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AN ACT

RELATING TO INSURANCE; AMENDING THE NEW MEXICO INSURANCE CODE

TO MODERNIZE THE REGULATION OF PROPERTY AND CASUALTY RATES

AND FORMS; INCREASING PENALTIES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 59A-17-1 NMSA 1978 (being Laws 1984,

Chapter 127, Section 299) is amended to read:

"59A-17-1. SHORT TITLE.--Chapter 59A, Article 17 NMSA

1978 may be cited as the "Insurance Rate Regulation Law"."

Section 2. Section 59A-17-2 NMSA 1978 (being Laws 1984,

Chapter 127, Section 297) is amended to read:

"59A-17-2. SCOPE OF ARTICLE--EXEMPTIONS.--

A. The Insurance Rate Regulation Law applies to

all kinds and lines of direct insurance written on risks or

operations in this state by any authorized insurer, except:

(1) wet marine and transportation insurance,

as defined in Section 59A-7-5 NMSA 1978;

(2) life insurance;

(3) variable and fixed annuities; and

(4) health insurance.

B. For purposes of the Insurance Rate Regulation

Law, "workers' compensation" insurance includes employer's

liability insurance.

C. The superintendent may by order exempt any

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person or class of persons or any market segment from any or

all of the provisions of the Insurance Rate Regulation Law to

the extent that the superintendent finds the provision or

provisions unnecessary to achieve the purposes of that law."

Section 3. Section 59A-17-4 NMSA 1978 (being Laws 1984,

Chapter 127, Section 300) is amended to read:

"59A-17-4. DEFINITIONS.--As used in the Insurance Rate

Regulation Law:

A. "advisory organization" means an entity,

including its affiliates or subsidiaries, that either has two

or more member insurers or is controlled either directly or

indirectly by two or more insurers, and that assists insurers

in the promulgation of policy forms; in ratemaking

activities, such as the collection, compilation and

furnishing of loss or expense statistics; or in the

recommendation, making or filing of rates, prospective loss

costs, supplementary rate information, policy forms or

endorsements. Two or more insurers having a common ownership

or operating in New Mexico under common management or control

constitute a single insurer for purposes of this definition;

B. "commercial insurance" means any line or kind

of property or casualty insurance not for personal, family or

household needs;

C. "market" means any line or kind of insurance or

any subdivision thereof or any class of risks or combination

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of classes;

D. "residual market mechanism" means an

arrangement, either voluntary or mandated by law, involving

participation by insurers in the equitable apportionment

among them of insurance that may be afforded applicants who

are unable to obtain insurance through ordinary methods;

E. "reverse competition" means a marketplace

situation where the placement of a line, kind or class of

insurance with insurers is determined primarily or

exclusively by parties other than the policyholders;

F. "supplementary rate information" includes any

manual or plan of rates, classification, rating schedule,

minimum premium, policy fee, rating rule, underwriting rule

and any other information needed to determine the applicable

rate in effect or to be in effect; and

G. "supporting information" means:

(1) the experience and judgment of the filer

and the experience or data of other insurers or advisory

organizations relied upon by the filer;

(2) the interpretation of any other data

relied upon by the filer;

(3) descriptions of methods used in making

the rates; and

(4) any other information required by the

superintendent to be filed."

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Section 4. A new section of the Insurance Rate

Regulation Law is enacted to read:

"COMPETITIVE MARKET.--A competitive market is presumed

to exist unless the superintendent, after notice and hearing,

determines that a reasonable degree of competition does not

exist within a market and issues a ruling to that effect.

The ruling shall expire three years after issue unless

rescinded earlier by the superintendent or unless the

superintendent renews the ruling after a hearing and a

finding as to the continued lack of a reasonable degree of

competition. Any ruling that finds that competition does not

exist shall identify the factors that cause the market not to

be competitive and may also include a plan for enhancing

competition. The superintendent shall monitor the degree and

continued existence of competition in New Mexico on an

ongoing basis. An interested party may petition the

superintendent to initiate a hearing to examine whether a

particular market is competitive or whether a particular

market is no longer noncompetitive."

Section 5. A new section of the Insurance Rate

Regulation Law is enacted to read:

"REVERSE COMPETITIVE MARKET.--A reverse competitive

market for a line, kind or class of insurance is presumed to

exist wherever the placement of a line, kind or class of

insurance with insurers is determined primarily or

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exclusively by parties other than the policyholders. The

superintendent may, by notice and hearing, establish rules

for determining the specific lines, kinds or classes of

insurance that, for the purposes of the Insurance Rate

Regulation Law, are reversely competitive."

Section 6. A new section of the Insurance Rate

Regulation Law is enacted to read:

"CONSUMER INFORMATION.--

A. The superintendent shall use, develop or cause

to be developed a consumer information system that will

provide and disseminate price and other relevant information

on a readily available basis to purchasers of homeowners,

private passenger non-fleet automobile or property insurance

for personal, family or household needs as well as for any

other types of personal or commercial insurance designated by

the superintendent. To the extent deemed necessary and

appropriate by the superintendent, insurers, advisory

organizations and other persons or organizations involved in

conducting the business of insurance in New Mexico, to which

this section applies, shall cooperate in the development and

utilization of a consumer information system.

B. An insurer writing homeowners insurance or

private passenger non-fleet automobile insurance in New

Mexico shall, upon renewal or upon the transfer of a policy

to another insurer under the same ownership or management as

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the transferring insurer, provide its policyholders with

written notification of their right to obtain from the

insurer a detailed written explanation of the reasons why

their policy premium has changed or is about to change."

Section 7. A new section of the Insurance Rate

Regulation Law is enacted to read:

"UNDERWRITING GUIDELINES.--

A. The superintendent may direct an insurer

writing homeowners insurance, private passenger non-fleet

automobile insurance or other lines, kinds or classes of

noncommercial insurance in New Mexico to file with the

superintendent underwriting guidelines that determine the

acceptance of applicants and tiering guidelines that

determine the placement of applicants and insureds into

rating tiers, regardless of whether such tiers exist within

the insurer or within a group of insurers under common

ownership or management.

B. The superintendent, after notice and hearing,

may order an insurer to cease using underwriting or tiering

guidelines that are unfairly discriminatory or that fail to

place applicants and insureds into tiers in a clear,

objective, risk-based and mutually exclusive manner.

C. Filings made pursuant to this section shall be

considered confidential trade secrets under the Uniform Trade

Secrets Act."

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Section 8. Section 59A-17-6 NMSA 1978 (being Laws 1984,

Chapter 127, Section 302) is amended to read:

"59A-17-6. RATE STANDARDS.--

A. Rates shall not be excessive, inadequate or

unfairly discriminatory, nor shall an insurer charge any rate

that, if continued, will have or tend to have the effect of

destroying competition or creating a monopoly.

B. In a competitive market, rates are presumed not

to be excessive.

C. In a noncompetitive market, rates are excessive

if they are likely to produce a profit that is unreasonably

high in relation to the riskiness of the line, kind or class

of business, or if expenses are unreasonably high in relation

to the services rendered.

D. Rates are inadequate if they are clearly

insufficient, together with the investment income

attributable to them, to sustain projected losses and

expenses in the line, kind or class of business to which they

apply.

E. There is unfair discrimination if one rate is

unfairly discriminatory in relation to another in the same

line, kind or class if it clearly fails to reflect equitably

the differences in expected losses and expenses. Rates are

not unfairly discriminatory because different premiums result

for policyholders with like loss exposures but different

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expense factors, or like expense factors but different loss

exposures, so long as the rates reflect the differences with

reasonable accuracy. Rates are not unfairly discriminatory

if they are averaged broadly among persons insured under a

group, franchise or blanket policy or a mass marketing plan."

Section 9. Section 59A-17-7 NMSA 1978 (being Laws 1984,

Chapter 127, Section 303) is amended to read:

"59A-17-7. RATING METHODS.--In determining whether

rates comply with the rate standards, the following criteria

shall be applied:

A. due consideration shall be given to past and

prospective loss and expense experience within and without

this state, to catastrophic hazards and contingencies, to

trends within and without this state, to loadings for

leveling premium rates over time or for dividends or savings

to be allowed or returned by insurers to their policyholders,

members or subscribers and to all other relevant factors,

including the judgment of technical personnel;

B. risks may be classified in any reasonable way

for the establishment of rates and minimum premiums, except

that classifications may not be based on race, color, creed

or national origin;

C. the expense provisions included in the rates to

be used by an insurer may reflect the operating methods of

the insurer and, so far as it is credible, its own expense

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experience; and

D. the rates may contain an allowance permitting a

profit that is not unreasonable in relation to the riskiness

of the line, kind or class of business. Profit shall include

investment income attributable to such rates."

Section 10. Section 59A-17-7.1 NMSA 1978 (being Laws

1987, Chapter 80, Section 1) is amended to read:

"59A-17-7.1. MOTOR VEHICLE LIABILITY--NOT-AT-FAULT

ACCIDENTS.--

A. The rates of a motor vehicle liability insurer

shall not provide for an increase in the premium if based

upon an accident in which the insured is not at fault in any

manner as determined by either the accident report or the

insurer. If the insurer determines that its insured is at

fault contrary to the specific finding of an accident report

that the insured is not at fault, the insurer shall reach its

conclusion only after an investigation.

B. A motor vehicle liability insurer shall not

cancel, or use as a basis for nonrenewal, an insurance policy

if such cancellation or nonrenewal is based upon an accident

in which the insured is not at fault in any manner as

determined by either the accident report or the insurer. If

the insurer determines that its insured is at fault contrary

to the specific finding of an accident report that the

insured is not at fault, the insurer shall reach its

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conclusion only after an investigation.

C. As used in this section, "motor vehicle

liability insurer" means an insurer authorized to transact in

this state the business of automobile and motor vehicle

bodily injury, property damage liability and physical damage

insurance.

D. This section shall not apply if other factors

exist, exclusive of the accident in which the insured is not

at fault, that allow for a premium increase, cancellation or

nonrenewal of an insurance policy under the Insurance Code or

rules pursuant to the Insurance Code."

Section 11. Section 59A-17-8 NMSA 1978 (being Laws

1984, Chapter 127, Section 304, as amended) is amended to

read:

"59A-17-8. MAKING OF RATES--WORKERS' COMPENSATION--RATE

CALCULATIONS--RATE CLASSIFICATIONS.--

A. A workers' compensation insurer shall adhere to

a uniform classification system and uniform experience rating

system filed with the superintendent by an advisory

organization designated by the superintendent.

B. A workers' compensation insurer shall report

its experience in accordance with the statistical plans and

other reporting requirements in use by the advisory

organization designated by the superintendent.

C. Workers' compensation premium rates shall be

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equalized and calculated on a basis that does not

discriminate against or penalize employers who pay higher

wages than other employers to workers in the same job

classification. The legislature finds that calculating

workers' compensation premium rates strictly on the basis of

an employer's wages paid discriminates against and penalizes

higher-paying employers. The legislature accordingly directs

that the superintendent shall:

(1) investigate alternatives to the current

method of computing workers' compensation premiums, including

but not limited to:

(a) split classification;

(b) payroll cap;

(d) premium credits;

(2) immediately conduct hearings on the

issue, including consideration of other alternatives; and

(3) adopt regulations, to become effective

no later than April 1, 1991, to equalize the workers'

compensation premium rates employers must pay for workers who

perform the same job.

Nothing in this subsection shall be construed to

prohibit the use of experience rating or scheduled credits.

D. A workers' compensation insurer may develop

subclassifications of the uniform classification system upon

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which rates may be made. Such subclassifications and their

filing shall be subject to all applicable provisions of the

Insurance Rate Regulation Law. Data produced from such

subclassifications shall be reported in accordance with the

statistical plans, uniform classification system and

experience rating system in use by the advisory organization

designated by the superintendent.

E. Classification assignments may be changed

within sixty days of the effective date or renewal date of

the policy, provided the employer is given reasonable prior

notice of the proposed change in order to object and provided

further that the change is based upon an appropriate audit or

investigation. The same provisions apply to initial

classification assignments for new operations added by the

employer so that they may be changed within sixty days of the

date the classification assignments are initially

established. No subsequent changes shall be made unless the

insurer proves, after conducting an audit or investigation,

that:

(1) there has been a substantial change in

the nature of the work performed; or

(2) the initial assignment was in error due

to withheld or inaccurate material information provided by

the employer.

F. A workers' compensation insurer may develop

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rating plans that identify loss experience as a factor to be

used. The rating plans and their filing shall be subject to

all applicable provisions of the Insurance Rate Regulation

Law.

G. The superintendent shall disapprove

subclassifications, rating plans or other variations from

supplementary rate information filed by a workers'

compensation insurer if the insurer fails to demonstrate that

the data produced can be reported consistent with the uniform

classification system and experience rating system and in

such a fashion so as to allow for the application of

experience rating filed by the advisory organization

designated by the superintendent."

Section 12. Section 59A-17-9 NMSA 1978 (being Laws

1984, Chapter 127, Section 305, as amended) is amended to

read:

"59A-17-9. FILING OF RATES.--

A. In regard to filings in competitive markets:

(1) for purposes of this section, reverse

competitive markets and residual markets are not competitive

markets;

(2) for filings by insurers:

(a) an insurer shall file with the

superintendent rates and supplementary rate information prior

to their use in New Mexico;

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(b) rates to be used in a competitive

market for commercial insurance other than workers'

compensation and medical professional liability need not be

filed; and

compensation subclassifications, rating plans, loss costs or

other supplementary rate information that differs from items

filed by the advisory organization designated by the

superintendent shall file with the superintendent relevant

subclassifications, rating plans, rates, loss costs, other

supplementary rate information and supporting information in

accordance with the requirements and provisions of Subsection

B of this section; and

(3) for filings by advisory organizations:

(a) with the exception of workers'

compensation filings, an advisory organization shall file

with the superintendent rates, supplementary rate information

and supporting information prior to their use in New Mexico;

and

(b) regarding workers' compensation

filings, the advisory organization designated by the

superintendent shall file with the superintendent rates,

supplementary rate information and supporting information in

accordance with the requirements and provisions of Subsection

B of this section.

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B. In regard to filings in noncompetitive, reverse

competitive and residual markets:

(1) an insurer or advisory organization

shall file with the superintendent rates, supplementary rate

information and supporting information for noncompetitive,

reverse competitive and residual markets at least thirty days

before the proposed effective date;

(2) the superintendent may give written or

electronic notice, within thirty days of receipt of the

filing, that the superintendent needs additional time, not to

exceed thirty days from the date of such notice, to consider

the filing;

(3) upon written or electronic application

of the insurer or advisory organization, the superintendent

may authorize rates to be effective before the expiration of

the waiting period or an extension of the waiting period;

(4) a filing shall be deemed to meet the

requirements of this section and to become effective unless

disapproved pursuant to Section 59A-17-13 NMSA 1978 by the

superintendent before the expiration of the waiting period or

an extension of the waiting period;

(5) the operation of the deemer provision

shall be suspended during a period of not more than sixty

days upon written or electronic notice to the insurer or

advisory organization that made the filing that additional

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information is needed to complete the review of the filing.

The suspension of the deemer provision may occur only once

for a filing. Failure of the insurer or advisory organization

to provide the requested information within sixty days shall

be deemed a request to withdraw the filing from further

consideration. The superintendent shall either approve or

disapprove the filing within thirty days of receipt of the

requested additional information. Failure of the

superintendent to act within the thirty-day period shall

result in the filing being deemed to meet the requirements of

the Insurance Rate Regulation Law. Neither the insurer nor

the superintendent may waive the timeliness requirements of

the deemer provisions of this section; and

(6) residual market mechanisms or advisory

organizations may file residual market rates.

C. In regard to reference filings; an insurer may

file its rates either by filing its final rates or by filing

a multiplier and, if applicable, an expense constant

adjustment to be applied to prospective loss costs that have

been filed by an advisory organization on behalf of the

insurer as permitted by Section 59A-17-17 NMSA 1978. Such

reference filings shall be made prior to their use or by

other methods the superintendent may allow by rule. An

insurer that chooses to adopt the prospective loss costs or

rates that have been filed by an advisory organization on its

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behalf for a competitive commercial line other than workers'

compensation or medical professional liability need not

file."

Section 13. Section 59A-17-11 NMSA 1978 (being Laws

1984, Chapter 127, Section 307, as amended) is amended to

read:

"59A-17-11. FILINGS OPEN TO INSPECTION.--A filing and

supporting information filed under Sections 59A-17-9 and

59A-17-10 NMSA 1978 shall, as soon as filed, be open to

public inspection at a reasonable time. A copy of a filing

and supporting information may be obtained by a person on

request to the superintendent and payment of a reasonable

charge. If the insurer or advisory organization believes

that information contained in the filing contains material

that it considers to be a trade secret, it shall include that

information in a separate section of the filing and include a

request for the superintendent to consider whether that

information should be kept confidential."

Section 14. Section 59A-17-12 NMSA 1978 (being Laws

1984, Chapter 127, Section 308) is amended to read:

"59A-17-12. INSURER MUST ADHERE TO RATES--CONSENT TO

RATE.--

A. No insurer shall make or issue a contract or

policy of insurance except in accordance with filings or

rates that are lawfully in effect for the insurer as provided

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in the Insurance Rate Regulation Law.

B. Upon written application of the insured stating

the underlying reasons that is filed with and approved by the

superintendent, a rate in excess of or below that otherwise

applicable may be used as to a specific risk."

Section 15. Section 59A-17-13 NMSA 1978 (being Laws

1984, Chapter 127, Section 309, as amended) is amended to

read:

"59A-17-13. GROUNDS AND PROCEDURES FOR DISAPPROVAL OF

RATES.--

A. The superintendent shall disapprove a rate for

use in a competitive market if the superintendent finds that

the rate is inadequate or unfairly discriminatory under the

rate standards set forth in Section 59A-17-6 NMSA 1978. The

superintendent shall disapprove a rate for use in a

noncompetitive, reverse competitive or residual market if the

superintendent finds that the rate is excessive, inadequate

or unfairly discriminatory under the rate standards set forth

in Section 59A-17-6 NMSA 1978.

B. The superintendent may at any time disapprove a

filing submitted under the "file and use" provisions of

Subsection A of Section 59A-17-9 NMSA 1978 after giving

notice of hearing pursuant to the provisions of Subsection A

of Section 59A-4-16 NMSA 1978 to every insurer and advisory

organization that adopted the rate.

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C. The superintendent may disapprove a filing

submitted under the "prior approval" provisions of Subsection

B of Section 59A-17-9 NMSA 1978:

(1) without a hearing prior to the

expiration of the waiting period or an extension of the

waiting period. An insurer or advisory organization whose

rates are disapproved under this subsection may request a

hearing before the superintendent by filing a written request

within thirty days of the date of the disapproval notice; or

(2) at any time after the expiration of the

waiting period or an extension of the waiting period, after

giving notice of hearing pursuant to the provisions of

Subsection A of Section 59A-4-16 NMSA 1978 to every insurer

and advisory organization that adopted the rate.

D. The superintendent's notice or order of

disapproval shall specify the respects in which the rate

fails to meet the standards set forth in Section 59A-17-6

NMSA 1978. The notice or order shall state an effective date

no sooner than thirty business days after the date of the

notice or order when the insurer shall discontinue the use of

the rate. The notice or order shall not affect any policy

made before the effective date of the notice or order."

Section 16. A new section of the Insurance Rate

Regulation Law is enacted to read:

"LARGE COMMERCIAL POLICYHOLDERS.--

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A. The superintendent may, by rule, establish a

class of large commercial policyholders, to be known as

exempt commercial policyholders, that shall be exempt from

the rate and form requirements of Chapter 59A, Articles 17

and 18 NMSA 1978, except for form provisions relating to

workers' compensation mandatory coverage provisions.

B. In the promulgation of this rule, the

superintendent shall consider the following factors in

establishing an exempt commercial policyholder class:

(1) the characteristics of insureds that are

likely to study and understand the details of their business

risks, insurance coverages and exclusions;

(2) the characteristics of insureds that are

likely to avail themselves of regular price comparisons

between competing insurers and are likely to study and

understand the differences and details of pricing proposals

that they receive;

(3) the characteristics of insureds that are

likely to require individually written policies, as

contrasted to insureds that can customarily have their

coverage needs met through a compilation of forms with

applicability to other insureds as well;

(4) the characteristics of insureds for

which filed rates and rating plans are less likely to provide

the lowest premiums otherwise consistent with the provisions

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of the Insurance Rate Regulation Law;

(5) the favorable or adverse experiences

with exemptions from regulatory requirements, especially the

experience in New Mexico;

(6) the extent to which commercial insureds

primarily located in another jurisdiction are subject to

similar exemptions or waivers in that jurisdiction; and

(7) any other relevant factors.

C. The superintendent may, by rule, waive some or

all of the diligent search requirements related to placement

of risks in the approved surplus lines market for some or all

of the exempt commercial policyholders."

Section 17. Section 59A-17-13.1 NMSA 1978 (being Laws

1993, Chapter 103, Section 1) is amended to read:

"59A-17-13.1. DISCOUNTS ON HOMEOWNERS' POLICIES FOR

BURGLARY PROTECTIONS.--Any insurer licensed to write

homeowner's insurance, as defined by the superintendent,

within the state shall provide a minimum premium discount of

ten percent for houses with electronic alarm systems designed

to prevent unauthorized entry into the house. The insurer

shall also provide a minimum premium discount of five percent

for houses with wrought iron bars covering all the doors and

windows of the house. These discounts shall apply to

comprehensive coverage and shall be part of the insurer's

rate filing. Some or all of the premium discounts required

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by this section may be omitted upon demonstration to the

superintendent in an insurer's rate filing that the discounts

are duplicative of other discounts provided by the insurer."

Section 18. Section 59A-17-16 NMSA 1978 (being Laws

1984, Chapter 127, Section 312, as amended) is amended to

read:

"59A-17-16. REQUIREMENT FOR SUPPORTING INFORMATION.--

A. By rule, the superintendent may require the

filing of supporting data as to any or all kinds or lines of

insurance or subdivisions thereof or classes of risks or

combinations thereof as the superintendent deems necessary

for the proper functioning of the rate monitoring and

regulating process. The supporting data shall include:

(1) the experience and judgment of the filer

and, to the extent it wishes or the superintendent requires,

of other insurers or advisory organizations;

(2) its interpretation of any statistical

data relied upon;

(3) descriptions of the actuarial and

statistical methods employed in setting the rates; and

(4) any other relevant matters required by

the superintendent.

B. Whenever a filing is not accompanied by the

information as the superintendent has required under

Subsection A of this section, the superintendent may inform

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the insurer and the filing shall be deemed to be made when

the information is furnished."

Section 19. Section 59A-17-17 NMSA 1978 (being Laws

1984, Chapter 127, Section 313, as amended) is amended to

read:

"59A-17-17. USE OF ADVISORY ORGANIZATION FILINGS.--

A. An insurer may itself establish rates and

supplementary rate information for a market segment based on

the factors set forth in Section 59A-17-7 NMSA 1978 or it may

in its rate filing incorporate by reference loss costs and

other supplementary rate information prepared by an advisory

organization, with modification for its own loss experience

as the credibility of that experience allows.

B. Nothing in the Insurance Rate Regulation Law

shall be construed as requiring an insurer to become a member

of or subscriber to any advisory organization.

C. The superintendent may adopt rules establishing

standards and administrative procedures to carry out the

provisions of this section."

Section 20. Section 59A-17-18 NMSA 1978 (being Laws

1984, Chapter 127, Section 314) is amended to read:

"59A-17-18. ADVISORY ORGANIZATIONS--LICENSE REQUIRED--

OBLIGATION TO PROVIDE SERVICE.--

A. No advisory organization shall provide a

service relating to the statistical collection or the rates

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of an insurance subject to the Insurance Rate Regulation Law,

and no insurer shall use the services of the organization for

such purposes, unless the organization has obtained a license

as required by Section 59A-17-19 NMSA 1978.

B. No advisory organization shall refuse to supply

a service for which it is licensed in this state to an

authorized insurer offering to pay the fair and usual

compensation for the services."

Section 21. Section 59A-17-19 NMSA 1978 (being Laws

1984, Chapter 127, Section 315) is amended to read:

"59A-17-19. ADVISORY ORGANIZATIONS--LICENSING.--

A. A person, whether domiciled within or outside

this state, may apply to the superintendent for license as an

advisory organization for the kinds of insurance or

subdivisions thereof as are specified in its application.

The application shall include:

(1) a copy of its constitution, charter,

articles of organization, agreement, association or

incorporation and a copy of its bylaws, plan of operation and

other rules governing conduct of its business;

(2) a list of its members and subscribers;

(3) the name and address of one or more

residents of this state upon whom notices, process affecting

it or orders of the superintendent may be served;

(4) a statement showing its technical

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qualifications for acting in the capacity for which it seeks

a license;

(5) payment of the license application fee

in an amount specified in Section 59A-6-1 NMSA 1978; and

(6) any other relevant information and

documents that the superintendent may require.

B. Every advisory organization that has applied

for a license shall promptly notify the superintendent in

writing of every material change in the facts or in the

documents on which its application was based, or of change in

name, address of its process agent under Paragraph (3) of

Subsection A of this section. No amendment to a document

referred to in Paragraph (1) of Subsection A of this section

shall be effective until not less than thirty days after the

amendment is filed with the superintendent.

C. If the superintendent finds that the applicant

and the individuals through whom it acts are competent,

trustworthy and technically qualified to provide the services

proposed, and that all requirements of law are met, the

superintendent shall within sixty days after completion of

the application issue a license to the applicant specifying

the authorized activity; otherwise, the superintendent shall

refuse to issue the license and shall promptly notify the

applicant, specifying the grounds for refusal. The

superintendent shall not issue a license if the proposed

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activity would tend to create a monopoly or lessen or destroy

price competition.

D. Licenses issued pursuant to this section shall

remain in effect until the licensee withdraws from the state

or until the license is suspended or revoked, subject to

annual continuation on May 1 of each year by payment of the

continuation fee specified in Section 59A-6-1 NMSA 1978."

Section 22. Section 59A-17-20 NMSA 1978 (being Laws

1984, Chapter 127, Section 316) is amended to read:

"59A-17-20. SUSPENSION, REVOCATION OF LICENSE.--The

superintendent shall promptly revoke the license of an

advisory organization if it ceases business or withdraws from

this state, and the superintendent may suspend or revoke the

license if the superintendent finds after a hearing that:

A. the organization no longer meets the

qualifications for licensing; or

B. the organization has failed to file amended

documents as required under Section 59A-17-19 NMSA 1978, or

has violated or failed to comply with any other material

requirement of the Insurance Rate Regulation Law or any other

law."

Section 23. Section 59A-17-21 NMSA 1978 (being Laws

1984, Chapter 127, Section 317) is amended to read:

"59A-17-21. CONDUCT OF ADVISORY ORGANIZATION.--

A. An advisory organization shall furnish its

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services without discrimination to its members and

subscribers.

B. An advisory organization shall not adopt any

rule, the effect of which would be to prohibit or regulate

payment of dividends, savings or unabsorbed premium deposits

allowed or returned by insurers to their policyholders,

members or subscribers."

Section 24. Section 59A-17-23 NMSA 1978 (being Laws

1984, Chapter 127, Section 319) is amended to read:

"59A-17-23. ADVISORY ORGANIZATIONS--APPEAL BY

MINORITY.-- A member of or subscriber to an advisory

organization may appeal to the superintendent from the action

or decision of the advisory organization in approving or

rejecting a proposed change in or addition to the filings of

the advisory organization and the superintendent shall, after

a hearing, issue an order approving the action or decision of

the advisory organization or directing it to give further

consideration to the proposal; or, if the appeal is from the

action or decision of the advisory organization in rejecting

a proposed addition to its filings, the superintendent may,

in the event the superintendent finds that the action or

decision was unreasonable, issue an order directing the

advisory organization to make an addition to its filings, on

behalf of its members and subscribers, in a manner consistent

with the superintendent's findings, within a reasonable time

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after the issuance of the order."

Section 25. Section 59A-17-25 NMSA 1978 (being Laws

1984, Chapter 127, Section 320, as amended) is amended to

read:

"59A-17-25. JOINT UNDERWRITING, JOINT REINSURANCE POOL

AND RESIDUAL MARKET MECHANISMS.--

A. A group, association or other organization of

insurers that engages in joint underwriting, joint

reinsurance pools or residual market mechanisms through the

group, association or organization or by standing agreement

among the members, shall file with the superintendent:

(1) a copy of its constitution, its articles

of incorporation, agreement or association and its bylaws and

rules governing its activities, all duly certified by the

custodian of the originals;

(2) a list of its members; and

(3) the name and address of a resident of

this state upon whom notices or orders of the superintendent

or process affecting the group, association or organization

may be served.

B. Every such group, association or other

organization shall notify the superintendent promptly in

writing of changes in its constitution, its articles of

incorporation, agreement or association, its bylaws and rules

governing conduct of its business, its list of members or the

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name and address of its process agent referred to in

Paragraph (3) of Subsection A of this section.

C. Every such group, association or organization

shall be subject to regulation as herein provided, subject,

however, as to joint underwriting to applicable provisions of

the Insurance Rate Regulation Law, and as to joint

reinsurance to Sections 59A-17-13, 59A-17-32, 59A-17-34 and

59A-17-35 NMSA 1978.

D. No group, association or organization shall

engage in an unfair or unreasonable practice with respect to

its activities. If, after a hearing, the superintendent

finds that an activity or practice of a group, association or

organization is unfair or unreasonable or otherwise

inconsistent with the provisions of the Insurance Rate

Regulation Law, the superintendent may issue an order

specifying the respects in which the activity or practice is

unfair or unreasonable or otherwise inconsistent with the

provisions of the Insurance Rate Regulation Law and requiring

discontinuance of the activity or practice."

Section 26. Section 59A-17-26 NMSA 1978 (being Laws

1984, Chapter 127, Section 321) is amended to read:

"59A-17-26. BINDING AGREEMENTS BY INSURERS.--No insurer

shall assume an obligation to a person other than a

policyholder or other insurers that with it are under common

control or management or are members of a joint underwriting

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organization subject to the provisions of Section 59A-17-25

NMSA 1978, to use or adhere to certain rates or rules, and no

other person shall impose a penalty or other adverse

consequence for failure of an insurer to adhere to certain

rates or rules except as to action by the superintendent in

enforcement of Section 59A-17-12 NMSA 1978."

Section 27. Section 59A-17-27 NMSA 1978 (being Laws

1984, Chapter 127, Section 322) is amended to read:

"59A-17-27. COOPERATIVE ACTIVITIES AUTHORIZED.--

Cooperation among advisory organizations or among

organizations and insurers in rate making or in other matters

within the scope of the Insurance Rate Regulation Law is

hereby authorized, provided the filings resulting from the

cooperation are subject to provisions of the Insurance Rate

Regulation Law applicable to filings generally. The

superintendent may review the cooperative activities and

practices and if, after a hearing, the superintendent finds

that the activity or practice is unfair or unreasonable or

otherwise inconsistent with the Insurance Rate Regulation

Law, the superintendent may issue an order specifying the

respects in which the activity or practice is unreasonable or

otherwise inconsistent with the Insurance Rate Regulation Law

and requiring discontinuance of the activity or practice."

Section 28. Section 59A-17-28 NMSA 1978 (being Laws

1984, Chapter 127, Section 323) is amended to read:

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"59A-17-28. RECORDING, REPORTING OF EXPERIENCE.--The

superintendent shall promulgate or approve reasonable rules,

including rules providing statistical plans, for use by all

insurers in the recording and reporting of loss and expense

experience, so that the experience of an insurer may be made

available to the superintendent at least annually in such

form and detail as may be necessary to aid the superintendent

in determining whether rating systems comply with applicable

rate standards and requirements. In promulgating the rules

and plans the superintendent shall give due consideration to

the rating systems on file with the superintendent and, so

that the rules and plans may be as uniform as practicable

among the several states, to the rules and form of plans used

for rating systems in other states. No insurer shall be

required to record or report its experience on a

classification basis inconsistent with its own rating system.

The superintendent may designate one or more advisory

organizations to assist the superintendent in gathering that

experience and making compilations of that experience, which

shall be made available to insurers, advisory organizations

and the public."

Section 29. Section 59A-17-29 NMSA 1978 (being Laws

1984, Chapter 127, Section 324) is amended to read:

"59A-17-29. EXCHANGE OF DATA, CONSULTATION

AUTHORIZED.--

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A. The superintendent may promulgate reasonable

rules and plans for interchange among insurers, advisory

organizations and others, of data necessary for application

of rating plans.

B. For furtherance of uniformity in administration

of rate regulatory laws, the superintendent and every insurer

and advisory organization may exchange information and

experience data with insurance regulatory officials, insurers

and advisory organizations in this and other states and may

consult with them as to rate making and the application of

rating systems."

Section 30. Section 59A-17-30 NMSA 1978 (being Laws

1984, Chapter 127, Section 325) is amended to read:

"59A-17-30. INFORMATION TO BE FURNISHED INSUREDS--

HEARINGS AND APPEALS OF INSUREDS.--

A. Every advisory organization and every insurer

that makes its own rates shall, within time frames

promulgated by the superintendent or, in the absence of time

frames, within a reasonable time after receiving written

request, furnish to an insured affected by a rate made by it,

or to the authorized representative of the insured, all

pertinent information as to the rate.

B. Every advisory organization and every insurer

that makes its own rates shall provide within this state

reasonable means whereby a person aggrieved by the

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application of its rating system may be heard, in person or

by the person's authorized representative, on the person's

written request to review the manner in which the rating

system has been applied in connection with the insurance

afforded the person. If the advisory organization or insurer

fails to grant or reject the request within thirty days after

it is made, the applicant may proceed in the same manner as

if the application had been rejected. A party affected by

the action of the rate service organization or the insurer on

the request may, within thirty days after written notice of

the action, appeal to the superintendent, who, after a

hearing, may affirm or reverse the action. If, after the

hearing, it is determined that the rates charged by an

insurer are in excess of the otherwise appropriate rate, the

overcharge shall be refunded to the insured."

Section 31. Section 59A-17-31 NMSA 1978 (being Laws

1984, Chapter 127, Section 326) is amended to read:

"59A-17-31. FALSE OR MISLEADING INFORMATION.--No person

shall willfully withhold information from, or knowingly give

false or misleading information to, the superintendent or

statistical agency designated by the superintendent or

advisory organization or insurer that will affect rates or

rating plans under the Insurance Rate Regulation Law.

Violation of this section shall be subject to the penalties

provided under Section 59A-1-18 NMSA 1978."

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Section 32. Section 59A-17-32 NMSA 1978 (being Laws

1984, Chapter 127, Section 327) is amended to read:

"59A-17-32. EXAMINATION OF ADVISORY AND JOINT

UNDERWRITING ORGANIZATIONS, JOINT REINSURANCE POOLS AND

RESIDUAL MARKET MECHANISMS.--

A. To be informed about any matter related to

enforcement of provisions of the Insurance Code, the

superintendent may examine the affairs and condition of any

advisory or joint underwriting organization, joint

reinsurance pool or residual market mechanism. The

superintendent shall examine every advisory organization and

conduct the examinations at intervals established by rules

promulgated by the superintendent.

B. In lieu of all or part of an examination, or in

addition to an examination, the superintendent may order an

independent audit by certified public accountants or

actuarial evaluation by actuaries approved by the

superintendent, or may accept the report of an audit already

made by certified public accountants or actuarial evaluation

by actuaries approved by the superintendent, or the report of

an examination made by the insurance supervisory official of

another state.

C. Conduct of the examination, examiners and other

personnel used by the superintendent in making the

examinations, payment of costs of the examination by the

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examinee, examination report and review and adoption and the

examination in general shall be subject to the applicable

provisions of Chapter 59A, Article 4 NMSA 1978."

Section 33. Section 59A-17-33 NMSA 1978 (being Laws

1984, Chapter 127, Section 328) is amended to read:

"59A-17-33. ENFORCEMENT--CEASE AND DESIST,

INJUNCTIONS--PENALTIES.--

A. The superintendent shall enforce compliance

with the provisions of the Insurance Rate Regulation Law.

Whenever the superintendent believes that there is a

violation of the Insurance Rate Regulation Law and that such

violation is continuing, the superintendent shall serve upon

the advisory, joint underwriting, joint reinsurance pool,

residual market mechanism or insurer or other person

violating, as the case may be, notice of a hearing before the

superintendent to be held not less than twenty days after

service of the notice, and requiring the organization or

person to show cause why the superintendent should not order

the organization or person to cease and desist from the

violation.

B. The superintendent, through the attorney

general, may maintain an action to enjoin a continuing

violation of the Insurance Rate Regulation Law.

C. After hearing, the superintendent may suspend

the license of an advisory organization or insurer that fails

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to comply with the superintendent's order within the time

limited by the order or an extension of time that the

superintendent may grant. The suspension shall not become

effective until the time prescribed for an appeal has

expired, or if an appeal has been taken, until the order has

been affirmed; otherwise, the superintendent may determine

when the suspension shall become effective, and the

suspension shall remain in effect for the period fixed unless

the superintendent modifies or rescinds the suspension, or

until the order on which suspension is based is modified,

rescinded or reversed.

D. If the superintendent finds that a person has

violated any provision of the Insurance Rate Regulation Law,

the superintendent may impose a penalty of not more than ten

thousand dollars ($10,000) for each violation; but if the

superintendent finds the violation to be willful, the

superintendent may impose a penalty of not more than

twenty-five thousand dollars ($25,000) for each violation.

Such penalties may be in addition to any other penalty

provided by law, and, if not paid voluntarily by the

violator, may be collected through civil action in the

district court of Santa Fe county in the name of the state of

New Mexico on the relation of the insurance board.

E. For the purposes of this section, an insurer

using a rate for which the insurer has failed to file the

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rate, supplementary rate information or supporting

information, if Section 59A-17-9 NMSA 1978 requires the

materials to be filed, shall have committed a separate

violation for each day the failure continues."

Section 34. Section 59A-17-35 NMSA 1978 (being Laws

1984, Chapter 127, Section 330, as amended by Laws 1999,

Chapter 265, Section 67 and also by Laws 1999, Chapter 289,

Section 26) is amended to read:

"59A-17-35. APPEALS FROM COMMISSION.--Any order made by

the commission pursuant to Section 59A-17-34 NMSA 1978 shall

be subject to review by appeal to the district court pursuant

to the provisions of Section 39-3-1.1 NMSA 1978. Upon

institution of the appeal and for good cause shown upon

motion and hearing, the court may, in the following cases,

stay operation of the commission's order:

A. where, pursuant to the Insurance Rate Regulation

Law, an advisory organization has been refused a license or

an insurer has been refused a certificate of authority or had

its license or certificate of authority suspended, it may,

with leave of court, be allowed to continue to engage in

business, subject to the provisions of the Insurance Rate

Regulation Law, pending final disposition of its application

for review; or

B. where any order of the commission shall provide

for, or sustain the superintendent's order for, a change in a

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rate or rating system that results in an increase or decrease

in rates, an insurer affected may, with leave of court

pending final disposition of the proceedings in the district

court, continue to charge rates that existed prior to the

order, on condition that the difference in the rates be

deposited in a special escrow or trust account with a

reputable financial institution by the insurer affected, to

be held in trust by the insurer and to be retained by the

insurer or paid to the holders of policies issued after the

order of the court, as the court may determine."

Section 35. Section 59A-17-36 NMSA 1978 (being Laws

1989, Chapter 145, Section 2) is amended to read:

"59A-17-36. RATE FILING--FAILURE TO SUBMIT DATA--

PENALTY.--

A. An insurer or advisory organization that makes a

rate filing under the Insurance Rate Regulation Law and

fails, without reasonable cause, to provide the data

requested by the superintendent within thirty working days

from the date of the request shall be subject to an

administrative penalty as provided in Section 59A-1-18 NMSA

1978.

B. The superintendent may, for good cause shown,

grant an extension of the thirty-day time period provided for

in Subsection A of this section.

C. The insurer or advisory organization may, within

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ten days after entry of the order, request a hearing before

the superintendent as provided in Section 59A-17-34 NMSA

1978."

Section 36. Section 59A-18-12 NMSA 1978 (being Laws

1984, Chapter 127, Section 342, as amended) is amended to

read:

"59A-18-12. FILING OF FORMS AND CLASSIFICATIONS--REVIEW

OF EFFECT UPON INSURED.--

A. An insurance policy or annuity contract shall

not be delivered or issued for delivery in this state, nor

shall an assumption certificate, endorsement, rider or

application that becomes a part of a policy be used, until a

copy of the form and the classification of risks pertaining

to the policy have been filed with the superintendent. A

filing shall be made at least sixty days before its proposed

effective date. A filing made pursuant to this section shall

not become effective nor shall it be used until approved by

the superintendent pursuant to Section 59A-18-14 NMSA 1978,

at which time it may be used. A filing for any kind of

insurance other than life insurance or health insurance, as

defined in the Insurance Rate Regulation Law, shall be deemed

to meet the requirements of Chapter 59A, Article 18 NMSA 1978

to become effective unless disapproved pursuant to Section

59A-18-14 NMSA 1978 by the superintendent before the

expiration of the waiting period or an extension of the

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waiting period. Provided, that:

(1) this subsection shall not apply as to

policies, contracts, endorsements or riders of unique and

special character not for general use or offering but

designed and used solely as to a particular insured or risk;

(2) if the superintendent has exempted a person

or a class of persons or a market segment from a part or all

of the provisions of the Insurance Rate Regulation Law

pursuant to Subsection C of Section 59A-17-2 NMSA 1978, the

superintendent also may exempt by rule that person, class of

persons or market segment from a part or all of the

provisions of this subsection;

(3) an insurer subject to the Insurance Rate

Regulation Law may authorize an advisory organization to file

policy forms, endorsements and other contract language and

related attachment rules on its behalf. Reference filings

shall be made prior to their use or by other methods the

superintendent may allow by rule; and

(4) the superintendent may, by rule, exempt

various lines and kinds of commercial insurance, as defined

in the Insurance Rate Regulation Law, from some or all of the

requirements of this subsection.

B. A workers' compensation insurance policy

covering a risk arising from the employment of a worker

performing work for an employer in New Mexico when that

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employer is not domiciled in New Mexico shall not be issued

or become effective, nor shall any endorsement or rider

covering such a risk be issued or become effective, until a

copy of the form and the classification of risks pertaining

thereto have been filed with the superintendent.

C. An insured may in writing request the insurer to

review the manner in which its filing has been applied as to

insurance afforded the insured. If the insurer fails to make

a review and grant appropriate relief within thirty days

after the request is received, the insured may file a written

complaint and request for a hearing with the superintendent,

stating grounds relied upon. If the complaint charges a

violation of the Insurance Code and the superintendent finds

that the complaint was made in good faith and that the

insured would be aggrieved if the violation is proved, the

superintendent shall hold a hearing, with notice to the

insured and insurer stating the grounds of complaint. If

upon the hearing the superintendent finds the complaint

justified, the superintendent shall order the insurer to

correct the matter complained of within a reasonable time

specified but not less than twenty days after a copy of the

order was mailed to or served upon the insurer."

Section 37. Section 59A-18-17 NMSA 1978 (being Laws

1984, Chapter 127, Section 346, as amended) is amended to

read:

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"59A-18-17. STANDARD PROVISIONS, IN GENERAL.--

A. Insurance contracts shall contain such standard

or uniform provisions as are required by applicable

provisions of the Insurance Code pertaining to contracts of

particular kinds of insurance.

B. No policy shall contain a provision inconsistent

with or contradictory to a standard or uniform provision used

or required to be used, but the superintendent may approve a

substitute provision that is, in the superintendent's

opinion, not less favorable in any particular to the insured,

owner or beneficiary than the provision otherwise required or

that is designed to comply with Chapter 59A, Article 19 NMSA

1978.

C. Insurance coverage provided in residential

property insurance policies shall provide coverage for the

cost to repair or replace without deduction for depreciation.

If the insured elects to effectuate repairs to the property

by the insured's own self, a reasonable overhead expense

shall be allowed.

D. In lieu of the provisions required by the

Insurance Code for contracts for particular kinds of

insurance, substantially similar provisions required by the

laws of the domicile of a foreign or alien insurer may be

used when approved by the superintendent.

E. A policy issued by a domestic insurer for

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delivery in another jurisdiction may contain any provision

required or permitted under the laws of such jurisdiction.

F. To protect consumers as well as enhance the

value of consumer information systems, the superintendent may

specify minimum coverage provisions that homeowners insurance

policies, private passenger non-fleet automobile insurance

policies or other lines or kinds of insurance policies that

are priced in a consumer information system shall contain,

provided that such minimum coverage provisions are contained

in the majority of policies in force in New Mexico for that

line or kind of insurance. An insurer that does not offer a

policy that contains the minimum coverage provisions

specified by the superintendent for a line or kind of

insurance shall not be included in a consumer information

system for that line or kind of insurance. The

superintendent shall not compel an insurer to offer a policy

containing minimum coverage provisions specified by the

superintendent."

Section 38. REPEAL.--Sections 59A-17-10, 59A-17-14,

59A-17-22, 59A-17-22.1 and 59A-17-24 NMSA 1978 (being Laws

1984, Chapter 127, Sections 306, 310 and 318, Laws 1986,

Chapter 22, Section 100 and Laws 1984, Chapter 127, Section

319a, as amended) are repealed.

Section 39. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2007.