TITLE
13 INSURANCE
CHAPTER
18 CREDIT INSURANCE
PART
2 CREDIT LIFE AND CREDIT
HEALTH INSURANCE
13.18.2.1 ISSUING AGENCY:
New Mexico Public Regulation Commission Insurance Division.
[7/1/97;
13.18.2.1 NMAC - Rn & A, 13 NMAC 18.2.1, 12/31/07]
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 ten (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.
[7/1/97;
13.18.2.2 NMAC - Rn, 13 NMAC 18.2.2, 12/31/07]
13.18.2.3 STATUTORY AUTHORITY:
Section 59A-2-9, NMSA 1978.
[7/1/97;
13.18.2.3 NMAC - Rn , 13 NMAC 18.2.3, 12/31/07]
13.18.2.4 DURATION:
Permanent.
[7/1/97;
13.18.2.4 NMAC - Rn, 13 NMAC 18.2.4, 12/31/07]
13.18.2.5 EFFECTIVE DATE:
July 1, 1997, unless a later date is cited at the end of a section or
paragraph.
[7/1/97;
13.18.2.5 NMAC - Rn, 13 NMAC 18.2.5, 12/31/07]
[Note: The words or paragraph, above, are no
longer applicable. Later dates are now
cited only at the end of sections, in the history notes appearing in brackets.]
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.
[7/1/97,
3/1/98, 6/1/98, 9/1/98; 13.18.2.6 NMAC - Rn, 13 NMAC 18.2.6, 12/31/07]
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 25 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. “Earned premium” means premium earned during the
experience period at the presumptive rate.
H. “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.
I. “Experience period” means the period of time for
which experience is reported, but not for a period longer than three years.
J. “Incurred claims” means the total claims incurred
during the experience period.
K. “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.
L. “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.
M. “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.
N. “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.
[7/1/97;
13.18.2.7 NMAC - Rn, 13 NMAC 18.2.7, 12/31/07]
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.
[7/1/97,
3/1/98, 6/1/98, 9/1/98; 13.18.2.8 NMAC - Rn, 13 NMAC 18.2.8, 12/31/07]
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.
[7/1/97;
13.18.2.9 NMAC - Rn, 13 NMAC 18.2.9, 12/31/07]
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.
[7/1/97;
13.18.2.10 NMAC - Rn, 13 NMAC 18.2.10, 12/31/07]
13.18.2.11 PAYMENTS OF BENEFITS TO THE
INSURED:
A. Excess benefit checks or drafts made in accordance with
Section 59A-25-7B 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.
[7/1/97,
3/1/98, 6/1/98, 9/1/98; 13.18.2.11 NMAC - Rn, 13 NMAC 18.2.11, 12/31/07]
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
ninety 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.
[7/1/97,
3/1/98, 6/1/98, 9/1/98; 13.18.2.12 NMAC - Rn, 13 NMAC 18.2.12, 12/31/07]
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.
[7/1/97;
13.18.2.13 NMAC - Rn, 13 NMAC 18.2.13, 12/31/07]
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 thirty (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.
[7/1/97;
13.18.2.14 NMAC - Rn, 13 NMAC 18.2.14, 12/31/07]
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.
[7/1/97;
13.18.2.15 NMAC - Rn, 13 NMAC 18.2.15, 12/31/07]
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.
[7/1/97,
3/1/98, 6/1/98, 9/1/98; 13.18.2.16 NMAC - Rn, 13 NMAC 18.2.16, 12/31/07]
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 55 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 55 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 45 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.
[7/1/97,
3/1/98, 6/1/98, 9/1/98; 13.18.2.17 NMAC - Rn, 13 NMAC 18.2.17, 12/31/07]
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: $0.84 per month per $1,000.00 of outstanding balance
indebtedness.
B. Coverage on a single life on the single premium basis:
(1) $0.52 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) $1.00 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: $1.26 per month per $1,000.00 of outstanding balance indebtedness.
D. Coverage for joint lives on the single premium basis:
(1) $0.78 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) $1.50 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.
[7/1/97,
3/1/98, 6/1/98, 9/1/98; 13.18.2.18 NMAC - Rn, 13 NMAC 18.2.18, 12/31/07]
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.
[7/1/97;
13.18.2.19 NMAC - Rn, 13 NMAC 18.2.19, 12/31/07]
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 50 percent of a creditor’s
open-end accounts are held jointly. Such rate shall be completed as
follows: COB = .84 (PSA) - 1.26 (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
50 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.
[7/1/97,
3/1/98, 6/1/98, 9/1/98; 13.18.2.20 NMAC - Rn, 13 NMAC 18.2.20, 12/31/07]
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.
[7/1/97;
13.18.2.21 NMAC - Rn, 13 NMAC 18.2.21, 12/31/07]
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.
[7/1/97,
3/1/98, 6/1/98, 9/1/98; 13.18.2.22 NMAC - Rn, 13 NMAC 18.2.22, 12/31/07]
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.
[7/1/97;
13.18.2.23 NMAC - Rn, 13 NMAC 18.2.23, 12/31/07]
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.
[7/1/97;
13.18.2.24 NMAC - Rn, 13 NMAC 18.2.24, 12/31/07]
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.
[7/1/97;
13.18.2.25 NMAC - Rn, 13 NMAC 18.2.25, 12/31/07]
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:
CREDIT ACCIDENT AND HEALTH INSURANCE
SINGLE PREMIUM RATE PER $100 OF INITIAL INSURED
INDEBTEDNESS
|
ORIGINAL NUMBER OF EQUAL MONTHLY INSTALLMENTS |
BENEFITS PAYABLE AFTER THE 14TH DAY OF DISABILITY |
BENEFITS PAYABLE AFTER THE 30TH DAY OF DISABILITY |
||
|
|
RETROACTIVE TO THE FIRST DAY |
NON- RETROACTIVE |
RETROACTIVE TO THE FIRST DAY |
NON-RETROACTIVE |
|
3 |
0.73 |
0.51 |
|
|
|
4 |
0.95 |
0.67 |
|
|
|
5 |
1.17 |
0.84 |
|
|
|
6 |
1.34 |
1.01 |
0.94 |
0.63 |
|
7 |
1.42 |
1.13 |
1.03 |
0.72 |
|
8 |
1.49 |
1.20 |
1.11 |
0.81 |
|
9 |
1.54 |
1.26 |
1.18 |
0.88 |
|
10 |
1.60 |
1.31 |
1.26 |
0.95 |
|
11 |
1.66 |
1.37 |
1.30 |
1.01 |
|
12 |
1.70 |
1.41 |
1.34 |
1.07 |
|
13 |
1.75 |
1.45 |
1.39 |
1.12 |
|
14 |
1.80 |
1.50 |
1.44 |
1.17 |
|
15 |
1.86 |
1.54 |
1.50 |
1.22 |
|
16 |
1.91 |
1.58 |
1.55 |
1.26 |
|
17 |
1.97 |
1.61 |
1.61 |
1.31 |
|
18 |
2.02 |
1.64 |
1.66 |
1.35 |
|
19 |
2.08 |
1.67 |
1.72 |
1.39 |
|
20 |
2.13 |
1.70 |
1.77 |
1.44 |
|
21 |
2.18 |
1.73 |
1.82 |
1.46 |
|
22 |
2.23 |
1.76 |
1.87 |
1.48 |
|
23 |
2.30 |
1.79 |
1.94 |
1.51 |
|
24 |
2.34 |
1.82 |
1.98 |
1.53 |
|
25 |
2.40 |
1.85 |
2.03 |
1.54 |
|
26 |
2.45 |
1.87 |
2.09 |
1.56 |
|
27 |
2.51 |
1.90 |
2.14 |
1.58 |
|
28 |
2.56 |
1.94 |
2.18 |
1.60 |
|
29 |
2.62 |
1.98 |
2.23 |
1.63 |
|
30 |
2.66 |
2.03 |
2.29 |
1.67 |
|
31 |
2.73 |
2.09 |
2.34 |
1.71 |
|
32 |
2.78 |
2.14 |
2.39 |
1.75 |
|
33 |
2.83 |
2.19 |
2.45 |
1.79 |
|
34 |
2.88 |
2.24 |
2.50 |
1.83 |
|
35 |
2.94 |
2.30 |
2.54 |
1.88 |
|
36 |
2.99 |
2.34 |
2.59 |
1.92 |
|
37 |
3.02 |
2.38 |
2.63 |
1.96 |
|
38 |
3.05 |
2.42 |
2.66 |
2.01 |
|
39 |
3.07 |
2.45 |
2.70 |
2.05 |
|
40 |
3.10 |
2.49 |
2.73 |
2.09 |
|
41 |
3.13 |
2.52 |
2.76 |
2.13 |
|
42 |
3.16 |
2.56 |
2.79 |
2.18 |
|
43 |
3.18 |
2.59 |
2.82 |
2.22 |
|
44 |
3.21 |
2.63 |
2.86 |
2.26 |
|
45 |
3.24 |
2.66 |
2.89 |
2.30 |
|
46 |
3.26 |
2.70 |
2.93 |
2.34 |
|
47 |
3.29 |
2.74 |
2.95 |
2.38 |
|
48 |
3.31 |
2.78 |
2.99 |
2.43 |
|
49 |
3.34 |
2.80 |
3.02 |
2.48 |
|
50 |
3.37 |
2.82 |
3.05 |
2.54 |
|
51 |
3.38 |
2.85 |
3.07 |
2.59 |
|
52 |
3.41 |
2.87 |
3.10 |
2.64 |
|
53 |
3.44 |
2.90 |
3.13 |
2.68 |
|
54 |
3.46 |
2.92 |
3.16 |
2.75 |
|
55 |
3.48 |
2.94 |
3.18 |
2.79 |
|
56 |
3.51 |
2.97 |
3.21 |
2.83 |
|
57 |
3.53 |
2.99 |
3.24 |
2.89 |
|
58 |
3.55 |
3.02 |
3.26 |
2.94 |
|
59 |
3.58 |
3.04 |
3.29 |
3.00 |
|
60 |
3.60 |
3.06 |
3.31 |
3.04 |
|
61 |
3.62 |
3.09 |
3.34 |
3.07 |
|
62 |
3.66 |
3.11 |
3.38 |
3.08 |
|
63 |
3.67 |
3.14 |
3.39 |
3.11 |
|
64 |
3.70 |
3.16 |
3.42 |
3.12 |
|
65 |
3.73 |
3.18 |
3.46 |
3.15 |
|
66 |
3.74 |
3.21 |
3.48 |
3.16 |
|
67 |
3.77 |
3.23 |
3.50 |
3.19 |
|
68 |
3.80 |
3.26 |
3.53 |
3.20 |
|
69 |
3.82 |
3.28 |
3.56 |
3.23 |
|
70 |
3.84 |
3.30 |
3.59 |
3.24 |
|
71 |
3.87 |
3.33 |
3.61 |
3.27 |
|
72 |
3.89 |
3.35 |
3.64 |
3.29 |
|
73 |
3.91 |
3.38 |
3.67 |
3.31 |
|
74 |
3.94 |
3.40 |
3.70 |
3.32 |
|
75 |
3.96 |
3.42 |
3.72 |
3.35 |
|
76 |
3.98 |
3.45 |
3.74 |
3.38 |
|
77 |
4.02 |
3.47 |
3.78 |
3.39 |
|
78 |
4.03 |
3.50 |
3.81 |
3.41 |
|
79 |
4.06 |
3.52 |
3.82 |
3.44 |
|
80 |
4.09 |
3.54 |
3.86 |
3.46 |
|
81 |
4.10 |
3.57 |
3.89 |
3.48 |
|
82 |
4.13 |
3.59 |
3.91 |
3.50 |
|
83 |
4.16 |
3.62 |
3.94 |
3.52 |
|
84 |
4.18 |
3.64 |
3.98 |
3.55 |
|
85 |
4.20 |
3.66 |
3.99 |
3.56 |
|
86 |
4.23 |
3.69 |
4.02 |
3.59 |
|
87 |
4.25 |
3.71 |
4.04 |
3.62 |
|
88 |
4.27 |
3.74 |
4.07 |
3.65 |
|
89 |
4.30 |
3.76 |
4.10 |
3.66 |
|
90 |
4.32 |
3.78 |
4.13 |
3.69 |
|
91 |
4.34 |
3.81 |
4.15 |
3.71 |
|
92 |
4.38 |
3.83 |
4.18 |
3.73 |
|
93 |
4.39 |
3.86 |
4.21 |
3.75 |
|
94 |
4.42 |
3.88 |
4.24 |
3.78 |
|
95 |
4.45 |
3.90 |
4.26 |
3.81 |
|
96 |
4.46 |
3.93 |
4.29 |
3.83 |
|
97 |
4.49 |
3.95 |
4.32 |
3.85 |
|
98 |
4.52 |
3.98 |
4.34 |
3.88 |
|
99 |
4.54 |
4.00 |
4.37 |
3.91 |
|
100 |
4.56 |
4.02 |
4.39 |
3.93 |
|
101 |
4.59 |
4.05 |
4.42 |
3.96 |
|
102 |
4.61 |
4.07 |
4.46 |
3.98 |
|
103 |
4.63 |
4.10 |
4.47 |
4.01 |
|
104 |
4.66 |
4.12 |
4.50 |
4.03 |
|
105 |
4.68 |
4.14 |
4.54 |
4.06 |
|
106 |
4.70 |
4.17 |
4.56 |
4.09 |
|
107 |
4.74 |
4.19 |
4.58 |
4.11 |
|
108 |
4.75 |
4.22 |
4.61 |
4.13 |
|
109 |
4.78 |
4.24 |
4.64 |
4.16 |
|
110 |
4.81 |
4.26 |
4.67 |
4.19 |
|
111 |
4.82 |
4.29 |
4.69 |
4.21 |
|
112 |
4.85 |
4.31 |
4.72 |
4.25 |
|
113 |
4.88 |
4.34 |
4.75 |
4.28 |
|
114 |
4.90 |
4.36 |
4.78 |
4.30 |
|
115 |
4.92 |
4.38 |
4.80 |
4.33 |
|
116 |
4.95 |
4.41 |
4.82 |
4.36 |
|
117 |
4.97 |
4.43 |
4.86 |
4.38 |
|
118 |
4.99 |
4.46 |
4.89 |
4.41 |
|
119 |
5.02 |
4.48 |
4.90 |
4.45 |
|
120 |
5.04 |
4.50 |
4.94 |
4.46 |
B. A monthly premium of $0.15 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:
(1) benefits payable after the 14th day of
disability:
(a) retroactive to first day: $0.19 per month
per $100 of outstanding balance insured indebtedness;
(b) non-retroactive: $0.15 per month per $100
of outstanding balance insured indebtedness;
(2) benefits payable after the 30th day of
disability:
(a) retroactive to first day: $0.16 per month
per $100 of outstanding balance insured indebtedness;
(b) non-retroactive: $0.11 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.
[7/1/97,
3/1/98, 4/1/98, 6/1/98, 9/1/98; 13.18.2.26 NMAC - Rn, 13 NMAC 18.2.26,
12/31/07]
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.
[7/1/97,
3/1/98, 4/1/98, 6/1/98, 9/1/98; 13.18.2.27 NMAC - Rn, 13 NMAC 18.2.27,
12/31/07]
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.
[7/1/97;
13.18.2.28 NMAC - Rn, 13 NMAC 18.2.28, 12/31/07]
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.
[7/1/97,
3/1/98, 4/1/98, 6/1/98, 9/1/98; 13.18.2.29 NMAC - Rn, 13 NMAC 18.2.29,
12/31/07]
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 5 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 (3) 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.
[7/1/97,
3/1/98, 4/1/98, 6/1/98, 9/1/98; 13.18.2.30 NMAC - Rn, 13 NMAC 18.2.30,
12/31/07]
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
[7/1/97;
13.18.2.31 NMAC - Rn, 13 NMAC 18.2.31, 12/31/07]
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.
[7/1/97;
13.18.2.32 NMAC - Rn, 13 NMAC 18.2.32, 12/31/07]
13.18.2.33 FORM CI-DRF: PART C - DETERMINATION
OF DEVIATED PRESUMPTIVE CASE RATE:
A. Single account cases: If the account is 100 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)].
[7/1/97;
13.18.2.33 NMAC - Rn, 13 NMAC 18.2.33, 12/31/07]
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.
[7/1/97,
3/1/98, 4/1/98, 6/1/98, 9/1/98; 13.18.2.34 NMAC - Rn, 13 NMAC 18.2.34, 12/31/07]
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.
[7/1/97,
3/1/98, 4/1/98, 6/1/98, 9/1/98; 13.18.2.35 NMAC - Rn, 13 NMAC 18.2.35,
12/31/07]
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.
[7/1/97;
13.18.2.36 NMAC - Rn, 13 NMAC 18.2.36, 12/31/07]
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 thirty (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.
[7/1/97,
3/1/98, 4/1/98, 6/1/98, 9/1/98; 13.18.2.37 NMAC - Rn, 13 NMAC 18.2.37,
12/31/07]
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.
[7/1/97;
13.18.2.38 NMAC - Rn, 13 NMAC 18.2.38, 12/31/07]
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.
[7/1/97;
13.18.2.39 NMAC - Rn, 13 NMAC 18.2.39, 12/31/07]
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.
[7/1/97,
3/1/98, 4/1/98, 6/1/98, 9/1/98; 13.18.2.40 NMAC - Rn, 13 NMAC 18.2.40,
12/31/07]
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.
[7/1/97;
9/1/98; 13.18.2.41 NMAC - Rn & A, 13 NMAC 18.2.41, 12/31/07]
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 Section 59A-25-8D 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.
[7/1/97;
13.18.2.42 NMAC - Rn, 13 NMAC 18.2.42, 12/31/07]
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 6 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.
[7/1/97;
13.18.2.43 NMAC - Rn, 13 NMAC 18.2.43, 12/31/07]
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 stated in Subsections A through D of 13.18.2.18
NMAC and Subsection A of 13.18.2.20 NMAC or as subsequently adjusted by this
section 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.
[3/1/98,
4/1/98, 6/1/98, 9/1/98; 13.18.2.44 NMAC - Rn, 13 NMAC 18.2.44, 12/31/07]
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 stated 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
or as subsequently adjusted by this section 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.
[3/1/98,
6/1/98, 9/1/98; 13.18.2.45 NMAC - Rn, 13 NMAC 18.2.45, 12/31/07]
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.