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.]
