Lesson 11: NC Statutes & Regulations Pertinent to Life Insurance Questions and Answers Graded A+

Lesson 11: NC Statutes & Regulations Pertinent to Life Insurance Questions and Answers Graded A+ Contract of Insurance 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 party has an interest. Commissioner Commissioner of Insurance of NC or authorized designee -Heads state Department of Insurance -Responsible for fair ratemaking, injury prevention efforts, and close regulation of insurance solvency and industry practices. Department Department of Insurance of NC NAIC National Association of Insurance Commissioners Person individual, partnership, firm, association, corporation, joint-stock company, trust, any similar entity, or combination acting together. Commissioner's Election and Term of Office -Elected by the people; same as General Assembly and State officers. -Term begins January 1st after they are elected and is 4 years or until someone else is elected. -Governor fills in any vacancy in an unexpired term. Powers and Duties of Commissioner -prescribe the necessary forms and financial statements to entities as described in Chapter 58. -report any violations of the law by insurance companies to the Attorney General -give synopsis of any insurance contract offered to citizens -administer oaths required in the discharge of Commissioner's official duty. -compile and make available list of rates charged and explanation of coverage for: Insurance against loss to residential real property and Private passenger (nonfleet) motor vehicle -administer and enforce provisions of Patient Protection and Affordable Care Act and the provisions of the Health Care and Education Reconciliation Act of 2010. Examination, Hearings, and Investigations -examinations, hearings, and investigations may be conducted by the Commissioner personally. -Commissioner may arrest with warrant or have person arrested if there is evidence of criminal activity. -All hearings must be held in ordinance with NC General Statutes and be at a time/place designated in a written notice by the Commissioner and given to the person cited. -Notice must state subject of inquiry and any charges. Restraining Orders; Criminal Convictions -Restraining orders are given when any person violates or threatens to violate Chapter 58, or Article A of Chapter 143 of the General Statutes. -Application must be given in the superior court of any county. -When licensee is convicted in court, their license is suspended until reinstated by the Commissioner. -Conviction: adjudication of guilt, plea of guilt, and plea of nolo contendere. License Surrender -Licensee accused of any act, omission, or misconduct that would subject to suspension or revocation may surrender license for a period of time established by Commissioner. Notification of Criminal Convictions; Change of Address; Service of Notice; Contracts for Online Service, Admin Services, or Regulatory Data Systems -Applicants provide Commissioner with address and email address; has 10 business days to inform Commissioner of any changes or is subject to a $50 fee. -Any conviction other than traffic violation must be reported to Commissioner within 10 business days. -Commissioner will contact licensee directly or send first-class mail for any service notices. -Licensees needing to notify Commissioner may do so in writing or with approved online service. -Commissioner may work with NAIC to get an online service for licensees. Civil Penalties or Restitution Violations; Administrative Procedure After notice to licensee and opportunity for hearing the person may have to pay: -fine of $100-$1000 ordered by Commissioner based on degree and extent of harm. -restitution to any person harmed -restitution to any state agency to cover administrative fees. Investigation of Charges Commissioner must investigate any complaint of violations of Chapter 58. -If complaint is justified, the company is subject to penalties described in Chapter 58 as well as paying expenses for the investigation. -If company does not pay, Commissioner is authorized to bring a civil action to the company for collection of those expenses. Reporting and Investigation of Insurance and Reinsurance Fraud and the Financial Condition of Licensees; Immunity from Liability Any person participating in an investigation is not subject to civil liability for libel or slander when furnishing information to the Commissioner pertaining to: any known/suspected fraudulent ins./reins. claim, transaction, or act OR the financial condition of any licensee. Persons must release any information requested and must cooperate in investigation. False Statement to Produce or Deny Benefit of Insurance Policy or Certificate Class H felony to knowingly present (or assist someone in presenting) false or misleading information as part of a claim for payment or other insurance benefit. -Each claim counted separately; if convicted and court imposes probation, defendant may pay restitution as part of probation. -Civil conviction may result in paying compensatory damages, attorney's fees, costs, and reasonable investigative costs to the plaintiff. Embezzlement by Insurance Agents, Brokers, or Administrators Any type of embezzlement activity is subject to felony charge. -Value of $100,000 or more = Class C felony -Less than $100,000 = Class H felony Report to Commissioner Anyone thought to violate NC insurance law or a licensed entity thought to be financially impaired must be reported to Commissioner with a statement of relevant facts and circumstances. Punishment for False Statement Class I felony and court imposed fine of $2,000-$10,000. Record of Business Kept by Companies and Agents; Commissioner May Inspect Record of business must include: number, date, term, amount insured, premiums, and all people who were issued a policy or certificate of renewal. Original book of business must be available to Commissioner if requested. May Require Records, Reports, Etc., for Agencies, Agents and Others Violation of recordkeeping rules and regulations result in: -first offense: license(s) suspended or revoked for 6 months. -second offense: license(s) suspended or revoked for 1 year. Refusal of submitting information to Commissioner can result in revocation and refusal of license. Books and Papers Required to be Exhibited Books, accounts, or papers of any licensed company must be exhibited to Commissioner upon request. Refusal or false statements are subject to suspension or revocation of license and Class 1 misdemeanor if guilty. Complaint Records Insurer or agents must keep itemized log of any written complaints w/ the following: -Department's file number, name of insured, nature of complaint, insurer's department subject to the complaint, policy or claim number of the insured, final disposition of the complaint. -Records kept for 5 years or until Commissioner has adopted final report of general examination that contains review of the records for that calendar year. Discriminatory Practices Prohibited -basing standard or rating plan for private passenger automobiles or motorcycles on age or sex. -refusing to insure or continue to insure, limit coverage, or charge different rates solely on blindness or deafness. -refusing to insure or continue to insure, limit coverage, or charge different rates because of race, color, or national/ethnic origin of that individual. Meaning of Terms "Accident", "Accidental Injury", and "Accidental Means" Must be defined to imply "result" language and may not include words that establish an accidental means test. -Applies to provisions in group life, group accident, group health, and group accident and health insurance policies, and group annuities after October 1, 1989 Proof of Loss Forms Required to be Furnished Blank proof of loss forms should be acquired by a representative of claimant from insurer.