A. All funds of others received by a person licensed or acting as an insurance producer, surplus line broker, bail bondsman or their solicitor, motor club agent or agent for a health care plan or prepaid dental plan, or in a similar capacity for which licensing of the person is required under the Insurance Code, are received and held by the person in a fiduciary capacity. Any person who diverts or appropriates funds to the person's own use, or takes or secretes with intent to embezzle, all without consent of the person entitled to the funds, is guilty of larceny by embezzlement.
B. Subject to the terms of any agreement between a person or licensee and the person's or licensee's principal or obligee, each person who does not make immediate remittance of 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 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 account so long as the amount held for each principal is readily ascertainable from the records of the depositor. The depositor may commingle with such fiduciary funds in a particular 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. The person may commingle with 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 person permitted under this section shall not alter the fiduciary capacity of the person as to funds of others.
History: Laws 1984, ch. 127, § 223; 2003, ch. 202, § 7; 2016, ch. 89, § 41.
ANNOTATIONSThe 2016 amendment, effective July 1, 2017, replaced "agents", "brokers", and "solicitors" with "insurance producers"; in the catchline, deleted "agents, brokers, solicitors" and added "insurance producers"; in Subsection A, after "acting as an insurance", deleted "agent, broker, solicitor" and added "producer", after "bail bondsman or", added "their", after "club agent or agent", deleted "or solicitor", after the next "for", added "a", after "plan", added "or", after "plan, or in", deleted "any" and added "a", after "licensing of", deleted "such" and added "the", after "received and held by", deleted "such" and added "the", after "Any", deleted "such", after "appropriates", deleted "such", after "funds to", deleted "his" and added "the person's", and after "person entitled to", deleted "such" and added "the"; in Subsection B, in the introductory paragraph, after "agreement between", deleted "such" and added "a", after "licensee and", deleted "his" and added "the person's or licensee's", after "oblige, each", deleted "such", and after "remittance of", deleted "such", in Paragraph (1), after "fifteen days after", deleted "such", in Paragraph (2), after "held in the same", deleted "such", after "amount held for each", deleted "such", and after "in a particular", deleted "such"; in Subsection C, deleted "Such" and added "The", after "comingle with", deleted "his" and added "the person's"; and in Subsection D, after "funds of any", deleted "such", and after "fiduciary capacity of", deleted "such" and added "the".
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.
The 2003 amendment, effective June 20, 2003, deleted "in this state" following "financial institution depositary" in Paragraph B(2) and substituted "of this section" for "above" at the end of Subsection C.
Applicability. — Under 59A-30-14 NMSA 1978, this section is applicable to title insurance companies and title insurance agents. 1987 Op. Att'y Gen. No. 87-30.
Escrow accounts. — A title insurance company acting as escrow agent cannot retain for its own benefit interest paid by a financial institution on escrow accounts without express permission from the customer or a written contract allowing this payment of interest as compensation. 1987 Op. Att'y Gen. No. 87-30.
The acceptance of other in-kind services and consideration in lieu of interest on escrow accounts is in violation of the fiduciary duties of the title insurance company, agent, broker, or solicitor to the principal. 1987 Op. Att'y Gen. No. 87-30.
Am. Jur. 2d, A.L.R. and C.J.S. references. — Computation of net "loss" for which fidelity insurer is liable, 5 A.L.R.5th 132.