NAC690A.090. Calculation of refunds.

     1. If, pursuant to subsection 3, an insurer specifies the formula for a refund in an individual policy or certificate of group insurance filed for approval by the Commissioner and the filing is acknowledged and not disapproved by the Commissioner, the formula may be used. A formula for a refund which is the sum of the amounts for each remaining period for payment of the obligation, calculated by multiplying the amount paid as the premium by a fraction which has a denominator equal to the sum of the total number of periods for payment of the obligation and a numerator equal to the sum of the remaining number of periods, may be referred to as the “sum-of-the-digits” formula.

     2. The following methods may be used to determine the amount of a refund for the following types of insurance:

     (a) For a premium for credit insurance, if the premium is paid on a single premium basis, the refund must be calculated by the sum-of-the-digits formula.

     (b) For a premium for credit insurance, if the premium is payable other than on the single premium basis, the refund must equal the prorated unearned gross premium.

     3. An insurer may calculate a refund on a daily or monthly basis. The insurer shall indicate the basis used when the insurer files the formula for calculating refunds for approval by the Commissioner. A refund may be calculated on an approximate daily basis by interpolating proportionately between the values at the beginning and at the end of the month. Each month shall be deemed to have 30 days. If a refund is calculated on a monthly basis, a charge may not be made for a period which is less than 16 days after the date the last monthly installment was due, but may be made for the entire month if the period is 16 days or more.

     (Added to NAC by Comm’r of Insurance by R014-06, 3-23-2007, eff. 4-1-2007; A by R145-08, 9-18-2008)