N.M. Admin. Code § 13.12.4.14

Current through Register Vol. 35, No. 17, September 10, 2024

Section 13.12.4.14 - FINANCIAL RESPONSIBILITY REQUIREMENTS

Prior to issuance of a certificate of self-insurance, and continuously thereafter if applicant is granted a certificate of self-insurance, the applicant must comply with each of the following requirements:

A.Security: The applicant shall furnish security for payment of claims, in one of the following forms:

(1) by depositing securities specified in Section 59A-10-3 NMSA 1978 as eligible for deposit, in the amount of two hundred thousand dollars ($200,000.00), or twenty-five percent (25%) of projected losses and loss adjustment expenses, whichever is greater;

(2) by a financial guaranty bond in favor of the superintendent in the amount of one hundred thousand dollars ($100,000.00) or twenty-five percent (25%) of projected losses and loss adjustment expenses, whichever is greater, guaranteeing automobile loss payments in New Mexico, on a form prescribed or approved by the superintendent; or

(3) by other security prescribed by the superintendent, provided, however, that the superintendent shall approve the amount and form of the proposed security prior to the applicant being issued a certificate of self-insurance.

B.Excess insurance coverage: The applicant shall obtain excess insurance coverage issued by a carrier acceptable to the superintendent with a limit of not less than one million dollars ($1,000,000.00) per occurrence, and provide photocopies of the declarations page and all endorsements providing or limiting coverage in New Mexico. The superintendent shall determine the maximum amount of retention for each self-insured.

C.Initial reserve: If applicant will be newly self-insured, the applicant shall set aside as an initial reserve an amount not less than seventy-five percent (75%) of the first year's projected losses and loss adjustment expense, as determined by a qualified actuary.

D.Loss reserve fund:

(1) The applicant shall establish and maintain a loss reserve fund sufficient to provide for the prompt payment of existing and projected loss claims which shall be fully covered by liquid assets or other assets agreeable to the superintendent.

(2) The applicant shall prepare and maintain records showing the calculation of the required amount of loss reserve fund. The fund shall cover incurred but not reported (IBNR) claims.

(3) The superintendent may waive the requirement of a loss reserve fund, or accept another method of setting reserves, upon receipt of a written request setting out specific facts supporting the exception to the requirement.

N.M. Admin. Code § 13.12.4.14

4/1/99; Recompiled 11/30/01