TO: Credit Property Data Specialist

DATE: April 8, 2015

TO: Credit Property Data Specialist

Insurers Writing Credit Property in North Carolina

FROM: Arthur J. Schwartz

Associate P&C Actuary

RE: North Carolina Credit Property Data Call for Data from calendar year 2014

DUE: July 1, 2015

What’s new for the data call for data from calendar year 2014

All is the same as last year although the “loss ratio demonstration” for credit unemployment insurance will be sent out in a separate mailing.

The North Carolina Department of Insurance requests your cooperation in completing the attached Data Call for credit property insurance.

In North Carolina, credit property insurance is considered to include six primary areas: insurance on personal property, such as household goods; creditor placed insurance on homes and automobiles, to preserve the creditor’s interest in the property in case an underlying policy is not available; unemployment insurance, to make payments on a credit obligation in case of involuntary loss of employment; non-filing insurance, to cover payments on a loan in lieu of perfecting a lien; family leave, to cover payments on a loan or credit card balance during a leave of absence from work for various family related events; and GAP, which covers the difference between a loan balance and the value of an insured property (usually a vehicle), in the event of a total loss of that property. If the type of insurance written does not correspond to these six primary areas, then please report the data in the “Other” column on the spreadsheet.

Please note that if your company writes insurance reported on line 28 (Credit) of the statutory State Page of the Annual Statement for North Carolina; or reports on Parts 3A, 3B, 4, or 5, of the Credit Insurance Experience Exhibit (which is a supplement to the Annual Statement) for North Carolina, then your company is required to complete the Data Call.

The Data Call is made pursuant to the authority contained in several statutes, among them NCGS 58-57-90(b), 58-57-100(b), 58-57-110(a), 58-57-115(j), 58-2-190, and a letter from Commissioner Jim Long, dating from May 2002, on non-filing insurance specifically. Filing this Data Call meets your company’s reporting obligation in regard to all North Carolina laws, regulations, bulletins, or Commissioner’s letters.

If your company is part of a group of companies that write credit property insurance in North Carolina, please complete a separate Data Call for each company in the group, even if only one Data Call was mailed to your group.

The Data Call consists of the Director’s, Officer’s, or Manager’s Statement, plus a Data Call in the form of an Excel spreadsheet. The Director’s, Officer’s, or Manager’s Statement should be signed and either faxed to 919-807-6652, or mailed, or scanned in electronic format and sent via e-mail. It’s preferred that the Excel spreadsheet be returned via e-mail although it can be mailed in on diskette.

As an attachment to the Excel spreadsheet, (or submitted to the Department in another format), please show the formula, or describe the method, used to calculate a consumers refunded premium in the event that the insurer or insured cancels the policy. If the formula differs by type of policy (for example, one formula for Personal Property and another formula for GAP), please show each formula by type of policy.

If you have questions or comments relating to the Data Call, please call me at 919-807-6646 or send an email to . Thank you for your cooperation.

Sincerely,

Arthur J. Schwartz

Associate P&C Actuary

North Carolina DOI

1201 Mail Service Center,

Raleigh, North Carolina 27699-1201

North Carolina Department of Insurance

Credit Property Data Call for data on Direct Business for calendar year 2014

Directors, Officer’s, or Manager’s Statement

I am a director, officer, or manager of this insurance company. The data and verbal information for credit property insurance for the state of North Carolina, as reported on the attached North Carolina Credit Property Data Call on data for Direct Business for calendar year 2014 data, are true and accurate to the best of my knowledge.

______

(Name)

______

(Title) (Date)

1.   Name of Insurer: ______

2.   NAIC Company Code:

______

3.   Street Address: ______

4.   City, State, Zip: ______

5.   Contact Person’s Name: ______

6.   Contact Person’s Title: ______

7.   Contact Person’s Telephone: ______

8.   Contact Person’s E mail address: ______

Instructions for completing the North Carolina Credit Property Data Call for Direct Business

General instructions

Please complete the enclosed Data Call, consisting of:

The Director’s or Officer’s Statement; and

The Actuarial Data and The Method of Allocation (Excel spreadsheet)

Please put your company’s name and NAIC Company code in cells B2 and B3 on the spreadsheet.

Items 2 through 6 of the NAIC’s “Instructions for Completing Credit Insurance Experience Exhibit”, contained in the NAIC’s Annual Statement Instructions, Property and Casualty, apply to this Data Call also.

If your company does not have any data to report for credit property insurance in North Carolina, then in the Actuarial Data spreadsheet, please type zeroes across line A, “Gross Written Premium”, or leave blank and submit a written statement, via e mail to that effect.

Data should be rounded to the nearest dollar.

Instructions for columns

Single stands for Single Interest

Dual stands for Dual interest or Limited dual interest

SP stands for Single Premium

MOB stands for Monthly Outstanding Balance

“Personal property” covers loss from any perils to personal property such as household goods or furnishings, but only in relation to credit transactions. Insurance on personal property from floaters attached to homeowners’ policies, for example, should be excluded.

“Creditor placed home-Single” is for coverage on “real property” collateral such as homes, condominiums, co-ops, manufactured homes, and mobile homes or motor homes, but only covering Single Interest (creditor’s interest). This can include standard homeowners or dwelling fire policies. Please include all types of coverage such as single premium or monthly outstanding balance.

“Creditor placed home-Dual” is for coverage on “real property” collateral such as homes, condominiums, co-ops, manufactured homes, and mobile homes or motor homes, but covering Dual Interest (creditors’ interest and policyholders’ interest). This can include standard homeowners or dwelling fire policies. Please include all types of coverage such as single premium or monthly outstanding balance.

“Creditor placed auto-Single” is for coverage on collateral such as autos, boats, motorcycles, and all other types of motor vehicles or recreational vehicles but only covering Single Interest (creditors’ interest). Please include all types of coverage such as single premium or monthly outstanding balance.

“Creditor placed auto-Dual” is for coverage on collateral such as autos, boats, motorcycles, and all other types of motor vehicles or recreational vehicles, but covering Dual Interest (creditors’ interest and policyholders’ interest). Please include all types of coverage such single premium or monthly outstanding balance.

“Unemployment” includes all waiting periods or retroactive periods of credit unemployment. “Unemployment” includes all forms of involuntary unemployment insurance.

“Non-filing CFA” refers to coverage written in accord with the Consumer Finance Act, Chapter 15, and NCGS 53-164 et seq. The specific insurance sections are NCGS 53-177, 178, and 179. This law covers certain types of consumer loans made by a lending institution. Data for non-filing insurance is to be reported separately for auto versus non-auto exposures.

“Non-filing RISA” refers to coverage written in accord with the Retail Installment Sales Act, Chapter 25A 1 et seq (Section 25A-17 and 25A-36 discusses the Commissioner’s role). This law covers certain types of retail installment sales between a retailer and a consumer. The retailer usually has a relationship with a lending institution. Data for non-filing insurance is to be reported separately for auto versus non-auto exposures.

“Credit family leave” refers to coverage written in accord with the federal Family and Medical Leave Act, as modified by NCGS 58-57-115. The coverage provides a benefit for loss of income during an unpaid leave of absence from employment resulting from specified causes set forth in NCGS 58-57-115 (d), such as illness of a close relative, or the adoption or birth of a child.

“Credit GAP” refers to coverage insuring the difference between the outstanding balance of a loan or credit obligation on insured property, and the value of the insured property, in the event of a total loss to the insured property. GAP usually covers cars. However credit GAP can be issued in regard to any other type of property, and all types of credit GAP should be shown in this column.

“Other” includes any type of credit insurance (insurance that pays off a loan or makes minimum payments on a loan or credit obligation) that is otherwise not included in the previous columns. Specific types of “other” include credit divorce; credit on auto other than “creditor placed auto” and other than “credit GAP”; blanket credit insurance such as on a retailer or lending institution; credit insurance on businesses; tuition reimbursement; and any other credit insurance reported either on line 28 of the State Page of the Annual statement for North Carolina, or on the Credit Insurance Experience Exhibit (CIEE) for North Carolina. Please briefly describe the coverage provided by the “Other” credit insurance on the footnote to the Excel spread sheet.

Instructions for rows

“Gross written premium” is the gross premium prior to refunds on policies terminated early, non-renewed, or cancelled. This is on direct business.

“Refunds” are the premium on policies terminated early or cancelled, which are returned to the debtor.

“Earned premium” should be derived from net written premium by taking the change in premium reserves into account.

The definitions of expense items going into lines H, I, J, and L should be the same definitions as used for the NAIC’s Insurance Expense Exhibit.

“Tracking expense” applies only to creditor placed insurance and covers only those tracking expenses incurred by an insurer. It covers the cost of notifying a debtor that they are required to maintain coverage, and verifying whether they have done so. This covers only tracking expenses incurred by an insurer using its own employees or incurred by an insurer and paid to a third party that actually performs the work.

“General (all other) expense” covers all expenses other than commissions & brokerage; other acquisition; premium tax, licenses, and fees; and tracking. For purposes of this Data Call, “non-refundable fees”, “dividends to consumers”, and “premium credits”, are not to be considered general (all other) expenses, because there are separate lines to report this data.

“Non-refundable fees” are the fees defined in NCGS 58-57-90. These are essentially origination fees per loan on “personal property” only.

“Dividends to consumers” refers to the dividends incurred for a debtor or consumer; but not to a bank, lender, retailer, or creditor (see “premium credits” below); even though any of these latter entities may be the policyholder. The amount should be on an “incurred” basis, meaning the amount paid plus any dividends declared during the calendar year but unpaid by year end, less any dividends declared in an earlier year but paid in the current year. This is normally decided after a calendar year has ended or a contract has terminated.

“Premium credits” refers to any return of premium (whether in the form of retrospective rate refunds, or dividends, or experience refunds, or otherwise) incurred for a bank, lender, retailer, or creditor; some entity other than a debtor or consumer. Please note that any money incurred, by the insurer and for the benefit of any other entity, based on a “stop-loss arrangement” should be shown here also. A “stop-loss arrangement” is a contract or policy or clause that cuts off an insurer’s losses at a given point. A “stop-loss arrangement” guarantees the loss ratio of the insurer won’t exceed a specifically determinable value. The “premium credits” should be on an “incurred” basis, meaning the amount paid plus any “premium credits” declared during the calendar year but unpaid by year end, less any “premium credits” declared in an earlier year but paid in the current year. This is normally decided after a calendar year has ended or a contract has terminated. A positive amount indicates money incurred to another entity; a negative amount indicates money incurred for the insurer. The amount reported should not be included on any of the premium rows.

“Number of claimants” refers to the number of claimants receiving payments, not to the number of payments. For example, a claimant receiving five credit involuntary unemployment payments during the course of the year, would be counted as 1 (one claimant), not as 5 (five payments).

The “Premium basis” (PB) (optional; please either complete this or complete “Number of policyholders/loans”)

For MOB, this is the arithmetic average of the monthly loan balances outstanding during that calendar year.

For SP, this is the beginning loan balance of all policies issued during that calendar year.

For blanket policies or group policies, either the arithmetic average or the beginning loan balance may be used, depending on the premium basis for the blanket or group premium.

The PB does not have to be calculated for policies in the “non-filing” or “other” columns.

“Number of policyholders or loans” (optional; please either complete this row or the “Premium Basis” row) is the number of individual policyholders or individual loans as of December 31 (this is sometimes referred to as “inforce as of December 31”). For a group policy, the number of individual policyholders or loans may have to be estimated.

“Department filing number” is the Department’s filing number assigned to your company’s most recent rate filing for each type of insurance in each column. Normally this begins with the letters “PC” or “LH” followed by six digits.

Guidelines for the allocation of expenses

The Data Call requires a brief description of the method of allocation for various expenses.

The Data Call asks for data for North Carolina for sixteen specifically defined products and one column which may include several miscellaneous products: personal property (four products), creditor placed (three products), unemployment (two products), non-filing (four products), family leave, GAP, and other (one column).

It is supposed that an insurer can directly determine the following for North Carolina by product: written and earned premiums paid and incurred losses, commissions & brokerage, non-refundable fees, dividends to consumer, premium credits, number of claims, and premium basis.