Printer-friendly: Click to view
View NCGA Bill Details2011-2012 Session
Senate Bill 490 (Public) Filed Thursday, March 31, 2011
Intro. by Rucho.

Status: Ref To Com On Insurance (Senate Action) (Apr 4 2011)

Bill History:

S 490

Bill Summaries:

  • Summary date: Mar 31 2011 - View Summary

    Current law provides that the North Carolina Rate Bureau (Rate Bureau) was created under GS 58-36-1 to assume the functions formerly performed by the North Carolina Fire Insurance Rating Bureau, the North Carolina Automobile Rate Administrative Office, and the Compensation Rating and Inspection Bureau of North Carolina. Amends GS 58-36-1 to remove the functions of the North Carolina Automobile Rate Administrative Office from among those assumed by the Rate Bureau. Deletes GS 58-36-3(a)(6) which took away the Bureau’s authority over insurance against theft or physical damage to motorcycles. Makes conforming changes to provisions in GS Chapter 58 dealing with the administration by the Rate Bureau of insurance coverage for nonfleet private passenger motor vehicles and motorcycles. Repeals GS 58-36-41, GS 58-36-65 through 58-36-85, and GS 58-36-95.
    Enacts new GS 58-40-17 to provide that despite the definition of nonfleet in GS 58-40-10(2), an insurer may adopt rules, subject to the approval of the Commissioner of Insurance, that specify the circumstances under which more than four private passenger motor vehicles may be covered under a nonfleet private passenger motor vehicle policy that is subject to Article 40, Regulation of Insurance Rates, of GS Chapter 58.
    Enacts new GS 58-40-145 to prohibit insurers from using credit scoring as the sole basis for (1) terminating an existing policy, (2) terminating coverage in an existing policy, or (3) subjecting a policy to a “consent rate” as specified in GS 58-40-30(c) without consideration of any other risk factors; however, does permit insurers to use credit scoring as the sole basis for discounting rates. Provides that for the purposes of subsection (b) of proposed GS 58-40-145 only, the term existing policy means a policy in effect for more than 60 days. Requires that an insurer provide the applicant or policyholder with written notice if a credit report was used in conjunction with other criteria to take an adverse action. Provides criteria regarding the content of the notice. Provides for re-underwriting or re-rating the insured as a result of disputed credit report information and a determination that the credit information was incorrect or incomplete under the dispute resolution process set forth in 611(a) of the federal Fair Credit Reporting Act, USC Section 1681i(a). Also provides criteria for refunds to the insured if premiums have been overpaid. Provides criteria for indemnification responsibilities of the insurer and filing requirements for the insurer. Enacts new GS 58-40-150 setting forth disclosure requirements regarding the use of non-original crash repair parts. Amends GS 58-40-155 providing remedies for an insurer when the applicant for the issuance or renewal of a nonfleet private passenger motor vehicle insurance policy knowingly makes a material misrepresentation on the application for a motor vehicle insurance policy.
    Amends GS 58-40-10 deleting a motorized scooter or other similar motorized vehicle not used for commercial purposes from the definition for a private passenger motor vehicle. Adds proposed Articles 37A and 41 of GS Chapter 58 to those Articles to which the definitions in this statute apply.
    Enacts new Article 37A, Motor Vehicle Insurance Flex-Rating, in GS Chapter 58 with provisions that apply only to nonfleet private passenger motor vehicle insurance written in North Carolina by any insurer licensed by the Commissioner of Insurance to write nonfleet private passenger motor vehicle insurance. Defines terms as they apply in this Article. Provides criteria for flex-rating, allowing an overall statewide increase or decrease of no more than 15% in a nonfleet private passenger motor vehicle insurance rate to take effect on or after the date it is filed. Provides restrictions on the frequency and timing of a rate filing and additional criteria regarding rate filings that provide for an increase greater than 15% when aggregated for all policy holders. Also specifies role of Commissioner in evaluating rate filings.
    Makes conforming changes to GS 58-37-35 regarding rates for clean risks reinsured in the NC Reinsurance Facility (Facility) effective October 1, 2012. Amends GS 58-37-40(f) to provide that the charges set out in the plan of operation and determined on the basis of the surcharge are to be set out as a separate charge on any statement of applicable premium charges provided to the policyholder (was, combined and displayed as a part of the applicable premium charge).
    Enacts new GS 58-37-80 directing the Facility to file, subject to review, modification, and promulgation by the Commissioner, rate classifications, schedules, or rules as deemed desirable and equitable by the Commissioner to classify drivers of nonfleet private passenger motor vehicles for purposes of reinsurance under Article 37 of GS Chapter 58. Requires the Facility to file a Safe Driver Incentive Plan (Plan) that distinguishes among various classes of drivers assigned to the Facility and provides premium differentials among those classes of drivers creating subclassification of drivers. Provides that the classifications and Plan filed by the Facility is subject to the filing, hearing, modification, approval, disapproval, review, and appeal procedures provided by law. Provides additional details regarding responsibilities and authority of the Facility in developing the Plan.
    Enacts new GS 58-37-85 to provide that the subclassification presented under proposed GS 58-37-80 may provide for separate surcharges for major, intermediate, and minor accidents. Defines what constitutes a major, intermediate, and minor accident. Provides criteria regarding point value and surcharges assigned to at-fault accidents and certain moving violations and specifications based on the subclassification plan. Also provides exceptions to the Safe Driver Incentive Plan surcharges.
    Requires the Executive Director and the Chair of the Board of Governors of the Facility to report to the Joint Legislative Commission on Government Operations on or before October 1, 2016, and again on or before October 1, 2018, on the size and market share of the Facility, and the analysis of the effective of the flex-rating authorized by Article 37A of GS Chapter 58 in reducing the size of the Facility. Effective October 1, 2012.
    Except as otherwise indicated, effective October 1, 2014.