New
Mexico Register / Volume XXXVI, Issue 5 / March 11, 2025
TITLE
13 INSURANCE
CHAPTER
18 CREDIT INSURANCE
PART
2 CREDIT LIFE AND CREDIT
HEALTH INSURANCE
13.18.2.1 ISSUING
AGENCY:
Office of Superintendent of Insurance
[13.18.2.1 NMAC – Rp, 13.18.2.1
NMAC, 3/11/2025]
13.18.2.2 SCOPE: This rule applies to all life insurance and
accident and health insurance sold in connection with loans or other credit
transactions, except such insurance sold in connection with a loan or other
credit transaction of more than 10 years’ duration, and except for such
insurance the issuance of which is an isolated transaction on the part of the
insurer not related to an agreement or plan for insuring debtors of the
creditor.
[13.18.2.2 NMAC – Rp, 13.18.2.2
NMAC, 3/11/2025]
13.18.2.3 STATUTORY AUTHORITY:
Sections 59A-2-9, and 59A-25-1 to 59A-25-14 NMSA 1978.
[13.18.2.3 NMAC – Rp, 13.18.2.3
NMAC, 3/11/2025]
13.18.2.4 DURATION:
Permanent.
[13.18.2.4
NMAC - Rp, 13.18.2.4 NMAC, 3/11/2025]
13.18.2.5 EFFECTIVE DATE:
March 11, 2025, unless a later date is cited at the end of a section.
[13.18.2.5
NMAC - Rp, 13.18.2.5 NMAC, 3/11/2025]
13.18.2.6 OBJECTIVE:
The purpose of this rule is to implement the Law for Regulation of
Credit Life Insurance and Credit Health Insurance, Sections 59A-25-1 to
59A-25-14 NMSA 1978.
[13.18.2.6
NMAC - Rp, 13.18.2.6 NMAC, 3/11/2025]
13.18.2.7 DEFINITIONS:
A. “Account” means the aggregate credit life
insurance or credit accident and health coverage for a single plan of insurance
for a single class of business written through a single creditor,
or written through more than one creditor under common control or
ownership, by the insurer, whether coverage is written on a group or individual
basis.
B. “Average number of life years” means the average
of the number of group certificates or individual policies in force each month
during the experience period (without regard to multiple coverage) times the
number of years in the experience period.
C. “Case” means either a single account case or a multiple
account case as follows.
(1) Single
account case means an account that is at least twenty-five percent credible or, at the option of the insurer, any higher
percentage as determined by the credibility table. An insurer exercising this
option must notify the superintendent, in writing, of the credibility factor it
will use to define a single account case. Once the superintendent is so notified, the credibility factor will remain in effect
for the insurer until a different election has been filed in writing by the
insurer and approved by the superintendent.
(2) Multiple
account case means a combination of all the insurer’s accounts of the same plan
of insurance and class of business which combination has experience in this
state, excluding all single account cases defined in (1) above, or with the
approval of the superintendent, multiple account case also means two or more
accounts of the insurer having like underwriting characteristics which are
combined by the insurer for premium rating purposes, excluding all single
account cases defined in (1) above and other multiple account cases defined
above.
D. “Claims incurred” means the liability resulting
from the happening of the contingency insured against, whether paid, reported,
not reported or resisted on accounting dates, valued by the date of accounts
and or amounts, excluding claims expenses, sufficient to discharge the company
from all liability.
E. “Class of business” means one of the following
determined by the source of the business:
(1) credit
unions;
(2) commercial
banks and savings and loan association;
(3) finance
companies;
(4) motor
vehicle dealers;
(5) other
sales finance;
(6) production credit associations;
(7) bank
agricultural loans; or
(8) all
others.
F. “Credibility factor” means the degree to which the
past experience of a case can be expected to occur in
the future. The credibility factor is based either on the average number of
life years or the incurred claim count during the
experience period as shown in the credibility table below. The insurer shall
notify the superintendent, in writing, which of these two methods
it will use in measuring credibility. Once the superintendent is so
notified, the method will remain in effect for the insurer until a change has
been filed and approved by the superintendent.
G. “Credit accident health insurance” has the same
meaning as defined in Subsection B of Section 59A-25-3 NMSA 1978.
H. “Credit life insurance” has the same meaning as
defined in Subsection A of Section 59A-25-3 NMSA 1978.
I. “Credit transaction” has the meaning as defined
in Subsection D of Section 59A-25-3 NMSA 1978.
J. “Creditor” has the same meaning as defined in
Subsection C of Section 59A-25-3 NMSA 1978.
K. “Debtor” has the same meaning as defined in Subsection
E of Section 59A-25-3 NMSA 1978.
L. “Earned premium” means premium earned during the
experience period at the presumptive rate.
M. “Experience” means the earned premium and incurred
claims for a single or multiple account case. Experience will be the most
recent experience in this state for a plan of insurance of
a class of business, and may include the experience of
the case while with a prior insurer to the extent necessary to achieve
credibility.
N. “Experience period” means the period
of time for which experience is reported, but not for a period longer
than three years.
O. “Incurred claims” means the total claims incurred
during the experience period.
P. “Incurred claim count” means the number of claims
incurred for the case during the experience period. This means the total number
of claims reported during the experience period (whether paid or in the process
of payment) plus any incurred but not reported at the end of the experience
period less the number of claims incurred but not reported at the beginning of
the experience period. If a debtor has been issued more than one certificate
for the same plan of insurance, only one claim is counted. If a debtor receives
disability benefits, only the initial claim payment for that period of
disability is counted.
Q. “Indebtedness” has the same meaning as defined in
Subsection F of Section 59A-25-3 NMSA 1978.
R. “OSI” means the office of superintendent of
insurance.
S. “Open-end credit” means consumer credit extended
by a creditor under a plan in which:
(1) the
creditor reasonably contemplates repeated transactions;
(2) the creditor may impose a finance
charge from time to time on an outstanding unpaid balance; and
(3) the
amount of credit that may be extended to the consumer during the term of the
plan (up to any limit set by the creditor) is generally made available to the
extent that any outstanding balance is repaid.
T. “Plan of insurance” means a plan of credit life
insurance or a plan of credit accident and health insurance for which rates are
prescribed in 13.18.2.18 NMAC or 13.18.2.26 NMAC.
U. “Premiums earned” means the total gross premiums
which become due the insurance company, adjusted only to reflect premiums
refunded or adjusted on account of termination of coverage, appropriately
adjusted for charges in unearned premiums. Unearned premiums, for the purpose
of determining premiums earned shall be calculated as described in 13.18.2.35
NMAC for the purpose of determining refunds.
V. “Superintendent” means the superintendent of
insurance or designee.
[13.18.2.7
NMAC - Rp, 13.18.2.7 NMAC, 3/11/2025]
13.18.2.8 TERMINATION UPON DISCHARGE OF
INDEBTEDNESS: Each individual policy or group certificate
of credit life insurance or credit accident and health insurance delivered or
issued for delivery in this state shall, in addition to the other requirements
of law, contain a statement indicating that upon discharge of the indebtedness
the insurance shall be terminated, but without prejudice to any claim
originating prior to such termination, and that in all cases of termination
prior to scheduled maturity, a refund of any unearned premium paid by or
charged to the debtor for insurance shall be made in accordance with the
appropriate formula set forth in 13.18.2.35 NMAC. Such refund shall be paid or credited
to the debtor or paid to the second beneficiary if the debtor is not living. No
such refund is required if the total amount of the refund is three dollars
($3.00) or less.
[13.18.2.8
NMAC - Rp, 13.18.2.8 NMAC, 3/11/2025]
13.18.2.9 CONTINUATION OF ACCIDENT AND
HEALTH INSURANCE BENEFITS: If an accident and health
insurance claim is in progress at the time of discharge of indebtedness, such
claim shall continue during the originally scheduled term of insurance, as if
there has been no such discharge of indebtedness.
[13.18.2.9
NMAC - Rp, 13.18.2.9 NMAC, 3/11/2025]
13.18.2.10 REFUND OF PREMIUMS:
A. Upon the termination of such continuing claim within the
original scheduled term of insurance a refund shall be made of any then
unearned premium. If, however, during the pendency of an accident and health
insurance claim the insurer elects to prepay and discharge the full remaining
balance thereon immediately in one payment, the accident and health premium
paid or then due and payable to the insurer is earned and no refund is
required.
B. In the case of termination of credit life insurance in
which death benefits are not payable due to the exclusions in the policy, the
insurer will refund the unearned premium in accordance with 13.18.2.35 NMAC. In
the case of termination of credit life insurance by payment of death benefits,
the life insurance premiums paid or then due and payable to the insurer are
deemed earned and no refund thereof is required; however, in such instances the
accident and health premium is not deemed earned and shall be refunded to the
second beneficiary in accordance with 13.18.2.35 NMAC.
[13.18.2.10
NMAC - Rp, 13.18.2.10 NMAC, 3/11/2025]
13.18.2.11 PAYMENTS OF BENEFITS TO THE
INSURED:
A. Excess benefit checks or drafts made in accordance with
Subsection B of Section 59A-25-7 NMSA 1978 shall be delivered only by the
insurer or, at the option of the insurer, by the
creditor. In any case, the insurer shall be responsible for the delivery of
such excess benefit checks or drafts. Electronic funds transfers may be used.
B. The creditor agent or group policyholder shall not
require that any benefit be applied to the reduction of any indebtedness other
than the indebtedness in connection with which the insurance was written.
C. Notice of payments under credit life insurance shall be
provided to the insureds’ estate. The insured shall be provided notice of
initiation of benefits under a credit accident and health insurance policy
along with a statement that such benefits will continue while the insured is
disabled under the terms of the insurance policy. The insurer shall be
responsible for such notice; however, such duty may be delegated to the
creditor provided the insurer maintains the responsibility
for seeing that these notice requirements are met.
D. Benefit checks or drafts payable to a beneficiary
or an insured may not be offset by any insurer against amounts due from a
creditor or an agent to the insurer or anyone acting on behalf of the insurer
unless the benefit check or draft is endorsed by the beneficiary or the insured
to whom it was made payable.
[13.18.2.11
NMAC - Rp, 13.18.2.11 NMAC, 3/11/2025]
13.18.2.12 POLICY PROVISIONS:
A. The policy or certificate shall not contain provisions
which would encourage misrepresentation or are unjust, unfair, inequitable,
misleading, deceptive, or contrary to the law of this state.
B. Provisions in individual policies or group certificates
pertaining to underwriting rules, conditions of eligibility or issue, or
maximum amounts or terms of insurance may be used only to determine initial
eligibility and may not, except as provided herein, be used as the basis for
the termination or reduction of coverage or the denial of claims.
C. The policy may state that if coverage is issued in excess
of a maximum amount or term limitation, the insurer has the right, within 90
days of effective date of coverage, to reduce the excess coverage and refund
the charge for excess insurance, or terminate the coverage and refund the full
charge for insurance, provided such adjustment is accomplished and the
appropriate refund is made prior to the incurred date of any claim under such
coverage.
D. The policy may state that if a debtor exceeds the
eligibility age defined in Subsection B of 13.18.2.22 NMAC for credit life and
Subsection D of 13.18.2.27 NMAC for credit accident and health, and has not
incorrectly stated his or her age in writing, and the coverage is issued in
error, the insurer has the right, within ninety days of the effective date of
coverage, to terminate the coverage and refund the full charge for insurance,
provided such termination is accomplished and the appropriate refund is made
prior to the incurred dated of any claim under such coverage.
E. Coverage issued in connection with open-end transactions may contain provisions limiting the maximum
amount of insurance which may become effective thereunder,
and may contain provisions for automatic termination of coverage upon
the attainment of a specified age of 72.
F. Nothing herein is intended to preclude an insurer, during
the contestable period, from contesting coverage on the basis
of a material misstatement by a debtor, subject to the requirement that
the misstatement must be contained in a written statement signed by the debtor,
and a copy of the statement must be furnished to the debtor or to his or her
beneficiary.
[13.18.2.12
NMAC - Rp, 13.18.2.12 NMAC, 3/11/2025]
13.18.2.13 INSURANCE FOR PERIODS BEYOND
PAYMENT PERIOD OF THE POLICY:
A. If a group certificate of insurance is issued to a debtor
under any plan charging the debtor an identifiable amount for insurance for a period of time greater than that of the shortest premium
payment period of the group policy issued to the creditor, the following rules
shall apply.
B. The certificate shall in
addition to all other requirements of this rule and the laws of this state,
clearly and prominently set forth that:
(1) the
creditor alone is liable for such excess charges as are unearned;
(2) the insurance company is not liable
for such excess unearned charges not received;
(3) the
liability of the insurance company for the benefit is on a month to month
basis, or otherwise as set out in the group policy of insurance;
(4) the
coverage may be terminated by the insurance company or the creditor upon thirty
days written notice to the debtor;
(5) the
insurer is not liable for claims beyond such interval; and
(6) the
certificate shall be so phrased as not to violate the public policy of the
state of New Mexico not to indicate to the ordinary debtor that the insurance
coverage had been provided commensurate to the identifiable charge appearing
upon the certificate for the full term of the indebtedness nor that the insurer
would be obligated to the debtor for any such excess unearned charges.
[13.18.2.13
NMAC - Rp, 13.18.2.13 NMAC, 3/11//2025]
13.18.2.14 GROUP POLICY TERMINATION
PROVISIONS: The following provisions apply to termination
of coverage under a group policy.
A. If a debtor is covered by a group credit insurance policy
providing for the payment of a single premium to the insurer, the master policy
and certificate shall provide that in the event of termination of the group
policy for any reason, insurance coverage with respect to any debtor then
insured under such policy shall be continued for the entire period for which
the single premium has been paid, subject to the provisions of the policy
relative to early termination of a debtor’s insurance.
B. If a debtor is covered by a group credit insurance policy
providing for payment of premium to the insurer on a monthly outstanding
balance basis, then the policy and certificate shall provide that, in the event
of termination of such group policy for any reason, the insured debtor shall be
given written notice that coverage will continue for 30 days from the date of
such notice, except where replacement of the coverage by the same or another
insurer in the same or greater amount takes place without interruption of
coverage and a new certificate reflecting such replacement coverage is
delivered to such debtor. The notice of termination required by this paragraph
shall be given by the insurer or, at the option of the insurer, by the
creditor.
[13.18.2.14
NMAC - Rp, 13.18.2.14 NMAC, 3/11/2025]
13.18.2.15 INSURED FINANCE CHARGES, ETC:
If the creditor adds identifiable insurance charge or premiums for
credit insurance to the indebtedness, and any direct or indirect finance,
carrying credit or service charge is made to the debtor on such insurance
charge or premiums, the charge to the debtor shall be of the same mode and in
an amount not to exceed the insurer’s charge.
[13.18.2.15
NMAC - Rp, 13.18.2.15 NMAC, 3/11/2025]
13.18.2.16 OPEN END TRANSACTIONS:
The following rules shall apply to open-end transaction forms.
A. The policy and certificate must be identified when used
for open-end transactions by either a form number followed by the suffix
(25-OE) or a check-off block and may be used for coverage of any other types of
indebtedness if previously approved by the superintendent.
B. The premiums paid by the creditor and any insurance
charges paid by the debtor for such insurance must be at the same mode.
C. If the insurer imposes conditions of insurability for an
increase in coverage, then the policy must state such conditions. The conditions
must be consistent with 13.18.2.25 NMAC and 13.18.2.28 NMAC of this rule.
D. If the disability benefit for an open-end
indebtedness is based upon a minimum payment, then the method of determining
the minimum payment must be stated in the policy.
[13.18.2.16
NMAC - Rp, 13.18.2.16 NMAC, 3/11//2025]
13.18.2.17 FILING OF FORMS AND RATES:
A. Every insurance company, when submitting a schedule of
rates for consideration by the superintendent of insurance, shall identify the
rates to be used with the policy form submitted for approval. In the
alternative, specific reference in the case of each submission shall be made to
the particular schedule of rates, or portions thereof,
which are applicable to the specific policy form. The face and face page of
every form or schedule submitted to the superintendent of insurance for his
consideration under Article 25, New Mexico Insurance Code, shall have added to
its identifying number the additional identification (25). Such additional
identification shall appear on issued copies of such forms.
B. Tests for reasonableness of premiums.
(1) The
benefits of credit life insurance, individual or group, shall be considered to be reasonable in relation to the premium
charged if it can reasonably be anticipated that a loss ratio of claims
incurred to premiums earned of not less than fifty-five percent will be
developed.
(2) The
benefits of credit accident and health insurance, individual or group, shall be considered to be reasonable in relation to the premiums
charged if it can reasonably be anticipated that a loss ratio of claims
incurred to premiums earned of not less than fifty-five
percent will be developed.
C. Any individual policy, application, group policy, group
certificate, or notice or proposed insurance shall be in full compliance with
the law and this rule.
D. Any insurer contracting with creditor policyholders,
agents, general agents, sub-agents, or any other representative(s) who in the
aggregate are paid based upon the production of credit life or credit accident
and health insurance premiums, individual or group, if the compensation is
based upon production of such insurance where the aggregate of all such
compensation exceeds forty-five percent of the aggregate premiums within a
calendar year shall be presumed by the superintendent to be in automatic
violation of the required minimum loss ratios stated in this rule without the
need of any other proof.
E. Each violation of the minimum loss ratios required by now Paragraph (1) of Subsection B of 13.18.2.17 NMAC for
credit life insurance or Paragraph (2) of Subsection B of 13.18.2.17 NMAC for
credit accident and health insurance that occurs due to compensation exceeding
the amount set out in Subsection D of 13.18.2.17 NMAC is subject to the
penalties of Section 59A-1-18 NMSA 1978.
F. The prima facie rates will be revised periodically as necessary
in a bulletin issued by the superintendent.
[13.18.2.17
NMAC - Rp, 13.18.2.17 NMAC, 3/11/2025]
13.18.2.18 PRESUMPTIVELY ACCEPTABLE CREDIT
LIFE INSURANCE PREMIUMS (PRIMA FACIE RATES): The superintendent
of insurance may presume (subject, however, to a rebuttal of the presumption)
that the benefits of a credit life insurance policy are reasonable in relation
to the premium charged if the premium rate for death benefits as filed does not
exceed an amount equal, or actuarially equivalent, to the following rates:
A. Coverage on a single life provided on the outstanding
indebtedness basis will be determined by the superintendent as necessary via
bulletin, by an amount per month per $1,000.00 of outstanding balance
indebtedness.
B. Coverage on a single life on the single premium basis
will be determined by the superintendent as necessary via bulletin, by:
(1) an amount per year of coverage per
$100.00 of initial insured indebtedness for all credit transactions when the
insured indebtedness is payable in substantially equal monthly installments
during the term of coverage; and
(2) an amount per year of coverage per
$100.00 of level life insurance where the amount of insured indebtedness
remains level during the term of coverage and is repayable in a single sum at
the end of the term.
C. Coverage on joint lives on the outstanding indebtedness
basis will be determined by the superintendent as necessary via bulletin, by an
amount per month per $1,000.00 of outstanding balance indebtedness.
D. Coverage for joint lives on the
single premium basis will be determined by the superintendent as necessary via
bulletin, by:
(1) an
amount per year of coverage per $100.00 of initial insured indebtedness for all
credit transactions when the insured indebtedness is repayable in substantially
equal monthly installments during the term of coverage; and
(2) an amount per year of coverage per
$100.00 of level life insurance where the amount of insured indebtedness
remains level during the term of coverage and is repayable in a single sum at
the end of the term.
[13.18.2.18
NMAC - Rp, 13.18.2.18 NMAC, 3/11/2025]
13.18.2.19 USE OF JOINT CREDIT LIFE INSURANCE:
Joint lives as used in Subsections C and D of 13.18.2.18 NMAC above
means only spouses or business partners, and such person must be jointly and
severally liable for repayment of the single indebtedness and be joint signers
of the instrument of indebtedness. Endorsers and guarantors are not eligible
for credit insurance coverage. Joint life coverage shall not be written
covering more than two lives. Jointly indebted persons
shall not both be covered separately at single life rates.
[13.18.2.19
NMAC - Rp, 13.18.2.19 NMAC, 3/11/2025]
13.18.2.20 COMPOSITE SINGLE JOINT OUTSTANDING
BALANCE RATE (PRIMA FACIE):
A. Joint life rates may not be charged for single life
coverage, except that a composite single joint outstanding balance life rate
may be used for open-end accounts where more than fifty percent of a creditor’s
open-end accounts are held jointly. Such rate shall be completed as follows and
will be determined by the superintendent as necessary via bulletin, by: COB = an
amount of (PSA) - an amount of (PJA), where:
(1) COB = composite outstanding balance
life rate per $1,000 per month;
(2) PSA
= percentage of open-end accounts held by a single person expressed as a
decimal fraction (for the first year, use all accounts; for subsequent years,
use insured accounts);
(3) PJA = percentage of revolving
accounts held jointly expressed as a decimal fraction (for the first year, use
all accounts; for subsequent years, use insured accounts).
B. Composite rates shall be recomputed when the percentage
of insured account jointly held drops by more than ten
percentage points below the percentage used to compute the composite rate.
Composite rates shall be discontinued when the
percentage of insured accounts jointly held drops below fifty percent. Recomputation or discontinuance shall be effective within
six months of the end of the policy year in which the changes requiring such
action occurred.
[13.18.2.20
NMAC - Rp, 13.18.2.20, 3/11/2025]
13.18.2.21 ACTUARIAL EQUIVALENT PREMIUM FOR
UNEQUAL MONTHLY INSTALLMENTS: Premiums and premium rates
for insurance concerning obligations payable in other than substantially equal
monthly installments during the period of coverage, or for coverage which
declines on other than a straight line basis, shall be determined in a manner
which produces a rate not exceeding the actuarial equivalent of the foregoing
rates.
[13.18.2.21
NMAC - Rp, 13.18.2.21 NMAC, 3/11/2025]
13.18.2.22 INSURABILITY REQUIREMENTS
PERMITTED: The presumptively reasonable premiums for
credit life insurance shall apply only to plans containing provisions
consistent with the following.
A. That the credit life insurance contract may require
submission of the debtor’s written and signed evidence of the debtor’s
insurability or that the debtor be in gainful employment at the time the
insurance becomes effective, or both, on a form filed with and approved by the
superintendent of insurance, and that such contract contains no conditions for
validity of insurance more restrictive than contestability based on material
misrepresentation and no exclusions other than for suicide, flight in nonscheduled
aircraft, and war or military hazard.
B. The insurer must require and be responsible in its
contract with the group policyholder and the creditor that proof be retained
for three years following the offer by the creditor, group policyholder or the
insurer and made available for examination by the superintendent that credit
life insurance coverage is provided or offered to all debtors not older than
the applicable age limit without age discrimination. The applicable age limit
for credit life using presumptively acceptable credit life premiums shall not
be less than the attained age of 70 years if such limit applies to the age when
the insurance is issued, or not less than the attained age of 72 if such limit
applies to the age on the scheduled maturity date of debt. Coverage issued in
connection with open-end transactions may contain a
provision for automatic termination of coverage upon attainment of a specified
age, which shall not be less than 72. The use of any other age limits will
require that premiums be filed under the deviation procedures in this rule.
[13.18.2.22
NMAC - Rp, 13.18.2.22 NMAC, 3/11/2025]
13.18.2.23 PREMIUM RATE ADJUSTMENTS FOR AGE
BRACKETS: If the premiums are determined according to
the age of the insured debtor or by age brackets, appropriate adjustments in
the rate and premium may be made according to age if such adjustments are
actuarially consistent with the foregoing rates when applied regardless of
actual age at issue and if such adjustments produce an aggregate premium not
greater than that produced by the foregoing rates, and such rates and
actuarially consistent computations are filed with and approved by the
superintendent of insurance.
[13.18.2.23
NMAC - Rp, 13.18.2.23 NMAC, 3/11/2025]
13.18.2.24 PREMIUM RATES FOR OTHER LAWFUL
BENEFITS: If a contract of insurance includes other
lawful benefit or benefits for which standards of reasonableness of benefits in
relation to premiums are not elsewhere in this rule determined or described,
any premium charged therefor shall be shown to the satisfaction of the
superintendent of insurance to be based upon credible data and shall meet the
basic test of reasonableness described in Subsection B of 13.18.2.17 NMAC of
this rule.
[13.18.2.24
NMAC - Rp, 13.18.2.24 NMAC, 3/11/2025]
13.18.2.25 INSURABILITY REQUIREMENTS PERMITTED
FOR INCREASED OPEN-ENDED CREDIT LIFE INSURANCE: If a debtor has credit life
insurance under an open-end outstanding balance policy, the policy may provide
that an increase in the amount of insurance because of an increase in the
amount of indebtedness will be subject to conditions of insurability. Any
policy provision regarding evidence of insurability for an increase will comply
with the following.
A. No charge for or cost of any such additional coverage
will be incurred by any debtor, except by voluntary acceptance of the coverage
and submission of such lawful statement as is required by the insurer.
Voluntary acceptance will not be deemed to have occurred except by a specific
positive written response by the debtor to a notice of availability of the
coverage; it may not be automatic subject to an act of rejection or
notification by the debtor.
B. The effective date of any such increase in coverage may
be either of the following:
(1) the
date on which the indebtedness is increased. In this event, however, if
specific positive written response is not received within 75 days of such
increase, or if such response is not satisfactory to the insurer, then the
additional insurance shall not be effective, and any premium which has been
paid therefore shall be refunded or credited to the account of the debtor not
more than 90 days after the increase in indebtedness; any claim which occurs
when positive response has not been received, but before the date by which such
response must be received, will be paid if the debtor was eligible for the
insurance under the terms of the policy; if the premium has been paid, but not
refunded or credited to the account of the debtor not more than 90 days after
the increase in indebtedness, the insurance shall be effective regardless of
the eligibility of the debtor; or
(2) the
date on which specific positive written response satisfactory to the insurer is
received by the insurer;
(3) nothing
herein shall preclude a policy provision prohibiting any increases in the
amount of insurance while the insured is disabled.
[13.18.2.25
NMAC - Rp, 13.18.2.25 NMAC, 3/11/2025]
13.18.2.26 PRESUMPTIVELY ACCEPTABLE RELATION
OF CREDIT ACCIDENT AND HEALTH BENEFITS TO PREMIUMS (PRIMA FACIE):
A. The superintendent may presume (subject, however, to a
rebuttal of the presumption) that the benefits of an accident and health
insurance form are reasonable in relation to the premium charged if the premium
rate schedule for such accident and health benefits, as filed, does not exceed
an amount equal to, or actuarially consistent with the following rate structure
where rates will be determined by the superintendent as necessary via bulletin,
by:
(1) Original number of equal monthly
installments;
(2) Benefits payable after the 14th
day of disability indicating:
(a) Retroactive; and
(b) Non-retroactive;
(3) Benefits payable after the 30th
day of disability indicating:
(a) Retroactive; and
(b) Non-retroactive.
B. A monthly premium will be determined by the
superintendent as necessary via bulletin, by an amount per $100 of outstanding
balance may be presumed reasonable for a disability benefit which consists of a
lump sum payment of the amount of indebtedness covered at the beginning of
disability, such payment to be made after disability has continued for 90
consecutive days. A daily benefit does not apply to this coverage.
C. Except for credit accident
and health insurance sold in connection with open-end loans, the rates for
premiums payable on other than a single premium basis shall be actuarially
consistent with the rates set forth in Subsection A of 13.18.2.26 NMAC above.
Such premium rates will be deemed actuarially consistent with the foregoing
single premium rates if such rates produce a total premium for any duration and
amount of insurance equal to the corresponding single premium for the same
duration and amount of insurance. Rates computed according to the following
formula are presumed to satisfy this requirement: Op = 20SPn/n+1, where:
(1) SPn
= single premium rate per $100 of initial indebtedness repayable in “n” installments;
(2) Op = monthly outstanding balance
premium rate per $1,000;
(3) n
= original repayment period, in months.
D. In credit accident and health insurance sold in
connection with open-end transactions or monthly closed-end transactions, the
superintendent may presume (subject, however, to a rebuttal of the presumption)
that the benefits are reasonable in relation to the premium charged if the
premium rate schedule for such accident and health insurance transactions does
not exceed an amount equal to, or actuarially consistent with, the following
rates that will be
determined by the superintendent as necessary via bulletin, by:
(1) benefits
payable after the 14th day of disability:
(a) retroactive to first day: an amount per
month per $100 of outstanding balance insured
indebtedness;
(b) non-retroactive:
an amount per month per $100 of outstanding balance insured
indebtedness;
(2) benefits
payable after the 30th day of disability:
(a) retroactive
to first day: an amount per month per $100 of outstanding balance insured indebtedness;
(b) non-retroactive: an amount per month
per $100 of outstanding balance insured indebtedness.
E. The premium in Paragraphs (1) and (2) of Subsection D of
13.18.2.26 NMAC above are based upon the assumption that benefits will be paid as long as there is an outstanding balance and the insured
is disabled. If there is a provision that benefit payment may cease during the
disability of the insured before the indebtedness outstanding on the date of
disability, including interest on such indebtedness, is retired, then these
premiums will be adjusted to reflect, in the opinion of the superintendent of
insurance, the effect of such provision.
F. If a contract of insurance includes other lawful benefit
or benefits for which standards of reasonableness of benefits in relation to
premium are not elsewhere in this rule determined or described, any premium
charged therefor shall be shown to the satisfaction of the superintendent to be
based upon credible data and shall meet the basic tests of reasonableness
described in Paragraphs (1) and (2) of Subsection B of 13.18.2.17 NMAC.
[13.18.2.26
NMAC - Rp, 13.18.2.26 NMAC, 3/11/2025]
13.18.2.27 STANDARD OF BENEFITS FOR CREDIT
ACCIDENT AND HEALTH INSURANCE: The standards and principles for the application of the rates set
forth for credit accident and health insurance are as
follows.
A. The initial amount of insured indebtedness to which the
rate is applied shall not exceed the aggregate of the insured portion of the periodic scheduled unpaid installments of the indebtedness.
B. Except for open-end accounts, the indebtedness must be
payable in substantially equal monthly or other periodic installments during
the period of coverage.
C. The credit accident and health insurance contract may
require written and signed evidence of insurability and, where offered, shall be offered to all eligible debtors and shall contain:
(1) no
provision for validity of insurance more restrictive than contestability based
on material misrepresentation; an insurer may not rely on material
misrepresentation as a defense against the payment of a claim unless the
insurer required the insured to sign a written statement in which the alleged
misrepresentation was made;
(2) no
provision which excludes or restricts liability in the event of disability
caused in a specific manner or under specific condition, except that it may
contain provisions excluding or restricting coverage in the event of:
(a) elective abortion;
(b) normal pregnancy, except
complications of pregnancy;
(c) intentionally self-inflicted
injuries;
(d) flight in nonscheduled aircraft;
(e) loss
resulting from war or military service;
(3) provision
for a daily benefit equal in amount to one-thirtieth (or other applicable
fraction) of the scheduled monthly (or other specified mode of installment)
payment or indebtedness;
(4) for the purpose of total disability
insurance, a definition of total disability which provides coverage during the
first 12 months of such disability even though the insured is able to perform
an occupation other than the one he held at the time such disability occurred; during
the first 12 months of each disability, the definition of total disability must
relate such disability to the occupation of the debtor at the time the
disability commenced; after disability continues for more than 12 months, the
definition of total disability may relate such continuing disability to the
inability to perform any occupation for which the debtor is reasonably fitted
by education, training or experience.
D. The credit accident and health insurance must be offered
to all debtors regardless of age, or to all debtors not older than the
applicable age limit. The applicable age limit shall not be less than the
attained age of 66 years if such limit applies to the age when the insurance is
issued, or not less than attained age 67 if such limit applies to the age on
the scheduled maturity date of the debt. Coverage issued in connection with
open-end transactions may contain a provision for the
automatic termination of coverage upon the attainment of a specified age, which
shall not be less than 67. The use of any other age limits will require that
premiums be filed under the deviation procedures in this rule.
E. There shall be no provisions excluding or denying a claim
for disability under credit accident and health insurance resulting from
pre-existing conditions except for those conditions for which the insured
debtor received medical diagnosis or treatment within six months immediately
preceding the effective date of the debtor’s coverage and which caused a period
of loss within six months following the effective date of coverage; provided,
however, that any subsequent period of disability resulting from such condition
that commences or recommences more than six months after the effective date of
the coverage shall be covered under the provisions of the policy. The effective
date for each part of the insurance attributable to a different advance or
charge to the account is the date on which the advance or charge is posted to
the account of the debtor.
[13.18.2.27
NMAC - Rp, 13.18.2.27 NMAC, 3/11/2025]
13.18.2.28 INCREASES IN OUTSTANDING BALANCE
OPEN-END COVERAGE:
A. If a debtor has credit accident
and health insurance under an open-end outstanding balance policy, the policy
may provide that an increase in the insurance benefits because of an increase
in the indebtedness will be subject to conditions of insurability. Any policy
provision regarding evidence of insurability for an increase will comply with
the following.
(1) No
charge for or cost of any such additional coverage will be incurred by a debtor
except by voluntary acceptance of the coverage and submission of such lawful
statement as is required by the insurer. Voluntary acceptance will not be
deemed to have occurred except by a specific positive written response by the
debtor to a notice of availability of the coverage; it may not be made
automatic subject to an act of a rejection or notification by the debtor.
(2) The
effective date of any such increase in coverage may be
either of the following:
(a) the date on which the indebtedness is
increased: In this event, however, if specific positive response is not
received within 75 days of such increase, or if such response is not
satisfactory to the insurer, then the additional insurance shall not be effective,
and any premium which has been paid therefore shall be refunded or credited to
the account of the debtor not more than 90 days after the increase in
indebtedness; any claim which occurs when specific positive written response
has not been received, but before the date by which such response must be
received, will be paid if the debtor was eligible for the insurance under the
terms of the policy; if the premium has been paid but not refunded or credited
to the account of the debtor within 90 days after the increase in indebtedness
the insurance shall be effective regardless of the eligibility of the debtor;
or
(b) the date on which specific positive
written response satisfactory to the insurer is received by the insurer.
B. Nothing herein shall preclude a policy provision
prohibiting any increases in the amount of insurance while the debtor is
disabled.
[13.18.2.28
NMAC - Rp, 13.18.2.28 NMAC, 3/11/2025]
13.18.2.29 DEVIATION PROCEDURES:
A. Notwithstanding the determination of presumptively
acceptable maximum rates which are reasonable in relation to the benefits of a
policy providing the coverage to which the rates are applicable:
(1) an
insurer who has experienced excessive loss ratios for a case consisting of a
single account or combination of accounts, as account is defined herein, will
be permitted, at its own request, to adjust the premium rate or premium rate
schedule for such case in accordance with the deviation procedures set out in
the following; and
(2) an
insurer who fails, on upward deviated accounts, or downward deviated accounts
that modify the age limits downward as allowed in this rule to develop the
minimum loss ratios as defined in Subsection B of 13.18.2.17 NMAC, for a case
consisting of a single account or combination of accounts, as accounts is
defined in this rule, will be required by the superintendent to adjust the
premium rate or premium rate schedule for such case in accordance with the
deviation procedures in this rule.
B. A request for a deviated rate must be made in writing and
shall include all of the information which is required
under this rule.
C. It must be accompanied by a list of the creditors whose
experience is the basis for such request, and must be
attested to by an officer of the insurer. The use of any deviation approved by
the superintendent is limited to those creditors whose names appear on such
list. No rate deviation may be used unless and until approved by the
superintendent in writing. Any request for deviated presumptive rates shall be
submitted to the superintendent in the manner prescribed on Form CI-DRF.
[13.18.2.29
NMAC - Rp, 13.18.2.29 NMAC, 3/11/2025]
13.18.2.30 DEVIATION CREDIBILITY TABLE:
|
AVERAGE NUMBER OF LIFE YEARS |
|
|
||
|
CREDIT LIFE |
CREDIT ACCIDENT AND HEALTH PLANS RETROACTIVE AND
NON-RETROACTIVE |
INCURRED CLAIM COUNT |
CREDIBILITY FACTOR |
|
|
|
14 DAY |
30 Day |
|
|
|
1 |
1 |
1 |
1 |
.00 |
|
|
|
|
|
|
|
1,800 |
141 |
209 |
9 |
.25 |
|
2,400 |
188 |
279 |
12 |
.30 |
|
3,000 |
234 |
349 |
15 |
.35 |
|
3,600 |
281 |
419 |
18 |
.40 |
|
4,600 |
359 |
535 |
23 |
.45 |
|
5,600 |
438 |
651 |
28 |
.50 |
|
6,600 |
516 |
767 |
33 |
.55 |
|
7,600 |
394 |
884 |
38 |
.60 |
|
9,600 |
750 |
1,116 |
48 |
.65 |
|
11,600 |
906 |
1,349 |
58 |
.70 |
|
14,600 |
1,141 |
1,698 |
73 |
.75 |
|
17,600 |
1,375 |
2,047 |
88 |
.80 |
|
20,600 |
1,609 |
2,395 |
105 |
.85 |
|
25,600 |
2,000 |
2,977 |
123 |
.90 |
|
30,600 |
2,391 |
3,558 |
153 |
.95 |
|
40,000 |
3,125 |
4,651 |
200 |
1.00 |
A. For credit life insurance, the currently charged premium
rates will be considered the case rates if the single premium (or its
equivalent) case rate per $100 of initial amount of insured indebtedness
repayable in 12 equal monthly installments as determined by the method
described herein is within 5 percent of the corresponding premium under the
currently charged premium rates for the case.
B. For credit accident and health
insurance, the currently charged premium rates will be considered the case rate
if the case rate as determined by the method described herein is within five
percent of the currently charged premium rates for the case.
C. The effective date for any rate deviation shall be no
earlier than 90 days or later than 180 days after the date of approval in
writing by the superintendent.
D. An upward or downward deviated single account case rate
remains with the case, regardless of any change of insurers, and shall continue
for a period equal to the experience period on which it was based, not to
exceed three years.
E. For cases which are not of credible size, or have no
experience, no deviation shall be made in the presumptive rates under these
deviation procedures; except that nothing herein shall be construed as
preventing any insurer from filing its rate schedules as otherwise provided in
Article 25 of the New Mexico Insurance Code.
F. For purpose of this rule, if the coverage for a single
creditor which qualifies as a case has been in force with the insurer for less
than the experience period;
(1) the
claim experience of the creditor while covered by any prior insurer shall be
included to the extent necessary in determining the appropriate case ratios;
and
(2) the
experience considered in the determination of multiple state case rates shall
be New Mexico experience unless the insurer makes the one-time election to use
nationwide experience; the election to use only nationwide experience must be
accompanied by a certification that the insurer uses the same nationwide basis
in determining the case ratios in each state in which the case has experience;
a grouping of states may be used subject to the same requirements of
consistency and certification.
G. When submitting form CI-DRF as required herein, the
insurer shall also file a schedule of new case rates, as determined by form
CI-DRF.
H. Any request for deviated presumptive rates shall be
submitted to the superintendent in the manner presented by the forms in
13.18.2.31 NMAC.
[13.18.2.30
NMAC - Rp, 13.18.2.30 NMAC, 3/11/2025]
13.18.2.31 FORM CI-DRF: PART A - GENERAL
INFORMATION:
Company
Code___________________________________________________________
Company
Name___________________________________________________________
Creditor
Name____________________________________________________________
This
deviation request form must be completed separately for each plan of credit
life or credit disability insurance written by the creditor or group of
creditors requesting the deviation. Experience of accounts may be combined only
within the same plan of benefits and class of business. If experience of
accounts is combined, attach a list of those included.
Based
on the Experience Period commencing _____________________
and ending ___________________.
(month/day/year) (month/day/year)
Class
of Business:
(1) (
) Credit Unions
(2) (
) Commercial Banks and Savings and Loan Associations
(3) (
) Finance Companies
(4) (
) Motor Vehicle Dealers
(5) (
) Other Sales Finance
(6) (
) Production Credit Association Bank Agricultural Loans
(7) (
) All Others
Plan
of Benefits: ( ) Credit
Life, Death Benefits Only
(
) Credit Disability
_____
days
_____
RETRO _____ NON RETRO
[13.18.2.31
NMAC - Rp, 13.18.2.31 NMAC, 3/11/2025]
13.18.2.32 FORM CI-DRF: PART B - CASE
EXPERIENCE:
19___ 19___ 19___ 19___
1. Actual Earned Premiums
a. Net Written Premiums* _____ _____ _____ _____
b. Premium Reserve Beginning of Period _____ _____ _____ _____
c. Premium Reserve End of Period _____ _____ _____ _____
d. Earned Premiums (a+b-c) _____ _____ _____ _____
2. Earned Premiums at Presumptive Rates _____ _____ _____ _____
3. Incurred Claims
a. Claims Paid _____ _____ _____ _____
b. Unreported Claims, Beginning of Period _____ _____ _____ _____
c. Unreported Claims, End of Period _____ _____ _____ _____
d. Claim Reserve, Beginning of Period _____ _____ _____ _____
e. Claim Reserve, End of Period _____ _____ _____ _____
f. Incurred Claims, (a+b+c-d-e)
_____ _____ _____ _____
4. Actual Loss Ratio for Case at Presumptive
Rates: 3(f) [divided by] 2 _____ _____ _____ _____
5. Average Number of Life Years _____ _____ _____ _____
6. Incurred Claim Count** _____ _____ _____ _____
*Net
written premiums are to be determined as Gross Premium written (before
deductions for dividends and experience rating credits) less refunds on
terminations.
**Entries
on 5. and 6. should be based on the Credibility Table elected by the insurer.
[13.18.2.32
NMAC - Rp, 13.18.2.32 NMAC, 3/11/2025]
13.18.2.33 FORM CI-DRF: PART C - DETERMINATION
OF DEVIATED PRESUMPTIVE CASE RATE:
A. Single account cases: If the account is one-hundred percent
credible or if it is within the definition of single account case as filed by
the insurer, the deviated presumptive case rate for the account will be
determined by the appropriate formula set forth in Subsection C of 13.18.2.33
NMAC below.
B. Multiple account cases: If the account is in a multiple account case,
the deviated presumptive case rate for the account will be the case rate for
that multiple account case determined by the appropriate formula set forth in
Subsection C of 13.18.2.33 NMAC below.
C. Calculation of deviated presumptive case rates.
(1) Symbols and definitions:
(a) NCR
= new case rate;
(b) PFR
= presumptive rate;
(c) ALR
= actual loss ratio for case at presumptive rate basis;
(d) ELR = expected loss ratio at
presumptive rate basis;
(e) Z
= credibility factor for case;
(f) CLR
= credibility adjusted case loss ratio at presumptive basis = Z(ALR) =
(1-Z)(ELR).
(2) New
case rate: credit life insurance:
(a) if CLR is greater than ELR, NCR = PFR
[1 + 1.1. (CLR - ELR)];
(b) if
CLR is less than ELR, NCR = PFR [1 - (ELR - CLR)].
(3) New case rate: credit disability
insurance:
(a) if
CLR is greater than ELR, NCR = PFR [1 + 1.2 (CLR ELR)];
(b) if CLR is less than ELR, NCR = PFR [1
- (ELR - CLR)].
[13.18.2.33
NMAC - Rp, 13.18.2.33 NMAC, 3/11/2025]
13.18.2.34 STATISTICAL DATA:
Insurers writing credit life insurance and/or credit accident and health
insurance in New Mexico shall keep statistical data in such form and manner as
necessary to enable the superintendent to determine if rates are reasonable in
relation to the benefits afforded by the various policy contracts. Every
company shall file with the superintendent and the national association of
insurance commissioner (NAIC) support and service offices, on or before the
first of April of each year, statistics on these kinds of insurance for the
year ending December 31 immediately preceding. Such statistics shall be filed
on forms designated as the credit insurance supplement - annual statement blank
approved by the NAIC unless modified by the superintendent.
[13.18.2.34
NMAC - Rp, 13.18.2.34 NMAC, 3/11/2025]
13.18.2.35 PREMIUM REFUNDS:
A. With respect to the policies issued and certificates
delivered after the effective date of these rules.
(1) The refund of an unearned amount paid
by or charged to a debtor for reducing term credit life insurance, or for
credit accident and health insurance, on which charges to the debtor are
payable by other than a single sum, and for level term credit life insurance,
must be not less than the pro rata gross unearned amount charged.
(2) The refund of an unearned amount paid
by or charged to a debtor for uniformly reducing term credit life insurance on
which the insurance charges to the debtor are paid in single sum must not be
less than the single premium for the scheduled remaining insured amount and the
remaining term of coverage using the premium rate schedule applicable at the
time the original premium was determined.
(3) The refund of an unearned amount paid
by or charged to a debtor for credit life insurance which is neither level nor
uniformly reducing, on which the insurance charges to the debtor are paid in a
single sum, must be based upon a formula approved by the superintendent of
insurance.
(4) The
refund of an unearned amount paid by or charged to a debtor for credit accident
and health insurance on which the insurance charges to the debtor are paid in a
single sum must be not less than the mean of the pro rata gross unearned amount
charged and the amount of unearned premium computed by
the Rule of 78.
B. Upon termination of insurance prior to maturity, and in
accordance with the refund formulas presented in this rule, and in accordance
with the insurer’s established refund procedures, each insured debtor shall
receive from the insurer any refund or unearned identifiable insurance charge
either in cash, or by check, electronic funds transfer, or credit to and
against the insured debtor’s indebtedness (provided that such credit shall be
applied only to the indebtedness to which the insurance charges are attributable).
Insurers shall be responsible for the establishment of procedures by which
refunds or credits are to be made, and shall furnish
to the creditors schedules for refunds or credits to be made in the event of
termination of insurance. Insurers also shall furnish instructions to creditors
with respect to the duties in the making of such refunds or credits.
C. Where insurance charges or premiums were
paid by or charged to the debtor and such funds are paid to the insurer, the
insurer is responsible for making the refund to the debtor (or to the debtor’s
estate). Where discharge of the insurer’s responsibility for completion of such
refunds is delegated by the insurer to the creditor, the actions of such
creditor will be deemed by the superintendent of insurance to be acts of the
insurer.
D. The requirement for filing refund formulas will be
satisfied if the formulas are set forth in the individual policy or group
policy filed with the superintendent and not disapproved. If the refund
formula, or part of the refund formula is the sum of the digits formula,
commonly known as the Rule of 78, it shall be sufficient to
so refer to such formula by either description in the policy.
E. A premium refund or credit need not be made if the amount
of the refund is three dollars ($3.00) or less.
F. In calculating such refunds, partial months may be
treated as though the insurance had terminated on the last day of the premium
month in which the insurance is terminated.
G. The insurer shall provide a statement of refund directly
to the insured debtor. The statement of refund form shall:
(1) disclose, separately, the amount of
credit life premium and the amount of credit disability premium being refunded;
and
(2) provide a statement which will inform
the insured debtor as to how the refund of premiums was disposed or applied.
[13.18.2.35
NMAC - Rp, 13.18.2.35 NMAC, 3/11/2025]
13.18.2.36 RESPONSIBILITIES AND OBLIGATIONS OF
INSURANCE COMPANIES: Each insurer transacting
credit insurance business in this state shall in compliance with the laws of
this state and this rule promulgated thereunder, be responsible for:
A. the approval, production, reproduction, amendment, and
modification of its policies, certificates of insurance, and other insurance
forms, including rate schedules, and for the issuance, cancellation, or
termination of such policies, certificates, or forms;
B. the election and appointment of its agents and
representatives;
C. the proper charge, collection, remittance, and refund of
credit insurance premiums;
D. the receipt of copies of all certificates of insurance
and other insurance forms issued in its name by its agents and representatives
or the receipt of electronic or other data therefore which can be substantiated
by certificates of insurance or other insurance forms;
E. the computation and maintenance of policy and claim
liabilities in accordance with 13.18.2.42 NMAC; and
F. the investigation of claims or written complaints filed
against the insurer and the payment, adjustment, settlement, or denial of such
claims;
G. none of the foregoing responsibilities of the insurer may
be delegated, nor may the performance of such responsibilities be assigned to
any creditor or to any agent or representative selected and appointed by the
insurer, except as provided in these rules.
[13.18.2.36
NMAC - Rp, 13.18.2.36 NMAC, 3/11/2025]
13.18.2.37 RESPONSIBILITIES AND OBLIGATIONS
THAT MAY BE DELEGATED TO THE GROUP POLICY CREDITOR OR AGENT:
The insurer, by its group policy, may authorize the group policy
creditor to issue certificates of group insurance or may authorize a legally
appointed insurance agent of the insurer to issue certificates of insurance or
policies of insurance, and respectively, to collect the insurance charge under
the group policy, or premium therefore under an individual policy, provided
that the master group insurance policy with the creditor or agent’s agreement
with the agent under which such authority is granted shall require that:
A. the creditor issue such group
certificate, or the agent issue such certificate of insurance or insurance
policy in the name of the insurer, and payment of the respective policy premium
shall be by a check payable to the insurer or by a deposit to an account of the
insurer under the sole control of the insurer;
B. a copy of each certificate or policy so issued, or
electronic or other data therefore which can be substantiated by such
certificate or policy, together with the premium
therefore, shall be delivered to the insurer within 30 days after the close of the calendar month in which the certificate or
policy is issued;
C. refunds of unearned premiums shall be made in accordance
with 13.18.2.35 NMAC of this rule;
D. no insurer may authorize, and no insurance agent or group
policyholder, within their respective capacities, may issue any policy or
certificate of insurance or collect any premium or insurance charge therefore
or make any refund of premium except only pursuant to and in accordance with
either a master group insurance policy or an agents’ agreement in compliance
with this rule;
E. any changes in the amount of coverage, premium or term of
coverage after issuance of the original group certificate, a certificate of
insurance or the insurance policy issued on a single premium basis shall cause
the insurer to issue a new certificate or individual policy, a copy of which
must be provided to the insured(s), along with a statement of additional
charges or any credits or refunds in premiums; this includes any coverage
changes in 13.18.2.12 NMAC;
F. copies of all records pertaining to each risk shall be
provided to the insurer or be maintained for examination by the superintendent
though the next examination period.
[13.18.2.37
NMAC - Rp, 13.18.2.37 NMAC, 3/11/2025]
13.18.2.38 CREDITOR MUST BE FIRST BENEFICIARY:
No group policy may be issued to other than a creditor. No first
beneficiary may be designated except a creditor. No creditor may be designated
as owner of the individual policy nor have any rights thereunder other than
that of first beneficiary as specifically authorized by law.
[13.18.2.38
NMAC - Rp, 13.18.2.38 NMAC, 3/11/2025]
13.18.2.39 AUTHORIZED REPRESENTATIVES OF THE
INSURER: The insurer may designate or engage one or
more representatives for the purpose of investigating or settling claims and
complaints, processing production reports, calculating reserves, printing of
approved forms, and providing other administrative services authorized by law,
provided:
A. such services are performed under the supervision and
direction of the insurer, and the insurer shall remain
responsible for their proper performance;
B. the
work product of representatives of the insurer are the
property of the insurer and shall be available for examination by the
superintendent, together with the supporting data used in their preparation;
C. all claims shall be promptly reported to the insurance
company, or its designated claim representative, and all claims shall be
settled as soon as reasonably possible and in accordance with the terms of the
insurance contract.
[13.18.2.39
NMAC - Rp, 13.18.2.39 NMAC, 3/11/2025]
13.18.2.40 REQUIREMENTS FOR HANDLING CLAIMS:
A. The insurance company shall establish an adequate claims
register and claim files, which may be reviewed and examined by the
superintendent of insurance.
B. Adequate proofs of loss must be in the possession of the
insurance company at the time its funds are disbursed in payment of claims,
except as provided in Subsection D of 13.18.2.40 NMAC below. Such proofs of loss shall include data sufficient for the insurer
to determine proper amounts of any excess benefits payable to a beneficiary
other than the creditor.
C. All claims shall be paid either by draft drawn on the
insurer, electronic funds transfer, or check of the
insurer to the specific beneficiary to whom payment of the claim is due.
D. No plan or arrangement shall be used whereby any person,
firm, or corporation other than the insurer or its designated claim
representatives shall be authorized to settle or adjust claims. The creditor
shall not be designated as a claim representative for the insurer in settling
or adjusting claims; however, a group policyholder may, by arrangement with the
group insurer, draw drafts or checks or use electronic funds transfer for
payment of claims due only to the group policyholder or other beneficiary, subject
to audit and review by the insurer. Nothing in this section may be construed to
relieve the insurance company of the responsibility
for the proper settlement, adjustment and payment of all claims to proper
beneficiaries in accordance with the terms of the insurance contract.
[13.18.2.40
NMAC - Rp, 13.18.2.40 NMAC, 3/11/2025]
13.18.2.41 CLAIM RESERVES:
A. The insurer shall set up adequate liabilities for claims
for credit life and credit accident and health insurance, in addition to the
policy reserves already described. Such liabilities shall be based upon
appropriate consideration for each of the following categories:
(1) the
liability for claims which are known to be due and payable, but which have not
yet been paid;
(2) the
reserve for continuing disability benefits which have been reported and on
which future payments will be due during the continuance of this disability;
(3) the
liability for claims which have been insured but not yet reported, with
benefits now due;
(4) the
reserve for disability benefits which are incurred but not yet reported, and on
which future payments will be due during the continuance of this disability.
B. The company may rely upon credible experience developed
by its own claim experience, industry wide experience, or any other available
source which produces an adequate liability for claims.
[13.18.2.41
NMAC – Rp, 13.18.2.41 NMAC, 3/11/2025]
13.18.2.42 APPROVAL AND RE-FILING OF FORMS:
Pursuant to Section 59A-25-8 NMSA 1978, all forms to be used in
connection with credit life and/or credit accident and health insurance shall
be filed by the insurer with the superintendent of insurance. Any such forms
which were approved by the superintendent prior to the effective date of this
rule shall be made to conform with the requirements of this rule and re-filed
with the superintendent for approval within 180 days after the effective date
of this rule. If an insurer fails to re-file within the prescribed period of time, the superintendent shall initiate actions to
propose a withdrawal of that insurer’s forms under Subsection D of Section
59A-25-8 NMSA 1978 and may take any other appropriate actions under the penalty
provisions of the New Mexico Insurance Code to respond to the insurer’s failure
to comply with the lawful rule of the superintendent.
[13.18.2.42
NMAC - Rp, 13.18.2.42 NMAC, 3/11/2025]
13.18.2.43 PREEXISTING CONDITIONS ON CREDIT
LIFE INSURANCE ON OPEN-ENDED CREDIT: There shall be no
provisions excluding or denying a claim for death from pre-existing conditions,
except that on insurance written in connection with open-end outstanding
balance accounts, a provision will be permitted that excludes or denies a claim
resulting from a medical condition for which the debtor received medical
diagnosis or treatment within six months immediately preceding the effective
date of coverage and which caused or substantially contributed to the death of
the insured debtor within six months following the effective date of coverage.
The effective date of coverage for each part of the insurance attributable to a
different advance or charge to the account is the date on which the advance or
charge is posted to the account.
[13.18.2.43
NMAC - Rp, 13.18.2.43 NMAC, 3/11/2025]
13.18.2.44 ADJUSTMENT OF PRESUMPTIVELY
ACCEPTABLE CREDIT LIFE INSURANCE PREMIUMS: If for the calendar
year 2000 as filed in the statistical statement, or following any even calendar
year thereafter, the combined loss ratios of all insurers writing credit life
insurance, individual or group, does not equal or exceed ninety percent of the
loss ratio stated in Paragraph (1) of Subsection B of 13.18.2.17 NMAC then the
credit life insurance premiums referenced in Subsections A through D of
13.18.2.18 NMAC and Subsection A of 13.18.2.20 NMAC shall be reduced by ten
percent with the results rounded to the higher whole cent and shall be
effective at the beginning of the next calendar year as the prima facie rate.
[13.18.2.44
NMAC - Rp, 13.18.2.44 NMAC, 3/11/2025]
13.18.2.45 ADJUSTMENT OF PRESUMPTIVELY
ACCEPTABLE CREDIT ACCIDENT AND HEALTH INSURANCE PREMIUMS:
If for the calendar year 2000 as filed in the statistical statement, or
following any even calendar year thereafter, the combined loss ratios of all
insurers writing credit accident and health insurance, individual or group,
does not equal or exceed ninety percent of the loss ratio stated in Paragraph
(2) of Subsection B of 13.18.2.17 NMAC then the credit accident and health
insurance premiums as referenced in Subsections A and B of 13.18.2.26 NMAC,
Subparagraphs (a) and (b) of Paragraph (1) Subsection D of 13.18.2.26 NMAC and
Subparagraphs (a) and (b) of Paragraph (2) of Subsection D of 13.18.2.26 NMAC
shall be reduced by ten percent with the results rounded to the higher whole
cent and shall be effective at the beginning of the next calendar year as the
prima facie rate.
[13.18.2.45
NMAC - Rp, 13.18.2.45 NMAC, 3/11/2025]
HISTORY
OF 13.18.2 NMAC:
Pre-NMAC History:
The material in this rule was previously filed with the commission of
public records, state records center as:
ID
67-1, Sections 26-1-1 through 26-1-15, New Mexico Official Administrative Rules
and Regulations Code filed 12/1/1967.
SCC-85-12,
Insurance Department Regulation 25, Credit Life and Credit Health Insurance
filed 11/4/1985.
Rule
No. SCC-87-1, Insurance Department Regulation 25, Credit Life and Credit Health
Insurance filed 2/4/1987.
History of Repealed Material:
[RESERVED]
Other History:
Rule No.
SCC-87-1, Insurance Department Regulation 25, Credit Life and Credit Health
Insurance (filed 2/4/1987) was renumbered, reformatted and replaced by 13 NMAC
18.2, Credit Life and Credit Health Insurance, effective 7/1/1997.
13 NMAC
18.2, Credit Life and Credit Health Insurance (filed 5/27/1997) was renumbered,
reformatted, amended and replaced by 13.18.2 NMAC, Credit Life and Credit
Health Insurance, effective 12/31/2007.
13.18.2
NMAC, Credit Life and Credit Health Insurance, filed 12/31/2007 was repealed
and replaced by 13.18.2 NMAC, Credit Life and Credit Health Insurance,
effective 03/11/2025.