NMSA 1978, § 59A-45-1 Short title
59A-45-1. Short title
This article [Chapter 59A, Article 45 NMSA 1978] may be cited as the "Insurance Premium Financing Law".
Laws 1984, ch. 127, § 831.
Premium Financing
NMSA 1978 ch. 59A, art. 45
in effectNMSA 1978, § 59A-45-2 Definitions
59A-45-2. Definitions
As used in this article:
A. "person" means any individual, corporation, association, partnership or any other legal entity;
B. "insurance policy" or "insurance contract" means any contract of insurance, indemnity, medical or hospital services, suretyship or annuity issued, proposed for issuance or intended for issuance by any person;
C. "insurance premium finance agreement" means an agreement by which an insured or a prospective insured promises to pay to any person engaged in the business of premium financing, the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent or broker in payment of premiums on an insurance contract; and
D. "insurance premium finance company" means a person engaged in the business of entering into insurance premium finance agreements.
Laws 1984, ch. 127, § 832.
NMSA 1978, § 59A-45-3 Licensing requirements
59A-45-3. Licensing requirements
A. No person shall engage in the business of financing insurance premiums in this state without first having obtained an insurance premium financing license from the superintendent.
B. The annual license fee shall be as stated in Section 101 [59A-6-1 NMSA 1978] (fee schedule) of the Insurance Code. Licenses may be renewed from year to year as of the first day of May of each year upon payment of the fee specified in such Section 101.
C. Licensing procedures and requirements shall be established by the superintendent by rule and regulation.
Laws 1984, ch. 127, § 833.
NMSA 1978, § 59A-45-4 Bonding requirements for licensees
59A-45-4. Bonding requirements for licensees
A. Prior to the issuance of an insurance premium financing license, the applicant shall file with the superintendent a surety bond or a bank certificate of deposit in favor of the superintendent in a total aggregate amount of not less than ten thousand dollars ($10,000), conditioned to pay the actual damages resulting to the state, to any policyholder or to any member of the public from violation by the licensee of the provisions of this article. The bond shall be executed by a surety insurer authorized to do business in this state. The certificate of deposit shall be issued from a bank licensed to do business in this state.
B. Bonds and certificates of deposit shall remain in effect during the term of the license. Without prejudice to any liability accrued prior to a cancellation, sureties may cancel their bonds by giving written notice to the superintendent at least thirty (30) days prior to the effective date of the cancellation.
C. The superintendent may increase the required amount of the bond or certificate of deposit according to a business volume scale which shall be established by the superintendent through rule or regulation.
Laws 1984, ch. 127, § 834.
NMSA 1978, § 59A-45-5 Exemptions
59A-45-5. Exemptions
A. The provisions of this article shall not limit the authority of the following institutions to engage in insurance premium financing or apply to:
(1) any life insurer authorized to do business in the state;
(2) any national banking institution;
(3) any state bank;
(4) any savings and loan association;
(5) any small loan company; or
(6) any credit union.
B. The licensing and bonding provisions of this article shall not apply to:
(1) any insurer, other than those exempt from this article pursuant to Paragraph A(1); and
(2) any insurance agent licensed by this state.
C. This article shall not apply to the financing of insurance premiums in connection with a transaction under the Motor Vehicle Sales Finance Act [58-19-1 to 58-19-12 NMSA 1978], or under Sections 56-1-1 to 56-1-15 NMSA 1978.
Laws 1984, ch. 127, § 835.
NMSA 1978, § 59A-45-6 Books and records
59A-45-6. Books and records
A. Every person engaged in the business of financing insurance premiums shall maintain records of his premium finance transactions and the records shall be open to examination and investigation by the superintendent. The superintendent may at any time require any such persons to bring such records as he may direct to the superintendent's office for examination.
B. Every person who is engaged in the business of financing insurance premiums shall preserve his records of premium finance transactions, including cards used in a card system, for at least three (3) years after making the final entry in respect to any premium finance agreement. The preservation of records in photographic forms shall constitute compliance with this requirement.
Laws 1984, ch. 127, § 836.
NMSA 1978, § 59A-45-7 Form of premium finance agreement
59A-45-7. Form of premium finance agreement
A premium finance agreement shall:
A. comply with all existing federal laws;
B. comply with any requirements established by the superintendent by way of rule or regulation; and
C. contain a statement that the Insurance Premium Financing Law does not require a person to enter into an insurance premium financing agreement as a condition of the purchase of any insurance policy.
Laws 1984, ch. 127, § 837.
NMSA 1978, § 59A-45-8 Additional requirements
59A-45-8. Additional requirements
The following additional provisions shall be applicable to an insurance premium finance agreement:
A. a premium finance company shall not charge, contract for, receive or collect a rate other than permitted pursuant to this article;
B. the rate is to be computed on the balance of the premium due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance coverage for which premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable;
C. nothing contained in this article shall limit or restrict the manner of calculating the interest charges whether by way of add-on, discount, simple annual rate or otherwise, so long as the rate of interest charge does not exceed that permitted pursuant to this article. If the loan is a precomputed loan transaction:
(1) the interest charge may be calculated on the assumption that all scheduled payments will be made when due; and
(2) the effect of prepayment is governed by the provisions on rebate upon prepayment in this section;
D. if the entire unpaid balance outstanding on a precomputed loan transaction is paid by cash, renewal or otherwise, at any time prior to maturity, the premium finance company shall give a refund or credit of the unearned portion of such charge, according to the rule commonly known as "the rule of 78's", which refund or credit shall represent at least as great a portion of the original charge as the sum of the consecutive balances of the contract scheduled to be outstanding after the date of prepayment bears to the sum of all the consecutive monthly balances of the contract scheduled to be outstanding under the schedule of payments in the original instrument or instruments evidencing the loan; except, that if the contract is prepaid in cash rather than renewed or refinanced, the premium finance company shall not be required to make a refund or credit if the amount, computed as herein set forth, would be less than one dollar ($1) for each loan prior to the maturity;
E. in precomputed loan transactions where the insurer and the premium finance company execute an extension agreement for the deferral of an installment payment, the premium finance company may make an interest charge on the monthly installment that is deferred at a rate not exceeding one percent per month for each month or portion thereof that the payment has been deferred; and
F. for repayment in greater or lesser periods or amounts, or in unequal, irregular or other than monthly installment, the rate may be computed at an equivalent effective rate having due regard for the installments as scheduled.
Laws 1984, ch. 127, § 839.
NMSA 1978, § 59A-45-9 Assignee subject to defenses
59A-45-9. Assignee subject to defenses
An assignee of the rights of a creditor under an insurance premium finance agreement, for the purchase of insurance primarily for personal, family or household purposes, is a holder within the meaning of the Uniform Commercial Code (55-1-101 to 55-9-507 NMSA 1978) and is subject to all defenses of the insured notwithstanding that there is an agreement to the contrary.
Laws 1984, ch. 127, § 840.
NMSA 1978, § 59A-45-10 Delinquency charges
59A-45-10. Delinquency charges
A premium finance agreement may provide for the payment by the insured of a delinquency charge on each installment in default for a period of more than ten days and in an amount not to exceed five percent of each installment, or five dollars ($5.00), whichever is less, or in lieu thereof, interest after maturity of each such installment not to exceed the highest lawful contract rate; except that with respect to agreements financing coverages for other than personal, family or household purposes, the delinquency charge shall be an amount equal to five percent of the unpaid installment, but in no event more than five hundred dollars ($500). In addition, such contract may provide for the payment of an attorney's reasonable fee, where it is referred for collection to an attorney not a salaried employee of the person to whom the installment payment is due, and for court costs and disbursements.
Laws 1984, ch. 127, § 841; 1999, ch. 75, § 1.
NMSA 1978, § 59A-45-11 Cancellation of insurance contract upon default
59A-45-11. Cancellation of insurance contract upon default
A. When a premium finance agreement contains a power of attorney enabling the premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the premium finance company unless such cancellation is made in accordance with this article.
B. Not less than ten (10) days written notice shall be mailed to the insured of the intent of the premium finance company to cancel the insurance contract unless the default is cured within the ten-day period.
C. After expiration of the ten-day period, the premium finance company may thereafter request, in the name of the insured, cancellation of such insurance contract or contracts by mailing to the insurer or its licensed agent a notice of cancellation, and the insurance contract shall be cancelled as if such notice of cancellation had been submitted by the insured himself, but without requiring the return of the insurance contract or contracts. The premium finance company shall also mail a notice of cancellation to the insured at his last known address.
D. All statutory, regulatory and contractual restrictions providing that the insurance contract may not be given to a governmental agency, mortgagee or other third party, shall apply where cancellation is made under this section. The insurer or its licensed agent shall give the prescribed notice on behalf of itself or the insured to any governmental agency, mortgagee or other third party on or before the tenth (10) [10th] business day after the day it receives the notice of cancellation from the premium finance company and shall determine the effective date of cancellation, taking into consideration the number of days' notice required to complete the cancellation.
E. Whenever an insurance contract is cancelled in accordance with this section, the insurer or its licensed agent shall return whatever gross unearned premiums are due under the insurance contract to the premium finance company effecting the cancellation for the account of the insured or insureds.
F. In the event that the crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured, the premium finance company shall refund such excess to the insured provided that no such refund shall be required if it amounts to less than one dollar ($1).
Laws 1984, ch. 127, § 842.
NMSA 1978, § 59A-45-12 Exemption from any filing requirement
59A-45-12. Exemption from any filing requirement
No filing of the premium finance agreement shall be necessary to perfect the validity of such agreement as a secured transaction as against creditors, subsequent purchasers, pledges and encumbrances, successor or assigns.
Laws 1984, ch. 127, § 843.
NMSA 1978, § 59A-45-13 Revocation and suspension of licenses
59A-45-13. Revocation and suspension of licenses
A. The superintendent may revoke or suspend the insurance premium financing license of any person when after investigation it appears to the superintendent that:
(1) any license issued to such person was obtained by fraud;
(2) there was any misrepresentation in the application of the license;
(3) the holder of such license has otherwise shown himself untrustworthy or incompetent to act as a premium finance company;
(4) such person has violated any of the provisions of this article; or
(5) such person has been rebating part of any valid service charge to an insurance agent, his employee or to any other person as an inducement to the financing of any insurance policy.
B. The procedures for revocation and suspension of licenses shall be established by the superintendent through rule and regulation.
Laws 1984, ch. 127, § 844.
NMSA 1978, § 59A-45-14 Cease and desist order from the superintendent
59A-45-14. Cease and desist order from the superintendent
Upon a determination by hearing that a person has violated any provision of this article or any rules or regulations adopted thereunder, the superintendent may issue an order requiring the person to cease and desist from engaging in such violation. If the alleged violator fails to comply with the cease and desist order from the superintendent, the superintendent shall bring action for injunction in the district court in the county of Santa Fe.
Laws 1984, ch. 127, § 845.
NMSA 1978, § 59A-45-15 Civil penalties
59A-45-15. Civil penalties
In addition to any penalties imposed pursuant to Sections 844 or 845 [59A-45-13 or 59A-45-14 NMSA 1978] of this article, the district court may, in an action filed by the superintendent, impose the following civil penalties:
A. for each violation of this article a penalty of not more than one thousand dollars ($1,000) but not to exceed an aggregate penalty of ten thousand dollars ($10,000) in any six-month period; and
B. for each violation of an order issued by the superintendent pursuant to Section 845 of this article, a penalty of not more than ten thousand dollars ($10,000).
Laws 1984, ch. 127, § 846.
NMSA 1978, § 59A-45-16 Other code provisions applicable
59A-45-16. Other code provisions applicable
The following additional articles and provisions of the Insurance Code shall also apply, as applicable, to insurance premium finance companies and their operations:
A. Article 1 [Chapter 59A, Article 1 NMSA 1978] (scope of code, initial definitions, general penalty);
B. Article 2 [Chapter 59A, Article 2 NMSA 1978] (department of insurance);
C. Article 4 [Chapter 59A, Article 4 NMSA 1978] (examination, hearings and appeals);
D. Article 10 [Chapter 59A, Article 10 NMSA 1978] (administration of deposits);
E. Article 16 [Chapter 59A, Article 16 NMSA 1978] (trade practices and frauds); and
F. Article 53 [not codified] (transitory provisions).
Laws 1984, ch. 127, § 847.
Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18562/index.doFetched: 10/20/2026