Bill Summary for S 496 (2021-2022)

Summary date: 

Apr 5 2021

Bill Information:

View NCGA Bill Details2021
Senate Bill 496 (Public) Filed Thursday, April 1, 2021
AN ACT TO AMEND AND TO MAKE CLARIFYING CHANGES TO VARIOUS INSURANCE LAWS, AS RECOMMENDED BY THE DEPARTMENT OF INSURANCE.
Intro. by Johnson, Edwards, McInnis.

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Bill summary

Part I.

Revises GS 58-17-75, regarding required filing of insurance holding company forms, to require copies of statements and all exhibits, papers, and documents filed as part of the statement to be filed with the Commissioner of Insurance (Commissioner) by mail (previously alternatively allowed for personal delivery). 

Part II.

Amends GS 58-7-170(d), which sets forth obligation limitations for permitted insurer investments under specified state law classified as medium to lower quality obligations which do not require the Commissioner's prior written approval. No longer excludes from the scope of the limitations obligations of subsidiaries or affiliated corporations. 

Amends GS 58-19-10(b)(1) regarding insurer investments in common stock, preferred stock, debt obligations, and other securities of affiliates or subsidiaries to consistently refer to both affiliates and subsidiaries. Makes conforming changes to subsection (c) to subject such investments to the medium and lower quality obligation limitations of GS 58-7-170(d), as amended.

Part III.

Revises GS 58-89A-110 to no longer require professional employer organization licensees to notify the Commissioner within 30 days of initiation or termination of the licensee's relationship with any client company; maintains the required notification of its workers' compensation carrier and the NC Industrial Commission.

Part IV.

Adds to the statutes specified in GS 58-67-171 that apply to health maintenance organizations (HMOs) to include GS 58-7-21 (concerning credit allowed to a domestic ceding insurer), GS 58-7-26 (concerning asset or reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of GS 58-7-21), GS 58-7-30 (concerning insolvent ceding insurers), and GS 58-7-31 (concerning life and health reinsurance agreements).

Part V.

Regarding the continuation of health care services under GS 58-93-75 for insolvent prepaid health plans (PHPs), requires PHP insolvency plans to allow for health care services to be provided to enrollees until the PHP's capitated contract is terminated by the Department of Health and Human Services (DHHS) and all enrollees required under GS 108D-40 to enroll in a PHP are transitioned to another PHP (was until all of the PHP's enrollees whose enrollment in a PHP is not voluntary are enrolled in another PHP). Makes conforming changes to the Commissioner's authority to impose certain requirements on a PHP's insolvency plan.

Part VI.

Amends GS 20-279.21(d1)(2) to require the party who rejects an umpire's motor vehicle damage appraisal report to pay the costs of the umpire.

Part VII.

Makes the following changes regarding public school insurance.

Revises GS 115C-523.1 to require local boards of education to annually provide the Commissioner with a list of all of its insurable buildings, the equipment and contents of the buildings, and their insurable values by October 1. Requires local boards to provide the Commissioner a copy of a policy of insurance issued from a licensed and authorized company for any insurable building, its equipment, or its contents, with subsequent notification for the policy's cancellation, termination, or other changes. Makes conforming changes to include violations of the new provisions within the Commissioner's authority to impose civil penalties. 

Enacts substantively identical reporting provisions to GS 115C-523.2 regarding flood insurance for public school buildings, GS 115D-58.11 regarding fire and casualty insurance for community colleges, and GS 115D-58.11A for flood insurance for community colleges, with local boards and boards of trustees charged with the duty as appropriate. Makes identical changes regarding the imposition of civil penalties for violations of the new reporting requirements.

Part VIII.

Revises and adds to the definitions set forth in GS 143-143.9, applicable to the NC Manufactured Housing Board and manufactured home warranties. Defines Code to mean the engineering standards entitled State of NC Regulations for Manufactured Homes adopted by the Commissioner (was engineering standards adopted by the Commissioner). Adds qualifier and defines the term to mean an individual taking the examination on behalf of a set-up contractor applicant, who is associated with the applicant and is actively engaged in the work of the applicant. 

Amends GS 143-143.15 to more specifically require manufactured homes to be set up in accordance with the standards entitled State of NC Regulation for Manufactured Homes adopted by the Commissioner. 

Repeals GS 143-143.21A(a)(5) to no longer require manufactured home purchase agreements to include the estimated terms of financing the purchase, if any. 

Amends GS 143-151(a) to set the maximum civil penalty for violating Article 9A or rules adopted thereunder to limits sets by specified federal law (was $1,000) per violation. Makes an identical change to penalties for a related series of violations occurring within one year after the date of the first violation. 

Part IX.

Makes a technical change to the phone number of the Senior's Health Insurance Information Program of the Department of Health Insurance set forth in GS 58-55-60.

Part X.

Amends GS 58-28-5(a)(4), which excepts from the licensure requirements of insurers' transactions involving group life insurance, group annuities or group, blanket, or franchise accident and health insurance where the master policy for the insurance was lawfully issued and delivered in a state in which the company is authorized to transact business. Adds that the exception does not apply to companies that have had their license to conduct business in the state suspended or revoked. 

Part XI.

Revises GS 58-49-12, which excludes certain health care sharing organizations from the authority of the Commissioner, to make the exception applicable to "faith-based health care sharing organizations" meeting the specified criteria. Revises the qualifications to include limiting participants to those of similar faith, disclosure of administrative fees and costs to participants, and providing that any card issued to a participant for presentation to a health care provider clearly indicates that the participant is part of a faith-based health care sharing organization that is not an insurance company. Adds to the required monthly statement publications to include the total payments by members for the previous month, the percentage of total payments applied to administrative expenses, and the percentage of the total payments applied to the payment of participants' qualified needs. Requires the disclaimer provided to be written at the beginning of all applications and guidance materials distributed by or on behalf of the organization (was, to be written on or accompanying the applications and guidance materials). Applies to any faith-based health care sharing organization conducting business on or after October 1, 2021, and any written statement provided to participants on or after that date.

Part XII.

Makes the following changes to GS 58-2-46, which provides for parameters that are effective when disaster declarations are proclaimed for the state or an area of the state or a Presidential major disaster declaration has been issued for the state or an area of the state, and the Commissioner has issued an order declaring the parameters to be in effect for the specific disaster. Makes changes throughout to refer to real property within the designated area rather than the geographic area designated in the proclamation or declaration. Adds that included in the deferral of time limits under the statute during a declared disaster is the transmittal of information and communications (was, the transmittal of information only) with respect to insurance policies or contracts, premium finance agreements, or debt instruments when the insurer, insured, claimant, or customer resides or is located in the designated areas in the proclamation or declaration. Further adds that the deferral of time limits applies to all insureds, claimants, or customers and does not require a request to defer. Adds the following conditions applicable to proclaimed or declared disasters.

For property and casualty insurance companies and insurance policies that insure customers and policyholders who reside in the designated area and who have been displaced from their residencies, requires: (1) payment of all premiums in arrears under the policy or contract after the deferral period has expired, with cancellation authorized for failure to pay on or after the 21st day following expiration, subject to notice requirements; (2) cancellations for nonpayment scheduled to be effective after the deferral period has commenced to be deferred until the period expires, subject to notice requirements; allows for processing of cancellations for cause that have been properly noticed during the deferral period; and (3) properly noticed nonrenewals effective after the commencement of the deferral period to be deferred until its expiration, subject to notice requirements. Excludes property and casualty insurance policies and contracts entered into on or after the date the Commissioner has issued an order declaring the statute effective for the specific disaster. Also excludes premium finance companies.

Instead enacts the following, applicable to premium finance companies and premium finance agreements that have financed property and casualty insurance policies for customers or policy holders who reside in the designated area in the proclamation or declaration who may have been displaced from their residences. Requires: (1) payments in arrears to be due after the deferral period has expired, with cancellation authorized for failure to pay on or after the 21st day following expiration, subject to notice requirements and (2) cancellations for nonpayment with properly noticed cancellation effective on or prior to the date the Commissioner issued the order to be cancelled and valid. Excludes premium finance agreements entered into on or after the date the Commissioner has issued an order declaring the statute effective.

Adds a new condition during a disaster, requiring that all collection agencies must discontinue attempts to collect debt against their customers who reside within the designated area in the proclamation or declaration during the deferral period. 

Enacts six similar conditions applicable during a public health emergency or other situations that require citizens to shelter in place, including (1) requiring notice giving customers the option to defer premium payments due during the time period covered by the Commissioner's order declaring the statute to be in effect, as specified, with payments due upon the expiration of the deferral period and cancellations for nonpayment authorized, and excluding policies and contracts entered into on or after the date of the Commissioner's order; (2) permitting property and casualty insurance policy nonrenewals or cancellations during the situation; (3) requiring that all collection agencies must discontinue attempts to collect debt against their customers who reside within the designated area in the proclamation or declaration during the deferral period; (4) not applying the deferral period to time limitations imposed by law, rule, or other policy or contract provision or the transmittal of information or communication related to policies, premium finance agreements, or debt instruments; (5) authorizing the Commissioner to extend the deferral period; and (6) payment of all health benefit plan premiums in arrears upon expiration of the deferral period, with lapse provided for premiums not paid, as specified. Excludes situations that involve enemy attack, invasion, insurrection, riot, rebellion, revolution, civil war or commotion, or military or usurped power.

Makes clarifying and technical changes. 

Part XIII.

Regarding licensed insurance adjusters of other states permitted by the Commissioner to perform emergency insurance adjustment work for an licensed adjuster employer under GS 58-33-70, requires the employer to certify prior to beginning work that the adjuster has completed an approved catastrophe education course required by the Commissioner (previously required written notice to the Commissioner upon beginning work).

Part XIV.

Expands the authority to incorporate optional enhancements to insurance programs under GS 58-36-43 to also include dwelling or residential private flood insurance (previously limited to automobile or homeowners' insurance). Makes conforming changes regarding program enhancement amendments and the prohibition against conditioning the acceptance of any optional enhancements upon the acceptance, renewal, or any underwriting rating criteria of the company, making those provisions applicable to the expanded policies and enhancements. 

Part XV.

Adds a standard notice statement to GS 58-44B-15 that must be included in travel protection plans, as specified.

Part XVI.

Except as otherwise provided, the act is effective when it becomes law. 

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