A. No insurer shall terminate a contract appointing an individual as an independent insurance producer without giving the insurance producer written notice of the termination, including the specific reason for such action, at least one hundred eighty days prior to the termination.
B. Notwithstanding the provisions of Subsection A of this section, no insurer may cancel a written agreement with an insurance producer with respect to property or casualty insurance because of an adverse loss-ratio experience on that insurance producer's book of business during any three full consecutive calendar years if:
(1) the insurer required the insurance producer to submit the application for underwriting approval, all material information on the application was fully completed and the insurance producer had not omitted or altered any information provided by the applicant; or
(2) the insurer accepted without prior approval policies issued by the insurance producer, if all material information on the application or on the insurer's copy of any policy issued by the insurance producer was fully completed and the insurance producer had not omitted or altered any information provided by the applicant.
C. The provisions of Subsection A or B of this section shall not apply to termination of a contract for insolvency, abandonment, gross or willful misconduct, failure to pay over to the company money due to the company under existing agency or company contract after receipt of a written demand therefor, fraud or intentional misrepresentation by the insurance producer, either to the insurer or to an insured, or after the insurance producer's license is revoked or otherwise terminated by the superintendent.
D. For one year following termination for any reason other than those set forth in Subsection C of this section, the insurance producer may renew, for a term of one year, any policies of the insurer in force at termination if the insureds meet current underwriting standards. The insurance producer shall earn a commission for such renewals at a rate not less than the rate in effect prior to termination.
E. For the purposes of this section:
(1) "independent insurance producer" means an insurance producer that is not an employee of an insurer and represents more than one insurer;
(2) "one insurer" includes any group of insurance companies under substantially the same management and control;
(3) "insurer" means any insurance company authorized to transact property or casualty insurance business in this state; and
(4) "policies" means all kinds of insurance, except life, health, annuities and credit life and health.
F. An individual who has suffered damages as a result of a violation of this section is granted a right to bring an action in district court to recover damages, including reasonable costs and attorney fees, if approved by the court.
G. 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.
H. 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.
I. 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 G of this section had the insurer then known of its existence.
J. 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 G, H and I 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 subject to the conditions provided in Subsection K of this section.
K. 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 office of superintendent of insurance 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 [Chapter 14, Article 2 NMSA 1978]. 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 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 documents, materials 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 subsection 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.
L. 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.
History: Laws 1984, ch. 127, § 192; 1986, ch. 109, § 1; 1987, ch. 259, § 12; 1989, ch. 12, § 1; 2016, ch. 89, § 18.
ANNOTATIONSThe 2016 amendment, effective July 1, 2017, provided for the duties of insurers that terminate business relationships with insurance producers, and replaced "agents" with "insurance producers" throughout the section; in the catchline, deleted "agents'" and added "insurance producers'"; in Subsection A, after "a contract appointing", deleted "any person" and added "an individual"; in Subsection F, deleted "Any person" and added "An individual", and after "reasonable costs and", deleted "attorneys'" and added "attorney"; and added new Subsections G through L.
Severability. — Laws 2016, ch. 89, § 71 provided that if any part or application of Laws 2016, ch. 89 is held invalid, the remainder or its application to other situations or persons shall not be affected.
Law reviews. — For annual survey of New Mexico insurance law, 19 N.M.L. Rev. 717 (1990).