Licensing of Agents, Brokers, Limited Representatives, and Adjusters

Agent

A person licensed to solicit applications for or to negotiate a policy of insurance on behalf of an insurer.

Insurance Producer

A person required to be licensed to sell, solicit, or negotiate insurance. (Includes an agent, broker, and limited representative)

Broker

A person who is licensed as an agent and obtains insurance for the insured through a duly authorized agent of an insurer licensed to do business in this state, but for which the broker is not authorized to act as an agent.

Blank Policies

An agent or limited representative who signs a blank contract or insurance policy is guilty of a Class 3 misdemeanor and upon conviction will be punished by a fine of $1,000 - $5,000.

Adjuster

An individual who, for a salary, fee, commission, or other compensation, investigates or reports to their principal with respect to claims arising under contracts other than life or annuities.

Assumed Names

An insurance producer doing business under any name other than the producer's legal name must notify the Commissioner before using the assumed name.

False Statements in Applications

Any agent, physician, applicant, or person who knowingly makes any false or fraudulent statements or representations on an insurance application for the purpose of obtaining any fees or commissions from a company engaged in the business of insurance will be guilty of a Class 1 misdemeanor.

Payment of Premium to Agent

Any producer receiving premiums through fraudulent representations is guilty of a Class 1 misdemeanor.

Limited Representative

Authorized by the Commissioner to solicit or negotiate contracts of insurance that are restricted in the scope of coverage they afford.

Representation

-Agent or Limited Representative: Represents the insurer. -Broker: Represents the insured or beneficiary.

Resident License

-An individual residing in this state will qualify. -Any licensee who ceases to maintain residency in this state must personally deliver or mail their insurance license to the Commissioner within 30 days after terminating residency.

Acting without a License

-Any person acting or pretending to be an agent, broker, limited representative, or adjuster by examining or investigating, collecting or transmitting premium, or soliciting or executing any contract of insurance. -Class 1 misdemeanor

License Denial

-If the Commissioner finds that the applicant has not fully met the requirements for licensing, the Commissioner will refuse to issue the license and send written notification to the applicant and the appointing insurer of the denial, stating the grounds for the denial. -A license applicant may request a review by the Commissioner within 30 days after receiving notice that the license application has been denied. -An applicant who disagrees with the outcome of the review may request a hearing within 30 days.

License Qualifications

Commissioner must find that the individual: -Is at least 18 years of age -Has completed at least 20 hours of prelicensing education for each license sought -Has taken and passed a required licensing examination -Paid the applicable fees -Has not committed any act that would be grounds for license probation, suspension, revocation, nonrenewal, or denial

Business Entity Licensing

-A corporation, association, partnership, limited liability company or partnership, or other legal entity. -Does not include a sole proprietorship. -Every member of a partnership and every officer, director, stockholder, and employee personally engaged in this state in selling, soliciting, or negotiating policies of insurance must qualify as an individual licensee. -Not required for officers, directors, or employees of insurers or insurance producers if these persons do not receive commissions from policies written or sold to insure risks within North Carolina. -Not required for those who gather information for, enroll individuals in, issue certificates for, or help administer group or blanket plans.

Nonresident License

-A person must be currently licensed and in good standing as a resident agent in their home state. -Will automatically lapse 30 days after the loss of the nonresident's home state license.

Referral of Business

-An insurer, agent, or adjuster may not recommend the use of a particular service or source for the repair of property damage without clearly informing the claimant that they are under no obligation to use the recommended repair service. -Gratuity or remuneration may not be received from a repair service for recommending that repair service to claimants. -Discounts agreed to by repair services are not prohibited.

Representing an Unlicensed Insurer

-Any person who solicits, negotiates, or sells insurance for an unauthorized insurer is strictly liable for any losses or unpaid claims if an unauthorized insurer fails to pay any claim in part or in full. -Class 1 misdemeanor if they do not know the insurer is unauthorized -Class H felony if they knew or should have known the insurer was not authorized

Suspension, Probation, Revocation, and Nonrenewal of License

Commissioner may suspend, place on probation, revoke, or refuse to renew a license for any one or more of the following causes: -Providing materially incorrect, misleading, incomplete, or false information on a licensing application -Obtaining or attempting to obtain a license through misrepresentation or fraud -Cheating on a prelicensing or continuing education exam -Using dishonest or fraudulent practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business -Being convicted of a felony or a misdemeanor involving dishonesty, breach of trust, or moral turpitude -Forging another's name to an insurance application or document related to an insurance transaction -Improperly withholding, misappropriating, or converting monies received while transacting insurance business -Willfully failing to notify the Commissioner of insolvency, bankruptcy, or receivership proceedings being taken against a licensee within 3 business days after the proceedings begin -Violating any state's insurance law or order of the Commissioner -Intentionally misrepresenting the terms of an insurance policy or application -Having an insurance producer license denied, suspended, or revoked in another state -Knowingly accepting insurance business from an individual not licensed to broker that kind of business -Willfully overinsuring property -Committing any insurance unfair trade practice -Soliciting, negotiating, or selling insurance for an unauthorized insurer, even if the licensee did not know the insurer was not authorized -Failing to pay state income tax -Failing to comply with a court order to pay child support -Commissioner may enforce penalties or take action against a person who is under investigation or has been charged with a violation even if the person's license has been surrendered or lapsed. -Commissioner will notify every appointing insurer about any suspension, revocation, nonrenewal, or surrender of a license.

Countersignature

There may not be requirement that a licensed resident agent or broker must countersign, solicit, transact, deliver, or process an application, policy, or contract on behalf of a nonresident agent, broker, or an authorized insurer.

Temporary Licensing

-Commissioner may issue a temporary license, without regard to education, experience, or exam requirements, for up to 180 days: -To the spouse, representative, or guardian of a deceased or disabled producer -To a member or an employee of a licensed business entity if the designated producer dies or becomes disabled -To the designee of a licensed producer entering the Armed Forces -As the Commissioner deems appropriate to the public interest -Commissioner may restrict or revoke a temporary license to protect the public. -A person holding a temporary license may not acquire any new insurer appointments. -Commissioner may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee. -Terminates upon the transfer of the business.

Ethical Standards

-Every insurance professional, when dealing with the public, must identify themselves and their occupation, carry their license for display upon request, and deal fairly and honorably. -An insurance professional may not: -Accept anything of value from a service provider for recommending the provider to claimants -Buy salvage from a claimant -Discourage a claimant from seeking legal counsel -Delay settlement of a property damage claim because of the claimant's choice of auto repair shop -Recommend an auto repair shop without stating that the claimant gets to choose the shop

Broker Licensing

-Must already possesses an agent's license and maintain an agent's license throughout licensure as a broker. -Will be issued only for the same lines of insurance authorized under the agent license. -Suspension or revocation of the agent license will immediately suspend or revoke the broker's license. -Must be renewed annually on April 1st. -Prior to issuance, the applicant must post a $15,000 surety bond in favor of the state of North Carolina. -The bond may not be terminated unless at least 30 days' prior written notice is given by the surety to the licensee and the Commissioner.

Reciprocity in Producer Licensing

-North Carolina complies with the reciprocity requirements in the federal Gramm-Leach-Bliley Act regarding all insurance licenses, except surplus lines licenses. -A nonresident person will be granted a nonresident license if: -The current home state license is in good standing -A request for licensure and applicable fees are submitted to the Commissioner -A copy of the application for licensure from the home state or a completed Uniform Application has been submitted to the Commissioner -The home state awards nonresident producer licenses to residents of this state on a reciprocal basis -A producer must report to the Commissioner any administrative action taken against the producer in another state or by another governmental agency in North Carolina within 30 days after final disposition. -An individual licensed as an insurance producer in another state who moves to North Carolina and applies for a resident insurance producer license in this state for the same kinds of insurance is exempt from education and examination requirements if the license application is received within 90 days after the person's license in the former state is cancelled.

General Licensing Requirements

-A licensed agent, broker, or limited representative may not sell, solicit, or negotiate any policy or transmit an application or premium for an unauthorized insurer that is not licensed to do business in this state. -An agent or broker must qualify for a license in one or more of the following kinds of insurance in order to sell, solicit, or negotiate these kinds of insurance: -Property -Casualty -Personal lines -Limited lines -Life -Accident and health or sickness -Medicare Supplement and Long-Term Care if licensed for accident and health or sickness -Variable life and variable annuity products -An individual who holds a property, casualty, or personal lines insurance license may apply for an adjuster license without having to take the adjuster exam if the property, casualty, or personal lines insurance license is surrendered within the previous 60 days. -The license must state the name and identifying number of the licensee, date of issue, kinds of insurance covered by the license, and any other information deemed necessary. -The license authorizes a person to act as an agent until the license is otherwise suspended or revoked, at which time the license must be returned to the Commissioner.

Appointment

-An individual who holds a valid insurance agent's license may not solicit, negotiate, or otherwise act as an agent for an insurer without an insurer appointment. -An agent may have only one appointment for each kind of insurance they are licensed for in North Carolina. - Continues in effect as long as the appointed agent is properly licensed and the appointing insurer is authorized to transact business in this state, unless the appointment is cancelled. -To appoint a licensed individual as its agent, insurer must: -File a notice of appointment within 15 days after the first insurance application is submitted -Pay the appointment fees as required by the Commissioner -Submit a renewal fee for each appointed agent by line of insurance prior to April 1 of each year

Commissions

-An insurance company or producer may not pay a commission, service fee, or other valuable consideration to a person other than a licensed insurance producer for selling, soliciting, or negotiating insurance. -The payment of renewal or other deferred commissions to a person who held a license at the time of the original sale is permissible. -A person may not accept a commission, service fee, brokerage, or other valuable consideration for selling, soliciting, or negotiating insurance if that person is required to be licensed but is not. -Commissions, fees, or other valuable consideration for the sale of insurance may be assigned or directed to be paid: -To a business entity by an owner, shareholder, member, partner, director, employee, or agent of that business entity -To a producer in connection with renewals of insurance business originally sold by or through the licensed person or for other deferred commissions -In connection with the indirect receipt of commissions in circumstances in which a license is not required

Termination of Appointment

-An insurer that terminates a producer's appointment must: -Notify the Commissioner within 30 days after the termination's effective date. -Provide additional information, documentation, or records pertaining to the termination or activity of the producer. -Give the producer a copy of the termination notice within 15 days after notifying the Commissioner of the termination. -The producer has 30 days after receiving the termination notice to file written comments with the Commissioner and insurer. -An insurer or producer failing to report a termination, or reporting a termination with malice, may, after a notice and hearing, be fined or have its license suspended or revoked.

Rebates and Charges in Excess of Premium Prohibited

An insurer, agent, or broker must not: -Excess Premiums - Knowingly charge, demand or receive a premium for any policy of insurance except in accordance with the applicable filing approved by the Commissioner. -Rebates - Pay, allow, or give directly or indirectly as an inducement to buy insurance. This includes any rebate, discount, abatement, credit, or reduction of the premium named in a policy of insurance after the insurance has been effected. Also included is any special favor or advantage in the dividends or other benefits that accrue, or any valuable consideration or inducement that is not specified in the policy of insurance. -Charges for Related Services - Knowingly charge or receive from an applicant for insurance any money or other consideration, such as money, in addition to the premium in return for the processing of applications or other forms or for the rendering of services associated with a contract of insurance, unless the applicant consents in writing before any services are rendered.