GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

S	1 

SENATE BILL 683

Short Title:  Underwriting Assn. Directors.	(Public)
─────────────────────────────────────── 
Sponsors: Senator Block.
─────────────────────────────────────── 
Referred to:  Insurance.
─────────────────────────────────────── 

April 18, 1991

A BILL TO BE ENTITLED
AN ACT TO PROVIDE FOR THE APPOINTMENT OF DIRECTORS TO THE NORTH CAROLINA INSURANCE UNDERWRITING ASSOCIATION AND TO THE FAIR PLAN UNDERWRITING ASSOCIATION AND TO PERMIT THE COVERAGE OF FARM AND MANUFACTURING RISKS BY THE NORTH CAROLINA UNDERWRITING ASSOCIATION.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 58-45-20 reads as rewritten:
"§ 58-45-20.  Board of Directors of Association.
The North Carolina Insurance Underwriting Association shall be administered by a board of directors.  The Board of Directors shall consist of 11 persons having one vote each from the following classifications:  Six directors of the Board shall be selected by the member insurers, and shall be fairly representative of the industry.  To insure fair representation, one director shall be selected by the following groups:  the American Insurance Association (or its successor), the Alliance of American Insurers (or its successor), all other stock insurers not affiliated with the above groups, and all other nonstock insurers not affiliated with the above groups.  Not more than one company in a group under the same ownership and management shall be represented on the Board at the same time.  The Commissioner of Insurance shall appoint five members of the Board who shall be fire and casualty insurance agents licensed in the State and actively engaged in writing property insurance in this State.  The term of office of the Board of Directors shall be two years."
Sec. 2.  G.S. 58-45-30 reads as rewritten:
"§ 58-45-30.  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 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. 58-45-1 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 36 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. 58-2-50, 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 paragraph. 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."
Sec. 3.  G.S. 58-45-5(5) reads as rewritten:
"(5)	‘Insurable property' means real property at fixed locations in beach areas of the State as that term is hereinafter defined or the tangible personal property located therein including farm and manufacturing risks but excluding insurance on motor vehicles, which property is determined by the Association, after inspection and pursuant to the criteria specified in the plan of operation, to be in an insurable condition: Provided, however, any one and two family dwellings built in substantial accordance with the Federal Manufactured Home Construction and Safety Standards, any predecessor or successor federal or State construction or safety standards, and any further construction or safety standards promulgated by the association and approved by the Commissioner, or the North Carolina Uniform Residential Building Code and any structure or building built in substantial compliance with the North Carolina Building Code, including the design-wind requirements, which is not otherwise rendered uninsurable by reason of use or occupancy, shall be an insurable risk within the meaning of this Article, but neighborhood, area, location, environmental hazards beyond the control of the applicant or owner of the property shall not be considered in determining insurable condition.  Provided further, that any structure commenced on or after January 1, 1970, not built in substantial compliance with the Federal Manufactured Home Construction and Safety Standards, any predecessor or successor federal or State construction or safety standards, and any further construction or safety standards promulgated by the association and approved by the Commissioner, or the North Carolina Uniform Residential Building Code or the North Carolina Building Code, including the design-wind requirements therein, shall not be an insurable risk.  The owner or applicant shall furnish with the application proof in the form of a certificate from a local building inspector, contractor, engineer or architect that the structure is built in substantial accordance with the Federal Manufactured Home Construction and Safety Standards, any predecessor or successor federal or State construction or safety standards, and any further construction or safety standards promulgated by the association and approved by the Commissioner, or the North Carolina Uniform Residential Building Code or the North Carolina Building Code; provided, however, such individual certificate shall not be necessary in those cases where the structure is located within a political subdivision which has certified to the Association on an annual basis that it is enforcing the North Carolina Uniform Residential Building Code or the North Carolina Building Code and has no plans to discontinue enforcing these codes during that year."
Sec. 4.  G.S. 58-46-25 reads as rewritten:
"§ 58-46-25. Board of Directors of the FAIR Plan Underwriting Association.
The underwriting association of the FAIR Plan shall be administered by a board of directors.  The Board of Directors shall consist of 11 persons having one vote each from the following classifications:  Six directors of the Board shall be selected by the member insurers, and shall be fairly representative of the industry.  To insure fair representation, one director shall be selected by the following groups:  the American Insurance Association (or its successor), the Alliance of American Insurers (or its successor), all other stock insurers not affiliated with the above groups, and all other nonstock insurers not affiliated with the above groups.  Not more than one company in a group under the same ownership and management shall be represented on the Board at the same time.  The Commissioner of Insurance shall appoint five members of the Board who shall be fire and casualty insurance agents licensed in the State and actively engaged in writing property insurance in this State.  The term of office of the Board of Directors shall be two years."
Sec. 5.  G.S. 58-46-15 reads as rewritten:
"§ 58-46-15. Requirements of Plan and authority of Association.
The Association formed pursuant to the provisions of this Article shall have authority on behalf of its members to cause to be issued basic property insurance policies, including coverage for farm risks; and shall offer additional extended coverage, optional perils endorsements, and crime insurance policies, or their successor forms of coverage; to reinsure in whole or in part, any such policies; and to cede any such reinsurance. The Plan adopted, pursuant to the provision of this Article, shall provide, among other things, for the perils to be covered, compensation and commissions, assessments of members, the sharing of expenses, income and losses on an equitable basis, the administration of the Plan and Association and any other matter necessary or convenient for the purpose of assuring fair access to insurance requirements. 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 to be 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."
Sec. 6.  This act becomes effective October 1, 1991.