N.M. Code R. § 13.18.2.35

Current through Register Vol. 35, No. 11, June 11, 2024

Section 13.18.2.35 - PREMIUM REFUNDS

A. With respect to the policies issued and certificates delivered after the effective date of these rules.

(1) The refund of an unearned amount paid by or charged to a debtor for reducing term credit life insurance, or for credit accident and health insurance, on which charges to the debtor are payable by other than a single sum, and for level term credit life insurance, must be not less than the pro rata gross unearned amount charged.

(2) The refund of an unearned amount paid by or charged to a debtor for uniformly reducing term credit life insurance on which the insurance charges to the debtor are paid in single sum must not be less than the single premium for the scheduled remaining insured amount and the remaining term of coverage using the premium rate schedule applicable at the time the original premium was determined.

(3) The refund of an unearned amount paid by or charged to a debtor for credit life insurance which is neither level nor uniformly reducing, on which the insurance charges to the debtor are paid in a single sum, must be based upon a formula approved by the superintendent of insurance.

(4) The refund of an unearned amount paid by or charged to a debtor for credit accident and health insurance on which the insurance charges to the debtor are paid in a single sum must be not less than the mean of the pro rata gross unearned amount charged and the amount of unearned premium computed by the Rule of 78.

B. Upon termination of insurance prior to maturity, and in accordance with the refund formulas presented in this rule, and in accordance with the insurer's established refund procedures, each insured debtor shall receive from the insurer any refund or unearned identifiable insurance charge either in cash, or by check, electronic funds transfer, or credit to and against the insured debtor's indebtedness (provided that such credit shall be applied only to the indebtedness to which the insurance charges are attributable). Insurers shall be responsible for the establishment of procedures by which refunds or credits are to be made, and shall furnish to the creditors schedules for refunds or credits to be made in the event of termination of insurance. Insurers also shall furnish instructions to creditors with respect to the duties in the making of such refunds or credits.

C. Where insurance charges or premiums were paid by or charged to the debtor and such funds are paid to the insurer, the insurer is responsible for making the refund to the debtor (or to the debtor's estate). Where discharge of the insurer's responsibility for completion of such refunds is delegated by the insurer to the creditor, the actions of such creditor will be deemed by the superintendent of insurance to be acts of the insurer.

D. The requirement for filing refund formulas will be satisfied if the formulas are set forth in the individual policy or group policy filed with the superintendent and not disapproved. If the refund formula, or part of the refund formula is the sum of the digits formula, commonly known as the Rule of 78, it shall be sufficient to so refer to such formula by either description in the policy.

E. A premium refund or credit need not be made if the amount of the refund is three dollars ($3.00) or less.

F. In calculating such refunds, partial months may be treated as though the insurance had terminated on the last day of the premium month in which the insurance is terminated.

G. The insurer shall provide a statement of refund directly to the insured debtor. The statement of refund form shall:

(1) disclose, separately, the amount of credit life premium and the amount of credit disability premium being refunded; and

(2) provide a statement which will inform the insured debtor as to how the refund of premiums was disposed or applied.

N.M. Code R. § 13.18.2.35

7/1/97, 3/1/98, 4/1/98, 6/1/98, 9/1/98; 13.18.2.35 NMAC - Rn, 13 NMAC 18.2.35, 12/31/07