GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

S	2 

SENATE BILL 512
Insurance Committee Substitute Adopted 5/8/89

Short Title:  Insurance Omnibus Amendments.	(Public)
─────────────────────────────────────── 
Sponsors:
─────────────────────────────────────── 
Referred to:  
─────────────────────────────────────── 

March 20, 1989

A BILL TO BE ENTITLED
AN ACT TO MAKE VARIOUS SUBSTANTIVE AND TECHNICAL CHANGES IN THE INSURANCE LAWS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 113-28.3 is repealed. 
Sec. 2. G.S. 58-340.38(a) reads as rewritten:
"(a)	Nothing contained in this Article shall be so construed as to affect or apply to:
(1)	Grand or subordinate lodges of societies, orders or associations now doing business in this State which provide benefits exclusively through local or subordinate lodges;
(2)	Orders, societies or associations which admit to membership only persons engaged in one or more crafts or hazardous occupations, in the same or similar lines of business, insuring only their own members and their families, and the ladies' societies or ladies' auxiliaries to such orders, societies or associations;
(3)	Domestic societies which limit their membership to employees of a particular city or town, designated firm, business house or corporation which provide for a death benefit of not more than five hundred dollars ($500.00) or disability benefits of not more than three hundred fifty dollars ($350.00) to any one person in any one year, or both; or
(4)	Domestic societies or associations of a purely religious, charitable or benevolent description, which provide for a death benefit of not more than five hundred dollars ($500.00) or for disability benefits of not more than three hundred fifty dollars ($350.00) to any one person in any one year, or both."
Sec. 3. G.S. 31A-11(a)(2) reads as rewritten:
"(2)	In any other manner payable to the slayer by virtue of his surviving the decedent, shall be paid to the person or persons who would have been entitled thereto as if the slayer had predeceased the decedent.  If no alternate beneficiary is named, insurance and annuity proceeds shall be paid into the estate of the decedent."
Sec. 4. G.S. 58-536(b) reads as rewritten:
"(b)	Each application for the issuance or renewal of a certificate shall be accompanied by a filing fee of twenty dollars ($20.00) and evidence of maintenance of a surety bond in an amount to be determined by rules adopted by the Commissioner."
Sec. 5.  G.S. 58-475(a) reads as rewritten:
"(a)	If an insurer intends to renew a policy, the insurer must furnish to the insured the renewal terms and a statement of the amount of premium due for the renewal policy period. This section applies only if the insurer intends to decrease coverage, increase deductibles, impose any kind of surcharge, or increase the premium rate in the renewal policy."
Sec. 6.  G.S. 58-475(c) reads as rewritten:
"(c)	If the insurer fails to furnish the renewal terms and statement of premium due in the manner required by this section, the insured may cancel the renewal policy within the 30-day period following receipt of the renewal terms and statement of premium due. For refund purposes, earned premium for any period of coverage shall be calculated pro rata upon the premium applicable to the policy being renewed instead of the renewal policy.  If an insurer fails to comply with the 45-day notice requirement of this section, the insured is entitled to the option of coverage under the policy being renewed and at the same cost of that policy until 45 days have elapsed after the insurer has provided the insured with the notice."
Sec. 7.  G.S. 58-351(b) reads as rewritten:
"(b)	The refund of premiums for decreasing term credit life insurance in transactions of 60 months or less and the refund of premiums for single interest credit property insurance and single interest physical damage insurance shall be equal to the amount computed by the sum of digits formula known as the ‘Rule of 78.'  The refund of premiums for decreasing term credit life insurance in transactions of more than 60 months duration shall be equal to the premium that would be charged for the remaining term and amount of coverage in the policy.  The refund of premiums for level term credit life insurance and dual interest credit property insurance and dual interest physical damage insurance shall be equal to the pro rata unearned gross premiums."
Sec. 8.  G.S. 58-176(c) is amended, at the bottom of the first page of photographically reproduced form, by deleting "Noon”and substituting "12:01 a.m.”for "Noon”in both places where it appears.
Sec. 9.  G.S. 58-9.7(a) reads as rewritten:
"§ 58-9.7.  Civil penalties or restitution for violations; summary suspension of license or certificate.
(a)	This section applies to any person who is subject to licensure or certification under the provisions of this Chapter, General Statutes Chapters 57, 57B or 85C, or Articles 9B or 9C of General Statutes Chapter 66"
Sec. 10.  G.S. 58-54 reads as rewritten:
"§ 58-54. Forms to be approved by Commissioner of Insurance.
(a)	It is unlawful for any insurance company doing business in this State to issue, sell, or dispose of any policy, contract, or certificate, or use applications in connection therewith, until the forms of the same have been submitted to and approved by the Commissioner of Insurance of North Carolina, and copies filed in the Insurance Department. If a policy form filing is disapproved by the Commissioner, the Commissioner may return the filing to the filer.  As used in this section, ‘policy form' includes endorsements, riders, or amendments to policies that have already been approved by the Commissioner.
(b)	As to group and blanket accident and health insurance and group life insurance policies issued and delivered to a trust outside of this State and covering persons resident in this State, the group certificates to be delivered or issued for delivery in this State shall be filed with and approved by the Commissioner pursuant to subsection (a) of this section."
Sec. 11.  Article 3 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-30.6.  Meaning  of terms ‘accident', ‘accidental injury', and ‘accidental means'.
(a)	This section applies to the provisions of all life insurance and accident and health insurance policies and annuities under this Chapter, subscriber contracts under Chapter 57 of the General Statutes, preferred provider arrangements under this Chapter and under Chapter 57 of the General Statutes, and health maintenance organization plans under Chapter 57B of the General Statutes.
(b)	‘Accident', ‘accidental injury', and ‘accidental means' shall be defined to imply ‘result' language and shall not include words that establish an accidental means test."
Sec. 12.  Article 32 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-360.  Automobile physical damage insurance.
(a)	Single interest or dual interest physical damage insurance may be written on nonfleet private passenger motor vehicles, as defined in G.S. 58-131.35A, that are used as collateral for loans made under Article 15 of Chapter 53 of the General Statutes, subject to the following conditions:
(1)	Such insurance may be written only on a motor vehicle on which there is a valid inspection sticker.
(2)	If a motor vehicle is already insured and the lender is named loss payee and that insurance continues in force, then no other physical damage insurance may be written.
(3)	Notification must be given orally and in writing to the borrower that he has the option to provide his own insurance coverage at any point during the term of the loan.
(4)	The creditor must have either a first or second lien on the motor vehicle to be insured.
(5)	The amount of insurance coverage may not exceed the lesser of (i) the principal amount of the loan plus allowable charges, excluding interest, plus two scheduled installment payments or (ii) the actual fair market value of the collateral at the time the insurance is written.
(6)	When a creditor accepts other collateral in addition to a motor vehicle as herein defined, the combined insurance on all collateral may not exceed the initial indebtedness of the loan.
(b)	Policy forms, rates, rating plans, and classifications for the insurance authorized by subsection (a) of this section shall be filed with the Commissioner in accordance with Articles 13C and 38 of this Chapter."
Sec. 13.  G.S. 58-54.24 reads as rewritten:
"§ 58-54.24.  cease and desist orders.
	(a)	Whenever the Commissioner, from evidence satisfactory to him, has reasonable grounds to believe that any person is violating or is about to violate G.S. 58-54.21, he may, after notice and opportunity for hearing, reduce his findings to writing and issue and cause to be served upon such person an order to cease and desist from violating G.S. 58-54.21.
	(b)	Until the expiration of the time allowed under G.S. 58-54.24A(a) for filing a petition for review, if no such petition has been duly filed within such time; or if a petition for review has been filed within such time, then until the transcript of the record in the proceeding has been filed in the Court, the Commissioner may at any time, upon such notice and in such manner as he considers proper, modify or set aside in whole or in part any order issued by him under this section.
	(c)	After the expiration of the time allowed for filing a petition for review, if no such petition has been duly filed within such time, the Commissioner may at any time, after notice and opportunity for hearing, reopen and alter, modify, or set aside, in whole or in part, any order issued by him under this section, whenever in his opinion conditions of fact or of law have so changed as to require such action or if the public interest requires."
Sec. 13.1.  Article 3C of Chapter 58 of the General Statutes is amended by adding the following new sections:
"§ 58-54.24A.  Judicial review of cease and desist orders.
	(a)	Any person required by an order of the Commissioner under G.S. 58-54.24 to cease and desist may obtain a review of such order by filing in the Superior Court of Wake County, within 30 days from the date of the service of such order, a written petition praying that the order of the Commissioner be set aside.  A copy of such petition shall be immediately served upon the Commissioner, and the Commissioner shall then immediately certify and file in the Court a transcript of the entire record in the proceeding, including all the evidence taken, and the order of the Commissioner.  Upon such filing of the petition and transcript the Court has jurisdiction of the proceeding and of the question determined therein, shall determine whether the filing of such petition shall operate as a stay of such order of the Commissioner, and has the power to make and enter upon the pleadings, evidence, and proceedings set forth in such transcript a decree modifying, affirming, or reversing the order of the Commissioner, in whole or in part.  The findings of the Commissioner as to the facts, if supported by substantial evidence, shall be conclusive.
	(b)	To the extent that the order of the Commissioner is affirmed, the Court shall thereupon issue its own order commanding obedience to the terms of such order of the Commissioner.  If either party applies to the Court for leave to adduce additional evidence, and satisfies the Court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the proceeding before the Commissioner, the Court may order such additional evidence to be taken before the Commissioner and to be adduced upon the hearing in such manner and upon such terms and conditions as the Court considers proper.  The Commissioner may modify his findings of fact, or make new findings by reason of the additional evidence so taken; and he shall file such modified or new findings which, if supported by substantial evidence, shall be conclusive; or shall file his recommendations, if any, for the modification or setting aside of his original order, with the return of such additional evidence.
	(c)	A cease and desist order issued by the Commissioner under G.S. 58-54.24 shall become final:
(1)	Upon the expiration of the time allowed for filing a petition for review if no such petition has been duly filed within such time; except that the Commissioner may thereafter modify or set aside his order to the extent provided in G.S. 58-54.24(b); or
(2)	Upon the final decision of the Court if the court directs that the order of the Commissioner be affirmed or the petition for review dismissed.
	(d)	No order of the Commissioner under this Article or order of a Court to enforce the same shall in any way relieve or absolve any person affected by such order from any liability under any other laws of this State.
"§ 58-54.24B.  Penalty.
	Any person who willfully violates a cease and desist order of the Commissioner under G.S. 58-54.24, after it has become final, and while such order is in effect, is subject to the provisions of G.S. 58-9.7.
"§ 58-54.24C.  Provisions of Article additional to existing law.
	The powers vested in the Commissioner by this Article are additional to any other powers to enforce any penalties, fines, or forfeitures authorized by law with respect to transacting the business of insurance without authority."
Sec. 14.  Section 16 of Chapter 430 of the 1987 Session Laws reads as rewritten:
"Sec. 16.  This act is effective upon ratification."
Sec. 15.  G.S. 58-614(c)(4) and 58-614(c)(6) are repealed.
Sec. 16.  G.S. 58-614(d) reads as rewritten:
"(d)	A fire and casualty insurance license shall not authorize an agent to sell accident and health insurance.  An agent must hold a life, accident and health insurance license or an accident and health insurance license to sell accident and health insurance.”
Sec. 17.  G.S. 58-614(e) reads as rewritten:
"(e)	A limited representative may receive qualification for one or more licenses without examination for the following kinds of insurance:
			(3)	Credit Life, Accident and Health
(4)	Credit
(5)	Travel Accident and Baggage
(6)	Motor Club
(7)	Dental Service "
Sec. 18.  G.S. 58-614 is amended by adding a new subsection to read:
"( d1)	A life, accident and health insurance license shall authorize an agent to sell variable contracts, provided that the licensee satisfies the commissioner that he has successfully completed Part I, NASD Securities Examination, or an alternative examination satisfactory to the Commissioner; and that he has complied with all securities registration requirements under State and federal law.”
Sec. 19.  G.S. 58-615(d)(2) reads as rewritten:
"(2)	All individual applicants for licensing as life, accident and health agents or as fire and casualty agents shall furnish evidence satisfactory to the Commissioner of successful completion of at least 40 hours of instruction, which shall in all cases include the general principles of insurance and any other topics that the Commissioner establishes by regulation; and which shall, in the case of life, accident and health insurance applicants, include the principles of life, accident, and health insurance and, in the case of fire and casualty insurance applicants, shall include instruction in fire and casualty insurance.  Any applicant who submits satisfactory evidence of having successfully completed an agent training course that has been approved by the Commissioner and that is offered by or under the auspices of a fire and casualty or life or health insurance company admitted to do business in this State or a professional insurance association shall be deemed to have satisfied the educational requirements of this subdivision.  The requirement in this subdivision for completion of 40 hours of instruction applies only to applicants for life, accident and health or fire and casualty insurance licenses.  The provisions of this subdivision also apply to applicants for accident and health insurance licenses; except that such applicants shall be required to successfully complete 20 hours of instruction.  Such instruction shall in all cases include the general principles of insurance and the principles of accident and health insurance."
Sec. 20.  G.S. 58-30.3 is amended by adding the following subsection:
"( c)	No insurer shall refuse to insure or refuse to continue to insure an individual; limit the amount, extent, or kind of coverage available to an individual; or charge an individual a different rate for the same coverage, because of the race, color, or national or ethnic origin of that individual.  This subsection supplements the provisions of G.S. 58-54.4(7) and also applies to entities subject to Chapter 57 and 57B of the General Statutes."
Sec. 21.  G.S. 58-42.1 reads as rewritten:
"§ 58-42.1. Twisting with respect to insurance policies; penalties.
No insurer shall make or issue, or cause to be issued, any written or oral statement that willfully misrepresents or willfully makes an incomplete comparison as to the terms, conditions, or benefits contained in any policy of insurance for the purpose of inducing or attempting to induce a policyholder in any way to terminate or surrender, exchange, or convert any insurance policy.  Any person who violates this section is subject to the provisions of G.S. 58-9.7, 58-37 through 58-39, and 58-44.4.”
Sec. 22.  G.S. 58-173.8(a) reads as rewritten:
"(a)	Any person having an insurable interest in insurable property, may, on or after the effective date of the plan of operation, be entitled to apply to the Association for such coverage and for an inspection of the property. Such application may be made on behalf of the applicant by a broker or agent authorized by him.  Each application shall contain a statement as to whether or not there are any unpaid premiums due from the applicant for essential property insurance on the property.
The term ‘insurable interest' as used in this subsection shall be deemed to include any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage."
Sec. 23.  G.S. 58-546(a)(11) reads as rewritten:
    	" (11)	‘Intermediate care facility' shall be defined in accordance with the terms of G.S. 131E-176(14b)."
Sec. 24.  G.S. 97-133(a)(3) reads as rewritten:
"(3)	Administer a fund, to be known as the North Carolina Self-Insurance Guaranty Fund, which shall receive the assessments required in subdivision (2) of this subsection.  Once the Fund reaches one million dollars ($1,000,000), no further assessments shall be made except initial assessments of new member self-insurers that are required to be made in subdivision (2)d. of this subsection.  Assessments may be subsequently made only to maintain the Fund at a level of one million dollars ($1,000,000).  In its discretion, the Board may determine that the assets of the Fund should be segregated, or, that a separate accounting shall be made, in order to identify that portion of the Fund which represents assessments paid by individual self-insurers and that portion of the Fund which represents assessments paid by group self-insurers.  If the Board determines to segregate the Fund in this manner, the Association shall thereafter pay covered claims against individual member self-insurers from that portion of the Fund which represents assessments against individual self-insurers and shall thereafter pay covered claims against group member self-insurers from that portion of the Fund which represents assessments against group self-insurers.  The cost of administration incurred by the Association shall be borne by the Fund and the Association is authorized to secure reinsurance and bonds and to otherwise invest the assets of the Fund to effectuate the purpose of the Association, subject to the approval of the Commissioner.  All earnings from investment of Fund assets shall be placed in or credited to the Fund.
	The Association may purchase primary excess insurance from an insurer licensed by the Commissioner for the appropriate lines of authority to defray its exposure to loss occasioned by the default of one of its members.  The terms of any excess insurance so purchased shall be limited to providing coverage of liabilities which exceed the Fund's assets after the payment by member self-insurers of the maximum post-insolvency assessment provided in subdivision (c)(1) of this section  herein and the Association shall fund any such purchase by levying a special assessment on its members for this purpose or by application of any unencumbered earnings of the Fund or any other available funds.  The Association may obtain from each member any information the Association may reasonably require in order to facilitate the securing of this primary excess insurance.  The Association shall establish reasonable safeguards designed to insure that information so received is used only for this purpose and is not otherwise disclosed;".
Sec. 25.  G.S. 58-124.24 reads as rewritten:
"§ 58-124.24. Appeal to Commissioner from decision of Bureau.
Any member of the Bureau may appeal to the Commissioner from any decision of the Bureau. After a hearing held on not less than 10 days' written notice to the appellant and to the Bureau, the Commissioner shall issue an order approving the decision or directing the Bureau to reconsider the decision.  In the event the Commissioner directs the Bureau to reconsider the decision and the Bureau fails to take action satisfactory to the Commissioner, the Commissioner shall make such order as he may see fit."
Sec. 26.  G.S. 58-9(1) reads as rewritten:
"(1)	See that all laws of this State that he is statutorily responsible for administering are faithfully executed; and to that end he shall have power and authority to make rules in accordance with Chapter 150B of the General Statutes, to enforce, carry out and make effective the provisions of those laws.  He also has the authority to make such further rules, not contrary to those laws which will prevent persons subject to his regulatory authority from engaging in practices injurious to the public."
Sec. 27.  Article 2 of Chapter 58 of the General Statutes is amended by adding new sections to read:
"§ 58-9.8.  Designated hearing officers.
	In any contested case under this Chapter, Chapters 57, 57B, or 85C of the General Statutes, Article 9B or 9C of Chapter 66 of the General Statutes, or Article 9A of Chapter 143 of the General Statutes, the Commissioner may designate a member of his staff to serve as a hearing officer.  When the Commissioner is unable or elects not to hear a contested case and elects not to designate a hearing officer to hear a contested case, he shall apply to the director of the Office of Administrative Hearings for the designation of an Administrative Law Judge to preside at the hearing of a contested case.  Upon receipt of the application, the Director shall, without undue delay, assign an Administrative Law Judge to hear the case.
"§ 58-9.9.  Restraining orders; criminal convictions.
	(a)	Whenever it appears to the Commissioner that any person has violated, is violating, or threatens to violate any provision of this Chapter, Chapters 57, 57B, or 85C of the General Statutes, Article 9B or 9C of Chapter 66 of the General Statutes, or Article 9A of Chapter 143 of the General Statutes, he may apply to the Superior Court of Wake County for a restraining order and injunction to restrain such violation.  If upon application the Court finds that any provision of said statutes has been violated, is being violated, or a violation thereof is threatened, the Court shall issue an order restraining and enjoining such violations; and such relief may be granted regardless of whether criminal prosecution is instituted under any provision of law.
	(b)	The conviction in any court of competent jurisdiction of any licensee for any criminal violation of the statutes referred to in subsection (a) of this section automatically has the effect of suspending the license of that person until such time that the license is reinstated by the Commissioner.  As used in this subsection, ‘conviction' includes an adjudication of guilt, a plea of guilty, and a plea of nolo contendere.
"§ 58-9.10.  License surrenders.
	This section applies to persons or entities licensed under this Chapter, Chapters 57, 57B, or 85C of the General Statutes, Article 9B or 9C of Chapter 66 of the General Statutes, or Article 9A of Chapter 143 of the General Statutes.  When a licensee is accused of any act, omission, or misconduct that would subject the license to suspension or revocation, the licensee, with the consent and approval of the Commissioner, may surrender the license for a period of time established by the Commissioner.  A person or entity who surrenders a license shall not thereafter be eligible for or submit any application for licensure during the period of license surrender."
Sec. 28.  G.S. 58-618(c) reads as rewritten:
"(c)	Whenever the Commissioner denies an initial application for a license, he shall notify the applicant and advise, in writing, the applicant of the reasons for the denial of the license.  Within 30 days of receipt of notification the applicant may make written demand upon the Commissioner for a hearing to determine the reasonableness of the Commissioner's action.  Such hearing shall be scheduled within 30 days from the date of receipt of the written demand."
Sec. 29.  G.S. 66-49.14 reads as rewritten:
"§ 66-49.14. Hearing on denial of license.
Whenever the Commissioner denies an initial application for a license, he shall notify the applicant and advise, in writing, the applicant of the reasons for the denial or nonrenewal of the license.  Within 30 days of receipt of notification the applicant may make written demand upon the Commissioner for a hearing to determine the reasonableness of the Commissioner's action.  Such hearing shall be scheduled within 30 days from the date of receipt of the written demand."
Sec. 30.  G.S. 85C-18 reads as rewritten:
"§ 85C-18. Notice and hearing before refusal, suspension, revocation, etc., of license.
(a)	No license shall be suspended, revoked, or renewal refused except on reasonable notice and opportunity to be heard afforded the person licensed or renewal thereof.
(b)	Whenever the Commissioner denies an initial application for a license, he shall notify the applicant and advise, in writing, the applicant of the reasons for the denial of the license.  Within 30 days of receipt of notification the applicant may make written demand upon the Commissioner for a hearing to determine the reasonableness of the Commissioner's action.  Such hearing shall be scheduled within 30 days from the date of receipt of the written demand."
Sec. 31.  G.S. 58-182.3, 58-182.4, 58-182.5, and 58-182.7 are each amended by substituting ", 58-182.1, and 58-182.9”for "and 58-182.1".
Sec. 32.  Article 20 of Chapter 58 of the General Statutes is amended by adding new sections to read:
"§ 58-182.9.  Deposits of foreign life insurance companies.
	In addition to other requirements of this Chapter, all foreign life insurance companies shall deposit securities, as specified in G.S. 58-182.3, having a market value of one hundred thousand dollars ($100,000) as a prerequisite of doing business in this State.  All foreign life insurance companies shall deposit an additional one hundred thousand dollars ($100,000) where such companies cannot show three years of net operational gains prior to admission.  Foreign life insurance companies that are licensed on or before the effective date of this section shall have one year from that date to comply with this section.
"§ 58-182.10.  Deposits of capital and surplus by domestic insurance companies.
	(a) In addition to other requirements of this Chapter, all domestic stock insurance companies shall deposit their required statutory capital with the Department.  Such deposits shall be under the exclusive control of the Department, for the protection of all policyholders wheresoever situated.
	(b) In addition to other requirements of this Chapter, all domestic mutual insurance companies shall deposit at least fifty percent (50%) of their minimum required surplus with the Department, with the amount of the deposit to be determined by the Commissioner.  Such deposits shall be under the exclusive control of the Department, for the protection of all policyholders wheresoever situated.
	(c) Domestic insurance companies that are licensed on or before the effective date of this section shall have one year from that date to comply with this section."
Sec. 33.  G.S. 58-79.1(c) is amended by adding a new subdivision to read:
    	" (11)	Electronic and mechanical machines constituting a data processing and accounting system if the cost of such system is at least twenty-five thousand dollars ($25,000), but not more than two percent (2%) of its admitted assets, which cost shall be amortized in full over a period not to exceed 10 calendar years."
Sec. 34.  G.S. 58-16 reads as rewritten:
"§  58-16. Examinations to be made.
Before granting certificates of authority to an insurance company to issue policies or make contracts of insurance the Commissioner shall be satisfied, by such examination and evidence as he sees fit to make and require, that the company is otherwise duly qualified under the laws of the State to transact business therein. As often as once in three years he shall personally or by his deputy visit each domestic insurance company and thoroughly inspect and examine its affairs, especially as to its financial condition and ability to fulfill its obligations and whether it has complied with the laws. He shall also make an examination of any such company whenever he deems it prudent to do so, or upon the request of five or more of the stockholders, creditors, policyholders, or persons pecuniarily interested therein, who shall make affidavit of their belief, with specifications of their reasons therefor, that the company is in an unsound condition. Whenever the Commissioner deems it prudent for the protection of policyholders in this State he shall in like manner visit and examine, or cause to be visited and examined by some competent person appointed by him for that purpose, any foreign insurance company applying for admission or already admitted to do business in this State. Any domestic or foreign company examined under this section shall pay the proper charges incurred in the examination, including the expenses of the Commissioner or his deputy and the expenses and compensation of his assistants employed therein. The refusal of any insurer to submit to examination, or the refusal or failure of an insurer to pay the expenses of examination upon presentation of a bill therefor by the Commissioner, shall be grounds for the revocation or refusal of a license. The Commissioner is authorized to make public any such revocation or refusal of license as he may determine and to give his reasons therefor. The Commissioner shall promptly institute a civil action to recover the expenses of examination against any insurer which refuses or fails to pay. For these purposes the Commissioner or his deputy or persons making the examination shall have free access to all the books and papers of the  insurance company that relate to its business, and to the books and papers kept by any of its agents, or to the books and papers of any affiliated or subsidiary corporations or partnerships that affect the affairs or financial condition of said company and may summon, administer oaths to, and examine as witnesses, the directors, officers, agents, and trustees of any such company, and any other person, affiliate or subsidiary in relation to its affairs, transactions, and condition."
Sec. 35.  Article 2 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-21.4.  CPA audits of financial statements.
The Commissioner is authorized to adopt rules to provide for audits and opinions of insurers' financial statements by certified public accountants.  Such rules shall be in accordance with the NAIC model rule that requires audited financial reports, as amended."
Sec. 36.  G.S. 85C-11 reads as rewritten:
"§ 85C-11. Qualification for professional bondsmen and runners.
Before license can issue to an applicant permitting him to act as a professional bondsman or runner, he must furnish the Commissioner a complete set of his fingerprints and a recent passport size full-face photograph of himself. The applicant's fingerprints shall be certified by an authorized law-enforcement officer.
Every applicant for license as a professional bondsman or runner before being issued such license shall satisfy the Commissioner that he:
(1)	Is 18 years of age or over;
(2)	Is a resident of this State;
(3)	Is a person of good moral character and has not been convicted of a felony or any crime involving moral turpitude;
(4)	Has knowledge, training, or experience of sufficient duration and extent to reasonably satisfy the Commissioner that he possesses the competence necessary to fulfill the responsibilities of a licensee;
(5)	Has no outstanding bail bond obligations;
(6)	Is not or has not been in violation of any provision of this Chapter or of Article 26 of Chapter 15A of the General Statutes or of any similar provision of law of any other state;
(7)	Has not been in any manner disqualified under the laws of this State or any other state to engage in the bail bond business."
Sec. 37.  G.S. 85C-17(a) is amended by adding the following new subdivisions:
    	" (12)	For cheating on an examination for a license under this Chapter.
(13)	For entering into any business association or agreement with any person, which person is at that time found by the Commissioner to be in violation of any of the bail bond laws of this State, or which person has been in any manner disqualified under the bail bond laws of any other state, whereby such person has any direct or indirect financial interest in the bail bond business of the licensee or applicant.
(14)	For knowingly aiding or abetting others to evade or violate the provisions of this Chapter."
Sec. 38.  G.S. 85C-17(b) reads as rewritten:
"(b)	The Commissioner, in addition to or in lieu of revoking or suspending a license in accordance with the provisions of this Chapter, may, in any one proceeding, by order, require the licensee to pay to the school fund in the county of his residence a civil penalty in the sum of five hundred dollars ($500.00) for each offense. Upon failure of such licensee to pay penalty within 20 days after the mailing of such order, postage prepaid, registered and addressed to the last known place of business of such licensee, unless such order is stayed by an  order of the court of competent jurisdiction, the Commissioner may revoke the license of such licensee or may suspend the same for such period as he may determine."
Sec. 39.  G.S. 85C-36 reads as rewritten:
"§ 85C-36. Limit on principal amount of bond to be written by professional bondsman.
No professional bondsman shall become liable on any bond or multiple of bonds for any one individual that totals more than one-fourth of the value of the securities deposited with the Commissioner at that time, until final termination of liability on such bond or multiple of bonds."
Sec. 40.  G.S. 85C-34 reads as rewritten:
"§ 85C-34. Monthly report required.
Each professional bail bondsman and surety bondsman shall file with the Commissioner of Insurance a written report in form prescribed by the Commissioner regarding all bail bonds on which he is liable as of the  first day of each month showing (i)	each individual bonded, (ii) the date such bond was given, (iii) the principal sum of the bond, (iv) the State or local official to whom given, and (v) the fee charged for the bonding service in each instance. Such report shall be filed on or before the fifteenth day of each month. Within the same time, a copy of this written report must also be filed with the clerk of superior court in any county in which he is obligated on bail bonds."
Sec. 41.  G.S. 143-143.11 is amended by adding a new subsection to read:
"( h)	To obtain a license under this Article, a person must pass an examination prescribed by the Board that is based on the North Carolina Manufactured/Mobile Home Regulations and Administrative Procedures required to enforce the Codes."
Sec. 42.  G.S. 143-143.13(c) reads as rewritten:
"(c)	In addition to the authority to deny, suspend, or revoke a license under this Article, the Board also has the authority to impose a five hundred dollar ($500.00) civil penalty per violation upon any person violating the provisions of this Article.”
Sec. 43.  G.S. 58-173.7 reads as rewritten:
"§ 58-173.7. Directors to submit plan of operation to Commissioner; review and approval; amendments.
Within 90 days after April 17, 1969, the directors of the Association shall submit to the Commissioner for his review and approval, a proposed plan of operation. Such proposed plan shall set forth the number, qualifications, terms of office, and manner of election of the members of the board of directors, and shall grant proper credit annually to each member of the Association for essential property insurance voluntarily written in the beach area and shall provide for the efficient, economical, fair and nondiscriminatory administration of the Association and for the prompt and efficient provision of essential property insurance in the beach areas of North  Carolina so as to promote orderly community development in those areas and to provide means for the adequate maintenance and improvement of the property in such areas. Such proposed plan may include a preliminary assessment of all members for initial expenses necessary to the commencement of operation; the establishment of necessary facilities; management of the Association; plan for the assessment of members to defray losses and expenses; underwriting standards; procedures for the acceptance and cession of reinsurance; procedures for determining the amounts of insurance to be provided to specific risks; time limits and procedures for processing applications for insurance and for such other provisions as may be deemed necessary by the Commissioner to carry out the purposes of this Article.
The proposed plan shall be reviewed by the Commissioner and approved by him if he finds that such plan fulfills the purposes provided by G.S. 58-173.1 of this Article. In the review of the proposed plan the Commissioner may, in his discretion, consult with the directors of the Association and may seek any further information which he deems necessary to his decision. If the Commissioner approves the proposed plan, he shall certify such approval to the directors and the plan shall become effective 10 days after such certification. If the Commissioner disapproves all or any part of the proposed plan of operation he shall return the same to the directors with his written statement for the reasons for disapproval and any recommendations he may wish to make. The directors may alter the plan in accordance with the Commissioner's recommendation or may within 30 days from the date of disapproval return a new plan to the Commissioner. Should the directors fail to submit a proposed plan of operation within 90 days of April 17, 1969, or a new plan which is acceptable to the Commissioner, or accept the recommendations of the Commissioner within 30 days after his disapproval of the plan, the Commissioner shall promulgate and place into effect a plan of operation certifying the same to the directors of the Association. Any such plan promulgated by the Commissioner shall take effect 10 days after certification to the directors: Provided, however, that until a plan of operation is in effect, pursuant to the provisions of this Article, any existing temporary placement facility may be continued in effect on a mandatory basis on such terms as the Commissioner may determine.
The directors of the Association may, subject to the approval of the Commissioner, amend the plan of operation at any time. The Commissioner may review the plan of operation at any time he deems expedient or prudent, but not less than once in each calendar year. After review of such plan the Commissioner may amend the plan after consultation with the directors and upon certification to the directors of such amendment.
The Commissioner may designate the kinds of property insurance policies on principal residences to be offered by the association, including insurance policies under Article 12B of this Chapter, and the commission rates to be paid to agents or brokers for these policies, if he finds, after a hearing held in accordance with G.S. 58-9.2, that the public interest requires the designation. The provisions of Chapter 150B do not apply to any procedure under this paragraph, except that G.S. 150B-39 and G.S. 150B-41 shall apply to a hearing under this subsection. Within 30 days after the receipt of notification from the Commissioner of a change in designation pursuant to this paragraph, the association shall submit a revised plan and articles of association for approval in accordance with this section.
As used in this section, ‘plan of operation' includes all rules, practices, and procedures of the Association.”
Sec. 44.  G.S. 58-173.21 is amended by adding a new subsection to read:
"( d)	As used in this section, ‘FAIR Plan' and ‘articles of association' include all rules, practices, and procedures of the association created pursuant to this Article."
Sec. 45.  Within 30 days after the effective date of this act, the North Carolina Joint Underwriting and Insurance Underwriting Associations shall file, with the Commissioner of Insurance for his approval, copies of all rules, practices, and procedures that are not contained within their respective plans of operation or other documents that have already been approved by the Commissioner.
Sec. 46.  G.S. 58-56.2(b) reads as rewritten:
"(b)	Whenever the Commissioner denies an initial application for a license, he shall notify the applicant and advise, in writing, the applicant of the reasons for the denial of the license.  Within 30 days of receipt of notification the applicant may make written demand upon the Commissioner for a hearing to determine the reasonableness of the Commissioner's action.  Such hearing shall be scheduled within 30 days from the date of receipt of the written demand."
Sec. 47.  Article 18A of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-173.16B.  New programs or coverages; penalty for noncompliance.
	(a)	Unless specifically waived by the Commissioner, all new programs or coverages shall be made available by the Association to policyholders or applicants no later than 30 days after the effective date of any statutory or regulatory requirement or within 30 days of the Commissioner's approval of any program or coverage filed by the North Carolina Rate Bureau, by the Insurance Services Office, or by any similar or successor entity.
	(b)	If the Association fails to comply with subsection (a) of this section, the Commissioner shall impose a civil penalty of five hundred dollars ($500.00) for each policy issued in violation of subsection (a) of this section, the clear proceeds of which penalty shall be forwarded to the General Fund.  Any penalty imposed under this section shall be absorbed by the member companies of the Association and shall not be passed on to any policyholders."
Sec. 48.  Article 18B of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-173.32.  New programs or coverages; penalty for noncompliance.
	(a)	Unless specifically waived by the Commissioner, all new programs or coverages shall be made available by the Association to policyholders or applicants no later than 30 days after the effective date of any statutory or regulatory requirement or within 30 days of the Commissioner's approval of any program or coverage filed by the North Carolina Rate Bureau, by the Insurance Services Office, or by any similar or successor entity.
	(b)	If the Association fails to comply with subsection (a) of this section, the Commissioner shall impose a civil penalty of five hundred dollars ($500.00) for each policy issued in violation of subsection (a) of this section, the clear proceeds of which penalty shall be forwarded to the General Fund.  Any penalty imposed under this section shall be absorbed by the member companies of the Association and shall not be passed on to any policyholders."
Sec. 49.  Article 17  of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-150.1.  Amendments to documents.
	Any change in or amendment to any document required to be filed under G.S. 58-150 shall be promptly filed with the Commissioner."
Sec. 50.  G.S. 58-73 reads as rewritten:
"§ 58-73. Manner of creating such corporations.
The procedure for organizing such corporations is as follows: The proposed incorporators, not less than 10 in number, a majority of whom must be residents of the State, shall subscribe articles of association setting forth their intention to form a corporation; its proposed name, which must not so closely resemble the name of an existing corporation doing business under the laws of this State as to be likely to mislead the public, and must be approved by the Commissioner of Insurance; the class of insurance it proposes to transact and on what business plan or principle; the place of its location within the State, and if on the stock plan, the amount of its capital stock. The words ‘insurance company,' ‘insurance association,' or ‘insurance society' or ‘life' or ‘casualty' or ‘indemnity,' or an acceptable alternative approved by the Commissioner, must be a part of the title of any such corporation”. The certificate of incorporation must be subscribed and sworn to by the incorporators before an officer authorized to take acknowledgment of deeds, who shall forthwith certify the certificate of incorporation, as so made out and signed, to the Commissioner of Insurance of the State at his office in the City of Raleigh. The Commissioner of Insurance shall examine the certificate, and if he approves of it and finds that the requirements of the law have been complied with, shall certify such facts, by certificate on such articles, to the Secretary of State. Upon the filing in the office of the Secretary of State of the certificate of incorporation and attached certificates, and the payment of a charter fee in the amount required for private corporations, and the same fees to the Secretary of State, the Secretary of State shall cause the certificate and accompanying certificates to be recorded in his office, and shall issue a certificate in the following form:
Be it known that, whereas (here the names of the subscribers to the articles of association shall be inserted) have associated themselves with the intention of forming a corporation under the name of (here the name of the corporation shall be inserted), for the purpose (here the purpose declared in the articles of association shall be inserted), with a capital (or with a permanent fund) of (here the amount of capital or permanent fund fixed in the articles of association shall be inserted), and have complied with the provisions of the statute of this State in such case made and provided, as appears from the following certified articles of association: (here copy articles of association and accompanying certificates). Now, therefore, I (here the name of the Secretary shall be inserted), Secretary of State, hereby certify that (here the names of the subscribers to the articles of association shall be inserted), their associates and successors, are legally organized and established as, and are hereby made, an existing corporation under the name of (here the name of the corporation shall be inserted), with such articles of association, and have all the powers, rights, and privileges and are subject to the duties, liabilities, and restrictions which by law appertain thereto.
Witness my official signature hereunto subscribed, and the seal of  the State of North Carolina hereunto affixed, this the ........ day of ........, in the year ...... (in these blanks the day, month, and year of execution of this certificate shall be inserted; and in the case of purely mutual companies, so much as relates to capital stock shall be omitted).
The Secretary of State shall sign the certificate and cause the seal of the State to be affixed to it, and such certificate of incorporation and certificate of the Secretary of State has the effect of a special charter and is conclusive evidence of the organization and establishment of the corporation. The Secretary of State shall also cause a record of his certificate to be made, and a certified copy of this record may be given in evidence with the same effect as the original certificate.
Any change in or amendment to the articles of incorporation, charter, or bylaws shall be promptly filed with the Commissioner."
Sec. 51.  G.S. 58-260.3 is amended by adding the following subsection:
"( h)	In the event of the insolvency of the employer or insurance fiduciary, any person insured who has incurred medical or hospital costs shall have a lien upon the assets thereof for such costs, which lien is prior to all other liens that can be acquired against such assets."
Sec. 52.  Article 27 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-260.7.  Approval of precertification practices.
(a)	This section applies to all accident and health insurers under this Chapter, all third party administrators and preferred provider arrangements, all entities subject to Chapters 57 and 57B of the General Statutes, and all self-funded health benefit plans.
(b)	The Commissioner shall adopt reasonable rules governing precertification practices and forms and utilization review organizations affiliated with the entities subject to this section."
Sec. 53.  Within one year after the effective date of Section 52 of this act, the Commissioner of Insurance shall give notice of hearing under G.S. 150B-12 for the rules required by Section 52 of this act.
Sec. 54.  G.S. 58-626(b) reads as rewritten:
"(b)	No insurer, agent, broker, or limited representative shall knowingly charge to or demand or receive from an applicant for insurance any money or other consideration in return for the processing of applications or other forms or for the rendering of services associated with a contract of insurance, which money or other consideration is in addition to the premium for such contract, unless the applicant consents in writing before any services are rendered."
Sec. 55.  G.S. 58-77(5)d, 58-124.28, 58-131.60, and 58-472(a) are each amended by substituting "six adjacent counties in this State”for "five counties in this State that are adjacent to the county in which its home office is located".
Sec. 56.  G.S. 20-279.32 reads as written:
"§ 20-279.32.  Exceptions.
This Article, except its provisions as to the filing of proof of financial responsibility by a common carrier and its drivers, does not apply to any vehicle operated under a permit or certificate of convenience or necessity issued by the North Carolina Utilities Commission, or by the Interstate Commerce Commission, if public liability and property damage insurance for the protection of the public is required to be carried upon it.  This Article does not apply to any motor vehicle owned by the State of North Carolina, nor does it apply to the operator of a vehicle owned by the State of North Carolina who becomes involved in an accident while operating the state-owned vehicle if the Commissioner determines that the vehicle at the time of the accident was probably being operated in the course of the operator's employment as an employee or officer of the State.  This Article does not apply to any motor vehicle owned by a county or municipality of the State of North Carolina, nor does it apply to the operator of a vehicle owned by a county or municipality of the State of North Carolina who becomes involved in an accident while operating such vehicle in the course of the operator's employment as an employee or officer of the county or municipality.  This Article does not apply to the operator of a vehicle owned by a political subdivision, other than a county or municipality, of the State of North Carolina who becomes involved in an accident while operating such vehicle if the Commissioner determines that the vehicle at the time of the accident was probably being operated in the course of the operator's employment as an employee or officer of the subdivision providing that the Commissioner finds that the political subdivision has waived any immunity it has with respect to such accidents and has in force an insurance policy or other method of satisfying claims which may arise out of the accident.  This Article does not apply to any motor vehicle owned by the federal government, nor does it apply to the operator of a motor vehicle owned by the federal government who becomes involved in an accident while operating the government-owned vehicle if the Commissioner determines that the vehicle at the time of the accident was probably being operated in the course of the operator's employment as an employee or officer of the federal government."
Sec. 57.  G.S. 58-251.2(a) is amended by deleting the third paragraph, which begins with "An insurer”and ends with "in force".
Sec. 58.  G.S. 58-254.7 is amended by designating the present five paragraphs as subsections (a) through (e) and by adding a new subsection (f) to read:
"( f)	An insurer may increase rates chargeable on policies subject to this section, other than noncancellable policies, with the approval of the Commissioner if the Commissioner finds that such rates are not excessive, not inadequate, and not unfairly discriminatory; and exhibit a reasonable relationship to the benefits provided by such policies.  Such approved rates shall be guaranteed by the insurer, as to the policyholders thereby affected, for a period of not less than 12 months; or as an alternative to the insurer giving such guarantee, such approved rates may be applicable to all policyholders at one time if the insurer chooses to apply for such relief with respect to such policies no more frequently than once in any 12-month period.  Such rates shall be applicable to all policies of the same type; provided that no rate increase may become effective for any policy unless the insurer has given the policyholder written notice of the rate revision 45 days prior to the effective date of the revision.  The policyholder thereafter must pay the revised rate in order to continue the policy in force.  The Commissioner may promulgate reasonable rules, after notice and hearing, to require the submission of supporting data and such information as is deemed necessary to determine whether such rate revisions meet these standards."
Sec. 59.  G.S. 57-4 is amended by rewriting the second sentence of the second paragraph to read:
"The Commissioner may refuse approval if he finds that such rates are excessive, inadequate, or unfairly discriminatory; or do not exhibit a reasonable relationship to the benefits provided by such contracts."
Sec. 60  G.S. 57-4.1 is amended by inserting the following after the first sentence:
“Such rate revision or new rate schedule shall be guaranteed by the insurer, as to the contract and certificate-holders thereby affected, for a period of not less than 12 months; or with respect to individual subscriber contracts as an alternative to giving such guarantee, such rate revision or new rate schedule may be made applicable to all individual contracts at one time if the corporation chooses to apply for such relief with respect to such contracts no more frequently than once in any 12-month period.  Such rate revision or new rate schedule shall be applicable to all contracts of the same type; provided that no rate revision or new rate schedule may become effective for any contract-holder unless the corporation has given written notice of the rate revision or new rate schedule 45 days prior to the effective date of such revision or new rate schedule.  The contract-holder thereafter must pay the revised rate or new rate schedule in order to continue the contract in force.  The Commissioner may promulgate reasonable rules, after notice and hearing, to require the submission of supporting data and such information as is deemed necessary to determine whether such rate revisions meet these standards."
Sec. 61.  G.S. 57B-8(b)(2) is amended by deleting the period at the end and by adding the following:
"; and must exhibit a reasonable relationship to the benefits provided by the evidence of coverage.  Such premiums or any revisions thereto shall be guaranteed, as to every enrollee covered under the same category of enrollee coverage, for a period of not less than 12 months; or as an alternative to giving such guarantee with respect only to nongroup enrollee coverage, such premium or premium revisions may be made applicable to all similar category of enrollee coverage at one time if the health maintenance organization chooses to apply for such premium revision with respect to such categories of coverages no more frequently than once in any 12-month period.  Such premium revision shall be applicable to all categories of nongroup enrollee coverage of the same type; provided that no premium revision may become effective for any category of enrollee coverage unless the corporation has given written notice of the premium revision 45 days prior to the effective date of such revision.  The enrollee thereafter must pay the revised premium in order to continue the contract in force.  The Commissioner may promulgate reasonable rules, after notice and hearing, to require the submission of supporting data and such information as is deemed necessary to determine whether such rate revisions meet these standards."
Sec. 62.  G.S. 58-576(b) reads as rewritten:
"(b)	‘Retrospective compensation agreement' means any such arrangement, agreement, or contract having as its purpose the actual or constructive retention by a domestic insurer of a fixed proportion of the gross premiums, with the balance of the premiums, retained actually or constructively by the agent or the producer of the business, who assumes to pay therefrom all losses, all subordinate commissions, loss adjustment expenses and his profit, if any, with other provisions of such arrangement, agreement, or contract auxiliary or incidental to such purpose."
Sec. 63.  G.S. 58-577(a) reads as rewritten:
"§ 58-577.  Management contracts.
(a)	All agreements or contracts under which any person is delegated management duties or control of a domestic insurer, or which transfer a substantial part of any major function of a domestic insurer such as adjustment of losses, production of business, investment of assets, or general servicing of the insurer's business must be filed with the Commissioner on or before the effective date of such contract or agreement."
Sec. 64.  G.S. 58-579 reads as rewritten:
"§ 58-579.  Supplement to financial statement.
Any domestic insurer that has a management contract shall file with its financial statement as supplement on forms prescribed by the Commissioner which discloses the following:  Salaries, commissions, or any valuable consideration paid to each officer and director of the management company or to any shareholder who owns, directly or indirectly, ten percent (10%) of the shares of either the managed insurer or the management company.  Any changes in the officers or directors of the managing company are to be reported to the Commissioner."
Sec. 65.  The title of Article 1 of Chapter 118 of the General Statutes and G.S. 118-1 and G.S. 118-2 through 118-5 read as rewritten:
"ARTICLE 1.
"Fund Derived from Insurance Companies.
"§ 118-1.  Insurance companies to report premiums collected.
Every insurance company, corporation, or association doing business in any town or city in North Carolina that has, or may hereafter have, a regularly organized fire department under the control of the mayor and city council or other governing body of said town or city, and which has in serviceable condition for fire duty apparatus and equipment amounting in value to one thousand dollars ($1,000) or more, and which enforces the fire laws to the satisfaction of the Insurance Commissioner, shall return to the Insurance Commissioner of the State of North Carolina a just and true account of all premiums collected and received from all fire and lightning insurance business done within the limits of such towns and cities during the year ending December 31, or such portion thereof as it may have transacted such business in such towns and cities.  Such companies, corporations, or associations shall make said returns within 60 days from and after the thirty-first day of December of each year.
"§ 118-2.  Tax on receipts for premiums.
Every insurance company, corporation, or association as aforesaid shall, within 75 days from December 31 of each year, deliver and pay to the State Insurance Commissioner the sum of fifty cents (50¢) out of and from every one hundred dollars ($100.00), and at that rate, upon the amount of all premiums written on fire and lightning policies covering property situated within the limits of such towns and cities during the year ending December 31, or for such portion of each year as said company, corporation, or association shall have done business in said towns and cities.
"§ 118-3.  Insurance Commissioner to investigate returns and collect tax.
Every such company, corporation, or association shall make accurate returns of all business done, on fire insurance, covering property situated within the limits of such towns and cities; and in case any fraud, misrepresentation, or mistake of any returns, as provided for in this Article, be apparent, it shall be the duty of the Insurance Commissioner to investigate such returns and collect the amount which he shall find to be due.
"§ 118-4.  Penalty for failure to report and pay tax.
Every insurance company, association, or corporation aforesaid which shall knowingly or willfully fail or neglect to report or pay over any of the moneys due on premiums as aforesaid, at the times and in the manner specified in this Article, or shall be found upon examination to have made a false return of business done by it, shall, after notice and opportunity for a hearing, for each offense forfeit and pay to the Commissioner of Insurance the sum of one thousand dollars ($1,000) for the use and benefit of the fire department of such town or city.
"§ 118-5.  Disbursement of funds by Insurance Commissioner.
The Insurance Commissioner shall deduct the sum of three percent (3%) from the money so collected from the insurance companies, corporations, or association, as aforesaid, and pay the same over to the treasurer of the State Firemen's Association for general purposes.  The Insurance Commissioner shall deduct the sum of two percent (2%) from the money so collected from the insurance companies, corporations, or associations, as aforesaid, and retain the same in the budget of the Department of Insurance for the purpose of administering the disbursement of funds by the board of trustees in accordance with the provisions of G.S. 118-7.  The remainder of the money so collected from the insurance companies, corporations, or associations, as aforesaid, doing business in the towns and cities in the State having or that may hereafter have organized fire departments as provided in this Article, said Insurance Commissioner shall pay to the treasurer of each town or city to be held by him as a separate and distinct fund, and he shall immediately pay the same to the treasurer of the local board of trustees upon his election and qualification, for the use of the board of trustees of the firemen's local relief fund in each town or city, which board shall be composed of five members, residents of said city or town as hereinafter provided for, to be used by it for the purposes as named in G.S. 118.7."
Sec. 66.  This act is effective upon ratification.