New Mexico Administrative Code
Title 13 - INSURANCE
Chapter 18 - CREDIT INSURANCE
Part 2 - CREDIT LIFE AND CREDIT HEALTH INSURANCE
Section 13.18.2.7 - DEFINITIONS

Universal Citation: 13 NM Admin Code 13.18.2.7

Current through Register Vol. 35, No. 6, March 26, 2024

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.

Disclaimer: These regulations may not be the most recent version. New Mexico may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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