Life and Health License - Chapter 14 - North Carolina State Law

Conversion: Exceptions

-An employee who was not eligible or did not pay the required premiums for continuation -An employee who fails to continue coverage for the full 18 months, or who is eligible for Medicare -A self-insurer employer is not required to provide continuation or conversion privileges To convert coverage, the employee must notify the insurer within 31 days after the date continued coverage terminates. Conversion may be denied for fraud or material misrepresentation, or if conversion would result in overinsurance. An insurer may not be required to provide coverage in addition to medical benefits (e.g., dental, vision).

Each life agent licensee must obtain how many insurance continuing education credits during each biennial compliance period? 12 15 20 24

24 Of the 24 credits, it is also required that 3 credits must be obtained by completing an ethic course.

How long must an insurer keep a Policy Summary? 3 years after issuance 3 years after last use 5 years after first use Until the Commissioner issues the final report of the next examination after issuance

3 years after last use Each insurer's home or main office must maintain a copy of each document approved for use during solicitation for 3 years following the date of its last authorized use.

Which of the following is NOT an acceptable grace period for late premium payments? 7 days for weekly premiums 10 days for monthly premiums 31 days for quarterly premiums 61 days for annual premiums

61 days for annual premiums The 31 day grace period applies to all policies with premium payment schedules other than weekly or monthly (including quarterly). Premiums may be 7 days late for weekly premiums and 10 days late for monthly premiums.

Which of the following rules regarding PPOs is INCORRECT? A PPO contract is considered approved if not disapproved by the Commissioner within 90 days of filing A PPO may make exclusive contracts with health care providers so that they don't sign up with other PPOs A new PPO must give all health care providers in its market at least 30 days to request to be preferred providers A PPO must disclose to the Commissioner the relationship between the insurer and preferred providers on an annual basis

A PPO may make exclusive contracts with health care providers so that they don't sign up with other PPOs A PPO may not make exclusive contracts with health care providers; a provider may enter PPO contracts with multiple PPOs. The Commissioner has 90 to disapprove a PPO contract. Providers have 30 days to request contracts with a new PPO. The relationship between a preferred provider and an insurer must be reported to the Commissioner annually.

Renewal

A broker's license must be renewed on April 1st, yearly.

Variable Annuities

A company issuing variable annuity contract must send an annual statement to the contract holder reporting on the investments in the separate account. For contracts not annuitized, the statement must provide the number of accumulation units and their value or the value of the entire account.

Ethics course

A continuing education course that deals with usage and customs among members of the insurance profession involving their moral and professional duties toward one another, toward clients, toward insureds, and toward insurers.

Fraternal Benefit Societies

A fraternal benefit society is any incorporated nonprofit society, having a representative government but no capital stock, that is conducted solely for the benefit of its members.

Group Health Insurance Continuation and Conversion Privileges: Continuation

A group health policy must provide that an employee who has been covered for 3 consecutive months, and whose coverage is terminated because of termination of employment or termination in a class eligible for coverage (and not for nonpayment of premium), may continue coverage for self, eligible spouse, and dependents by electing coverage and paying the first premium within 60 days after termination of coverage under the group policy. A continued or converted policy must become effective upon termination of coverage under the group policy. An employee who gets other, comparable coverage within 31 days after termination of coverage is not entitled to continue coverage. The right to continue coverage applies only to medical benefits, excluding dental, vision, or prescription drug benefits. The premium to continue coverage must be charged at least monthly and may not exceed 102% of the group rate. Continued coverage terminates on the earliest of: -The date 18 months after group coverage terminates -Nonpayment of premium -The date the employee becomes eligible for similar coverage under a group policy. -The date that group coverage is terminated for all employees (the person is entitled to conversion of coverage to an individual policy or, if the group policy is replaced, continuation under the succeeding policy) Benefits Not Included - Continuation is not required to include dental, vision care, or prescription drug benefits, or any other benefits provided under the group policy in addition to its hospital, surgical, or major medical benefits. A notice of an employee's right to continue or convert coverage must be on the Certificate of Coverage.

Blanket Health Policy

A group policy against accidental death or injury, if insuring passengers, employees, students, firefighters, a family, a recreational facility's staff, or any group of at least 25 members, if the group is not formed in order to get insurance.

Coordination of Benefits with Medicaid

A health insurer may not refuse to provide health benefits because the insured may be eligible for coverage under another policy. An employee health policy may not limit or exclude coverage to an insured because he/she is entitled to Medicaid benefits. Medicaid may not be required to pay first; it is the payor of last resort.

Nature of Policies: Health Policy - Required Provisions

A health policy must contain: -The premium due, term of coverage, and all exceptions, reductions, and limitations to coverage. -Coverage for only one person plus his/her family, including spouse, and dependent children under 19 years of age -A 10-day free look period with a full premium refund if the policy is returned -A time limit on certain defenses of 2 years from the date of issue -A grace period of: -7 days for weekly premium policies -10 days for monthly premium policies -31 days for all other policies -A reinstatement provision requiring: -All overdue premiums, for up to 60 days, must be paid before a policy may be reinstated -The policy is considered reinstated when the insurer accepts the premium or, if the insurer does not deny reinstatement, 45 days after the insurer receives the premium, whichever occurs first -The reinstated policy must have a 10-day waiting period for coverage for sickness Claims - Requirement that the insured must make a claim within 20 days after an occurrence resulting in a covered loss, and provide the insurer with proof of loss within 180 days after the date of loss, or within 1 year if the insured can prove that he/she was incapable of providing proof of loss in a timely manner Payment of claims - An insured must wait at least 60 days after providing proof of loss before suing an insurer to recover benefits. An insured may not bring such suit more than 3 years after proof of loss is provided Premiums and benefits may be changed to reflect a change in hazard accompanying a change in occupation. If an insured changes to a more hazardous occupation during a covered period, the insurer will pay only to the limits of the original occupation unless additional premiums are paid. If an insured changes to a less hazardous occupation, the insurer will reduce premiums accordingly and refund pro rata any excess unearned premiums. An insurer may change a policy to correct for a misstatement of the insured's age. If an insurer provides excess insurance to an insured, the insurer must void the excess insurance and refund all premiums paid for the portion of insurance that is excess. If an insured has excess insurance through coverage from more than one insurer, a claim may be made against each policy providing coverage for that loss and each insurer's responsibility is represented by its portion of the total coverage provided. A preexisting condition exclusion period may not exceed 1 year, and time spent toward any preexisting condition exclusion period under previous coverage must be credited toward the current policy. (When applied to an insured over age 65, the term preexisting condition means only a condition for which a rider specifically excludes coverage.)

Health Policy - Required Coverages: Coverage for Cancer

A health policy must cover: -Screening for cervical cancer -Screening for breast cancer -Reconstructive breast surgery after a mastectomy -Screening for prostate cancer Coverage for breast cancer screening must include: -One baseline mammogram for a woman age 35 through 39 years -A mammogram every other year for a woman age 40 through 49 years, and as recommended by a physician -A mammogram every year for a woman at least 50 years of age

Health Policy - Optional Coverage for Children

A health policy providing benefits for children must: -Cover a newborn, adopted, or foster child for 30 days from the date of birth, adoption, or placement, respectively; the child's parent may continue coverage after the first 30 days by enrolling the child and by paying any additional premium due -Cover birth defects -Allow for continuation of coverage for a child who has reached the limiting age but is handicapped and dependent on the insured (proof of incapacity must be provided to the insurer within 31 days of the child's attainment of limiting age) An insurer may not refuse to issue a health policy providing child coverage because an applicant's eligible child has a mental or physical handicap. The policy, however, may exclude benefits for losses resulting directly from the handicap. A health insurer may not deny a child's enrollment because the child: -Was born out of wedlock -Is not claimed as a dependent -Does not live with his/her parent or in the insurer's service area

Licensee

A licensed adjuster, a licensed broker, or a licensed agent with any of the following lines of authority: property, casualty, personal lines, life, or accident and health or sickness.

Responsibilities of the Insurer

A life insurance company may not discriminate between individuals of the same class and equal life expectancy as to premiums, benefits, dividends, terms, or conditions. No rebate or special favor or advantage may be given to induce the purchase of a contract unless stated in the contract. An insurer may not refuse to issue or charge different premiums for life insurance solely because the insured has sickle cell trait or hemoglobin C trait. No life insurance company, officer, director, or agent may misrepresent the terms of policies they issue. Nor may they make any misrepresentation for the purpose of inducing a prospect to lapse, forfeit, or surrender an insurance contract.

Group Life Insurance

A life insurance policy issued to an employer to insure its employees, when the employer is not the beneficiary. The policy must specify who is eligible and have premiums payable by the employer, employees, or both. (If the employer pays the entire premium, the insurer must insure all eligible employees.)

Standard Provisions of a Life Insurance Contract

A life insurance product must disclose benefits, payment method, premiums, and any other information as required by the Commissioner. To be issued in North Carolina, an individual life policy must: -Have a grace period of 31 days -Be incontestable after being in force for 2 years from the issue date -Specify the method for adjusting premiums, benefits, or both to correct a misstatement of age or gender on the application -Provide a full refund of all premiums paid if the insured commits suicide within the first 2 years -Allow a lapsed policy to be reinstated within 5 years by providing evidence of insurability and by paying all overdue premiums, indebtedness, and interest. A reinstated policy has the same contestability standards and limits as when the policy was originally issued.

Viatical Settlement Provider

A person who enters into a viatical settlement contract with a viator. This does not include a bank, an issuer of the life insurance policy providing accelerated benefits, and others.

Viatical Settlement Purchaser

A person who gives money for a life insurance policy or an interest in a death benefit or an interest in a trust that owns a viatical settlement contract.

Franchise Health Policy

A policy against death, injury, disability, or sickness that covers: -At least 5 employees, if issued to a business entity or governmental body -At least 10 members, if issued to a professional association or labor union

Group Health Policy

A policy against disability, disease, and sickness that covers more than one person, excluding a blanket health policy. An employer group health policy must cover all employees, except those who refuse coverage. A waiting period for coverage under an employer group health policy may not exceed 90 days from the first day of employment. To be issued a group health policy, an association: -Must have at least 500 members -Must be in existence for at least 5 years -May not be organized for the purpose of getting insurance A credit policy issued to a creditor must: -State the names of all of the debtors covered under the policy -Receive at least 100 new debtors yearly -Allow the insurer to require evidence of individual insurability if less than 75% of new debtors become insured A group health policy may provide that the insurer may pay benefits to the employee. An insurer may adjust the rate of a group health policy to reflect actual experience. The insurer must base rates on a period of at least 12 months and must give at least 45 days' notice before changing rates on, or nonrenewing, a policy.

Health Laws: General Regulations - Right of Insured to Choose Services

A policyholder has the right to choose the provider of services under a health plan, provided that the plan: -May require the use of network providers to obtain benefits, or to obtain a higher level of benefits (a list of network providers must be provided to insureds) -May deny a disability claim if the disability is not certified by a duly licensed medical professional -May not deny or decrease benefits for treatment provided by a duly licensed chiropractor -May not deny a claim if services were performed by a registered nurse or physician's assistant acting under the rules of the North Carolina Medical Board. Registered nurses may also be paid for examinations or procedures performed for the purpose of collecting evidence from victims of offenses. An insurer may not be required to pay more than one provider for the same service.

General Rules Relating to Solicitation: Presentations

A presentation that compares two or more life insurance policies must make use of the time value of money with an appropriate interest rate. Guaranteed and nonguaranteed benefits may not be presented as a single sum unless they are also shown separately next to the single sum. Any reference to policy dividends must include a statement that dividends are not guaranteed. A reference about using life insurance cost indexes must explain that the indexes are useful only for comparing the relative costs of two or more similar policies. A cost index reflecting dividends must be based on the insurer's current dividend scale. An insurer reserving the right to change a premium must show the maximum annual premium in the presentation.

Supervised examination

A timed, closed book examination that is monitored and graded by a disinterested third party.

Viatical Settlement Contract

A written agreement in which a viator transfers all or a portion of a life insurance policy in exchange for cash that is less than the expected death benefit of the policy.

Duties of Existing Insurer

After receiving notice of the replacement, the existing insurer is required to send a letter to the policy or contract owner informing him/her of the right to receive information about the existing policy and contract values, including any in force illustrations. The existing insurer must provide existing product value information to the policyowner within 5 business days, upon request, and advise any policyowner who requests to borrow against the existing product that such borrowing may affect the product's value and benefits. Upon receiving a request to borrow, surrender, or withdraw any policy values, the existing insurer must send a notice to the policy owner stating that the release of policy values may affect the guaranteed elements, nonguaranteed elements, face amount, or surrender value of the policy. 1

Which of the following situations is subject to the replacement rules? Agent Jessica is making a presentation to employees covered by group life insurance Agent Nathaniel is working with a client to upgrade her policy with a new policy from the same insurer Agent Roman's client is in the last 2 years of a 10-year non-convertible, non-renewable term policy Agent Steve is recommending that his client take a policy loan from an existing policy to buy a new one from a different insurer

Agent Steve is recommending that his client take a policy loan from an existing policy to buy a new one from a different insurer A replacement is any transaction in which a life insurance policy or an annuity is to be purchased, and it is known that an existing contract will be lapsed, forfeited, surrendered, or terminated; converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values; amended to reduce the benefit or the term of coverage; reissued with a reduced cash value; or used in a financed purchase (e.g., subjected to borrowing).

General Regulations - Ethical Standards

Agents, limited representatives, brokers, adjusters, appraisers, or other insurer's representatives must: -Promptly identify themselves and their occupation when in contact with the public -Carry their insurance license while performing their duties and display it upon request to any to any person with whom they have contact while in the performance of duty -Conduct themselves in such a manner as to inspire confidence by fair and honorable dealings Claims management persons, agents, or other insurer's representatives may not accept any gratuity or other form of remuneration from any provider of services for recommending that provider to claimants.

Viatical Settlements - General Provisions

All viatical contract and disclosure forms must be approved by the Commissioner before use. All viatical licensees must provide annual reports to the Commissioner by June 1 with information he prescribes. Viatical Settlement providers and brokers pay a $500 application fee and an annual license renewal fee of $500. The Commissioner may require disclosure of the provider's stockholders, officers, partners, members and employees. The Commissioner may refuse a license if he/she deems any member of the provider's entity to be unethical. All records pertaining to a viatical contract must be retained for a minimum of 5 years. A viatical broker or provider must inform a viator of the following: Possible alternatives to a viatical settlement exist, such as accelerated benefits or policy loans Viatical proceeds could be subject to tax liability that would not apply to the death benefit Proceeds may be subject to creditors' claims Proceeds may jeopardize eligibility for government assistance such as Medicaid A provider entering into a contract shall first obtain: Certification from a licensed physician that the viator is of sound mind and under no constraint or undue influence to enter the contract Written release of the viator's medical records to the provider or broker and to the insurance company if the policy has been in effect for less than 5 years Once it becomes certain that a policy will be viated, the provider must give written notice to the insurer within 20 days. The notice shall include the documents described above. Within 30 days of receiving notice that the policy is to be viated, the insurer must provide certification of coverage. It must also indicate if it intends to investigate the validity of the viatical contract. Before or at the time of executing the contract, the provider shall obtain a witnessed document in which the viator: Consents to the contract Acknowledges that he/she has a full and complete understanding of the contract and policy benefits Acknowledges that he/she is entering into the contract freely and voluntarily Confirms that any terminal or chronic illness was first diagnosed after the policy was originally issued The viator may rescind the contract within 10 business days after receiving the viatical proceeds. If the viator dies during the rescission period, the contract shall be deemed to have been rescinded and proceeds must be returned. Once a viatical contract is in force, the viator's health status is subject to examination. If the life expectancy is more than one year, the examinations are limited to once every 3 months. If the life expectancy is less than one year, the examinations shall be limited to once per month. The provider is responsible to ensure compliance with all statutes and regulations. Viatical brokers represent and owe a fiduciary duty only to the viator.

General Rules Relating to Solicitation: Pre-Arrangement Insurance Policy Disclosures

An agent must disclose: -That a prearrangement policy is being used to fund a pre-need funeral contract -The relationship between the agent and the funeral service provider -Any guarantees -The effect, on the prearrangement, of any changes in the policy and of any penalties for cancellation, surrender, or nonpayment of premium -What will happen to the prearrangement if the life policy's proceeds are not enough to fund the preneed funeral contract -Any penalties or restrictions

Health Laws: General Regulations-Application

An application for a health policy must be signed by the insured, head of household, or guardian, and certified by the agent that the application accurately contains the information provided by the insured. Every policy must contain the application, which is made part of it. This requirement does not apply to applications for: travel insurance, dread disease insurance, or conversion under a group contract to an individual policy. An insurer must provide an application within 15 days, upon request, to a health policy's owner who intends to reinstate or renew the policy. Any changes made to an application must have the written consent of the applicant. A false statement in an application does not bar an insured's right to benefits under the policy unless the false statement materially affected the acceptance of the risk or the hazard assumed by the insurer.

Conversion: Other Coverage Provisions

An employee whose group coverage would have been continued from retirement through eligibility for Medicare may elect to convert (instead of electing to continue) terminated group coverage. If a converted policy covers a dependent child whose coverage under the group policy would have terminated at a specified date, the converted policy may also provide for termination on or after that date.

Conversion: Coverage

An employee whose group health coverage is terminated is entitled to convert coverage to an individual policy covering self, spouse, and dependents who were covered on the group coverage's termination date.

Person

An individual, partnership, firm, association, corporation, joint-stock company, trust, or similar entity, or any combination of the above acting in concert.

Health Policy - Required Provisions: Payment of claims

An insured must wait at least 60 days after providing proof of loss before suing an insurer to recover benefits. An insured may not bring such suit more than 3 years after proof of loss is provided

Health Policy Cancellation and Replacement

An insurer may cancel a health policy covering fewer than 10 persons by giving a cancellation notice: -At least 30 days before the premium due date if the policy has been in effect for less than 1 year, or -At least ¼ of the number of full months the policy has been in force, up to 2 years (i.e., up to 6 months' notice) If a group health policy is replaced within 15 days of being terminated, the replacing insurer must cover each person who was covered under the policy being replaced.

Health Policy - Required Coverages: Mental and Nervous Disorders

An insurer may not discriminate against a person in the issuance of, or premiums charged for, a health policy solely because the person has had a mental illness or chemical dependency. An insurer may not discriminate against a person in the issuance of, or premiums charged for, a health policy solely because the person has had a mental illness A group health policy may not limit, restrict, or deny coverage specifically for mental and nervous disorders.

Health Law: General Regulations - Termination of Group Plans - Notice and Fiduciary Duty

An insurer must give insured employees who pay for coverage through payroll deduction at least 15 days' notice before cancelling an employer's group policy for nonpayment of premium. An insurer, HMO, or other group health or group life insurance issuer must notify fiduciaries of their obligations, which include notifying insureds, when a group health policy or plan is being terminated, of their right to convert group coverage to coverage under an individual policy. A fiduciary of a group plan may not: -Terminate a group health or group life policy by failing to pay premiums -Terminate a group health plan by failing to fund the plan -Willfully fail to give all insureds at least 45 days' notice before terminating a group contract A fiduciary who violates his/her obligations is guilty of a felony and, upon conviction, may be required to make full restitution for health or death benefits that would have been paid under the terminated coverage, and to provide all documents, related to the terminated contract, for examination by the Commissioner.

Health Law: General Regulations - Grievance Review

An insurer must: -Have a grievance process for insureds, and maintain records of grievances -Acknowledge, within 10 business days, receipt of a grievance about the quality of care -Resort to its formal grievance process, after informally reconsidering a claim denial, if it upholds the claim denial or if it cannot reach a final decision within 10 business days -Issue a written decision within 30 days after receiving a grievance -Allow a secondary grievance review if a person is dissatisfied with either an initial grievance review or with the decision of an appeal of a utilization review -Inform an aggrieved person of his/her rights and provide the person with contact information for both the reviewer and Health Insurance Smart NC (formerly Managed Care Patient Assistance Program) within 10 business days of receiving a secondary grievance -Give a person at least 15 days' notice of a secondary grievance review -Conduct a secondary grievance review within 45 days of receiving a grievance -Inform an aggrieved person and, if applicable, his/her provider of the decision of a secondary grievance review within 7 business days An insurer may bar an aggrieved person from attending a grievance review. Consequently, the insurer may not dismiss a grievance because the aggrieved person does not attend a grievance review, regardless of whether the person was barred from attendance. A utilization or grievance review may be appealed, and the appeal may be expedited if medically necessary.

Health Law: General Guidelines - Penalties

An insurer or its officer or agent issuing a noncompliant health policy is guilty of a misdemeanor and, upon conviction, may be fined up to $5,000 per offense and be subject to license revocation.

Domestic Company

Any company incorporated or organized under the laws of North Carolina.

Conversion: Preexisting Conditions

Any time spent toward satisfying a preexisting condition exclusion period under the group policy must be credited toward converted coverage.

Replacement

Any transaction in which a life insurance policy or an annuity is to be purchased, and it is known or should be known to the producer or insurer that the existing contract(s) will be: -Lapsed, forfeited, surrendered, or terminated -Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values -Amended to reduce the benefit or the term of coverage -Reissued with a reduced cash value -Used in a financed purchase (e.g., subjected to borrowing) The following types of policies are exempt from standard policy replacement rules: -Credit Life -Group Policies / Annuities not involving individual solicitation -Group Policies / Annuities funding prearranged funeral contracts -Policies being issued by the same insurer of the replaced policy -Non-convertible, non-renewable term policies with less than 5 years of coverage remaining -Governmental or church plans, or church welfare benefit plans -Section 457 Deferred Compensation Plans for tax-exempt organizations

Which of the following is not a required health policy coverage? Screening for breast cancer Screening for cervical cancer Screening for prostate cancer Birth defects

Birth defects Coverage of birth defects is an optional coverage for children.

Life Insurance Companies

Companies that pay money conditioned on the continuance or cessation of human life or involving insurance, guaranty, or pledge for payment of endowments or annuities, or employ agents to solicit such business. §58-58-1

Group Health Insurance Continuation and Conversion Privileges: Benefits Not Included

Continuation is not required to include dental, vision care, or prescription drug benefits, or any other benefits provided under the group policy in addition to its hospital, surgical, or major medical benefits. A notice of an employee's right to continue or convert coverage must be on the Certificate of Coverage.

Which of the following is a requirement for continuation coverage under a group health policy? The employee must first secure comparable coverage within 31 days after termination of coverage under the group policy Continuation coverage includes medical, drugs, dental, and vision coverage The premium to continue coverage may not exceed 105% the group rate Continuation of coverage lasts up to 18 months, so long as the (former) employee pays premiums

Continuation of coverage lasts up to 18 months, so long as the (former) employee pays premiums Continued coverage can last up to 18 months but terminates if the (former) employee fails to pay the premiums or becomes eligible for similar coverage under another group policy or if the employer terminates the policy for all employees. The right to continue coverage applies only to medical benefits, excluding dental, vision, or prescription drug benefits. The premium to continue coverage may not exceed 102% the group rate.

Conversion Coverage Plans: Plan C

Covers everything under Plan A, except that: -Maximum daily hospital expenses are 50% of the maximums under Plan A -Maximum surgical expenses are $400

Conversion Coverage Plans: Plan B

Covers everything under Plan A, except that: -Maximum daily hospital expenses are 75% of the maximums under Plan A -Maximum surgical expenses are $600

Conversion Coverage Plans: Plan A

Covers: -Daily hospital expenses for up to 70 days -Miscellaneous hospital expenses for up to 10 times the daily hospital expenses -Surgical expenses, up to $800

Which of the following is covered by the Life and Health Insurance Guaranty Association? Employer XYZ hires 123 Health Co. to administer its self-insured health plan for employees and 123 Health Co. becomes insolvent J has an a nonguaranteed contract with LMNO Insurance, which becomes insolvent O has a term life insurance contract for $300,000 on his life when RST Insurance becomes insolvent - O is still alive E has submitted a claim for $500,000 of medical expenses when GHI Insurance becomes insolvent

E has submitted a claim for $500,000 of medical expenses when GHI Insurance becomes insolvent The Association will cover medical claims against an insolvent insurer of up to $500,000. Self-insurance and nonguaranteed benefits are not covered. Neither are claims for which the insolvent insurer would not have been liable (a claim under O's life insurance is not valid until O dies).

Twisting

Encouraging a client to lapse forfeit, exchange, convert, or surrender an existing policy and then replacing the policy with another using incomplete comparisons of benefits, features, clauses, etc. to the client's detriment

Health Law: General Regulations - Utilization Review

Every insurer is required to have a utilization program to evaluate the clinical necessity, appropriateness, efficacy, or efficiency of health services. An insurer must: -Have qualified medical professionals oversee its utilization reviews -Coordinate utilization reviews with other medical management activities -Give insureds and providers access to review staff -Request only information that is necessary to certify health care services -Have written procedures for utilization reviews (updated periodically), for notifying insureds, and for addressing situations when necessary information is unavailable An insurer must: -Notify a provider of the determination of a utilization review within 3 business days -Cover care provided before any utilization review denies coverage, unless the review occurs after all necessary care is provided, in which case a determination must be made within 30 days after receiving all information that is necessary for the review -Notify an insured and his/her provider of a claim denial, stating the reason for denial, within 5 business days -Notify an insured and his/her provider of any rejected appeal of a claim denial within 10 business days -Disclose its utilization review procedures to insureds -Provide information about Health Insurance Smart NC (formerly Managed Care Patient Assistance Program) -Maintain records of utilization reviews, appeals, and compliance with utilization review and utilization review appeal requirements

Licensee Requirements

Every person holding a life, accident, and health insurance license must complete every two years: -24 credit hours, including -3 credit hours of ethics training A licensee must keep records of courses attended within the past 5 years. A course may not be repeated for credit within a licensure period. Licensees may receive credit for a course only for the biennial compliance period in which the course is completed. Nonresident licensees who meet continuing education requirements in their home states are deemed to meet these continuing education requirements without taking any additional courses.

Individual biennial compliance period

Every person with an even numbered birth year must meet continuing education requirements in an even numbered compliance year. Every person with an odd numbered birth year must meet continuing education requirements in an odd numbered compliance year. Every licensee must complete the 24 credit hours by the last day of his/her birth month in the compliance year. A member of a professional insurance association may receive up to 2 credit hours during the biennial compliance period based solely on membership in the association. The association must: -Have been in existence for at least 5 years -Be approved as a continuing education provider -Have been formed for purposes other than providing continuing education. Only whole credit hours may be carried over from one biennial compliance period to the next biennial compliance period. There is no limit on the number of credit hours that can be carried over.

Viatical Settlements -

Having an illness that can reasonably be expected to result in death in 24 months or fewer.

Nature of Policies: Filing of Forms and Rates

Health insurance forms and rates must be filed with, and approved by, the Commissioner before use. A filing may not be used until the earlier of the Commissioner's approval or after 90 days. The Commissioner must, upon receipt of the insurer's request, hold a hearing concerning disapproval of a filed form or rate. An insurer must notify an insured at least 45 days before the effective date of an increase in rates. A rate must be effective at least 12 months before it may be increased.

Which of the following properly states a requirement of a group health policy? An employer group may cover executives only If a group policy is replaced within 15 days of being terminated, the replacing insurer must cover everyone covered under the policy being replaced A credit policy may require evidence of individual insurability if less than 75% of new debtors become insured An association group must have 100 members and be in existence for at least 5 years

If a group policy is replaced within 15 days of being terminated, the replacing insurer must cover everyone covered under the policy being replaced An association group must have at least 500 members. A creditor group must receive 100 new debtors yearly. The association group must also be organized for purposes other than getting insurance. An employer group must cover all employees, not just executives. If a group policy is terminated then replaced within 15 days, the new policy must cover everyone covered under the old policy.

Health Laws: General Regulations - Age Limit

If a policy has a provision which establishes, as an age limit or otherwise, a date after which it will no longer be effective and such date falls within a period for which premiums have been paid, the policy must continue in force until the end of the payment period. If a premium is accepted after such date, the policy must continue in force for the period the premium payment covers. If age was misstated and the correct age would have ended coverage before any further premiums were received, the insurer is required to refund only the premiums for the period not covered by the policy.

Insurance Continuing Education Credit

If an approved course is taken in a classroom setting, each instruction period must be at least 50 minutes in order to count for one hour of CE credit. Independent study programs qualify for CE credit only when the examination is supervised by a disinterested third party. -No examination administered or graded by insurance company personnel for its own employees is considered to be administered by a disinterested third party -The examination supervisor shall submit to the provider a sworn affidavit that certifies the authenticity of the examination -Credit hours will be awarded upon the passing of the supervised exam. Courses are not approved for less than one credit hour.

Conversion Major Medical Plans

If the terminated group coverage provided major medical expense benefits, the employee may convert coverage to a policy meeting the following requirements: -A converted policy may use a definition of benefit period that is 24 months or may use a calendar year benefit period. The converted policy may contain a benefit limit for each benefit period that was available under the group policy, or $100,000, whichever is less. -A 20% deductible for the first $1,000 -A deductible of up to 50% for outpatient mental illness treatment (if such treatment was covered under the terminated group coverage) -A deductible, per benefit period, of, at the insurer's option, either $100 plus the deductible for all benefits provided during the benefit period, or the deductible that would have been charged under the terminated group coverage -The maximum coverage for surgical expenses must be at least $1,200

General Rules Relating to Solicitation

In addition to the information contained in the Study Manual, the following disclosure standards apply to producers and insurers in North Carolina: An insurer must provide a Buyer's Guide and Policy Summary to all prospective purchasers: -Before accepting the applicant's initial premium -Before policy delivery, if the policy or the Policy Summary gives the purchaser 10 days to return the policy for a full refund of premium -Upon request Exception: An abridged, written statement may be provided instead of a Policy Summary for a policy with an equivalent level death benefit of $5,000 or less. Failure to comply with this requirement shall constitute a misrepresentation and fall within the meaning of an Unfair Trade Practice. Each insurer's home or main office must maintain a copy of each document approved for use during solicitation for 3 years following the date of its last authorized use. An agent must, before beginning a sales presentation, inform a prospective purchaser that he/she is acting as a life agent and provide the full name of the insurer that he/she represents. A producer may not use terms such as "financial planner," "investment advisor," "financial consultant," "financial analyst," or "financial counselor," in any advertisement, solicitation material, or sales presentation, that imply that the producer's compensation is unrelated to insurance sales, unless that is actually the case.

Insurable Interests and Other Rules

In addition to the information in the Study Manual, the following are considered insurable interests in North Carolina. Business owners who enter into a contract in which a surviving owner agrees to purchase the shares (partnership or corporation) of an owner who dies are deemed to have an insurable interest in each other so that they may use life insurance to fund the agreement. Business partners have insurable interests in each other. An employer has an insurable interest and may purchase life insurance on an employee, provided that notice is given to the employee within 30 days. For nonkey or nonmanagerial employees, the amount of coverage must be reasonably related to benefits provided to the employees. Life insurance may also be used to finance pension and welfare plans. A pension plan trustee has an insurable interest in the life of a person covered by the pension plan.

Viatical Settlements - Chronically Ill

Includes being unable to perform at least 2 activities of daily living (eating, toileting, transferring, bathing, dressing, or continence) or requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment. Note: This is similar to the benefit trigger for long-term care insurance.

Licensee Exemptions

Individuals licensed for the first dime in the current calendar year are exempt from the continuing education requirement for that year. Licensed insurance producers who are unable to comply with continuing education requirements due to military service, or long-term medical disabilities may request a waiver for continuing education requirements, and the Commissioner will grant an exemption from ICEC requirements for up to one year if the disabled individual furnishes a notarized statement from a licensed physician stating that the producer is unable to do the work he is licensed to do and needs a long-term medical disability waiver. A licensee age 65 or older who has been continuously licensed in the line of authority for at least 25 years and either holds a professional designation for that line or certifies annually that he/she is an inactive agent taking no part in agency operations is exempt from the continuing education requirement.

Credit Life Insurance

Insurance on the life of a debtor. It may grant the debtor total permanent disability benefits.

Health Law: General Regulations - Preferred Provider Organizations (PPOs)

Insurers may enter into preferred provider contracts or other cost containment arrangements approved by the Commissioner to reduce the cost of providing health care services. A PPO contract is considered approved if not disapproved by the Commissioner within 90 days after filing. A new PPO must give all health care providers in its market at least 30 days to request to be preferred providers. A PPO may not make the contract with a provider exclusive; a provider may enter PPO contracts with multiple PPOs. An insurer offering a PPO's benefit plan must annually disclose to the Commissioner the plan's name and business address, the terms of the relationship between the insurer and preferred providers, and any other information required by law.

False Pretenses and Cheats

It is a felony to intentionally use a false pretense to obtain any article, thing, or item of value. Example: A commissioned agent who falsely claims to be a government official in order to induce a prospective insured to purchase insurance is using a false pretense (i.e., that he/she represents the government) to get a commission (i.e., a thing of value). Intent is required. Evidence of non-fulfillment of a contract obligation, by itself, does not establish intent to defraud

Industrial Life Insurance

Life insurance for which premiums are payable at least monthly, if the insurance has a face value of $1,000 or less and the words "Industrial Policy" are printed on the policy as part of the descriptive manner.

Protection against creditors

Life policy proceeds are protected from creditors, except for premiums paid with the intent to defraud such creditors. A person must be at least 15 years of age to enter into an insurance contract or an annuity. A minor shall have the rights, with respect to the contract or annuity that a person at least 18 years of age would have. An insurer must pay interest on death benefits not paid within 30 days after receiving proof of loss. An insurer must give 5 to 45 days' notice before cancelling an individual life policy with a grace period; 15 to 45 days' notice if the policy does not have a grace period. Note: A cancellation notice is not required if cancelling a term policy of less than 1 year, or a policy with premiums due monthly or more frequently, or a group policy. Wait at least 30 days after giving notice, before declaring a policy forfeited and pay specified or requested non-forfeiture options within 60 days after a policy premium is in default. If the policy has been in force for at least 3 years (5 years for an industrial policy), the insurer will pay a cash surrender value as specified in policy schedules. Note: The period in which a person may recover under a forfeited policy is 3 years from the unpaid premium's due date.

Defamation

Making any false statement that is maliciously critical or derogatory of any insurer's financial condition with intent to injure someone in the insurance business.

Misrepresentation

Making misleading representations or fraudulent comparisons of policies; misrepresenting a policy's terms or benefits; or making misleading representations as to an insurer's financial condition.

Limited Lines Insurance

Motor vehicle physical damage and title insurance, or any other kind of insurance that the Commissioner considers necessary to recognize as such.

Health Law: General Regulations - Offsets Against Provider Reimbursement

No insurer or health insurance contract provision may offset or reverse a payment made to a medical services provider unless the payment is required to be paid under Workers' Compensation.

Which of the following has an insurable interest in the other? An employee in an officer or director of his/her employer An employee in a fellow employee (nonkey, nonmanagerial) One business partner in his/her partner Life insurance company in an independent agent

One business partner in his/her partner Business partners have insurable interests in each other. Employees don't generally have insurable interests in their employer or in each other. But an employer may have an insurable interest in an employee, if notice is given.

A viatical settlement broker is required to inform the viator of all of the following EXCEPT: Proceeds are exempt from creditor claims Accelerated death benefits or policy loans are possible alternatives to a viatical settlement Proceeds may jeopardized eligibility for Medicaid Proceeds could be subject to tax liability

Proceeds are exempt from creditor claims Proceeds might be subject to the claims of a viator's creditors. The life insurance death benefit, however, would be paid to the viator's beneficiaries free of creditor claims.

Marketing and Research Surveys

Questions designed to gain information solely for marketing and/or research and not for insurance transactions, must be clearly identified as such.

Offering a premium discount not specifically included in the policy is called: Rebating Twisting Misrepresentation False information

Rebating Rebating is offering any rebate, discount of premium, advantage, or valuable consideration not specified in the policy, but does not include a bonus, reduction in premium for mailing premium, and readjusting group rates based on claims experience.

Replacement Regulations

Replacements are permitted but strict rules must be followed to assure that purchasers get information that will help them make a decision in their own best interest and to reduce the chance of misrepresentation and incomplete disclosure.

Health Policy - Required Provisions: Claims

Requirement that the insured must make a claim within 20 days after an occurrence resulting in a covered loss, and provide the insurer with proof of loss within 180 days after the date of loss, or within 1 year if the insured can prove that he/she was incapable of providing proof of loss in a timely manner

All of the following are duties of the Commissioner EXCEPT: Issuing licenses to insurance agents Arresting any person suspected of violating insurance laws Selling contracts of insurance Extending times for filing proofs of loss in declared disaster areas

Selling contracts of insurance The Commissioner administers the state's insurance laws. This included issuing certificates of authority and licenses, various actions to stop violations of the law (including arresting the suspected violators), declaring disasters and arranging for orderly administration of claims during disasters. The Commissioner does not sell insurance.

Special Cases

The Commissioner will prepare courses to address and remedy deficiencies in licensee professional performance or conduct detected by the Commissioner through analyses of consumer complaints or from Departmental audits or examinations of insurance companies, licensees, or insurance agencies or brokerages. The Commissioner will require an individual licensee to take and complete remedial or rehabilitative courses if the licensee has committed any of the acts or omissions causing suspension, probation, revocation, or nonrenewal of licenses. The Commissioner will award 24 biennial continuing professional educational credit hours based on government service relative to insurance or finance, such as service as a legislator on a committee in the General Assembly that hears insurance and finance matters.

Life and Health Insurance Guaranty Association

The Life and Health Insurance Guaranty Association of North Carolina protects residents, who have rights under a contract providing benefits of life or health or both, against financial loss due to insurer impairment or insolvency. The Association also assists in detecting and preventing insurer impairment or insolvency. The Association consists of all authorized insurers writing the above types of policies in North Carolina. Member insurers each pay an assessment to fund the Association. The benefits for which the Association may become liable will not exceed the lesser of: -The contractual obligations for which an insurer would have been liable if it were not impaired or insolvent -$300,000 per person, regardless of the number of policies in effect, for life, annuities, certain retirement plans, and other nonmedical coverages -$500,000 per person for medical coverages -$5 million for holders of annuity contracts, regardless of the number of contracts, - $1 million per holder for structured settlement annuities The Association does not cover: -Nonguaranteed benefits -Reinsurance, unless assumption certificates have been issued -Self-insurance -Insurance issued by an insurer not licensed in North Carolina. This applies to policies issued by insurers who, though licensed in North Carolina now, were not so licensed at the time the policy was issued. -Other types of insurance for which coverage by the Association is prohibited by law A person may not advertise the existence of the Association to induce a person to purchase insurance. An insurer or agent must provide written notice whenever the policy being issued is not covered by the Association.

NAIC

The National Association of Insurance Commissioners.

Department

The North Carolina Department of Insurance.

All of the following are standard provisions of an individual life insurance policy EXCEPT: The policy is incontestable after 2 years A lapsed policy may be reinstated within 5 years Errors in age or gender of the insured may be corrected by adjusting premiums or benefits The grace period for late payment of premiums is 45 days

The grace period for late payment of premiums is 45 days The grace period for late payment of premiums is 31 days, during which the policy remains in force. A policy is incontestable after being in force for 2 years from the issue date. It must specify the method for adjusting premiums, benefits, or both to correct a misstatement of age or gender on the application. A lapsed policy may be reinstated within 5 years by providing evidence of insurability and by paying all overdue premiums, indebtedness, and interest.

Failure to Complete

The license of a person failing to meet continuing education requirements must lapse. The license will be reinstated when the person has completed the continuing education requirements and paid an administrative fee of $75 within 4 months after the end of the person's previous compliance year. If the person does not satisfy these requirements within 4 months after the end of the person's previous compliance year, he/she must complete the appropriate prelicensing education requirement and pass the appropriate licensing examination, at which time the Commissioner shall reinstate the person's license. The Commissioner may suspend, revoke or refuse to renew a license if any portion of the renewal or continuing education process is done under false pretenses or for other good cause. If there is due hardship, extensions of time to complete CE requirements may be requested during or before the last month of the current compliance year.

Viator

The owner of a life insurance policy who seeks to enter a viatical settlement contract because of a terminal or chronic illness. Note: It is an act of fraud to make, for use, false information about viaticals or to commit fraud related to viaticated policies. The contract must include a loan provision, and the provider must pay before the death benefit is assigned to it.

Which of the following would be a violation of a health plan policyholder's right to choose the provider of service? The plan denies a claim because the services were performed by a registered nurse The plan requires the use of a network provider to obtain a higher level of benefits The plan requires certification of a disability by a duly licensed medical professional before approving a disability claim The plan pays for treatment by a licensed chiropractor

The plan denies a claim because the services were performed by a registered nurse A plan man not deny a claim if services were performed by a registered nurse or physician's assistant. A plan may require the use of network providers to obtain benefits, or to obtain a higher level of benefits. It may also require certification of a disability claim by a licensed medical professional, and it may not deny or decrease benefits for treatment provided by a duly licensed chiropractor.

Regulations of Life Insurance Solicitation: Purpose

The purpose of regulating life insurance solicitation is to hold insurers responsible for providing information that will improve the buyer's ability to select the most appropriate plan for their needs and to improve their understanding of that policy.

Duties of Replacing Insurers

The replacing insurer's duties include: -Making certain that all replacement actions comply with state regulations -Notifying each existing insurer within 5 business days and, upon request, furnishing a copy of any proposals and comparison statements -Being capable of monitoring each producer's replacement transactions -Providing a free look period of 30 days on a replacement contract, subject to full refund Note: The existing policy should not be terminated until the new policy is issued and delivered. An insurer must maintain a copy of replacement forms until the later of 5 years or the next examination by its home state's insurance department.

Compliance year

The second year of the biennial compliance period.

Conversion: Basic Coverage Plans

There are 3 basic coverage plans: Plan A, Plan B, and Plan C The Commissioner shall set basic conversion coverage maximums not more frequently than once every 3 years.

Viatical Settlements - Fraudulent Viatical Settlement Acts

This includes a variety of acts or omissions committed in the viatical settlement process knowingly and with the intent to defraud for the purpose of pecuniary gain.

Conversion: Alternative Plans

To offer basic and major medical plans under one policy, an insurer must provide deductible options of $100, $500, and $1,000.

Unauthorized Insurance Contracts

Transacting insurance business for a domestic insurer in a state in which the insurer is not licensed.

Which of the statements about a utilization review is FALSE? The review may not request information that is unnecessary to certify the health care services under review The insurer must notify an insured and the provider of a claim denial within 5 business days The insurer must disclose utilization review procedures to insureds Utilization reviews must be overseen by the accounting department

Utilization reviews must be overseen by the accounting department An insurer is required to have qualified medical professionals oversee its utilization reviews. A reviewer may request only that information that is necessary to certify health care services. An insurer must notify an insured and his/her provider of a claim denial, stating the reason for denial, within 5 business days, and must disclose utilization review procedures to insureds.

Z is terminally ill and is looking to find someone who will buy Z's life insurance policy to get funds to pay for care. Z is a: Viatical settlement broker Viatical settlement provider Viatical settlement purchaser Viator

Viator The viator is the sick person who needs funds. The broker helps the viator find a provider who will enter into a viatical settlement contract, which will provide the funds.

Duties of Producers

When a producer takes an application, he/she must submit a signed statement about whether the applicant has existing policies. If the answer is yes, the producer must present and read a notice regarding replacements and get a list of all life insurance or annuities proposed to be replaced together with the following information: -Name of insurer -Name of insured or annuitant -Policy or contract number (if available) The notice must be signed by the applicant. This statement, together with the application must be submitted to the insurer. The producer must leave a copy of all sales material with the applicant, and a list of the sales material provided must be submitted to the insurer with the application and notice of replacement. The replacing insurer, in turn, notifies the existing insurer.

Correction of records

Within 30 days after an insurer receives a written request from a client to correct, amend or delete personal information about the client, the insurer must either: -Comply with the client's request, or -Inform the client why it will not or cannot comply (the insurer must also inform the client of his write to submit a rebuttal to the insurer's position) A legal action regarding illegal disclosure of private information must be brought within 2 years from the date of the alleged violation is or should have been discovered.

Viatical Settlement Broker

a person who attempts to negotiate viatical settlement contracts between a viator and one or more viatical settlement providers. This does not include an attorney, certified public accountant, or certain certified financial planners.

Contract of Insurance

A contract of insurance is an agreement that obligates an insurer to compensate an insured upon the destruction, loss, or injury of something in which the insured has an interest.

Agent

A person licensed to solicit insurance applications or negotiate policies. An agent is deemed to represent an insurer.

Resident

A person living in North Carolina. (A person who lives in a county that shares a border with North Carolina may qualify for a resident license, even though the person is not a resident.)

Disinterested third party

A person not concerned, with respect to possible gain or loss, in the result of a pending course final examination.

Unfair Discrimination

Allowing individuals of the same class and equal expectation of life (life insurance), or individuals of the same class and hazard (health insurance), or individuals of the same class and risk (property and casualty insurance) to be charged different rates for the same insurance coverage (unless the rate differential is based upon sound actuarial principles or is related to actual experience).

Which of the following individuals does not require an insurance agent's license in North Carolina? An individual licensed in Virginia wishing to sell insurance in Winston-Salem An individual wishing to represent purchasers of insurance An agency clerk who maintains records for agents An individual who has earned the Chartered Life Underwriter (CLU) designation

An agency clerk who maintains records for agents Employees of insurance producers do not require an agent's license as long as they do not receive commissions from policies written or sold in the state. An individual licensed in another state is required to get a nonresident license before selling insurance in North Carolina. An individual representing purchasers require a broker's license, but first must obtain and agent license. A CLU is exempt from the exam, not the licensing requirement.

Foreign Company

Any company incorporated or organized under the laws of the United States or any of its jurisdictions other than the laws of North Carolina.

Commissioner of Insurance: Producer of Record

Any person or entity transacting insurance business in the state must appoint a producer of record, who must provide records to the Commissioner on demand. Any person who is subject to these recordkeeping regulations and violates them may be subject to the following discipline after notice and hearing. -First offense: License suspended or revoked for 1 to 6 months -Second offense: License suspended or revoked for 1 year

Ethical Standards

Every insurance professional, when dealing with the public, must identify himself/herself and his/her occupation, carry his/her 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. Nor may he/she discourage a claimant from seeking legal counsel.

Unfair Trade Practices

The following are unfair trade practices in insurance: Misrepresentation Twisting False information and Advertising Defamation Boycott, Coercion, or Intimidation False Financial Statements Unfair Discrimination Rebating Stock Options and Advisory Board Contracts Illegal Advertising Unauthorized Insurance Contracts

Fees and Appointment

No individual who holds a valid insurance agent's license may, either directly or for an insurance agency, solicit, negotiate, or otherwise act for an insurer without an insurer appointment. An insurer authorized to do insurance business in this state must appoint an individual as its agent. An agent may have only one appointment for each kind of insurance he/she is licensed for in the state. An appointment 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.

Twisting

An insurer may not willfully misrepresent, or incompletely compare, the terms, conditions, or benefits of any insurance policy to induce a policyholder to replace an existing policy.

False Pretenses and Cheats: Penalty

If the value of the item obtained is greater than $100,000 the violation will be a Class C Felony and if less than $100,000 the violation will be a Class H Felony.

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.

Report to Insurers

The Commissioner shall notify every appointing insurer about any revocation, suspension or nonrenewal of a license by the Commissioner. The Commissioner shall also notify the central office of the NAIC.

Continuing education course

A course that is directly related to insurance principles and practices or a course designed and approved specifically for licensees; but does not mean a business course of a general nature or an insurance marketing or sales course. Courses must be for instructional purposes only and not for promoting the interests of or recruiting employees for any particular insurance agency or company.

Military Sales Agent License

A domestic life insurer's appointee may get a military sales agent license if transacting insurance only in a foreign country and either on a US military installation or with US military personnel, or both. The license must be renewed yearly.

Adjuster

A person who investigates health, property, or casualty insurance claims.

Report of Adverse Administrative Action

An agent must report any adverse administrative action taken against him/her in another jurisdiction, or by another governmental unit in this state, within 30 days after the final disposition of the matter. The report must include a copy of the order, consent order, and any other relevant legal documents.

Report of Prosecution for Crime

If an agent is prosecuted for a crime in any jurisdiction, he/she must report it to the Commissioner within 30 days after the initial court appearance. The report must include a copy of the charging document, including a citation, an indictment, a statement of charges, any court order issued, and any other relevant documents. (Misdemeanor auto violations need not be reported.)

Which of the following disclosures in prohibited under the Insurance Information and Privacy Protection Act? Information about an individual in connection with an insurance transaction Information provided to a group policyholder for reporting claims experience Information given to a medical provider in order to provide care Information disclosed in an audit of the insurer

Information about an individual in connection with an insurance transaction It is prohibited to disclose personal information about an individual in connection with an insurance transaction, but there are many exceptions.

Business Entity

A legal entity other than a person or a sole proprietorship (e.g., S corporation or limited liability company).

Rebates

Pay, allow, or give directly or indirectly, as an inducement to buy insurance or, after insurance has been effected, any rebate, discount, abatement, credit, or reduction of the premium named in a policy of insurance, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified in the policy of insurance.

How much time does an insurer have to notify the Commissioner after an agent's appointment is terminated? 15 days 30 days 60 days The insurer is not required to notify the Commissioner

30 days An insurer that terminates a producer's appointment must notify the Commissioner within 30 days after the termination's effective date. The notice must state the cause for termination if the cause is also ground for license suspension, probation, revocation, or nonrenewal.

Insurance continuing education credit

A credit hour assigned to a course by the Commissioner after review and approval of course information.

Criminal History Record Checks

A license applicant must furnish the Commissioner with a complete set of fingerprints certified by an authorized law enforcement officer. The fingerprints will be forwarded to the State Bureau of Investigation for a criminal history record check. If warranted, the State Bureau of Investigation will forward a set of the fingerprints to the Federal Bureau of Investigation for a national criminal history record check. The applicant is required to pay the cost of the State and any national criminal history record check. The Commissioner must keep all such information privileged, in accordance with applicable State law and federal guidelines. The information is confidential and will not be a public record under the General Statutes.

Commissioner of Insurance: Notice to Commissioner/Address Change

A license applicant must notify the Commissioner in writing within 10 days of a change in residential address or of being convicted of a crime other than an auto misdemeanor. Violation of this requirement is not subject to suspension or revocation but is subject to a $50 fine. The Commissioner may contract with the NAIC or other persons to provide administrative services to licensees and regulatory data systems to the Commissioner.

License Termination

A license may be terminated for a number of reasons discussed below. -Moving -Suspension, Probation, Revocation, and Nonrenewal of Licenses -Report of Adverse Administrative Action -Report of Prosecution for Crime -Report to Insureres -Termination of Appointment

Commissioner of Insurance: Investigations of Complaints

A person must report, and the Commissioner must investigate, suspected insurance fraud or a licensee's financial impairment. A person acting without malice is immune from liability. In the investigation, the Commissioner may examine the insurer's books, records, and documents. The Commissioner may request information for an investigation from any person. If the complaint is justified, the insurer is required to pay investigation expenses and any appropriate fines. Each insurer or its agents must maintain a record of all written complaints for at least 5 years after the complaint's final disposition or, for domestic companies, until the Commissioner adopts a final report of a general examination that contains a review of these records, whichever is later. These records may be subject to inspection and should contain at a minimum: -The insured's name -The nature of the complaint -The policy/claim number of the insured -The final disposition of the complaint

Broker

A person who places insurance with an authorized insurer that has not appointed the person. A broker is deemed to represent an insured.

Penalties

A violation of privacy regulation is punishable by one or more of the following: -License suspension or revocation -A monetary fine up to $10,000 per violation -A monetary fine up to $50,000 if the violations occur with such frequency constituting a general business practice The Commissioner must give at least 10 days' notice for a hearing about an alleged violation of privacy regulation. After the hearing, the Commissioner may issue a Cease and Desist Order. The statute of limitations for legal action is 2 years from the date of the alleged illegal disclosure of private information.

Negotiate

Act of conferring directly with, or offering advice directly to, a prospective insured concerning any of the substantive benefits, terms, or conditions of the contract, only if the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.

Commissioner of Insurance: Records Maintenance/Inspection

All companies, agents, or brokers doing any kind of insurance business in North Carolina must make and keep a full and correct record of their business. Such records include the person(s) to whom policies are issued, the policy/certificate of renewal number, date, term, amount insured, and premiums. Information from these records must be furnished to the commissioner on demand, and the original books of record shall be open to the Commissioner's inspection whenever he/she requests.

Commissioner of Insurance:

All examinations, hearings, and investigations may be conducted by the Commissioner personally or by one or more deputies, investigators, actuaries, examiners, or employees designated for the purpose. If it is deemed that there is evidence to charge any person or persons with a criminal violation of any provision, the Commissioner may arrest with warrant or cause the person or persons to be arrested. The Commissioner must notify all interested parties of a hearing's time, place, and subject. After a hearing, the Commissioner may suspend or revoke a license or, alternatively, impose an administrative fine of not less than $100 but not more than $1,000.

Brokers

An applicant for a broker's license must already possess an agent license and maintain that license throughout licensure while a broker. A broker's license will be issued only for the same lines of insurance authorized under the agent license. A corporate surety bond of at least $15,000 must be filed and kept in force as long as the broker's license is active. Suspension or revocation of the agent license will immediately suspend or revoke the broker's license as well.

Notice of Appointment and Fees

An appointing insurer must file, in a format approved by the Commissioner, a notice of appointment within 30 days of appointing an agent, or within 15 days after the first insurance application is submitted, and must pay the appointment fees as required by the commissioner. The insurer must submit a renewal fee for each appointed agent, when required, by line of insurance. When a temporary license is issued, the fee shall be at the same rate as for a permanent license of the same type. Any amounts so paid for a temporary license may be credited against the fee required for an appointment by the sponsoring company. Any person who is not licensed and is required by law or administrative rule to secure a license shall, upon application, pay a fee of $50. If additional licensing for other kinds of insurance is requested, a fee of $50 shall be paid to the Commissioner upon application for licensing for each additional kind of insurance. All fees are nonrefundable

Which of the following action would NOT result in a misdemeanor penalty? An agent unknowingly acts as a third-party administrator for an unauthorized insurer An agent signed a blank contract An insurance agency employee embezzles $500 from the agency An agent makes a false statement on an insurance application

An insurance agency employee embezzles $500 from the agency Embezzlement up to $100,000 results in a Class H felony; the other actions would result in a misdemeanor.

Assumed Names

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

General Regulations for Insurance

An insurer may not charge different rates: -For auto insurance based on the insured's age or gender -For life or health insurance solely because of blindness or deafness -Because of race, color, nationality, or ethnicity -For persons of the same class and risk or hazard Group life and group health policies are prohibited from requiring proof that a loss is accidental. An insurer must provide claim forms to a claimant within 15 days of receiving notice of loss. Twisting - An insurer may not willfully misrepresent, or incompletely compare, the terms, conditions, or benefits of any insurance policy to induce a policyholder to replace an existing policy. A lender may not require a customer to buy insurance from an affiliated insurer in order to get a loan. A home loan provider must accept a binder as evidence of insurance. An insurer, agent, or broker who accepts premiums by credit card may not discriminate in providing this service and must pay any fees charged for providing this service. Pretending to be or acting as an agent, broker, adjuster or any other person engaged in any facet of insurance business is a Class 1 Misdemeanor. All statements or descriptions in any application for a policy of insurance, or in the policy itself, are deemed representations and not warranties. A representation, unless material or fraudulent, will not prevent a recovery on the policy. Regarding policies providing health benefits, the words "accident," "accidental injury," and "accidental means" must be defined to imply "result" language and must not include words that establish an accidental means test. Note: The accidental means test is the definition of accident as any event which causes loss for which the results were unforeseen.

Termination of Appointment

An insurer that terminates a producer's appointment must notify the Commissioner within 30 days after the termination's effective date. The notice must state the cause for termination if the cause is also ground for license suspension, probation, revocation, or nonrenewal. The insurer must 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. These comments will be included with any report distributed or disclosed about the producer as permitted by law. 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 a license suspended or revoked. Note: The Commissioner must notify a nonresident licensee within 3 business days of receiving legal process against the licensee. The licensee must be given at least 40 days to respond.

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 or, after insurance has been effected, any rebate, discount, abatement, credit, or reduction of the premium named in a policy of insurance, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, 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. An insured must not knowingly receive or accept, directly or indirectly, any rebate, discount, abatement or reduction of premium, or any special favor or advantage or valuable consideration or inducement. These rules do not prohibit the payment of commissions or other compensation to duly licensed agents, brokers and limited representatives. They also do not prevent a participating insurer from distributing to its policyholders dividends, savings or the unused or unabsorbed portion of premiums and premium deposits. An insurer may not require a claimant to repair property damage through a particular business or receive remuneration from a particular business for recommending claimants. Any agent or representative of any company doing the business of insurance must not make any discrimination in favor of any person. Any person transacting insurance business in North Carolina for an unauthorized insurer may, in addition to having his/her license revoked, be held liable for any unpaid claims.

Adverse Underwriting Decisions

And adverse underwriting decision includes declining coverage, terminating coverage, charging a higher rate, or declining to make an application. In the event of an adverse underwriting decision, the insurer or agent responsible for the decision shall give the applicant a written notice that: -Either provides the specific reason(s) for the decision or that the applicant may be receive the reason(s) upon written request, and -Provides the applicant, with a summary of rights The applicant has 90 days to request reasons for the adverse underwriting decision and the response must be made within 21 days of being received. The insurer or agent is not required to provide specific items of privileged information if there is reasonable suspicion that the applicant has engaged in fraudulent or criminal activity. Medical information supplied by a medical care entity, shall be disclosed to the directly to the applicant. The names and addresses of the institutional sources that supplied the specific items of information shall be disclosed. When an adverse underwriting decision results solely from an oral request or inquiry, the explanation of reasons and summary of rights required by this section may be given orally.

Alien Company

Any company incorporated or organized under the laws of any jurisdiction outside the United States of America.

Insurance Company/Insurer

Any corporation, association, partnership, society, order, individual or group of individuals engaging, proposing or attempting to engage as principals in any kind of insurance business.

Insurance Producer

Any person required to be licensed to transact insurance business.

Commissioner of Insurance: False Statements/Embezzlement

Any person willfully misstating information is guilty of a Class I felony, and the entity on whose behalf the person willfully provided information known to be wrong, is subject to a fine of not less than $2,000 nor more than $10,000. Any person willingly and knowingly participating in making false or fraudulent statements or claims with the intent to procure or deny an insurance benefit is guilty of a Class H felony. Each claim is considered a separate count. Punishments include: -Probation and restitution of all procured or denied funds -An award for compensatory damages, all attorneys' fees, investigation costs and court costs -Treble damages if the defendant has engaged in a pattern of violations Embezzlement in the amount of $100,000 or more is a Class C felony and less than $100,000 is a Class H felony. Any insurance company or any of its agents, brokers, employees or representatives who have good reason to believe that fraud and/or embezzlement are being committed, must inform the Commissioner. Failure to do so will result in license suspension or revocation. The same penalty applies if a person fails to notify the Commissioner of known or suspected financial impairment/insolvency of an insurer.

Commissioner of Insurance: Insolvency

Any person working in or for the insurance business must notify the Commissioner if he knows or has reason to believe that an insurance entity licensed by the Commissioner is financially impaired. Notification should include all relevant facts and circumstances. The person notifying the Commissioner will be free of any liability, as long as the notification is without malice or deception.

Insurance Information and Privacy Protection Act

Applicants must be given notices of the insurer's information practices at the time of policy delivery when the information is provided by the applicant or public records, or when the information is received, if provided by someone other than the applicant or public records. In the case of a policy renewal, a notice shall be provided no later than the policy renewal date, except that no notice shall be required in connection with a policy renewal if personal information is collected only from the policyholder or from public records or a privacy information notice has been provided within the previous 24 months. In the case of a policy reinstatement or change in insurance benefits, a notice shall be provided no later than the time a request for a policy reinstatement or change in insurance benefits is received by the insurance institution. Insurers, agents, agency support personnel, or corporations may not disclose any personal information about an individual in connection with an insurance transaction, without having the individual's written authorization before the disclosure occurs. This information may be used, however, in making legitimate business decisions, determining eligibility for benefits, or preventing criminal activity (such as fraud, misrepresentation, or concealment). This rule does not prohibit disclosing the information to: -A medical institution to provide care -A group policyholder for reporting claims experience or performing an audit -A lien holder, mortgagee, etc. who has a proven interest in the insurance benefits -The certificate- or policy-holder to verify coverage -A government authority in determining eligibility for benefits, such as Medicaid -Anyone, if required by law It also does not prohibit disclosing the information for: -Any audit in connection with an insurer's or agent's product or service -Actuarial or research studies, or for marketing statistics, when the name is not disclosed (An individual may permit name disclosure for studies.) -An insurer's or agency's sale, merger, or consolidation Disclosing information given by a consumer reporting agency other than an insurance agency is also permitted. An insurer or agent must notify a person at least 30 days before disclosing private information, or notify the Commissioner if a person's application for coverage has been denied. Unless reasons are also requested, an insurer or agent may not seek information in connection with an applicant's previous insurance transactions concerning adverse underwriting decisions or coverage obtained through a residual market mechanism.

Solicit

Attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company.

Boycott, Coercion, or Intimidation

Being involved in an action resulting in an unreasonable restraint of, or monopoly in, the insurance business. Example: Making the purchase of insurance from a particular source the condition to another business transaction.

An insurance professional who represents the insured is which of the following? Broker Insurance Producer Agent Limited Representative

Broker An insurance broker is a person who places insurance with an authorized insurer that has not appointed the person, and is deemed to represent an insured.

Which of the following is NOT prohibited from disclosing personal information about a client under the Insurance Information and Privacy Protection Act? Insurer Agent Agency support personnel Client

Client No insurers, agents, or agency support personnel may disclose any personal information about a client in connection with an insurance transaction, without having the client's written authorization before the disclosure occurs. The client owns the information about him/herself and is free to disclose it.

Sell

Exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company.

Choose the passive unfair claim settlement practice: Refusing to pay claims without conducting an investigation Failing to promptly explain, based on applicable provisions or laws, a claim's denial Misrepresenting pertinent facts or insurance policy provisions relating to the coverage Telling an insured the policy of appealing arbitration awards

Failing to promptly explain, based on applicable provisions or laws, a claim's denial Failing to act promptly upon receiving a claim, failing to implement reasonable standards for the prompt investigation of claims, and failing to affirm or deny coverage within a reasonable time after receiving the proof of loss are also passive unfair claim settlement practices.

False Financial Statements

Intentionally making a false statement about an insurer's financial condition, or intentionally making a false entry, or omitting a true entry, in an insurer's document to deceive an examiner or public official. Example Making the purchase of insurance from a particular source the condition to another business transaction.

Misdemeanors, Prohibited Practices, and Prohibited Rebates

It is a misdemeanor: -To willfully make a false statement on an insurance application -To make a false statement to get a commission or benefit from an insurer -To adjust an unauthorized contract -For an agent, broker, or limited representative to knowingly use fraudulent representations to transact insurance business -For an agent or limited representative to sign a blank contract (upon conviction, the person may be fined $1,000 to $5,000) -For an agent or broker to unknowingly solicit, negotiate, sell, or act as third-party administrator for an unauthorized insurer. Unknowingly doing so is a Class 1 misdemeanor, but knowingly doing so is a Class H Felony. Each solicitation, negotiation or sale will be counted as a separate offense. Note: A third-party administrator performs administrative functions, including claims administration and payment, marketing, premium accounting, premium billing, coverage verification, and underwriting authority. -For a person to act as or pretend to be an agent or broker of any type and conduct any type of insurance transaction. -To make any statement that willfully misrepresents a policy's terms, conditions, or benefits to induce a policyholder to terminate, surrender, exchange, or convert a policy.

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.

Commissions

No commission, fee, reward, rebate, or other consideration for selling, soliciting, or negotiating insurance may be paid, directly or indirectly, to a person other than a licensed insurance producer. However, 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 resident agent or broker may not be required to transact insurance on behalf of, or pay commissions for such transactions to, a nonresident agent or broker or an authorized insurer. No person may 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. § An agent may not adjust losses on which his/her commissions are based.

Pretext Interviews

No person engaged in the business of insurance shall use or authorize the use of pretext interviews to obtain information in connection with an insurance transaction. A pretext interview is an interview whereby a person, in an attempt to obtain information about a natural person, performs one or more of the following acts: -Pretends to be someone he is not -Pretends to represent a person he is not in fact representing -Misrepresents the true purpose of the interview -Refuses to identify himself upon request A pretext interview may be undertaken to obtain information regarding a claim that is suspected to be based upon fraud or criminal activity. The person interviewed should not have a legally privileged relationship with the person about whom the information relates.

Rebating

Offering any rebate, discount of premium, advantage, or valuable consideration not specified in the policy.

False Information and Advertising

Presenting any information or advertisement that is false or misleading about the insurance business, or about any person in the conduct of his/her insurance business.

The Commissioner may revoke an agent's license for all of the following EXCEPT: Making a material misstatement on a licensing application Mishandling funds received while transaction insurance business Reporting a crime from another jurisdiction to the Commissioner Failing to pay court ordered child support

Reporting a crime from another jurisdiction to the Commissioner If an agent is prosecuted for a crime in any jurisdiction, he/she is required to report it to the Commissioner within 30 days after the initial court appearance. The other answer options are grounds for license revocation.

Biennial compliance period

The 24-month period during which an agent or adjuster must comply with continuing education requirements.

Commissioner of Insurance: General Duties and Broad Powers

The Commissioner advises the Governor on insurance matters and is responsible for organizing, administering, and carrying out the general duties and broad powers of the Department. The Commissioner's primary duties involve: -Issuing, refusing, suspending, or revoking Certificates of Authority to insurers and licenses to insurance agents -Establishing rules and regulations necessary to fulfill North Carolina insurance laws -Conducting examinations, investigations, and hearings as necessary to administer state insurance laws -Reporting to the Attorney General, any violations of laws relative to insurance companies and the overall business of insurance -Providing insurance policy or contract summaries, upon request, to state residents -Providing a list of insurance policy or contract rates to the public -Administering oaths (the Deputy Commissioner also has this power) -Arresting any person suspected of violating insurance law, if holding evidence -Seeking restraining orders, from the appropriate superior court, against a person who is violating, or whom the Commissioner believes might violate, insurance law. Such an order may be granted regardless of whether criminal prosecution is instituted under any provision of law. -Ordering a stay of the reporting times for proof of loss as established by insurance policies, in the event that the state or a portion of this state is declared a disaster area. This stay shall not exceed the later of 45 days or the expiration of the declaration of disaster. -Adopting additional rules not contrary to established insurance rules that will prevent persons subject to the Commissioner's regulatory authority from engaging in practices injurious to the public

Investigation and Penalties

The Commissioner has the power to examine and investigate into the affairs of every person engaged in the business of insurance in this State in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice.

Which of the following statement regarding North Carolina insurance law is FALSE? The Commissioner is appointed by the Governor A contract of insurance is an agreement that obligates an insurer to pay an insured for a loss of something in which the insured has an interest During a hearing, all parties may examine and cross-examine witnesses A licensee must notify the Commissioner of a change of address within 10 days of the change

The Commissioner is appointed by the Governor The Commissioner of Insurance is elected by North Carolina residents for a 4-year term.

Commissioner of Insurance: Cease and Desist Orders

The Commissioner may apply to the applicable superior court for an injunction to restrain any violation that is occurring, has occurred, or is under threat of occurring. If the court finds that any insurance statute is under violation, it shall issue an order requiring that such activities cease and desist. This order may be issued even if criminal charges have not been filed. If charges are filed and a licensee is convicted of a violation, their license is automatically suspended until reinstated by the Commissioner. For this purpose, "conviction" includes: -A guilty verdict by a judge, jury, or arbitrator -A guilty plea -A plea of nolo contendere (no contest) The Commissioner may, after a hearing, issue a cease and desist order for unfair trade practices. In such cases, the licensee may request a hearing within 30 days of receiving the order. Once a cease and desist order is finalized, fines between $1,000 and $5,000 per violation may be imposed.

Temporary Agent License

The 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, or the designee of a licensed producer entering the armed forces -As the Commissioner deems appropriate to the public interest The 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. The 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. A temporary license terminates upon the transfer of the business.

Suspension, Probation, Revocation, and Nonrenewal of Licenses

The Commissioner may suspend, place on probation, revoke, or refuse to renew a license for: -Making a material misstatement on a licensing application -Obtaining or attempting to obtain a license through misrepresentation or fraud -Cheating on an insurance exam -Failing to meet any license application requirement -Committing dishonest or fraudulent practices in the insurance business -Being convicted of a felony or crime of moral turpitude -Forging another's name on an insurance document -Using fraud, coercion, or dishonesty or demonstrating incompetence, untrustworthiness, or financial irresponsibility -Mishandling funds received while transacting insurance business -Willfully failing to notify the Commissioner of proceedings (insolvency, impairment, bankruptcy, etc.) being taken against an insurer within 3 business days after the proceedings begin (this also applies to proceedings against owners, managers and officers) -Violating any state's insurance law -Willfully misrepresenting the provisions of an insurance policy or application -Having been refused a license or certificate in another state, or having a license suspended or revoked in another state -Knowingly accepting business from an unlicensed or inappropriately licensed broker -Intentionally writing or issuing substantial overinsurance on property insurance risks -Failure to pay court ordered child support or state / federal income taxes A person whose license has lapsed or been surrendered may still be held accountable for actions taken while the license was in force.

Commissioner of Insurance: Election and Term of Office

The Commissioner of Insurance is elected by the residents of North Carolina to head the Department of Insurance for a 4-year term. If the Commissioner's office becomes vacant, the Governor must act as Commissioner for the unexpired portion of the term. The Commissioner appoints and may remove, at his/her discretion, a Deputy Chief Commissioner who has the authority to act with all powers vested in the Commissioner in his/her absence, death, resignation, disability or disqualification.

Commissioner

The Commissioner of Insurance of North Carolina, or an authorized designee of the Commissioner.

Unfair Claims Settlement Practices: Unfair Trade Practices Specific to Life and Health Insurance

The following are unfair trade practices specific to life and health insurance: - Failure to give each prospective life or health policyowner a Buyer's Guide and a Policy Summary (See Regulations of Life Insurance Solicitation - General Rules Relating to Solicitation in this chapter for an exception.) -Violating a replacement regulation. An insurer or producer doing this must provide a Notice of Replacement and, for the replacement policy, either a summary or a disclosure document. The producer may be fined, subject to license suspension or revocation, required to forfeit commissions or other compensation from a transaction in which a violation occurred, or any combination of these. The Commissioner may, after a notice and hearing, issue a Cease and Desist Order against anyone engaging in an unfair trade practice. Anyone who violates such Cease and Desist Order may be fined $1,000 to $5,000 per violation. The following practices are considered active unfair claims settlement practices: -Misrepresenting pertinent facts or insurance policy provisions relating to the coverage -Refusing to pay claims without conducting an investigation based upon all information -Compelling insureds to sue to recover amounts due by offering substantially less than the amounts typically recovered in actions brought by legal process -Attempting to settle a claim for less than a reasonable person would believe he/she is entitled, or on the basis of an altered application -Making known to insureds or claimants a policy of appealing arbitration awards -Delaying a claim investigation or payment by requiring submission of a preliminary claim report -Making overinsurance a condition for receiving credit or a loan -Misusing a borrower's confidential information provided by a lender about property policies the lender holds The following practices are considered passive unfair claims settlement practices: -Failing to acknowledge and act promptly upon receiving a claim under a policy -Failing to adopt and implement reasonable standards for the prompt investigation of claims -Failing to affirm or deny coverage of claims within a reasonable time after receiving proof of loss -Not attempting in good faith to promptly, fairly, and equitably settle a claim in which liability has become reasonably clear -Making claim payments to insureds not accompanied by a statement indicating coverage under which payment is made -Failing to promptly settle a claim where liability has become reasonably clear under one portion of the policy in order to influence settlements under other portions of the policy -Failing to promptly explain, based on applicable provisions or laws, a claim's denial

Overview

The purpose of this chapter is to acquaint the student with the insurance regulatory and licensing process in the State of North Carolina, as depicted by the North Carolina Administrative Code (NCAC), the General Statutes of North Carolina (G.S.), and other sources, and to inform the student of the ethical standards and practices expected of the insurance professional. Note: Information in this chapter modifies or amends information from previous chapters.

Nonresident Agent License

To get a nonresident agent license, a person must be currently licensed and in good standing as a resident agent in his/her home state. The Commissioner may verify a person's licensing status through the producer database maintained by the NAIC. The person's home state must award nonresident licenses to North Carolina residents on the same basis that nonresident licenses are awarded to nonresidents of North Carolina. A person previously licensed for the same kind of insurance in his/her former state is exempt from education, experience, and exam requirements if he/she is in good standing in the former state and the license application is received within 90 days after person's license in the former state is cancelled. If a nonresident licensee moves to North Carolina and desires licensure in this state, he must apply for resident licensure within 90 days of establishing legal residence. A nonresident licensee must report to this state's Commissioner, any administrative action taken against him/her by an agency in his own state, or a different agency within this state. Notification must be provided within 30 days after the matter's final disposition.

Business licensing

To get an insurance license, a business entity must designate a licensee to act as the entity's principal contact with the Department. Licenses are not required for officers, directors or employees of insurers or insurance producers if such persons do not receive commissions from policies written or sold to insure risks within this state. Licenses are not required for those who gather information for, enroll individuals in, issue certificates for, or help administer group or blanket plans.

Commissioner of Insurance: License Surrenders

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

Which of the following is considered "twisting"? Discriminating between individuals of the same class in the amount of premium charged or benefits paid Accepting premiums by credit card but charging a fee for the service Willfully misrepresenting or incompletely comparing the terms of an insurance policy to induce the policyholder to replace it Refusing to approve a loan unless the applicant buys insurance from an affiliated insurer

Willfully misrepresenting or incompletely comparing the terms of an insurance policy to induce the policyholder to replace it Twisting is giving prospects misleading information or comparisons about an insurance policy in order to sell them a replacement policy. The other choices describe prohibited practices, but they are not called "twisting."

Third Party Administrator

A person who performs administrative, marketing, financial, or underwriting services directly related to insurance. Note: An agent may not act as an adjuster if the agent's compensation is determined by the adjustment of losses. This law decreases the probability of reasonable claims being denied.

Moving

A resident licensee must return his/her license(s) to the Commissioner within 30 days after terminating residency in the state.

Illegal Advertising

Advertising a cancellable individual health policy without disclosing that it is cancellable, or stating benefits under an individual health policy in an advertisement without also disclosing any limitations on, and conditions for, coverage.

Penalty for Violation of Unfair Trade Practices

Any person who willfully violates the Commissioner's final cease and desist order regarding unfair trade practices shall forfeit and pay to the Commissioner no less than $1,000 and no more than $5,000 for each violation.

Stock Options and Advisory Board Contracts

Giving capital stock, benefit certificates or shares in a corporation, securities, special or advisory board contracts, or contracts promising returns and profits as inducements to purchase insurance.

Agent License

To act as an agent in North Carolina, a person must obtain a license for the kinds of insurance for which the person intends to act as an agent and, if acting for an insurer, an appointment from the insurer. This requirement also applies to a business entity that wants to accept compensation under its own name while acting as an agent. An agent or broker may qualify for a license in one or more of the following kinds of insurance: -Life and health (NASD requirements must be met to sell variable contracts) -Property and casualty -Personal lines of property and casualty -Medicare Supplement and Long-Term Care (A life and health license is required) To obtain an insurance license, a person must: -Be at least 18 years of age -Complete at least 20 hours of prelicensing education for each license sought (in addition, applicants for Medicare and Long-Term Care licensure must complete 10 hours of instruction relating specifically to Medicare and Long-Term Care issues pursuant to North Carolina and federal law) -Pass a written licensing examination -Pay any appropriate fees -Have not committed any act that would be a ground for license denial A person applying for a life and health agent license is exempt from the exam if he/she is a Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Life Underwriter Training Council Fellow (LUTCF), or Fellow of Life Management Institute (FLMI).