31.13.03.04

.04 Definitions.

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.