SB0663

SENATE BILL 663

52nd legislature - STATE OF NEW MEXICO - first session, 2015

INTRODUCED BY

Carroll H. Leavell

AN ACT

RELATING TO INSURANCE; INCREASING CAPITAL, SURPLUS AND DEPOSIT REQUIREMENTS; CHANGING DEFINITIONS AND CLASSIFICATIONS OF INSURANCE; CHANGING INSURANCE LICENSING PROVISIONS; AMENDING, REPEALING AND ENACTING CERTAIN SECTIONS OF THE NEW MEXICO INSURANCE CODE.

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

SECTION 1. Section 59A-5-16 NMSA 1978 (being Laws 2007, Chapter 282, Section 1) is amended to read:

"59A-5-16. CAPITAL FUNDS, DEPOSITS, REQUIRED FOR CERTIFICATE OF AUTHORITY.--

A. To qualify for certificate of authority to transact any one kind or combination of kinds of insurance in this state, an insurer shall possess:

(1) if a stock insurer, paid-in capital stock and, when first so authorized, surplus all as shown in Schedule I of this section; or

(2) if a mutual, reciprocal or Lloyds insurer, basic capital surplus, including guaranty funds, if any, and additional unassigned surplus when first so authorized, as required under Schedule I of this section.

B. Except that an insurer that on January 1, 1985, having applied for a certificate on or before February 15, 1984, held a valid and subsisting certificate of authority to transact insurance in this state may, if a domestic insurer, continue to be so authorized until December 31, 1995, so long as otherwise qualified therefor and possessing paid-in capital stock, if a stock insurer, or basic capital surplus, if a mutual, reciprocal or Lloyds insurer, not less than that required of the insurer by the laws of this state in force on January 1, 1986; and if a foreign insurer, may so continue to be so authorized, if otherwise qualified therefor, while possessing such capital funds (paid-in capital stock and surplus if a stock insurer, and surplus if a mutual or reciprocal insurer) until December 31, 1990. At the expiration of such period, as applicable, the insurer shall meet the basic capital requirements of this section as set forth in Schedule I of this section in order to maintain its certificate of authority. Upon a change in the control of either a domestic insurer or foreign insurer, the insurer shall, within one year from effective date of such change of control, meet the capital funds requirements of Schedule I of this section as though a newly authorized insurer, but this sentence shall not act to extend the otherwise applicable time period. For the purposes of this subsection, "control" shall have the meaning ascribed in Section 59A-37-2 NMSA 1978.

C. The capital funds required for authority to transact insurance in this state shall be based upon all the kinds of insurance the insurer transacts, wherever transacted or to be transacted.

D. This section shall not apply as to domestic Lloyds plan insurers as identified in Chapter 59A, Article 38 NMSA 1978 except as stated in that article.

E. The capital requirements of this section are set forth in the following schedule:

Schedule I

NEW MEXICO

Minimum Capital, Surplus and Deposit Requirements

Property/Casualty Insurer

Premium Volume: Under $5 $5 to $10 $10 to $25 Over $25

Million Million Million Million

Number of Kinds of Insurance

1 2 [3] Basic Capital500,000600,000[700,000]800,000900,0001,000,000

Additional Surplus 500,000 600,000 [700,000] same as same as same as

Under Under Under

$5 Million $5 Million $5 Million

General Deposit [100,000] 200,000 [200,000] 300,000 [300,000] [400,000] 500,000 [400,000] 500,000 [400,000] 500,000

Special Deposit [100,000] 200,000 [200,000] 300,000 [300,000] same as same as same as

Under Under Under

$5 Million $5 Million $5 Million

Life/Health Insurer

Premium Volume: Under $5 $5 to $10 $10 to $25 Over $25

Million Million Million Million

Basic Capital 600,000 700,000 800,000 900,000

Additional Surplus 400,000 400,000 400,000 400,000

General Deposit [100,000] 200,000 [100,000] 200,000 [100,000] 200,000 [100,000] 200,000

Special Deposit [100,000] 200,000 [100,000] 200,000 [100,000] 200,000 [100,000] 200,000

Notes: Premium Volume means the insurer's worldwide direct premiums earned (if Property/Casualty) or received (if Life/Health) during the previous calendar year.

Kinds of insurance pertains to the general kinds of insurance that property/casualty insurers are authorized to transact. The following groups or single kinds of insurance shall be counted as one kind of insurance when calculating the amount of required Basic Capital, Additional Surplus, General Deposit and Special Deposit:

Casualty [and/or Surety]; Property [and/or Marine & Transportation; Vehicle]; and Title.

When determining Basic Capital and Additional Surplus amounts, the kinds of Insurance shall be based on the insurer's actual or requested transaction authority Worldwide.

When determining General Deposit and Special Deposit amounts, the kinds of Insurance shall be based on the insurer's actual or requested transaction authority in New Mexico.

"Basic Capital" means paid-in capital stock (if a stock insurer) or basic capital surplus (if a mutual, reciprocal or Lloyds insurer).

General Deposit or Special Deposit funds are included within, and are not additional to, required Basic Capital and Additional Surplus.

General Deposit amounts shown above are not applicable to alien insurers."

SECTION 2. Section 59A-7-1 NMSA 1978 (being Laws 1984, Chapter 127, Section 107) is amended to read:

"59A-7-1. DEFINITIONS NOT MUTUALLY EXCLUSIVE--INSURING POWERS--CLASSIFICATION OF INSURERS.--

A. It is intended that certain insurance coverages may come within more than one "kind" of insurance as defined in [this article] Chapter 59A, Article 7 NMSA 1978, and inclusion of such coverage within one definition shall not exclude it as to any other kind of insurance within the definition of which the coverage is likewise reasonably includable.

B. No insurer shall be authorized to transact any kind or kinds of insurance other than those defined in [this article] Chapter 59A, Article 7 NMSA 1978. Insurers shall be classified as to insuring powers according to kind or kinds of insurance for which so authorized.

C. An insurance company may apply to engage in insurance activities in one or more of the following lines of insurance:

(1) life and annuities;

(2) accident and health;

(3) property;

(4) casualty; and

(5) variable life and annuity."

SECTION 3. Section 59A-7-2 NMSA 1978 (being Laws 1984, Chapter 127, Section 108, as amended) is repealed and a new Section 59A-7-2 NMSA 1978 is enacted to read:

"59A-7-2. [NEW MATERIAL] LIFE AND ANNUITY.--Life and annuity includes:

A. fixed annuity;

B. immediate annuity;

C. deferred annuity;

D. equity-indexed annuity;

E. endowment;

F. term life;

G. universal life;

H. whole life;

I. credit life; and

J. similar products relating to life and annuity matters."

SECTION 4. Section 59A-7-3 NMSA 1978 (being Laws 1984, Chapter 127, Section 109, as amended) is repealed and a new Section 59A-7-3 NMSA 1978 is enacted to read:

"59A-7-3. [NEW MATERIAL] ACCIDENT AND HEALTH INSURANCE.--Accident and health includes:

A. accident;

B. accidental death and dismemberment;

C. blanket accident and sickness;

D. credit health;

E. critical illness;

F. dental;

G. disability income;

H. excess or stop loss;

I. home health care;

J. hospital indemnity;

K. long-term care;

L. major medical;

M. medical expense;

N. medicare supplement;

O. prescription drug;

P. sickness;

Q. specified disease;

R. vision; and

S. similar products relating to accident and health matters."

SECTION 5. Section 59A-7-4 NMSA 1978 (being Laws 1984, Chapter 127, Section 110) is repealed and a new Section 59A-7-4 NMSA 1978 is enacted to read:

"59A-7-4. [NEW MATERIAL] PROPERTY.--Property includes:

A. aircraft cargo;

B. aircraft hull;

C. auto commercial physical damage;

D. baggage;

E. builders risk;

F. business owners;

G. cargo;

H. commercial inland marine;

I. commercial multi-peril;

J. commercial property;

K. crop;

L. crop hail;

M. difference in conditions;

N. dwelling;

O. earthquake;

P. event cancellation;

Q. extended coverages;

R. farm and ranch property;

S. fire and allied lines;

T. flood;

U. garage;

V. marine cargo;

W. marine hull;

X. ocean marine;

Y. personal inland marine;

Z. personal property;

AA. pet insurance;

BB. travel coverage; and

CC. similar products relating to property matters."

SECTION 6. Section 59A-7-6 NMSA 1978 (being Laws 1984, Chapter 127, Section 112) is repealed and a new Section 59A-7-6 NMSA 1978 is enacted to read:

"59A-7-6. [NEW MATERIAL] CASUALTY.--Casualty includes:

A. aircraft liability;

B. auto commercial liability;

C. auto private passenger liability;

D. auto warranty contract;

E. boiler and machinery;

F. burglary and theft;

G. collateral protection;

H. commercial excess/umbrella liability;

I. commercial general liability;

J. congenital defects;

K. contractual liability;

L. credit;

M. credit property;

N. creditor-placed dual/single interest;

O. crime;

P. directors and officers liability;

Q. employers liability;

R. elevator;

S. entertainment;

T. errors and omissions;

U. failure to file instrument;

V. farm and ranch liability;

W. fidelity bonds;

X. fidelity insurance;

Y. financial guaranty;

Z. gap;

AA. garage liability;

BB. glass;

CC. involuntary unemployment;

DD. kidnap and ransom;

EE. leakage and fire-extinguishing equipment;

FF. legal liability;

GG. liquor liability;

HH. livestock;

II. mechanical breakdown;

JJ. medical malpractice;

KK. mobile homes under transport;

LL. money and securities;

MM. motor club service contracts;

NN. mortgage guaranty;

OO. personal excess/umbrella liability;

PP. personal effects;

QQ. personal liability;

RR. personal property floater;

SS. pollution liability;

TT. premises and operations;

UU. product liability;

VV. products and completed operations;

WW. professional liability;

XX. owners and contractors;

YY. stop loss liability;

ZZ. surety;

AAA. title;

BBB. vandalism and malicious mischief;

CCC. workers' compensation; and

DDD. similar products relating to casualty matters."

SECTION 7. Section 59A-7-7 NMSA 1978 (being Laws 1984, Chapter 127, Section 113) is repealed and a new Section 59A-7-7 NMSA 1978 is enacted to read:

"59A-7-7. [NEW MATERIAL] VARIABLE LIFE AND ANNUITY.--Variable life and annuity includes:

A. variable deferred annuity;

B. variable immediate annuity;

C. variable life; and

D. similar products relating to variable life and annuity matters."

SECTION 8. Section 59A-11-1 NMSA 1978 (being Laws 1984, Chapter 127, Section 180) is amended to read:

"59A-11-1. SCOPE OF ARTICLE.--

A. [This article] Chapter 59A, Article 11 NMSA 1978 provides [as to] procedures [in] for licensing insurance [agents, solicitors, brokers] producers, surplus line brokers and adjusters; agents of prepaid dental plans; agents [and solicitors] of nonprofit health care plans; bail bondsmen [and solicitors]; registration of motor club representatives; licensing of insurance securities salespersons; and applications for, qualifying examinations, and issuance of, duration, continuation and termination of all such licenses and registrations. For the purposes of [this] that article, all such licenses and registrations are referred to as "licenses".

B. [This article] Chapter 59A, Article 11 NMSA 1978 shall also apply [as] to all additional categories of persons operating in insurance fields and related fields as administrators, consultants, appraisers, or in whatever similar capacity, under laws now or hereafter enacted, the licensing and supervision of whom is delegated [by such laws] to the superintendent.

C. Definitions, requirement of licenses, qualifications for license and other requirements and provisions as to [such agents, solicitors, brokers] insurance producers, adjusters, bail bondsmen [and solicitors], motor club representatives, and other categories referred to in Subsection B [above] of this section, shall be as provided in subsequent articles in the Insurance Code now or hereafter respectively dealing with such categories; provided that "insurance producer" means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance."

SECTION 9. Section 59A-11-2 NMSA 1978 (being Laws 1984, Chapter 127, Section 181, as amended) is repealed and a new Section 59A-11-2 NMSA 1978 is enacted to read:

"59A-11-2. [NEW MATERIAL] APPLICATION FOR LICENSE--INDIVIDUAL.--

A. A person applying for a resident insurance producer license shall apply to the superintendent on the uniform application and declare under penalty of refusal, suspension or revocation of the license that the statements made in the application are true, correct and complete to the best of the applicant's knowledge and belief.

B. Before approving the application, the superintendent shall:

(1) confirm that the applicant:

(a) is at least eighteen years of age;

(b) has not committed any act that is a ground for denial, suspension or revocation under the Insurance Code;

(d) has successfully passed the examinations for the lines of authority for which the application is made;

(2) review the applicant's answers to the standard background questions on the uniform application;

(3) obtain the applicant's fingerprints; and

(4) conduct state and federal criminal background checks on the applicant.

C. The superintendent may require any documents reasonably necessary to verify the information contained in an application. The superintendent may obtain fingerprints from licensed resident insurance producers from whom fingerprints were not obtained at the time of application or when adding additional lines of authority to their license.

D. Each insurer that sells, solicits or negotiates any form of limited line credit insurance shall provide to each individual whose duties will include selling, soliciting or negotiating limited line credit insurance a program of instruction approved by the superintendent."

SECTION 10. Section 59A-11-3 NMSA 1978 (being Laws 1984, Chapter 127, Section 182) is repealed and a new Section 59A-11-3 NMSA 1978 is enacted to read:

"59A-11-3. [NEW MATERIAL] APPLICATION BY PARTNERSHIP OR CORPORATION.--

A. A business entity acting as an insurance producer is required to obtain an insurance producer license. Application shall be made using the uniform business entity

application. Before approving the application, the superintendent shall confirm that:

(1) the business entity has paid the fees set forth in Section 59A-6-1 NMSA 1978;

(2) the business entity has designated a licensed insurance producer responsible for the business entity's compliance with the insurance laws of this state; and

(3) a licensee who is to exercise license powers shall be affiliated by submitting an application. The application must be submitted with payment as required in Section 59A-6-1 NMSA 1978.

B. The application shall be signed on behalf of the applicant by an authorized partner or corporate officer, and under oath if required by the superintendent.

C. The application form may require the following information about the applicant:

(1) if the applicant is a partnership, the name, residence, proof of identity, business record and reputation, business experience of each partner and any other information required by the superintendent;

(2) if the applicant is a corporation, the name, residence, proof of identity, business record and reputation, business experience of each officer, member of the board of directors, controlling stockholder and any other information required by the superintendent;

(3) evidence satisfactory to the superintendent that transaction of business proposed to be transacted under the license applied for is within the partnership agreement, if the applicant is a partnership, or within the corporate powers, if the applicant is a corporation; and

(4) such further information concerning the applicant, appointment of the applicant, partners, corporate officers, directors and stockholders, as the superintendent may require.

D. If the applicant is a partnership, each individual who is not a general partner and who is to exercise license powers, and if the applicant is a corporation, each individual, whether or not an officer, director, stockholder or in other relationship to the corporation, who is to exercise the license powers, shall file an application as though for an individual license for the same kind of business as that applied for by the partnership or corporation.

E. The application shall be accompanied by payment of the application filing fee, fee for any examination required under the Insurance Code to be taken and passed prior to licensing and by any bond otherwise required for the license applied for. A license application filing fee is required for each individual who is to exercise the license powers of a corporation, or license powers of a partnership if not a general partner therein.

F. The business entity shall comply with all other licensing and registration requirements to do business in the state."

SECTION 11. Section 59A-11-4 NMSA 1978 (being Laws 1984, Chapter 127, Section 183) is repealed and a new Section 59A-11-4 NMSA 1978 is enacted to read:

"59A-11-4. [NEW MATERIAL] TEMPORARY LICENSES.--The superintendent may issue a temporary insurance producer license for a period not to exceed one hundred eighty days without requiring an examination if the superintendent deems that the temporary license is necessary for the servicing of an insurance business in accordance with the Insurance Code."

SECTION 12. Section 59A-11-6 NMSA 1978 (being Laws 1984, Chapter 127, Section 185) is repealed and a new Section 59A-11-6 NMSA 1978 is enacted to read:

"59A-11-6. [NEW MATERIAL] EXAMINATION OF APPLICANT.--

A. A resident individual applying for an insurance producer license shall pass a written examination unless exempt pursuant to Section 59A-12-8 NMSA 1978. The examination shall test the knowledge of the individual concerning the lines of authority for which application is made, the duties and responsibilities of an insurance producer and the insurance laws and rules of this state. Examinations required by this section shall be developed and conducted under rules promulgated by the superintendent.

B. The superintendent may make arrangements, including contracting with an outside testing service, for administering examinations and collecting the non-refundable fee set forth in Section 59A-6-1 NMSA 1978.

C. Each individual applying for an examination shall remit a non-refundable fee as prescribed by the superintendent as set forth in Section 59A-6-1 NMSA 1978.

D. An individual who fails to appear for the examination as scheduled or fails to pass the examination shall reapply for an examination and remit all required fees and forms before being rescheduled for another examination.

E. Where an applicant for a license is required to take and pass an examination prior to issuance of a license, such examinations shall be subject to the following provisions:

(1) the examination shall be made available to applicants for particular licenses at least once each month at places within New Mexico designated by the superintendent;

(2) the examination shall require answers of the applicant to questions asked. If the applicant requests, the examination shall be administered in the Spanish language;

(3) all examinations shall be conducted and graded in a fair and impartial manner, and without unfair discrimination as between individuals examined;

(4) a grade of not less than seventy is a passing grade;

(5) any individual who has failed to pass an examination may take another such examination at any subsequent scheduled examination date; except, that an individual who has taken and failed to pass four such examinations shall not be entitled to take another such examination until after six months from the date of the last examination failed;

(6) an examination application fee, in the amount stated in Section 59A-6-1 NMSA 1978, or as provided for under Paragraph (8) of this subsection, shall be paid for each examination;

(7) the superintendent may cause to be prepared and made available to applicants a manual showing general type and scope of examination for any license for which examination is required; and

(8) the superintendent may contract with an independent agency to prepare, conduct and grade examinations for a reasonable fee."

SECTION 13. Section 59A-11-8 NMSA 1978 (being Laws 1984, Chapter 127, Section 187, as amended) is repealed and a new Section 59A-11-8 NMSA 1978 is enacted to read:

"59A-11-8. [NEW MATERIAL] DENIAL OF APPLICATION OR RENEWAL OF LICENSE.--

A. If the superintendent denies an application for initial issuance or renewal of a license, the superintendent shall notify the applicant in writing and advise the applicant of the reason for the denial.

B. Within thirty days of the date of issuance of the denial of an application for initial issuance or renewal of a license, the applicant may request in writing a hearing on the denial. The hearing shall be held within thirty days and shall be held pursuant to requirements of the Insurance Code.

C. The license of a business entity may be suspended, revoked or refused if the superintendent finds after hearing that an individual licensee's violation was known or should have been known by one or more of the partners, officers or managers acting on behalf of the partnership or corporation and the violation was neither reported to the superintendent nor corrective action taken."

SECTION 14. Section 59A-11-9 NMSA 1978 (being Laws 1984, Chapter 127, Section 188) is repealed and a new Section 59A-11-9 NMSA 1978 is enacted to read:

"59A-11-9. [NEW MATERIAL] LICENSE CONTENTS--NUMBER REQUIRED.--

A. The license shall contain the licensee's name, address, personal identification number, the date of issuance, the lines of authority, the expiration date and any other information the superintendent requires.

B. The license of an insurance producer shall not specify the name of any particular insurer or underwriter's department by which the licensee is appointed, and the licensee may represent as agent under the one license as many insurers or underwriters' departments as may be appointed as agent under the Insurance Code, subject to Section 59A-11-13 NMSA 1978 as to certain life or health insurance agents having unsettled debit balances with an insurer previously represented.

C. The license of a partnership or corporation shall also record the name of each individual authorized to exercise the license powers. The superintendent may require the names of each individual to be registered with the insurance department."

SECTION 15. Section 59A-11-10 NMSA 1978 (being Laws 1984, Chapter 127, Section 189, as amended) is repealed and a new Section 59A-11-10 NMSA 1978 is enacted to read:

"59A-11-10. [NEW MATERIAL] CONTINUATION--EXPIRATION OF LICENSE.--

A. The term of the license shall be perpetual contingent upon payment of fee and completion of resident continuing education requirements.

B. Individual licenses shall renew and continue on a biennial basis on the last day of the licensee's month of birth. Business entity licenses and affiliations shall continue on a date certain, and for vending machines, request shall be made and signed by the supervisory agent thereof.

C. Any license referred to in this section that is not so continued shall be deemed to have terminated as of midnight on the last day of the licensee's month of birth; except that the superintendent may effectuate a request for continuation received within thirty days thereafter if accompanied by an annual continuation fee equal to one hundred fifty percent of the continuation fee otherwise required.

D. If the superintendent has reason to believe that the competence of any licensee, or individual designated to exercise license powers, is questionable, the superintendent may require as a condition of continuation of the license or license powers that the licensee or individual take and pass a written examination as required under the Insurance Code of new individual applicants for the same license.

E. This section shall not apply to temporary licenses, which shall be for such duration and subject to extension as provided in the respective sections of the Insurance Code by which such licenses are authorized.

F. All licenses and appointments of an insurer or other principal that ceases to be authorized to transact business in this state shall automatically terminate without notice as of date of such cessation.

G. A license shall terminate upon death of the licensee, if an individual, or dissolution of a corporation or change in partnership members of a partnership; provided that, in the case of a partnership, the license may be continued for a reasonable period while application for new license is being made or pending, as provided by rule."

SECTION 16. Section 59A-11-12 NMSA 1978 (being Laws 1984, Chapter 127, Section 191) is repealed and a new Section 59A-11-12 NMSA 1978 is enacted to read:

"59A-11-12. [NEW MATERIAL] APPOINTMENT OF INSURANCE PRODUCER--CONTINUATION.--

A. An insurance producer shall not act as an agent of an insurer unless the insurance producer becomes an appointed insurance producer of that insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed.

B. To appoint an insurance producer as its agent, the appointing insurer shall file in a format approved by the superintendent a notice of appointment within fifteen days from the date the agency contract is executed or the first insurance application is submitted. An insurer may also elect to appoint an insurance producer to all or some insurers within the insurer's holding company system or group by the filing of a single appointment request.

C. Upon receipt of the notice of appointment, the superintendent shall verify within a reasonable time not to exceed thirty days that the insurance producer is eligible for appointment. If the insurance producer is determined to be ineligible for appointment, the superintendent shall notify the insurer within five days of its determination.

D. An insurer shall pay an appointment fee in the amount and method of payment set forth in Section 59A-6-1 NMSA 1978 for each insurance producer appointed by the insurer.

E. An insurer shall remit in a manner prescribed by the superintendent a renewal appointment fee in the amount set forth in Section 59A-6-1 NMSA 1978.

F. Appointments shall be continuous subject to payment of any applicable fees. Fees must be calculated as of a date certain."

SECTION 17. Section 59A-11-13 NMSA 1978 (being Laws 1984, Chapter 127, Section 192, as amended) is repealed and a new Section 59A-11-13 NMSA 1978 is enacted to read:

"59A-11-13. [NEW MATERIAL] INSURANCE PRODUCERS' RIGHTS--CANCELLATION.--

A. An insurer or authorized representative of the insurer that terminates the appointment, employment contract or other insurance business relationship with an insurance producer shall notify the superintendent within thirty days following the effective date of the termination in the format prescribed by the superintendent, if the reason for termination is one of the reasons set forth in Section 59A-11-14 NMSA 1978 or the insurer has knowledge that the insurance producer was found by a court, government body or self-regulatory organization authorized by law to have engaged in any of the activities in Section 59A-11-14 NMSA 1978. Upon the written request of the superintendent, the insurer shall provide additional information, documents, records or other data pertaining to the termination or activity of the insurance producer.

B. An insurer or authorized representative of the insurer that terminates the appointment, employment or contract with an insurance producer for any reason not set forth in Section 59A-11-14 NMSA 1978 shall notify the superintendent within thirty days following the effective date of the termination, in the format prescribed by the superintendent. Upon written request of the superintendent, the insurer shall provide additional information, documents, records or other data pertaining to the termination.

C. The insurer or the authorized representative of the insurer shall promptly notify the superintendent in the format prescribed by the superintendent if, upon further review or investigation, the insurer discovers additional information that would have been reportable to the superintendent in accordance with Subsection A of this section had the insurer then known of its existence.

D. The insurer shall provide a copy of the notification of termination or cancellation to the insurance producer.

(1) Within fifteen days after making the notification required by Subsections A, B and C of this section, the insurer shall mail a copy of the notification to the insurance producer at the insurance producer's last known address. If the insurance producer is terminated for any of the reasons listed in Section 59A-11-14 NMSA 1978, the insurer shall provide a copy of the notification to the insurance producer at the insurance producer's last known address by certified mail, return receipt requested, postage prepaid or by overnight delivery using a nationally recognized carrier.

(2) Within thirty days after the insurance producer has received the original or additional notification of termination, the insurance producer may file written comments concerning the substance of the notification with the superintendent. The insurance producer shall, by the same means, simultaneously send a copy of the comments to the reporting insurer, and the comments shall become a part of the superintendent's file and accompany every copy of a report distributed or disclosed for any reason about the insurance producer as permitted under Subsection E of this section.

E. The documents and materials related to termination or cancellation of an insurance producer's appointment shall be deemed confidential as follows:

(1) any documents, materials or other information in the control or possession of the insurance department that is furnished by an insurer, insurance producer or an employee or agent thereof acting on behalf of the insurer or insurance producer, or obtained by the superintendent in an investigation pursuant to this section, shall be confidential and shall not be subject to the Inspection of Public Records Act. Nothing in this section shall be construed as a grant of privilege or confidentiality or a bar to production of that information by an insurer or the insurance producer in a civil suit, whether or not the superintendent is a party; provided that the superintendent may use the documents, materials or other information in a regulatory or legal action brought in the course of the superintendent's official duties. The documents, materials or other information shall not be made public by the superintendent or any other person, except to insurance departments of other states, unless the superintendent determines that the interests of the policyholders, shareholders or the public will be served by the publication of them, in which case the superintendent may publish all or any part of them in the manner the superintendent deems appropriate;

(2) in order to assist in the performance of the superintendent's duties, the superintendent may:

(a) share documents, materials or other information, including the confidential documents, materials or information subject to this section, with other state, federal and international regulatory agencies, with the national association of insurance commissioners, its affiliates or subsidiaries and with state, federal and international law enforcement authorities; provided that the recipient agrees to maintain the confidentiality of the document, material or other information;

(b) receive documents, materials or information, including otherwise confidential documents, materials or information from the national association of insurance commissioners, its affiliates or subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and

(c) enter into agreements governing sharing and use of information consistent with this subsection. The language in this subsection assumes the recipient has the authority to protect the applicable confidentiality or privilege, but does not address the verification of that authority that would presumably occur in the context of a broader information-sharing agreement;

(3) no waiver of any privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the superintendent under this section or as a result of sharing as authorized in this section; and

(4) nothing in this act shall prohibit the superintendent from releasing final adjudicated actions, including for-cause terminations that are open to public inspection pursuant to the Inspection of Public Records Act, to a database or other clearinghouse service maintained by the national association of insurance commissioners, its affiliates or subsidiaries of the national association of insurance commissioners.

F. An insurer, the authorized representative of the insurer or insurance producer that fails to report as required under the provisions of this section or that is found by a court of competent jurisdiction to have reported with actual malice may, after notice and hearing, have its license or certificate of authority suspended or revoked and may be fined in accordance with the Insurance Code."

SECTION 18. Section 59A-11-14 NMSA 1978 (being Laws 1984, Chapter 127, Section 193, as amended) is repealed and a new Section 59A-11-14 NMSA 1978 is enacted to read:

"59A-11-14. [NEW MATERIAL] SUSPENSION--REVOCATION--

REFUSAL TO CONTINUE LICENSE--GROUNDS.--

A. The superintendent may place on probation, suspend, revoke or refuse to issue or renew an insurance producer's license or may levy a civil penalty in accordance with Section 59A-1-18 or 59A-2-9 NMSA 1978 or any combination of actions, for any of the following causes:

(1) providing incorrect, misleading, incomplete or materially untrue information in the license application;

(2) violating any insurance law or violating any regulation, subpoena or order of the superintendent or of another state's superintendent or commissioner of insurance;

(3) obtaining or attempting to obtain a license through misrepresentation or fraud;

(4) improperly withholding, misappropriating or converting any money or properties received in the course of doing insurance business;

(5) intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance;

(6) having been convicted of a felony;

(7) having admitted or been found to have committed any insurance unfair trade practice or fraud;

(8) using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere;

(9) having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory;

(10) forging another's name to an application for insurance or to any document related to an insurance transaction;

(11) improperly using notes or any other reference material to complete an examination for an insurance license;

(12) knowingly accepting insurance business from an individual who is not licensed;

(13) failing to comply with an administrative or court order imposing a child support obligation; or

(14) failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.

B. If the superintendent denies an initial or renewal application for a license, the superintendent shall notify the applicant in writing and advise the applicant of the reason for the denial or non-renewal of the application. Within thirty days of the date of issuance of the denial of application for initial issuance or renewal of a license, the applicant may request in writing a hearing on the denial. The hearing shall be held within ninety days and shall be held otherwise pursuant to Section 59A-4-15 NMSA 1978.

C. The license of a business entity may be suspended, revoked or refused if the superintendent finds, after hearing, that an individual licensee's violation was known or should have been known by one or more of the partners, officers or managers acting on behalf of the partnership or corporation and the violation was neither reported to the superintendent nor corrective action taken.

D. In addition to or in lieu of any applicable denial, suspension or revocation of a license, a person may, after hearing, be subject to an administrative fine according to Section 59A-1-18 NMSA 1978.

E. The superintendent shall retain the authority to enforce the provisions of and impose any penalty or remedy authorized by this section against any person who is under investigation for or charged with a violation of this section even if the person's license or registration has been surrendered or has lapsed by operation of law."

SECTION 19. Section 59A-11-15 NMSA 1978 (being Laws 1984, Chapter 127, Section 194) is repealed and a new Section 59A-11-15 NMSA 1978 is enacted to read:

"59A-11-15. [NEW MATERIAL] PROCEDURE FOR SUSPENSION, REVOCATION OR REFUSAL TO CONTINUE LICENSE.--

A. Within fifteen days after making the notification as required, the insurer shall mail a copy of the notification to the insurance producer at the insurance producer's last known address. If the insurance producer is terminated for cause for any of the reasons listed in Section 59A-11-14 NMSA 1978, the insurer shall provide a copy of the notification to the insurance producer at the insurance producer's last known address by certified mail, return receipt requested, postage prepaid or by overnight delivery using a nationally recognized carrier.

B. Within thirty days after the insurance producer has received the original or additional notification, the insurance producer may file written comments concerning the substance of the notification with the superintendent. The insurance producer shall, by the same means, simultaneously send a copy of the comments to the reporting insurer, and the comments shall become a part of the superintendent's file and accompany every copy of a report distributed or disclosed for any reason about the insurance producer permitted under Section 59A-11-13 NMSA 1978.

C. Denial or revocation and imposition of civil penalties at a minimum shall be as established in Section 59A-11-14 NMSA 1978. The state shall participate in the national association of insurance commissioners attachment warehouse personal information capture system alerts or another appropriate mechanism to monitor actions against existing licensees and take necessary action, when warranted based on the information obtained through such notifications."

SECTION 20. A new section of Chapter 59A, Article 11 NMSA 1978 is enacted to read:

"[NEW MATERIAL] DUTY TO REPORT.--

A. A licensee shall report to the superintendent any administrative action taken against the licensee in another jurisdiction or by another governmental agency in this state within thirty days of the final disposition of the matter. The report shall include a copy of the order, consent to order or other relevant legal documents.

B. Within thirty days of the initial pretrial hearing date, a licensee shall report to the superintendent any criminal prosecution of the licensee taken in any jurisdiction. The report shall include a copy of the initial complaint filed, the order resulting from the hearing and any other relevant legal documents."

SECTION 21. A new section of Chapter 59A, Article 11 NMSA 1978 is enacted to read:

"[NEW MATERIAL] RECIPROCITY.--

A. The superintendent shall waive any requirements for a nonresident license applicant with a valid license from the applicant's home state, except the requirements imposed by Section 59A-11-8 NMSA 1978, if the applicant's home state awards nonresident licenses to residents of this state on the same basis.

B. A nonresident licensee's satisfaction of the nonresident licensee's home state's continuing education requirements shall constitute satisfaction of the continuing education requirements if the nonresident licensee's home state recognizes the satisfaction of its continuing education requirements imposed upon licensees from New Mexico on the same basis."

SECTION 22. A new section of Chapter 59A, Article 11 NMSA 1978 is enacted to read:

"[NEW MATERIAL] NONRESIDENT LICENSE--REQUIREMENTS.--

A. Unless denied a license pursuant to Section 59A-11-8 NMSA 1978, a nonresident person shall receive a nonresident license if:

(1) the person is currently licensed as a resident in good standing in the person's home state;

(2) the person has submitted the proper request for licensure and has paid the fees required by Section 59A-6-1 NMSA 1978;

(3) the person has submitted or transmitted to the superintendent the application for licensure that the person submitted to the person's home state or a completed uniform application; and

(4) the person's home state awards nonresident licenses to residents of this state on the same basis.

B. The superintendent may verify the applicant's licensing status through the insurance producer database maintained by the national association of insurance commissioners, its affiliates or subsidiaries.

C. A nonresident licensee who moves from one state to another state or a resident licensee who moves from this state to another state shall file a change of address and provide certification from the new resident state within thirty days of the change of legal residence.

D. Notwithstanding any other provision of this section, a person licensed as a surplus lines producer in the person's home state shall receive a nonresident surplus lines producer license pursuant to Subsection A of this section. Except as provided in Subsection A of this section, nothing in this section otherwise amends or supersedes any provision of Chapter 59A, Article 14 NMSA 1978.

E. Notwithstanding any other provision of this section, a person licensed as a limited lines credit insurance or other type of limited lines producer in the person's home state shall receive a nonresident limited lines producer license, pursuant to Subsection A of this section, granting the same scope of authority as granted under the license issued by the producer's home state. For the purposes of this subsection, limited line insurance is any authority granted by the home state that restricts the authority of the license to less than the total authority prescribed in the associated major lines pursuant to Chapter 59A, Article 7 NMSA 1978."

SECTION 23. Section 59A-12-1 NMSA 1978 (being Laws 1984, Chapter 127, Section 201) is repealed and a new Section 59A-12-1 NMSA 1978 is enacted to read:

"59A-12-1. [NEW MATERIAL] PURPOSE AND SCOPE.--Chapter 59A, Article 12 NMSA 1978 governs the qualifications and procedures for the licensing of insurance producers. Chapter 59A, Article 12 NMSA 1978 does not apply to surplus lines brokers licensed pursuant to Chapter 59A, Article 14 NMSA 1978, except as provided in Sections 21 and 22 of this 2015 act."

SECTION 24. Section 59A-12-2 NMSA 1978 (being Laws 1984, Chapter 127, Section 202) is repealed and a new Section 59A-12-2 NMSA 1978 is enacted to read:

"59A-12-2. [NEW MATERIAL] DEFINITIONS.--As used in Chapter 59A, Article 12 NMSA 1978:

A. "affiliate" means a person that controls, is controlled by or is under common control with the insurance producer;

B. "business entity" means a corporation, association, partnership, limited liability company, limited liability partnership or other legal entity;

C. "home state" means the District of Columbia and any state or territory of the United States in which an insurance producer maintains the insurance producer's principal place of residence or principal place of business and is licensed to act as an insurance producer;

D. "insurance" means any of the lines of authority in Chapter 59A, Article 7 NMSA 1978;

E. "insurance producer" means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance;

F. "insurer" means every person engaged as principal and as indemnitor, surety or contractor in the business of entering into contracts of insurance;

G. "license" means a document issued by the superintendent authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent or inherent, in the holder to represent or commit an insurance carrier;

H. "limited line credit insurance" includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection insurance and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation;

I. "limited line credit insurance producer" means a person who sells, solicits or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group or individual policy;

J. "limited lines insurance" means those lines of insurance referred to in Section 59A-12-20 NMSA 1978 or any other line of insurance that the superintendent deems necessary to recognize for the purposes of complying with Section 22 of this 2015 act;

K. "limited lines producer" means a person authorized by the superintendent to sell, solicit or negotiate limited lines insurance;

L. "negotiate" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms or conditions of the contract; provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers;

M. "sell" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company;

N. "solicit" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company;

O. "terminate" means the cancellation of the relationship between an insurance producer and the insurer or the termination of an insurance producer's authority to transact insurance;

P. "uniform application" means the current version of the national association of insurance commissioners uniform application for resident and nonresident insurance producer licensing; and

Q. "uniform business entity application" means the current version of the national association of insurance commissioners uniform business entity application for resident and nonresident business entities."

SECTION 25. Section 59A-12-3 NMSA 1978 (being Laws 1984, Chapter 127, Section 203) is repealed and a new Section 59A-12-3 NMSA 1978 is enacted to read:

"59A-12-3. [NEW MATERIAL] LICENSE REQUIRED.--A person shall not sell, solicit or negotiate insurance in this state for any class or classes of insurance unless the person is licensed for that line of authority in accordance with the Insurance Code."

SECTION 26. Section 59A-12-4 NMSA 1978 (being Laws 1984, Chapter 127, Section 205, as amended by Laws 1999, Chapter 272, Section 5 and also by Laws 1999, Chapter 289, Section 6) is repealed and a new Section 59A-12-4 NMSA 1978 is enacted to read:

"59A-12-4. [NEW MATERIAL] EXCEPTIONS TO LICENSING.--

A. Nothing in Chapter 59A, Article 12 NMSA 1978 shall be construed to require an insurer to obtain an insurance producer license. In this section, the term "insurer" does not include an insurer's officers, directors, employees, subsidiaries or affiliates.

B. A license as an insurance producer shall not be required of the following:

(1) an officer, director or employee of an insurer or of an insurance producer; provided that the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state and:

(a) the officer's, director's or employee's activities are executive, administrative, managerial, clerical or a combination of these, and are only indirectly related to the sale, solicitation or negotiation of insurance;

(b) the officer's, director's or employee's function relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance; or

(c) the officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance;

(2) a person who receives no commission and who secures and furnishes information for the purpose of group life insurance, group property and casualty insurance, group annuities, group or blanket accident and health insurance, or enrolls individuals, issues certificates or otherwise assists in administering plans, or performs administrative services related to mass marketed property and casualty insurance;

(3) an employer or association or its officers, directors, employees or the trustees of an employee trust plan, to the extent that the employers, officers, employees, director or trustees are engaged in the administration or operation of a program of employee benefits for the employer's or association's own employees or the employees of its subsidiaries or affiliates, which program involves the use of insurance issued by an insurer, as long as the employers, associations, officers, directors, employees or trustees are not in any manner compensated, directly or indirectly, by the company issuing the contract; (4) employees of insurers or organizations employed by insurers who are engaging in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the sale, solicitation or negotiation of insurance;

(5) a person whose activities in this state are limited to advertising without the intent to solicit insurance in this state through communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the state; provided that the person does not sell, solicit or negotiate insurance that would insure risks residing, located or to be performed in this state;

(6) person who is not a resident of this state who sells, solicits or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one state insured under that contract; provided that that person is otherwise licensed as an insurance producer to sell, solicit or negotiate that insurance in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state; or

(7) a salaried full-time employee who counsels or advises the employee's employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer; provided that the employee does not sell or solicit insurance or receive a commission."

SECTION 27. Section 59A-12-5 NMSA 1978 (being Laws 1984, Chapter 127, Section 206) is repealed and a new Section 59A-12-5 NMSA 1978 is enacted to read:

"59A-12-5. [NEW MATERIAL] APPLICATION FOR EXAMINATION.--

B. The superintendent may contract with an outside testing service for administering examinations and collecting the nonrefundable fee set forth in Section 59A-6-1 NMSA 1978.

C. Each individual applying for an examination shall remit a non refundable fee as prescribed by the superintendent as set forth in Section 59A-6-1 NMSA 1978.

SECTION 28. Section 59A-12-6 NMSA 1978 (being Laws 1984, Chapter 127, Section 207, as amended) is repealed and a new Section 59A-12-6 NMSA 1978 is enacted to read:

"59A-12-6. [NEW MATERIAL] APPLICATION FOR LICENSE.--

(1) is at least eighteen years of age;

(2) has not committed any act that is a ground for denial, suspension or revocation set forth in Sections 59A-11-8 and 59A-11-14 NMSA 1978;

(3) has paid the fees set forth in Section 59A-6-1 NMSA 1978; and

(4) has successfully passed the examinations for the lines of authority for which the person has applied.

B. A business entity acting as an insurance producer is required to obtain an insurance producer license. Application shall be made using the uniform business entity application. Before approving the application, the superintendent shall confirm that:

(1) the business entity has paid the fees set forth in Section 59A-6-1 NMSA 1978; and

(2) the business entity has designated a licensed insurance producer responsible for the business entity's compliance with the insurance laws of this state."

SECTION 29. Section 59A-12-7 NMSA 1978 (being Laws 1984, Chapter 127, Section 208) is repealed and a new Section 59A-12-7 NMSA 1978 is enacted to read:

"59A-12-7. [NEW MATERIAL] LICENSE.--

A. Unless denied licensure pursuant to Sections 59A-11-8 and 59A-11-14 NMSA 1978, persons who have met the requirements of Sections 59A-12-5 and 59A-12-6 NMSA 1978 shall be issued an insurance producer license. An insurance producer may receive qualification for a license in one or more of the following lines of authority:

(1) life insurance coverage on human lives, including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income;

(2) accident and health or sickness insurance coverage for sickness, bodily injury or accidental death and may include benefits for disability income;

(3) property insurance coverage for the direct or consequential loss or damage to property of every kind;

(4) casualty insurance coverage against legal liability, including that for death, injury or disability or damage to real or personal property;

(5) variable life and variable annuity products insurance coverage provided under variable life insurance contracts and variable annuities;

(6) personal lines property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes;

(7) credit limited line credit insurance; and

(8) any other line of insurance permitted under state laws.

B. An insurance producer license shall remain in effect unless revoked or suspended as long as the fee set forth in Section 59A-6-1 NMSA 1978 is paid and education requirements for resident insurance producers are met by the due date.

C. An insurance producer who allows the insurance producer's license to lapse may, within twelve months from the due date of the renewal fee, reinstate the same license without the necessity of passing a written examination. However, a penalty in the amount of double the unpaid renewal fee shall be required for any renewal fee received after the due date.

D. A licensed insurance producer who is unable to comply with license renewal procedures due to military service or some other extenuating circumstance may request a waiver of those procedures. The insurance producer may also request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures.

E. The license shall contain the licensee's name, address and personal identification number, the date of issuance, the lines of authority, the expiration date and any other information the superintendent deems necessary.

F. Licensees shall inform the superintendent in the format prescribed by the superintendent of a change of address within thirty days of the change. Failure to timely inform the superintendent of a change in legal name or address shall result in a penalty of fifty dollars ($50.00).

G. The superintendent may contract with non- governmental entities, including the national association of insurance commissioners or any affiliates or subsidiaries that the national association of insurance commissioners oversees, to perform any ministerial functions, including the collection of fees, related to insurance producer licensing that the superintendent and the non-governmental entity may deem appropriate."

SECTION 30. Section 59A-12-8 NMSA 1978 (being Laws 1984, Chapter 127, Section 209, as amended by Laws 1999, Chapter 272, Section 6 and also by Laws 1999, Chapter 289, Section 7) is repealed and a new Section 59A-12-8 NMSA 1978 is enacted to read:

"59A-12-8. [NEW MATERIAL] EXEMPTION FROM EXAMINATION.--

A. An individual who applies for an insurance producer license in this state who was previously licensed for the same lines of authority in another state shall not be required to take an examination. This exemption is only available if the person is currently licensed in that state or if the application is received within ninety days of the cancellation of the applicant's previous license and if the prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state or the state's insurance producer database records, maintained by the national association of insurance commissioners, its affiliates or subsidiaries, indicate that the insurance producer is or was licensed in good standing for the line of authority requested.

B. A person licensed as an insurance producer in another state who moves to this state shall make application within ninety days of establishing legal residence to become a resident licensee pursuant to Section 59A-12-6 NMSA 1978. No examination shall be required of that person to obtain any line of authority previously held in the prior state except where the superintendent determines otherwise by rule."

SECTION 31. Section 59A-12-9 NMSA 1978 (being Laws 1984, Chapter 127, Section 210, as amended) is repealed and a new Section 59A-12-9 NMSA 1978 is enacted to read:

"59A-12-9. [NEW MATERIAL] ASSUMED NAMES.--An insurance producer shall not do business under any name other than the insurance producer's legal name without written prior approval of the superintendent."

SECTION 32. Section 59A-12-10 NMSA 1978 (being Laws 1997, Chapter 48, Section 1, as amended) is repealed and a new Section 59A-12-10 NMSA 1978 is enacted to read:

"59A-12-10. [NEW MATERIAL] TEMPORARY LICENSING.--

A. The superintendent may issue a temporary insurance producer license for a period not to exceed one hundred eighty days without requiring an examination if the superintendent deems that the temporary license is necessary for the servicing of an insurance business in the following cases:

(1) to the surviving spouse or court- appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the sale of the insurance business owned by the insurance producer or for the recovery or return of the insurance producer to the business or to provide for the training and licensing of new personnel to operate the insurance producer's business;

(2) to a member or employee of a business entity licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license;

(3) to the designee of a licensed insurance producer entering active service in the armed forces of the United States; or

(4) in any other circumstance where the superintendent deems that the public interest will best be served by the issuance of the license.

B. The superintendent may by order limit the authority of any temporary licensee in any way deemed necessary to protect insureds and the public. The superintendent may require the temporary licensee to have a suitable sponsor who is a licensed insurance producer or insurer and who assumes responsibility for all acts of the temporary licensee and may impose other similar requirements designed to protect insureds and the public. The superintendent may by order revoke a temporary license if the interest of insureds or the public is endangered. A temporary license shall not continue after the owner or the personal representative disposes of the business."

SECTION 33. Section 59A-12-11 NMSA 1978 (being Laws 1984, Chapter 127, Section 212) is repealed and a new Section 59A-12-11 NMSA 1978 is enacted to read:

"59A-12-11. [NEW MATERIAL] COMMISSIONS.--

A. An insurance company or insurance producer shall not pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under Chapter 59A, Article 12 NMSA 1978 and is not so licensed.

B. A person shall not accept a commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under Chapter 59A, Article 12 NMSA 1978 and is not so licensed.

C. Renewal or other deferred commissions may be paid to a person for selling, soliciting or negotiating insurance in this state if the person was required to be licensed under Chapter 59A, Article 12 NMSA 1978 at the time of the sale, solicitation or negotiation and was so licensed at that time.

D. An insurer or insurance producer shall not pay or assign commissions, service fees, brokerages or other valuable consideration to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this state."

SECTION 34. Section 59A-12-12 NMSA 1978 (being Laws 1984, Chapter 127, Section 213, as amended by Laws 1999, Chapter 272, Section 8 and also by Laws 1999, Chapter 289, Section 9) is repealed and a new Section 59A-12-12 NMSA 1978 is enacted to read:

"59A-12-12. [NEW MATERIAL] COMPENSATION DISCLOSURE.--

A. Where any insurance producer or any affiliate of the insurance producer receives any compensation from the customer for the placement of insurance or represents the customer with respect to that placement, neither that insurance producer nor the affiliate shall accept or receive any compensation from an insurer or other third party for that placement of insurance unless the insurance producer has, prior to the customer's purchase of insurance:

(1) obtained the customer's documented acknowledgment that such compensation will be received by the insurance producer or affiliate; and

(2) disclosed the amount of compensation from the insurer or other third party for that placement. If the amount of compensation is not known at the time of disclosure, the insurance producer shall disclose the specific method for calculating the compensation and, if possible, a reasonable estimate of the amount.

B. Subsection A of this section does not apply to an insurance producer who:

(1) does not receive compensation from the customer for the placement of insurance;

(2) represents an insurer that has appointed the insurance producer in connection with that placement of insurance; and

(3) discloses to the customer prior to the purchase of insurance:

(a) that the insurance producer will receive compensation from an insurer in connection with that placement; or

(b) that, in connection with that placement of insurance, the insurance producer represents the insurer and that the insurance producer may provide services to the customer for the insurer.

C. A person shall not be considered a customer for purposes of this section if the person is merely:

(1) a participant or beneficiary of an employee benefit plan; or

(2) covered by a group or blanket insurance policy or group annuity contract sold, solicited or negotiated by the insurance producer or affiliate.

D. This section does not apply to:

(1) a person licensed as an insurance producer who acts only as an intermediary between an insurer and the customer's insurance producer, for example, a managing general agent, a sales manager or wholesale broker; or

(2) a reinsurance intermediary.

E. For purposes of this section:

(1) "compensation from an insurer or other third party" means payments, commissions, fees, awards, overrides, bonuses, contingent commissions, loans, stock options, gifts, prizes or any other form of valuable consideration, whether or not payable pursuant to a written agreement; and

(2) "documented acknowledgment" means the customer's written consent obtained prior to the customer's purchase of insurance. In the case of a purchase over the telephone or by electronic means for which written consent cannot reasonably be obtained, consent documented by the producer shall be acceptable."

SECTION 35. Section 59A-12-14 NMSA 1978 (being Laws 1984, Chapter 127, Section 215) is repealed and a new Section 59A-12-14 NMSA 1978 is enacted to read:

"59A-12-14. [NEW MATERIAL] NO LICENSE WHERE SHARES OR INTEREST USED AS INDUCEMENT TO INSURANCE.--The superintendent shall not license an insurance producer, or permit any such license to continue, if the superintendent finds that the licensee did, or that the applicant for license intends to, offer, give or sell stock or other ownership or participating interest in the agency or brokerage as inducement to or in connection with purchase of insurance."

SECTION 36. Section 59A-12-15 NMSA 1978 (being Laws 1984, Chapter 127, Section 216, as amended by Laws 1999, Chapter 272, Section 9 and also by Laws 1999, Chapter 289, Section 10) is repealed and a new Section 59A-12-15 NMSA 1978 is enacted to read:

"59A-12-15. [NEW MATERIAL] CONTINUING EDUCATION.--

A. The superintendent may require as a condition to continuation of an insurance producer license that during the twenty-four months next preceding expiration of the current license period the licensee has attended the minimum number of hours of formal class instruction, lectures or seminars required and approved by the superintendent covering the kinds of insurance for which licensed.

B. Instruction shall be designed to refresh the licensee's understanding of basic principles and coverages involved, recent and prospective changes, applicable laws and rules of the superintendent, proper conduct of the licensee's business and duties and responsibilities of the licensee.

C. The superintendent may permit licensees who, because of remoteness of residence or business, cannot with reasonable convenience attend formal instruction sessions to successfully complete an equivalent course of study and instruction by mail.

D. The superintendent may impose a penalty not to exceed fifty dollars ($50.00) for a licensee's failure to timely report continuing education credits.

E. The superintendent shall charge, at the time of certifying each licensee's continuing education credits as a condition of continuation of license, a fee of one dollar ($1.00) per credit hour of continuing education; provided that the superintendent may contract with an independent agency to receive and review continuing education compliance reports and, in such a case, the fee shall be a reasonable amount fixed by the superintendent and payable to the contracting agency.

F. This section does not apply to holders of limited licenses issued under Section 59A-12-21 NMSA 1978."

SECTION 37. Section 59A-12-16 NMSA 1978 (being Laws 1984, Chapter 127, Section 217, as amended) is repealed and a new Section 59A-12-16 NMSA 1978 is enacted to read:

"59A-12-16. [NEW MATERIAL] CONTINUING EDUCATION FUND.--There is created in the state treasury a fund that shall be known as the "insurance licensee continuing education fund". All fees imposed by the provisions of this section shall be deposited in the insurance licensee continuing education fund and shall be used for the purpose of administering the continuing education program."

SECTION 38. Section 59A-12-17 NMSA 1978 (being Laws 1984, Chapter 127, Section 218, as amended) is repealed and a new Section 59A-12-17 NMSA 1978 is enacted to read:

"59A-12-17. [NEW MATERIAL] PLACE OF BUSINESS--DISPLAY OF LICENSE.--An insurance producer shall have and maintain a place of business accessible to the public where the licensee conducts transactions under the license. Nothing in this section shall prohibit maintenance of the place of business in the licensee's residence."

SECTION 39. Section 59A-12-18 NMSA 1978 (being Laws 1984, Chapter 127, Section 219, as amended) is repealed and a new Section 59A-12-18 NMSA 1978 is enacted to read:

"59A-12-18. [NEW MATERIAL] RECORDS OF GENERAL LINES PRODUCER.--

A. Every insurance producer shall keep in the insurance producer's place of business complete records of transactions under the insurance producer's license. The records shall show the following information for each insurance policy placed by or through the licensee:

(1) the names of the insurer and insured;

(2) the number and expiration date of each policy;

(3) the premium payable for each policy;

(4) the names of all other persons from whom business is accepted or to whom commissions are promised or paid;

(5) all premiums collected; and

(6) any additional information the superintendent may require.

B. The records shall be open to the superintendent's examination, and the superintendent may at any reasonable time require the licensee to furnish, in the manner and form as the superintendent may require, any information kept or required to be kept in such records.

C. Records as to a particular policy may be destroyed on expiration of three years after the policy's expiration."

SECTION 40. Section 59A-12-19 NMSA 1978 (being Laws 1984, Chapter 127, Section 220) is repealed and a new Section 59A-12-19 NMSA 1978 is enacted to read:

"59A-12-19. [NEW MATERIAL] SPECIAL REQUIREMENTS--TITLE INSURANCE PRODUCERS.--

A. The superintendent shall not issue or permit to continue an insurance producer license for title insurance except for an applicant who, in addition to other applicable qualifications and requirements, owns, operates or controls an abstract plant consisting of a set of records in which an entry has been made of all documents or matters that under law impart constructive notice of matters affecting title to real property or any interest therein or encumbrance thereon, which have been filed or recorded in the county for which such title plant is maintained for a period of not less than twenty years immediately prior to date of application for license. Such records shall consist of:

(1) an index or indices in which notations of or references to any such documents that describe property affected thereby are posted, entered or otherwise included, according to the property described therein, or copies or briefs of all such documents that describe the property affected thereby that are sorted and filed according to such property; and

(2) an index or indices in which all other such documents are posted, entered or otherwise included, according to the name or names of the parties whose title to real property or any interest therein or encumbrances thereon is affected.

B. Every applicant who, on January 1, 1965, was licensed as an agent to issue title insurance shall be exempted from the requirement of having a twenty-year abstract plant, if an abstract plant is maintained on a current basis commencing July 1, 1965.

C. A license as producer to issue title insurance shall permit the licensee to issue policies only on property located in the county or counties for which the licensee has the necessary abstract plant."

SECTION 41. Section 59A-12-20 NMSA 1978 (being Laws 1984, Chapter 127, Section 221, as amended) is repealed and a new Section 59A-12-20 NMSA 1978 is enacted to read:

"59A-12-20. [NEW MATERIAL] LIMITED LINES.--

A. The superintendent may issue a limited insurance producer license to individual applicants employed full time by a vendor of merchandise or other property, or by a financial institution making consumer loans on terms with respect to which credit life insurance, credit health insurance, credit property insurance or credit involuntary unemployment insurance under individual policies is customarily required of or offered to the purchaser or borrower, covering only that credit life, credit health, credit property or credit involuntary unemployment insurance. B. The superintendent may issue a limited insurance producer license to vendors in accordance with the provisions of the Portable Electronics Insurance Act. The application shall provide:

(1) the name, residence address and other information required by the superintendent for an employee or officer of the vendor that is designated by the applicant as the person responsible for the vendor's compliance with the requirements of the Portable Electronics Insurance Act. If the vendor derives more than fifty percent of its revenue from the sale of portable electronics insurance, the information noted above shall be provided for all officers, directors and shareholders of record having beneficial ownership of ten percent or more of any class of securities registered under the federal securities law; and

(2) the location of the applicant's home office.

C. No holder of a limited license issued pursuant to Subsection A of this section shall concurrently be otherwise licensed under the Insurance Code."

SECTION 42. Section 59A-12-21 NMSA 1978 (being Laws 1984, Chapter 127, Section 222) is repealed and a new Section 59A-12-21 NMSA 1978 is enacted to read:

"59A-12-21. [NEW MATERIAL] LIMITED LICENSES--TRAVEL INSURANCE.--

A. The superintendent may issue a limited lines travel insurance producer license to applicants who are qualified to solicit or sell travel insurance.

B. A travel retailer may offer travel insurance under the license of a limited lines travel insurance producer only if:

(1) the limited lines travel insurance producer or travel retailer provides to purchasers of travel insurance:

(a) a description of the material terms of the insurance coverage;

(b) a description of the process for filing a claim;

(d) the identity and contact information of the insurer and limited lines travel insurance producer;

(2) the limited lines travel insurance producer:

(a) establishes at the time of licensure on a form prescribed by the superintendent a register of each travel retailer that offers travel insurance on behalf of the limited lines travel insurance producer;

(b) includes in the register each travel retailer's federal tax identification number and the name, address and contact information of each travel retailer and an officer or person who directs or controls the travel retailer's operations;

(d) submits the register to the superintendent upon reasonable request; and

(e) certifies that each travel retailer on the register complies with federal laws;

(3) the limited lines travel insurance producer has selected a designated responsible agent who is one of its licensed individual limited lines travel insurance producer employees and who is responsible for the limited lines travel insurance producer's compliance with the travel insurance laws and rules of this state;

(4) the designated responsible insurance producer, president, secretary, treasurer and all other officers or persons who direct or control the limited lines travel insurance producer's insurance operations comply with the fingerprinting requirements for insurance producers of the resident state of the limited lines travel insurance producer;

(5) the limited lines travel insurance producer has paid all applicable insurance producer licensing fees pursuant to state law; and

(6) the limited lines travel insurance producer requires each employee and authorized representative of the travel retailer whose duties include offering and disseminating travel insurance to receive a program of instruction or training that the superintendent may review and that, at a minimum, contains instructions on the types of insurance offered, ethical sales practices and required disclosures to prospective customers.

C. A travel retailer that offers and disseminates travel insurance shall make available to prospective purchasers brochures or other written materials that:

(1) identify and provide the contact information of the insurer and the limited lines travel insurance producer;

(2) explain that the purchase of travel insurance is not a prerequisite to the purchase of any other product or service of the travel retailer; and

(3) explain that an unlicensed travel retailer may provide general information about the insurance offered and disseminated by the travel retailer, including a description of the coverage and price, but is not qualified or authorized to answer technical questions about the terms and conditions of the insurance offered by the travel retailer or to evaluate the adequacy of the customer's existing insurance coverage.

D. A travel retailer's employee or authorized representative who is not licensed as a limited lines travel insurance producer shall not:

(1) evaluate or interpret the technical terms, benefits or conditions of the travel insurance coverage offered;

(2) evaluate or provide advice concerning a prospective purchaser's existing insurance coverage; or

(3) make representation as being a licensed insurer, licensed limited lines travel insurance producer or insurance expert.

E. A travel retailer and its employees and authorized representatives whose insurance-related activities are limited to the offering and dissemination of travel insurance on behalf of and under the direction of a limited lines travel insurance producer that complies with this section may conduct and receive compensation for those activities.

F. A travel retailer may place insurance under an individual policy or under a group or master policy.

G. As the insurer designee, a limited lines travel insurance producer shall be responsible for the acts of the travel retailer and shall use reasonable means to ensure that the travel retailer complies with the provisions of this section.

H. As used in this section:

(1) "limited lines travel insurance producer" means a licensed managing general agent or third-party administrator or a licensed insurance producer;

(2) "offer and disseminate" means providing general information, including a description of coverage and price, processing applications, collecting premiums and performing other non-licensable activities permitted by this state;

(3) "travel insurance" means insurance coverage for personal risks incident to planned travel, including the interruption or cancellation of a trip or event; the loss of baggage or personal effects; damage to accommodations or rental vehicles; or sickness, accident, disability or death during travel. "Travel insurance" does not include major medical plans that provide comprehensive medical protection for travelers on trips of six months or longer, such as for those working overseas as expatriates or deployed military personnel; and

(4) "travel retailer" means a business entity that makes, arranges or offers travel services."

SECTION 43. Section 59A-12-22 NMSA 1978 (being Laws 1984, Chapter 127, Section 223, as amended) is amended to read:

"59A-12-22. FIDUCIARY FUNDS--[AGENTS, BROKERS, SOLICITORS] INSURANCE PRODUCERS, SURPLUS LINE BROKERS, BAIL BONDSMEN, MOTOR CLUB AGENTS AND OTHERS.--

A. All funds of others received by [any] a person licensed or acting as an insurance [agent, broker, solicitor] producer, surplus line broker, bail bondsman [or solicitor], motor club agent or agent [or solicitor] for health care plan, prepaid dental plan, or in [any] a similar capacity for which licensing of [such] the person is required under the Insurance Code, are received and held by [such] the person in a fiduciary capacity. Any such person who diverts or appropriates [such] funds to [his] the person's own use, or takes or secretes with intent to embezzle, all without consent of the person entitled to [such] the funds, is guilty of larceny by embezzlement.

B. Subject to the terms of any agreement between such person or licensee and [his] the person's or licensee's principal or obligee, each such person who does not make immediate remittance of such funds to the insurer or other person entitled thereto, shall elect and follow as to funds received for account of a particular insurer or person either of the following methods:

(1) remit received premiums (less applicable commissions, if any) and return premiums to the insurer or other person entitled thereto within fifteen days after [such] receipt; or

(2) establish and maintain in a commercial bank or other established financial institution depositary one or more accounts, separate from accounts holding general personal, firm or corporate funds, and forthwith deposit and retain therein pending transmittal to the insurer or other person entitled thereto, all such premiums (net of applicable commissions, if any) and return premiums. Funds belonging to more than one principal may be as deposited and held in the same [such] account so long as the amount held for each [such] principal is readily ascertainable from the records of the depositor. The depositor may commingle with such fiduciary funds in a particular [such] account such additional funds as the licensee deems prudent for advancing premiums, reserves for payment of return commissions or for other contingencies arising in the business of receiving and transmitting premiums or return premiums.

C. [Such] The person may commingle with [his] the person's own funds to an unlimited amount funds of a particular principal who has in writing in advance expressly waived the segregation requirements of Subsection B of this section.

D. Any commingling of funds with funds of any [such] person permitted under this section shall not alter the fiduciary capacity of [such] the person as to funds of others."

SECTION 44. Section 59A-12-23 NMSA 1978 (being Laws 1984, Chapter 127, Section 224, as amended by Laws 1999, Chapter 272, Section 13 and also by Laws 1999, Chapter 289, Section 14) is amended to read:

"59A-12-23. INSURANCE VENDING MACHINES.--

A. A licensed [agent] insurance producer may solicit for and issue personal travel accident insurance policies of an authorized insurer by means of mechanical vending machines supervised by the [agent] insurance producer and placed at airports and other places of convenience to the traveling public, if the superintendent finds that:

(1) the policy provides reasonable coverage and benefits, is suitable for sale and issuance by vending machine and use of such a machine in a proposed location would be of material convenience to the public;

(2) the type of machine proposed to be used is reasonably suitable for the purpose;

(3) reasonable means are provided for informing prospective purchasers of policy coverages and restrictions;

(4) reasonable means are provided for refund of money inserted in defective machines and for which insurance so paid for is not received; and

(5) the cost of maintaining such a machine at a particular location is reasonable.

B. For each machine to be used the superintendent shall issue to the applicant a special vending machine license. The license shall state the name and address of the insurer and [agent] insurance producer, name of the policy to be sold and serial number and operating location of the machine. The license shall be subject to annual continuation, to expiration, suspension or revocation coincidentally with that of the agent. The superintendent shall also revoke the license as to any machine as to which [he] the superintendent finds that license qualifications no longer exist. Proof of existence of a subsisting license shall be displayed on or about each machine in use in [such] the manner [as] that the superintendent reasonably requires."

SECTION 45. REPEAL.--Sections 59A-7-5, 59A-7-8, 59A-7-9, 59A-11-19, 59A-12-18.1 and 59A-12-20.1 NMSA 1978 (being Laws 1984, Chapter 127, Sections 111, 114, 115 and 199, Laws 2013, Chapter 140, Section 3 and Laws 2003, Chapter 306, Section 5, as amended) are repealed.

SECTION 46. SEVERABILITY.--If any part or application of this act is held invalid, the remainder or its application to other situations or persons shall not be affected.

SECTION 47. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2016.

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