No surplus lines insurance for an insured whose home state is New Mexico shall be solicited, negotiated, contracted for, effectuated or otherwise transacted within the meaning of Section 59A-1-13 NMSA 1978, unless:

1. A. the insurance is procured through a surplus lines broker;
2. B. each nonadmitted insurer providing such insurance is an eligible surplus lines insurer;

3. C. either:

   1. (1) the full amount or type of insurance cannot be obtained from insurers authorized to do business in this state as determined after making a diligent search among insurers authorized to transact and actually writing the particular type and class of insurance in this state; or

   2. (2) the insurance is being procured for an exempt commercial purchaser and:

      1. (a) the surplus lines broker procuring or placing the surplus lines insurance has disclosed to the exempt commercial purchaser that the insurance may or may not be available from insurers authorized to do business in this state, which may provide greater protection with more regulatory oversight; and
      2. (b) the exempt commercial purchaser has subsequently requested in writing the surplus lines broker to procure or place the insurance from an eligible surplus lines insurer;
4. D. the surplus lines broker has taken such reasonable steps to ascertain that the insurer is in sound financial condition as may be required by regulations adopted by the superintendent; and
5. E. all other requirements of Chapter 59A, Article 14 NMSA 1978 are met.

History: 1978 Comp., § 59A-14-3, enacted by Laws 1991, ch. 125, § 13; 1993, ch. 320, § 54; 2011, ch. 156, § 6.

ANNOTATIONS

Repeals and reenactments. — Laws 1991, ch. 125, § 13 repealed former 59A-14-3 NMSA 1978, as enacted by Laws 1984, ch. 127, § 241, relating to eligibility for export, and enacted a new section, effective April 3, 1991.

The 2011 amendment, effective June 17, 2011, prohibited the placement of surplus lines insurance by nonadmitted insurers for insured’s whose home state is New Mexico unless the insurance is being procured for an exempt commercial purchaser and the broker discloses that the insurance may or may not be available from insurers authorized to do business in New Mexico, and the purchaser subsequently requests the broker to obtain the insurance.

Applicability. — Laws 2011, ch. 156, § 11 provided that the provisions §§ 3 through 10 of Laws 2011, ch. 156 are applicable to insurance policies issued on or after July 21, 2011.

The 1993 amendment, effective June 18, 1993, substituted "among insurers authorized to transact" for "among authorized insurers pools, associations, programs and plans authorized to transact" in the second sentence in Subsection C.

Miscommunication may result in coverage despite exclusion. — Since the surplus lines insurer authorized a surplus lines broker to issue insurance, the insurer must assume responsibility for inadequate insurance coverage resulting from miscommunications made between intermediaries during the process of selling insurance to the insured. Since the insured initially sought coverage for a particular injury, the insured's damages are covered under the policy notwithstanding an exclusion for that particular injury. Barth v. Coleman, 1994-NMSC-067, 118 N.M. 1, 878 P.2d 319.