New Mexico Administrative Code › Title 13 - INSURANCE › Chapter 8 - INSURANCE POLICIES AND RATES › Part 5 - RATE MODIFICATION PLANS › Section 13.8.5.8 - STANDARDS FOR RATE MODIFICATION PLANS

Current through Register Vol. 35, No. 13, July 16, 2024
Rate modification plans shall comply with the following
				  standards:
A. Rate modification plans
				may only be used to acknowledge variance in risk or expense
				characteristics.
B. Rate
				modification plans may be based only on rating characteristics not already
				reflected in the manual rates or experience rating plan. Rate modification
				plans must clearly indicate the objective criteria to be used.
C. Individual underwriting files must contain
				specific criteria and document particular circumstances of the risk in support
				of each debit or credit. Such documentation must be maintained in the file to
				enable the superintendent to verify compliance with this rule. Documentation
				may include, but is not limited to inspection reports, photographs, agent
				observations and findings, insured formal safety plans, premises evaluations
				and narrative reports covering other aspects of the risk. Expenses such as
				reduced commissions may be considered but must be documented in the
				underwriting file.
D. Any rate
				modification plan designed to be applied simultaneously to property, liability,
				or vehicle coverage shall contain reasonable factors that give appropriate
				recognition to the distinct exposures involved in such coverage.
E. Once a rate modification plan has been
				filed and approved, its use by the insurer is mandatory. The rate modification
				plan must be applied uniformly in a non-discriminatory manner for all eligible
				classes of risk even if the application of the rate modification plan results
				in a "1.0" modification or no change in a previous modification
				applied.
F. The application of any
				rate modification plan shall not result in debits or credits that exceed 25
				percent for the commercial vehicle, commercial general liability and commercial
				property lines of business. The application of any rate modification plan shall
				not result in debits or credits that exceed 15 percent for the workers'
				compensation line of business. Modifications generated by loss experience or
				company expense experience are not subject to this limitation. Professional
				liability, contract surety bonds, and directors and officers liability are not
				subject to this limitation.
G. Once
				a rate modification plan has been applied to a risk and a credit or debit
				established, no changes in the credit or debit can be made without appropriate
				justification and documentation.
H.
				Any rate modification plan must provide that an applicant will be notified in
				writing by the insurer at the issuance of a new policy of the factors and
				resulting amounts which resulted in the rating modification, whether a debit or
				credit, so that, among other things, the applicant will be fairly apprised of
				any corrective action that might be appropriate with respect to the insurance
				risk. The insured must also be notified in writing by the insurer at the
				issuance of a renewal policy of either the removal of credits or the addition
				of debits in the rating modification and the reasons therefor.