GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

H	1 

HOUSE BILL 434*

Short Title:  Insurance Amendments.	(Public)
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Sponsors: Representative Hardaway.
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Referred to:  Commerce.
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April 1, 1991

A BILL TO BE ENTITLED
AN ACT TO MAKE VARIOUS SUBSTANTIVE AMENDMENTS TO THE INSURANCE LAWS AND OTHER LAWS RELATED TO THE DEPARTMENT OF INSURANCE.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 58-36-50 reads as rewritten:
"§ 58-36-50.  Limitation; farmers mutual policy forms.
(a)	Except as provided in subsections (c) and (d) of this section, nothing in this Article shall apply to any town or county farmers mutual fire insurance association restricting its operations to not more than six adjacent counties in this State, or to domestic insurance companies now doing business in this State on the assessment plan.
(b)	Nothing in this Article applies to fraternal benefit societies or orders that are subject to Articles 24 and 25 of this Chapter.
(c)	Entities referred to in subsection (a) of this section must use the policy forms promulgated pursuant to this Article for the kinds of insurance the companies are permitted to write.  There shall be attached to or included in each of these policies the portion of the bylaws that constitute a part of the policy contract.  Bylaws or their amendments that are not a part of the policy contract shall not affect the policy contract unless they are included as an endorsement mailed or delivered to the policyholder.
(d)	Entities referred to in subsection (a) of this section shall file with the Commissioner for approval copies of all policy forms and endorsements that they intend to use in the transaction of their business.  The rates used by these entities must be filed with the Commissioner for informational purposes."
Sec. 2.  G.S. 58-8-35 reads as rewritten:
"§ 58-8-35. Contingent liability printed on policy. 
Every insurance company licensed to do business in this State shall print upon the front of the policy and application in clear and explicit language the full contingent liability of its members, in accordance with the rules adopted by the Commissioner."
Sec. 3.  G.S. 58-33-35(6) is repealed.
Sec. 4.  G.S. 58-41-50 is amended by adding a new subsection to read:
"( g)	An insurer subject to this Article may develop and use an individual form or rate as a result of the uniqueness of a particular risk.  The form or rate shall be developed, filed, and used in accordance with rules adopted by the Commissioner."
Sec. 5.  G.S. 58-43-5 reads as rewritten:
"§ 58-43-5. Limitation as to amount and term; indemnity contracts for difference in actual value and cost of replacement; functional replacement.
No insurance company or agent shall knowingly issue any fire insurance policy upon property within this State for an amount which, together with any existing insurance thereon, exceeds the fair value of the property, nor for a longer term than seven years: Provided, any fire insurance company authorized to transact business in this State may, by appropriate riders or endorsements or otherwise, provide insurance indemnifying the insured for the difference between the actual value of the insured property at the time any loss or damage occurs, and the amount actually expended to repair, rebuild or  replace on the premises described in the policy, or some other location within the State of North Carolina with new materials of like size, kind and quality, such property as has been damaged or destroyed by fire or other perils insured against:  Provided further, that the Commissioner may adopt rules which permit the insurance company, at the option of the insured, to replace the property with similar property which performs the same function when replacement with materials of like size, kind, and quality is not possible, necessary or cannot be done without extraordinary expense.  The rules may also provide for credits when functional replacement cost coverage is provided.  Policies issued in violation of this section are binding upon the company issuing them, but the company is liable for the forfeitures by law prescribed for such violation."
Sec. 6.  G.S. 58-28-5(a) is amended by adding a new subdivision to read:
"(8)	Insurance on vessels or craft, their cargoes, marine builders' risks, marine protection and indemnity, or other risks commonly insured under marine insurance policies, as distinguished from inland marine insurance policies."
Sec. 7. G.S. 58-7-15 reads as rewritten:
"§ 58-7-15. Kinds of insurance authorized.
The kinds of insurance which may be authorized in this State, subject to the other provisions of Articles 1 through 64 of this Chapter, are set forth in the following paragraphs. Except to the extent an insurer participates in a risk sharing plan under Article 42 of this Chapter, nothing herein contained shall require any insurer to insure every kind of risk which it is authorized to insure. Except to the extent an insurer participates in a risk sharing plan under Article 42 of this Chapter no insurer may transact any other business than that specified in its charter and articles of association. The power to do any kind of insurance against loss of or damage to property shall include the power to insure all lawful interests in such property and to insure against loss of use and occupancy, rents and profits resulting therefrom; but no kind of insurance shall be deemed to include life insurance or insurance against legal liability for personal injury or death unless specified herein. In addition to any power to engage in any other kind of business than an insurance business which is specifically conferred by the provisions of Articles 1 through 64 of this Chapter, any insurer authorized to do business in this State may engage in such other kind or kinds of business to the extent necessarily or properly incidental to the kind or kinds of insurance business which it is authorized to do in this State. Each of the following paragraphs indicates the scope of the kind of insurance business specified therein:
(1)	'Life insurance,' meaning every insurance upon the lives of human beings and every insurance appertaining thereto. The business of life insurance shall be deemed to include the granting of endowment benefits; additional benefits in the event of death by accident or accidental means; additional benefits operating to safeguard the contract from lapse, or to provide a special surrender value, in the event of total and permanent disability of the insured, including industrial sick benefit; and optional modes of settlement of proceeds.
(2)	'Annuities,' meaning all agreement to make periodical payments, whether in fixed or variable dollar amounts, or both, at specified intervals.
(3)	'Accident and health insurance,' meaning
a.	Insurance against death or personal injury by accident or by any specified kind or kinds of accident and insurance against sickness, ailment or bodily injury except as specified in paragraph b following; and
b.	Noncancellable disability insurance, meaning insurance against disability resulting from sickness, ailment or bodily injury (but not including insurance solely against accidental injury), under any contract which does not give the insurer the option to cancel or otherwise terminate the contract at or after one year from its effective date or renewal date.
(4)	'Fire insurance,' meaning insurance against loss of or damage to any property resulting from fire, including loss or damage incident to the extinguishment of a fire or to the salvaging of property in connection therewith.
(5)	'Miscellaneous property insurance,' meaning loss of or damage to property resulting from
a.	Lightning, smoke or smudge, windstorm, tornado, cyclone, earthquake, volcanic eruption, rain, hail, frost and freeze, weather or climatic conditions, excess or deficiency of moisture, flood, the rising of the waters of the ocean or its tributaries, or
b.	Insects, or blights, or from disease of such property other than animals, or
c.	Electrical disturbance causing or concomitant with a fire or an explosion in public service or public utility property, or
d.	Bombardment, invasion, insurrection, riot, civil war or commotion, military or usurped power, any order of a civil authority made to prevent the spread of a conflagration, epidemic or catastrophe, vandalism or malicious mischief, strike or lockout, or explosion; but not including any kind of insurance specified in subdivision (9), except insurance against loss or damage to property resulting from:
1.	Explosion of pressure vessels (except steam boilers of more than 15 pounds pressure) in buildings designed and used solely for residential purposes by not more than four families,
2.	Explosion of any kind originating outside of the insured building or outside of the building containing the property insured,
3.	Explosion of pressure vessels which do not contain steam or which are not operated with steam coils or steam jackets,
4.	Electrical disturbance causing or concomitant with an explosion in public service or public utility property.
(6)	'Water damage insurance,' meaning insurance against loss or damage by water or other fluid or substance to any property resulting from the breakage or leakage of sprinklers, pumps or other apparatus erected for extinguishing fires or of water pipes or other conduits or containers, or resulting from casual water entering through leaks or openings in buildings or by seepage through building walls, but not including loss or damage resulting from flood or the rising of the waters of the ocean or its tributaries; and including insurance against accidental injury of such sprinklers, pumps, fire apparatus, conduits or containers.
(7)	'Burglary and theft insurance,' meaning:
a.	Insurance against loss of or damage to any property resulting from burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation or wrongful conversion, disposal or concealment by any person or persons, or from any attempt at any of the foregoing, and
b.	Insurance against loss of or damage to moneys, coins, bullion, securities, notes, drafts, acceptances or any other valuable papers or documents, resulting from any cause, except while in the custody or possession of and being transported by any carrier for hire or in the mail.
(8)	'Glass insurance,' meaning insurance against loss of or damage to glass and its appurtenances resulting from any cause.
(9)	'Boiler and machinery insurance,' meaning insurance against loss of or damage to any property of the insured, resulting from the explosion of or injury to:
a.	Any boiler, heater or other fired pressure vessel;
b.	Any unfired pressure vessel;
c.	Pipes or containers connected with any of said boilers or vessels;
d.	Any engine, turbine, compressor, pump or wheel;
e.	Any apparatus generating, transmitting or using electricity;
f.	Any other machinery or apparatus connected with or operated by any of the previously named boilers, vessels or machines;
	and including the incidental power to make inspections of and to issue certificates of inspection upon, any such boilers, apparatus, and machinery, whether insured or otherwise.
(10)	'Elevator insurance,' meaning insurance against loss of or damage to any property of the insured, resulting from the ownership, maintenance or use of elevators, except loss or damage by fire.
(11)	'Animal insurance,' meaning insurance against loss of or damage to any domesticated or wild animal resulting from any cause.
(12)	'Collision insurance,' meaning insurance against loss of or damage to any property of the insured resulting from collision of any other object with such property, but not including collision to or by elevators or to or by vessels, craft, piers or other instrumentalities of ocean or inland navigation.
(13)	'Personal injury liability insurance,' meaning insurance against legal liability of the insured, and against loss, damage or expense incident to a claim of such liability, and including an obligation of the insurer to pay medical, hospital, surgical and funeral benefits and in the case of automobile liability insurance including also disability and death benefits to injured persons, irrespective of legal liability of the insured, arising out of the death or injury of any person, or arising out of injury to the economic interests of any person as a result of negligence in rendering expert, fiduciary or professional service, but not including any kind of insurance specified in subdivision (15).
(14)	'Property damage liability insurance,' meaning insurance against legal liability of the insured, and against loss, damage or expense incident to a claim of such liability, arising out of the loss or destruction of, or damage to, the property of any other person, but not including any kind of insurance specified in subdivision (13) or (15).
(15)	'Workers' compensation and employer's liability insurance,' meaning insurance against the legal liability, whether imposed by common law or by statute or assumed by contract, of any employer for the death or disablement of, or injury to, his or its employee.
(16)	'Fidelity and surety insurance,' meaning:
a.	Guaranteeing the fidelity of persons holding positions of public or private trust;
b.	Becoming surety on, or guaranteeing the performance of, any lawful contract except the following:
1.	A contract of indebtedness secured by title to, or mortgage upon, or interest in, real or personal property;
2.	Any insurance contract except reinsurance;
c.	Becoming surety on, or guaranteeing the performance of, bonds and undertakings required or permitted in all judicial proceedings or otherwise by law allowed, including surety bonds accepted by states and municipal authorities in lieu of deposits as security for the performance of insurance contracts;
d.	Guaranteeing contracts of indebtedness secured by any title to, or interest in, real property, only to the extent required for the purpose of refunding, extending, refinancing, liquidating or salvaging obligations heretofore lawfully made and guaranteed;
e.	Indemnifying banks, bankers, brokers, financial or moneyed corporations or associations against loss resulting from any cause of bills of exchange, notes, bonds, securities, evidences of debts, deeds, mortgages, warehouse receipts, or other valuable papers, documents, money, precious metals and articles made therefrom, jewelry, watches, necklaces, bracelets, gems, precious and semiprecious stones, including any loss while the same are being transported in armored motor vehicles, or by messenger, but not including any other risks of transportation or navigation; also against loss or damage to such an insured's premises, or to his furnishings, fixtures, equipment, safes and vaults therein, caused by burglary, robbery, theft, vandalism or malicious mischief, or any attempt thereat.
(17)	'Credit insurance,' meaning indemnifying merchants or other persons extending credit against loss or damage resulting from the nonpayment of debts owed to them; and including the incidental power to acquire and dispose of debts so insured, and to collect any debts owed to such insurer or to any person so insured by him including without limiting the foregoing, mortgage guaranty insurance which is insurance against financial loss by reason of the nonpayment of principal, interest and other sums agreed to be paid under the terms of any note or bond, or other evidence of indebtedness secured by a security interest, mortgage, deed of trust, or other instrument constituting a lien or charge on real estate, or on such personal property as the Commissioner may from time to time approve.
(18)	'Title insurance,' meaning insuring the owners of real property and chattels real and other persons lawfully interested therein against loss by reason of defective titles and encumbrances thereon and insuring the correctness of searches for all instruments, liens or charges affecting the title to such property, including the power to procure and furnish information relative thereto, and such other incidental powers as are specifically granted in Articles 1 through 64 of this Chapter.
(19)	'Motor vehicle and aircraft insurance,' meaning insurance against loss of or damage resulting from any cause to motor vehicles or aircraft and their equipment, and against legal liability of the insured for loss or damage to the property of another resulting from the ownership, maintenance or use of motor vehicles or aircraft and against loss, damage or expense incident to a claim of such liability.
(20)	'Marine insurance,' meaning insurance against any and all kinds of loss or damage to:
a.	Vessels, craft, aircraft, cars, automobiles and vehicles of every kind, as well as all goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidences of debt, valuable papers, bottomry and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to or in connection with any and all risks or perils of navigation, transit, or transportation, including war risks, on or under any seas or other waters, on land or in the air, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the same or during any delays, storage, transshipment, or reshipment incident thereto, including marine builder's risks and all personal property floater risks, and
b.	Person or to property in connection with or appertaining to a marine, inland marine, transit or transportation insurance, including liability for loss of or damage to either, arising out of or in connection with the construction, repair, operation, maintenance or use of the subject matter of such insurance (but not including life insurance or surety bonds nor insurance against loss by reason of bodily injury to the person arising out of the ownership, maintenance or use of automobiles), and
c.	Precious stones, jewels, jewelry, gold, silver and other precious metals, whether used in business or trade or otherwise and whether the same be in course of transportation or otherwise, and
d.	Bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and/or civil commotion are the only hazards to be covered; piers, wharves, docks and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and/or civil commotion; other aids to navigation and transportation, including dry docks and marine railways against all risks.
(21)	'Marine protection and indemnity insurance,' meaning insurance against, or against legal liability of the insured for, loss, damage or expense arising out of, or incident to, the ownership, operation, chartering, maintenance, use, repair or construction of any vessel, craft or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness or death or for loss of or damage to the property of another person.
(22)	'Miscellaneous insurance,' meaning insurance against any other casualty authorized by the charter of the company, not included in subdivisions (1) to (21) inclusive of this section, which is a proper subject of insurance."
Sec. 8.  G.S. 58-58-110(a) reads as rewritten:
"(a)	Each insurer admitted to transact insurance in this State which, without the written consent of the beneficiary, fails or refuses to pay the death proceeds or death benefits in accordance with the terms of any policy providing a death benefit issued by it in this State within 30 days after receipt of satisfactory proof of loss because of the death, whether accidental or otherwise, of the insured shall pay interest, at a rate not less than the then current rate of interest on death proceeds left on deposit with the insurer computed from the date of the insured's death, on any moneys payable and unpaid after the expiration of such 30-day period. As used in this subsection, the phrase "satisfactory proof of loss because of the death"includes, but is not limited to, a certified copy of the death certificate; or a written statement by the attending physician at the time of death that contains the following information: (i) the name and address of the physician, who must be duly licensed to practice medicine in the United States; (ii) the name of the deceased; (iii) the date, time, and place of the death; and (iv) the immediate cause of the death."
Sec. 9.  G.S. 58-58-140 reads as rewritten:
"§ 58-58-140. Group life insurance standard provisions.
No policy of group life insurance shall be delivered in this State unless it contains in substance the following provisions, or provisions which in the opinion of the Commissioner are more favorable to the persons insured, or at least as favorable to the persons insured and more favorable to the policyholder, provided, however, (i)	that subdivisions (6) to (10) inclusive shall not apply to policies issued to a creditor to insure debtors of such creditor; (ii) that the standard provisions required for individual life insurance policies shall not apply to group life insurance policies; and (iii) that if the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision or provisions which in the opinion of the Commissioner is or are equitable to the insured persons and to the policyholder, but nothing herein shall be construed to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies:
(1)	A provision that the policyholder is entitled to a grace period of 31 days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder shall have given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during such grace period.
(2)	A provision that the validity of the policy shall not be contested, except for nonpayment of premiums, after it has been in force for two years from its date of issue; and that no statement made by any person insured under the policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two years during such person's lifetime nor unless it is contained in a written instrument signed by him.
(3)	A provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties, and that no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or to his beneficiary.
(4)	A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of his coverage.
(5)	A provision specifying an equitable adjustment of premiums or of benefits or of both to be made in the event the age of a person insured has been misstated, such provision to contain a clear statement of the method of adjustment to be used.
(6)	A provision that any sum becoming due by reason of the death of the person insured shall be payable to the beneficiary designated by the person insured, subject to the provisions of the policy in the event there is no designated beneficiary as to all or any part of such sum living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of such sum not exceeding two hundred fifty dollars ($250.00) to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured.
(7)	A provision that the insurer will issue to the policyholder for delivery to each person insured an individual certificate setting forth a statement as to the insurance protection to which he is entitled, to whom the insurance benefits are payable, and the rights and conditions set forth in (8), (9) and (10) following.
(8)	A provision that if the insurance, or any portion of it, on a person covered under the policy ceases because of termination of employment or of membership in the class or classes eligible for coverage under the policy, such person shall be entitled to have issued to him by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits, provided application for the individual policy shall be made, and the first premium paid to the insurer, within 31 days after such termination, and provided further that,
a.	The individual policy shall, at the option of such person, be on any one of the forms, except term insurance, then customarily issued by the insurer at the age and for the amount applied for;
b.	The individual policy shall be in an amount not in excess of the amount of life insurance which ceases because of such termination, provided that any amount of insurance which shall have matured on or before the date of such termination as an endowment payable to the person insured, whether in one sum or in installments or in the form of an annuity, shall not, for the purposes of this provision, be included in the amount which is considered to cease because of such termination; and
c.	The premium on the individual policy shall be at the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which such person then belongs, and to his age attained on the effective date of the individual policy.
(9)	A provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of such termination whose insurance terminates and who has been so insured for at least five years prior to such termination date shall be entitled to have issued to him by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided by (8) above, except that the group policy may provide that the amount of such individual policy shall not exceed the smaller of (i) the amount of the person's life insurance protection ceasing because of the termination or amendment of the group policy, less the amount of any life insurance for which he is or becomes eligible under any group policy issued or reinstated by the same or another insurer within 31 days after such termination, and (ii) ten thousand dollars ($10,000).
(10)	A provision that if a person insured under the group policy dies during the period within which he would have been entitled to have an individual policy issued to him in accordance with (8) or (9) above and before such an individual policy shall have become effective, the amount of life insurance which he would have been entitled to have issued to him under such individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefor has been made."
Sec. 10.  G.S. 58-60-35(a)(2) reads as rewritten:
"(2)	'Prearrangement insurance policy' means a life insurance policy, annuity contract, or other insurance contract, or any series of contracts or agreements in any form or manner, issued on a group or individual basis by an insurance company authorized by law to do business in this State, which, whether by assignment or otherwise, has for a purpose the funding of a specific preneed funeral contract or a specific insurance-funded funeral or burial prearrangement, the insured being the person for whose service the funds were paid."
Sec. 11.  G.S. 58-51-80(g) reads as rewritten:
"(g)	Any policy or contract of group accident, group health or group accident and health insurance may provide for readjustment of the rate of premium based on the experience thereunder at the end of the first year, or at any time during any subsequent year based upon at least 12 months of experience:  Provided that any such readjustment after the first year shall not be made any more frequently than once every six months.  Any rate adjustment must be preceded by a 60-day notice prior to the effective date of any rate increase or any policy benefit revision.  A notice of nonrenewal shall be given 60 days prior to termination.  Any refund under any plan for readjustment of the rate of premium based on the experience under group policies and any dividend paid under such policies may be used to reduce the employer's or principal's contribution to group insurance for the employees of the employer, or the agents of the principal, and the excess over such contribution by the employer, or principal, shall be applied by the employer, or principal, for the sole benefit of the employees or agents."
Sec. 12.  G.S. 58-51-30 reads as rewritten:
"§ 58-51-30. Policies to cover newborn infants and adopted and foster children.
Every policy of insurance and every hospital service or medical service plan as defined in Articles 65 and 66 of this Chapter, and any health care plan operated by a health maintenance organization as defined in Article 67 of this Chapter (regardless of whether any of such policies or plans shall be defined as individual, family, group, blanket, franchise, industrial or otherwise) which provides benefits on account of any sickness, illness, or disability of any minor child or which provides benefits on account of any medical treatment or service authorized or permitted to be furnished by a hospital under the laws of this State to any minor child shall provide such benefits for such occurrences beginning with the moment of birth of such child if such birth occurs while said policy, subscriber contract, or evidence of coverage with such a plan is in force.
Benefits in such insurance policies, plans, or evidence of coverage shall be the same for  congenital defects or anomalies as are provided for most sicknesses or illnesses suffered by minor children which are covered by said policies, plans, or evidence of coverage. Benefits for congenital defects or anomalies shall specifically include, but not be limited to, all necessary treatment and care needed by individuals born with cleft lip or cleft palate.
No policy or plan subscriber contract or evidence of coverage shall be approved by the Commissioner of Insurance pursuant to the provisions of this Article or the provisions of Articles 65, 66, and 67 of this Chapter that does not comply with the provisions of this section.
The provisions of this section shall apply both to insurers governed by the provisions of Articles 1 through 64 of this Chapter and to corporations governed by the provisions of Articles 65, 66, and 67 of this Chapter."
Sec. 13.  G.S. 58-67-50(c) reads as rewritten:
"(c)	The Commissioner shall, within a reasonable period, approve any form if the requirements of paragraph (1) are met and any schedule of premiums if the requirements of paragraph (2) are met.  It shall be unlawful to issue such form or to use such schedule of premiums until approved. If the Commissioner disapproves such filing, he shall notify the filer.  In the notice, the Commissioner shall specify the reasons for his disapproval.  A hearing will be granted within 30 days after a request in writing by the person filing. If the Commissioner does not approve or disapprove any form or schedule of premiums within 90 days of the filing of such forms or premiums, they shall be deemed approved."
Sec. 14.  Article 3 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-3-102.  Request for determination of coverage under health benefit payment mechanisms; required response time; penalties.
(a)	As used in this section, 'insurer' includes any payer of health benefits that is subject to this Chapter.
(b)	When a person or that person's health care provider or representative requests that person's insurer to determine whether or not a particular health care treatment or procedure is eligible for benefits under that person's health benefit coverage, the insurer shall, within 10 days after receipt of the request, inform the requesting person as to whether or not there is coverage.
(c)	This section applies only to health care treatments or procedures that are deemed to be medically necessary by the person's health care provider.
(d)	An insurer that fails to comply with this section is subject to a civil penalty of one thousand dollars ($1,000) for each day after the 10-day period referred to in subsection (b) of this section that it fails to comply."
Sec. 15.  G.S. 58-69-5 reads as rewritten:
"§ 58-69-5. License required.
No motor club, district or branch office of a motor club, or franchise motor club shall engage in business in this State unless it holds a valid license issued to it by the Commissioner as provided in this Article.  The license shall at all times be prominently displayed in each office of the entity to which the license is issued."
Sec. 16.  G.S. 58-33-25(e) reads as rewritten:
"(e)	A limited representative may receive qualification for one or more licenses without examination for the following kinds of insurance:
(1),	(2)  Repealed by Session Laws 1989, c. 485, s. 19.
	(3)	Credit Life, Accident and Health
(4)	Credit
(5)	Travel Accident and Baggage
(6)	Motor Club
(7)	Dental Services
(8)	Bail bonds executed or countersigned by surety bondsmen under Article 71 of this Chapter."
Sec. 17.  G.S. 58-71-80 reads as rewritten:
"§ 58-71-80.  Grounds for denial, suspension, revocation or refusal to renew licenses.
(a)	The Commissioner may deny, suspend, or revoke or refuse to renew any license issued under this Article for any of the following causes:
(1)	For any cause sufficient to deny, suspend, or revoke license under any other provision of this Article.
(2)	Violation of any laws of this State relating to bail in the course of dealings under the license issued him by the Commissioner.
(3)	Material misstatement, misrepresentation or fraud in obtaining the license.
(4)	Misappropriation, conversion or unlawful withholding of moneys belonging to insurers or others and received in the conduct of business under the license.
(5)	Fraudulent or dishonest practices in the conduct of business under the license.
(6)	Conviction of a felony regardless of the time such conviction occurred and regardless of whether such conviction resulted from conduct in or related to the bail bond business.
(7)	Failure to comply with or violation of the provisions of this Article or of any order, rule or regulation of the Commissioner.
(8)	When in the judgment of the Commissioner, the licensee has in the conduct of his affairs under the license, demonstrated incompetency, financial irresponsibility, or untrustworthiness; or that he is no longer in good faith carrying on the bail bond business; or that he is guilty of rebating, or offering to rebate, or offering to divide the premiums received for the bond.
(9)	For failing to pay any judgment or decree rendered on any forfeited undertaking in any court of competent jurisdiction.
(10)	For charging or receiving, as premium or compensation for the making of any deposit or bail bond, any sum in excess of that permitted by this Article.
(11)	For requiring, as a condition of his executing a bail bond, that the principal agree to engage the services of a specified attorney.
(12)	For cheating on an examination for a license under this Article.
(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 Article.
(15)	Any cause for which issuance of the license could not have been refused had it then existed and been known to the Commissioner at the time of issuance.
(b)	The Commissioner may suspend or revoke a license in accordance with the provisions of this Article, and 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 two hundred fifty dollars ($250.00) for each offense. Upon failure of such licensee to pay the 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 or unless the Commissioner has already suspended or revoked the license of the licensee, the Commissioner may revoke the license of such licensee or may suspend the same for such period as he may determine."
Sec. 18.  G.S. 58-71-105 reads as rewritten:
"§ 58-71-105. Persons prohibited from becoming surety or runners.
No sheriff, deputy sheriff, other law-enforcement officer, judicial official, attorney, parole officer, probation officer, jailer, assistant jailer, employee of the General Court of Justice, nor other public employee assigned to duties relating to the administration of criminal justice, nor the spouse of any such person, may in any case become surety on a bail bond for any person. In addition, no person covered by this section may act as an agent for any bonding company or professional bondsman. No such person may have an interest, directly or indirectly, in the financial affairs of any firm or corporation whose principal business is acting as a bail bondsman.  Provided, however, nothing in this section prohibits any such person from being surety upon the bond of his or her spouse, parent, brother, sister, child, or descendant."
Sec. 19.  G.S. 58-71-185 reads as rewritten:
"§ 58-71-185.  Penalties for violations.
Any person, firm, association or corporation violating any of the provisions of this Article is guilty of a misdemeanor and shall upon conviction for each offense be fined or imprisoned in the discretion of the court."
Sec. 20.  G.S. 58-71-165 reads as rewritten:
"§ 58-71-165.  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.  Any person who willfully falsifies a report required by this section is guilty of a Class J felony."
Sec. 21.  G.S. 58-71-170 reads as rewritten:
"§ 58-71-170.  Examinations.
(a)	Whenever the Commissioner deems it prudent he shall visit and examine or cause to be visited and examined by some competent person appointed by him for that purpose any professional bail bondsman subject to the provisions of this Article.  For this purpose the Commissioner or person making the examination shall have free access to all books and papers of the bondsman that relate to his business and to the books and papers kept by any of his agents or runners. 
(b)	The Commissioner may conduct examinations of surety bondsmen under G.S. 58-2-195 as well as under subsection (a) of this section."
Sec. 22.  Article 71 of Chapter 58 of the General Statutes is amended by adding two new subsections to read:
"§ 58-71-167.  Portion of bond premium payments deferred.
(a)	In any case where the agreement between principal and surety calls for some portion of the bond premium payments to be deferred or paid after the defendant has been released from custody, a written memorandum of agreement between the principal and surety shall be kept on file by the surety with a copy provided to the principal.  Such memorandum shall contain the following information:
(1)	The amount of the premium payment deferred or not yet paid at the time the defendant is released from jail.
(2)	The method and schedule of payment to be made by the defendant to the bondsman, which shall include the dates of payment and amount to be paid on each date.
(b)	Such memorandum must be signed by the defendant and the bondsman, or one of the bondsman's agents, and dated at the time the agreement is made.  Any subsequent modifications of the memorandum must be in writing, signed, dated, and kept on file by the surety, with a copy provided to the principal.
"§ 58-71-168.  Records to be maintained.
All records related to executing bail bonds, including bail bond registers, monthly reports, receipts, collateral security agreements, and memoranda of agreements, shall be kept separate from records of any other business and must be maintained for not less than three years after the final entry has been made."
Sec. 23.  G.S. 58-70-65 is amended by adding a new subsection to read:
"( c)	Each permit holder located outside this State shall deposit in a separate trust account, designated for its North Carolina creditors, funds to pay all monies due or owing all collection creditors or forwarders located within this State."
Sec. 24.  G.S. 131E-211(e) reads as rewritten:
"(e)	A majority of the Commission members who are present and who are entitled to vote shall constitute a quorum for the transaction of business."
Sec. 25.  Article 4 of Chapter 97 of the General Statutes is amended by adding a new section to read:
"§ 97-143.  Use of deposits made by insolvent member self-insurers.
After the Commissioner has notified the Association, pursuant to G.S. 97-136(a), that a member is insolvent, the Commissioner shall assign and deliver to the Association, and the Association is authorized to expend, the deposit made by the insolvent member pursuant to G.S. 97-93(b), to the extent the deposit is needed by the Association to pay covered claims against the premium taxes owed by the insolvent member as required by this Article, and to the extent the deposit is needed to pay expenses of the Association relating to covered claims against the insolvent member.  The Association shall account to the Commissioner and the insolvent member or its successor for all deposits received from the Commissioner under this section."
Sec. 26.  G.S. 58-2-40 reads as rewritten:
"§ 58-2-40.  Powers and duties of Commissioner.
The Commissioner shall:
(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.
(2)	Have the power and authority to make and promulgate rules and regulations pertaining to and governing the solicitation of proxies, including financial reporting in connection therewith, with respect to the capital stock or other equity securities of any domestic stock insurance company.
(3)	Prescribe to the companies, associations, orders or bureaus required by Articles 1 through 64 of this Chapter to report to him, the necessary forms for the statements required, which forms may be changed by him from time to time when necessary to secure full information as to the standing, condition and such other information desired of companies, associations, orders or bureaus under the jurisdiction of the Department.
(4)	Receive and thoroughly examine each financial statement required by Articles 1 through 64 of this Chapter.
(5)	Report in detail to the Attorney General any violations of the laws relative to insurance companies, associations, orders and bureaus or the business of insurance, and he shall have power to institute civil actions or criminal prosecutions either by the Attorney General or such other attorney as the Attorney General may select, for any violation of the provisions of Articles 1 through 64 of this Chapter.
(6)	Upon a proper application by any citizen of this State, give a statement or synopsis of the provisions of any insurance contract offered or issued to such citizen.
(7)	Administer by himself or by his deputy all oaths required in the discharge of his official duty.
(8)	Compile and make available to the public such lists of rates charged, including deviations, and such explanations of coverages that are provided by insurers for and in connection with contracts or policies of (i) insurance against loss to residential real property with not more than four housing units located in this State and any contents thereof or valuable interest therein and other insurance coverages written in connection with the sale of such property insurance and (ii) private passenger (nonfleet) motor vehicle liability, physical damage, theft, medical payments, uninsured motorists, and other insurance coverages written in connection with the sale of such insurance, as may be advisable to inform the public of insurance premium differentials and of the nature and types of coverages provided. The explanations of coverages provided for in this section must comply with the provisions of Article 38 of this Chapter."
Sec. 27.  G.S. 58-51-20(a) reads as rewritten:
"(a)	Every individual or blanket family hospitalization policy and accident and health policy, other than noncancellable or nonrenewable policies but including group, blanket and franchise policies, as defined in Articles 1 through 64 of this Chapter, covering less than 10 persons, issued in North Carolina after January 1, 1956, shall include in substance the following provision:
Renewability: This policy is renewable at the option of the policyholder unless sufficient notice of nonrenewal is given the policyholder in writing by the insurer.
Sufficient notice shall be, during the first year of any policy, or during the first year following any lapse and reinstatement, a period of 30 days prior to the premium due date. After one continuous year of coverage and acceptance of premium for any portion of the second or subsequent year sufficient notice shall be a number of full months most nearly equivalent to one fourth the number of months of continuous coverage from the inception date of the policy, to the date of mailing of such notice: Provided no period of required notice shall exceed two years."
Sec. 28.  Article 63 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-63-32.  Cease and desist order.
(a)	If, after a hearing under G.S. 58-63-25, the Commissioner determines that the method of competition or the act or practice in question is defined in G.S. 58-63-15 and that the person complained of has engaged in such method of competition, act, or practice in violation of this Article, he shall reduce his finding to writing and shall issue and cause to be served upon the person charged with the violation an order requiring such person to cease and desist from engaging in such method, act, or practice.
(b)	Until the expiration of the time allowed under G.S.58-63-35(a) for filing a petition for review, if no such petition has been duly filed within such time, then until the transcript of the record in the proceeding has been filed in 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. 29.  G.S. 58-63-30 is repealed.
Sec. 30.  Article 62 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-62-92.  Procedure for appeal to Commissioner from decision of Association.
In any hearing called by the Commissioner for an appeal made pursuant to G.S. 58-62-90(b), no later than 20 days before such hearing the appellant shall file with the Commissioner or his designated hearing officer and shall serve on the appellee a written statement of his case and any evidence he intends to offer at the hearing.  No later than five days before such hearing, the appellee shall file with the Commissioner or his designated hearing officer and shall serve on the appellant a written statement of his case and any evidence he intends to offer at the hearing.  Each such hearing shall be recorded and transcribed.  The cost of such recording and transcribing shall be borne equally by the appellant and the appellee; provided that upon any final adjudication the prevailing party shall be reimbursed for his share of such costs by the other party.  Each party shall be reimbursed for his share of such costs by the other party.  Each party shall, on a date determined by the Commissioner or his designated hearing officer, but not sooner than 15 days after delivery of the completed transcript to the party, submit to the Commissioner or his designated hearing officer and serve on the other party, a proposed order.  The Commissioner or his designated hearing officer shall then issue an order."
Sec. 31.  Article 48 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-48-42.  Procedure for appeal to Commissioner from decision of Association.
In any hearing called by the Commissioner for an appeal made pursuant to G.S.58-48-40(7), no later than 20 days before such hearing the appellant shall file with the Commissioner or his designated hearing officer and shall serve on the appellee a written statement of his case and any evidence he intends to offer at the hearing.  No later than five days before such hearing, the appellee shall file with the Commissioner or his designated hearing officer and shall serve on the appellant a written statement of his case and any evidence he intends to offer at the hearing.  Each such hearing shall be recorded and transcribed.  The cost of such recording and transcribing shall be borne equally by the appellant and the appellee; provided that upon any final adjudication the prevailing party shall be reimbursed for his share of such costs by the other party.  Each party shall, on a date determined by the Commissioner or his designated hearing officer, but not sooner than 15 days after delivery of the completed transcript to the party, submit to the Commissioner or his designated hearing officer and serve on the other party, a proposed order.  The Commissioner or his designated hearing officer shall then issue an order."
Sec. 32.  G.S. 58-7-75 reads as rewritten:
"§ 58-7-75. Amount of capital and/or surplus required; impairment of capital or surplus.
The amount of capital and/or surplus requisite to the formation and organization of companies under the provisions of Articles 1 through 64 of this Chapter shall be as follows:
(1)	Stock Life Insurance Companies.
a.	A stock corporation may be organized in the manner prescribed in Articles 1 through 64 of this Chapter and licensed to do the business of life insurance, only when it shall have paid-in capital of at least six hundred thousand dollars ($600,000) and a paid-in initial surplus of at least nine hundred thousand dollars ($900,000), and it may in addition do the kind of business specified in subdivision (2) of G.S. 58-7-15 (annuities), without having additional capital or surplus. Every such company shall at all times thereafter maintain a minimum capital of not less than six hundred thousand dollars ($600,000) and a minimum surplus of at least one hundred fifty thousand dollars ($150,000). Provided that, any such corporation may do either or both of the kinds of insurance authorized for stock, accident and health insurance companies, as set out in paragraphs a and b of subdivision (3) of G.S. 58-7-15 (accidental death or personal injury, and noncancelable disability), where its charter so permits, and when and so long as it meets and maintains a minimum capital and surplus equal to the sum of the minimum capital and surplus requirements of this subdivision (1)a and the minimum capital and surplus requirements of subdivision (2)a and/or (2)b hereof as applicable.
b.	If the Commissioner, after such investigation as he may deem it expedient to make, finds that a corporation may be organized to do the business of life insurance, or the writing of annuities or both, that its operations are restricted solely to one state, and that the organization of such corporation is in the public interest, he may permit the organization of a stock corporation to do on such restricted plan either or both kinds of business specified in subdivisions (1) and (2) of G.S. 58-7-15 (life insurance and annuities), with the minimum paid-in capital and a minimum paid-in initial surplus in an amount to be prescribed by him, but in no event to be less than a paid-in capital of four hundred thousand dollars ($400,000) and a paid-in surplus of six hundred thousand dollars ($600,000). Every such company shall at all times thereafter maintain such prescribed minimum capital, or four hundred thousand dollars ($400,000), whichever is greater and a minimum surplus of at least one hundred thousand dollars ($100,000).
(2)	Stock Accident and Health Insurance Companies.
a.	A stock corporation may be organized in the manner prescribed in Articles 1 through 64 of this Chapter and licensed to do only the kind of insurance specified in subdivision (3)a of G.S. 58-7-15 (accidental death or personal injury), when it shall have a paid-in capital of not less than four hundred thousand dollars ($400,000), and a paid-in initial surplus of at least six hundred thousand dollars ($600,000). Every such company shall at all times thereafter maintain a minimum capital of not less than four hundred thousand dollars ($400,000) and a minimum surplus of at least one hundred thousand dollars ($100,000).
b.	Any company organized under the provisions of paragraph a of this subdivision may, by the provisions of its original charter or any amendment thereto, acquire the power to do the kind of business specified in paragraph b of subdivision (3) of G.S. 58-7-15 (noncancelable disability insurance), if it has a paid-in capital of at least six hundred thousand dollars ($600,000) and a paid-in initial surplus of at least nine hundred thousand dollars ($900,000). Every such company shall at all times maintain a minimum capital of not less than six hundred thousand dollars ($600,000) and a minimum surplus of at least one hundred fifty thousand dollars ($150,000).
(3)	Stock Fire and Marine Companies. – A stock corporation may be organized in the manner prescribed in Articles 1 through 64 of this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (4), (5), (6), (7), (8), (11), (12), (19), (20), (21) and (22) of G.S. 58-7-15 only when it shall have a paid-in capital of not less than eight hundred thousand dollars ($800,000) and a paid-in initial surplus of not less than one million two hundred thousand dollars ($1,200,000). Every such company shall at all times thereafter maintain a minimum capital of not less than eight hundred thousand dollars ($800,000) and a minimum surplus of at least two hundred thousand dollars ($200,000). Provided that, any such corporation may do all the kinds of insurance authorized for casualty, fidelity and surety companies, as set out in subdivision (4) hereof where its charter so permits, and when and so long as it meets and thereafter maintains a minimum capital and surplus equal to the sum of the minimum capital and surplus requirements of this subdivision (3) and the minimum capital and surplus requirements of subdivision (4) hereof.
(4)	Stock Casualty and Fidelity and Surety Companies.
a.	A stock corporation may be organized in the manner prescribed in Articles 1 through 64 of this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (3), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17), (18), (19), (21) and (22) of G.S. 58-7-15 only when it shall have a paid-in capital of not less than one million dollars ($1,000,000) and a paid-in initial surplus of not less than one million five hundred thousand dollars ($1,500,000). Every such company shall at all times thereafter maintain a minimum capital of not less than one million dollars ($1,000,000) and a minimum surplus of at least two hundred fifty thousand dollars ($250,000).
b.	If the Commissioner, after such investigation as he may deem it expedient to make, finds that a corporation may be organized to do one or more of such kinds of insurance, that its operations are restricted solely to one state, and that the organization of such corporation is in the public interest, he may permit such corporation to be organized and licensed to write the lines set out in subsection a above with a paid-in capital of not less than six hundred thousand dollars ($600,000) and a paid-in initial surplus of not less than nine hundred thousand dollars ($900,000). Every such company shall hereafter maintain a minimum capital of not less than six hundred thousand dollars ($600,000) and a minimum surplus of at least one hundred fifty thousand dollars ($150,000). Provided that, any such casualty, fidelity and surety corporation may do all the kinds of insurance authorized for fire and marine companies, as set out in subdivision (3) hereof where its charter so permits, when and if it meets all additional requirements as to capital and surplus as fixed in said section, and maintains the same.
(5)	Mutual Fire and Marine Companies.
a.	Limited assessment companies. – A limited assessment mutual company may be organized in the manner prescribed in Articles 1 through 64 of this Chapter and licensed to do one or more kinds of insurance specified in subdivisions (4), (5), (6), (7), (8), (11), (12), (19), (20), (21) and (22) of G.S. 58-7-15 only when it has no less than five hundred thousand dollars ($500,000) of insurance in not fewer than 500 separate risks subscribed with a paid-in initial surplus of at least three hundred thousand dollars ($300,000), which surplus shall at all times be maintained. The assessment liability of a policyholder of a company organized in accordance with the provisions of this paragraph shall not be limited to less than five annual premiums provided, such limited assessment company may reduce the assessment liability of its policyholders from five annual premiums as set out herein to one additional annual premium when the free surplus of such company amounts to not less than three hundred thousand dollars ($300,000), which surplus shall at all times be maintained.
b.	Assessable mutual companies. – An assessable mutual company may be organized in the manner prescribed in Articles 1 through 64 of this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (4), (5) and (6) of G.S. 58-7-15 (fire, miscellaneous property and water damage), with an unlimited assessment liability of its policyholders only when it shall have not less than five hundred thousand dollars ($500,000) of insurance in not fewer than 500 separate risks subscribed with a paid-in initial surplus equal to twice the amount of the maximum net retained liability under the largest policy of insurance issued by such company; but not less than sixty thousand dollars ($60,000) which surplus shall at all times be maintained. Provided such company, when its charter so permits, in addition may be licensed to do one or more of the kinds of insurance specified in subdivisions (7), (8), (11), (12), (19), (20), (21) and (22) of G.S. 58-7-15, with an unlimited assessment liability of its policyholders, when its free surplus amounts to not less than sixty thousand dollars ($60,000), which surplus shall at all times be maintained.
c.	Nonassessable mutual companies. – A nonassessable mutual company may be organized in the manner prescribed in Articles 1 through 64 of this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (4), (5), (6), (7), (8), (11), (12), (19), (20), (21) and (22) of G.S. 58-7-15 and may be authorized to issue policies under the terms of which a policyholder is not liable for any assessments in addition to the premium set out in the policy only when it shall have not less than five hundred thousand dollars ($500,000) of insurance in not fewer than 500 separate risks subscribed with a paid-in initial surplus of not less than eight hundred thousand dollars ($800,000), which surplus shall at all times be maintained.
d.	Town or county mutual insurance companies. – A town or county mutual insurance company with unlimited assessment liability may be organized in the manner prescribed in Articles 1 through 64 of this Chapter and licensed to do the kinds of insurance specified in G.S. 58-7-15(4) only when it shall have not less than fifty thousand dollars ($50,000) of insurance in force in not fewer than 50 separate risks subscribed with a paid-in initial surplus of not less than fifteen thousand dollars ($15,000), which surplus shall at all times be maintained.  A town or county mutual insurance company may, in addition to writing the business specified in G.S. 58-7-15(4) cover in the same policy the hazards usually insured against under an extended coverage endorsement when such company has not less than five hundred thousand dollars ($500,000) of insurance in force in not fewer than 500 separate risks and maintains a surplus at all times of not less than one hundred twenty thousand dollars ($120,000): Provided, that such company may not operate in more than six adjacent counties in this State.  Any company authorized under this section prior to July 1, 1991, shall be permitted to continue to do the same kinds of business that it was authorized to do prior to July 1, 1991, without being required to increase its surplus; provided further, however, such insurer shall increase its surplus to the required amounts on or before July 1, 1992.  The requirements of this sub-subdivision as to surplus shall apply to such companies as a prerequisite to writing additional lines of business, and to such companies as a prerequisite to commencing business if unlicensed prior to July 1, 1991.
(6)	Mutual Life, Accident and Health Insurance Companies. – A nonassessable mutual insurance company may be organized in the manner prescribed in Articles 1 through 64 of this Chapter, and licensed to do only one or more of the kinds of insurance specified in subdivisions (1), (2) and (3) of G.S. 58-7-15 (life, annuities, and accident and health) when it has complied with the requirements of Articles 1 through 64 of this Chapter and with those hereinafter set forth in paragraphs a to d of this subdivision, inclusive, whichever shall be applicable.
a.	If organized to do only the kinds of insurance specified in subdivisions (1) and (2) of G.S. 58-7-15 (life insurance and annuities), such company shall have not less than 500 bona fide applications for life insurance in an aggregate amount not less than five hundred thousand dollars ($500,000), and shall have received from each such applicant in cash the full amount of one annual premium on the policy applied for by him, in an aggregate amount at least equal to ten thousand dollars ($10,000), and shall in addition have a paid-in initial surplus of two hundred thousand dollars ($200,000), and shall have and maintain at all times a minimum surplus of one hundred thousand dollars ($100,000).
b.	If organized to do only the kind of insurance specified in paragraph a of subdivision (3) of G.S. 58-7-15 (accidental death and personal injury), such company shall have not less than 250 bona fide applications for such insurance, and shall have received from each such applicant in cash the full amount of one annual premium on the policy applied for by him in an aggregate amount of at least ten thousand dollars ($10,000), and shall have a paid-in initial surplus of two hundred thousand dollars ($200,000) and shall have and maintain at all times a minimum surplus of one hundred thousand dollars ($100,000).
c.	If organized to do the kinds of insurance specified in subdivision (1) and in paragraph a of subdivision (3) of G.S. 58-7-15 (life insurance and accidental death and injury), such company shall have complied with the provisions of both paragraphs a and b hereof.
d.	If organized to do the kind of insurance specified in paragraph b of subdivision (3) of G.S. 58-7-15 (noncancelable disability insurance), in addition to the kind or kinds of insurance designated in any one of the foregoing paragraphs of this subdivision, such company shall have a paid-in initial surplus of at least five hundred thousand dollars ($500,000) and shall maintain a minimum surplus of at least three hundred thousand dollars ($300,000).
(7)	Organization of Mutual Casualty, Fidelity and Surety Companies.
a.	Nonassessable, mutual companies. – A mutual insurance company with no assessment liability provided for its policyholders may be organized in the manner prescribed in Articles 1 through 64 of this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (3), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17), (18), (19), (21) and (22) of G.S. 58-7-15 when it has a minimum paid-in initial surplus of one million dollars ($1,000,000) and not less than five hundred thousand dollars ($500,000) in insurance subscribed in not less than 500 separate risks. The surplus of such company shall at all times be maintained at or above the amount required hereinabove for organization of such company.
b.	Assessable mutual companies. – A mutual insurance company with assessment liability provided for its policyholders may be organized in the manner prescribed in Articles 1 through 64 of this Chapter and licensed to do one or more of the kinds of insurance specified in subdivisions (3), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17), (18), (19), (21) and (22) of G.S. 58-7-15 when it has a minimum paid-in initial surplus of four hundred thousand dollars ($400,000) and not less than five hundred thousand dollars ($500,000) of insurance subscribed in not less than 500 separate risks. Such company shall at all times maintain a surplus in an amount not less than four hundred thousand dollars ($400,000). The assessment liability of a policyholder of such company shall not be limited to less than one annual premium.
(8)	Organization of Mutual Multiple Line Companies.
a.	Assessable mutual companies. – A company may do all the kinds of insurance authorized to be done by a company organized under the provisions of paragraph a of subdivision (5) hereof (limited assessment mutual fire and marine companies), and paragraph b of subdivision (7) hereof (assessable mutual casualty, fidelity and surety companies), where its charter so permits when and if it meets the combined minimum requirements of said paragraphs. The assessment liability of policyholders of such a company shall not be limited to less than one annual premium within any one policy year.
b.	Nonassessable mutual companies. – A company may do all the kinds of insurance authorized to be done by a company organized under the provisions of paragraph c of subdivision (5) hereof (nonassessable mutual fire and marine companies), and paragraph a of subdivision (7) hereof (nonassessable mutual casualty, fidelity and surety companies), where its charter so permits when and if it meets the combined minimum requirements of said paragraphs. The policyholders of such a company shall not be subject to any assessment liability.
	(10)	Impairment of Capital and/or Surplus. – Whenever the Commissioner finds from a financial statement made by any such company, or from a report of examination of any such company, that its admitted assets are less than the aggregate amount of its liabilities and its outstanding capital stock and/or required minimum surplus, he shall determine the amount of such impairment of capital and/or surplus and issue an order in writing requiring the company to eliminate the impairment within such period of not more than 90 days as he shall designate. The Commissioner may, by order served upon the company, prohibit the company from issuing any new policies while such impairment exists. If at the expiration of the designated period the company has not satisfied the Commissioner that the impairment has been eliminated, an order for the rehabilitation or liquidation of the company may be entered as provided in Article 17A, Chapter 58 of the General Statutes of North Carolina."
Sec. 33.  G.S. 58-42-55 is repealed.
Sec. 34.  G.S. 143-143.13(a) reads as rewritten:
"(a)	A license may be denied, suspended or revoked by the Board on any one or more of the following grounds:
(1)	Material misstatement in application for license;
(2)	Failure to post an adequate corporate surety bond, cash bond or fixed value equivalent thereof;
(3)	Engaging in the business of manufactured home manufacturer, dealer, salesman or set-up contractor without first obtaining a license from the Board;
(4)	Failure to comply with the warranty service obligations and claims procedure established by this Article;
(5)	Failure to comply with the set-up and tie-down requirements established by this Article;
(6)	Having knowingly failed or refused to account for or to pay over moneys or other valuables belonging to others which have come into licensee's possession arising out of the sale of manufactured homes;
(7)	Use of unfair methods of competition or unfair or deceptive commercial acts or practices;
(8)	Failure to comply with any provision of this Article;
(9)	Failure to appear before the Board upon due notice or to follow directives of the Board issued pursuant to this Article;
(10)	Employing unlicensed retail salesmen;
(11)	Knowingly offering for sale the products of manufacturers who are not licensed pursuant to this Article or selling, to dealers not licensed pursuant to this Article, manufactured homes which are to be sold in this State to buyers as defined in this Article;
(12)	Conviction of a felony or any crime involving moral turpitude;
(13)	Having had a license revoked, suspended or denied by the Board under this Article; or having had a license revoked, suspended or denied by a similar entity in another state; or engaging in conduct in another state which conduct, if committed in this State, would have been a violation under this Article;
(14)	Knowingly engaging any person to perform set-up operations who is not licensed by the Board as a set-up contractor."
Sec. 35.  G.S. 143-143.11(a) reads as rewritten:
"(a)	It shall be unlawful for any manufactured home manufacturer, dealer, salesman or set-up contractor to engage in business as such in this State without first obtaining a license from the Board, as provided in this Article.  The fact that a person is licensed by the Board as a set-up contractor or a dealer does not preempt any other license boards' applicable requirements for that person."
Sec. 36.  Article 9A of Chapter 143 of the General Statutes is amended by adding a new section to read:
"§ 143-143.25.  Staff support for Board.
The Manufactured Housing Division of the Department shall provide clerical and other staff services required by the Board; and shall administer and enforce all provisions of this Article and all rules adopted under this Article, subject to the direction of the Board; except for powers and duties delegated by this Article to local units of government, other State agencies, or to any persons."
Sec. 37.  G.S. 58-63-15 reads as rewritten:
"§ 58-63-15.  Unfair methods of competition and unfair or deceptive acts or practices defined.
The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:
(1)	Misrepresentations and False Advertising of Policy Contracts. – Making, issuing, circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby or the dividends or share of the surplus to be received thereon, or making any false or misleading statement as to the dividends or share or surplus previously paid on similar policies, or making any misleading representation or any misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates, or using any name or title of any policy or class of policies misrepresenting the true nature thereof, or making any misrepresentation to any policyholder insured in any company for the purpose of inducing or tending to induce such policyholder to lapse, forfeit, or surrender his insurance.
(2)	False Information and Advertising Generally. – Making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station, or in any other way, an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading.
(3)	Defamation. – Making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting or encouraging the making, publishing, disseminating or circulating of any oral or written statement or any pamphlet, circular, article or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, and which is calculated to injure any person engaged in the business of insurance.
(4)	Boycott, Coercion and Intimidation. – Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance.
(5)	False Financial Statements. – Filing with any supervisory or other public official, or making, publishing, disseminating, circulating or delivering to any person, or placing before the public, or causing directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false statement of financial condition of an insurer with intent to deceive.
	   Making any false entry in any book, report or statement of any insurer with intent to deceive any agent or examiner lawfully appointed to examine into its condition or into any of its affairs, or any public official to whom such insurer is required by law to report, or who has authority by law to examine into its condition or into any of its affairs, or, with like intent, willfully omitting to make a true entry of any material fact pertaining to the business of such insurer in any book, report or statement of such insurer.
(6)	Stock Operations and Insurance Company Advisory Board Contracts. – Issuing or delivering or permitting agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities or any special or any insurance company advisory board contracts or other contracts of any kind promising returns and profit as an inducement to insurance.
(7)	Unfair Discrimination.
a.	Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract.
b.	Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of accident or health insurance or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever.
c.	Making or permitting any unfair discrimination between or among individuals or risks of the same class and of essentially the same hazard by refusing to issue, refusing to renew, cancelling, or limiting the amount of insurance coverage on a property or casualty risk because of the geographic location of the risk, unless:
1.	The refusal or limitation is for the purpose of preserving the solvency of the insurer and is not a mere pretext for unfair discrimination, or
2.	The refusal, cancellation, or limitation is required by law.
d.	Making or permitting any unfair discrimination between or among individuals or risks of the same class and of essentially the same hazard by refusing to issue, refusing to renew, cancelling, or limiting the amount of insurance coverage on a residential property risk, or the personal property contained therein, because of the age of the residential property, unless:
1.	The refusal or limitation is for the purpose of preserving the solvency of the insurer and is not a mere pretext for unfair discrimination, or
2.	The refusal, cancellation, or limitation is required by law.
(8)	Rebates.
a.	Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any contract of life insurance, life annuity or accident and health insurance, or agreement as to such contract other than as plainly expressed in the contract issued thereon, or paying or allowing, or giving or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance, or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; or giving, or selling, or purchasing or offering to give, sell, or purchase as inducement to such insurance or annuity or in connection therewith, any stocks, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the contract.
b.	Nothing in subdivision (7) or paragraph a of subdivision (8) of this section shall be construed as including within the definition of discrimination or rebates any of the following practices:
1.	In the case of any contract of life insurance or life annuity, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, provided, that any such bonuses or abatement of premiums shall be fair and equitable to policyholders and for the best interests of the company and its policyholders;
2.	In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expense;
3.	Readjustment of the rate of premium for a group insurance policy based on the loss or expense experienced thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year.
c.	No insurer or employee thereof, and no broker or agent shall pay, allow, or give, or offer to pay, allow, or give, directly or indirectly, as an inducement to insurance, or after insurance has been effected, any rebate, discount, abatement, credit or reduction of the premium named in a policy of insurance, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified in the policy of insurance. Nothing herein contained shall be construed as prohibiting the payment of commissions or other compensation to regularly appointed and licensed agents and to brokers duly licensed by this State; nor as prohibiting any participating insurer from distributing to its policyholders dividends, savings or the unused or unabsorbed portion of premiums and premium deposits.
(9)	Advertising of Health, Accident or Hospitalization Insurance. – In all advertising of policies, certificates or service plans of health, accident or hospitalization insurance, except those providing group coverage, where details of benefits provided by a particular policy, certificate or plan are set forth in any advertising material, such advertising material shall contain reference to the major exceptions or major clauses limiting or voiding liability contained in the policy, certificate or plan so advertised. The references to such exceptions or clauses shall be printed in a type no smaller than that used to set forth the benefits of the policy, certificate or plan. In all advertising of such policies, certificates or plans which contain a cancellation provision or a provision that the policies, certificates or plans may be renewed at the option of the company or medical service corporation only, such advertising material shall contain clear and definite reference to the fact that the policies, certificates or plans are cancellable or that the same may be renewed at the option of the company only.
	   In advertising, sale, or solicitation for sale of any insurance policy represented or advertised to afford coverages and benefits supplemental to or in addition to Medicare coverage, all such advertising materials, except for advertisements which have as their objective the creation of a desire to inquire further about an insurance product and do nothing more than generally describe the product and invite inquiries for costs and further details of the coverage, including limitations, exclusions, reductions or limitations and terms under which the policy may be continued in force, in whatever medium, and all solicitation and presentations for the sale of such policies, shall contain specific references to major exclusions or major exceptions that may result in voiding liability or in a reduction of benefits below those primarily advertised.  When such policies contain a coordination of benefits clause whereby benefits are limited by or prorated with other outstanding coverages, such provision shall be called to the attention of the prospective purchaser by conspicuously printed type no smaller than 10 point type.  When such policies are advertised to provide coverage above Medicare payments, but contain provisions limiting benefits to those approved for payment by Medicare under Part B, such limitation in benefits shall be called to the attention of the prospective purchaser regardless of the advertising medium; and when policies containing such provisions are delivered, there shall be incorporated therein the language or affixed thereto a sticker in conspicuously printed type no smaller than 10 point type stating:  CAUTION:  POLICY BENEFITS ARE LIMITED TO THOSE APPROVED BY MEDICARE FOR PAYMENT.  Any person engaged in the solicitation or sale of such supplemental Medicare policies in this State shall, as a part of the application, determine and list on the application all policies of Medicare supplement or other health insurance currently in force that cover the prospective insured.  In compiling such information, the person is entitled to rely upon information furnished by the prospective purchaser or insured.
(10)	Soliciting, etc., Unauthorized Insurance Contracts in Other States. – Soliciting, advertising or entering into insurance contracts in foreign states and any other jurisdiction in which such domestic insurer is not licensed in accordance with the laws of such state or jurisdiction, except as provided in G.S. 58-14-5.
(11)	Unfair Claim Settlement Practices. – Committing or performing with such frequency as to indicate a general business practice of any of the following: Provided, however, that no violation of this subsection shall of itself create any cause of action in favor of any person other than the Commissioner:
a.	Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
b.	Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;
c.	Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
d.	Refusing to pay claims without conducting a reasonable investigation based upon all available information;
e.	Failing to affirm or deny coverage of claims within a reasonable time after proof-of-loss statements have been completed;
f.	Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;
g.	Compelling [the] insured to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insured;
h.	Attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled;
i.	Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured;
j.	Making claims payments to insureds or beneficiaries not accompanied by [a] statement setting forth the coverage under which the payments are being made;
k.	Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;
l.	Delaying the investigation or payment of claims by requiring an insured claimant, or the physician, of [or] either, to submit a preliminary claim report and then requiring the subsequent submission of formal proof-of-loss forms, both of which submissions contain substantially the same information;
m.	Failing to promptly settle claims where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage; and
n.	Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
(12)	Misuse of Borrowers' Confidential Information. – Soliciting, accepting, or using any information from a lender concerning policies of insurance held by such lender as a mortgagee of real property, except from a lender who is an insurer where the loan has been made by or sold or held for sale to such insurer. Provided, however, this subdivision shall not apply to the use of such information by a lender for the solicitation of life or accident and health insurance.
(13)	Overinsurance in Credit or Loan Transactions. – In connection with a loan or extension of credit secured by real or personal property or both, requiring the applicant to procure property and casualty insurance against any one risk which results in coverage which exceeds the replacement value of the secured property at the time of the loan or extension of credit.  In connection with a secured or unsecured loan or extension of credit, requiring the applicant to procure life or health insurance against any one risk which exceeds the amount of the loan.  In connection with a loan secured by both real and personal property, requiring credit property insurance, as defined in G.S. 58-57-90, on the personal property.  For the purposes of this subsection "amount of loan" shall be deemed to be the amount of principal and accrued interest to be paid by the debtor including other allowable charges.
(14)	Notice of Claim Settlement Payments. – Upon payment of five thousand dollars ($5,000) or more in settlement of any third party liability claim and where the claimant is a natural person, the failure of the insurer to cause written notice to be mailed to the claimant at the same time payment by draft, check, or otherwise is made by the insurer or its representative, including the insurer's attorney, to the claimant's attorney or other representative of the claimant.  Nothing in this subsection creates a cause of action for any person, other than the Department, against the insurer or its representative based upon a failure to serve such notice, or the defective service of such notice.  Nothing in this subsection establishes a defense for any party to any cause of action based upon a failure by the insurer or its representative to serve such notice, or the defective service of such notice."
Sec. 38.  This act is effective upon ratification.