New Mexico § 52-6-8 - Board of trustees; membership, powers, duties and prohibitions

§ 52-6-8. Board of trustees; membership, powers, duties and prohibitions

Each group shall be operated by a board of trustees that shall consist of not less

than five persons whom the members of a group elect for stated terms of office. At least two-thirds of the trustees shall be employees, officers or directors of

members of the group. The group's administrator or service company, or any owner, officer or employee

of, or any other person affiliated with, the administrator or service company shall

not serve on the board of trustees of the group. All trustees shall be residents of this state or officers of corporations authorized

to do business in this state. The board of trustees of each group shall ensure that all claims are paid promptly

and take all necessary precautions to safeguard the assets of the group, including

all of the following: A. the board of trustees shall: (1) maintain responsibility for all money collected or disbursed from the group and

segregate all money into a claims fund account and an administrative fund account. At least seventy percent of the net premium shall be placed into a designated depository,

to be called the “claims fund account”, for the sole purpose of paying claims, allocated

claims expenses, reinsurance or excess insurance and special fund contributions, including

second-injury and other loss-related funds; provided that income taxes may be paid

from the actuarially determined surplus portion of the claims fund account at the

discretion of the board of trustees. The remaining net premium shall be placed into a designated depository, to be called

the “administrative fund account”, for the payment of taxes, general regulatory fees

and assessments and administrative costs. The director may approve an administrative fund account of more than thirty percent

and a claims fund account of less than seventy percent only if the group shows to

the director's satisfaction that: (a) more than thirty percent is needed for an effective safety and loss-control program;

or (b) the group's aggregate excess insurance attaches at less than seventy percent; (2) maintain minutes of its meetings and make the minutes available to the director; (3) designate an administrator to carry out the policies established by the board

of trustees and to provide day-to-day management of the group and delineate in the

written minutes of its meetings the areas of authority it delegates to the administrator;

and (4) retain an independent certified public accountant to prepare the statement of

financial condition required by Subsection A of Section 52-6-12 NMSA 1978; and B. the board of trustees shall not: (1) extend credit to individual members for payment of a premium except pursuant to

payment plans approved by the director; or (2) borrow any money from the group or in the name of the group except in the ordinary

course of business, without first advising the director of the nature and purpose

of the loan and obtaining prior approval from the director.