NC HEALTH INSURANCE CHAPTER 4

What is an authorized insurer?

An insurer that has received a Certificate of Authority from the Department of Insurance to transact insurance in the state.

Define a business entity in insurance.

A corporation, association, partnership, LLC, LLP, or other legal entity.

What does cease and desist mean?

To stop or discontinue an activity, typically by regulatory order.

What is coercion in insurance?

A forceful act or threat aimed at influencing a person to act against their will.

Define commission.

Payment to an agent by the insurer for placing insurance, usually a percentage of the premium.

What is a disclosure?

Revealed information that helps someone make an educated decision.

What does exempt mean?

Not subject to an obligation.

What is an insurer’s home office?

The insurer’s headquarters or principal place of business.

Define an inducement.

An offer intended to influence the other party.

What does insolvent mean?

Unable to meet financial obligations.

What is restitution?

Restoration to the original condition or repayment.

Define statute.

A formal written law enacted by a legislature.

What is a subpoena?

An order to appear as a witness or provide evidence.

Explain surplus lines insurance.

Coverage placed with non-admitted insurers when authorized insurers won’t write the risk.

How do NC statutes define a contract of insurance?

An agreement obligating the insurer to pay money or provide value as indemnity for loss.

What does domicile refer to?

The location where an insurer is incorporated.

List the three domicile-based classifications of insurers.

Domestic, foreign, and alien.

What is a domestic insurer?

ncorporated in the same state where it does business.

What is a foreign insurer?

Incorporated in another U.S. state, D.C., or territory.

What is an alien insurer?

Incorporated outside the United State

What must an insurer obtain before doing business in NC?

A Certificate of Authority.

Who heads the Insurance Department?

The Commissioner of Insurance.

How long is the Commissioner’s term?

Four years.

Name two general powers of the Commissioner.

Enforce statutes; fix and collect regulatory fees

How often must every domestic insurer be examined?

At least once every five years.

Who pays for an examination?

The insurer being examined.

Minimum notice before a hearing?

10 days.

How long must business records be kept?

5 years after the transaction ends.

Retention period for claim reports?

5 years after claim settlement or until exam report adopted.

Retention period for complaint logs?

5 years.

Suspension for first record-keeping offense?

1-6 months.

Criminal charge for refusing to provide records?

Class 1 misdemeanor.

Penalty class for fraudulent insurance statements?

Class H felony.

What can the court order as probation for fraud?

Restitution.

Possible treble damages?

Yes—if a pattern of violations is proven

What court relief can the Commissioner seek for violations?

Restraining order and injunction.

Effect of a criminal conviction on a license?

Automatic suspension until reinstated.

Monetary penalty range per violation?

$100–$1,000 per day.

Duty to report violations?

Applies to any licensed person; communication is privileged.

Fine for willfully violating a cease-and-desist order

$1,000–$5,000 per violation (or $10,000 for privacy-related breaches).

What is the purpose of producer licensing in NC?

To ensure that insurance producers meet educational and ethical standards so they can fulfill their responsibilities to insurers and the public.

Define an agent under NC licensing law.

A person licensed (or who should be licensed) to solicit, sell, or negotiate insurance on behalf of an insurer; an agent represents the insurer, not the insured or beneficiary.

What is an adjuster?

Any individual who, for salary, fee, or commission, investigates or reports on insurance claims arising under contracts other than life or annuity

Who is excluded from the definition of adjuster?

An attorney-at-law who adjusts losses incidental to practice or an adjuster of marine losses.

Define a broker.

A licensed person who procures insurance for a party other than themselves through an authorized insurer for which they are not an agent; a broker represents the insured.

What entities qualify as a business entity for licensing?

Corporation, association, partnership, LLC, LLP, or other legal entity (not a sole proprietorship).

What is a person's home state in licensing terms?

NC or any U.S. state/territory where the agent maintains principal place of residence or business and is licensed as an agent.

Define insurance producer.

A person required to be licensed to sell, solicit, or negotiate insurance (includes agents, brokers, and limited representatives).

What is a limited lines agent?

A person authorized by the Commissioner to sell, solicit, or negotiate limited lines insurance only.

What does it mean to negotiate insurance?

Act of directly offering advice about benefits, terms, or conditions of a policy to a purchaser/prospect, or completing insurance applications for them.

Define sell in relation to insurance.

To exchange a contract of insurance for money or its equivalent on behalf of an insurer.

Define solicit.

Attempting to sell insurance or urging a person to apply for a specific policy; does not include generic discussions of policy terms.

What does terminate mean in agency context?

Cancellation of the relationship between an agent and insurer, or termination of the agent's authority.

What is the Uniform Application?

The current NAIC application used for resident and non-resident agent licensing.

Who is considered a resident for NC licensing?

Someone who lives in NC or an adjoining county in a bordering state; cannot hold resident license in another state.

What qualification is NOT required for nonresident producers?

Reciprocity for surplus lines licenses - reciprocity does not apply.

List two key qualifications for a non-resident producer license.

Hold good-standing resident license in home state and submit NAIC Uniform Application & fees to NC.

Maximum duration of a temporary insurance agent license?

180 days (can be longer for good cause).

Name one situation where a temporary license may be issued.

To a spouse/heir of a deceased or disabled agent to service the business.

What coverages can be sold under a limited rental car license? (Name any two)

Excess liability beyond rental agreement limits Accident & health for renters Personal effects loss Any other Commissioner-approved coverage.

What is the maximum rental period for which limited rental car coverage can be issued?

30 consecutive days

Who may hold a restricted overseas military agent license?

Foreign military sales agents representing a life insurer on U.S. installations overseas with U.S. personnel

How often must a restricted military license be renewed?

Annually

How many hours of pre-licensing education are required per single-line license?

20 hours (10 hours for Medicare Supplement & LTC).

What examination must every applicant pass?

A written exam demonstrating competence in the line of authority

Minimum bond amount to obtain a broker's license?

$15,000 (or equivalent cash/CD deposit).

Notice period to terminate a broker bond?

30 days written notice to licensee and Commissioner.

Annual renewal fee for an adjuster license?

$75

Renewal fee for a resident broker license?

$50

Renewal fee for surplus lines licensee - corporate?

$100

What is the penalty for selling insurance for an unauthorized insurer if agent did not know?

Class 1 misdemeanor (each transaction is separate offense)

Penalty class if the agent should have known the insurer was unauthorized?

Class H felony.

Minimum age to apply for a resident agent license?

18 years

Deadline for an insurer to file a notice of appointment for a new agent?

Within 15 days after the date the first insurance application is submitted

By what date must annual agent appointment renewal fees be paid?

Prior to April 1 each year.

Within how many days must an agent notify the Commissioner after appointment termination?

30 days.

Total CE hours required every compliance period?

24 hours every 2 years, including 3 hrs ethics.

Additional CE for adjusters/property/personal lines agents?

3 hours approved Flood course each compliance period.

How long must CE records be retained?

At least 5 years.

When does CE lapse cause license lapse?

If CE not completed by last day of the licensee's birth month in compliance year

Name one group eligible for a CE waiver up to one year.

Licensees on active U.S. military deployment or with long-term medical disability (documentation required)

Permanent CE exemption applies to which licensees?

Those 65+ AND continuously licensed 25 years OR holding certain professional designations before 10/1/2010.

Deadline to report change of address/email to Commissioner?

Within 10 business days.

Penalty for failing to report address change?

$50 administrative fee.

Within how many business days must notice of bankruptcy or insolvency be given?

3 business days.

Give two causes for which a license may be suspended or revoked.

Obtaining license by fraud Misappropriating premiums (others listed).

What offense is acting as an agent without a license?

Class 1 misdemeanor.

Who may receive commissions for insurance sales?

Only persons properly licensed at time of sale/negotiation or entities through licensed owners/agents.

Can renewal commissions be paid after a license lapses?

Yes, if the person was properly licensed when the business was originally placed.

What must an agent display on request during duties?

Their Department-issued license.

What conduct is required of all licensees?

Conduct to inspire confidence by fair and honorable dealings (prompt ID, honesty, etc.).

How soon must a licensee notify the Commissioner after ANY criminal conviction?

Within 10 days after the date of conviction.

Timeframe for Commissioner to notify NAIC after suspension/revocation?

Promptly (no specific days stated, but must notify every appointing insurer and NAIC).

When must a duplicate license be issued upon loss/stole

Upon written request plus required fee.

What are the five core purposes of the Insurance Information and Privacy Protection Act (IIPPA)?

Set standards for collecting, using & disclosing info

Balance insurer info needs with consumer privacy

Enable consumers to learn what data is collected & verify accuracy

Limit disclosure of info from insurance transactions

* Let applicants/policyholders know why adverse underwriting decisions are made

Under what three situations does the IIPPA apply?

When information about NC residents is collected/maintained in connection with insurance

When transactions involve applicants, insureds, or policyholders who are NC residents

When mortgage guaranty policies/contracts/certificates of property & casualty insurance are delivered or renewed in NC

Who is considered a resident under the IIPPA?

A person whose last known mailing address in the insurer/agent/support organization's records is in North Carolina.

Define a pretext interview.

An interview where the interviewer misrepresents identity, true purpose, or pretends to represent someone else, or refuses to reveal identity to obtain information about a natural person

When may a pretext interview be used under IIPPA?

Only to obtain info from a person or institution without a privileged relationship, and only to investigate a claim where there is reasonable suspicion of criminal activity, fraud, material misrepresentation, or nondisclosure.

When must a notice of information practices be given for applications?

No later than policy delivery / certificate delivery if info is collected only from applicant or public records, OR when collection from other sources begins.