Adjustment of presumptively acceptable credit life insurance and credit card accident and health insurance premium rates

[LOGO] SUPERINTENDENT OF INSURANCE John G. Franchini 505-827-4299 NEW MEXICO OFFICE OF SUPERINTENDENT OF INSURANCE DEPUTY SUPERINTENDENT Robert Doucette 505-827-5832 Bulletin 2016-007 March 21, 2016 TO: CREDIT LIFE AND CREDIT ACCIDENT AND HEALTH INSURERS RE: ADJUSTMENT OF PRESUMPTIVELY ACCEPTABLE CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE PREMIUM RATES The following Bulletin is issued pursuant to NMSA 1978 Sections 59A-2-8, 59A-2-10, and 13.18.2.44 and 13.18.2.45 NMAC. The Credit Life and Credit Health Insurance Rule, 13.18.2 NMAC, provides for reduction of the presumptively acceptable credit life insurance premiums and credit accident and health insurance premiums set forth in the rule if the combined loss ratios of all insurers writing each type of insurance for the calendar year 2000 or any even-numbered calendar year thereafter, as filed in the NAIC statistical statements, does not equal or exceed ninety percent of the loss ratios stated in the rule for each type of insurance. The adjustment formula specified in the rule (reduction by ten percent and rounding up to the nearest whole cent) would never permit the reduction of any presumptive rate below $0.10; from the proximity to $0.10 of the original presumptively acceptable rate stated in 13.18.2.26.D.(2)(b) it may be presumed that this was not the intent of the rule; from the current adjusted level for that rate, as given in Bulletin No. 2011-010, ($0.08), that specified formula already has not been strictly imposed. The presumptively acceptable rates were not updated in 2013 from the 2012 statistical reports, nor in 2015 from the 2014 statistical reports. This bulletin adjusts the presumptively acceptable rates from the 2014 statistical reports; however, in lieu of the rule's stated effective date for the adjusted rates, the presumptive acceptability of these adjusted rates will be effective immediately upon the issue of this Bulletin. Also, these rates are adjusted using certain corrections of rounding. In no case is the result below one cent less than the result of strict imposition of the specified formula. The calendar year 2014 statistical statements establish that the combined loss ratio 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. Accordingly, and pursuant to 13.18.2.44 NMAC, 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, as previously reduced, shall be reduced by ten percent as stipulated Main Phone: 505-827-4601 Main Fax: 505-827-4734 Toll Free: 1-855-4-ASK-OSI Mailing Address: P.O. Box 1689 Santa Fe, NM 87504-1689 Physical Address: 1120 Paseo de Peralta Santa Fe, NM 87501 above. The attached Table 1, entitled Presumptively Acceptable Credit Life Insurance Premiums, contains the aforementioned prima facie rates that shall be effective as of the date of this Bulletin in lieu of January 1, 2016. The calendar year 2014 statistical statements establish that the combined loss ratio 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. Accordingly, and pursuant to 13.18.2.45 NMAC, the credit life insurance premiums stated in Subsections A, B, and D of 13.18.2.26 NMAC, as previously reduced, shall be reduced by ten percent as stipulated above. The attached Table 2, entitled Presumptively Acceptable Credit Accident and Health Insurance Premiums, contains the aforementioned prima facie rates that shall be effective as of the date of this Bulletin in lieu of January 1, 2016. DONE and ORDERED this 21th day of March, 2016. JOHN G. FRANCHINI Superintendent of Insurance Bulletin 2016-007, page 2 Table 1 Effective January 01, 2016 # **PRESUMPTIVELY ACCEPTABLE CREDIT LIFE INSURANCE PREMIUMS (PRIMA FACIE RATES):** | Relative to NMAC: | | | --- | --- | | 13.18.2.18.A. | Coverage on a single life provided on the outstanding indebtedness basis: $0.43 per month per $1,000.00 of outstanding balance indebtedness. | | 13.18.2.18.B. | Coverage on a single life on the single premium basis: | | Par. (1) | $0.27 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 | | Par. (2) | $0.50 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. | | 13.18.2.18.C. | Coverage on joint lives on the outstanding indebtedness basis: $0.63 per month per $1,000.00 of outstanding balance indebtedness. | | 13.18.2.18.D. | Coverage for joint lives on the single premium basis: | | Par. (1) | $0.40 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 | | Par. (2) | $0.74 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. | # **13.18.2.20.A. COMPOSITE SINGLE JOINT OUTSTANDING BALANCE RATE (PRIMA FACIE):** COB = $0.43 (PSA) - $0.63 (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). Bulletin 2016-007, page 3 Table 2 # PRESUMPTIVELY ACCEPTABLE RELATION OF CREDIT ACCIDENT AND HEALTH BENEFITS TO PREMIUMS (PRIMA FACIE): Effective January 01, 2016 # 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 | 0.41 | 0.29 | | | | 4 | 0.53 | 0.37 | | | | 5 | 0.65 | 0.47 | | | | 6 | 0.73 | 0.55 | 0.52 | 0.36 | | 7 | 0.78 | 0.62 | 0.57 | 0.41 | | 8 | 0.81 | 0.66 | 0.61 | 0.45 | | 9 | 0.84 | 0.69 | 0.65 | 0.49 | | 10 | 0.87 | 0.72 | 0.69 | 0.53 | | 11 | 0.90 | 0.74 | 0.72 | 0.55 | | 12 | 0.92 | 0.77 | 0.74 | 0.59 | | 13 | 0.96 | 0.80 | 0.76 | 0.61 | | 14 | 0.98 | 0.81 | 0.79 | 0.65 | | 15 | 1.01 | 0.84 | 0.81 | 0.66 | | 16 | 1.03 | 0.87 | 0.84 | 0.69 | | 17 | 1.07 | 0.88 | 0.88 | 0.72 | | 18 | 1.09 | 0.90 | 0.90 | 0.74 | | 19 | 1.13 | 0.90 | 0.93 | 0.76 | | 20 | 1.15 | 0.92 | 0.96 | 0.79 | | 21 | 1.18 | 0.94 | 0.99 | 0.81 | | 22 | 1.20 | 0.96 | 1.02 | 0.81 | | 23 | 1.25 | 0.98 | 1.06 | 0.82 | | 24 | 1.26 | 0.99 | 1.08 | 0.83 | | 25 | 1.30 | 1.00 | 1.10 | 0.84 | | 26 | 1.32 | 1.02 | 1.14 | 0.85 | | 27 | 1.35 | 1.03 | 1.16 | 0.87 | | 28 | 1.38 | 1.06 | 1.18 | 0.88 | | 29 | 1.41 | 1.08 | 1.20 | 0.89 | | 30 | 1.44 | 1.10 | 1.25 | 0.90 | Bulletin 2016-007, page 4 Table 2, cont'd | 31 | 1.47 | 1.14 | 1.26 | 0.93 | | --- | --- | --- | --- | --- | | 32 | 1.50 | 1.16 | 1.30 | 0.96 | | 33 | 1.53 | 1.19 | 1.32 | 0.98 | | 34 | 1.55 | 1.21 | 1.35 | 0.99 | | 35 | 1.59 | 1.25 | 1.38 | 1.02 | | 36 | 1.62 | 1.26 | 1.39 | 1.04 | | 37 | 1.62 | 1.29 | 1.42 | 1.06 | | 38 | 1.64 | 1.31 | 1.44 | 1.08 | | 39 | 1.66 | 1.32 | 1.46 | 1.11 | | 40 | 1.67 | 1.35 | 1.47 | 1.14 | | 41 | 1.69 | 1.36 | 1.49 | 1.15 | | 42 | 1.71 | 1.38 | 1.51 | 1.18 | | 43 | 1.71 | 1.39 | 1.53 | 1.20 | | 44 | 1.72 | 1.42 | 1.54 | 1.23 | | 45 | 1.74 | 1.44 | 1.55 | 1.25 | | 46 | 1.76 | 1.46 | 1.58 | 1.26 | | 47 | 1.78 | 1.47 | 1.60 | 1.29 | | 48 | 1.79 | 1.50 | 1.62 | 1.32 | | 49 | 1.80 | 1.51 | 1.62 | 1.34 | | 50 | 1.81 | 1.53 | 1.64 | 1.38 | | 51 | 1.82 | 1.54 | 1.66 | 1.39 | | 52 | 1.83 | 1.55 | 1.67 | 1.43 | | 53 | 1.85 | 1.55 | 1.69 | 1.45 | | 54 | 1.86 | 1.57 | 1.71 | 1.48 | | 55 | 1.88 | 1.59 | 1.71 | 1.51 | | 56 | 1.89 | 1.61 | 1.72 | 1.53 | | 57 | 1.90 | 1.62 | 1.74 | 1.55 | | 58 | 1.90 | 1.62 | 1.76 | 1.59 | | 59 | 1.92 | 1.63 | 1.78 | 1.62 | | 60 | 1.93 | 1.65 | 1.79 | 1.63 | | 61 | 1.95 | 1.67 | 1.80 | 1.65 | | 62 | 1.97 | 1.67 | 1.82 | 1.66 | | 63 | 1.98 | 1.69 | 1.83 | 1.67 | | 64 | 1.98 | 1.71 | 1.84 | 1.68 | | 65 | 2.00 | 1.71 | 1.86 | 1.70 | | 66 | 2.01 | 1.72 | 1.87 | 1.71 | | 67 | 2.03 | 1.73 | 1.88 | 1.72 | | 68 | 2.04 | 1.76 | 1.90 | 1.72 | | 69 | 2.05 | 1.77 | 1.91 | 1.73 | | 70 | 2.06 | 1.78 | 1.93 | 1.74 | Bulletin 2016-007, page 5 Table 2, cont'd | 71 | 2.08 | 1.79 | 1.94 | 1.76 | | --- | --- | --- | --- | --- | | 72 | 2.09 | 1.80 | 1.96 | 1.78 | | 73 | 2.10 | 1.82 | 1.98 | 1.79 | | 74 | 2.11 | 1.83 | 1.98 | 1.79 | | 75 | 2.12 | 1.84 | 1.99 | 1.80 | | 76 | 2.14 | 1.86 | 2.01 | 1.82 | | 77 | 2.16 | 1.87 | 2.03 | 1.83 | | 78 | 2.16 | 1.88 | 2.05 | 1.83 | | 79 | 2.18 | 1.89 | 2.05 | 1.85 | | 80 | 2.19 | 1.90 | 2.07 | 1.86 | | 81 | 2.20 | 1.92 | 2.09 | 1.87 | | 82 | 2.21 | 1.93 | 2.11 | 1.88 | | 83 | 2.24 | 1.95 | 2.12 | 1.89 | | 84 | 2.25 | 1.96 | 2.14 | 1.90 | | 85 | 2.25 | 1.97 | 2.14 | 1.91 | | 86 | 2.27 | 1.98 | 2.16 | 1.93 | | 87 | 2.28 | 1.98 | 2.17 | 1.95 | | 88 | 2.29 | 2.01 | 2.19 | 1.97 | | 89 | 2.31 | 2.03 | 2.20 | 1.97 | | 90 | 2.32 | 2.04 | 2.21 | 1.98 | | 91 | 2.33 | 2.05 | 2.23 | 1.98 | | 92 | 2.35 | 2.06 | 2.25 | 2.00 | | 93 | 2.36 | 2.07 | 2.26 | 2.02 | | 94 | 2.37 | 2.08 | 2.27 | 2.04 | | 95 | 2.38 | 2.09 | 2.28 | 2.05 | | 96 | 2.39 | 2.11 | 2.31 | 2.05 | | 97 | 2.42 | 2.12 | 2.32 | 2.07 | | 98 | 2.43 | 2.14 | 2.33 | 2.08 | | 99 | 2.44 | 2.14 | 2.34 | 2.10 | | 100 | 2.44 | 2.16 | 2.36 | 2.11 | | 101 | 2.46 | 2.18 | 2.37 | 2.12 | | 102 | 2.47 | 2.19 | 2.39 | 2.14 | | 103 | 2.49 | 2.20 | 2.40 | 2.15 | | 104 | 2.50 | 2.20 | 2.42 | 2.16 | | 105 | 2.51 | 2.22 | 2.43 | 2.18 | | 106 | 2.52 | 2.25 | 2.44 | 2.19 | | 107 | 2.54 | 2.25 | 2.45 | 2.20 | | 108 | 2.55 | 2.26 | 2.47 | 2.21 | | 109 | 2.56 | 2.27 | 2.49 | 2.24 | | 110 | 2.57 | 2.28 | 2.51 | 2.25 | Bulletin 2016-007, page 6 Table 2, cont'd | 111 | 2.58 | 2.31 | 2.52 | 2.26 | | --- | --- | --- | --- | --- | | 112 | 2.60 | 2.32 | 2.52 | 2.28 | | 113 | 2.61 | 2.33 | 2.55 | 2.30 | | 114 | 2.62 | 2.34 | 2.56 | 2.31 | | 115 | 2.63 | 2.35 | 2.57 | 2.32 | | 116 | 2.65 | 2.36 | 2.59 | 2.34 | | 117 | 2.67 | 2.37 | 2.61 | 2.35 | | 118 | 2.68 | 2.39 | 2.62 | 2.36 | | 119 | 2.69 | 2.41 | 2.62 | 2.38 | | 120 | 2.70 | 2.42 | 2.64 | 2.39 | Effective January 01, 2016 # PRESUMPTIVELY ACCEPTABLE CREDIT ACCIDENT AND HEALTH INSURANCE PREMIUMS (PRIMA FACIE RATES): Relative to NMAC: 13.18.2.26.B. A monthly premium of $0.09 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. 13.18.2.26.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: Par. (1) benefits payable after the 14th day of disability: subpar. (a) retroactive to first day: $0.13 per month per $100 of outstanding balance insured indebtedness; subpar. (b) non-retroactive: $0.09 per month per $100 of outstanding balance insured indebtedness; Par. (2) benefits payable after the 30th day of disability: subpar. (a) retroactive to first day: $0.10 per month per $100 of outstanding balance insured indebtedness; subpar. (b) non-retroactive: $0.08 per month per $100 of outstanding balance insured indebtedness; Bulletin 2016-007, page 7