Title: S.L. 1967-935
Category: Introduced Bill
Keywords: Bill ?

NORTH CAROLINA GENERAL ASSEMBLY
1967 SESSION

CHAPTER 935
SENATE BILL 515

AN ACT TO PROHIBIT DOMESTIC INSURERS FROM TRANSACTING INSURANCE BUSINESS IN STATES AND JURISDICTIONS WHERE THEY ARE NOT AUTHORIZED TO DO A BUSINESS OF INSURANCE AND PRESCRIBING PENALTIES FOR VIOLATION OF PROHIBITED ACT AND TRANSACTION.

The General Assembly of North Carolina do enact:

Section 1.  Chapter 58 of the General Statutes of North Carolina is hereby amended by adding after Article 3C a new Article to be designated as Article 3D and to read as follows:
"ARTICLE 3D
"UNAUTHORIZED INSURANCE BY DOMESTIC COMPANIES
"§ 58-54.26.  Purpose of Act. It is the purpose of this Act to effectively control and regulate the activities of domestic insurance companies so as to prevent them from engaging in and transacting insurance business in states and jurisdictions in which they are not authorized to do a business of insurance. The General Assembly recognizes that insofar as domestic companies of this State engage in transacting insurance business in states and jurisdictions in which they are not authorized to do business that such activity subjects the domestic companies of this State to the penalties for such unlawful activities in other states and jurisdictions, and that such activities tend to substantially impair the effectiveness of the domestic companies in this State. The General Assembly also recognizes that the practices of unauthorized insurers could be largely corrected if each state would effectively regulate the activities of its domestic companies. The provisions of this Act are in addition to all other statutory provisions designed to control the activities of domestic companies and nothing herein shall be construed to amend, modify or repeal the provisions of existing laws.
"§ 58-54.27.  Domestic Insurers Prohibited From Transacting Business in Foreign States Without Authorization; Exceptions. Except as hereinafter provided, no domestic insurer organized under the laws of this State shall transact or attempt to transact or solicit business in any manner or accept risks in any jurisdiction in which such insurer is not licensed in accordance with the laws of such jurisdiction. There is excepted from the terms of this Section the following acts and transactions:
(a)	Contracts entered into by a domestic company insuring a risk within a foreign state or jurisdiction, where the law of the foreign state or jurisdiction permits an unauthorized insurer to so contract;
(b)	Contracts entered into where the prospective insured is personally present in the state in which the insurer is authorized to transact business when he signs the application;
(c)	Contracts of reinsurance between a licensed insurer of the foreign state or jurisdiction and a domestic company;
(d)	The issuance of certificates under a lawfully transacted group life or group disability policy, where the master policy was entered into in a state in which the insurer was then authorized to transact business;
(e)	The renewal or continuance in force, with or without modification, of contracts otherwise lawful and which were not originally executed in violation of this Section.
"§ 58-54.28.  Domestic Insurers; Advertising; Exceptions. No domestic insurer shall knowingly solicit or advertise its insurance business in a state or jurisdiction in which it is not licensed as an authorized insurer. Provided, however, that this Section shall not prohibit a domestic insurer from advertising through publications, radio or television if such advertising is not expressly directed toward the residents or subjects of insurance in a foreign state or other jurisdiction. Nor shall this Section apply to trade journals or directories.
"§ 58-54.29.  Penalties Provided for Unauthorized Acts. Whenever any domestic insurer shall knowingly engage in the practice of soliciting, advertising or making contracts for insurance in states or jurisdictions in which it is not licensed, the North Carolina Insurance Commissioner shall be authorized, as hereinafter provided, to issue an order requiring such company to cease and desist from engaging in such activities and, for the purposes of this Section, the acts prohibited by G.S. 58-54.28 and the foregoing Sections, are declared to be an unfair trade practice within the meaning of G.S. 58-54.4 and G.S. 58-54.9. Provided; whenever the Commissioner shall have reason to believe that any domestic company has been engaged or is engaging in the practice of knowingly soliciting, advertising or writing contracts of insurance on risks within a state or jurisdiction in which it is not licensed, he shall proceed to serve such company with notice of hearing and the hearing shall in all respects conform with the hearing procedure set forth in G.S. 58-54.6. Any action taken by the Commissioner of Insurance after such hearing shall be in compliance with G.S. 58-54.7, and any company aggrieved by an order of the Commissioner shall be entitled to that judicial review as is provided in G.S. 58-54.8."
Sec. 2.  G.S. 58-54.4 is hereby amended by adding after the present subdivision (9) thereof a new subdivision to be designated as subdivision "(10) and to read as follows:
"(10)	Soliciting, advertising or entering into insurance contracts in foreign states and any other jurisdiction in which such domestic insurer is not licensed in accordance with the laws of such state or jurisdiction, except as provided in G.S. 58-54.27."
Sec. 3.  If any provision of this Act or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are declared to be severable.
Sec. 4.  All laws and clauses of laws in conflict with this Act are hereby repealed.
Sec. 5.  This Act shall be effective on and after July 1, 1967, but the same shall not apply to any contracts of insurance in effect before the effective date of this Act.
In the General Assembly read three times and ratified, this the 27th day of June, 1967.