• Increase Text Icon
  • Decrease Text Icon
  • Email Icon
  • Print this page
You are here: Home . rules . 2002 . 0127-059
Archived File – for Reference Use.
Links and contact information may be outdated.

Subchapter FF. Credit Life and Accident and Health Insurance

28 TAC §3.6101

The Commissioner of Insurance adopts an amendment to §3.6101 concerning policy reserves. The amended section is adopted without changes to the proposed text published in the October 18, 2002 issue of the Texas Register (27 TexReg 9694) and will not be republished.

The adopted amendment is necessary to implement Texas Insurance Code Art. 3.28, §3(h). Subsection (h) was added to Art. 3.28, §3 by Acts 20010, 77th Legislature in House Bill (HB) 2159. That subsection addresses minimum reserve requirements applicable to credit life policies and certificates issued under Insurance Code Art. 3.53 and provides that reserve requirements for payment of benefits are met if, in aggregate, the reserves are maintained at 100% of the 1980 Commissioner's Standard Ordinary (CSO) Mortality Table, with interest not to exceed 5.5%.

Prior to the enactment of HB 2159, §3.6101 provided minimum reserves applicable to credit life insurance policies and certificates for premium refunds and payment of benefits to be at 130% of the reserves computed on the 1958 CSO Mortality Table with interest not to exceed 5.5%; or at 100% of the reserves computed on the 1941 CSO Mortality Table, with interest not to exceed 5.5%; or at 100% of the reserves computed on the 1958 Commissioner's Extended Term (CET) Mortality Table, with interest not to exceed 5.5%; or at 150% of the reserves computed on the 1980 CSO Mortality Table, with interest not to exceed 5.5%.

The adopted amendment continues to allow the use of any of those minimum credit life reserve levels. However, this amendment also includes the proviso that notwithstanding other law, the minimum reserve requirements applicable to credit life policies and certificates are met if, in aggregate, the reserves are maintained at 100% of the 1980 CSO Mortality Table, with interest not to exceed 5.5%. The amendment makes clear that the policy reserves must not, in aggregate, be less than the premium refund liability, which may include consideration of commission, premium tax and other expenses recoverable.

No comments were received.

The amendment is adopted under the Insurance Code Article 3.28 and §36.001. Article 3.28(h) provides that, notwithstanding any other law, the minimum reserve requirements for payment of benefits applicable to credit life policies and certificates issued under Article 3.53 are met if, in aggregate, the reserves are maintained at 100% of the 1980 CSO Mortality Table, with interest not to exceed 5.5%. Section 36.001 provides that the Commissioner of Insurance may adopt rules to execute the duties and functions of the Texas Department of Insurance as authorized by statute.

§§3.6101. Policy Reserves.

(a) Except as provided in §3.6102 of this title (relating to Claims Reserves), the minimum reserves for premium refunds required by these rules and the payment of benefits under outstanding credit life insurance policies and certificates may not be less in the aggregate than 130% of the reserves computed on the 1958 CSO Mortality Table with interest not to exceed 5.5%; or, at the option of the company, such reserves may be maintained at 100% of the reserves computed on the 1941 CSO Mortality Table or the 1958 CET Mortality Table with interest not to exceed 5.5%; or 150% of the 1980 CSO Mortality Table with interest not to exceed 5.5%; provided, however, notwithstanding any other law or rule, the minimum reserve requirements for policy reserves applicable to credit life policies and certificates issued under Article 3.53 of the Insurance Code or these rules are met if, in aggregate, the reserves are maintained at 100% of the 1980 CSO Mortality Table, with interest not to exceed 5.5%. Such policy reserves, in aggregate, must not be less than the premium refund liability, which may include consideration of commission, premium tax, and other expenses recoverable.

(b) The reserve for credit accident and health insurance or disability insurance which has an effective date after December 31, 1980, may not be less than the product rounded to the next higher dollar of the gross presumptive single premium rate per $100 of insured indebtedness for the term of the indebtedness remaining as of the valuation date times the number of hundreds of dollars of indebtedness outstanding as of the valuation date (herein called the rule of anticipation) or, as an alternative and at the option of the insurer, the mean of the gross unearned premium calculated by the "sum of the digits" (rule of 78) and the pro rata methods. The reserve for such insurance which has an effective date prior to January 1, 1981, may not be less than the gross unearned premium calculated by the sum of the digits (rule of 78) method.



For more information, contact:

Contact Information and Other Helpful Links