A BILL TO BE ENTITLED
AN ACT TO INCREASE THE FAIRNESS and equity OF PROPERTY INSURANCE RATE MAKING IN NORTH CAROLINA BY requiring that CERTAIN PROPERTY INSURANCE DATA BE MADE AVAILABLE TO THE PUBLIC; by providing the commissioner WITH THE AUTHORITY to order a decrease in rates in a property insurance rate-making proceeding; by limiting the commission on policies issued under the beach plan to ten percent; by increasing the beach plan's nonrecoupable assessment cap; and by exempting premiums paid for beach plan policies from the gross premium tax.
The General Assembly of North Carolina enacts:

PART I. PROPERTY INSURANCE CLARITY
SECTION 1.  Article 10 of Chapter 58 of the General Statutes is amended by adding a new Part to read:
"Part 9. Property Insurance Rate Clarity.
"§ 58‑10‑335.  Title.
This Part is known and may be cited as the "Property Insurance Clarity Act."
"§ 58‑10‑340.  Information submission and compilation: current year.
(a)	Each insurer authorized to transact property insurance business in the State of North Carolina shall annually submit to the Department of Insurance, no later than April 1, computations of the total amount of direct incurred losses, the number of policies in force, and the direct earned premiums for the prior calendar year for all property insurance policies written by the insurer. The insurance company shall report the computations to the Department by rate territory. For purposes of this Part, property insurance shall also include condominium insurance, dwelling fire policies, renters or tenants insurance, and mobile home and manufactured housing property insurance. Condominium association insurance and commercial insurance are excluded from this Part.
(b)	Each insurance company authorized to transact homeowners insurance business in the State shall annually submit to the Department, no later than April 1, computations of the direct incurred losses and the number of policies in force, by rate territory, for the prior calendar year for each of the following perils:
(1)	Fire.
(2)	All wind and hail.
(3)	All other perils.
(c)	Each insurance company authorized to transact homeowners insurance business in the State shall submit to the Department catastrophe wind and hail information pursuant to a data call by the Department based on a specific catastrophic event.
(d)	The information received by the Department under the submission requirements of this section shall be aggregated across all insurance companies collectively, arranged by rate territory, and posted to the Department's Web site no later than June 1 for the prior calendar year.
"§ 58‑10‑345.  Submission of historical information.
No later than October 1, 2014, each insurer authorized to transact property insurance business in this State shall provide the information required pursuant to G.S. 58‑10‑340(a) for calendar years 2007 through 2012. Voluntary submissions of the information required by G.S. 58‑10‑340(a) for calendar years prior to 2007 may be submitted and shall be compiled and posted by the Department in the same manner. Based upon the submitted information, the Department shall compile aggregate totals, commencing with 2007, and post those aggregate totals on the Department Web site no later than December 1, 2014.
"§ 58‑10‑350.  Waiver; sanctions.
(a)	Upon written request of an insurer, the Commissioner may waive, modify, or extend for an additional time period, for good cause shown, the reporting requirements imposed by this act. The request shall demonstrate good cause for waiving, modifying, or extending the reporting requirements. Good cause may include, but is not limited to, the insurer's limited percentage of the total property insurance market in this State, or the undue burden of compiling and reporting the computations, data, and other information required by this act due to the manner, format, or method in which the insurer has stored the computations, data, or other information required.
(b)	Any insurer that fails to timely comply with the reporting requirements imposed by this act shall be given notice by the Department of such failure and provided 90 days within which to comply. Any insurer that fails to comply on or before the 90th day shall pay, after notice and hearing, a civil penalty of two thousand five hundred dollars ($2,500) per month to the Commissioner until the date of compliance. The clear proceeds of civil penalties provided for in this section shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C‑457.2.
"§ 58‑10‑355.  Confidentiality of information.
Any information reported to the Department by an insurer pursuant to this act is considered a trade secret as defined in G.S. 66‑152 and shall be treated as confidential information by the Department. However, once the information from all property insurers is aggregated, then the Department may provide such information in accordance with this Part. Notice of at least 10 business days shall be given to the insurer if confidential information pertaining to that insurer is ordered by a court of competent jurisdiction to be released by the Department."

PART II. AUTHORITY TO LOWER RATES
SECTION 2.  G.S. 58‑36.20 reads as rewritten:
"§ 58‑36‑20.  Disapproval; hearing, order; adjustment of premium, review of filing.
(a)	At any time within 50 days after the date of any filing, the Commissioner may give written notice to the Bureau specifying in what respect and to what extent the Commissioner contends the filing fails to comply with the requirements of this Article and fixing a date for hearing not less than 30 days from the date of mailing of such notice. Once begun, hearings must proceed without undue delay. At the hearing the burden of proving that the proposed rates are not excessive, inadequate, or unfairly discriminatory is on the Bureau. At the hearing the factors specified in G.S. 58‑36‑10 shall be considered. If the Commissioner after hearing finds that the filing does not comply with the provisions of this Article, he may issue his order determining wherein and to what extent such filing is deemed to be improper and fixing a date thereafter, within a reasonable time, after which the filing shall no longer be effective. In the event the Commissioner finds that the proposed rates are excessive, the Commissioner shall issue an order disapproving the filing and specifying the appropriate rate level or levels that may be used by the members of the Bureau instead of the rate level or levels proposed by the Bureau filing. In any such order, the Commissioner shall make findings of fact based on the evidence presented in the filing and at the hearing. Any order issued after a hearing shall be issued within 45 days after the completion of the hearing. If no order is issued within 45 days after the completion of the hearing, the filing shall be deemed to be approved.
…."

PART III. LIMIT AGENT'S COMMISSION
SECTION 3.1.  G.S. 58‑45‑35 is amended by adding a new subsection to read:
"§ 58‑45‑35.  Persons eligible to apply to Association for coverage; contents of application.
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(f)	The Association shall provide in its plan of operation that the commission rates to be paid to agents or brokers for policies issued under this section shall not exceed ten percent (10%) of written premium."
SECTION 3.2.  No later than October 1, 2013, the North Carolina Insurance Underwriting Association shall amend its plan of operation as provided in G.S. 58‑45‑30 to implement Section 3.1 of this act.

PART IV. INCREASE NONRECOUPABLE ASSESSMENT CAP
SECTION 4.  G.S. 58‑45‑47 reads as rewritten:
"§ 58‑45‑47.  Deficit event.
(a)	In the event of losses and expenses to the Association exceeding available surplus, reinsurance, and other sources of funding of Association losses, the Association is authorized to issue a nonrecoupable assessment upon its members in accordance with its Plan of Operation. Member assessments shall not exceed one billion two hundred million dollars ($1,200,000,000) for losses incurred from any event or series of events that occur in a given calendar year, regardless of when such assessments are actually levied on or collected from member companies.
(b)	When the Association knows that it has incurred losses and loss expenses in a particular calendar year that will exceed the combination of available surplus, reinsurance, and other sources of funding, including permissible member company assessments, then the Association shall immediately give notice to the Commissioner that a deficit event has occurred.
(c)	Upon a determination by the Association that a deficit event has occurred, the Association shall determine, in its discretion, the appropriate means of financing the deficit, which may include, but is not limited to, the purchase of reinsurance, arranging lines of credit, or other forms of borrowing or financing. If the Association determines that the member companies have paid one billion two hundred million dollars ($1,200,000,000) in nonrecoupable assessments for losses and expenses incurred in any given year pursuant to subsection (a) of this section, the Association may, subject to the verification by the Commissioner that the dollar value of losses and expenses has reached the level necessary for a catastrophe recovery charge, authorize member companies to impose a catastrophe recovery charge on their residential and commercial property insurance policyholders statewide. Catastrophe recovery charges shall be charged as a uniform percentage of written premiums as prescribed by the Commissioner and shall not exceed an aggregate amount of ten percent (10%) of the annual policy premium on any one policy of insurance. Catastrophe recovery charges collected under this section shall be transferred directly to the Association on a periodic basis as determined by the Association and ordered by the Commissioner. The Association and the FAIR Plan also shall charge their policyholders a catastrophe recovery charge as provided in this section.
…."

PART V. EXEMPT BEACH PLAN FROM GROSS PREMIUM TAX
SECTION 5.1.  G.S. 58‑45‑1 reads as rewritten:
"§ 58‑45‑1.  Declarations and purpose of Article.
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(c)	It is the intent of the General Assembly that except for the fire and lightning tax, the activities of the Association be exempt from State and federal taxation to the fullest extent permitted by law."
SECTION 5.2.  G.S. 58‑45‑80 reads as rewritten:
"§ 58‑45‑80.  Exemption from premium taxes.
All insurance written under this Article shall be exempt from the gross premium tax levied in Article 8B of Chapter 105 of the General Statutes."
SECTION 5.3.  G.S. 105‑228.5 reads as rewritten:
"§ 105‑228.5.  Taxes measured by gross premiums.
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(g)	Exemptions. – This section does not apply to any of the following:
(1)	Farmers' mutual assessment fire insurance companies.
(2)	Fraternal orders or societies that do not operate for a profit and do not issue policies on any person except members.
(3)	Insurance policies written under Article 45 of Chapter 58 of the General Statutes."

PART VI. MISCELLANEOUS PROVISIONS
SECTION 6.1.  If any section or provision of this act is declared unconstitutional or invalid by the courts, such action does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.
SECTION 6.2.  Section 1 of this act is effective when it becomes law and applies to the 2013 calendar year. Part V of this act is effective for taxable years beginning on or after July 1, 2013. The remainder of this act becomes effective July 1, 2013.