Lesson 11: NC Statutes & Regulations Pertinent to Life Insurance

Insurance Continuing Education Credits

(ICECs) - 24 per biennial compliance period for those licensed in: life, accident and health/sickness, property, casualty, personal lines. -Must maintain record of ICECs for 5 years.

Flood Insurance

-3 ICECs and courses on flood insurance and National Flood Insurance Program; -property, personal lines, adjuster

Notification of Criminal Convictions; Change of Address; Service of Notice; Contracts for Online Service, Admin Services, or Regulatory Data Systems

-Applicants provide Commissioner with address and email address; has 10 business days to inform Commissioner of any changes or is subject to a $50 fee. -Any conviction other than traffic violation must be reported to Commissioner within 10 business days. -Commissioner will contact licensee directly or send first-class mail for any service notices. -Licensees needing to notify Commissioner may do so in writing or with approved online service. -Commissioner may work with NAIC to get an online service for licensees.

Disclosure Requirements

-Buyer's Guide and Policy Summary prior to premium payment. -unconditional refund provision of at least 10 days does not require a buyer's guide

Commissioner's Election and Term of Office

-Elected by the people; same as General Assembly and State officers. -Term begins January 1st after they are elected and is 4 years or until someone else is elected. -Governor fills in any vacancy in an unexpired term.

License Surrender

-Licensee accused of any act, omission, or misconduct that would subject to suspension or revocation may surrender license for a period of time established by Commissioner.

Restraining Orders; Criminal Convictions

-Restraining orders are given when any person violates or threatens to violate Chapter 58, or Article A of Chapter 143 of the General Statutes. -Application must be given in the superior court of any county. -When licensee is convicted in court, their license is suspended until reinstated by the Commissioner. -Conviction: adjudication of guilt, plea of guilt, and plea of nolo contendere.

Application for License

-at least 18 -not committed any act that is grounds for probation, suspension, nonrenewal or revocation -satisfied education and training -paid fees -passed required exams.

Discriminatory Practices Prohibited

-basing standard or rating plan for private passenger automobiles or motorcycles on age or sex. -refusing to insure or continue to insure, limit coverage, or charge different rates solely on blindness or deafness. -refusing to insure or continue to insure, limit coverage, or charge different rates because of race, color, or national/ethnic origin of that individual.

Purpose of Consumer and Customer Information Protection

-establish standards for use of info -maintain balance -regulate use of info -limit disclosure -enable applicants and policyholders to obtain reasons for adverse underwriting decisions

Examination, Hearings, and Investigations

-examinations, hearings, and investigations may be conducted by the Commissioner personally. -Commissioner may arrest with warrant or have person arrested if there is evidence of criminal activity. -All hearings must be held in ordinance with NC General Statutes and be at a time/place designated in a written notice by the Commissioner and given to the person cited. -Notice must state subject of inquiry and any charges.

Industrial Life

-premiums payable monthly or more frequently; face amount less than $1000; "Industrial Policy" is part of policy description.

Powers and Duties of Commissioner

-prescribe the necessary forms and financial statements to entities as described in Chapter 58. -report any violations of the law by insurance companies to the Attorney General -give synopsis of any insurance contract offered to citizens -administer oaths required in the discharge of Commissioner's official duty. -compile and make available list of rates charged and explanation of coverage for: Insurance against loss to residential real property and Private passenger (nonfleet) motor vehicle -administer and enforce provisions of Patient Protection and Affordable Care Act and the provisions of the Health Care and Education Reconciliation Act of 2010.

Purpose of Life and Health Guaranty Association

-protect insurance consumers against failure of contractual obligations due to delinquency of the member that issued the policy -protection provided by association of insurers who pay benefits and continue coverage as limited. Members of Association are subject to provide funds.

Included in notice when there is a change of benefits:

-whether personal information will be collected -types of personal information that will be collected -description of consumer rights -that information retained from a report may be disclosed to other persons/organizations -other disclosures required by NC law.

Minors in NC have full power and authority to make contracts of insurance at age

15

Compliance Years

24 hours of CE must be completed by last day of licensee's birth month in the compliance year. -Compliance year determined by birth year; if born on even year, CE completed in even number year. Odd year works respectively.

Ethics Course

3 ICECs + ethics course(s) within 2 years of licensure and every biennial compliance period for: life, accident and health/sickness, property, casualty, personal lines, variable life and variable annuity products.

Temporary Contracts of Insurance Permitted

A lender servicing real estate mortgages or deed of trust loans for 1-4 family residences must accept a contract of temporary insurance. A lender can refuse to accept a binder if under reasonable circumstances. -A binder should not be accepted unless it includes: name & address of insured, name & address of mortgagee, description of insured collateral, provision for cancellation, amount of insurance bound, receipt of payment for one year's premium, note of undertaker's best efforts to issue an actual policy.

Limited Lines Producer

A person authorized by the Commissioner to sell, solicit, or negotiate limited lines insurance.

License Required

A person may not sell, solicit, or negotiate insurance in NC without a license for that kind of insurance.

Limited Line Credit Insurance Producer

A person who sells, solicits, or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group, or individual policy.

Civil Penalties or Restitution Violations; Administrative Procedure

After notice to licensee and opportunity for hearing the person may have to pay: -fine of $100-$1000 ordered by Commissioner based on degree and extent of harm. -restitution to any person harmed -restitution to any state agency to cover administrative fees.

Contract of Insurance

Agreement by which the insurer is bound to pay money or its equivalent, or do some act of value to the insured upon and as an indemnity or reimbursement for the destruction, loss, or injury of something in which the party has an interest.

Restricted License for Overseas Military Agents

An individual may be licensed as a foreign military sales agent to represent a life insurance company domiciled in NC, provided the agent represents the insurance company only in a foreign country or territory and either on a US military installation or with US military personnel.

Reporting and Investigation of Insurance and Reinsurance Fraud and the Financial Condition of Licensees; Immunity from Liability

Any person participating in an investigation is not subject to civil liability for libel or slander when furnishing information to the Commissioner pertaining to: any known/suspected fraudulent ins./reins. claim, transaction, or act OR the financial condition of any licensee. Persons must release any information requested and must cooperate in investigation.

Embezzlement by Insurance Agents, Brokers, or Administrators

Any type of embezzlement activity is subject to felony charge. -Value of $100,000 or more = Class C felony -Less than $100,000 = Class H felony

Report to Commissioner

Anyone thought to violate NC insurance law or a licensed entity thought to be financially impaired must be reported to Commissioner with a statement of relevant facts and circumstances.

Proof of Loss Forms Required to be Furnished

Blank proof of loss forms should be acquired by a representative of claimant from insurer. If forms are not furnished within 15 days after receipt of notice; claimant must be deemed to have complied by submitting written proof of occurrence character, and extent of loss within designated timeframe.

Books and Papers Required to be Exhibited

Books, accounts, or papers of any licensed company must be exhibited to Commissioner upon request. Refusal or false statements are subject to suspension or revocation of license and Class 1 misdemeanor if guilty.

Agent, Adjuster, Etc., Acting Without a License or Violating Insurance Law

Class 1 Misdemeanor for anyone w/out appropriate license to: -act as, or pretend to be, principal, agent, broker, limited representative, adjuster or licensed motor vehicle damage appraiser without required license. -solicit, examine or inspect any risk. -examine into, adjust, or aid in adjusting any loss. -investigate or advise relative to amount of damages/amount needed to make automotive repairs. -received, collect, transmit any premium of insurance. -any other act of soliciting, making, or executing any contract of insurance of any kind otherwise the law permits.

False Statement to Produce or Deny Benefit of Insurance Policy or Certificate

Class H felony to knowingly present (or assist someone in presenting) false or misleading information as part of a claim for payment or other insurance benefit. -Each claim counted separately; if convicted and court imposes probation, defendant may pay restitution as part of probation. -Civil conviction may result in paying compensatory damages, attorney's fees, costs, and reasonable investigative costs to the plaintiff.

Punishment for False Statement

Class I felony and court imposed fine of $2,000-$10,000.

Investigation of Charges

Commissioner must investigate any complaint of violations of Chapter 58. -If complaint is justified, the company is subject to penalties described in Chapter 58 as well as paying expenses for the investigation. -If company does not pay, Commissioner is authorized to bring a civil action to the company for collection of those expenses.

Limited License for Rental Car Companies

Commissioner my issue limited license for insurance to rental car companies.

Commissioner

Commissioner of Insurance of NC or authorized designee -Heads state Department of Insurance -Responsible for fair ratemaking, injury prevention efforts, and close regulation of insurance solvency and industry practices.

Limited Line Credit Insurance

Credit insurance written, mortgage life, mortgage guaranty, mortgage disability, automobile dealer gap, or any insurance offered in connection with an extension of credit limited to partially/wholly extinguishing that credit obligation; Commissioner determined form of limited line credit insurance.

Department

Department of Insurance of NC

License Requirements

File application, satisfy education and training, pass state exam, (brokers = bond), denial of license, resident (in the state) or nonresident license.

FINRA

Financial Industry Regulatory Authority

Individual Policy Standard Provisions

Individual policy may not be delivered if it does not contain: grace period, incontestability, misstatement of age or gender, suicide, reinstatement

Complaint Records

Insurer or agents must keep itemized log of any written complaints w/ the following: -Department's file number, name of insured, nature of complaint, insurer's department subject to the complaint, policy or claim number of the insured, final disposition of the complaint. -Records kept for 5 years or until Commissioner has adopted final report of general examination that contains review of the records for that calendar year.

Solicitation, Negotiation, or Payment of Premiums on Insurance Policies

Insurer, agent, or broker may accept payment of premiums by credit or debit card; Insurer must comply with the prohibition against unfair discrimination.

Certain Insurance Activities by Lenders with Customers Prohibited

Lenders may not make, renew, finance or establish any terms or conditions of any loan. Lenders may not include organizations of the Farm Credit System.

Meaning of Terms "Accident", "Accidental Injury", and "Accidental Means"

Must be defined to imply "result" language and may not include words that establish an accidental means test. -Applies to provisions in group life, group accident, group health, and group accident and health insurance policies, and group annuities after October 1, 1989

NAIC

National Association of Insurance Commissioners

Discrimination Forbidden

No company doing the business of insurance may make any discrimination if favor of any person. Individuals of the same class in the amount of premiums or rates charged for any policy, benefits payable, or any term/conditions of the policy are prohibited.

Twisting with Respect to Insurance Policies; Penalties

No insurer should issue oral/written statements that willfully misrepresent the policyholder in order to induce or tempt them to terminate, surrender, exchange or convert any policy; Violation is subject to civil penalties, restitution, license suspension or revocation and future license restrictions.

Interstate Reciprocity in Producer Licensing

Person can receive nonresident producer license if: -they are licensed and in good standing in their home state. -submitted a request for licensure and paid fees. -submitted a copy of this application to their home state. -home state awards nonresident producer licenses to residents of NC on a reciprocal basis.

Record of Business Kept by Companies and Agents; Commissioner May Inspect

Record of business must include: number, date, term, amount insured, premiums, and all people who were issued a policy or certificate of renewal. Original book of business must be available to Commissioner if requested.

General License Requirements

Types: Accident and Health/Sickness, Casualty, Limited Line Insurance, Life, Medicare Supplement or Long-Term Care Insurance, Personal Lines, Property, Variable Life and Variable Annuity

May Require Records, Reports, Etc., for Agencies, Agents and Others

Violation of recordkeeping rules and regulations result in: -first offense: license(s) suspended or revoked for 6 months. -second offense: license(s) suspended or revoked for 1 year. Refusal of submitting information to Commissioner can result in revocation and refusal of license.

Agent

a person licensed to solicit applications for, or negotiate a policy, of insurance.

Adjuster

a person who for investigates or reports to his principal relative to claims arising under insurance claims arising under insurance contracts other than life or annuity for any type of compensation.

Limited Representative

a person who is authorized to solicit or negotiate contracts for insurance types identified in G.S. 58-33-26(g) and which kinds of insurance are restricted in the scope of coverage afforded.

Appointment of Agents

an insurer may appoint its agent as an individual who holds a valid agent's license issued by Commissioner. Appointing insurer must file a notice of appointment within 15 days after the date of the first insurance application is completed. -insurer pays appointment fee. -Agent remains appointed until the appointment is cancelled. -Must be renewed each year by April 1.

Prearrangement

any contract, agreement, or mutual understanding created for specific funeral services and final disposition of deceased body; does not mean furnishing burial plot, marker, or monument. *Prearrangement Insurance Policy- contract created for funding funeral or burial.

Federal Privacy Disclosure Notice

given annually during continuation of policy

Hardship

if licensee is experiencing hardship, may request extension for CEs before the last month of their compliance year.

Person has the right to insure the life of the other in a partnership

true

Carryover Credit

whole ICECs can be carried over into the following compliance period; no limit on ICECs carried over.

Person

individual, partnership, firm, association, corporation, joint-stock company, trust, any similar entity, or combination acting together.

Notice of Insurance Information Practices

insurance institution or agent must provide a notice to all applicants or policyholders in connection with insurance transactions

Credit Life Insurance

insurance on the life of a debtor that may be indebted to a person, firm or corporation; may allow addition benefits to debtor in event of total/permanent disability.

General Rules to Soliciation

insurer is subject to maintaining a complete file containing one copy of each document authorized by the insurer. Must contain one copy of each authorized form for a 3 year period following date of its last authorized use.

False pretenses and cheats

it is a felony to knowingly act by means of false pretenses in order to cheat or defraud an individual; Class C felony for damages over $100,000 Class H felony for damages under $100,000

Broker

licensed agent who procures insurance for a party other than himself through a licensed agent of insurance that is licensed to do business in that State but for which the broker is not authorized to act as agent.

Unfair Trade Practices

misrepresentation and false advertising of policy contracts; false information and advertising generally; defamation; boycott, coercion, and intimidation; false financial statements; stock operations and insurance company advisory board contracts; unfair discrimination; rebates; advertising of health, accident, or hospitalization insurance; soliciting unauthorized insurance contracts in other states; unfair claim settlement practices; misuse of borrowers' confidential information; overinsurance in credit or loan transactions

Limited Lines Insurance

motor vehicle physical damage and title insurance

Pretext Interview

no insurance entity/agent may use or authorize use of pretext interviews to obtain information in connection with insurance transaction.

Replacement Regulations

protect interests of life insurance and annuity purchasers: -assure purchasers to receive information to help them make best decisions. -reduce opportunity for misrepresentation and incomplete disclosures. -establish penalties.

Viatical Settlement

sale of a life insurance policy by the policy holder before the policy matures; settlements occur with those with shorter life expectancy/become terminally ill.

Soliciting Agent Represents the Company

soliciting application for insurance upon the life of another... agent is of the company, not the insured.

Notice of Non-payment must be issued

to insured's last known address at least 15 but no more than 45 days prior to when payment is due prior to forfeiture.

Life Insurance Disclosure Act

to require information to be delivered to purchasers of life insurance that will improve: -buyer's ability to select the plan that best suits their needs. -buyer's understanding of the policy -ability of the buyer to evaluate costs of similar plans