NC State Insurance Law

License Qualifications

-18 -20 hours of pre-licensing -licensing examination -paid fees -no criminal record

Must provide _____ days notice for coverage or rate change.

15 days must also notify agent

For Workers Comp and employers liability insurance, The Commissioner has ____ days to give notice of a hearing.

60

Commissions

Agent has to be licensed to get commission

Insurance Producer

An agent, broker, or limited representative. -A person licensed to sell, solicit, or negotiate insurance.

Termination of Appointment

An insurer that terminates a producers appointment must let the Commissioner know within 30 days after the terminations effective date. The insurer must give the producer a copy of the termination notice within 15 days after notifying the Commissioner of the termination The Producer then has 30 days after receiving the termination to file written comments with the Commissioner and Insurer. Those comments are included in any report disclosed about the producer. An insurer or producer failing to report a termination may have their license suspended or revoked

Judicial Review - The Commissioner

Any order or decision made by the Commissioner will be subject to judicial review in the Superior Court if a petition is filed within 30 days from the date of delivery of the order or decision. -Does not include decision about financial impairment or premium rates

Acting without a License

Any person acting as if they have a license is guilty of a CLASS 1 MISDEMEANOR -If you are not licensed, but should be, you have to pay an admin fee of $50

False Statements in Application

CLASS 1 MISDEMEANOR for false application statement

Embezzlement

Embezzlement in the amount of MORE THAN $100,000 IS A CLASS C FELONY LESS THAN $100,000 IS CLASS H FELONY Includes: -Embezzlement -Fraudulently converting for own use or withholds -Disposes of -Appropriates -Lends -Invests

Fraternal Benefits Society

NON-PROFIT, fraternal benefits society. -Social organizations that provide health and life insurance to their members.

Rebates and Charges in Excess of Premium Prohibited

None of the above can be done by an agent broker or insurer.

Statements in the Applicaiton

REPRESENTATIONS -Unless material or fraudulent, will not prevent a recovery on the policy

"Choose in Action"

The right to sue a person to recover property, money, goods, or debts

NC Rate Bureau provides coverage for damage to rental vehicles for damage over ___________ if you have not been renting the car for over____days.

$250, 21 days

License Denial

-If the Commissioner finds the applicant does not meet the requirements for licensing, they will send a notification to the applicant stating the grounds for denial -A license applicant can request a review within 30 days of receiving the notice of denial. If the applicant disagrees with the review, they can request a hearing within 30 days.

If the Commissioner denies the NC Rate Bureaus filing, he must give notice within _______ days of the filing.

50

Reciprocal Insurance Company

A group-owned insurer whose main activity is risk sharing. -Unincorporated -Each member is a subscriber -Assessment of additional premium can be made

Ethical Standards

A producer must -Carry license with them A producer must not -Accept anything of value from a service provider for recommending their service -Buy salvage from a claimant -Discourage a claimant from seeking legal counsel -Delay settlement of a property damage claim because of the claimants choice of auto repair shop -Recommend an auto repair shop without stating that the claimant can choose the shop

Disclosure Authorization Forms

Following Requirements: -Dated -Type of person authorized to disclose information -Nature of disclosure -Purpose for disclosure -The length of time the authorization remains valid

Punishment for Misstatements

Making willful misstatements of information in financial or other required statements is a CLASS I FELONY, punishable by a fine of not less than $2,000 and not more than $10,000

Notice of Insurance Information Practices

Must be provided at policy delivery -No privacy info notice needs to be provided to the insured if one was provided within past 24 MONTHS The notice must include: -Whether personal information will be collected -Types of info collected -Types of disclosures required -Description of individuals rights

Producer (Agent)

Represents the insurance company when selling an insurance policy

What are the features of an Unauthorized Insurer

- Business is considered to be contrary to public welfare -Insurer may be licensed in a foreign jurisdiction -The insurer does not have a Certificate of Authority -The insurer is NOT subject to NC insurance laws

Insurance Regulation at the State Level

- Insurance is primarily regulated at the state level. -The Legislative Branch writes and passes the laws. -The Executive Branch enforces the existing statutes that have been put in place. -The Commissioner has the power to issue rules and regulations to help enforce these statutes

Penalties for Violating Privacy Regulation

-License suspension or revocation -Fine up to $10k per violation -Fine up to $50k if violations occur with frequency that constitutes a general business practice Legal action regarding illegal disclosure of private information must be brought within 2 years from the date of the alleged violation

Business Entity Licensing

A business entity engaged in selling, soliciting, or negotiating insurance contracts MUST OBTAIN A LICENSE. Every officer, director, stockholder, and employee of the business personally engaged in this must qualify as an individual licensee.

Investigations of Complaints - The Commissioner

A citizen of this state may file a complaint and the Commissioner must investigate the complaint. They Commissioner can request information for investigation from any person. Providing this evidence does not make you liable for slander or libel. -If the complaint is justified, the insurer must pay investigation expenses and any appropriate fines.

Contract of Insurance

An agreement that obligates an insurer to compensate an insured when there is a destruction, loss, or injury to something which the insured has an interest.

Resident License

An individual must be residing in the sate to apply for a resident license. -A licensee must notify the Commissioner within 30 days of terminating residency (moves)

Payment of Premium to Agent

CLASS 1 MISDEMEANOR for fraudulent receipt of premium

The Commissioner of Insurance

Elected by NC residents and regulates insurance carriers and issues insurance licenses -approves rates -conducts examinations -4 year term -Governor acts as Commissioner if the position becomes vacant

Special Cases for C.E. Courses - Who gets to opt out?

Legislators and Committee Members of the General Assembly are awarded 24 ICEC credits each biennial year based on government service

Non Resident License

To qualify, the licensee must be currently licensed and in good standing as a resident agent in their home state. If the license in the resident state falls out of good standing, the nonresident license will lapse 30 days after the loss of the home state license. - A nonresident license may be reinstated within 30 days after lapse upon proof that the nonresident's home state license has been reinstated.

Broker

licensed as an argent and obtains insurance for the insured through a duly authorized agent of an insurer licensed to do business in this state. -Represents the INSURED

General Licensing Requirements

-Must be an authorized insurer - Property, Casualty, Personal Lines, Limited Lines, Life, Accident and health or sickness, Medicare Supplement Long Term Care if licensed for accident and health or sickness, Variable life and variable annuity products P&C An individual who holds a P&C or personal lines license may apply for an adjuster license without having to take the adjuster exam if the license is surrendered within the previous 60 DAYS. THE LICENSE Must state the name and ID number, date of issue, kinds of insurance covered -The Commissioner may issue duplicate licenses

Penalty for placing business as an Unauthorized Insurer

1ST OFFENCE - a fine not over $5000 2ND OFFENCE + - $10000 PER VIOLATION EVERY DAY IS A NEW VIOLATION

C.E. Requirements for P&C License

24 ICECs each biennial compliance period 3 ethics ICECs each biennial compliance period 3 flood insurance ICECs each biennial compliance period

Adjuster

A person who for a salary or fee or commission investigates or reports to their principal with respect to claims arising under contracts other than life or annuities. -Does not include attorney who occasionally adjusts losses incidental to their profession or an adjuster of marine losses.

Representation

Agent - Represents the Insurer and NOT the insured Broker - Represents the Insured and NOT the insurer -When an insurer delivers an insurance policy to a broker directly or through an authorized agent is deemed to have authorized the broker to receive payment pf premium that is due at the time of policy delivery.

Representing an Unlicensed Insurer

Any producer selling insurance from an unlicensed insurer is STRICTLY LIABLE if the unlicensed insurer fails to pay claims. Even if they did not know that the insurer was unlicensed. CLASS 1 MISDEMEANOR if they do not know CLASS H FELONY if they did know or should have known

Blank Policies

CLASS 3 MISDEMEANOR for singing a blank policy FINE $1k-$5k

The National Association of Insurance Commissioners (NAIC)

Consists of all state and territorial insurance commissioners or regulators. Promotes uniformity among states and members may accept or reject recommendations. No legal authority to enforce or enact insurance laws.

Types of Business Entities

Corporation, association, partnership, limited liability company or partnership or other legal entity. -Does not include Sole Proprietorship

Unauthorized Insurer Exceptions

Covering Nuclear Electric Reinsurance marine aircraft or liability insurance Is obtained through a surplus lines insurer Is otherwise legal and happens to cover a group, in another state, with insureds who are NC residents

Complaint Records

Every insurer must maintain record of all complaints for 5 YEARS or, if domestic, until the Commissioner has adopted a final report of a general examination that contains a review of those records for that calendar year, whichever is later. Must contain -Insureds name -Nature of complaint -Policy/Claim number -Final disposition of the complaint

Penalty for Obtaining Property under False Pretenses

If theft is greater than $100,000 CLASS C FELONY If theft is less than $100,000 CLASS H FELONY

Adverse Underwriting Decisions

If there is a denial, written statement with reason and summary of rights must be delivered to insured The insured has 90 days to request a reason for an adverse underwriting decision The insurer has 21 days to respond to the request Insurer cannot base underwriting decision on a previous adverse underwriting decision

Assumed Names

If you use a nickname, you have to tell Commissioner

Broker

Represents the insured when selling an insurance policy

Agent

a person licensed to solicit applications on behalf of an insurer. -Represents the INSURER

Producer of Record

Every insurance agency in NC must appoint a producer of record. This person ahs the responsibilities of seeing that all records are maintained as required and provide to Commissioner as requested. If you violate the record-keeping regulations -First offence, person may have their license suspended or revoked for not less than one month or more than 6 months. -Second offence, the person may have their license suspended or revoked for one year -If you refuse to provide or make false statements on these records, you are guilty of a CLASS 1 MISDEMEANOR and subject to license suspension or revocation

Twisting

When an insurer misrepresents or incompletely compare the terms conditions or benefits of any insurance policy in order to induce a policyholder to replace an existing policy.

Failure to Complete ICEC's

Within 4 months you can take your C.E. Courses and pay a $75 fine. After 4 months you must take the pre-licensing course and the state proctored exam again to reobtain your license. An extension of deadline for C.E. may be requested for circumstances of hardship if the request is placed during or before the last month of the current compliance year. Up to one year can be allowed for either military service or a notarized note from a doctor stating that the producer is unable to do the work they are licensed to do and needs a long-term medical disability waiver. Provisions for ppl 65+, too.

Reciprocity in Produce Licensing

- Gramm-Leach-Bailey Act: set requirements for reciprocity. -The requirements to receive a nonresident license 1)Good standing resident license 2)Request for licensure and fees have been sent to Commissioner 3)A copy of the application for the resident state has been submitted to the Commissioner 4)The home state awards nonresident producer licenses to residents of this state on a reciprocal basis If you qualify, the Commissioner will waive the license application requirements and will accept a home state continuing education requirements. -Must report following final disposition within 30 days If you move to NC and apply for a resident license for the same kind of license you already have that same kind of insurance will be exempt from education and examination requirements if the license application is received within 90 DAYS after the persons license in the former state is cancelled.

Insurance Information and Privacy Protection Act

-Established standards for collection use and disclosure of info gathered in connection with ins transactions -Maintain a balance between need for info and fairness -Minimize intrusiveness -Establish regulatory mechanism to enable individuals to determine what info is being collected about them and has access to dispute it -Limit the disclosure of info collected -Enable insurance applicant to obtain reasons for adverse underwriting decisions

Referral of Business

An insurer or agent 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 that repair service. Agent cannot receive gratuity for recommending a particular repair service. BUT repair services can offer discounts

Marketing or Research Surveys

An insurer or agent must clearly identify questions designed to obtain information solely for marketing or research purposes from those in connection with an insurance transaction

Pretext Interviews

An interview where a person in attempt to obtain info about a natural person, performs one or more of the following acts: -Pretends to be someone he is not -Pretends to represent someone he does not -Misrepresents the true purpose of the interview -Refuses to identify himself upon request

Broker Licensing

Brokers must already have an agent license and maintain an agents license throughout licensure as a broker. -A brokers license must be renewed annually on April 1st -Prior to issuance of a license as a broker, the applicant must post a $15,000 SURTEY BOND in favor of North Carolina. -This bond must not be terminated unless at least 30 days after receiving notice that the license application will be denied. An applicant who disagrees with the outcome of the review may request a hearing within 30 days.

Discriminatory Practices Prohibited

Cannot base any standard or rating plan for private passenger autos on the age or sex of the person insured. May not refuse based on race, color, or national or ethnic origin. -Cannot discriminate in favor of any person

The Federal Insurance Office (FIO)

Established by the Dodd-Frank Wall Street Reform and Consumer Protection Act. -Monitors the insurance industry to identify gaps in the state regulation. -Monitors affordable access to insurance by underserved communities.

Notifications to the Commissioner

Every applicant for a license must provide the Commissioner with a residential address and email address. -Commissioner must be notified in writing within 10 DAYS of a change in address or email address -Violation of this requirement is subject to a $50 ADMINISTRATIVE FEE. -If a licensee is convicted of any crime other than minor traffic, they must notify The Commissioner within 10 days after the conviction.

Deadlines for The NC Rate Bureau

Feb 1st - Private Passenger motor vehicle ins May 1st 2021, files a schedule of credits for policyholders based on the presence of mitigation and construction features and on the condition of buildings that it insures in teh beach and coastal areas of the state Reviewed annually Binders are good for 30 days

Risk Retention Group (RRGs)

Group-owned insurers that primarily assume and spread the liability related risks of their members. -Owned by policyholders and licensed in at least one state -May insure members of the group in other states -Large number of similar unites and membership is limited to risks with exposure to similar liability needs i.e. theme parks, go carts, waterslides -Must have sufficient liquid assets to meet loss obligations and each member assumes a portion of the risk insured

Hearings and Penalties

If there is a reason that the Commissioner believes a person has violated any part of the Act, they issue and serve a statement of charges and notice of hearing to be held not less than 10 days after the sate of service.

Any order of the Commissioner is subject to ______________________.

Judicial Review

Activities by Lenders and Temporary Contracts

Lender cannot require the purchase of insurance to make renew or refinance a loam Must accept a temporary written contract of insurance issued by a licensed ins argent broker or insurer as evidence of insurance. Acceptable Binders Include: -Name and address of insured -Name and address of mortgagee -Description of insured collateral -Provision for non-cancellation within a term of the binder except within 10 days notice to the mortgagee -Must be accompanied with receipt of one-years premiums

Coinsurance Clause

Many not issue any property insurance policy that contains a clause requiring the insured to maintain a larger amount of insurance than what is expressed in the policy. -Coinsurance clause or provision can be written in or attached to a policy when the words "Coinsurance Contract" are stamped on the declarations page -If there is a difference in premium between a policy with or without the coinsurance clause, the rates must be provided upon request.

Mutual Insurance Company

Owned by policyholders (members). A Board of Trustees or Directors directs the company operations and is elected by policyholders. -Receive NON-TAXABLE dividends as a return of unused premium when declared by directors. -Dividends are NOT guaranteed -Issue participating policies

Insurance Producer and Company Trade Associations

Provide education support and networking for insurance companies and producers.

Self-Insurer

To self-insure means to assume the financial risk one's self. This is generally only an option for large companies who may even reinsure for risks above certain maximum limits.

NC Rate Bureau's Purpose

Too recommend rates for Property and Casualty to The Commissioner. They hold hearings for grievances and concerns They act as a RISK-SHARING plan Any ins company authorized to sell ins must be a member of the bureau The bureau makes a rate proposal to the commissioner, at that time they are also made available to the public, each rate is made effective on the date specified in the filing, but not earlier than 210 days from the date the filing is received by the Commissioner.

Civil Penalties of Restitution for Violations - The Commissioner

Violation of any provisions of the general statutes subjects the licensee to suspension or revocation after notice and opportunity for a hearing. - The Commissioner can also order a payment anywhere from $100-$1000 in addition to any other payment for any other penalty for a violation of the criminal laws of this state.

License Surrenders - The Commissioner

When a licensee is accused of any act that would subject the license to suspension or revocation, the licensee may surrender the license of a period of time established by the Commissioner. -Commissioner must consent and approve of the surrender. -A person who surrenders their license is not eligible for a license and cannot submit a licensing application during the period of time that the license is surrendered.

Correction of Recorded Personal Information

Within 30 days after an insurer receives written request from a client to correct, amend, or delete personal information the insurer must -Correct, amend, or delete -Notify client of its refusal to do so, the reason, and the right for the client to file a formal statement with the insurance institution

Records Maintenance/Inspection

All companies agents brokers in NC have to make and keep full records of business done including -Policy renewal number, date, term, amount insured, premiums -The person to whom it was issued This information should be prepared to be provided on demand whenever requested by Commissioner.

Disclosure Limitations and Conditions

Must have insureds written consent to disclose health info. Insured must provide notice 30 days prior to disclosing private information, and must notify Commissioner if the personal application for coverage has been denied

Rebating

Offering a premium discount (or other advantage) not specifically included in the policy.

Stock Insurance Company

Owned by stockholders or shareholders. Directors and officers direct he company operations and are elected by the stockholders -Stockholders receive TAXABLE corporate dividends as a return of profit when declared by Directors -Dividends are NOT guaranteed - Issue non-participating policies

A member of a professional association may receive up to _____ ICEC's based solely on membership in that association.

4

The Commissioner must set a hearing date within ________ days of the hearing notice being mailed to the NC Rates Bureau for rate disapproval.

30

The Commissioner issues an order within _______ days after the completion of the hearing. If no order is issued within those ______ days, the filing will be deemed to be approved. In the event that no notice of a hearing is issued within ______ days the filing will be deemed to be approved.

45,45,50

P&C Records Must be Kept for _ Years

5

No insurance forms can be used unless either approved by the Commissioner, or _________days have passed with no notice of disapproval of forms submission.

90

Appointment

An individual who holds a valid insurance agents license many not solicit insurance for an insurer without an insurer appointment. -To appoint an agent the appointing insurer must file a notice of appointment within 15 days after the first insurance application is submitted, and must pay appointment fees as required by the commissioner.

False Statements to Procure or Deny Benefits

FALSE CLAIMS = CLASS H FELONY Any person who presents a written or oral statement that contains false or misleading information material to a claim to procure or deny benefits is guilty of a CLASS H FELONY. -Must have intent to defraud, injure ect... -Each claim is a separate count -Upon conviction the court may mandate the defendant to pay restitution including compensatory damages, attorney's fees, costs, and reasonable investigation costs.

Safe Driver Incentive Plan

Filed by the NC Rate Bureau It distinguishes classes of drivers based on history. -Minor moving traffic violations -Major moving traffic violations -At fault Accidents Subclassificaiton surcharges must be applied to a policy for 3 policy years Premium surcharges are also applied for drivers that have less than 3 years driving experience with a license.

Report to the Commissioner

If you believe that any other person has violated the law or any entity licensed by the Commissioner is financially impaired must inform the Commissioner and provide a complete statement of all relevant facts. -Commissioner may suspend, revoke, or refuse to renew the license of any licensee who fails to comply

Payment of Premiums

Insurer agent or broker may accept premiums by credit or debut card if the insurer complies with the prohibition against unfair discrimination and pays the fees charged by the credit card company for the payments of premium.

Proof of Loss Forms

Insurer must provide claim forms to claimants WITHIN 15 DAYS of receiving notice of a loss. If they fail to do so, the claimant will be deemed to have satisfied the proof of loss requirements as long as the claimant provides the supporting documentation within the policy's time frame.

Private VS Government Insurers

Most insurance is written through private insurers. However, there are instances where governmental-based insurers step in to offer an insurance alternative when private insurers are unable to provide protection. This usually relates to the catastrophic nature of the risk, capacity to handle the risk, and lack of desire to engage in a line of insurance where experience to evaluate necessary premium intake to offset potential loss is lacking.

Lloyd's of London

NOT an insurance company -Consists of a group of underwriters called Syndicates, each of which specializes in a insuring a particular type of risk. -Provides a meeting place for syndicate members who actually transact the business of insurance -Members are individually liable for each risk they assume

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 authorized insurer. Also do not have to share commissions.

Restraining Orders - The Commissioner

The Commissioner may apply to the superior court for a restraining order and injunction to restrain the violation when a person who has violated any provision of state insurance law. -If the courts find that the provision was violated, they will issue the restraining order prohibiting violations. -This order may be issued regardless of whether criminal prosecution is instituted. -Conviction of any licensee for any criminal violation of state statutes results in automatic suspension of the producers license, until the Commissioner reinstates it.

Examinations, Hearings, and Investigations - The Commissioner

The Commissioner may arrest someone that appears to have committed a criminal violation, without a warrant or cause. -The Commissioner must provide a written notice stating the subject and specific charges, if any. -Must also notify all interested parties of the hearings time place and subject.

Temporary Licensing

The Commissioner may issue a temporary license without regard to education for up to 180 days: -Spouse, rep, guardian of deceased of disabled producer -To a member or an employee of a licensed business entity if the designated producer dies or becomes disabled -The the designee of a licensed producer entering the Armed Forces -As the Commissioner deems appropriate to the public interest Commissioner can revoke temporary license to protect the public Cannot acquire any new insurer appointments with temporary license

Insurance Regulation at the Federal Level

The McCarran-Ferguson Act of 1945 determined that Federal government can not regulate insurance in areas over which state have the authority to do so. -Congress created federal agencies to provide regulatory oversight impacting insurance practices. -Government insurers step in as a last resort when private insurers are unable to provide protection relative to the catastrophic nature or unpredictability of a risk.

Insurance is primarily regulated by.....

The individual States

Limited Representative

authorized by the Commissioner to solicit or negotiate contracts of insurance that are restricted in the scope of the coverage they afford. -Does not require as much professional competency as broker or agent