Payment of funds by electronic funds transfer

# STATE OF NEW MEXICO # OFFICE OF SUPERINTENDENT OF INSURANCE P.O. Box 1689, Santa Fe, NM 87504-1689 1120 Paseo de Peralta, Room 428, Santa Fe, NM 87501 Phone: (505) 827-4601; Fax (505) 827-4734 SUPERINTENDENT OF INSURANCE John G. Franchini (505) 827-4299  ACTING DEPUTY SUPERINTENDENT Alan Seeley (505) 827-4307 JUL 18 AM 11 18 FILED OF INSURANCE OFFICE OF SUPERINTENDENT OF INSURANCE # BULLETIN NO. 2016-017 TO: EVERY INSURER, NONPROFIT HEALTH CARE PLAN, HEALTH MAINTENANCE ORGANIZATION, AND PREPAID DENTAL PLAN TRANSACTING BUSINESS IN NEW MEXICO FROM: JOHN G. FRANCHINI, SUPERINTENDENT OF INSURANCE DATE: JULY 08, 2016 RE: PAYMENT OF CLAIMS BY ELECTRONIC FUNDS TRANSFER This Bulletin is issued pursuant to Section 59A-2-8 NMSA 1978 of the New Mexico Insurance Code, 13.1.2 et seq. NMAC. NMSA 1978 §59A-16-21A currently states as follows: 59A-16-21. Payment of claim by check or draft; failure to pay; interest. A. An insurer shall pay claims arising under its policies with checks or drafts which are promptly paid. Without amending other statutes dealing with checks and drafts, a resident of New Mexico is granted a cause of action for ten percent of the amount of any check or draft that is not paid or lawfully rejected within ten days of forwarding by a New Mexico financial institution, but in no case to be less than five hundred dollars ($500) plus costs of suit and attorneys' fees. The insurer shall not be required to pay such civil damages for delay if it proves that the delay in processing and payment was caused by a financial institution or postal or delivery service, and the check or draft was paid or lawfully rejected within forty-eight hours of actual receipt of the draft or check by the person on whom drawn. ... (emphasis added) plus costs of suit and attorneys' fees. The insurer shall not be required to pay such civil damages for delay if it proves that the delay in processing and payment was caused by a financial institution or postal or delivery service, and the check or draft was paid or lawfully rejected within forty-eight hours of actual receipt of the draft or check by the person on whom drawn. ... (emphasis added) This statute is clearly intended by the New Mexico Legislature to protect insurance consumers from unreasonable delays in the payment of claims by insurers. This is a reasonable and legitimate concern on the part of the Legislature and the Office of the Superintendent of Insurance as the regulator responsible for the supervision of this industry. Prompt payment of claims is a crucial component of the insurance business. It must be noted, however, that the statutory provision quoted above was passed in its present form more than thirty years ago, and business practices have changed significantly during that time. In particular, financial transactions may now occur through electronic payments, which occur almost instantaneously and securely and which were not available to either individual or business insurance consumers in 1984. The Superintendent is aware that this provision of the Insurance Code should be updated to allow for electronic payments as an ordinary business practice, and that such an amendment would significantly benefit insurance claimants and beneficiaries since electronic payments are speedier and more secure than the mailing or ground delivery of checks and drafts. Electronic payments would also benefit the payor by protecting against loss of the payment and the attendant administrative inconvenience of verifying and replacing the payment. siness practice, and that such an amendment would significantly benefit insurance claimants and beneficiaries since electronic payments are speedier and more secure than the mailing or ground delivery of checks and drafts. Electronic payments would also benefit the payor by protecting against loss of the payment and the attendant administrative inconvenience of verifying and replacing the payment. Until the statute can be changed through the legislative process, however, it is the determination of the Superintendent that electronic payment of claims, properly processed with voluntary participation and documented consent of the payee as well as the payor shall be deemed compliant with the requirement of this Section 59A-16-21 to make payment by means of check or draft. All other terms of this Section remain in full force and effect. ISSUED at Santa Fe, New Mexico on July 18th, 2016. OFFICE OF NEW MEXICO SUPERINTENDENT OF INSURANCE John G. Franchini Superintendent of Insurance