AUTOMATIC RATE ESCALATIONS

STATE OF NEW MEXICO OFFICE OF SUPERINTENDENT OF INSURANCE SUPERINTENDENT OF INSURANCE Russell Toal DEPUTY SUPERINTENDENT Jennifer A. Catechis Main Office: 1120 Paseo de Peralta, Room 428, Santa Fe, NM 87501 Satellite Office: 6200 Uptown Blvd NE, Suite 400, Albuquerque, NM 87110 Main Phone: (505) 827-4601 | Satellite Phone: (505) 322-2186 | Toll Free: (855) 4 - ASK - OSI www.osi.state.nm.us BULLETIN 2022-020 November 1, 2022 TO: ALL INSURERS AND ADVISORY ORGANIZATIONS THAT HAVE FILED PROPERTY AND CASUALTY INSURANCE RATES COVERING RISKS LOCATED IN THE STATE OF NEW MEXICO RE: AUTOMATIC RATE ESCALATIONS This bulletin is issued in accordance with Sections 59A-2-8, 59A-2-10 and 59A-4-3 NMSA 1978, and with 13.1.2.9 NMAC. In New Mexico, property and casualty insurance rates, like all other rates, “shall not be excessive, inadequate or unfairly discriminatory, nor shall an insurer charge any rate that, if continued, will have or tend to have the effect of destroying competition or creating a monopoly.” Section 59A-17-6, NMSA 1978, Rate standards, Subsection A. However, the OSI has become aware of a practice in rate filings that utilizes automatic rate escalations beyond a reasonably foreseeable period. This usually takes the form of a rating factor that automatically increases the rates by a set percentage, typically on a monthly basis, and often for as long as several years into the future. This factor can result in a sizeable annual rate increase for several years in a row. This practice is not allowed by the OSI, because the need for a rate increase cannot be reasonably anticipated or justified so far in advance, and therefore, the rates cannot be reasonably evaluated for compliance with the applicable statutes and regulations. The purpose of this bulletin is to require insurers and advisory organizations that have filed such rating factors in New Mexico to correct and refile the rates in conformance with statutory and rule requirements, within 6 months of the date of issuance of this bulletin. B U L L E T I N 2 0 2 2 - 0 2 0 P a g e | 2 Main Office: 1120 Paseo de Peralta, Room 428, Santa Fe, NM 87501 Satellite Office: 6200 Uptown Blvd NE, Suite 400, Albuquerque, NM 87110 Main Phone: (505) 827-4601 | Satellite Phone: (505) 322-2186 | Toll Free: (855) 4 - ASK - OSI www.osi.state.nm.us Questions regarding this bulletin should be directed to Melissa Robertson, by emailing Melissa.Robertson@state.nm.us or by calling (505) 670-2704. ISSUED this 1st day of November, 2022. ____________________________________________ JENNIFER A. CATECHIS, Deputy Superintendent for Superintendent Russell Toal