premium refund is not required under §A of this regulation if the sum of the refunds on all insurance issued to the debtor by an insurer in connection with the loan would be less than $1. F. If a refund or credit is due to the debtor in accordance with Insurance Article, §13-107(c)(3) or 13-112(b), Annotated Code of Maryland, the amount of refund or credit may not be less than the amount paid by the debtor, less the amount payable under any substituted or delayed coverage issued to the debtor. G. Death of Debtor. In the event of the death of a debtor who is covered for credit involuntary unemployment benefit insurance: (1) The credit involuntary unemployment benefit insurance may not be deemed to have terminated by the performance of the insurance contract by reason of the debtor's death; and (2) The insurer shall make the appropriate refund for the credit involuntary unemployment benefit insurance coverage that terminated at the date of death. #### Regulation .15 Commission to Insurance Producers and Creditors. *COMAR 31.13.03.15* A. On all loans originating in Maryland, an insurer may not directly or indirectly pay, allow, or offer to pay any form of commission, as defined in Regulation .04B(7) of this chapter, in excess of the limits stated in this chapter on a form of credit involuntary unemployment benefit insurance, regardless of whether the payment is made to a licensed insurance producer, a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor or the licensed insurance producer. B. The maximum commission payable to all payees on each policy of credit involuntary unemployment benefit insurance may not exceed a total of 36 percent of prima facie premium rates. C. A commission paid to a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor, regardless of whether the payee is a licensed insurance producer, may not exceed 32 percent of prima facie premium rates. D. Payment as described in §C of this regulation does not preclude payment of commission to a licensed insurance producer not listed in §C of this regulation, if the total commission paid under §C of this regulation and under this section does not exceed the maximum rate allowed in §B of this regulation. E. Payment of Commission by Insurance Producer. (1) A licensed insurance producer proposing to pay commission to any payee listed in §C of this regulation shall first inquire of the insurer whether any commission is being paid by the insurer to that payee on the same business. (2) The insurance producer may not pay that payee an amount which, if added to the amount paid by the insurer for the same business, would cause the payment to exceed the maximum rate allowed in §C of this regulation. (3) The insurer shall cooperate with the insurance producer in providing the information called for by this section. #### Regulation .16 Reinsurance Treaties. *COMAR 31.13.03.16* A. To permit the Commissioner to enforce the provisions of Regulation .15 of this chapter with respect to that portion of commission defined by Regulation .04B(7)(a)(xiv) of this chapter and to permit the Commissioner to ascertain that there are no violations of Insurance Article, Title 27, Annotated Code of Maryland, and other applicable sections of Insurance Article, Annotated Code of Maryland, a contract of reinsurance of credit involuntary unemployment benefit insurance on loans originating in Maryland may not be entered into, or continued, after the effective date of this chapter unless approved by the Commissioner and unless the reinsurer is licensed in Maryland, qualifies under Insurance Article, §13-116, Annotated Code of Maryland, or is an accredited reinsurer. B. A person proposing to enter into a reinsurance treaty as described in this regulation or a person proposing to continue a treaty entered into before the effective date of this chapter shall submit the treaty to the Commissioner for the Commissioner's approval. C. If the Commissioner does not approve or disapprove the proposed or existing reinsurance treaty within 90 days after the date it is filed with the Commissioner, the treaty shall be deemed to be approved. D. The Commissioner may withdraw approval of a reinsurance treaty after a hearing held not less than 20 days after written notice to the insurer and the reinsurer. #### Regulation .17 Prohibited Transactions. *COMAR 31.13.03.17* A. A person may not solicit, sell, or negotiate a group or individual policy of credit involuntary unemployment benefit insurance unless the person is licensed as an insurance producer in accordance with Insurance Article, Title 10, Subtitle 1, Annotated Code of Maryland. B. Enroller. (1) An enroller may not receive any form of commission, compensation, remuneration, or other benefit based on the enroller's activity in enrolling persons in group policies of credit involuntary unemployment benefit insurance. (2) An enroller who is not also licensed as an insurance producer may not engage in soliciting, selling, or negotiating, or assist in soliciting, selling, or negotiating, an individual policy of credit involuntary unemployment benefit insurance. C. Unfair Trade Practices. (1) An insurer or insurance producer may not engage in any of the following practices in connection with the solicitation, sale, or negotiation of credit involuntary unemployment benefit insurance as an inducement to the sale of the insurance, and each of these practices is an unfair trade practice under Insurance Article, Title 27, Annotated Code of Maryland: (a) Offering or granting to a creditor or to a person connected or affiliated with the creditor any special advantage or service not specified in the insurance contract; (b) Agreeing to deposit with a bank or financial institution money or securities of the insurer or the insurance producer with the design or intent that the deposit reduce or take the place of a deposit of money or securities that otherwise would be required of the creditor or an affiliate of the creditor by the bank or financial institution as a compensating balance or offsetting deposit for a loan or other advance; (c) Allowing the creditor to retain premiums on credit involuntary unemployment benefit insurance on policies issued to the creditor or on policies sold or collected by the creditor for more than 60 days after the due date of the premiums; or (d) Depositing with the creditor or an affiliate of the creditor money or securities without interest or at a lesser rate of interest than is generally being paid by the creditor bank or financial institution to other depositors of like amounts. (2) Section C(1)(d) of this regulation may not be construed to prohibit the maintenance by an insurer or insurance producer of demand deposits or premium deposit accounts that are reasonably necessary for use in the ordinary course of the insurer's or the insurance producer's business. D. If advance loan payments are made before the date of involuntary unemployment of the debtor on a loan covered by single premium credit involuntary unemployment benefit insurance, or if the debtor, the beneficiary, or any other person makes payments on a loan after the date the debtor is first entitled to receive a benefit for involuntary unemployment, the insurer may not reduce the amount of payments that were scheduled to be paid under the provisions of the credit involuntary unemployment benefit insurance policy because of these loan payments. E. Benefit Eligibility Requirements. (1) Benefit eligibility requirements may not include a requirement that as of the date of loss of employment the insured debtor had been employed for a: (a) Set number of hours per week; or (b) Set period of time. (2) The insurer may require only that the insured debtor had been employed and that separation from employment was the result of involuntary unemployment as defined in Regulation .04B(18) this chapter. F. Credit involuntary unemployment benefit insurance may not be permitted in a package sold to any individual who is not eligible for coverage on the date of the application for coverage. G. Reeligibility Conditions. (1) A credit involuntary unemployment benefit insurance policy may impose conditions upon which an insured debtor becomes reeligible for credit unemployment benefits after a period of receiving benefits. (2) If reeligibility conditions are required for full benefits for a subsequent period of unemployment, the conditions may not: (a) Be more stringent than the initial eligibility conditions; and (b) Require that the insured be actively at work for more than 30 consecutive days. (3) If an insured debtor has not satisfied the reeligibility requirement at the time of a subsequent unemployment, the unemployment shall be considered a continuation of the prior unemployment with no waiting period, with the maximum benefit period equal to the unused portion of the maximum benefit period for the prior unemployment. H. Return To Work. (1) If a debtor was working full time on the date of involuntary unemployment and returns to work less than full time, the insurer shall consider the debtor to be involuntarily unemployed until the debtor returns to full-time employment. (2) If a debtor was working less than full time on the date of involuntary unemployment and returns to work less than full time, the insurer may consider the debtor to be no longer involuntarily unemployed. #### Regulation .18 Combinations of Coverages. *COMAR 31.13.03.18* If an individual policy form or group policy form of credit involuntary unemployment benefit insurance or a certificate form of group credit involuntary unemployment benefit insurance is used to provide both single and joint coverage, the coverage in effect shall clearly and prominently be indicated in the schedule of benefits. #### Regulation .19 Notice to Debtors. *COMAR 31.13.03.19* A. Notice of Termination. (1) If a debtor is covered by a group credit involuntary unemployment benefit insurance policy providing for payment of premiums to the insurer on a monthly premium basis, the policy shall provide that in the event of termination of the policy for any reason: (a) The insured debtor shall be given written notice of termination; and (b) Except if replacement of the coverage by the same or another insurer in the same or greater amount takes place without interruption of coverage and a new certificate reflecting the replacement coverage is delivered to the insured debtor, coverage will continue for at least 31 days from the date of notice. (2) The notice of termination required by this section shall be given by the insurer unless the insurer is unable to identify the debtors, in which case it shall be given by the creditor. (3) There shall be a prominent notice printed or stamped close to the schedule of benefits in the certificate form that the insurance coverage will terminate if the group policy terminates. (4) An insurer also may include notice of additional events that would lead to termination of insurance coverage if the events are approved by the Commissioner. B. Notice that Benefit May Not Cover Installments. (1) If a credit involuntary unemployment benefit insurance policy is issued under which the monthly benefit might not cover payment of the entire scheduled monthly loan installment or the total benefit might not cover payment of all of the unpaid scheduled installments under the loan even if the loan account and the insurance premiums are paid on a current basis, then there shall be a notice to this effect in the individual policy or in certificates of insurance issued under a group policy. (2) The notice under §B(1) of this regulation shall be prominently printed or stamped close to the schedule of benefits in the policy and in the certificate form. C. Other Notices. A policy or certificate of credit involuntary benefit insurance shall include a notice printed in or close to the schedule of benefits that clearly calls attention to any of the following limitations or requirements that are applicable to the policy or certificate: (1) Any evidence of insurability required for advances of credit; (2) Any limit on the number of monthly benefit payments that the insurance will provide per occurrence of involuntary unemployment; (3) Any limit on the number of monthly benefit payments that the insurance will provide over the term of the insurance; (4) The right of the insured to cancel credit involuntary unemployment benefit coverage that has been issued without canceling any other coverage that has been issued covering the same debt; (5) Any limit on the term of coverage; (6) Any limit on the amount of any monthly benefit payment that the insurance will provide over the term of the insurance; (7) Any limit on the aggregate of any monthly benefit payments that the insurance will provide over the term of the insurance; and (8) Any requirement that the insured register with the Office of Unemployment Insurance or a recognized employment agency to be eligible for benefits. #### Regulation .20 Benefits. *COMAR 31.13.03.20* A. If a debtor has filed in accordance with the policy provisions a claim for benefits for which the insurer is liable under a credit involuntary unemployment benefit insurance policy, the insurer shall pay any late charges accruing on the amount payable under the claim after the date the claim has been filed. B. For monthly premium credit involuntary unemployment benefit insurance: (1) The amount of the monthly benefit payable on a revolving, open end, account shall be the greater of the minimum payment required by the creditor or 3 percent of the debt at the time of involuntary unemployment, subject to any policy maximum; and (2) If involuntary unemployment occurs prior to the date of termination of the policy or prior to the date of termination of coverage of an insured debtor and if benefits would otherwise have been payable, benefits shall be paid as if coverage continued. C. For single premium and nonrevolving, closed end, monthly outstanding balance credit involuntary unemployment benefit insurance, the amount of the monthly benefit payable shall be the scheduled payment required by the creditor, subject to any policy maximum. D. For purposes of this chapter, a claim shall be deemed filed if it is transmitted to the creditor, the insurer, or an insurance producer of the insurer. E. Amount Due in Excess of Amount Due to Creditor. (1) An amount due under a credit involuntary unemployment benefit insurance policy in excess of the payment due at the time of involuntary unemployment shall be paid by the insurer directly to the debtor, the designated second beneficiary, or the estate of the debtor, whichever is entitled to the payment. (2) If the insurer does not have the address of the person entitled to the excess amount, the insurer shall send a check payable to that person to the creditor for transmittal. F. Claims shall be paid either by a check of the insurer, by a draft drawn upon the insurer, or by electronic transmission. G. The creditor may not be authorized to settle or adjust claims or to act as a claim representative for the insurer. H. Benefits for a covered period of unemployment less than a full month shall be paid at a rate of 1/30 of a full monthly benefit for each day of unemployment. I. The benefit payable under a joint credit involuntary unemployment benefit insurance policy if only one debtor is receiving benefits may not be less than the benefit that would have been paid if both were eligible for benefits. J. If a policy requires registration with the Office of Unemployment Insurance or a recognized employment agency within a stated time period in order to be eligible for benefits: (1) The time period may not be less than 15 days; and (2) If the debtor registers after the stated time period has expired, benefits otherwise payable may not be denied for periods of unemployment after the registration. #### Regulation .21 Review of Credit Operations. *COMAR 31.13.03.21* A. Review Required. (1) Every insurer transacting credit involuntary unemployment benefit insurance business in Maryland shall conduct a review of each of its creditor accounts with respect to the credit involuntary unemployment benefit insurance business of the creditor to ensure compliance with the insurance laws and regulations of Maryland. (2) Unless a satisfactory review has been made within 2 years before the effective date of this chapter, the first review shall be made not later than 15 months after the effective date of this chapter or of the date of the initial credit involuntary unemployment benefit insurance transaction between the creditor and the insurer, whichever is later. (3) After review under §A(2) of this regulation, a review shall be made not later than 36 months after the last preceding review. B. The review shall include but need not be limited to a determination that: (1) The proper premium charges to debtors are made by the creditor and remitted in a timely manner to the insurer; (2) The proper refunds are being accurately calculated and promptly made by the creditor; (3) All claims are being filed promptly and properly handled; (4) Amounts of insurance payable in excess of the amounts necessary to extinguish the indebtedness are properly calculated and reported to the insurer in proofs of loss; and (5) The creditor is promptly and fairly processing complaints concerning its credit insurance operations and is maintaining proper procedures for, and records of, the complaints processed. C. Insurers shall retain copies of the reviews in their home offices for at least 5 years. D. An insurer may retain copies of the reviews in paper, photographic, microprocessed, magnetic, mechanical, electronic, digital, or any other medium if the copies of the reviews are maintained in a manner that: (1) Is clear and legible; (2) Accurately represents the original document in its entirety, including any attachment to the document; (3) Is capable of producing a clean and legible hard copy of the original document; and (4) Preserves evidence of any signature contained in the original document. #### Regulation .22 Effective Date. *COMAR 31.13.03.22* A. An individual policy, group policy, or group certificate of credit involuntary unemployment benefit insurance not in conformity with this chapter may not be issued or continued to be used in connection with any loan made on or after the effective date of this chapter. B. A premium in excess of that permitted by these regulations may not be charged for credit involuntary unemployment benefit insurance, and a commission or other form of benefit may not be paid to insurance producers or creditors in excess of the premium and commission rates permitted under this chapter for credit involuntary unemployment benefit insurance which is issued in connection with any loan made on or after the effective date of this chapter. #### Regulation .23 Clerical Errors. *COMAR 31.13.03.23* A. Excess Insurance. (1) If a policy of credit involuntary unemployment benefit insurance limits the involuntary unemployment benefits to stated policy maximums, the policy and certificates of insurance issued under a group policy shall provide that if the insured has been charged premiums for insurance in excess of the stated maximums, the insurer may terminate the excess insurance and refund all premiums paid by the debtor for the excess insurance. (2) The notice of termination of the excess insurance shall state that the premium paid by the debtor for the excess coverage shall be refunded to the person entitled to it. (3) A single premium credit involuntary unemployment benefit insurance policy and certificate shall further provide that excess insurance shall remain in force if the insurer does not terminate the excess insurance within 60 days after the effective date of coverage or if the debtor suffers a covered loss within the 60-day period but before notification by the insurer of termination of the excess coverage. (4) A monthly premium credit involuntary unemployment benefit insurance policy and certificate shall further provide that the excess insurance shall be in force for the period for which a premium was charged unless the excess insurance is cancelled before the occurrence of a loss. B. Ineligible Debtor. (1) Misstatement of Age. (a) If a policy of credit involuntary unemployment benefit insurance or certificate of credit involuntary unemployment benefit insurance issued under a group policy contains an age restriction, the policy or certificate may allow the insurer to terminate the coverage and refund all premiums paid by the debtor if: (i) The debtor has misstated the debtor's age; and (ii) The debtor's true age is greater than the limiting age stated in the policy. (b) If a policy of credit involuntary unemployment benefit insurance or certificate of credit involuntary unemployment benefit insurance issued under a group policy contains an age restriction, the policy or certificate may not provide for an adjustment of premiums or benefits if: (i) The debtor misstates the debtor's age; and (ii) The debtor's true age is not greater than the limiting age stated in the policy or certificate. (2) If a debtor's eligibility for credit involuntary unemployment benefit insurance is subject to restrictions based on employment or other factors, the policy and certificates of insurance issued under a group policy shall provide that if insurance is issued to an ineligible debtor who has truthfully answered all eligibility questions, the insurer may terminate the insurance and refund all premiums paid by the debtor. (3) The notice of termination of the insurance shall state that the premium paid by the debtor shall be refunded to the person entitled to it. (4) A single premium credit involuntary unemployment benefit insurance policy and certificate shall also provide that the insurance shall remain in force if the insurer does not terminate the coverage within 60 days after the effective date of coverage or if the debtor suffers a covered loss within the 60-day period but before notification by the insurer of termination of the insurance. (5) A monthly premium credit involuntary unemployment benefit policy and certificate shall provide that the insurance shall be in force for the period for which a premium was charged unless the insurance is cancelled with not less than 31 days notice before the occurrence of a loss. #### Regulation .24 Change of Insurers Reporting Requirements Coverage and Rates. *COMAR 31.13.03.24* A. Insurers That Cease to Offer Credit Involuntary Unemployment Benefit Insurance. Within 90 days after an insurer ceases to offer credit involuntary unemployment benefit insurance through a case, the insurer shall notify the Commissioner of: (1) The name or code number of the creditor; (2) Each coverage no longer offered; (3) The date on which the coverage ceased to be offered; and (4) The current approved premium rate applicable to each coverage no longer offered. B. Insurers That Begin to Offer Credit Insurance. (1) At the end of a calendar year in which an insurer has begun to offer credit involuntary unemployment benefit insurance for which premium rates have not yet been established by the case method but for which a prior insurer submitted notification of a new case required by Regulation .06B(2) and (3) of this chapter, the insurer shall: (a) File the report for the case required by Regulation .06B(1) of this chapter; and (b) Submit the insurer's experience and the experience of the prior insurer for the experience period even if the account did not qualify as a case for the most recent policy year. (2) An insurer that is required to submit its experience and the experience of a prior insurer under §B(1) of this regulation shall submit the experience of each insurer: (a) Separately by year; and (b) As a total for a 2-year period. (3) The Commissioner shall notify an insurer if a report for a case is required to be filed under §B(2) of this regulation. (4) If an insurer begins to offer credit insurance through a case during an experience period for which premium rates were established for a prior insurer by the case method, the insurer shall certify to the Commissioner that the insurer will not charge premium rates that exceed the rates permitted under Regulation .08E of this chapter. (5) If an insurer begins to offer credit insurance for a case after the end of a previously established experience period but before the effective date of new premium rates approved by the Commissioner based on that experience period, the: (a) Commissioner shall, when new premium rates are established, send written notice of the new premium rates to the insurer, stating an effective date that provides the insurer at least 30 days notice; and (b) Insurer shall: (i) Beginning not later than the effective date established by the Commissioner, use premium rates not greater than the new premium rates approved by the Commissioner; and (ii) At the end of the experience period stated by the Commissioner, file the report for the case required by Regulation .06B(1) of this chapter, submitting the experience of the former insurer and the insurer's own experience for the term of the experience period in order to determine subsequent rates for the account. (6) An insurer required to submit its experience and the experience of a former insurer under §B(5)(b)(ii) of this regulation shall submit the experience of each insurer: (a) Separately by year; and (b) As a total for a 2-year period. (7) On the request of a succeeding insurer, a prior insurer promptly shall provide the succeeding insurer with any experience information of the prior insurer that the succeeding insurer needs to meet the requirements of this section.