CHAPTER 4 ‑ CONSUMER SERVICES DIVISION
SECTION .0100 ‑ GENERAL PROVISIONS
11 NCAC 04 .0101 PURPOSE OF DIVISION
11 NCAC 04 .0102 DEPUTY COMMISSIONER
11 NCAC 04 .0103 STRUCTURE OF DIVISION
11 NCAC 04 .0104 DIVISION PERSONNEL AND PROCEDURES
11 NCAC 04 .0105 COMPLAINTS AND INQUIRIES AND
INFORMATION
History Note: Filed as an Emergency Repeal Eff. April
25, 1979, for a Period of 120 Days to be Reinstated
on August 23, 1979;
Authority G.S. 57‑1; 57‑4; 57‑10; 57‑13;
57A‑18; 58‑9; 58‑9.2; 58‑10; 58‑11; 58‑15;
58‑18;
58‑25; 58‑25.1; 58‑26; 58‑27; 58‑262;
58‑262.4; 58‑296; 58‑357; 58‑7.3;
Eff. February 1, 1976;
Readopted Eff. March 16, 1979;
Repealed Eff. August 23, 1979.
11 NCAC 04 .0106 RULE FOR LOSS
AND CLAIM PRACTICES AND PROCEDURES
History Note: Authority G.S. 57‑4; 57‑10;
58‑9; 58‑9.2; 58‑15; 58‑25; 58‑25.1; 58‑26;
58‑27; 58‑40;
58‑40.1; 58‑128;
Eff. February 1, 1976;
Repealed Eff. March 8, 1978.
11 NCAC 04 .0107 SEX DISCRIMINATION IN INSURANCE
History Note: Filed as an Emergency Repeal Eff. April
25, 1979, for a Period of 120 Days to be Reinstated
on August 23, 1979;
Authority G.S. 58‑9; 58‑44.3; 58‑54.1;
58‑54.13;
Eff. May 5, 1977;
Readopted Eff. March 16, 1979;
Repealed Eff. August 23, 1979.
11 NCAC 04 .0108 MISREPRESENTATION OF POLICY
PROVISIONS
11 NCAC 04 .0109 ETHICAL STANDARDS
11 NCAC 04 .0110 STATEMENT OF ACTION
11 NCAC 04 .0111 LOSS OR CLAIM NOTICE
History Note: Filed as an Emergency Repeal Eff. April
25, 1979, for a Period of 120 Days to be Reinstated
on August 23, 1979;
Authority G.S. 57‑4; 58‑8; 58‑9; 58‑39;
58‑40; 58‑40.1; 58‑40.6; 58‑41; 58‑48; 58‑52;
58‑54.4; 58‑199; 58‑249;
Eff. March 16, 1979;
Repealed Eff. August 23, 1979.
11 NCAC 04 .0112 PURPOSE OF DIVISION
11 NCAC 04 .0113 DEPUTY COMMISSIONER
11 NCAC 04 .0114 STRUCTURE OF DIVISION
History Note: Authority G.S. 58‑7.3; 58‑9;
Eff. December 15, 1979;
Amended Eff. July 1, 1986;
Repealed Eff. July 1, 1988.
11 NCAC 04 .0115 DIVISION PROCEDURES
(a) Complaint
Handling Procedure. Complaints will be processed in the following manner:
(1) Analyst
will request explanation from company, agent or adjuster;
(2) If
he finds that the complaint has been improperly handled, then he will recommend
that proper action be taken;
(3) If
the issue is not resolved, the deputy commissioner may arrange a conference
with company representatives to resolve the problem.
(b) Hearings.
If a conference does not resolve a disputed issue, the deputy commissioner may
recommend to the commissioner that appropriate legal action be taken to insure
compliance with the statutes, rules and regulations administered by the
department. Such legal action may include the convening of a public hearing to
review, in light of the conduct which occasioned the complaint, the necessity
of entering an order against the party complained of.
(c) Complaints
Represented by Counsel. The Division will not investigate a complaint which is
also the subject matter of a pending lawsuit filed by an attorney representing
the complainant. If a lawsuit has not been filed but the complainant has
retained an attorney, the Division will investigate the complaint according to
its normal procedures provided it has first obtained the attorney's consent.
History Note: Authority G.S. 58-2-40; 58-2-50;
58-2-155; 58-2-185; 58-2-190; 58-2-195; 58-2-200; 58-3-100; 58‑33-45;
58-65-1; 58-65-40; 58-67-20; 58-67-150;
Eff. December 15, 1979;
Amended Eff. April 1, 1989.
11 NCAC 04 .0116 INQUIRIES AND INFORMATION
The Division maintains facilities and personnel to receive
inquiries and complaints by telephone, letter or personal visit. The telephone
numbers for the Division are toll-free 1-800-662-7777 or 1-800-546-5664 and
1-919-807-6750. The mailing address of the Division is: North Carolina
Department of Insurance, 1201 Mail Service Center, Raleigh, North Carolina 27699-1201;
(Attention: Consumer Services Division). The street address of the Division
is: Room 3040, Dobbs Building, 430 North Salisbury Street, Raleigh, North
Carolina.
History Note: Authority G.S. 58-2-25; 58-2-40;
Eff. December 15, 1979;
Amended Eff. July 1, 2012; April 1, 1989; July 1, 1986.
11 NCAC 04 .0117 STATEMENT OF ACTION
(a) When an
insurer denies a claim after receiving written notice thereof from the claimant
sufficiently informative to enable the insurer to identify the specific
coverage involved, the insurer's denial shall be in writing and shall cite
specific policy provisions or legal basis relied upon in denying the claim.
(b) When an
insurer offers to settle a claim after receiving written notice thereof from
the claimant sufficiently informative to enable the insurer to identify the
specific coverage involved, the insurer's offer of compromise settlement, when
requested by the consumer, shall confirm in writing the offer of compromise
settlement and shall cite the specific policy provision or legal basis relied
upon in support of the compromise.
History Note: Authority G.S. 58-2-40; 58-3-100;
58-63-15; 58-65-40; 58-67-65; 58-67-150;
Eff. December 15, 1979;
Amended Eff. April 1, 1989; December 15, 1979.
11 NCAC 04 .0118 INSURANCE CARRIERS AS LENDERS
Any lender who
offers an insurance product to a consumer either directly or indirectly through
a subsidiary or affiliate in conjunction with an extension of credit shall
inform the consumer of the protections afforded by G.S. 58-3-135. Nothing in
this Regulation shall limit the right of the lender, for purposes of protecting
the interest of the lender, to require insurance in connection with a loan.
This Regulation shall not apply where the extension of credit arises out of a
life insurance contract itself or where the extension of credit is subject to
the provisions of Regulation Z (12 CFR 226), or other federal statutes or
regulations requiring comparable disclosures.
History Note: Authority G.S. 58-2-40; 58-3-135;
58-3-150;
Eff. July 1, 1986;
Amended Eff. April 8, 2002; April 1, 1989.
11 NCAC 04 .0119 INSURER DEFINED
For the
purposes of this Chapter, "insurer" shall mean any entity governed by
the provisions of Chapter 58.
History Note: Authority G.S. 58-2-40; 58-65-1;
58-67-150;
Eff. April 1, 1989;
Amended Eff. April 8, 2002.
11 NCAC 04 .0120 POLICY OR SERVICE FEES
An agent,
broker, or limited representative who deals directly with an applicant and who
intends to charge a policy or service fee in accordance with G.S. 58‑33‑85(b)
shall not do so unless he complies with the following:
(1) A sign
that informs the applicant in large bold print that a policy or service fee of
[amount] will be charged, shall be displayed in a prominent place so as to be
seen and read from any part of the office lobby.
(2) The
applicant's consent in writing is obtained on a separate form each time a
policy or service fee is charged. The form shall be entitled, "Policy or
Service Fee Consent" and shall include the date and amount of each fee
charged.
(3) A dated
receipt for the payment of a policy or service fee shall be issued either
separately from the policy premium receipt or stated separately on the receipt
issued for the policy premium.
History Note: Authority G.S. 58-2-40; 58-2-195;
58-33-85(b);
Eff. February 1, 1993;
Amended Eff. February 1, 1996.
11 NCAC 04 .0121 PREMIUM PAYMENT RECEIPTS
All premium
payment receipts and copies issued by an agent, broker, or limited
representative, shall be dated and contain the printed or stamped name and
address of the agency or agent, broker, or limited representative, and the name
of the insurer. Receipts shall be signed by the person accepting the payment.
History Note: Authority G.S. 58-2-40; 58-2-185;
58-2-195;
Eff. February 1, 1993;
Amended Eff. February 1, 1996.
11 NCAC 04 .0122 POWER-OF-ATTORNEY
Except for
authorizations given in accordance with G.S. 58-45-35(a) or G.S. 58-46-15, no
agent, broker, or limited representative shall solicit a power-of-attorney from
a consumer that authorizes the agent, broker, or limited representative to sign
insurance-related forms.
History Note: Authority G.S. 58-2-40; 58-2-195;
Eff. February 1, 1993.
11 NCAC 04 .0123 USE OF SPECIFIC COMPANY NAME IN
RESPONSES
When an insurer
makes a written response to an inquiry or complaint made by a consumer or the
Department, the insurer shall identify on its response its mailing address,
official corporate name, and on its response to the Department, the NAIC
company code; or its mailing address, specific corporate name, and on its
response to the Department, the NAIC company code if the insurer is part of a
group of companies.
History Note: Authority G.S. 58-2-40; 58-2-190;
58-3-50; 58-63-65;
Eff. April 1, 1995;
Amended Eff. February 1, 1996.
11 NCAC 04 .0124 INSURANCE COMPANY CONTACT PERSONS
Every insurer
shall provide the Department=s Consumer Services Division with the name, title,
address, and telephone number, including a toll‑free number, of a
designated person to whom any person may send a complaint or inquiry. Every
insurer shall also provide the Division with the company president=s name,
address, and telephone number for the Division=s use. Forms will be provided
by the Division, which shall be completed and returned to the Division by every
insurer. Every insurer shall complete, have signed by a corporate officer, and
file with the Division a new form within 15 business days after any change in
the information on the form.
History Note: Authority G.S. 58-2-40; 58-2-190; 58-63-65;
Eff. April 1, 1995;
Amended Eff. February 1, 1996.
SECTION .0200 ‑ MARKET CONDUCT EXAMINATION SECTION
11 NCAC 04 .0201 FUNCTION OF SECTION
11 NCAC 04 .0202 REPORT AND COLLECTION PROCEDURES
History Note: Filed as an Emergency Repeal Eff. April
25, 1979, for a Period of 120 Days to be Reinstated on August 23, 1979;
Authority G.S. 57‑10; 57A‑18; 58‑7.3;
58‑9; 58‑9.2; 58‑18; 58‑25; 58‑16; 58‑16.2;
58‑63; 58‑25.1; 58‑26; 58‑27; 58‑296;
Eff. February 1, 1976;
Readopted Eff. March 16, 1979;
Repealed Eff. August 23, 1979;
Transferred Eff. August 14, 1986.
11 NCAC 04 .0203 MAINTENANCE OF RECORDS
11 NCAC 04 .0204 COMPLAINT RECORDS
History Note: Filed as an Emergency Repeal Eff. April
25, 1979, for a Period of 120 Days to be Reinstated on August 23, 1979;
Authority G.S. 57‑10; 58‑9; 58‑9.2; 58‑15;
58‑16; 58‑25; 58‑25.1; 58‑26; 58‑27;
Eff. March 16, 1979;
Repealed Eff. August 23, 1979;
Transferred to T11.11G; Eff. August 14, 1986.
11 NCAC 04 .0205 FUNCTION OF SECTION
History Note: Authority G.S. 57‑10; 57A‑18;
58‑7.3; 58‑9; 58‑9.2; 58‑16; 58‑25; 58‑25.1;
58‑26;
58‑27; 58‑296;
Eff. December 15, 1979;
Transferred to T11.11G; Eff. August 14, 1986.
11 NCAC 04 .0206 REPORT AND COLLECTION PROCEDURES
History Note: Authority G.S. 57‑10; 58‑16;
58‑16.2; 58‑18; 58‑63;
Eff. December 15, 1979;
Transferred to T11.11G; Eff. August 14, 1986.
11 NCAC 04 .0207 MAINTENANCE OF RECORDS
History Note: Authority G.S. 57‑10; 58‑9;
58‑9.2; 58‑15; 58‑25; 58‑25.1; 58‑26; 58‑27;
Eff. December 15, 1979;
Transferred to T11.11G; Eff. August 14, 1986.
11 NCAC 04 .0208 COMPLAINT RECORDS
History Note: Authority G.S. 57‑10; 58‑9;
58‑16; 58‑25.1; 58‑26; 58‑27; 58‑54.5; 58‑54.6;
Eff. December 15, 1979;
Transferred to T11.11G; Eff. August 14, 1986.
SECTION .0300 ‑ LIFE: ACCIDENT AND HEALTH
11 NCAC 04 .0301 FUNCTION OF SECTION
11 NCAC 04 .0302 RECEIPT AND DISTRIBUTION OF MEDICAL
INFORMATION
11 NCAC 04 .0303 PROVISIONS OF ACCIDENT: HEALTH AND
DISABILITY CONTRACTS
11 NCAC 04 .0304 PREMIUM NOTICES: PAYMENTS: AND
REFUNDS
11 NCAC 04 .0305 ISSUANCE OF ACCIDENT: HEALTH AND
DISABILITY CONTRACTS
11 NCAC 04 .0306 CONTESTABILITY CLAUSE AND RESCISSION
11 NCAC 04 .0307 ISSUE AND PREMIUM PAYMENTS OF LIFE
INSURANCE CONTRACTS
11 NCAC 04 .0308 CREDIT ACCIDENT: HEALTH AND LIFE
INSURANCE
11 NCAC 04 .0309 LIFE INSURANCE SALES: FINANCING
FIRST YEAR PREMIUM
History Note: Filed as an Emergency Repeal Eff. April
25, 1979, for a Period of 120 Days to be Reinstated on August 23, 1979;
Authority G.S. 57‑1; 57‑4; 57‑10; 58‑9;
58‑25.1; 58‑26; 58‑27; 58‑42.1; 58‑207; 58‑251.1;
58‑251.4; 58‑260.1;
Eff. February 1, 1976;
Readopted Eff. March 16, 1979;
Repealed Eff. August 23, 1979.
11 NCAC 04 .0310 CLAIM PRACTICES: PROCEDURES: LIFE:
ACCIDENT: HEALTH
History Note: Filed as an Emergency Repeal Eff. April
25, 1979, for a Period of 120 Days to be Reinstated on August 23, 1979;
Authority G.S. 57‑1; 57‑4; 58‑9; 58‑54.3;
Eff. March 16, 1979;
Repealed Eff. August 23, 1979.
11 NCAC 04 .0311 FUNCTION OF SECTION
History Note: Authority G.S. 57‑1, ‑4; 58‑9,
‑262.4;
Eff. December 15, 1979;
Repealed Eff. July 1, 1988.
11 NCAC 04 .0312 INFORMATION USED IN CLAIM
SETTLEMENTS
(a) Any information (including medical information) used in
whole or in part as the basis of settling a life, accident health or disability
claim shall be furnished to the Department as necessary in connection with
specific complaints and inquiries. As used in this Section,
"furnished" shall include either mailing claim settlement information
to the Department or exhibiting such information to the appropriate division
personnel at a time and place set by the Division personnel.
(b) To the extent permitted by law, the Department shall
treat medical information as confidential.
History Note: Authority G.S. 58-2-40; 58-2-100;
58-2-130; 58-2-190; 58-2-195; 58-2-200; 58-63-20; 58-65-40; 58-65-105; 58-67-65;
58-67-150;
Eff. December 15, 1979;
Amended Eff. April 1, 1989.
11 NCAC 04 .0313 PROVISIONS OF CONTRACTS
In order to prevent unfair discrimination among insureds,
the following phrases and provisions commonly found in life, accident, health
and disability contracts, if not expressly defined in such contracts, shall be
construed by the Department in the following manner:
(1) Regular Care and Attendance of a Physician. As
used in life, accident and health and disability policies, "regular care
and attendance of a physician" shall not be construed to require insureds
to see or be under the care of a physician on a regular basis if it can be
shown that the insured has reached his maximum point of recovery yet is still
disabled under the terms of the insurance contract. This requirement shall
not, however, restrict the right of the insurer at its own expense, to
periodically examine or cause to have examined the insured according to the
terms of the contract of insurance.
(2) Premature Baby. A premature baby shall not be
considered a well baby. The protection afforded newborn infants under G.S.
58-51-30 shall be provided to premature babies.
(3) Medical Necessity. "Medical necessity"
shall be construed as including treatment which restores not only the insured's
physical but also his mental well-being. As used in this Section,
"restoration of mental well-being" does not require coverage of
psychiatric disorders when such disorders are excluded under the express terms
of the contract.
(4) Sound Health. The question, "Are you in sound
health?" shall be considered ambiguous, and therefore answers to that
question on an insurance application shall not be used as the basis for
rescission of a policy or denial of a claim.
History Note: Authority G.S. 58-2-40; 58-3-150;
58-51-1; 58-63-15; 58-63-65; 58-65-1; 58-65-40; 58-65-95; 58-67-65; 58-67-150;
Eff. December 15, 1979;
Amended Eff. July 1, 2012; April 8, 2002; April 1, 1989.
11 NCAC 04 .0314 PREMIUM NOTICES: PAYMENTS AND
REFUNDS
The Commissioner shall consider an unfair trade practice the
failure by an insurer to adhere to any of the following procedures concerning
premium notices, payments and refunds on life, accident, health, or disability
policies when such failure is so frequent as to indicate a general business
practice:
(1) Premium Notices. Any insurer which makes a
practice of sending premium notices shall maintain records sufficient to show
that it mailed or otherwise delivered such notice to an individual insured or
policy owner.
(2) Timely Remittance. Insurance companies shall use
date of mailing, rather than date of receipt, to determine whether the insured
has made timely remittance of premium, provided the premium payment is received
within seven days after either the termination date of the policy or the last
day of its grace period, whichever is later.
(3) Right to Return Policy. When such right is given
by contract or statute, no insurer shall abridge or frustrate the right of the
insured to return a policy within ten days after he receives it for a full
refund of premiums paid. Evidence of such delivery shall be signed statements
from the policyowner of the date of delivery, copies of signed certified mail
receipt, certification of mailing, or firm mailing book entry.
(4) Unearned Premium Refund. When such right is given
by contract or statute, no insurer shall abridge or frustrate the right of the
insured to receive a refund of unearned premium.
(5) Unearned Premium on Health Policies. When an
insured covered by an accident, health or disability policy dies during the
term of the policy, his insurer shall refund the unearned premium.
(6) Commingling. No licensed person may commingle
premiums, insurance deposits or other such funds. Such funds are considered to
have been received in a fiduciary capacity on behalf of policyowner and must be
immediately forwarded to the proper insurers or be deposited into an authorized
account which is separate and distinct from the person's operating and/or
personal accounts. The account shall be used to receive and disburse premiums
paid for insurers, return premiums to policyowner, bank charges for the account
and transfer of earned commissions or fees.
History Note: Authority G.S. 58-2-40; 58-2-195;
58-51-10; 58-51-15; 58-63-65; 58-65-40; 58-67-50; 58-67-65; 58-67-150;
Eff. December 15, 1979;
Amended Eff. April 1, 1989.
11 NCAC 04 .0315 ISSUANCE OF CONTRACTS
The Commissioner shall consider an unfair trade practice the
failure by an insurer to adhere to any of the following procedures with respect
to the issuance of life, accident, health, or disability policies when such
failure is so frequent as to indicate a general business practice:
(1) Policies to Cover Newborn Infants. No health
application or requirements of insurability shall be used to circumvent the
requirements of North Carolina General Statute 58-51-30.
(2) Rating of Guaranteed Issue Coverages. There shall
be no rating of policies where guaranteed issue at a specified rate is
represented. When only guaranteed issue is represented, the insurer shall
disclose in writing to any applicant subjected to individual rating the fact
that his rate deviates from the standard rates for such coverage. This Section
shall not apply to individual policies issued to employees under a contract
between their employer and his insurer.
(3) Replacement of Existing Coverage. With respect to
individual accident, health and disability coverages, when an insurer's agent,
by misrepresenting the new policy as a supplement or addition to the existing
policy, induces an insured to assent to the replacement of his existing policy
with a new policy new waiting periods shall be decreased by the amount of time
coverage was afforded under the existing policy.
(4) Continuous Coverage Under Credit Life, Accident and
Health Policies. In a series of credit life or credit accident and health
insurance transactions where the insured, the lender, and the insurer are the
same and there is no appreciable lapse in coverage between transactions, the
waiting periods of the insurance agreements shall run from the date of the
first insurance contract, at least to the extent of the amount and term of the
indebtedness outstanding at the time of renewal or refinancing.
History Note: Authority G.S. 58-2-40; 58-3-125;
58-3-150; 58-33-75; 58-51-30; 58-63-40; 58-65-40; 58-67-50; 58-67-65;
58-67-150;
Eff. December 15, 1979;
Amended Eff. April 8, 2002; April 1, 1989; December 15,
1979.
11 NCAC 04 .0316 CONTESTABILITY CLAUSE AND RESCISSION
If an insurer does not promptly attempt to rescind an
accident, health or disability policy upon becoming aware that the insured's
application contained false statements, the insurer may not subsequently use
such false statements as a basis for attempted rescission or alteration of the
policy. The Commissioner shall consider failure to adhere to this principle an
unfair trade practice when such failure is so frequent as to indicate a general
business practice.
History Note: Authority G.S. 58-2-40; 58-63-40;
58-65-1; 58-65-40;
Eff. December 15, 1979.
11 NCAC 04 .0317 SEX DISCRIMINATION: LIFE: ACCIDENT
AND HEALTH INSURANCE
(a) Prohibited Practices. The Commissioner shall consider
unfair discrimination the denial of life, accident, health or disability
insurance on the basis of the insured's or prospective insured's sex or marital
status. The amount of benefits payable on any term, condition or type of
coverage shall not be restricted, modified, excluded or reduced on the basis of
the sex or marital status of the insured or prospective insured. All
underwriting criteria shall be applied in all instances of similar
circumstances without regard to the sex or marital status of the insured or
prospective insured, except to the extent that the amount of the benefits,
terms, conditions or type of coverage vary as a result of the application of
rate or premium differentials not prohibited under this Chapter, such as
differentials for life insurance or annuities derived from sex‑based life
expectancy tables. Nothing in this Section shall prohibit an insurer from
taking marital status into account for the purpose of determining persons
eligible for dependent benefits. Examples of the practices prohibited by this
Section include, but are not limited to:
(1) denying coverage to females gainfully
employed at home, employed part‑time or employed by relatives when
coverage is offered to males similarly employed;
(2) denying policy riders to females when the
riders are available to males;
(3) denying maternity coverage to unmarried
females covered under a policy or contract if maternity coverage is available
to married females covered under such a policy or contract;
(4) denying, under group contracts, dependent
coverage to husbands of female employees, when dependent coverage is available
to wives of male employees;
(5) denying disability income contracts to
employed women when coverage is offered to men similarly employed;
(6) treating complications of pregnancy
differently from any other illness or sickness under the contract;
(7) restricting, reducing, modifying, or
excluding benefits payable for disorders of the genital organs of only one sex;
(8) offering lower maximum monthly benefits to
women than to men who are in the same classification under a disability income
contract;
(9) offering more restrictive benefit periods
and more restrictive definitions of disability to women than to men in the same
classifications under a disability income contract;
(10) establishing different conditions by sex
under which the policyholder may exercise benefit options contained in the
contract;
(11) limiting the amount of coverage an insured
or prospective insured may purchase based upon the insured's or prospective
insured's marital status unless such limitation is for the purpose of defining
persons eligible for dependent benefits.
(b) Applicability and Scope. This Rule shall apply to all
contracts delivered or issued for delivery in this state by an insurer on or
after the effective date of this Rule and to all existing group contracts which
are amended or renewed on or after the effective date of this Rule.
History Note: Authority G.S. 58-2-40; 58-3-120;
58-63-1; 58-63-65;
Eff. December 15, 1979.
11 NCAC 04 .0318 LIFE INSURANCE SALES: FINANCING
FIRST YEAR PREMIUM
Subject to the exception set forth in Subsection (16) of
this Rule, the Commissioner shall consider an unfair trade practice the failure
by an insurance company to adhere to the following procedures concerning the
sale of life insurance contracts for which the first year's premium or any
portion thereof is financed through a device suggested by the insurer or its
agent with the insurance policy itself being assigned as security:
(1) Minimum Down‑Payment Required. A minimum
down‑payment of twenty five dollars ($25.00) in cash or by valid and
currently collectible check of the applicant is required for such insurance.
Under no circumstances will a company or an agent directly or indirectly either
furnish this down‑payment or waive this requirement.
(2) Financing Device to be Explained in Policy
Application. The furnishing of a promissory note in connection with financing
part of the first year's premium must be explained in the policy application.
Such explanation must be clear and complete and must specify the principal sum
of the note or notes, the interest payable, the due date, the amount payable on
that due date, the interest rate and the annual percentage rate.
(3) Execution of Promissory Note. All blank spaces in
a promissory note form or an assignment of an insurance policy form
subsequently executed by the insured must be filled in by the handwriting of
the insured except blank spaces relating to the policy number to be issued, and
the signatures of witnesses and co‑makers. No agent or anyone acting
under his direction or control other than the insured shall write in such
spaces.
(4) Promissory Note May be Sold Only With Recourse. If
a promissory note is taken to finance part of the first year's premium said
note may be sold or otherwise transferred by the payee with recourse only, and
this fact must appear in bold print on the face of the note.
(5) Note to be Retained Until Policy Acceptance is
Executed. Any promissory note given by the applicant in connection with an
application for a policy shall not be sold or otherwise transferred by the
agent or company, nor any commissions on the sale paid to the agent until 15
days after a properly executed policy acceptance form has been received in the
home office of the insurance company issuing the policy.
(6) Copy of Note to be Furnished Applicant. A copy of
the note executed by the applicant must be attached to the policy when
delivered.
(7) Policy Acceptance to be Executed on Delivery of the
Policy; Contract Rescission. Upon delivery of the policy, a policy acceptance
form must be executed which recites the following:
(a) The policy has been issued as represented;
(b) The applicant acknowledges and understands
the provisions and obligations of the debt he has incurred in connection with
applying for the policy and the terms are set forth in the record;
(c) The applicant understands that he may cancel
the policy and his promissory note and his down‑payment will be returned
to him if he refuses to accept delivery of the policy and sign the acceptance
form, and the applicant understands that if at any time within 10 days after
the execution of the policy acceptance form he shall be allowed to rescind the
agreement, and the promissory note, together with the total amount of his down‑payment,
shall be returned to him;
(d) The applicant further understands that the
rescission or rejection must be communicated to the company by mail and return
of the policy within the 10 day period; and
(e) The applicant acknowledges that the
obligations of the debt cannot be altered by a cancellation of the policy at
his request unless properly cancelled within 10 days, in writing, mailed to the
company at the address specified. The policy acceptance form shall contain a
number designation corresponding to the policy issued and shall not be made
available to the agent until the application is received in the home office.
The provisions of Subsections (7)(c) and (d) of this Rule shall be printed in
bold type upon the face of the policy.
(8) Insured to be Notified of Assignment. The insurer,
the note purchaser, assignee or company shall notify the note maker (insured)
and all co‑makers regarding the purchase, transfer or assignment of the
note, after such transfer, inviting any questions relative to the note or the
policy which is used as collateral security for the note.
(9) Requests for Cancellation to be Handled Promptly.
The company and its agents shall give prompt and complete cooperation to the
insured and the Department of Insurance when requests to cancel the policy and
premium financing arrangements are received.
(10) Special Rule in Event Applicant is Under Eighteen
Years of Age. If the applicant is a minor and executes a promissory note for
the payment of part or all of the first year's premium, such note must be
witnessed by at least one of the applicant's parents or his guardian.
(11) Disclosure of Extended Obligations. The agent shall
clearly disclose to the insured that the cancellation of the note may reduce
the cash surrender value of the policy in direct proportion to the amount of
the promissory note. The agent shall not use terms such as "bonus
payment", "free insurance", or any other term which induces the
applicant to believe that the promissory note will be paid by monies other than
his policy cash values. Terms leading the applicant to believe that he is
receiving free insurance by deferring the premium payment for the first year
shall not be employed.
(12) Cash Values. Cash values shown at the presentation
shall be based on the policy offered. The cash values shown at the time of
presentation shall be a specimen of the policy being offered and not for a
larger policy.
(13) Cancellation of Existing Insurance. The disturbing
of any permanent insurance, including the partial or total replacement of any
provisions of an existing policy for the purpose of placing additional
insurance, or "twisting" as defined in G.S. 58-3-115, will be cause
for investigation and review by the Department of Insurance.
(14) Licensed Agents. Only licensed agents are eligible
to sell life insurance. No person other than a licensed agent shall
participate or receive commission or any other valuable consideration in
connection with the solicitation, negotiation, procurement, or making of life
insurance contracts in this state.
(15) Agent Identification. An agent or field
representative who is licensed by this state as a life insurance agent shall
not represent, refer to, or hold himself out to the public under any special
title which would obscure the fact that he is a licensed agent of the company.
Identification as an agent or representative of a special division may be
permitted providing such a division actually exists and the agency relationship
is disclosed.
(16) Scope of Regulation. This Regulation shall not
apply to life insurance policies financed in conformity with G.S. 58, Article
35.
History Note: Authority G.S. 58-2-40; 58-3-115;
58-63-40;
Eff. December 15, 1979
Amended Eff. April 8, 2002.
11 NCAC 04 .0319 CLAIMS PRACTICES: LIFE: ACCIDENT AND
HEALTH INSURANCE
The Commissioner shall consider as prima facie violative of
G.S. 58-63-15(11) the failure by an insurer to adhere to the following
procedures concerning settlement of life, accident, health and disability
claims when such failure is so frequent as to indicate a general business
practice:
(1) Examining Physician's Opinion. When the patient's
health is in question, an insurer shall give greater weight to the opinion of a
physician who has examined the patient than to the opinion of a physician who
has not examined the patient and whose opinion is based solely on a review of
the examining physician's notes or reports. As used in this Section,
"examination of the patient" shall include the interpretation by a
specialist of the results of diagnostic tests performed on the patient by
others.
(2) Settlement Offers. Initial offers of settlement or
compromise made by an insurer or its representative shall remain open for a
period of time of not less than 30 calendar days.
(3) Multiple Health Impairments. When an insured is
confined to the hospital with multiple health impairments some of which may be
excluded from coverage, the insurer or its representative shall make pro rata
payments where treatment for excluded conditions can be separated.
(4) Assignment of Benefits. If an accident, health or
disability contract does not prohibit assignment of benefits and a proper
assignment (including notice to the insurer prior to the payment of the claim)
is made, the insurer shall honor the assignment even though it may have
erroneously paid the insured. Submission of a completed claims form G33H and
its successor(s) indicating that an assignment is on file shall be treated as
though it were submission of the actual assignment.
(5) Claim Status Reports. Health insurance claims
subject to 58-3-225 shall be processed in accordance with the provisions of the
statute. Otherwise, if benefits claimed under an accident, health, or
disability contract have not been paid within 45 days after receipt of the
initial claim by the insurer, the insurer shall at that time mail a claim
status report to the insured.
History Note: Authority G.S. 58-2-40; 58-3-225; 58-63-15;
58-63-65; 58-65-1; 58-65-40; 58-65-125; 58-67-65; 58-67-150;
Eff. December 15, 1979;
Amended Eff. July 1, 2012; April 8, 2002; April 1, 1989.
11 NCAC 04 .0320 STUDENT LOANS
Whenever a life insurer offers an insurance product that has
associated with it the possibility of that company making a federal guaranteed
student loan through the Federal Higher Education Act in connection with the solicitation
or sale of the life insurance product, said agent of company and applicant
shall execute a form to be approved by the Department. Said form shall set out
the rights of the applicant under G.S. 58-3-135, and, among other things, also
shall state that the purchase of life insurance is not necessary to obtain a
federal guaranteed student loan and that information on alternative sources of
such loans can be had by contacting student finance officers at institutions of
higher learning. Once this form is executed, one copy of the same shall be
left with the applicant and the insurance carrier, issuing the insurance
product, shall keep a copy of the form in its records for a period of at least
three years.
History Note: Authority G.S. 58-2-40; 58-3-135;
58-3-150;
Eff. July 1, 1986;
Amended Eff. April 8, 2002; April 1, 1989.
SECTION .0400 ‑ PROPERTY AND LIABILITY
11 NCAC 04 .0401 FUNCTION OF SECTION
11 NCAC 04 .0402 RATING OF AUTOMOBILE INSURANCE
11 NCAC 04 .0403 BILLING PROCEDURES FOR AUTOMOBILE
LIABILITY INSURANCE
11 NCAC 04 .0404 CANCELLATION: TERMINATION: RENEWAL
OR NONRENEWAL
History Note: Filed as an Emergency Repeal Eff. April
25, 1979, for a Period of 120 Days to be Reinstated
on August 23, 1979;
Authority G.S. 58‑9; 58‑30.3; 58‑30.4;
58‑32; 58‑72(4) through ‑72(22); 58‑131.56;
58‑131.57; 58‑248.26; 58‑248.31; 58‑248.32;
58‑248.36; 20‑310;
Eff. February 1, 1976;
Readopted Eff. March 16, 1979;
Repealed Eff. August 23, 1979.
11 NCAC 04 .0405 DRIVE‑IN CLAIM SERVICE
FACILITIES
11 NCAC 04 .0406 TOTAL LOSSES ON MOTOR VEHICLES
11 NCAC 04 .0407 REPAIR ESTIMATES
11 NCAC 04 .0408 DETERMINATION OF REPAIR COSTS
11 NCAC 04 .0409 NOTICE OF CESSION
11 NCAC 04 .0410 PROMPT DETERMINATION OF DAMAGE
11 NCAC 04 .0411 SEX DISCRIMINATION IN AUTOMOBILE
INSURANCE
11 NCAC 04 .0412 HANDLING OF LOSS AND CLAIM PAYMENTS
11 NCAC 04 .0413 WRITTEN CONFIRMATION OF ORAL
AGREEMENTS
History Note: Filed as an Emergency Repeal Eff. April
25, 1979, for a Period of 120 Days to be Reinstated
on August 23, 1979;
Authority G.S. 58‑9; 58‑30.3; 58‑30.4;
58‑39; 58‑44.3; 58‑54; 58‑54.4; 58‑131.37;
Eff. March 16, 1979;
Repealed Eff. August 23, 1979.
11 NCAC 04 .0414 FUNCTION OF SECTION
History Note: Authority G.S. 58‑7.3, ‑9, ‑72;
Eff. December 15, 1979;
Repealed Eff. July 1, 1988.
11 NCAC 04 .0415 SAFE DRIVER INCENTIVE PLAN
The following
are Department of Insurance rules regarding the Safe Driver Incentive Plan
("SDIP"):
(1) License
revocation for refusal to submit to chemical tests shall not be considered
conviction of a moving traffic violation.
(2) A
conviction for driving the wrong way on a one‑way street is not a
conviction for driving on the wrong side of the road.
(3) The
revocation or suspension of a driver's license solely because of the
accumulation of motor vehicle points shall not be considered a conviction.
(4) When new
operators are added to an automobile policy, their SDIP points may be added to
the policy at the same time coverage is extended to them.
(5) SDIP
points for an operator whose license has been suspended or revoked may be added
only at the date the operator again becomes eligible for license with the
following exception: SDIP points may be charged at the inception date of the
current policy if the operator has previously been convicted of a moving traffic
violation while his license was suspended or revoked or if there is reliable
evidence that the operator does, in fact, operate a motor vehicle.
(6) If an
operator dies or permanently leaves an insured's household during the policy
period, his SDIP points shall be removed at the time of his death or departure.
History Note: Authority G.S. 58-2-40; 58-36-65;
58-36-75;
Eff. December 15, 1979;
Amended Eff. February 1, 1993.
11 NCAC 04 .0416 BILLING PROCEDURES FOR AUTOMOBILE
INSURANCE
(a) With
respect to new business, an insurer shall take no more than 90 days from the
effective date of the policy to make any investigation other than review of the
initial application and to bill the insured for proper classification or sub‑classification.
(b) With
respect to renewal business, an insurer shall not bill for any additional
premium after the renewal quotation is made (for any condition which existed at
the time of renewal and which is on the driver's motor vehicle record).
(c) With
respect to renewal business, if the insured does not provide complete rating
information necessary to underwrite the policy or makes an effort to withhold
rating information, the insurer shall take no more than 90 days from the
effective date of the renewal to make inquiry of the insured, to make any other
investigation and to bill the insured for proper classification and sub‑classification.
(d) When an
insurer obtains information from sources other than the Department of Motor
Vehicles for use in underwriting an automobile policy and the insured alleges
that such information is incorrect, the insurer shall verify the accuracy of
such information.
(e) Unearned
premium refunds shall be determined from the later of either the date the
consumer gives direct notice to a company or an agent of the company of such
cancellation or the effective date of cancellation requested by the insured.
In the case of physical damage insurance where there is a loss payee, the
effective date of cancellation for the purposes of determining unearned premium
refund shall be ten days from the date cancellation notice was given directly
to a company or a company's agent. However, if the consumer can show proof
that within the ten day period in this Rule where cancellation involves a loss
payee, that the consumer had obtained replacement physical damage coverage
which included the loss payee, then determination of the cancellation date for
purposes of determining unearned premium refund shall be had, from the last
date of any lapse in coverage for the loss payee during the ten day time set
out in this Rule, or; in the case of no lapse, shall be determined as if no
loss payee was involved.
History Note: Authority G.S. 58‑9; 58‑248.34;
Eff. December 15, 1979;
Amended Eff. April 1, 1989; July 1, 1986.
11 NCAC 04 .0417 DRIVE-IN CLAIM SERVICE FACILITIES
No insurer shall require any claimant to use a drive-in
claim service operated by the insurer. The claimant's voluntary utilization of
a drive-in claim service or preferred repair shop shall not prejudice the right
of either party to obtain independent appraisals and negotiate settlement on
the basis of such appraisals.
History Note: Authority G.S. 58-2-40; 58-63-65;
Eff. December 15, 1979;
Amended Eff. July 1, 2012.
11 NCAC 04 .0418 TOTAL LOSSES ON MOTOR VEHICLES
The
commissioner shall consider as prima facie violative of G.S. 58‑63‑15(11)
the failure by an insurer to adhere to the following procedures concerning
settlement of covered "total loss" motor vehicle claims when such
failure is so frequent as to indicate a general business practice:
(1) If the
insurer and the claimant are initially unable to reach an agreement as to the
value of the vehicle, the insurer shall base any further settlement offer not
only on published regional average values of similar vehicles, but also on the
value of the vehicle in the local market. Local market value shall be
determined by using either the local market price of a comparable vehicle or,
if no comparable vehicle can be found, quotations from at least two qualified
dealers within the local market area. Additionally, if the claimant represents
that the vehicle actually owned by him was in better than average condition,
the insurer shall give due consideration to the condition of the claimant's
vehicle prior to the accident.
(2) Where
the insurer has the right to elect to replace the vehicle and does so elect,
the replacement vehicle shall be available without delay, similar to the lost
vehicle, and paid for by the insurer, subject only to the deductible and to the
value of any enhancements acceptable to the insured.
(3) If the
insurer makes a deduction for the salvage value of a "total loss"
vehicle retained by the claimant, the insurer, if so requested by the claimant,
shall furnish the claimant with the name and address of a salvage dealer who
will purchase the salvage for the amount deducted.
(4) If a
written statement is requested by the claimant, a total loss payment by an
insurer shall be accompanied by a written statement listing the estimates,
evaluations and deductions used in calculating the payment, if any, and the
source of these values.
(5) When a
motor vehicle is damaged in an amount which, inclusive of original and
supplemental claims, equals or exceeds 75 percent of the preaccident actual
cash value, as such value is determined in accordance with this Rule, an
insurance carrier shall "total loss" the automobile by paying the
claimant the preaccident value, and in return, receiving possession of the legal
title of the salvage of said automobile. At the election of the claimant, or
in those circumstances where the insurance carrier will be unable to obtain an
unencumbered title to the damaged vehicle then the insurance carrier shall have
the right to deduct the value of the salvage of the total loss from the actual
value of the vehicle and leave such salvage with the claimant subject to the
insurance carrier abiding by Subparagraphs (3) and (6) of this Rule. No
insurer, adjuster, appraiser, agent, or any other person shall enter into any
oral or written agreement(s), by and between themselves, to limit any original
or supplemental claim(s) so as to artificially keep the repair cost of a
damaged vehicle below 75% of its preaccident value, if in fact such original and
any supplemental claim(s) exceed or would exceed 75% of the vehicle's
preaccident value.
(6) The
insurer shall be responsible for all reasonable towing and storage charges
until three days after the owner and storage facility are notified in writing
that the insurer will no longer reimburse the owner or storage facility for
storage charges. Notification to the owner shall include the name, address,
and telephone number of the facility where the vehicle is being stored.
Notification to the storage facility shall include the name, address, and, if
available, telephone number of the owner. No insurer shall abandon the salvage
of a motor vehicle to a towing or storage service without the consent of the
service involved. In instances where the towing and storage charges are paid
to the owner, the check or draft for the amount of such service shall be
payable jointly to the owner and the towing or storage service.
History Note: Authority G.S. 58‑2‑40; 58‑63‑65;
Eff. December 15, 1979;
Amended Eff. April 1, 1993; April 1, 1989; July 1, 1986.
11 NCAC 04 .0419 MOTOR VEHICLE REPAIR ESTIMATES
The
commissioner shall consider as prima facie violative of G.S. 58‑63‑15(11)
the failure by an insurer to adhere to the following procedures concerning
repair estimates on covered motor vehicle damage claims submitted when such
failure is so frequent as to indicate a general business practice:
(1) If the
insurer requires the claimant to obtain more than two estimates of property
damage, the cost, if any, of such additional estimates shall be borne by the
insurer.
(2) No
insurer shall refuse to inspect the damaged vehicle if a personal inspection is
requested by the claimant. However, if the damaged vehicle is situated other
than where it is normally used or cannot easily be moved, the insurer may
satisfy the requirements of this Section by having a competent local appraiser
inspect the damaged vehicle.
(3) When the
insurer elects to have the claimant's property repaired, the insurer shall, if
so requested by the claimant, furnish the claimant with a legible front and
back copy of its estimate. This estimate shall contain the name and address of
the insurer and, if the estimate was prepared by a repair service, the name and
address of that service. If there is a dispute concerning pre‑existing
damage to the vehicle which the insurer does not intend to have repaired, the
extent of such damage shall be clearly stated in the estimate.
(4) If
requested by a claimant, an insurer shall provide to the claimant copies of the
estimate and all supplements thereto that it uses to offer a settlement.
History Note: Authority G.S. 58‑2‑40; 58‑63‑65;
Eff. December 15, 1979;
Amended Eff. April 1, 1993; April 1, 1989.
11 NCAC 04 .0420 WRITTEN CONFIRMATION OF ORAL
AGREEMENTS
(a) If an
insurer, by telephone or otherwise, accepts liability or advises a claimant to
have damaged property repaired with the understanding that the insurer will pay
or reimburse the claimant, the insurer shall, if requested by the claimant,
promptly confirm the understanding in writing. Such writing shall clearly
state the responsibility assumed by the insurer for payment of incurred costs.
(b) If so
requested by the claimant, the insurer or its representative shall confirm in
writing all other oral agreements between itself or its representative and the
claimant.
History Note: Authority G.S. 58-2-40; 58-3-100;
58-63-15;
Eff. December 15, 1979.
11 NCAC 04 .0421 HANDLING OF LOSS AND CLAIM PAYMENTS
The
commissioner shall consider as prima facie violative of G.S. 58‑3‑100
and 58‑63‑15(11) failure by an insurer to adhere to the following
procedures concerning loss and claim payments when such failure is so frequent
as to indicate a general business practice:
(1) Loss and
claim payments shall be mailed or otherwise delivered within 10 business days
after the claim is settled.
(2) Unless
the insured consents, no insurer shall deduct from a loss or claim payment made
under one policy premiums owed by the insured on another policy.
(3) No
insurer shall withhold the entire amount of a loss or claim payment because the
insured owes premium or other monies in an amount less than the loss or claim
payment.
(4) If a
release or full payment of claim is executed by a claimant, involving a repair
to a motor vehicle, it shall not bar the right of the claimant to promptly
assert a claim for property damages unknown to either the claimant or to the
insurance carrier prior to the repair of the vehicle, which damages were
directly caused by the accident and which damages could not be determined or
known until after the repair or attempted repair of the motor vehicle. Claims
asserted within 30 days after repair shall be considered promptly asserted.
(5) If a
release or full payment of claim is executed by a third party claimant,
involving a repair to a motor vehicle, it shall not bar the right of the third
party claimant to promptly assert a claim for diminished value, which
diminished value was directly caused by the accident and which diminished value
could not be determined or known until after the repair or attempted repair of
the motor vehicle. Claims asserted within 30 days after repair for diminished
value shall be considered promptly asserted.
History Note: Authority G.S. 58‑2‑40; 58‑3‑100;
58‑63‑65;
Eff. December 15, 1979;
Amended Eff. February 1, 1996; April 1, 1993; April 1,
1989; July 1, 1986.
11 NCAC 04 .0422 CANCELLATION OF INSURANCE
The
Commissioner shall consider an unfair trade practice the cancellation by an
insurer of any personal lines insurance policy for which the premium has been
paid because there is another policy in force for which the premium has not
been paid.
History Note: Authority G.S. 58‑2-40; 58‑63-40;
Eff. December 15, 1979;
Amended Eff. February 1, 1996.
11 NCAC 04 .0423 ETHICAL STANDARDS
(a) Every agent, limited representative, broker, adjuster,
appraiser, or other insurer's representative shall, when conducting insurance
business with a member of the public:
(1) identify himself or herself and his or her
occupation; and
(2) provide his or her National Producer Number
and the Department's website address and phone number for verification of
licensure status when requested to show proof of licensure by any claimant, any
repairer while he or she is investigating a claim or loss, any Department
representative, or any other person with whom he or she has contact while
performing his or her insurance business.
(b) No claims management person, agent, agency employee,
limited representative, broker, adjuster, appraiser, or other insurer's
representative shall:
(1) accept any gratuity or other form of
remuneration from any provider of services for recommending that provider to
claimants;
(2) purchase salvage from a claimant;
(3) intimidate or discourage any claimant from
seeking legal advice and counsel by withdrawing and reducing a settlement offer
previously tendered to the claimant or threatening to do so if the claimant
seeks legal advice or counsel. No adjuster shall advise a claimant of the
advisability of seeking legal counsel nor recommend any legal counsel to any
claimant; or
(4) cause any undue delay in the settlement of
a property damage claim on account of the claimant's choice of a motor vehicle
repair service.
(c) No claims management person, agent, agency employee,
limited representative, broker, or other insurer's representative shall
recommend the utilization of a particular motor vehicle repair service without
informing the claimant that he is under no obligation to use the recommended
repair service and that he may use the service of his choice.
History Note: Authority G.S. 58-2-40; 58-33-10;
58-33-30; 58-35-25; 58-63-65; 58-65-40;
Eff. December 15, 1979;
Amended Eff. October 1, 2010; April 1, 1993; April 1,
1989; July 1, 1986.
11 NCAC 04 .0424 PURPOSE
History Note: Authority G.S. 58‑9;
Eff. April 1, 1989;
Repealed Eff. April 1, 1993.
11 NCAC 04 .0425 DEFINITIONS
As used in this
Section the following terms shall be construed as follows:
(1) "After
market part" means a part made by a nonoriginal manufacturer.
(2) "Insurer"
includes any person authorized to represent the insurer with respect to a claim
and who is acting within the scope of the person's authority.
(3) "Nonoriginal
manufacturer" means any manufacturer other than the original manufacturer
of a part.
(4) "Part"
means a sheet metal or plastic part that generally is a component of the
exterior of a motor vehicle, including an inner or outer panel.
History Note: Authority G.S. 58-2-40;
Eff. April 1, 1989.
11 NCAC 04 .0426 LIKE KIND AND QUALITY
No insurer
shall require the use of an after market part in the repair of a motor vehicle
unless the after market part is at least equal to the original part in terms of
fit, quality, performance and warranty. Insurers specifying the use of after
market parts shall include in the estimate the costs of any modifications made
necessary by the use of after market parts.
History Note: Authority G.S. 58-2-40;
Eff. April 1, 1989.
11 NCAC 04 .0427 DISCLOSURE REQUIREMENTS
Every insurer that writes motor vehicle
insurance in this state and that intends to require or specify the use of after
market parts must disclose to its policyholders in writing, either in the
policy or on a sticker attached thereto, the following information in no
smaller print than ten point type:
IN THE REPAIR OF YOUR COVERED AUTO
UNDER THE PHYSICAL DAMAGE COVERAGE PROVISIONS OF THIS POLICY, WE MAY REQUIRE OR
SPECIFY THE USE OF AUTOMOBILE PARTS NOT MADE BY THE ORIGINAL MANUFACTURER.
THESE PARTS ARE REQUIRED TO BE AT LEAST EQUAL IN TERMS OF FIT, QUALITY,
PERFORMANCE AND WARRANTY TO THE ORIGINAL MANUFACTURER PARTS THEY REPLACE.
All after market parts installed on a motor vehicle shall be
identified on the estimate and invoice for such repair.
History Note: Authority G.S. 58-2-40;
Eff. April 1, 1989;
Amended Eff. March 1, 2004.
11 NCAC 04 .0428 ENFORCEMENT
History Note: Authority G.S. 58‑9;
Eff. May 1, 1989;
Repealed Eff. May 3, 1993.
11 NCAC 04 .0429 COMMINGLING
The accounting
records maintained by agents, brokers, and limited representatives shall be
separate and apart from any other business records and demonstrate at all times
that collected funds due to insurers and return premiums due to policyholders
are available at all times.
History Note: Authority G.S. 58-2-40; 58-2-195;
Eff. February 1, 1993;
Amended Eff. February 1, 1996.
11 NCAC 04 .0430 PROOF OF MAILING; AUTOMOBILE
INSURANCE
As used in G.S. 58-36-85, "proof of mailing" means
a certificate issued by and bearing the date stamp of the United States Postal
Service or an official United States Postal Service tracking number or similar
proof of mailing.
History Note: Authority G.S. 58-2-40; 58-36-85;
Eff. February 1, 1993;
Amended Eff. July 1, 2012; February 1, 1996.
11 NCAC 04 .0431 DEFINITION OF CLAIMANT
As used in this
Section, unless the context clearly indicates otherwise, "claimant"
means a first party claimant or a third party claimant.
History Note: Authority G.S. 58‑2‑40(1); 58‑3‑100(5);
58‑63‑15;
Eff. April 1, 1993.
11 NCAC 04 .0432 REFUND OF EXCESS PREMIUM ON
SCHEDULED ITEMS
If an insured has any scheduled item covered by a
homeowner's or personal inland marine insurance policy, and that item is
replaced for less than the scheduled amount of coverage, the insurer shall
refund the insured the difference in premium charged between the scheduled
amount of coverage and the actual amount of the loss paid by the insurer, if
the refund per policy term is greater than five dollars ($5.00). Any refund
shall be computed from the date of issuance of the policy or five years,
whichever is less.
History Note: Authority G.S. 58-2-40; 58-43-10;
58-63-65;
Eff. April 1, 1995;
Amended Eff. July 1, 2012.
11 NCAC 04 .0433 REFUND OF AUTO INSURANCE PREMIUM ON
NEW BUSINESS
If an insured
asks an insurer to cancel a newly issued motor vehicle insurance policy on or
before the premium billing due date, the unearned premium refund made by the
insurer shall be made on a pro rata rather than a short rate basis, and the
refund shall be based on the premium initially quoted by the insurer if both of
the following conditions are met:
(1) The
insured provided the insurer with accurate and complete rating information.
(2) The
insurer subsequently calculated the premium to be greater than the premium
initially quoted.
History Note: Authority G.S. 58-2-40; 58-36-85;
58-63-65;
Eff. April 1, 1995.
CHAPTER 4 ‑ CONSUMER SERVICES DIVISION
SECTION .0500 ‑ LIFE INSURANCE ILLUSTRATIONS
11 NCAC 04 .0501 SCOPE AND DEFINITIONS
(a) These Rules apply to all policies sold on and after the
effective dates of these Rules and to all certificates issued under those
policies.
(b) As used in this Section, the following terms have the
following meanings:
(1) "Actuarial Standards Board" means
the board established by the American Academy of Actuaries to develop and
promulgate standards of actuarial practice.
(2) "Basic illustration" means a
ledger or proposal used in the sale of a policy that shows both guaranteed and
non‑guaranteed elements.
(3) "Contract premium" means the
gross premium that is required to be paid under a fixed premium policy,
including the premium for a rider for which benefits are shown in the
illustration.
(4) "Currently payable scale" means a
scale of non‑guaranteed elements in effect for a policy as of the
preparation date of the illustration or declared to become effective within the
next 95 days.
(5) "Disciplined current scale" means
a scale of non‑guaranteed elements constituting a limit on illustrations
currently being illustrated by an insurer that is reasonably based on actual
recent historical experience, as certified annually by an illustration actuary
designated by the insurer.
(6) "Guaranteed elements" means the
premiums, benefits, values, credits, or charges under a policy that are
guaranteed and determined at issue.
(7) "Illustrated scale" means a scale
of non‑guaranteed elements currently being illustrated that is not more
favorable to the policy owner than the lesser of:
(A) The disciplined current scale; or
(B) The currently payable scale.
(8) "Illustration" means a
presentation or depiction that includes non‑guaranteed elements of a
policy over a period of years and that is either a basic illustration, in‑force
illustration, or a supplemental illustration.
(9) "In force illustration" means an
illustration furnished at any time after the policy that it depicts has been in
force for one year or more.
(10) "Illustration actuary" means an
actuary meeting the requirements of 11 NCAC 4 .0509 who certifies to
illustrations based on the standard of practice promulgated by the Actuarial
Standards Board.
(11) "Lapse‑supported
illustration" means an illustration of a policy failing the test of self‑supporting
as defined in this Section, under a modified persistency rate assumption using
persistency rates underlying the disciplined current scale for the first five
years and 100 percent policy persistency thereafter.
(12) "Non‑guaranteed elements"
means the premiums, benefits, values, credits, or charges under a policy that
are not guaranteed or not determined at issue.
(13) "Policy" means a group or
individual life insurance policy or certificate. "Policy" does not
include:
(A) A variable life insurance policy or certificate.
(B) An annuity contract.
(C) A credit life insurance policy or certificate.
(D) A life insurance policy with no illustrated death
benefit on any individual exceeding ten thousand dollars ($10,000).
(14) "Policy owner" means the owner
named in a policy or the certificate holder in the case of a group policy.
(15) "Premium outlay" means the amount
of premium assumed to be paid by the policy owner or other premium payer out‑of‑pocket.
(16) "Self‑supporting
illustration" means an illustration of a policy for which it can be
demonstrated that, when using experience assumptions underlying the disciplined
current scale, for all illustrated points in time on or after the fifteenth policy
anniversary or the twentieth policy anniversary for second‑or‑later‑to‑die
policies (or upon policy expiration if sooner), the accumulated value of all
policy cash flows equals or exceeds the total policy owner value available.
For this purpose, policy owner value will include cash surrender values and any
other illustrated benefit amounts available at the policy owner's election.
(17) "Supplemental illustration" means
an illustration furnished in addition to a basic illustration that meets the
applicable requirements of this Section, and that may be presented in a format
differing from the basic illustration, but may only depict a scale of non‑guaranteed
elements that is permitted in a basic illustration.
History Note: Authority G.S. 58-2-40; 58-58-1;
58-58-40; 58-60-15; 58-60-20; 58-63-15; 58-63-65;
Eff. January 1, 1997.
11 NCAC 04 .0502 ASSUMED EXPENSES AND CURRENT SCALE
(a) As used in this Rule, "minimum assumed
expenses" means the minimum expenses used in the calculation of the
disciplined current scale for a policy. An insurer may choose to designate
each year the method of determining assumed expenses for all policies from the
following:
(1) Fully allocated expenses.
(2) Marginal expense.
(3) A table of fully allocated expenses
developed by the Actuarial Standards Board and approved by the National
Association of Insurance Commissioners.
Marginal expenses may be used only if greater than a
generally recognized expense table. If no generally recognized expense table
is approved, fully allocated expenses must be used.
(b) Further guidance in determining the disciplined current
scale as contained in standards established by the Actuarial Standards Board
may be relied upon if the standards:
(1) Are consistent with all provisions of this
Section.
(2) Limit a disciplined current scale to
reflect only actions that have been taken on events that have already occurred.
(3) Do not permit a disciplined current scale
to include any projected trends of improvements in experience or any assumed
improvements in experience beyond the illustration date.
(4) Do not permit assumed expenses to be less
than minimum assumed expenses.
History Note: Authority G.S. 58-2-40; 58-58-1;
58-58-40; 58-60-15; 58-60-20; 58-63-15; 58-63-65;
Eff. January 1, 1997.
11 NCAC 04 .0503 ILLUSTRATED POLICIES
(a) Each insurer marketing policies to which this Section
applies shall notify the Commissioner whether a policy form is to be marketed
with or without an illustration. For all policy forms being actively marketed on
the effective date of this Section, the insurer shall identify in writing those
policy forms and whether or not an illustration will be used with them. For
policy forms filed after the effective date of this Section, the identification
shall be made at the time of filing. Any previous identification may be
changed by notice to the Commissioner.
(b) If the insurer identifies a policy form as one to be
marketed without an illustration, any use of an illustration before the first
policy anniversary for any policy form using that policy is prohibited.
(c) If a policy form is identified by an insurer as one to
be marketed with an illustration, the insurer shall prepare and deliver a basic
illustration in accordance with this Section, except that a basic illustration
need not be provided to individual members of a single employer group or to
individuals insured under multiple lives coverage issued to a single applicant
unless the coverage is marketed to those individuals. The illustration
furnished to an applicant for a group policy issued to a single applicant on
multiple lives may be either an individual or composite illustration
representative of the coverage on the lives of members of the group or the
multiple lives covered.
(d) As used in this Paragraph, "non‑term group
life" means a group policy or individual policies of traditional permanent
or universal life insurance issued to members of a single employer group where:
(1) Every plan of coverage was selected by the
employer.
(2) The premium is paid by the employer or
through payroll deduction.
(3) Group underwriting or simplified
underwriting is used.
Potential enrollees for policies and certificates of non‑term
group life subject to this Section shall be furnished a quotation with the
enrollment materials. The quotation shall show potential policy values for
sample ages and policy years on a guaranteed and non‑guaranteed basis
appropriate to the group and the coverage. This quotation shall not be
considered an illustration for purposes of this Section, but all information
provided shall be consistent with the illustrated scale. A basic illustration
shall be provided at delivery of the policy or certificate to enrollees for non‑term
group life who enroll for more than the minimum premium necessary to provide
pure death benefit protection. In addition, the insurer shall make a basic
illustration available to any non‑term group life enrollee who requests
it.
History Note: Authority G.S. 58-2-40; 58-58-1;
58-58-40; 58-60-15; 58-60-20; 58-63-15; 58-63-65;
Eff. January 1, 1997.
11 NCAC 04 .0504 GENERAL RULES
(a) As used in this Rule, "generic name" means a
short title descriptive of the policy being illustrated, such as "whole
life", "term life", or "flexible premium adjustable
life." An illustration used in the sale of a policy shall satisfy the
applicable requirements of this Section, be clearly labeled "life
insurance illustration" and contain the following basic information:
(1) Name of insurer.
(2) Name and business address of producer or
insurer's authorized representative, if any.
(3) Name, age and sex of proposed insured,
except where a composite illustration is permitted under this Section.
(4) Underwriting or rating classification upon
which the illustration is based.
(5) Generic name of the policy, the company product
name, if different, and policy form number.
(6) Initial death benefit.
(7) Dividend option election or application of
non‑guaranteed elements, if applicable.
(b) When using an illustration in the sale of a policy, an
insurer or its agents or other authorized representatives shall not:
(1) Represent the policy as anything other than
a life insurance policy;
(2) Use or describe non‑guaranteed
elements in a manner that is misleading or has the capacity or tendency to
mislead;
(3) State or imply that the payment or amount
of non‑guaranteed elements is guaranteed;
(4) Use an illustration that does not comply
with the requirements of this Section;
(5) Use an illustration that at any policy
duration depicts policy performance more favorable to the policy owner than
that produced by the illustrated scale of the insurer whose policy is being
illustrated;
(6) Provide an applicant with an incomplete
illustration;
(7) Represent in any way that premium payments
will not be required for each year of the policy in order to maintain the
illustrated death benefits, unless that is the fact;
(8) Use the term "vanish" or
"vanishing premium", or a similar term that implies the policy
becomes paid up, to describe a plan for using non‑guaranteed elements to
pay a portion of future premiums;
(9) Except for policies that can never develop
nonforfeiture values, use an illustration that is "lapse‑supported";
or
(10) Use an illustration that is not "self‑supporting."
(c) If an interest rate used to determine the illustrated
non‑guaranteed elements is shown, it shall not be greater than the earned
interest rate underlying the disciplined current scale.
History Note: Authority G.S. 58-2-40; 58-58-1;
58-58-40; 58-60-15; 58-60-20; 58-63-15; 58-63-65;
Eff. January 1, 1997.
11 NCAC 04 .0505 STANDARDS FOR BASIC ILLUSTRATIONS
(a) Format. A basic illustration shall conform with the
following requirements:
(1) The illustration shall be labeled with the
date on which it was prepared.
(2) Each page, including any explanatory notes
or pages, shall be numbered and show its relationship to the total number of
pages in the illustration (e.g., the fourth page of a seven‑page
illustration shall be labeled "page 4 of 7 pages").
(3) The assumed dates of payment receipt and
benefit pay‑out within a policy year shall be clearly identified.
(4) If the age of the proposed insured is shown
as a component of the tabular detail, it shall be issue age plus the numbers of
years the policy is assumed to have been in force.
(5) The assumed payments on which the
illustrated benefits and values are based shall be identified as premium outlay
or contract premium, as applicable. For policies that do not require a
specific contract premium, the illustrated payments shall be identified as
premium outlay.
(6) Guaranteed death benefits and values
available upon surrender, if any, for the illustrated premium outlay or
contract premium shall be shown and clearly labeled guaranteed.
(7) If the illustration shows any non‑guaranteed
elements, they shall not be based on a scale more favorable to the policy owner
than the insurer's illustrated scale at any duration. These elements shall be
clearly labeled non‑guaranteed.
(8) The guaranteed elements, if any, shall be
shown before corresponding non‑guaranteed elements and shall be
specifically referred to on any page of an illustration that shows or describes
only the non‑guaranteed elements (e.g., "see page one for guaranteed
elements").
(9) The account or accumulation value of a
policy, if shown, shall be identified by the name this value is given in the
policy being illustrated and shown in close proximity to the corresponding
value available upon surrender.
(10) The value available upon surrender shall be
identified by the name this value is given in the policy being illustrated and
shall be the amount available to the policy owner in a lump sum after deduction
of surrender charges, policy loans and policy loan interest, as applicable.
(11) Illustrations may show policy benefits and
values in graphic or chart form in addition to the tabular form.
(12) Any illustration of non‑guaranteed
elements shall be accompanied by a statement indicating that:
(A) The benefits and values are not guaranteed;
(B) The assumptions on which they are based are subject
to change by the insurer; and
(C) Actual results may be more or less favorable.
(13) If the illustration shows that the premium
payer may have the option to allow policy charges to be paid using non‑guaranteed
values, the illustration must clearly disclose that a charge continues to be
required and that, depending on actual results, the premium payer may need to
continue or resume premium outlays. Similar disclosure shall be made for
premium outlay of lesser amounts or shorter durations than the contract
premium. If a contract premium is due, the premium outlay shall not be left
blank or show zero unless accompanied by an asterisk or similar mark to draw
attention to the fact that the policy is not paid up.
(14) If the applicant plans to use dividends or
policy values, guaranteed or non‑guaranteed, to pay all or a portion of
the contract premium or policy charges, or for any other purpose, the
illustration may reflect those plans and the effect on future policy benefits
and values.
(b) Narrative Summary. A basic illustration shall include
the following:
(1) A brief description of the policy being
illustrated, including a statement that it is a life insurance policy.
(2) A brief description of the premium outlay
or contract premium, as applicable, for the policy. For a policy that does not
require payment of a specific contract premium, the illustration shall show the
premium outlay that must be paid to guarantee coverage for the term of the
policy, subject to maximum premiums allowable to qualify as a life insurance policy
under the applicable provisions of the Internal Revenue Code.
(3) A brief description of any policy features,
riders or options, guaranteed or non‑guaranteed, shown in the basic
illustration and the effect they may have on the benefits and values of the
policy.
(4) Identification and a brief definition of
column headings and key terms used in the illustration.
(5) A statement containing the following: This
illustration assumes that the currently illustrated non-guaranteed elements
will continue unchanged for all years shown. This is not likely to occur.
Actual results may be more or less favorable than those shown.
(c) Numeric Summary.
(1) Following the narrative summary, a basic
illustration shall include a numeric summary of the death benefits and values
and the premium outlay and contract premium, as applicable. For a policy that
provides for a contract premium, the guaranteed death benefits and values shall
be based on the contract premium. This summary shall be shown for at least
policy years 5, 10 and 20 and at age 70, if applicable, on the three bases
shown below. For multiple life policies the summary shall show policy years 5,
10, 20 and 30. The columns of the numeric summary shall be as follows:
(A) Policy guarantees;
(B) Insurer's illustrated scale; and
(C) Insurer's illustrated scale used but with the non‑guaranteed
elements reduced as follows:
(i) Dividends at 50 percent of the dividends
contained in the illustrated scale used;
(ii) Non‑guaranteed credited interest at rates
that are the average of the guaranteed rates and the rates contained in the
illustrated scale used; and
(iii) All non‑guaranteed charges, including but
not limited to, term insurance charges, mortality and expense charges, at rates
that are the average of the guaranteed rates and the rates contained in the
illustrated scale used.
(2) In addition, if coverage would cease before
policy maturity or age 100, the year in which coverage ceases shall be
identified for each of the three bases.
(d) Statements. Statements substantially similar to the
following shall be included on the same page as the numeric summary and signed
by the applicant, or the policy owner in the case of an illustration provided
at time of delivery, as required in this Section.
(1) A statement to be signed and dated by the
applicant or policy owner reading as follows: "I have received a copy of
this illustration and understand that any non‑guaranteed elements
illustrated are subject to change and could be either higher or lower. The
agent has told me they are not guaranteed."
(2) A statement to be signed and dated by the
insurance producer or other authorized representative of the insurer reading as
follows: "I certify that this illustration has been presented to the
applicant and that I have explained that any non‑guaranteed elements
illustrated are subject to change. I have made no statements that are
inconsistent with the illustration."
(e) Tabular Detail.
(1) A basic illustration shall include the
following for at least each policy year from one to 10 and for every fifth
policy year thereafter ending at age 100, policy maturity or final expiration,
and except for term insurance beyond the 20th year, for any year in which the
premium outlay and contract premium, if applicable is to change:
(A) The premium outlay and mode the applicant plans to
pay and the contract premium, as applicable;
(B) The corresponding guaranteed death benefit, as
provided in the policy; and
(C) The corresponding guaranteed value available upon
surrender, as provided in the policy.
(2) For a policy that provides for a contract
premium, the guaranteed death benefit and value available upon surrender shall
correspond to the contract premium.
(3) Non‑guaranteed elements may be shown
if described in the policy. In the case of an illustration for a policy on
which the insurer intends to credit terminal dividends, they may be shown if
the insurer's current practice is to pay terminal dividends. If any non‑guaranteed
elements are shown they must be shown at the same durations as the
corresponding guaranteed elements, if any. If no guaranteed benefit or value
is available at any duration for which a non‑guaranteed benefit or value
is shown, a zero shall be displayed in the guaranteed column.
History Note: Authority G.S. 58-2-40; 58-58-1;
58-58-40; 58-60-15; 58-60-20; 58-63-15; 58-63-65;
Eff. January 1, 1997.
11 NCAC 04 .0506 STANDARDS FOR SUPPLEMENTAL
ILLUSTRATIONS
(a) A supplemental illustration may be provided as long as:
(1) It is appended to, accompanied by or
preceded by a basic illustration that complies with this Section;
(2) The non‑guaranteed elements shown are
not more favorable to the policy owner than the corresponding elements based on
the scale used in the basic illustration;
(3) It contains the same statement required of
a basic illustration that non‑guaranteed elements are not guaranteed; and
(4) For a policy that has a contract premium,
the contract premium underlying the supplemental illustration is equal to the
contract premium shown in the basic illustration. For policies that do not
require a contract premium, the premium outlay underlying the supplemental
illustration shall be equal to the premium outlay shown in the illustration.
(b) The supplemental illustration shall include a notice
referring to the basic illustration for guaranteed elements.
History Note: Authority G.S. 58-2-40; 58-58-1;
58-58-40; 58-60-15; 58-60-20; 58-63-15; 58-63-65;
Eff. January 1, 1997.
11 NCAC 04 .0507 DELIVERY OF ILLUSTRATION AND RECORD
RETENTION
(a) If a basic illustration is used by an insurance agent
or other authorized representative of the insurer in the sale of a policy and
the policy is applied for as illustrated, a copy of that illustration, signed
in accordance with this Section, shall be submitted to the insurer at the time
of policy application. A copy also shall be provided to the applicant.
(b) If the policy is issued other than as applied for, a
revised basic illustration conforming to the policy as issued shall be sent
with the policy. The revised illustration shall conform to the requirements of
this Section, shall be labeled "Revised Illustration" and shall be
signed and dated by the applicant or policy owner and producer or other
authorized representative of the insurer no later than the time the policy is
delivered. A copy shall be provided to the insurer and the policy owner.
(c) If no illustration is used by an insurance agent or
other authorized representative in the sale of a policy or if the policy is
applied for other than as illustrated, the producer or representative shall
certify to that effect in writing on a form provided by the insurer. On the
same form the applicant shall acknowledge that no illustration conforming to
the policy applied for was provided and shall further acknowledge an
understanding that an illustration conforming to the policy as issued will be
provided no later than at the time of policy delivery. This form shall be
submitted to the insurer at the time of policy application.
(d) If the policy is issued, a basic illustration
conforming to the policy as issued shall be sent with the policy and signed no
later than the time the policy is delivered. A copy shall be provided to the insurer
and the policy owner.
(e) If the basic illustration or revised illustration is
sent to the applicant or policy owner by mail directly from the insurer, it
shall include instructions for the applicant or policy owner to sign the
duplicate copy of the numeric summary page of the illustration for the policy
issued and return the signed copy to the insurer. The insurer's obligation
under this subsection shall be satisfied if it can demonstrate that it has made
a diligent effort to secure a signed copy of the numeric summary page. The
requirement to make a diligent effort shall be deemed satisfied if the insurer
includes in the mailing a self‑addressed postage prepaid envelope with
instructions for the return of the signed numeric summary page.
(f) A copy of the basic illustration and a revised basic
illustration, if any, signed as applicable, along with any certification that
either no illustration was used or that the policy was applied for other than
as illustrated, shall be retained by the insurer until three years after the
policy is no longer in force. A copy need not be retained if no policy is
issued.
History Note: Authority G.S. 58-2-40; 58-58-1;
58-58-40; 58-60-15; 58-60-20; 58-63-15; 58-63-65;
Eff. January 1, 1997.
11 NCAC 04 .0508 ANNUAL REPORTS AND NOTICES TO POLICY
OWNERS
(a) In the case of a policy designated as one for which an
illustration will be issued, the insurer shall provide each policy owner with
an annual report on the status of the policy that shall contain the information
specified in this Rule.
(b) For universal life policies, the report shall include
the following:
(1) The beginning and end date of the current
report period;
(2) The policy value at the end of the previous
report period and at the end of the current report period;
(3) The total amounts that have been credited
or debited to the policy value during the current period, identifying each by
type (e.g., interest, mortality, expense and riders);
(4) The current death benefit at the end of the
current report period on each life covered by the policy;
(5) The net cash surrender value of the policy
as of the end of the current report period;
(6) The amount of outstanding loans, if any, as
of the end of the current report period; and
(7) Either:
(A) For fixed premium policies: If, assuming guaranteed
interest, mortality and expense loads and continued scheduled premium payments,
the policy's net cash surrender value is such that it would not maintain
insurance in force until the end of the next reporting period, a notice to this
effect shall be included in the report; or
(B) For flexible premium policies: If, assuming
guaranteed interest, mortality and expense loads, the policy's net cash
surrender value will not maintain insurance in force until the end of the next
reporting period unless further premium payments are made, a notice to this
effect shall be included in the report.
(c) For all other policies, where applicable, the report
shall contain:
(1) Current death benefit;
(2) Annual contract premium;
(3) Current cash surrender value;
(4) Current dividend;
(5) Application of current dividend; and
(6) Amount of outstanding loan.
(d) Insurers writing policies that do not build
nonforfeiture values shall only be required to provide an annual report with
respect to these policies for those years when a change has been made to
nonguaranteed policy elements by the insurer.
(e) If the annual report does not include an in force
illustration, it shall contain the following notice in boldface print with a
capitalized heading "IMPORTANT POLICY OWNER NOTICE: You should consider
requesting more detailed information about your policy to understand how it may
perform in the future. You should not consider replacement of your policy or
make changes in your coverage without requesting a current illustration of your
policy. You may annually request, without charge, such an illustration by
calling [insurer's phone number], writing to [insurer's name] at [insurer's
address] or contacting your agent. If you do not receive an illustration of
your policy within 30 days from your request, you should contact your state
insurance department." The insurer may vary the sequential order of the
methods for obtaining an in force illustration.
(f) Upon the request of the policy owner, the insurer shall
furnish an in force illustration of current and future benefits and values
based on the insurer's present illustrated scale. This illustration shall
comply with the requirements of 11 NCAC 4 .0504(a), .0504(b), .0505(a), and
.0505(e). No signature or other acknowledgment of receipt of this illustration
shall be required.
(g) If an adverse change in any non‑guaranteed
element that could affect the policy has been made by the insurer since the
last annual report, the annual report shall contain a brief notice of that fact
and a description of the change, which notice and description shall be printed
in boldface print in a type at least two points larger than the report.
History Note: Authority G.S. 58-2-40; 58-58-1; 58-58-40;
58-60-15; 58-60-20; 58-63-15; 58-63-65;
Eff. January 1, 1997.
11 NCAC 04 .0509 ANNUAL CERTIFICATIONS
(a) The board of directors of each insurer shall appoint
one or more illustration actuaries.
(b) The illustration actuary shall certify that the
disciplined current scale used in illustrations is in conformity with the
Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on
Life Insurance Illustrations promulgated by the Actuarial Standards Board, and
that the illustrated scales used in insurer‑authorized illustrations meet
the requirements of this Section.
(c) The illustration actuary shall:
(1) Be a member in good standing of the
American Academy of Actuaries;
(2) Be familiar with the standard of practice
regarding life insurance policy illustrations;
(3) Not have been found by the Commissioner,
following appropriate notice and opportunity for hearing to have:
(A) Violated any provision of, or any obligation imposed
by, the insurance law or other law in the course of his or her dealings as an
illustration actuary;
(B) Been found guilty of fraudulent or dishonest
practices;
(C) Demonstrated his or her incompetence, lack of
cooperation, or untrustworthiness to act as an illustration actuary; or
(D) Resigned or been removed as an illustration actuary
within the past five years as a result of acts or omissions indicated in any
adverse report on examination or as a result of a failure to adhere to
generally acceptable actuarial standards;
(4) Not fail to notify the Commissioner of any
action taken by an insurance regulator of another state similar to that under
Subparagraph (c)(3) of this Rule;
(5) Disclose in the annual certification
whether, since the last certification, a currently payable scale applicable for
business issued within the previous five years and within the scope of the
certification has been reduced for reasons other than changes in the experience
factors underlying the disciplined current scale. If nonguaranteed elements
illustrated for new policies are not consistent with those illustrated for
similar in force policies, this shall be disclosed in the annual
certification. If nonguaranteed elements illustrated for both new and in force
policies are not consistent with the nonguaranteed elements actually being
paid, charged, or credited to the same or similar form, this shall be disclosed
in the annual certification; and
(6) Disclose in the annual certification which
of the following methods are used to allocate overhead expenses for all
illustrations:
(A) Fully allocated expenses;
(B) Marginal expenses; or
(C) A table of fully allocated expenses developed by the
Actuarial Standards Board and approved by the National Association of Insurance
Commissioners.
(d) The illustration actuary shall file a certification
with the board and with the Commissioner:
(1) Annually for all policies for which
illustrations are used; and
(2) Before a new policy is illustrated.
If an error in a previous certification is discovered, the
illustration actuary shall notify the board of directors of the insurer and the
Commissioner promptly.
(e) If an illustration actuary is unable to certify the
scale for any policy illustration the insurer intends to use, the actuary shall
notify the board of directors of the insurer and the Commissioner promptly of
his or her inability to certify.
(f) A responsible officer of the insurer, other than the
illustration actuary, shall certify annually that the illustration formats meet
the requirements of this Section and that the scales used in insurer‑authorized
illustrations are those scales certified by the illustration actuary and that
the company has provided its agents with information about the expense
allocation used by the company in its illustrations and disclosed as required
in 11 NCAC 4 .0509(c)(6).
(g) The annual certifications shall be provided to the
Commissioner each year by a date determined by the insurer.
(h) If an insurer changes the illustration actuary
responsible for all or a portion of the company's policies, the insurer shall
notify the Commissioner of that fact promptly and disclose the reason for the
change.
History Note: Authority G.S. 58-2-40; 58-2-171;
58-58-1; 58-58-40; 58-60-15; 58-60-20; 58-63-15; 58-63-65;
Eff. January 1, 1997.
