A. To ensure the faithful performance of a provider's obligations to the provider's service contract holders, a provider shall comply with the requirements of one of the following:
(1) maintain a deposit with the superintendent as provided in this paragraph:
(a) a provider of a service contract shall deposit fifty thousand dollars ($50,000) unless the contract covers the following, in which case the provider shall deposit one hundred thousand dollars ($100,000): 1) a motor vehicle; and 2) mechanical, plumbing and electrical systems and appliances at a residential dwelling when the service contract was sold in conjunction with the sale of the residential dwelling;
(b) deposits required pursuant to Subparagraph (a) of this paragraph shall be: 1) a surety bond issued by a surety company authorized to do business in New Mexico on a form acceptable to the superintendent; 2) securities of the type eligible for deposit by an insurance company; or 3) a clean and irrevocable letter of credit issued by a financial institution acceptable to the superintendent; and
(c) additional deposits may be required of any provider when it is determined by the superintendent that an additional deposit is necessary for the protection of the public; or
(2) insure all service contracts under a reimbursement insurance policy issued by an insurer licensed, registered or otherwise authorized to do business in this state, and who either:
(a) at the time the policy is filed with the superintendent, and continuously thereafter: 1) maintains a surplus as to policyholders and paid-in capital of at least fifteen million dollars ($15,000,000); and 2) annually files copies of the insurer's financial statements, its national association of insurance commissioners annual statement and the actuarial certification required by and filed in the insurer's state of domicile; or
(b) at the time the policy is filed with the superintendent, and continuously thereafter: 1) maintains a surplus as to policyholders and paid-in capital of less than fifteen million dollars ($15,000,000) but at least equal to ten million dollars ($10,000,000); 2) demonstrates to the satisfaction of the superintendent that the company maintains a ratio of net written premiums, wherever written, to surplus as to policyholders and paid-in capital of not greater than three to one; and 3) annually files copies of the insurer's audited financial statements, its national association of insurance commissioners annual statement and the actuarial certification required by and filed in the insurer's state of domicile.
B. Except for the requirements specified in this section, no other financial security requirements shall be required by the superintendent.
C. The provisions of this section shall not apply to major manufacturing companies' service contracts.
History: Laws 2001, ch. 206, § 6; 2007, ch. 282, § 13; 2017, ch. 125, § 5.
ANNOTATIONSThe 2017 amendment, effective June 16, 2017, provided a second financial security option to ensure the faithful performance of a provider's obligations to the provider's service contract holders; in Subsection A, in the introductory clause, after the second occurrence of "provider's", added "service", after "provider shall", added "comply with the requirements of one of the following", added paragraph designation "(1)", in Paragraph A(1), after "provided in this", deleted "section" and added "paragraph"; redesignated former Subsections B through D as Subparagraphs A(1)(a) through A(1)(c), respectively; redesignated former Paragraphs B(1) and B(2) as Items 1) and 2) of Subparagraph A(1)(a), respectively; in Subparagraph A(1)(b), after "pursuant to", deleted "Subsection B of this section" and added "Subparagraph (a) of this paragraph", redesignated former Paragraphs C(1) through C(3) as Items 1) through 3) of Subparagraph A(1)(b), respectively, and after the semicolon, added "and"; in Subparagraph A(1)(c), after "additional", deleted "financial security" and added "deposits", and after the semicolon, added "or", and added Paragraph A(2); and added a new Subsection B and redesignated former Subsection E as Subsection C.
The 2007 amendment, effective June 15, 2007, eliminated cash deposits.