Ala. Admin. Code r. 482-1-117-.11

Current through Register Vol. 43, No. 02, November 27, 2024

Section 482-1-117-.11 - Refunds

(1) The requirements of the consumer credit insurance law that refund formulas be filed with the Commissioner shall be considered fulfilled if the refund formulas are set forth in the individual policy or group certificate filed with the Commissioner.

(2) Each individual policy or group certificate shall provide for a refund in the event of termination of the insurance prior to the scheduled maturity date of the insurance and upon notice to the insurer. The refund of an amount paid by or charged to the debtor for insurance shall be paid or credited promptly to the person entitled thereto; provided, however, that no refund need be made which would be less than that established by the Superintendent, or with respect to leases, less than $1.00. The formula to be used in computing the refund shall be filed with and approved by the Commissioner. A formula filed and approved in accordance with this rule shall be deemed to be in compliance in all respects with the laws of this State.

(3) The refund of the premium or the amount charged to the debtor for insurance provided on a single premium basis shall be calculated by multiplying the original single premium, charge or periodic payment by the appropriate refund factor.

(a) In determining the refund, if less than 15 days of insurance coverage have been provided during the credit transaction month, no charge shall be made for that month. If 15 or more days of coverage have been provided during the credit transaction month, a full month may be charged.

(b) For level term credit life insurance, the refund shall be no less than the refund computed based on a pro rata basis.

(c) For decreasing term credit life insurance and credit disability insurance provided on the single premium basis, the refund shall be no less than the refund computed, in the discretion of the insurer, either on the basis of the Rule of 78s or an actuarial basis.

(d) For any plans not listed above, the refund method shall be the "Actuarial Method" and the formula shall be filed with the Commissioner.

(4) The Commissioner's approval of any consumer credit insurance refund formula prior to the effective date of this chapter remains valid notwithstanding the provisions of this rule, except to the extent such formula is not in compliance with this chapter, in which case the approval shall be deemed withdrawn as of one hundred eighty (180) days following the effective date of this chapter.

(5) A refund may be effected through cash payment to the debtor, or credit to the account of debtor with respect to any of principal, outstanding interest or other fees, as determined by the insurer or creditor, or as otherwise provided in the agreement relating to the credit transaction.

Author: Reyn Norman, Associate Counsel

Ala. Admin. Code r. 482-1-117-.11

New Rule: October 14, 1999; effective November 1, 1999. Filed for codification in the Alabama Administrative Code by the Department of Insurance on January 17, 2003, pursuant to the Code of Ala. 1975, § 27-7-43.

Statutory Authority:Code of Ala. 1975, § 27-2-17.