NC LAWS
Continuing education
Resident agents must complete 24 hours of continuing education every 2 years to keep their license active. 3 of those hours must be in ethics. • The Board of Insurance Agent Education develops the continuation education program and submits the proposal to the Commissioner for approval. • Nonresident agents are not required to complete North Carolina continuing education requirements as long as their home state requirements are met.
Financial planner/consultant
Terms such as "financial planner" or "financial consultant" may not be used by life insurance agents to imply that they are generally engaged in an advisory business in which compensation is unrelated to sales UNLESS such is actually the case.
Cease and desist order
The Commissioner has the authority to examine and investigate the affairs of any person engaged in the business of insurance in this state. Based on the investigation, the Commissioner may issue a cease and desist order. Any person who willfully violates a cease and desist order of the Commissioner may be subject to a fine of $1,000 to $5,000 for each violation.
Notice and hearing
The Commissioner may call and hold hearings for any purpose deemed necessary. At least 10 days written notice will be given to all persons affected by the hearing.
Examination of records
The Commissioner may conduct a financial examination of any insurance company as often as deemed appropriate. At the very least, a company shall be examined once every 5 years.
Agent appointments
An agent cannot act as an agent for an insurer unless he or she is appointed to work for that insurer. Insurers are responsible for submitting an appointment notice to the Commissioner within 30 days of an agent's appointment or submission of first insurance application. The insurer is also responsible for paying the agent's appointment renewal fee.
Commingling
An agent who has combined premiums collected with personal funds has engaged in commingling, which is a prohibited act.
Temporary License
The Commissioner may issue a temporary insurance agent license for a maximum period of 180 days (or longer for good cause) without requiring an examination if the Commissioner deems that the temporary license is necessary for the servicing of an insurance business.
Nonresident agents
An agent who holds a resident license in a different state may apply for a nonresident license in North Carolina, as long as both states have a reciprocal agreement. To apply, nonresidents must submit an application form, proof of resident license in good standing, and fees. Nonresident agent applicants do not have to take the North Carolina state licensing exam, but must not have committed any act for which the license could be denied, suspended, or revoked.
Blank Contract Application
An agent who signs a blank contract application or policy of insurance is guilty of a misdemeanor. The fine for this can be anywhere between $1,000 and $5,000.
Process
An applicant for a resident agent license in North Carolina must submit an application to the Commissioner and • Be at least 18 years of age • Not have committed any act that is grounds for denial, suspension, or revocation • Completed a 20 hour pre-licensing course • Have passed the state exam for the lines of authority in which licensure is sought • Submit the application with fees • Not intend to use the license primarily to write controlled business • Be deemed trustworthy and competent
Agent
An individual who in any manner sells, solicits, or negotiates insurance on behalf of insurance companies for compensation is an insurance agent. • The licensing of insurance agents is needed to protect the public. • In North Carolina, an individual agent is considered to represent the insurance company. • A licensee may not transact insurance business in North Carolina until the licensee is appointed by an insurer.
Definition of small employer
2-50 employees.
Alien insurance company:
A company that is chartered and organized in any country other than the United States. It is considered an alien company in all states. A company chartered in Canada would be an alien company in North Carolina
Domestic insurance company:
A company that resides and is incorporated under the laws of the state in which its home office is located. A company domiciled in North Carolina would be a domestic company in North Carolina
Foreign insurance company:
A company whose home office is located in another state. It is considered to be a foreign company in all states except for its home office. A company domiciled in Pennsylvania would be a foreign company in North Carolina
Contract of Insurance
A contract of insurance is defined in North Carolina statutes as an agreement by which the insurer is bound to pay money or its equivalent or do some act of value to the insured upon, and as an indemnity or reimbursement for, the destruction, loss, or injury of something in which the other party has an interest. The Insurance Department is responsible for regulating the business of transacting insurance contracts in North Carolina. All contracts of insurance that are made within North Carolina are subject to the laws of this state.
Reinstatement and renewal
A licensee who allows his or her license to lapse may, within 4 months from the renewal date, reinstate the license without retaking a pre-licensing course and state licensing exam. Continuing education requirements still need to be met and a reinstatement fee applies.
Free Look
A policyowner has 10 days to return an Accident/Health insurance policy and receive a full refund on premiums.
(from here on is health laws) Entire contract
A provision that the policy (including the endorsements and the attached papers) along with the application shall constitute the entire contract between the parties.
Solicitation and sales presentations
Agents must provide applicants and prospects with the approved NAIC Buyer's Guide. Agents must also provide a Policy Summary to applicants.
Address/name change
Agents must report a change in address or name to the Commissioner within 10 business days of the change.
Coverage of adopted children
All individual and group health plans must provide coverage to the insured's adopted children on the same basis as other dependents.
Newborn child coverage
All individual and group health plans which provide coverage to family members of the insured must provide coverage for the insured's newborn child at the moment of birth. If a premium is required to continue the newborn's coverage, it must be paid within the first 31 days to continue coverage. Coverage includes injury and sickness, including medical care for diagnosed congenital defects and birth abnormalities.
Statements in Application
All statements or descriptions in any application for a policy of insurance, or in the policy itself, are representations and not warranties. A representation, unless material or fraudulent, will NOT prevent a recovery on the policy.
Broker
An insurance broker in North Carolina is a representative of the insured.
Domestic, Foreign, and Alien Companies
An insurance company is classified according to the location of its corporation. Regardless of where the insurance company is incorporated, it still has to get a Certificate of Authority before transacting insurance within a state.
Notice of lapse
An insurance company must provide a notice to the insured 15 days before a policy will be cancelled or lapsed due to nonpayment.
Mutual life insurance companies:
An insurance company owned and controlled by its policyowners. These policyholders elect a board of trustees or governing body to manage the firm. The profits of a mutual insurance company are returned to the policyowners in the form of dividends, or retained as surplus to meet future obligations. • Mutual insurance companies are considered participating because the policyowners do share in the profits of the company. • The objective is to provide insurance to its owners, the policyowners, at the lowest net cost.
Unauthorized insurer:
An insurance company that has been denied or not yet applied for a Certificate of Authority and may not sell insurance in this state. Any agent that sells an insurance policy for an unauthorized insurer runs the risk of being responsible for unpaid claims. • Also called a non-admitted company • Any person or entity who solicits, negotiates, or sells insurance for an unauthorized insurance company is guilty of a misdemeanor and will be liable for any losses or unpaid claims.
Authorized insurer:
An insurance company that has qualified and received a Certificate of Authority from the Insurance Department to sell insurance in this state. • Also called an admitted insurance company
Stock Insurance Company:
An insurance company that is owned and controlled by stockholders (shareholders). The stockholders provide the capital and share in profits or losses. • Stock insurance companies are considered nonparticipating because the policyowners do not share in the profits of the company. • The objective is to produce profits for the owners, the stockholders. • A stock insurance company that issues both participating and nonparticipating policies is referred to as a company doing business on a mixed plan.
Claim forms
An insurance company will send forms for filing proof of loss to a claimant within 15 days after company receives notice of a claim.
Claim forms
An insurance company will send forms for filing proof of loss to a claimant within 15 days after the company receives notice of a claim.
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.
Rate increases
An insurer must provide written notice to individual accident and health policyowners at least 30 days before the effective date of a rate increase.
Termination of agent appointment
An insurer that terminates an agent appointment must notify the Commissioner within 30 days of the date of termination. Within 15 days of such notice, the insurer must mail a copy of the notice to the terminated agent, after which the agent will have 30 days to submit written comments to the Commissioner.
Minimum Maternity Benefits
Any individual and group policy that provides for maternity benefits must provide coverage for a minimum of 48 hours of inpatient care after a normal delivery, and a minimum of 96 hours of inpatient care after a cesarean section, for a mother and her newborn infant.
Pap Smears
Any individual or group health insurance policy must provide coverage for annual gynecological exams, mammograms, and routine pap smears (cervical cancer testing).
Mammograms
Any insurer offering insurance in North Carolina must provide coverage for breast cancer screening mammography. Coverage is as follows: • One baseline mammogram for women between ages 35-39 • One mammogram every 2 years between ages 40-49, or more frequently if recommended by her physician • One mammogram a year for women age 50 and older Any policy that provides coverage for a mastectomy must also provide coverage for reconstructive breast surgery following the mastectomy
Conformity with State Statutes
Any provision of this policy which is in conflict of the state in which the insured resides on the date of issue is understood to be amended to conform to the statutes of that state.
Group rates
Approved premium rates for group health insurance shall be guaranteed by the insurer for an initial period of no less than 12 months.
Readjustment of Premium
As long as it is based on 12 months experience, a Group Health Policy can provide for readjustment of the premium rate once every 6 months after the first year.
Form, classification, and rates
Before an insurance policy is issued or delivered, the form, classification or risks, and premium rates must be filed with the Commissioner of Insurance.
Continuation of coverage
Continuation of group health coverage is only available to those employees who were covered under a group plan for a minimum period of 3 months prior to the date of termination. • Continuation of coverage of a group Hospital, Surgical, and Major Medical Policy must include hospital expenses. • The eligible employee can elect continuation of coverage for at least 60 days and up to 18 months after termination, as long as the premiums are paid by the employee. No more than 102% of the full group rate will be charged to that employee. • Continuation payments need to start being paid by the employee within 31 days of termination to be eligible for continuation coverage. • Continuation coverage is not required to include dental, vision, or prescription drug benefits.
Controlled business
Controlled business can be defined as policies written on people that the licensed agent has direct influence over: including family, employers, and/or any company to which the agent has stock control. Obtaining a license for the primary purpose of writing controlled business is prohibited.
Chemical dependency
Coverage for chemical dependency will be in included in all group health plans ($8,000 minimum benefit for the year; $16,000 for lifetime of contract).
Direct response
Direct response solicitation means any offer by an insurance company to persons in this state (either directly or through a third party) to effect life or health insurance coverage which enables the individual to apply for the insurance on the basis of the offer.
Relation of earnings to income
Disability payments shall not exceed the average monthly earnings of the insured at the time disability begins or for the two years prior to the disability.
Genetic Testing
Discrimination based on genetic information is prohibited.
Contestability period (Time limit on certain defenses)
EXCEPT for fraud, the time after issuance of a policy during which an insurance company may contest a health insurance claim due to the statements on an application is 2 years from the date of issue.
OB-GYN Coverage
Each health plan will allow female participants 13 and older access to the services of an obstetriciangynecologist.
Complaint Record
Each insurer or its agents must maintain, for at least 5 years, a log of all written complaints listing the following: • Department file number; • Name of insured; • Nature of the complaint, • Department subject to the complaint; • Policy or claim number of the insured; and • Disposition of the complaint.
Employee eligibility
Employees shall be added to the master group coverage no later than 90 days after their first day of employment.
PSA Testing
Every accident and health insurance policy will provide coverage for prostate-specific antigen (PSA) tests for the presence of prostate cancer.
Business Records
Every insurance agent/broker MUST maintain all records, books, and documents for insurance transactions for a period of no less than 5 years.
Medical examinations and lab tests including HIV
For underwriting an individual policy, insurers may require proposed insureds to undergo an HIV test, but only in conjunction with other medical tests. The basis for requiring an HIV test cannot be the proposed insured's sexual orientation. The insurer must obtain written consent from the proposed insured in order to conduct the HIV test.
Fraternal Benefit Society
Fraternal Benefit Societies are a corporation, society, or order that have a representative form of government and are organized through a lodge system. Fraternal benefit societies exist for the benefit of its members and their beneficiaries.
Handicapped dependents
Handicapped children are not subject to an age limitation and are covered until they become selfsupportive.
Age limits
If a company accepts a renewal premium payment that would extend coverage beyond the policy's maximum age limit, the company must continue the coverage to the end of the period of time for which the premium was accepted.
Reinstatement
If a health policy is reinstated after it has lapsed for nonpayment, there is a waiting period of 10 days before a claim covering sickness will be covered. Injuries sustained from an accident, however, will be covered immediately.
Reporting of actions
If a licensee is convicted in any court for any crime or offense other than a motor vehicle infraction, the licensee must notify the Commissioner 10 days after the date of conviction. When an agent reports a final disposition of an administrative action against the agent to the Commissioner, the report must include a copy of the order or other relevant legal documents.
Policy forms
If an insurer has been notified by the Commissioner of Insurance that an individual Health Policy form does not comply with the state's laws, the insurer may not issue the form in connection with any new applications.
False Pretenses and Cheats
If any insurance agent, broker, or administrator embezzles or fraudulently uses or withholds any money received as a result of acting as an agent, broker, or administrator, he/she can be charged with a felony.
Denial of License
If the Commissioner refuses to issue a license for any reason, a license may be suspended, revoked, or denied. The applicant will be notified in writing. Within 30 days after service of the notification, the applicant may make a written appeal to the Commissioner for a review. The review must be completed without undue delay, and the applicant must be notified promptly in writing as to the outcome of the review. If the applicant still disagrees with the outcome, he or she may appeal for a hearing within 30 days
Group Health Certificate
In North Carolina, a group health certificate of insurance must contain a summary of policy features andbenefits.
Time payment of claims
Indemnity claims will be paid immediately upon receipt of written proof of loss. Disability claims will be paid no less frequently than monthly.
Boycott, coercion, and intimidation
It is an illegal practice to commit or coordinate any act or boycott, coercion, or intimidation in order to restrain or monopolize the business of insurance.
False advertising
It is an illegal practice to falsely advertise insurance products or publish misleading information about its insurance coverage. This includes making false statements about the financial condition of an insurer.
Defamation
It is an illegal practice to make any public statement or advertisement that contains false information or unsubstantiated criticisms about an insurance company intended to harm or malign.
Misrepresentation
It is an illegal practice to misrepresent any fact about an insurance policy, such as policy terms, benefits, value, cost, effective date, or existence of a contract of insurance.
Unfair discrimination
It is an illegal practice to unfairly discriminate against a person in any way on an insurance-related matter. An example would be charging a different rate for someone in the same actuarial class. Fair discrimination is necessary for the issuance of life insurance policies, which is based on mortality.
Genetic screening information
It is illegal for insurers to use the results of a proposed insured's genetic screening to: underwrite a policy; determine whether to issue an insurance policy or to cancel; refuse to issue or renew, or limit benefits of a policy.
Rebating
It is illegal to offer a prospective client something of value that is not specified in a contract to induce the purchase of an insurance policy. This does not include sharing commissions with other licensed and appointed agents.
False financial statements
It is illegal to publish any false financial statement regarding a person or entity
New Residents
Licensed agents moving to North Carolina from another state have 90 days within cancelling their previous license to apply for a resident license here. After 90 days, the applicant must complete prelicense education and pass the state exam in North Carolina.
Commissions
No person shall pay or accept commissions to/from an unlicensed individual for the purpose of selling or negotiating insurance business.
Pre-existing conditions/group coverage
Pre-existing conditions are health issues that existed, were treated, or diagnosed within 6 months prior to employment. An enrollee for a health benefit plan may be excluded for up to 12 months (18 months for late enrollees). A late enrollee is an individual who elects coverage after the initial eligibility period.
Probation, suspension, revocation, refusal to issue or renew of licenses
The Commissioner must give written notice to the agent before holding a hearing that may lead to the suspension or revocation of the agent's license. The Commissioner may place on probation, suspend, revoke, refuse to renew, or deny a license to any person who has: • Provided incorrect, misleading, incomplete, or untrue information in the license application • Violated any insurance laws, regulations, subpoena, or orders from the Commissioner • Attempted to obtain a license through fraud or misrepresentation • Intentionally misrepresented the terms of an insurance contract • Been convicted of a felony • Committed any insurance unfair trade practice • Used fraudulent, coercive, or dishonest practices or demonstrated incompetence, untrustworthiness, or financial irresponsibility in this or any other state. • Had an insurance license denied, suspended, or revoked by another state • Forged a name to an insurance document or application • Cheated on an insurance license examination • Knowingly accepted insurance business from an unlicensed individual • Failed to comply with a court order imposing child support • Failed to pay state income tax
Fingerprinting
The Commissioner requires fingerprinting within 30 days of applying for a resident insurance license.
• Enforcing and carrying out all the provisions of the General Statutes • Adopting rules and regulations to enforce provisions of the General Statutes • Adopting rules pertaining to solicitation of proxies, including financial reporting of equity securities of any domestic stock insurance company • Approving forms used by companies, association, orders, or bureaus • Receiving and thoroughly examining all financial records • Reporting in detail to the Attorney General any violation of insurance laws • Instituting civil actions or criminal prosecutions by the Attorney General for any violation • When requested by any citizen of this state, providing a synopsis of the provisions of any insurance contract which is offered or issued • Compiling and making available to the public lists of rates charged, including deviations, and explanations of coverages that are provided by insurers
The Commissioner's powers and duties include:
North Carolina Life and Health Guaranty Association
The North Carolina Life and Health Guaranty Association provides claim payments of admitted, insolvent (financially incapacitated) insurers. Agents are prohibited from using the existence of the North Carolina Guaranty Association for selling, soliciting, or inducing purchase of an insurance policy. For any one person, the Guaranty Association will provide: • $300,000 in life insurance death benefits • $300,000 in cash values • $300,000 in health insurance; disability; long-term care insurance • $300,000 in present value annuity benefits The Life and Health Guaranty Association is funded by insurance companies through assessments.
Buyer's guide
The buyer's guide enables applicants to compare different life insurance policies and help them choose which policy is best for their needs.
Unfair Claims Methods
The following acts, omissions, or practices are defined as unfair and deceptive claim settlement practices when knowingly committed or performed with such frequency as to indicate a general business practice, and are prohibited: • Misrepresenting to insureds pertinent facts or policy provisions relating to coverage at issue • Failing to acknowledge and act reasonably promptly upon communications with respect to an insurance claim • Failing to adopt and implement reasonable standards for prompt investigation and processing of insured's claims • Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements are completed and submitted by insureds • Not attempting in good faith to effect prompt, fair, and equitable settlements of claims for which liability has become reasonably clear; Refusing or delaying a settlement solely because there is other insurance available to partially or entirely satisfy the claim loss; the claimant who has a right to recover from more than one insurer has the right to choose the coverage from which to recover and the order in which payment is to be made. • Compelling insureds to initiate suits to recover amounts due under an insurance policy by offering substantially less than the amount ultimately recovered in those suits
Free look period
The free-look period allows the policyowner time to decide whether or not to keep it. If the policyowner decides not to keep the policy within the free-look period, a full refund will be given. In North Carolina, life insurance policies must provide a minimum free-look period of 10 days upon policy delivery. A delivery receipt is a signed document that starts the free-look period.
Grace Period
The grace period for health and accident insurance is required to be no less than 7 days for weekly premium policies, 10 for monthly premium policies, and 31 for all other policies. If premium is paid within the grace period, coverage shall remain in effect.
Physical Exams and Autopsies
The insurer has the right to examine the insured during the claim process, and to perform an autopsy when death is involved and where it is not forbidden by law.
Policy summary
The policy summary contains specific information on the provisions, benefits, and coverage of the policy applied for.
Insurance Information and Privacy Protection Act
The purpose of this Act is to establish standards for the collection, use, and disclosure of information gathered during an insurance transaction. The Insurance Information and Privacy Protection Act is designed to limit or direct the information collection activities of: • agents and limited representatives • insurance support organizations • insurance companies The Insurance Information and Privacy Protection Act requires that an applicant for an individual insurance policy be notified of an investigation into his personal character, general reputation, and mode of living. An insurance company MUST clearly specify questions designed to obtain information solely for marketing research in any insurance transaction. When access to recorded personal information is requested following an adverse underwriting decision, the insurer must make the information available within 30 business days. Any reported violations of this Act require the Commissioner of Insurance to issue and serve a statement of charges and notice of hearing. The date of such hearing shall be at least 10 days after service of charges.
Definition of "employee"
The term "employee", for group health insurance purposes, is defined as a nonseasonal person who works on a full-time basis with a normal work week of 30 or more hours and is otherwise eligible for coverage.
Legal Action
There is a waiting period of 60 days to file a lawsuit after a claim for loss has been filed by the insured. No lawsuit may be filed after 3 years has passed from when the claim was submitted.
Twisting
Twisting is inducing or attempting to induce any insured person through misrepresentation to lapse, forfeit, or surrender insurance. The reason for this is normally to sell an insurance policy with another insurer
Interest payments on death benefits
Upon the death of the insured, payments made after 30 days from the receipt of satisfactory proof of loss must receive the insurer's current interest rate, computed from the date of death
Unpaid Premiums
Upon the payment of a claim under this policy, any premium due and unpaid or covered by any note or written order may be deducted from such payment.
Pre-existing conditions, replacement policies
When replacing an individual health policy in North Carolina, the required replacement notice to the applicant must include notice that pre-existing conditions may not be covered. An individual's waiting period for pre-existing conditions is reduced when he or she has "creditable coverage." Creditable coverage is previous coverage under another group or individual health plan when there has not been a break in coverage of 63 days. The 63-day period begins when the individual's previous coverage ended. It ends when coverage under your plan begins, or, if earlier, when your group's waiting period for eligibility begins.
Notice of claim
Written notice of claim for injury or sickness must be given to the insurer within 20 days after the date of occurrence.
Proof of loss
Written proof of loss must be furnished to the insurer within 180 days after the date of such loss.
Commissioner of Insurance
enforces all laws of the state governing insurance companies and makes rules and regulations relating to the business of insurance. The Commissioner is elected to office for a term of 4 years. If a vacancy occurs during the term, it shall be filled by the Governor for the unexpired term.
Conversion of coverage
• An employee who is insured under a group plan that has been terminated can convert to an individual plan with the same insurer without evidence of insurability. • Employee must have been covered under the group plan for a period of at least 3 months. • Application for a conversion policy and first premium payment must be made within 31 days after termination of insurance. • The converted policy will not exclude, as a pre-existing condition, any condition covered by the group policy.
