NC Statutes and Regulations Pertinent to Property and Liability

Nonresident License- Addtn'l Info

-An applicant for an NC producer license will not have to complete any pre-licensing/exam if they were licensed for the same thing in their home state -Applicant has to be currently licensed in their home state, and application needs to be received within 90 days after cancellation of previous license and the home state certifies that applicant is in good standing -Commissioner will notify person if nonresidents license is revoked/suspended -Commissioner will notify all appointment insurers regarding license suspension/renewal -Any licensee who ceases to maintain residency in NC must deliver the licensee's insurance license to the Commissioner within 30 days after terminating residency. If insurer cancels a licensee's appointment/employment/contract, insurer must notify Commissioner within 30 days

Commissioner of Insurance & Duties

-Elected by the people -Terms start Jan 1. and lasts 4 years -Furnishing the necessary reporting forms to insurance companies -Reviews annual statements -Conducts investigations of all domestic insurers at least once every 3 years -Reports violations of insurance laws to attorney general -Conducts hearings/investigations, can have people arrested if evidence is found -Can visit any agency/agent/broker anytime (must keep full records of business, including policy #/ate/term/amount insured. Termination papers kept for 5 years) -Must give written notice to all hearings (10 days) -Can bring civil action for expense collection if a company refuses/neglects to pay -Can apply for restraining order if a person has violated an insurance law -May approve of someone (a licensee) to suspend their license for a period of time if accused of misconduct

Unfair Trade Practices

-Misrepresentation/false advertising of policies in the insurance business -Defamation (untrue statements about competitor) -Actions tending to result in monopoly -False financial statements -Unfair discrimination -Rebates -Soliciting unauthorized insurance contracts in other states -Unfair claim settlement practices

Unfair Claim Settlement Practices

-Misrepresenting material facts in insurance policy provisions -Failure to act promptly; failing to have reasonable standards to investigate claims -Refusing to pay claims without conducting a reasonable investigation -Failing to affirm/deny coverage within a reasonable time -Failing to make a good faith attempt to settle promptly/fairly a claim in which liability has became reasonably clear -Forcing the insured to litigate a claim to recover amounts due under a policy through litigation -Delaying a claims investigation -Paying claims without specifying the coverage under which the payment was made **A personal that willfully engages in an unfair claims practice or unfair method must pay to the Commissioner between $1,000 and $5,000 for EACH violation

Continuing Education

-Must obtain 24 credits during each biennial (24 month) period -Must complete ethics course every biennial compliance period, must be 3 credits -Must complete a floor course every other biennial (48 months) compliance period, must be 3 credits -Licensees must not receive insurance CE for the same course more often than once in any biennial compliance period -Licensees must maintain records of all insurance CE credits for 5 years- must be available for inspection by Commissioner -Must complete CE requirements in an even/odd compliance year based on your birth year (even=even, odd=odd). Must be completed by the LAST DAY of the licensee's birth month in said compliance year -Commissioner will appoint one advisory committee for each the fire and casualty insurance licensees and life and health insurance licensees -CE credits CAN be carried over from one biennial compliance period to the next. No limit -If license of any person lapses, license will be reinstated after completing CE courses and pay $75 admin fee. -Must complete pre-licensing education IF reinstatement requirements are not complete within 120 days after end of individuals previous compliance year

General Licensing Requirements

-Must submit application and the statements made in the application are true, correct, and complete to the best of the individuals knowledge -Must be 18 years old -Not have committed any act that is grounds for probation -Have special education/experience to satisfy requirements -Have passed the licensing exam including the NC laws -Have paid applicable fees

Insurance Information and Privacy Protection Act Standards

-Prohibits pre-text interviews -Requires notice of insurance information practices -Requires notice of adverse underwriting decisions -Requires insurer to inform individual of nature of the personal information

Suspension/Revocation/Denial

-Providing materially incorrect/misleading incomplete/untrue information in the license application -Violating any insurance law of ANY state; or violating any rule of FINRA -Obtaining a license through misrepresentation/fraud -Misappropriating monies in the course of doing business -Intentionally misrepresenting the terms of an insurance contract/application -Been convicted of a felony involving dishonesty/breach of trust/moral turpitude -Committing any insurance unfair trade practice/fraud -Forging another's name to an application for insurance -Knowingly accepting brokered insurance business from an individual who is not licensed to broker that kind of business -Soliciting/negotiating/selling insurance in this state for an unauthorized insurer -Failing to comply with an administrative or court imposing a child support obligation -Failing to pay state income tax -Cheating on exam/pre-licensing course/CE for insurance license -Willfully over insuring property

Licensing and CE Courses

-The Commissioner sets requirements for approval of content -Instructors who present pre-licensing/CE courses in insurance must be approved by the Commissioner -No one may teach or offer a course w/o a license issued by the Commissioner

Policy Cancellation

-This law allows an insurer 60 days to complete underwriting on a new piece of business -During this 60 day window, a policy may be cancelled for any reason -Beyond the 60 days, a policy may only be cancelled for a specific reason In the event of an adverse underwriting decision, the insured must be provided notice within a certain number of days: -Nonpayment- 15 days -Nonrenewal- 45 days -Any other reason- 60 days

Business Entity

A corporation, association, partnership, limited liability company or legal entity

Unauthorized Insurer

A fraudulent operation in which a company poses as an authorized provider. Whenever the Commissioner has reasonable grounds to believe that any person is violating state law governing this, he may, after notice and opportunity for hearing, issue a cease and desist. Agent will be personally liable

Broker

A licensed agent who obtains insurance for the third parties through an agent of an insurer for whom they are not authorized to act. Represents the insured and NOT the insurer

Countersignatures

A licensed resident agent of broker does not need to countersign an application on behalf of the nonresident agent or broker, nor receive any commissions earned in order for the transaction to be valid

Nonresident License

A nonresident may receive an NC nonresident producer license if: -Currently licensed as a resident/in good standing in home state -Has submitted request/paid all fees -Has submitted copy of the license application that was submitted to home state, or completed a Uniform Application Form -The home state awards nonresident license to NC residents on reciprocal basis

Agent

A person licensed to solicit insurance applications or to negotiate an insurance policy. Represents the insurance company

False Pretense and Cheats

A person who attempts to obtain anything of value from another by false pretenses with the intent to cheat or defraud is guilty of a felony

Limited Representative

A person who is authorized by the Commissioner to solicit contracts for title insurance, motor club, travel accident, dental services, limited line credit insurance, vehicle service agreements insurance. License must be renewed every April 1, and renewal fees paid

Fraudulent Claims

A person who knowingly presents a false or fraudulent claim to an insurer is guilty of a felony

Representation

A statement made by an applicant on the application. Unless this is material or fraudulent, it will not prevent the policyholder from recovering for losses under the policy

Binders

A temporary insurance contract that lenders must accept as evidence of insurance. Limited to 60 days, and will include all provisions of the insurance contract. Policy may or may not be issued. Agents/insurers issue, may be oral or written

Temporary License

A temporary license may be issued for up to 180 days without requiring an exam. The Commissioner may issue this to: -The spouse, court-appointed personal representative/guardian of a licensed producer who dies/becomes mentally/physically disabled -Member/employee of a business entity who dies/becomes mentally/physically disabled -The designee of a licensed insurance producer entering active service in armed forces -Any other circumstance the Commissioner feels will serve the public interest

Penalties for Violation

Acting as a principal/agent/broker/limited representative/adjuster/damage appraiser without a license, or does any act in soliciting/making/executing any contract of insurance other than as permitted under the law, is guilty of a misdemeanor

Signing Blank Policies

Agent will be guilty of a misdemeanor and, upon conviction, may be punished by a fine of no less than $1,000 to $5,000

Statements Made in Application

All statements made in the applications are considered representations

NC Post Assessment Insurance Guaranty Association

An association created to provide a mechanism for payment of covered claims when an insurer becomes insolvent and try to detect and prevent insolvencies. All companies who transact insurance of the type covered by the association and members (all NC insurance companies have to be members & contribute) -Association applies to all types of insurance except: fidelity/surety bonds, no flood, no business income, title insurance, ocean marine insurance, and retroactive insurance for claims already made -Association is obligated to pay all claims existing before an insurer was declared insolvent and arising within 30 days of insolvency --Any claim between $50 and $300,000 --Workers compensation paid in FULL

Commingling

An illegal practice that occurs when an agent mixes personal funds with the insured's or insurer's funds. *The accounting records maintained must be kept separate and apart from any other business records and must demonstrate at all times that collected funds due to insurers and return premiums due to policyholders are available

Assumed Business Names

An insurance producer doing business under an assumed name (other than the producer's legal name) must notify the Commissioner before using the assumed name

Twisting

An insurer may not make any statement misrepresenting or comparing the terms of any insurance policy to induce a policyholder to drop an existing policy to his detriment

Foreign Insurer

An insurer organized in any state outside of NC

Domestic Insurer

An insurer organized in the state it is domiciled

Alien Insurer

An insurer organized under the laws of another country other than the US

Pre-text Interview

An interview whereby a person, in attempt to obtain information about a person, does one or more of the following: -Pretend to be someone they are not -Pretend to represent a person he is not representing -Misrepresents the true purpose of the interview -Refuses to identify himself if upon request

Service Fee

Applicant has to consent in writing

Becoming a Broker

Applicant must hold an Agent's license. Before license is issued, applicant must keep in force a bond for no less than $15,000 in favor of NC for the use of aggrieved parties. Must be renewed every April 1, and renewal fees paid

NC Rate Bureau

Created to establish rates for residential property insurance of no more than four units and the contents of those units, personal auto insurance, and workers compensation rates -The Commissioner may disallow a rate filing by the Bureau with notice given within 50 days of the filing and set a date for a rate hearing. If no notice is given within 50 days, the rates are deemed approved. -An insurer may deviate from the Bureau's rates if the insurer files the proposed deviation with the Commissioner and the Bureau, provided the deviation is based on sound actuarial principles and is approved by the Commissioner **Policy forms also must be filed and approved. If the Commissioner does not act on a for filing within 90 days, it is deemed to be approved

Change of Address

Every licensee must give written notification to the Commissioner of any change of rsidential address or email address. Notification must be provided within 10 business days after the licensee moves into a new residence or obtains a different email address. $50 fee if this is violated

Ethical Standards (To Do)

Every producer or limited representative must, when in contact with the public: -Promptly identify himself and occupation -Provide his National Producer Number -Conduct himself in such a manner as to inspire confidence and fair dealings

Notice of Conviction

If a licensee is convicted in any court for any vrime or offense other than a motor vehicle infraction, the licensee must notify the Commissioner within 10 days after the date of conviction

Penalty for False Statements

If a person willfully misstates information in any financial statement, he is guilty of perjury. The entity on whose behalf the person made the statement is subject to a fine of at least $2,000 to $10,000

Personal Information

If an individual submits a written request to an insurer/agent for access to this information, the insurer/agent must, within 30 business days, inform the individual of the nature of the information and permit the individual to see/copy it. Information must be corrected/amended/deleted within 30 bus days from the date of the request/notify the individual of the refusal to do so and reasons. Insurance company cannot sell, distribute, or market this information, including CC information

Embezzlement

If any insurance agent or broker appropriates money or other considerations received, he is guilty of embezzlement, a felony

Required to be Licensed

In NC, agents/brokers/limited representatives must be licensed to sell or solicit property and casualty insurance. Insurer may not pay commission to any unlicensed/improperly appointed person. Agent must have valid license and current appointment with an insurer to place a policy. Licensed issued to an agent is authorized to act until license is otherwise suspended/revoked

Adverse Underwriting Decision

In the event of this decision, the insurer or agent must give written notice that provides the applicant or policyholder with the reason for the decision. This is any of the following: -Declined coverage -Terminated coverage -Failure to apply for a requested insurance institution

Pre-Licensing Education

Individuals applying for licenses for accident and health or sickness, casualty, life, personal lines, or property must complete at least 20 hours of instruction for each license. Applicants for Medicare supplement/long-term care licenses must successfully complete 10 additional hours of instruction

Appointing an Agent

Insurer must file a notice of appointment within 15 days after the first insurance application is submitted. If appointment cancelled or termination of employment, the insurer must file written notice with Commissioner within 30 days

Discrimination: FORBIDDEN

Insurers may not favor any person. Can not disfavor on the basis of blindness/partial blindness/deafness/partial deafness/race/color/national or ethnic origin

Adjuster

Investiages claims arising out of insurance contracts

Payment of Premium (CC)

May accept debit/credit cards, and authorized representative must pay the fees charged by the credit card company

Illegal Compensation for Recommendations on Repairs

May not recommend a particular service for the repair of property damaged without advising the insured that he does not need to use the recommended repair service

Premium Payment Receipts

Must be signed and dated by person receiving payment, with the name and address of both the agency and insurer.

Required Insurance

No lender shall require the purchase of insurance from them as a condition to settling the terms of a loan

Power of Attorney

No producer may solicit this from a consumer to sign insurance related forms

Ethical Standards (To Not Do)

No producer/limited representative/agency employee will: -Accept gratuities/other forms of remuneration from any service provider for recommending that provider to a claimant -Purchase salvage from a claimant -Discourage a claimant from seeking legal counsel -Cause a delay in property damage settlement because of the claimant's choice of a repair facility -Recommend a particular repair facility without informing the claimant that he or she is under no obligation to use that facility

False Pretenses

Obtaining information in a deceiving manor; guilty of a misdemeanor

Rebating

Offering something of value to induce someone to buy insurance. This is prohibited.

Mutual Companies

Owned by policyholders

Stock Companies

Owned by stockholders

Consumer Division

Responsible for gathering and responding to consumer inquiries and complaints regarding insurance company or producer activities

Restricted Licenses

The Commissioner may grant restricted licenses to a rental car company to act as an agent with the rental of vehicles less than 30 days for: excess liability coverage/accidental and health/personal effects

Contract of Insurance

The NC Department of Insurance (DOI) regulates insurance contracts. An insurance contract is an agreement that obligates an insurer to pay money as reimbursement for destruction/loss/injury of something in which the insured has an economic interest

Insurance Information and Privacy Protection Act

To establish standards for the collection and use of information gathered by insurers and agents. Depending on the act, the agent/insurer could be fined $10,000 to $50,000 and may have his/her license suspended/revoked

Acting w/o a License

Violates the insurance law and is guilty of a Class 1 Misdemeanor. A fine of $1,000 to $5,000 can be imposed

Proof of Loss Forms

When an insurer requires written proof of what is lost. Insured must be furnished blank form. Insurer must furnish within 15 days after receipt of notice, form must be signed within 60 days

Reporting Violations

Whenever any insurer, employee, or representative of the insurer or any other licensed person knows that a person has violated either the fraudulent claims or embezzlement provisions, or that a company is financially impaired, it is that person's or that entity's duty to notify the commissioner within 30 days