TO: All Companies writing credit life, health and accident insurance in Mississippi
 

WHEREAS, a certain credit life, health and accident regulation dated February 25, 1969, was rescinded by the Insurance Commissioner of this state, effective November 16, 1981, for the intended purpose of giving the 1982 session of the Mississippi Legislature the opportunity to consider and enact meaningful credit life, health and accident legislation for the better protection of the credit insurance buying public of this state without being hampered by said regulation, and

WHEREAS, the 1982 session of the Mississippi Legislature convened in January, 1982 and adjourned in early April, 1982 without passing into law any legislation addressing the problems existing in the regulation of credit life, accident and health insurance, and

WHEREAS, in the interim since November 16, 1981, documentation has been received in this office that in innumerable instances there have occurred unfair competitive practices for the purpose of transferring credit life, health and accident business from one company to another by the under and acceptance of great increases in the agent's compensation paid or assigned to certain creditors or agents as a special incentive for obtaining business and such actions, if necessary and appropriate steps are not taken to arrest this situation, may have the tendency to promote coercive sales techniques by some creditors or agents, and

WHEREAS, such increases in agents compensation constitute a real and present danger to the protection and cost to those debtors purchasing such credit life, accident and health insurance, and

WHEREAS, some insurance companies are currently engaged in a "compensation war" which necessitates some affirmative action be taken by the Mississippi Insurance Department in order to hold down the cost of such credit insurance and to maintain, preserve, and upgrade the integrity of the credit insurance industry as well as to stabilize the credit insurance market in this state, and

WHEREAS, the rates currently being charged for credit life, health and accident' insurance may be inadequate to fund this "compensation war" and unless remedial action is taken to hold down the cost of credit insurance, the rates may be increased with such rate increases to be borne by the purchasers of such insurance, due to the lack of action to the part of the Mississippi Legislature, and

WHEREAS, the amount of compensation currently being paid agents as a result of this "compensation war" is excessive in relation to the benefits provided under the Policies and to the services performed by such agents, and

WHEREAS, any further increase in the amount of agents compensation would intensify the current chaotic condition that exists in this industry and would, if allowed to proceed unabated, contribute to the eroding, weakening and, possibly, impairing of the solvency of one or more insurance companies engaged in this type of insurance, and

WHEREAS, the Commissioner of Insurance has been directed to promulgate regulations for the purposes of maintaining the separation between lending institutions and the insurance business and to minimize the possibility of unfair competitive practices by lending institutions against insurance companies, agents and brokers.

IT IS, THEREFORE, ORDERED that effective September 1, 1982, no insurance company holding a privilege license to transact the business of insurance in this state shall pay any compensation, either directly or indirectly, in excess of that which is permitted by the following rules.

I, George Dale, duly elected Commissioner of Insurance of the State of Mississippi, pursuant to the authority granted me in Sections 83-5-1, 83-17-129, and 83-17-227 through 83-17-233 of the Mississippi Code of 1972, as Amended, and in accordance with Sections 25-43-1 through 25-43-19, Mississippi Code of 1972, known as the Mississippi Administrative Procedures Law, do hereby promulgate the following regulation 82-102 with an effective date of September 1 , 1982 upon compliance with the applicable statutes, to read as follows:

Section I - Purpose

The purpose of this regulation is to promote the public welfare by regulating credit life insurance and credit accident and health or disability insurance. Nothing in this regulation is intended to prohibit or discourage reasonable competition. The provisions of this regulation shall be liberally construed.

Section II - Compensation

No insurance company shall pay any compensation, either directly or indirectly, to any creditor or agent for the sale of any policy, certificate or other contract of credit insurance which exceeds Fifty Percent (50%) of the premium collected.

Section III - Expiration Date

This rule and regulation shall stand repealed from and after March 1, 1983.

Signed this the 3rd day of June, 1982.

GEORGE DALE
COMMISSIONER OF INSURANCE