NC Property and Casualty State Exam
Members of the North Carolina Rate Bureau ANSWER-- each company writing any of
these coverage forms must be a member of the Bureau and are entitled to one voting
representative to the Bureau
- representatives shall elect a governing body
- governing body shall have 2 unaffiliated, non-voting members appointed by the Governor
- expenses of the Bureau are based on market shares (shared proportionately)
NCRB: Factors to Consider When Proposing Rates ANSWER-- rates must be adequate,
not excessive, and not unfairly discriminatory
- factors considered are:
1. Past loss and expense experience fo the past 3 years (5 years for property coverage)
2. Possible future losses and expenses
3. Reasonable Profit Margin
4. Investment Income
5. Potential for Catastrophe
NCRB: Proposed Rates ANSWER-A. Proposed rates cannot becomes effective until after
a waiting period of 210 days has passed since filing with the commissioner; Commissioner may
notify NCRB within 50 days (60 for worker's comp) whether the proposed rates are felt to be in
compliance with the regulations of the state; if not in compliance proposed rates may be charged
at the end of the waiting period, if not in compliance, a hearing must be scheduled within 30
days; after this hearing, the commissioner has the right to disapprove of the rate filing
,B. If commissioner disapproves, Bureau may appeal this disapproval for judicial review; RATES
MAY BE USED DURING THE APPEAL PROCESS; difference in premium between the
current and proposed rates must be maintained in an escrow account; will be used to refund
insured's if the commissioner's disapproval is upheld
C. An insurer is prohibited from issuing any policy that does not conform with the Rate Bureau
unless approved
D. Whenever an insurer changes the coverage provided or rates charged for the current coverage,
all insureds must be give 15 DAYS ADVANCE NOTICE
NCRB: Proposed Policy Forms ANSWER-- must be submitted to the commissioner for
approval before they may be used
- if commissioner does not disapprove them within 90 days, that policy form may be used
The Safe Driver Plan ANSWER-- designed to encourage safe driving practices by
motorists in this state and to provide a system for distinguishing between operators of motor
vehicles for rating purposes
Factors Considered in the Rating of an Automobile Policy ANSWER-1. Vehicle use
(pleasure, business, etc.)
2. Whether the operator is a principal or occasional operator of the vehicle
3. Amount of licensed driving experience
4. Characteristics of the vehicle
5. Garaging address
6. Age and sex of the operator ARE NOT allowed as rating factors
,Surcharges ANSWER-- if the insured is involved in an at-fault accident, and also is
convicted for a moving traffic violation
IN CONJUCTION WITH THE ACCIDENT, a surcharge will apply to whichever of the two
provides for the higher premium increase
- drivers with less than 3 years driving experience may receive a surcharge
- any policy that loses a safe driving discount or is surcharged with receive a notice before the
billing for additional premium
**Must collect moving violation records for each insured annually from DMV**
North Carolina Motor Vehicle Reinsurance Facility ANSWER-- created to provide
required automobile liability, med pay, and UM/UIM motorist coverage to "eligible risks" who
are "difficult to place" in the normal market
- eligible: resides in NC, has a NC driver's license, or has an automobile registered in NC
Facility Maximum Limits ANSWER-- $100,000/$300,000/$100,000 with $2000 med pay
- maximum limit for UM is $1,000,000/$1,000,000/$50,000
- maximum limity for UIM is $1,000,000/$1,000,000
Operations of the Facility ANSWER-1. All insurers must accept required coverage on any
eligible risk regardless of driving record; customers have the right to choose insurer; insurer may
then choose to cede or transfer the liability for that policy to the facility
2. Any losses incurred by the Facility on these ceded risks are shared equitably through
assessments of the member insurers, then insurers may recoup these assessments through
recoupment charges to all policyholders
3. No discrimination in service
, 4. The reasons for placement in the facility must be furnished; applicant must also be informed of
their right to seek insurance elsewhere that may not place them in the facility; customer can
receive unearned premium if ceded policy is canceled within 45 days
5. An agent may not refuse to accept application from or bind coverage to an eligible risk
6. Governed by a board of directors (12 people). 5 of these are appointed by the member
insurance companies, and 7 are appointed by the commissioner; must have 2 non-voting board
members who are not affiliated with any insurance company which are appointed by the
Governor
7. Ceded (transferred) business may not be terminated unless premium has not been paid (15
days) or named insured has moved out of state (60 days)
Financial Responsibility Laws ANSWER-- require that motor vehicle operators must
show their ability to respond to BI or PD claims that arise out of operation of a motor vehicle
- must be furnished when the individual is licensed as an operator, licenses a vehicle, or is
involved in an accident that causes $500 or more of PD
- can be demonstrated by:
1. Auto liability coverage of at least 30/60/25
2. Qualifying as a self-insured
3. Depositing a sufficient amount of money with the DMV
4. Posting a bond in favor of the state of NC in an amount at least equal to the minimum liability
insurance limits ($85,000)
The Building and Personal Property Coverage Form ANSWER-- provides coverage for
most commercial, industrial, and manufacturing risks
- used to write coverage for the direct loss only of the building, contents, or both
Members of the North Carolina Rate Bureau ANSWER-- each company writing any of
these coverage forms must be a member of the Bureau and are entitled to one voting
representative to the Bureau
- representatives shall elect a governing body
- governing body shall have 2 unaffiliated, non-voting members appointed by the Governor
- expenses of the Bureau are based on market shares (shared proportionately)
NCRB: Factors to Consider When Proposing Rates ANSWER-- rates must be adequate,
not excessive, and not unfairly discriminatory
- factors considered are:
1. Past loss and expense experience fo the past 3 years (5 years for property coverage)
2. Possible future losses and expenses
3. Reasonable Profit Margin
4. Investment Income
5. Potential for Catastrophe
NCRB: Proposed Rates ANSWER-A. Proposed rates cannot becomes effective until after
a waiting period of 210 days has passed since filing with the commissioner; Commissioner may
notify NCRB within 50 days (60 for worker's comp) whether the proposed rates are felt to be in
compliance with the regulations of the state; if not in compliance proposed rates may be charged
at the end of the waiting period, if not in compliance, a hearing must be scheduled within 30
days; after this hearing, the commissioner has the right to disapprove of the rate filing
,B. If commissioner disapproves, Bureau may appeal this disapproval for judicial review; RATES
MAY BE USED DURING THE APPEAL PROCESS; difference in premium between the
current and proposed rates must be maintained in an escrow account; will be used to refund
insured's if the commissioner's disapproval is upheld
C. An insurer is prohibited from issuing any policy that does not conform with the Rate Bureau
unless approved
D. Whenever an insurer changes the coverage provided or rates charged for the current coverage,
all insureds must be give 15 DAYS ADVANCE NOTICE
NCRB: Proposed Policy Forms ANSWER-- must be submitted to the commissioner for
approval before they may be used
- if commissioner does not disapprove them within 90 days, that policy form may be used
The Safe Driver Plan ANSWER-- designed to encourage safe driving practices by
motorists in this state and to provide a system for distinguishing between operators of motor
vehicles for rating purposes
Factors Considered in the Rating of an Automobile Policy ANSWER-1. Vehicle use
(pleasure, business, etc.)
2. Whether the operator is a principal or occasional operator of the vehicle
3. Amount of licensed driving experience
4. Characteristics of the vehicle
5. Garaging address
6. Age and sex of the operator ARE NOT allowed as rating factors
,Surcharges ANSWER-- if the insured is involved in an at-fault accident, and also is
convicted for a moving traffic violation
IN CONJUCTION WITH THE ACCIDENT, a surcharge will apply to whichever of the two
provides for the higher premium increase
- drivers with less than 3 years driving experience may receive a surcharge
- any policy that loses a safe driving discount or is surcharged with receive a notice before the
billing for additional premium
**Must collect moving violation records for each insured annually from DMV**
North Carolina Motor Vehicle Reinsurance Facility ANSWER-- created to provide
required automobile liability, med pay, and UM/UIM motorist coverage to "eligible risks" who
are "difficult to place" in the normal market
- eligible: resides in NC, has a NC driver's license, or has an automobile registered in NC
Facility Maximum Limits ANSWER-- $100,000/$300,000/$100,000 with $2000 med pay
- maximum limit for UM is $1,000,000/$1,000,000/$50,000
- maximum limity for UIM is $1,000,000/$1,000,000
Operations of the Facility ANSWER-1. All insurers must accept required coverage on any
eligible risk regardless of driving record; customers have the right to choose insurer; insurer may
then choose to cede or transfer the liability for that policy to the facility
2. Any losses incurred by the Facility on these ceded risks are shared equitably through
assessments of the member insurers, then insurers may recoup these assessments through
recoupment charges to all policyholders
3. No discrimination in service
, 4. The reasons for placement in the facility must be furnished; applicant must also be informed of
their right to seek insurance elsewhere that may not place them in the facility; customer can
receive unearned premium if ceded policy is canceled within 45 days
5. An agent may not refuse to accept application from or bind coverage to an eligible risk
6. Governed by a board of directors (12 people). 5 of these are appointed by the member
insurance companies, and 7 are appointed by the commissioner; must have 2 non-voting board
members who are not affiliated with any insurance company which are appointed by the
Governor
7. Ceded (transferred) business may not be terminated unless premium has not been paid (15
days) or named insured has moved out of state (60 days)
Financial Responsibility Laws ANSWER-- require that motor vehicle operators must
show their ability to respond to BI or PD claims that arise out of operation of a motor vehicle
- must be furnished when the individual is licensed as an operator, licenses a vehicle, or is
involved in an accident that causes $500 or more of PD
- can be demonstrated by:
1. Auto liability coverage of at least 30/60/25
2. Qualifying as a self-insured
3. Depositing a sufficient amount of money with the DMV
4. Posting a bond in favor of the state of NC in an amount at least equal to the minimum liability
insurance limits ($85,000)
The Building and Personal Property Coverage Form ANSWER-- provides coverage for
most commercial, industrial, and manufacturing risks
- used to write coverage for the direct loss only of the building, contents, or both
