Chapter 19 - NC State Insurance Law

Coverage for Damage to Rental Vehicles Authorized

The Bureau is authorized to provide rates and policy forms for insurance against property damage to rented private passenger motor vehicles. Property damage includes damage or loss to the rented vehicle of more than $250. This includes loss of use and any costs or expenses related to the damage or loss that the renter is legally obligated to pay. The vehicle must be rented on a daily-rate basis for no more than 21 consecutive days.

Investigation of Unfair Practices and Penalties

The Commissioner has the power to examine and investigate the affairs of every person engaged in the business of insurance in this state in order to determine whether a person has been or is engaged in any unfair or deceptive act or practice. After a hearing, the Commissioner may issue a cease and desist order for unfair trade practices. Once a cease and desist order is finalized, fines between $1,000 and $5,000 per violation of the order may be imposed.

Temporary Agent License

The Commissioner may issue this for up to 180 DAYS to any of the following without an exam: - The spouse, representative, or guardian of a deceased or disabled producer in order to transfer business, train new personnel, or allow time for the producer's recovery. - A member or an employee of a licensed business entity if the designated producer dies or becomes disabled - The designee of a licensed producer entering the armed forces - Anyone the Commissioner deems appropriate to protect the public interest This may be restricted or revoked to protect the public. Anyone holding a temporary license may not acquire any new insurer appointments.

Coinsurance Clause

- An insurance company/agent may not issue any property insurance policy that contains a clause requiring the insured to maintain a larger amount of insurance than what is expressed in the policy. - A coinsurance clause or provision may be written in or attached to a policy when the words "Coinsurance Contract" are stamped on the Declaration page. - If there is a difference in rate for the insurance with or without the coinsurance clause, the rates must be provided upon request.

Adverse Underwriting Decisions

- Declining or terminating coverage - Declining to make an application with a specific insurer requested by an applicant - Placing a risk with a residual market policy, an unauthorized insurer, or an insurer specializing in substandard risks - Charging a higher rate based on information that differs from that which the applicant provided The applicant has 90 days to request reasons for the adverse underwriting decision. The response must be made within 21 days of receiving the request. NOT: - The termination of an individual policy form on a class or statewide basis - A declination of coverage solely because the coverage is not available on a statewide basis - The rescission of a policy

Disclosure Conditions, Limitations, and Authorization

- Insurers, etc. may not disclose personal info without having written authorization - However, it may be used without when making legitimate business decisions, preventing criminal activity, etc. -Disclosing information given by a consumer reporting agency to a person other than an insurer or agent is also permitted. The insurer or agent must notify a person at least 30 days before disclosing private information.

Commissions

Agents must be licensed and have an appointment with an insurer at the time of the solicitation in order to receive commissions.

License Renewal

Business entity licenses expire on March 31 of each year unless the renewal fee is paid. Business entities are also responsible for paying renewal fees for each appointed agent per line of insurance prior to April 1 of each year. Licenses for limited representatives, adjusters, and motor vehicle damage appraisers are renewed on April 1 of each year, unless the Commissioner establishes staggered license renewal dates to apportion renewals throughout the calendar year.

Commissioner of Insurance - Election

Elected by NC residents as the chief officer to head the Dept. of Insurance for a 4yr term. If this office becomes vacant, the gov. must act as Commissioner for the remaining portion of the term.

Accidental Injury

In group life, group accident, group health, group accident and health, and group annuity policies, the terms "accident," "accidental injury," and "accidental means" must be defined to imply accidental results, meaning only the injury is unintended and unforeseen, and must not include words that establish an accidental means test.

Records Maintenance and Inspection

Includes: The number, date, term, amount insured, and premiums of all policies, certificates, and renewals. The person(s) to whom it was issued. -Commissioner may inspect at any time

ICEC

Insurance Continuing Education Credit

Unauthorized Insurance Contracts

It is not lawful to transact insurance business for a domestic insurer in a state in which the insurer is not licensed.

Unfair Methods of Competition

Unfair methods of competition and unfair or deceptive acts or practices are commonly known as unfair trade practices. All persons engaged in the business of insurance are prohibited from committing these acts.

Business Entity License

- A business entity engaged in selling, soliciting, or negotiating insurance contracts must obtain a license. - Every member of a partnership and every officer, director, stockholder, and employee of the business entity personally engaged in selling, soliciting, or negotiating insurance policies must qualify as an individual licensee. - Must submit the uniform business entity application

Resident License

- An individual residing in this state will qualify for a resident license - A person who lives in a county that shares a border with NC may qualify - Any licensee who moves must give their license back to the Commissioner within 30 DAYS after terminating residency

Proof of Loss Forms

- An insurer must provide proof of loss forms to a claimant within 15 DAYS of receiving notice of loss. - If they don't, the claimant will be considered compliant with proof of loss requirements as long as they provide written proof of the occurrence, character, and extent of loss within the policy's time frame.

Embezzlement

- Includes any fraudulent conversion, withholding, disposal, lending, or investment of money or consideration they receive based on their performance as a producer. - Embezzlement in the amount of $100,000 or more is a Class C felony - Less than $100,000 is a Class H felony

Limited Lines

- Limited lines insurance includes motor vehicle physical damage insurance, title insurance, and any other kind of insurance recognized by the Commissioner as a limited line. - Limited lines producers are authorized to transact limited lines insurance. Limited representatives are authorized by the Commissioner to solicit or negotiate contracts of insurance that are restricted in the scope of coverage they afford.

License Regulations

- The license must state the name and identifying number of the licensee, date of issue, kinds of insurance covered by the license, and any other information deemed necessary. - The Commissioner may issue duplicate licenses - May not simultaneously hold an adjuster license and a property, casualty, or personal lines license. - If an individual surrenders an adjuster's license in order to apply for a property, casualty, or personal lines license, or vice versa, the examination requirement is waived if application is made within 60 days of license surrender.

Binder (what must an acceptable binder include)

- The name and address of the insured - The name and address of the mortgagee - A description of the insured collateral - A provision that it may not be cancelled within a term of the binder except with 10 days' written notice to the mortgagee - The amount of insurance bound A binder in NC is effective for up to 60 DAYS

License Surrenders

-When a licensee is accused of any act, omission, or misconduct, the licensee 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 another license and cannot submit a licensing application during the period of license surrender.

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 U.S. military installation or with U.S. military personnel, or both. The license must be renewed yearly.

Adjuster

A licensed individual who investigates claims arising under contracts other than life or annuities. - An attorney who occasionally adjusts losses incidental to their profession or an adjuster of marine losses is not considered an adjuster within the intent of the law.

Agent

A person license to solicit applications for or to negotiate a policy of insurance on behalf of an insurer. A company that compensates a person for soliciting insurance policies accepts and acknowledges the person as its agent in the transaction.

Hearings (Commissioner of Insurance)

All examinations, hearings, and investigations may be conducted by the Commissioner or by one or more deputies, investigators, actuaries, examiners, etc. If they find evidence to charge anyone, the Commissioner may arrest them with warrant or cause them to be arrested. - The person will have the option for a hearing. - Each day during which a violation occurs is considered a separate violation. - The Commissioner may suspend or revoke a license and/or impose a penalty of $100-$1,000 depending on severity

Statements in the Application

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.

Unfair Discrimination

Allowing individuals of the same class and equal life expectancy, of the same class and hazard, or of the same class and risk to be charged different rates for the same insurance coverage. It is not unfair discrimination if the rate differential is based on sound actuarial principles or is related to actual experience. - Solely because of blindness or deafness regarding life and health insurance - Solely because of the geographic location of a property or casualty risk - Solely because of the age of a residential property - Because of race, color, nationality, or ethnicity - For persons of the same class and risk or hazard - Age or gender

Assumed Names

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

North Carolina Rate Bureau - Purpose

Assess and recommend rates for: - Property and casualty insurance against loss to residential contents and real property with not more than 4 housing units - Theft and physical damage loss to nonfleet private passenger motor vehicles - Liability insurance for nonfleet private passenger motor vehicles, including medical payments coverage and Uninsured and Underinsured Motorists coverage - Workers' Compensation and Employers Liability insurance Hold hearings for grievances and concerns Act as a risk-sharing plan, providing insurance for uninsurable or high-risk persons or property and sharing the risks among all property and casualty insurers Any insurance company that is authorized to write lines of insurance represented by the Bureau must subscribe to and become a member

Prohibited Practices

Class 1 misdemeanor: - To willfully make a false statement on an insurance application for the purpose of obtaining any fees or commissions from a company engaged in the business of insurance - For a producer or limited representative to knowingly receive premium payment through fraudulent representations - For any unlicensed person to act as or pretend to be a licensee by collecting premiums or soliciting, investigating, or examining risks. Anyone not duly licensed who acts as a licensee will be liable for all the duties, requirements, liabilities, and penalties to which that licensee is subject

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 in order to deceive an examiner or public official.

Defamation

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

Limited License for Rental Car Companies

License may be issued for: - Excess liability insurance to cover the rental car company, its franchisee, and its renters in excess of the standard liability limits provided by the company in its rental agreement for liability arising from the negligent operation of the rental vehicle. - Accident and health insurance that covers renters and occupants for accidental death and dismemberment and medical expenses resulting from an accident. - Personal effects insurance to cover loss of or damage to a renter's personal effects. - Any other coverage approved by the Commissioner Insurance may be written only if the rental period does not exceed 30 consecutive days and meet requirements

Misstatements

Making willful misstatements of information in financial or other required statements is a Class I felony, punishable by a $2,000-$10,000 fine.

Rebating

Offering any rebate, discount of premium, advantage, or valuable consideration not specified in the policy. This does not include the readjustment of group rates based on claims experience.

Approval of Forms

Policy forms must be filed and approved prior to use. Forms are considered approved if specifically approved by the Commissioner or if not been disapproved within 90 days after filing.

Misuse of Borrower's Confidential Information

Producers may not solicit, accept, or use any information from a lender concerning insurance policies held by the lender as a mortgagee of real property.

Safe Driver Incentive Plan (SDIP)

Rates take into account: - insured's years of driving experience - vehicle characteristics - use of the vehicle (w/out limitation to farm use, business use and work commutes) Various classes of drivers: - at-fault accidents - convictions of major moving traffic violations - minor violations same^

Fees (licensing)

The annual fees required, per license, when a license is issued, renewed, or cancelled are: $11 for individual agents, $20 for oversees military sales agents, limited reps, and crop/hail adjusters, $75 for adjusters other than crop/hail, $100 for business entities. In addition, a $50 fee is required: - Upon app for a license by any person who is not licensed but is legally required to secure a license - If additional licensing for another line of authority is requested - Upon app for a supp license to sell Medicare Supplement or LTC policies

Licenses - Qualifications

To obtain an insurance license, a person must submit an application to the Commissioner and: - Be at least 18 - Complete at least 20 hours of prelicensing education for each license sought. In addition, applicants for Medicare Supplement and LTC licensure must complete 10 hours of instruction relating specifically to Medicare and LTC issues pursuant to North Carolina and federal law. - Pass a written licensing exam - Pay any fees - Have not committed any act that would be ground for license denial and be deemed trustworthy and competent

Overinsurance in Credit or Loan Transactions

When a loan or credit is secured by real or personal property, producers may not require insurance that exceeds the replacement value of the property at the time of the loan or extension of credit.

Ethical Standards

When dealing with the public, all insurance professionals must: - Identify themselves and their occupation - On request, provide their National Producer Number and Department's website and phone # for verification of licensure status

Activities by Lenders and Temporary Contracts

- A lender may not require the purchase of insurance from that lender or an affiliate of the lender as a condition to the making, renewing, or refinancing of any loan. - A lender engaged in making/servicing real estate mortgage loans on 1-4 family residences must accept a binder or other temporary written contract of insurance as evidence. - Temporary insurance may be made orally or in writing for a period of up to 60 days. - A lender is not prohibited from refusing to accept a binder as long as the refusal is reasonable (not including certain info) - The binder must be accompanied by a paid receipt for 1 year's premium, except in the case of a policy renewal subsequent to the closing of a loan. - The binder must also include an undertaking of the agent to use their best efforts to have the insurance company issue a policy.

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 insurer must give the producer or limited representative a copy of the termination notice within 15 days after notifying the Commissioner of the termination. The producer or limited representative has 30 days after receiving the termination notice to file written comments with the Commissioner and insurer.

Insurance Continuing Education Credit

- Classroom setting (50 min counts for 1 hr of CE credit) - Attendance must be monitored somehow (webinar, etc.)

License Denial

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

Restraining Orders (Commissioner of Insurance)

- The Commissioner may apply to the applicable superior court for an injunction to restrain any violation. If the court agrees, it will issue a cease and desist order - even if criminal charges have not been filed. - If charges are filed and a licensee is convicted, their license is automatically suspended until reinstated by the Commissioner.

Pretext Interviews

A person in an attempt to gain info does one of the following: - Pretends to be someone they are not - Pretends to represent a person they are not representing - Misrepresents the true purpose of the interview - Refuses to disclose their identity upon request

Licensing of Producers, Limited Representatives, and Adjusters

A person may not sell, solicit, or negotiate insurance in this state unless licensed for that line of authority.

Licenses

A person must obtain a license for the kinds of insurance for which the person intends to act as an agent. If acting for an insurer, the person also needs an appointment from an insurer. A licensed producer or limited representative may not transact any policy or transmit an application or premium for an unauthorized insurer that is not licensed to do business in this state.

Insurance Producer

A person required to be licensed in order to sell, solicit, or negotiate insurance. Includes an agent and a broker.

Licensing Exceptions

A producer license is not required for the following individuals who do not participate in the sale, solicitation, or negotiation of insurance: - An officer, director, or employee of an insurer who does not receive commission on insurance policies when their duties: - are executive, admin, managerial, or clerical - relate to UW, loss control, inspection, or processing a claim - are limited to a special agent/agency providing tech help - A person who performs administrative services related to group insurance policies - Employees of an insurer who are engaged in rating risks or supervising producer training - A person whose activities are limited to advertising without intent to solicit insurance - A nonresident who transacts insurance for commercial property and casualty risks to an insured with risks in multiple states, as long as the nonresident is properly licensed in the state where the insured maintains its principal place of business - A salaried employee who advises their employer on the employer's insurance interests

Lines of Authority

A producer may qualify for a license in one or more of the following kinds of insurance: - Property - Casualty - Personal Lines - Limited lines - Life - Variable life and variable annuity products - Accident and health or sickness - Medicare Supplement and long-term care, as a supplement to a life or health license

Privacy Notice

A separate privacy disclosure notice must also be delivered no later than either before the initial disclosure to an entity using the information for marketing purposes or the time of policy delivery. This notice should provide information about the insurer's policies with disclosing nonpublic personal information to affiliates or nonaffiliated third parties, and their policies to protect the nonpublic personal information of consumers. This notice must be provided annually during the continuation of the policy.

Twisting

An insurer may not willfully misrepresent or incompletely compare the terms, conditions, or benefits of any insurance policy in order to induce a policyholder to terminate, exchange, or convert the policy.

Payment of Premiums

An insurer or producer may accept premiums by credit or debit card if the insurer complies with the prohibition against unfair discrimination and pays the fees charged by the credit card company for using the service.

Prohibited Rebates and Charges in Excess of Premium

An insurer or producer must not: - Knowingly charge, demand, or receive a premium for any policy of insurance except in accordance with the applicable filing approved by the Commissioner - Directly or indirectly pay, allow, give, or accept as an inducement to buy insurance: -Any rebate, discount, abatement, credit, or reduction of the premium named in an insurance policy -Any special favor or advantage in the dividends or other benefits -Any valuable consideration or inducement not specified in the policy - Knowingly charge or receive from an applicant any money or other consideration 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

Disclosure Forms

Musty comply with state law by: - Specify the date - Specify the types of persons authorized to disclose information about the individual - Specify the nature of the information to be disclosed - Name the insurance institution or agent and identify to whom the individual is authorizing information to be disclosed - Specify the purpose for which the information is being collected - Specify the length of time the authorization remains valid. For information regarding property and casualty insurance, the authorization is valid for 1 year.

Nonresident License - Countersignature

There may not be a requirement that a licensed resident producer must countersign, solicit, transact, deliver, or process an application, policy, or contract on behalf of a nonresident producer or an authorized insurer. A licensed resident producer is not required to share in the payment of commissions, if any, related to such business.

Appeal of Commissioner's Order

Whenever a Bureau rate is held to be unfairly discriminatory or excessive and no longer effective by order of the Commissioner, the members of the Bureau may continue to use that rate for the interim period pending judicial review. However, each member places in escrow the amount that is potentially unfairly discriminatory or the excessive portion of the premium collected during the interim period. Once the court reaches a final determination, or a consent agreement or consent order between the Bureau and the Commissioner is reached, the Commissioner orders the escrowed funds to be distributed appropriately, either to the policyholders or the Bureau.

Special Cases (CE)

- A member of a professional insurance association may receive up to 4 credit hours during the biennial compliance period based solely on membership in that association. The association must have been in existence for at least 5 years. It also must be approved as a CE provider, but formed for purposes other than providing continuing education. - The Commissioner will award 24 credit hours for 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.

Broker

- A person who obtains insurance for the insured through an authorized agent of an insurer. - Unlike an agent, a broker works ON BEHALF OF THE INSURED and does not represent the insurer's interest, meaning the broker is not authorized to act as an agent for the insurer, and does not have legal authority to bind the insurer. - NC does not offer a separate broker license. Brokers may be licensed as insurance producers or remain unlicensed. Unlicensed brokers are still subject to everything a licensed producer is.

Commissioner's Primary Duties

- Administering and executing the applicable laws in NC and adopting rules to enforce and carry out - Revising and prescribing to insurers all forms necessary for required statements - Receiving and examining each financial statement required by law - Reporting to the attorney general any violations of laws relative to insurance companies and the overall business of insurance - Upon request by any citizen of NC, providing a statement of the provisions of any insurance contract offered or issued to that citizen. - Administering required oaths - Compiling and making available to the public a list of rates charged and explanations of coverages provided by insurers in connection with residential property and private passenger auto insurance - Approving/disapproving rates, forms, classification plans, rating plans, and plans of operation - Issuing, refusing, suspending, or revoking agent licenses and insurer certificates of authority

Commissioner Responsibilities (CE)

- Adopts rules to ensure CE requirements enhance professional competence and responsibility - Establishes qualifications for provider, presenter, and instructor authority - To qualify, instructors must hold certain professional designations relevant to their insurance specialty, have 5 years of full-time experience as an agent or broker covering policies in their specialty, or have an associate or bachelor's degree in insurance - Temporary instructor authority will be given to each qualified applicant, and the authority becomes permanent after 6 months. Approval will be denied, suspended, or terminated if the instructor: - not qualified or lies to commissioner - license denied, suspended, etc. - obtained/used exam questions - uses presentations deemed inaccurate - gets poor evaluation from any dept monitor/majority of attendees

Appointment

- An individual who holds a valid insurance producer's license may not solicit, negotiate, or otherwise act as an agent for an insurer without an insurer appointment. An agent is considered to have one appointment for each kind of insurance they are licensed for in North Carolina. - An insurer authorized to do insurance business in this state may appoint any properly licensed individual as its agent. To do so, the insurer must file a notice of appointment within 15 days after the date the first insurance application is submitted. - An appointment continues in effect as long as the appointed producer is properly licensed and the appointing insurer is authorized to transact business in this state, unless the appointment is cancelled. The insurer must submit an appointment fee.

Judicial Review

- Any order issued or executed by the Commissioner will be subject to judicial review in the superior court if a petition is filed within 30 days from the date of delivery of the decision. - The judicial review doesn't apply to an order regarding financial impairment or a decision that the premium rates charged/filed on any class of risk are excessive, inadequate, or unfairly discriminatory.

False Statements to Procure of Deny Benefits

- Any person who presents a written or oral statement that contains false or misleading information material to a claim to procure or deny an insurance benefit is guilty of a Class H felony. The person must have intent to injure, defraud, or deceive an insurer or claimant. - Each claim is considered a separate count. - Upon conviction the court may impose probation and order the defendant to pay restitution, including compensatory damages, attorney's fees, and reasonable investigation costs. - If it can be demonstrated that the person has engaged in a pattern of presenting false statements about claims, the person may be subject to treble damages, meaning they will be subject to three times the amount ordered had there not been a pattern of violations.

Prohibited Practices (cont.)

- Any person who solicits, negotiates, or sells insurance for an unauthorized insurer is strictly liable for any losses or unpaid claims if an unauthorized insurer fails to pay any claim in part or in full. The person making the sale will be guilty of a Class 1 misdemeanor if they do not know the insurer is unauthorized and a Class H felony if they knew or should have known the insurer was not authorized. - An agent or limited representative who signs a blank contract or insurance policy is guilty of a Class 3 misdemeanor, punishable by a $1,000-$5,000 fine upon conviction.

Violations (Commissioner of Insurance)

- Anyone who has reason to believe anyone has made a violation (willful misstatement, false statement to affect a benefit, embezzled funds) must inform the Commissioner (as soon as reasonable possible, such as 30 days) and provide a complete statement. - A person reporting fraud or insolvency who acts without malice is immune from liability. - The Commissioner may suspend, revoke, or refuse to renew the license of any who fail to comply.

Notice of Insurance Information Practices

- Applicants for insurance must be given notice of the insurer's info practices AT THE TIME OF POLICY DELIVERY if the info is provided by the applicant or public records - In the case of a policy renewal, a notice must be provided no later than the policy renewal date. Notice is not required with a policy renewal if personal information is collected only from the policyholder or from public records or if a privacy information notice meeting the requirements has been provided within the previous 24 months.

North Carolina Rate Bureau - Property Insurance Filings

- Coastal areas reviewed and reported annually (presence of mitigation, construction features, condition of buildings) - Residential property insurance rate filings considerations (risks for wind/hail, and all other risks) for each territory of the state

Disapproval of Rates

- Commissioner must notify the Bureau w/in 50 days after date of filing. If not, considered approved. - If given notice to Bureau, Commissioner must set a hearing at least 30 days from when notice is mailed. - Bureau is responsible for proving rates are not excessive, etc. - Commissioner must issue an order w/in 45 days after hearing if the rate is still noncompliant. If not, deemed approved. - For Workers' Compensation insurance and Employers Liability insurance, the Commissioner has 60 days to give notice of a hearing.

Credit Insurance Regulations

- Creditors may not be required to have credit life insurance or credit accident and health insurance. - When credit property insurance is required for any indebtedness, the debtor must be notified in writing that the required insurance may be furnished through policies the debtor already owns or controls, or the debtor may purchase insurance through an authorized insurer.

North Carolina Rate Bureau - Filings

- Each rate or loss costs filing will become effective on the date specified in the filing, but not earlier than 210 days from the date the filing is received by the Commissioner - The Bureau must maintain records of the experience of its members and of the data, statistics, and information collected or used in connection with any rate, underwriting rule, and policy form. This information must be filed with the Commissioner: By February 1 of each year, as it relates to nonfleet private passenger motor vehicle insurance, including any recommended adjustments; By September 1 of each year, as it relates to Workers' Compensation and Employers Liability insurance, in addition to filing a residual market rate or prospective loss costs review

Insurance Information and Privacy Protection Act

- Establishes standards for the collection, use, preservation, and disclosure of information gathered during insurance transactions - Maintain a balance between the insurer's need for information and the public's need for fairness and minimal intrusiveness in insurance information practices - Establish a regulatory mechanism to enable the public to know what information is being collected and allow them to verify or dispute its accuracy - Limit the disclosure of collected information - Enable insurance applicants and policyholders to obtain reasons for adverse underwriting decisions

Address Change and Notices

- Every licensee must notify the Commissioner in writing within 10 days after a change in residential or email address. - Violation is NOT subject to suspension or revocation, but a $50 admin fee. - Notices sent TO the Commissioner BY licensees may be given in writing or online service. - Notices sent BY the Commissioner TO licensees may be given personally or first-class mail.

Licensee Requirements

- Every person with a license must obtain 24 ICECs total during each biennial compliance period. Includes at least 3 hrs in ethics, and 3 hrs on flood insurance and the National Flood Insurance Program (every other compliance period) - Licensees must keep records of any CE courses within the past 5 yrs. - Even numbered birth year - even numbered compliance year - Odd numbered vice versa

Deviations

- Except for Workers' Compensation loss costs filings, insurers and their representatives may not knowingly issue, deliver, or permit the issuance or delivery of any policy that does not conform to the rates, rating plans, classifications, schedules, rules, and standards made and filed by the Bureau. - An insurer may deviate from the rates promoted by the Bureau only if the insurer has filed the proposed deviation with the Bureau and the Commissioner. The proposed deviation must be based on sound actuarial principles and be approved by the Commissioner. - Amendments to deviations are subject to the same requirements as initial filings. Deviations may be terminated if they have been in effect for at least 6 months and notice is sent to the Commissioner at least 15 days prior to the effective date of termination. - Rates greater than those set by the Bureau and Commissioner may be used for risks if the higher rate is charged in accordance to rules set by the Commissioner, if a notice is included on the Declarations page, and if the insured consents to the rate, documentation of which must be kept by the insurer for Commissioner inspection.

Correction of Recorded Personal Information

- If an individual requests access to their recorded personal information, the insurer or agent has 30 days to inform the client of the information, permit them to see the information or obtain a copy, disclose what entities received the information within the previous 2 years, and provide the procedure through which a correction may be requested. - 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 -Notify the client of its refusal to make such corrections, the reason for the refusal, and the individual's right to file a formal statement with the insurance institution

Reporting of Actions

- Insurance producers must report any adverse administrative action taken against them in another state, or by another governmental unit in this state, within 30 days after the final disposition. The report must include a copy of the order, consent order, and any other relevant legal documents. - If an agent is prosecuted for a crime other than misdemeanor auto violations in any jurisdiction, they must report it to the Commissioner within 30 days after the initial pretrial hearing date. The report must include a copy of the initial complaint, any court order issued, and any other relevant documents. If the licensee is subsequently convicted of the crime, they must report it to the Commissioner within 10 days after the date of conviction. - 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.

False Pretenses and Cheats

- It is a felony to intentionally use false pretense to obtain or attempt to obtain any money, goods, property, services, chose in action, or other thing of value from any other person. - A CHOSE IN ACTION is the right to sue a person to recover property, money, goods, or debts. - Intent to defraud is required. Evidence of nonfulfillment of a contract obligation, by itself, does not establish intent to defraud. - If the value of the item obtained is $100,000 or more, the violation will be a Class C felony. If the value is less than $100,000, the violation will be a Class H felony.

Failure to Complete CE

- License will lapse - Will be reinstated once CE is completed + $75 admin fee within 4 months after the end of compliance yr - If not within 4 months, they have to go through whole licensing again

Unfair Claim 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 they are 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 they are entitled, or on the basis of an application that was altered without permission - Making known to insureds or claimants a policy of appealing arbitration awards to compel them to accept settlements for less than the amount awarded in arbitration - Delaying a claim investigation or payment by requiring submission of a preliminary claim report then requiring a subsequent formal proof of loss with the same information - Failing to acknowledge and act promptly on 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 the 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 a claim's denial based on applicable provisions or laws

Producer of Record

- Must provide records to the Commissioner on demand. - If this person violates regulations they may be subject to the following discipline after notice and hearing: - License suspended or revoked for 1 to 6 months for a 1st offense - License suspended or revoked for 1 year for a 2nd offense - Any person who refuses to provide records or makes any false statements about records is guilty of a Class 1 misdemeanor and subject to license suspension or revocation.

NCAC G.S.

- North Carolina Administrative Code - General Statutes of North Carolina

SDIP Surcharges and Records of Traffic Violations

- Point system - Points are charged during the experience period (3yr period preceding applying for coverage) - Subclassification plan surcharges assigned to insureds with at-fault accidents or traffic violations must be applied to a policy for 3 policy years.

Suspension, Probation, Revocation, and Nonrenewal of License

- Providing materially incorrect, misleading, incomplete, or false information on a licensing application - Violating any state's insurance law or order of the Commissioner - Obtaining or attempting to obtain a license through misrepresentation or fraud - Improperly withholding, misappropriating, or converting monies received while transacting insurance business - Intentionally misrepresenting the terms of an insurance policy or application - Being convicted of a felony or a misdemeanor involving dishonesty, breach of trust, or moral turpitude, or committing any insurance unfair trade practice - Using dishonest or fraudulent practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business - Having an insurance producer license denied, suspended, or revoked in another state - Forging another's name on an insurance application or document related to an insurance transaction - Willfully failing to notify the Commissioner of insolvency, bankruptcy, or receivership proceedings being taken against a licensee within 3 business days after the proceedings begin - Soliciting, negotiating, or selling insurance for an unauthorized insurer, even if the licensee did not know the insurer was not authorized - Failing to comply with a court order to pay child support - Failing to pay state income tax - Cheating on a prelicensing or continuing education exam - Willfully overinsuring property

Continuing Education (CE)

- The 24-month period during which an agent or adjuster must comply with continuing education requirements is known as the biennial compliance period. The second year of this period is known as the compliance year. - Approved continuing education courses are courses directly related to insurance principles and practices, or other courses approved specifically for insurance licensees. Approved courses include ethics courses regarding usage and customs of the insurance industry, including the moral and professional duties toward one another, clients, insureds, and insurers. General business courses and marketing or sales courses are not considered CE courses.

Investigations of Complaints (Commissioner of Insurance)

- The Commissioner must investigate ALL reports of suspected fraud, etc. If the complaint is justified, the insurer is required to pay all expenses/fines. - Each insurer/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 Department's file number - The insured's name - The nature of the complaint - The policy/claim number of the insured - The final disposition of the complaint

Nonresident License - Reciprocity and Retaliation Provisions

- The applicant'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. - Any enforced or waived restrictions that apply to North Carolina residents with a nonresident license in another state will also apply to that state's residents who have a nonresident license in North Carolina.

Nonresident License

- To get this, a person must be currently licensed and in good standing in their home state. - If a nonresident licensee is no longer in good standing in their home state, this license will lapse 30 days after the home state loss. Within 30 days after the lapse, it can be reinstated if their home state has been - or if a change of address notices is filed within 60 days after the issuance of the new home state license. - If a nonresident licensee moves to NC and wants licensure, they must apply for resident licensure within 90 DAYS of moving. They are exempt from education/exam if one of the following applies: - Currently licensed in their home state - Good standing in former state - Application is received within 90 days after former license is cancelled

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 their insurance business is known as false information and advertising.

Boycott, Coercion, or Intimidation

Producers are not allowed to be involved in an action that results in an unreasonable restraint of, or monopoly in, the insurance business, such as making the purchase of insurance from a particular source the condition to another business transaction.

Misrepresentation

Producers are prohibited from making misleading or untrue representations or fraudulent comparisons of policies, misrepresenting a policy's terms or benefits, or making misleading representations about an insurer's financial condition.

Stock Operations and Insurance Company Advisory Board Contracts

Producers may not give 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.

Marketing or Research Surveys

Questions designed to gain information solely for marketing and/or research and not for insurance transactions must be clearly identified. Insurers, agents, and insurance-support organizations are prohibited from releasing any account number or access code for a credit card or deposit account to any nonaffiliated third party for marketing use.

Hearings and Penalties

The Commissioner must give at least 10 days' notice for a hearing about an alleged violation of privacy regulation. 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 a frequency that constitutes a general business practice Any person who knowingly obtains information about an individual from an insurance institution, agent, or support organization under false pretenses will be guilty of a Class 1 misdemeanor.

Exceptions (Privacy Notice)

The insurer or agent is not responsible for providing these notices to: - Any applicant or policyholder whose last known address is deemed invalid by postal authorities - Any policyholder whose policy is lapsed, expired, or inactive with no communication from the insurer, other than annual privacy notices and promotional materials, for at least 12 months

Notice of Coverage or Rate Change

Whenever an insurer changes the coverage or changes the premium rate, the insurer must give the insured at least 15 days' advance written notice of the coverage or premium rate change. Notice is not required if the insured requests the change. A copy of the notice must also be sent to the agent. This regulation applies to all policies and coverages except Workers' Compensation insurance and Employers Liability insurance.