To All My Indiana Colleagues and Any others that may be doing business in IN.

I just learned yesterday that there are changes in the IN Code concerning CL&D effective 1/1/03. It's a revision to the Title 760 of the Department of Insurance and the Final Rule LSA Document #01-399 can be downloaded from the Dept. of Ins. Web page.

From my understanding it requires new CL&D forms and contracts and the refund can no longer be done under the Rules of 78s.

We contacted our CL&D rep and he was not aware of some of the changes.

Just as a head's up, you may want to make sure that the appropriate people are aware of this and the proper steps are being taken to comply with the new law.

Thanks for the heads up! I was not aware of the change. Hopefully our Credit Life Insurance provider was. I'll check with them ASAP.

The Indiana DofI says that the revised calculation method for refunds is effective on all loans that terminate after 1/1/03...not effective for new booked loans as of that date. This will be a mess for us as we have been calculating on Rules of 78 and some of our loans are nearing 10 years booked. Our insurance folks are telling us that it will only apply going forward for new loans. Has anyone heard one way or the other?

Debbie, it affects all loans paid off on or after 1/1/03.

Our insurance company, Commercial Bankers, aknowledged this.

It is also addressed in 760 IAC 1-5.1-8 on refunds, plus 760 IAC 1-5.1-13 Implementation Sec 13 (a) reads as follows:

Approval of all forms and premium rates not in compliance with this rule is hereby withdrawn as of January 1, 2003.

Hope this helps.

Thanks. That's what I was afraid of.

We have had several opinions on the calculation of the rebate. To me, and to our attorney, the reg reads that we need to use a straight line approach for the calculation but AUL, our insurance company, is using a formula just slightly different than the Rules of 78 calculation. What's your take?

They are suppose to be using what's called the Rule of Anticipation. I'm not sure I can explain it, as I'm not sure If I completely understood it when it was explained to me, but has something to do with anticpating the coverage and anticpated earnd premiums at a given point in the loan. I'd really suggest you have some one with AUL go over this with you.

The premium and refund chart sent to us didn't look much different other than we could no longer plug in a Period Range - In other words we couldn't say months 1 -6 at .40 and months 7-12 at .30. We had to plug in premium and refund rates by the month, which was a pain. The premium percentages were lower and the refund percentages were higher.

Sorry I can't be of more help on this part.

Heads Up Warning:

I haven't seen the ruling, but I was told today that a "final" ruling came out on the "rules of anticipation" and that it will only affect loans made after 1/1/03 and that the pay offs on loans made prior to that will still be on the rules of 78 (it was originally thought the rules of anticipation would affect all loans). If you have not been informed of this you may want to contact your insurance carrier for confirmation (we will be contacting ours today). This will change the way we set our programs up and we will have to make adjustments.