N.M. Admin. Code § 1.6.2.10

Current through Register Vol. 35, No. 21, November 5, 2024

Section 1.6.2.10 - DETERMINATION OF EXPOSURE/EXPERIENCE PREMIUMS

A. Prior to the annual notice required pursuant to Section 4 of this rule [now Subsection A of 1.6.2.8 NMAC], the RMD shall calculate for each covered entity the annual premium for each line of coverage. Such premiums shall consist of an exposure-rated component and if applicable, in accordance with this rule, an experience-rated component.

B.The annual premium for an individual entity for a given line of coverage shall be calculated according to the following formula:

Entity Premium = IEP + IXP, where IEP and IXP are, respectively, the individual entity's exposure premium component and experience premium component. IXP may be zero or not applicable to any particular risk group or to any given line of coverage, in the director's discretion. The director may, in his discretion, prescribe a minimum premium for any risk group or line of coverage, and, where applicable, such minimum premium shall be charged to the entity if greater than the entity premium calculated according to this subsection. The director may exempt from payment entities having a premium of $50.00 or less. Entities having less than three full calendar year's experience shall be charged on a 100 percent exposure basis, regardless of the fact that other entities in the same risk group are paying on the basis of exposure and experience for a given line of coverage.

C. The exposure-rated premium component for each individual entity for each line of coverage, other than entities rated on a 100 percent exposure basis pursuant to Section 6.2 of this rule [now Subsection B of 1.6.2.10 NMAC], shall be calculated according to the following formula:

IEP = TEP x IEU

TEU

where:

(1) IEP is an individual entity's exposure premium component for a given line of coverage;

(2) TEP is the total exposure premium for that line of coverage for the risk group of which the individual entity is a part;

(3) IEU is the number of exposure units of the kind set forth in table 1 for the individual entity for that line of coverage;

(4) TEU is the total number of exposure units for all entities in that risk group for that line of coverage.

D. Exposure units for specified risk groups for each line of coverage shall be as established by the RMD policy and shall be identified as table 1.

E. The experience-rated premium component, if any, for each individual entity shall be calculated according to the following formula:

IXP = TXP x IL / TL

where:

(1) IXP is an individual entity's experience premium component for a given line of coverage;

(2) TXP is the total experience premium for that line of coverage for the risk group of which the individual entity is a part;

(3) IL is the individual entity's ratable losses for the line of coverage; and

(4) TL is the total ratable losses for that risk group for that line of coverage.

F. Ratable losses for a given line of coverage for an individual entity shall be the experience for that entity for that line of coverage during the five most recent consecutive fiscal years, including the current partial year; subject to a loss limit per claim of up to five per cent (5 percent) of the entity's total operating budget, but in no case shall such loss be limited to less than $2,500 per claim or no more than $1,000,000. The director of the RMD shall set the percentage loss limitation annually and the same percentage shall apply to all individual entities within a group of entities for the line of business involved.

[Current citations have been added as annotations for the internal references contained in Subsections A and C of this section; however, those references appear to be carried forward incorrectly from earlier versions of the rule, and the current citations provided are based strictly on a reading of the content and could be in error. Also, there is no clear point of reference to the table 1 cited in Subsections C and D in the rule as filed.]

N.M. Admin. Code § 1.6.2.10

6/14/1997; 1.6.2.10 NMAC - Rn, 1 NMAC 6.2.10; 9/15/2004