GENERAL ASSEMBLY OF NORTH CAROLINA
1995 SESSION
CHAPTER 360
The General Assembly of North Carolina enacts:
REVENUE DEPARTMENT COLLECT SOME PREMIUMS TAX
Section 1. (a) G.S. 105-228.9 reads as rewritten:
"§ 105-228.9. Commissioner of Insurance to administer portions of Article.
This Notwithstanding any other provision of this Article,
the taxes levied in this Article on self-insurers and the additional tax levied
in this Article at the rate of one and thirty-three hundredths percent (1.33%)
on contracts of insurance applicable to fire and lightning coverage shall
be administered solely by the Commissioner of Insurance, who has the same
authority and responsibility in administering those portions of this
Article as the Secretary of Revenue has in administering the other Articles
of this Chapter. All provisions of this Chapter that are not inconsistent
with this Article apply to this Article. portions of this Article."
(b) G.S. 105-228.3 reads as rewritten:
"§
105-228.3. To whom this Article shall apply. Definitions.
The following definitions apply in this Article:
(1) Article 65 corporation. - A corporation subject to Article 65 of Chapter 58 of the General Statutes, regulating hospital, medical, and dental service corporations.
(2) Insurer. - An insurer as defined in G.S. 58-1-5 or a group of employers who have pooled their liabilities pursuant to G.S. 97-93 of the Workers' Compensation Act.
(3) Self-insurer. - An employer that carries its own risk pursuant to G.S. 97-93 of the Workers' Compensation Act.
provisions of this Article shall
apply to every person, firm, corporation, association, society, or order
operating in this State, hereinafter to be referred to as insurance company,
which contracts or offers on his, their, or its account to issue any policy or
contract for annuities or insurance as defined in G.S. 58-1-10, or to exchange
or issue reciprocal or interinsurance contracts, or to function as a
rate-making bureau or association, advisory organization, joint underwriting or
joint reinsurance organization, or to serve as an underwriters agency. Said
provisions shall likewise apply to any person, firm or corporation who or which
shall be a broker, organizer, manager, or agent, whether local, special or
general, of any insurance company, and to self-insurers under the provisions of
the Workers' Compensation Act."
(c) G.S. 105-228.4 is recodified as G.S. 58-6-7.
(d) G.S. 105-228.5 reads as rewritten:
"§ 105-228.5. Taxes measured by gross premiums.
(a) Tax Levied. -
Every insurance company and every corporation subject to Article 65 of Chapter
58 of the General Statutes is subject to the tax imposed by this section. A
tax is levied in this section on insurers, Article 65 corporations, and
self-insurers. A person who An insurer or Article 65
corporation that is subject to the tax imposed levied by this
section is not subject to franchise or income taxes imposed by Articles 3 and
4, respectively, of this Chapter.
(b) Tax Base. - The tax
imposed by this section on an insurance company insurer shall be
measured by gross premiums from business done in this State during the
preceding calendar year and the tax on a corporation subject to Article 65
of Chapter 58 of the General Statutes year. The tax imposed by
this section on an Article 65 corporation shall be measured by gross
collections from membership dues, exclusive of receipts from cost plus plans,
received by the corporation during the preceding calendar year. The tax
imposed by this section on a self-insurer shall be measured by the gross
premiums that would be charged against the same or most similar industry or
business, taken from the manual insurance rate then in force in this State,
applied to the self-insurer's payroll for the previous calendar year as
determined under Article 2 of Chapter 97 of the General Statutes modified by
the self-insurer's approved experience modifier.
In determining the amount of gross premiums from business in this State, all gross premiums received in this State, credited to policies written or procured in this State, or derived from business written in this State shall be deemed to be for contracts covering persons, property, or risks resident or located in this State unless one of the following applies:
(1) The premiums are properly reported and properly allocated as being received from business done in some other nation, territory, state, or states.
(2) The premiums are from policies written in federal areas for persons in military service who pay premiums by assignment of service pay.
Gross premiums from business done in this State in the case
of life insurance contracts, including supplemental contracts providing for
disability benefits, accidental death benefits, or other special benefits that
are not annuities, shall mean means all premiums collected in the
calendar year, other than for contracts of reinsurance, for policies the
premiums on which are paid by or credited to persons, firms, or corporations
resident in this State, or in the case of group policies, for contracts of
insurance covering persons resident within this State. The only deductions
allowed shall be for premiums refunded on policies rescinded for fraud or other
breach of contract and premiums that were paid in advance on life insurance
contracts and subsequently refunded to the insured, premium payer, beneficiary
or estate. Gross premiums shall be deemed to have been collected for the
amounts as provided in the policy contracts for the time in force during the
year, whether satisfied by cash payment, notes, loans, automatic premium loans,
applied dividend, or by any other means except waiver of premiums by companies
under a contract for waiver of premium in case of disability.
Gross premiums from business done in this State for all other
contracts of insurance, including contracts of insurance required to be carried
by the Workers' Compensation Act, shall mean means all premiums
written during the calendar year, or the equivalent thereof in the case of
self-insurers under the Workers' Compensation Act, for contracts covering
property or risks in this State, other than for contracts of reinsurance,
whether the premiums are designated as premiums, deposits, premium deposits,
policy fees, membership fees, or assessments. Gross premiums shall be deemed to
have been written for the amounts as provided in the policy contracts, new and
renewal, becoming effective during the year irrespective of the time or method
of making payment or settlement for the premiums, and with no deduction for
dividends whether returned in cash or allowed in payment or reduction of
premiums or for additional insurance, and without any other deduction except
for return of premiums, deposits, fees, or assessments for adjustment of policy
rates or for cancellation or surrender of policies.
(c) Exclusions. - Every insurer, in computing the premium tax, shall exclude all of the following from the gross amount of premiums:
(1) All premiums received
on or after July 1, 1973, from policies or contracts issued in connection with
the funding of a pension, annuity, or profit-sharing plan qualified or exempt
under sections section 401, 403, 404, 408, 457 or 501 of the Code
as defined in G.S. 105-228.90.
(2) Premiums or considerations received from annuities, as defined in G.S. 58-7-15.
(3) Funds or considerations received in connection with funding agreements, as defined in G.S. 58-7-16.
The gross amount of the excluded premiums, funds, and considerations shall be exempt from the tax imposed by this section.
(d) Tax Rates. - The tax
rate to be applied to gross premiums premiums, or the equivalent
thereof in the case of self-insurers, collected on contracts applicable to
liabilities under the Workers' Compensation Act shall be two and five-tenths
percent (2.5%). The tax rate to be applied to gross premiums collected on all other
insurance contracts issued by insurers shall be one and nine-tenths percent
(1.9%). An additional tax shall be applied to amounts collected on contracts of
insurance applicable to fire and lightning coverage, except in the case of
marine and automobile policies, at the rate of one and thirty-three hundredths
percent (1.33%). Twenty-five (1.33%); twenty-five percent (25%)
of the net proceeds of the one and thirty-three hundredths percent (1.33%)
tax on amounts collected on contracts of insurance applicable to fire and
lightning coverage this additional tax shall be deposited in the
Rural Volunteer Fire Department Fund established in Articles 84 through 88 of
Chapter 58 of the General Statutes. The tax rate to be applied to gross premiums
and/or gross collections from membership dues, exclusive of receipts from cost
plus plans, received by Article 65 corporations subject to Article 65
of Chapter 58 of the General Statutes shall be one-half of one percent (1/2
of 1%).
(e) Report and Payment. -
Each insurance company and corporation subject to Article 65 of Chapter 58
of the General Statutes insurer, Article 65 corporation, and
self-insurer doing business in this State shall, within the first 15 days
of March, file with the Commissioner of Insurance Secretary of
Revenue a full and accurate report of the total gross premiums as defined
in this section section, the payroll and other information required
by the Secretary in the case of a self-insurer, or the total gross
collections from membership dues exclusive of receipts from cost plus plans
collected in this State during the preceding calendar year. The Commissioner
of Insurance shall specify the form of the report and the information to be
contained in the report. The report shall be verified by the oath of
the company official or other representative responsible for transmitting
it or by some principal officer at the home or head office of the company or
association in this country. The it; the taxes imposed by this
section shall be remitted to the Commissioner of Insurance Secretary with
the report. This subsection applies to reports and taxes for firms,
corporations, or associations exchanging reciprocal or interinsurance
contracts, and those reports and taxes shall be transmitted by their
attorneys-in-fact.
(f) Installment
Payments Required. - Insurance companies and corporations subject to Article
65 of Chapter 58 of the General Statutes Insurers, Article 65
corporations, and self-insurers that are subject to the tax imposed by this
section and have a premium tax liability of ten thousand dollars ($10,000) or
more for business done in North Carolina during the immediately preceding year
shall remit three equal quarterly installments with each installment equal to
at least thirty-three and one-third percent (33 1/3%) of the premium tax
liability incurred in the immediately preceding taxable year. The quarterly
installment payments shall be made on or before April 15, June 15, and October
15 of each taxable year. The company shall remit the balance by the following
March 15 in the same manner provided in this section for annual returns.
The Commissioner of Insurance Secretary of Revenue may
permit an insurance company to pay less than the required estimated payment
when the insurer reasonably believes that the total estimated payments made for
the current year will exceed the total anticipated tax liability for the year.
If a company does not meet the installment payment
requirement of this subsection, the Commissioner of Insurance shall assess a
penalty on underpayments that is equal to the interest rate adopted by the
Secretary of Revenue An underpayment of an installment payment required
by this subsection shall bear interest, as a penalty, at the rate established under
G.S. 105-241.1(i). Any overpayment shall bear interest as provided in G.S.
105-266(b) and, together with the interest, shall be credited to the
company and applied against the taxes imposed upon the company under this
Article.
(g) Exemptions. - This section does not apply to farmers' mutual assessment fire insurance companies or to fraternal orders or societies that do not operate for a profit and do not issue policies on any person except members."
(e) G.S. 105-228.5A reads as rewritten:
"§ 105-228.5A. Credit against gross premium tax for assessments paid to the Insurance Guaranty Association and the Life and Health Insurance Guaranty Association.
(a) The following definitions apply in this section:
(1) Assessment. - An assessment as described in G.S. 58-48-35 or an assessment as described in G.S. 58-62-41.
(2) Association. - The North Carolina Insurance Guaranty Association created under G.S. 58-48-25 or the North Carolina Life and Health Insurance Guaranty Association created under G.S. 58-62-26.
(3) Commissioner.
- Commissioner of Insurance.
(4) Member insurer. - A member insurer as defined in G.S. 58-48-20 or a member insurer as defined in G.S. 58-62-16.
(b) A member insurer who pays an assessment is allowed as a credit against the tax imposed under G.S. 105-228.5 an amount equal to twenty percent (20%) of the amount of the assessment in each of the five taxable years following the year in which the assessment was paid. In the event a member insurer ceases doing business, all assessments for which it has not taken a credit under this section may be credited against its premium tax liability for the year in which it ceases doing business. The amount of the credit allowed by this section may not exceed the member insurer's premium tax liability for the taxable year.
(c) Any sums that are
acquired by refund, under either G.S. 58-48-35 or G.S. 58-62-41, from the
Association by member insurers, and that have previously been offset against
premium taxes as provided in subsection (b) of this section, shall be paid by
the member insurers to this State in the manner required by the Commissioner.
Secretary of Revenue. The Association shall notify the Commissioner
Secretary that the refunds have been made."
(f) G.S. 105-228.8 reads as rewritten:
"§ 105-228.8. Retaliatory premium taxes.
(a) When the laws of any
other state impose, or would impose, any premium taxes, upon North Carolina insurers
companies doing business in the other state that are, on an
aggregate basis, in excess of the premium taxes directly imposed upon similar insurers
companies by the statutes of this State, the Commissioner of
Insurance Secretary of Revenue shall impose the same premium taxes,
on an aggregate basis, upon the insurers companies chartered in
the other state doing business or seeking to do business in North
Carolina. Any insurer company subject to the retaliatory
tax imposed by this section shall report and pay such the tax
with the annual premium tax return required by G.S. 105-228.5. The
retaliatory tax imposed by this section shall be included in the quarterly
prepayment rules for premium taxes.
(b) For purposes of this section, the following definitions shall be applied:
(1) 'State' includes the District of Columbia and other states, territories, and possessions of the United States, the provinces of Canada, and other nations.
(2) 'Insurers' 'Companies'
includes all entities subject to tax under G.S. 105-228.5.
(c) For purposes of this
section, any premium taxes that are, or would be, imposed upon North Carolina insurers
companies by any city, county, or other political subdivision or
agency of another state shall be deemed to be imposed directly by that state.
(d) In computing the
premium taxes that another state imposes, or would impose, upon a North
Carolina insurer company doing business in the state, it shall be
assumed that North Carolina insurers companies pay the highest
rates of premium tax that are generally imposed by the other state on similar insurers
companies chartered outside of the state.
(e) This section shall not apply to special purpose obligations or assessments based on premiums imposed in connection with particular kinds of insurance, to the special purpose regulatory charge imposed under G.S. 58-6-25, or to dedicated special purpose taxes based on premiums. For purposes of this section, seventy-five percent (75%) of the one and thirty-three hundredths percent (1.33%) tax on amounts collected on contracts of insurance applicable to fire and lightning coverage shall not be a special purpose obligation or assessment or a dedicated special purpose tax within the meaning of this subsection.
(f) If the laws of
another state retaliate against North Carolina insurers companies on
other than an aggregate basis, the Commissioner of Insurance Secretary
of Revenue shall retaliate against insurers companies chartered
in such that state on the same basis."
(g) G.S. 105-266(b) reads as rewritten:
"(b) Interest. - An overpayment of tax bears interest at the rate established in G.S. 105-241.1(i) from the date that interest begins to accrue until a refund is paid. A refund is considered paid on a date determined by the Secretary that is no sooner than five days after a refund check is mailed.
Interest on an overpayment of a tax, other than a tax levied under Article 4 or Article 8B of this Chapter, accrues from a date 90 days after the date the tax was originally paid by the taxpayer until the refund is paid. Interest on an overpayment of a tax levied under Article 4 or Article 8B of this Chapter accrues from a date 45 days after the latest of the following dates until the refund is paid:
(1) The date the final return was filed.
(2) The date the final return was due to be filed.
(3) The date of the overpayment.
The date of an overpayment of a tax levied under Article 4 or Article 8B of this Chapter is determined in accordance with section 6611(d), (f), (g), and (h) of the Code."
(h) G.S. 97-100 reads as rewritten:
"§ 97-100.
Rates for insurance; carrier to make reports for determination of solvency; tax
upon premium; returned or canceled premiums; reports of premiums collected; wrongful
or fraudulent representation of carrier punishable as misdemeanor; notices
to carrier; employer who carries own risk shall make report on payroll. notices.
(a) The rates charged by all carriers of insurance, including the parties to any mutual insurance association writing insurance against the liability for compensation under this Article, shall be fair, reasonable, and adequate.
(b) Each such insurance
carrier shall report to the Commissioner of Insurance, in accordance with such
reasonable rules as rules adopted by the Commissioner of Insurance
may at any time prescribe, Insurance, for the purpose of determining
the solvency of the carrier and the adequacy of its rates; for such this
purpose the Commissioner of Insurance may inspect the books and records of such
any insurance carrier, and examine its agents, officers, and
directors under oath.
(c) Every insurer
under this Article, every employer carrying its own risk under G.S. 97-93, and
every group of employers that has pooled the employers' liabilities under G.S.
97-93 is subject to the premiums tax levied in Article 8B of Chapter 105 of the
General Statutes. person, partnership, association, corporation,
whether organized under the laws of this or any other state or country, every
mutual company or association and every other insurance carrier insuring
employers in this State against liability for personal injuries to their
employees, or death caused thereby, under the provisions of this Article,
shall, as hereinafter provided, pay a tax upon the premium received, whether in
cash or notes, in this State, or on account of business done in this State, for
such insurance in this State, at the rate provided in the Revenue Act then in
force, which tax shall be in lieu of all other taxes on such premiums, which
tax shall be assessed and collected as hereinafter provided; provided, however,
that such insurance carriers shall be credited with all canceled or returned
premiums actually refunded during the year on such insurance.
(d) Every such
insurance carrier shall, for the six months ending December 31, 1929, and
annually thereafter, make a return, verified by the affidavit of its president
and secretary, or other chief officers or agents, to the Commissioner of
Insurance, stating the amount of all such premiums and credits during the
period covered by such return. Every insurance carrier required to make
such return shall file the same with the Commissioner of Insurance on or before
the first day of April after the close of the period covered thereby, and shall
at the same time pay to the State Insurance Commissioner the tax provided in
the Revenue Act then in force on such premium ascertained, as provided in
subsection (c) hereof, less returned premium on canceled policies.
(e) If any such
insurance carrier shall fail or refuse to make the return required by this
Article, the said Commissioner of Insurance shall assess the tax against such
insurance carrier at the rate herein provided for, on such amount of premium as
he may deem just, and the proceedings thereon shall be the same as if the
return had been made.
(f) If
any such insurance carrier shall withdraw from business in this State before
the tax shall fall due, as herein provided, or shall fail or neglect to pay
such tax, the Commissioner of Insurance shall at once proceed to collect the
same; and he is hereby empowered and authorized to employ such legal process as
may be necessary for that purpose, and when so collected he shall pay the same
into the State treasury. The suit may be brought by the Commissioner of
Insurance, in his official capacity, in any court of this State having
jurisdiction. Reasonable attorney's fees may be taxed as costs therein,
and process may issue to any county of the State, and may be served as in civil
actions, or in case of unincorporated associations, partnerships,
interindemnity contracts, upon any agent of the parties thereto upon whom
process may be served under the laws of this State.
(g) Any person or
persons who shall in this State act or assume who acts or assumes to
act as agent for any such insurance carrier whose authority to do
business in this State has been suspended, while such the suspension
remains in force, or shall neglect or refuse who neglects or refuses to
comply with any of the provisions of this section obligatory upon such
person or party section, or who shall willfully make willfully
makes a false or fraudulent statement of the business or condition of any such
insurance carrier, or false or fraudulent return as herein provided,
shall be deemed is guilty of a Class 2 misdemeanor.
(h) Whenever by this
Article, or the terms of any policy contract, any officer is required to give
any notice to an insurance carrier, the same notice may be given
by delivery, or by mailing by registered letter properly addressed and stamped,
to the principal office or general agent of such the insurance
carrier within this State, or to its home office, or to the secretary, general
agent, or chief officer thereof of the carrier in the United
States, or to the State Insurance Commissioner. Commissioner
of Insurance.
(i) Any
insurance carrier liable to pay a tax upon premiums under this Article shall
not be liable to pay any other or further tax upon such premiums, under any
other law of this State.
(j) Every
employer carrying his own risk under the provisions of G.S. 97-93 shall, under
oath, report to the Commissioner of Insurance his payroll, subject to the
provisions of this Article. Such report shall be made in form prescribed by the
Commissioner of Insurance, and at the times herein provided for premium reports
by insurer. The Commissioner of Insurance shall assess against such
payroll a maintenance fund tax computed by taking such percent of the basic
premiums charged against the same or most similar industry or business taken
from the manual insurance rate then in force in this State as is assessed in
the Revenue Act against the insurance carriers for premiums collected on
compensation insurance policies. The Commissioner shall use the approved
experience modifier of an employer in calculating the employer's maintenance
fund tax liability under this subsection. Receipts collected under this
subsection shall be deposited to the credit of the State Treasurer as general
fund revenue.
(k) Every group
of two or more employers who have pooled their liabilities pursuant to G.S.
97-93 shall pay a tax upon premiums received in this State in the same manner
as the tax is calculated and paid by insurance carriers insuring employers in
this State and set forth in subsections (c), (d), (e), and (f) above."
(i) G.S. 58-6-25(c) reads as rewritten:
"(c) Returns; When Payable. The charge levied on each insurance company is payable at the time the insurance company remits its premium tax. If the insurance company is required to remit installment payments of premiums tax under G.S. 105-228.5 for a taxable year, it shall also remit installment payments of the charge levied in this section for that taxable year at the same time and on the same basis as the premium tax installment payments. Each installment payment shall be equal to at least thirty-three and one-third percent (33.3%) of the insurance company's regulatory charge liability incurred in the immediately preceding taxable year.
Every insurance company shall, on or before the date the
charge levied in this section is due, file a return on a form prescribed by the
Commissioner. Secretary of Revenue. The report return shall
state the company's total North Carolina premiums for the taxable year and
shall be accompanied by any supporting documentation that the Commissioner Secretary
of Revenue may by rule require."
(j) This section becomes effective January 1, 1996.
DISCONTINUE INSURANCE AUDIT AND EXAMINATION FEE CHARGES
Sec. 2. (a) G.S. 58-30-22(c) is repealed.
(b) G.S. 58-40-90 reads as rewritten:
"§ 58-40-90. Examination of rating, joint underwriting, and joint reinsurance organizations.
The Commissioner shall, at least once every three years, make
or cause to be made an examination of each rating organization licensed
pursuant to G.S. 58-40-50 and each advisory organization licensed pursuant to
G.S. 58-40-55. He The Commissioner may, as often as he
may deem it deemed expedient, make or cause to be made, an
examination of each group, association, or other organization referred to in
G.S. 58-40-60. Such This examination shall relate only to
the activities conducted pursuant to this Article and to the organizations
licensed under this Article. The reasonable cost of any such examination
shall be paid by the organization examined upon presentation to it of a
detailed account of such cost. The officers, manager, agents and employees
of any such organization may be examined at any time under oath and shall
exhibit all books, records, account, documents or agreements governing its
method of operation. In lieu of any such examination, the Commissioner may
accept the report of an examination made by the insurance advisory official of
another state, pursuant to the laws of such that state."
(c) G.S. 58-2-131(k) reads as rewritten:
"(k) When making an
examination, the Commissioner may retain attorneys, appraisers, independent
actuaries, independent certified public accountants, or other professionals and
specialists as examiners, the cost of which shall be borne by the insurer
that is the subject of the examination. examiners."
(d) G.S. 58-2-133(c) reads as rewritten:
"(c) Any insurer
examined shall pay the proper charges incurred in the examination, including
the expenses and compensation of the Commissioner. The charges and
expenses shall be reasonable as determined by the Commissioner and in
accordance with guidelines established by the NAIC set forth in the NAIC
Examiners' Handbook. The refusal of any insurer to submit to examination,
or the refusal or failure of any insurer to pay the expenses of examination
upon presentation by the Commissioner of a bill for those expenses, examination
is grounds for the revocation, suspension, or refusal of a license.
The Commissioner may make public any such revocation, suspension, or refusal of
license and may give reasons for that action. The Commissioner shall
promptly begin a civil action to recover the expenses of examination against
any insurer that refuses or fails to pay."
(e) G.S. 58-2-195(e) reads as rewritten:
"(e) Whenever the
Commissioner deems it to be prudent for the protection of policyholders in this
State, he or any other authorized employee described in G.S. 58-2-25 shall
visit and examine any insurance agency, agent, broker, adjuster, motor vehicle
damage appraiser, or producer of record, which shall pay the proper charges
incurred in the examination, including the expenses and compensation of the
Commissioner or his authorized employee. Such expenses shall not exceed
the per diem and allowances specified in G.S. 138-5; provided, the collection
of such expense and allowance may, in the discretion of the Commissioner, be waived.
record. The refusal of any agency, agent, broker, adjuster,
motor vehicle damage appraiser, or producer of record to submit to examination
or to pay the expenses of examination upon presentation of a bill therefor by
the Commissioner or his authorized employee, examination is grounds
for the revocation or refusal of a license. The Commissioner may institute a
civil action to recover the expenses of examination against any person that
refuses or fails to pay the expenses."
(f) G.S. 58-6-5(3) reads as rewritten:
"(3) The Commissioner shall
receive for copy of any record or paper in his office fifty cents (50¢) per
copy sheet and ten dollars ($10.00) for certifying same, or any fact or data
from the records of his office; for examination of any foreign company, not
less than forty dollars ($40.00) per diem and all expenses or the fees as
prescribed by the Examination Committee of the National Association of
Insurance Commissioners, and for examining any domestic company, actual
expenses incurred; office and for the examination and approval of
charters of companies, twenty-five dollars ($25.00). Notwithstanding the
provisions of G.S. 138-6, the Commissioner is authorized to pay examiners an
amount in lieu of traveling expenses equal to the rate charged to and collected
from the companies, associations or orders. For the investigation of tax
returns and the collection of any delinquent taxes disclosed by such
investigation, the Commissioner may, in lieu of the above per diem charge,
assess against any such delinquent company the expense of the investigation and
collection of such delinquent tax, a reasonable percentage of such delinquent
tax, not to exceed ten per centum (10%) of such delinquency, and in addition
thereto."
(g) G.S. 58-7-21(b)(4)b. reads as rewritten:
"b.
In the case of a group of incorporated insurers under common administration
which (i) complies with the filing requirements contained in the previous
paragraph, (ii) has continuously transacted an insurance business outside the
United States for at least three years immediately before making application
for accreditation, (iii) submits to this State's authority to examine its books
and records and bears the expense of the examination, records, and
(iv) has aggregate policyholders' surplus of ten billion dollars
($10,000,000,000); the trust shall be in an amount equal to the group's several
liabilities attributable to business ceded by United States ceding insurers to
any member of the group under reinsurance contracts issued in the name of the
group. In addition, the group shall maintain a joint trusteed surplus of which
one hundred million dollars ($100,000,000) shall be held jointly for the
benefit of United States ceding insurers of any member of the group as
additional security for any such liabilities, and each member of the group
shall make available to the Commissioner an annual certification of the
member's solvency by the member's domiciliary regulator and its independent
public accountant."
(h) G.S. 58-19-35(c) is repealed.
(i) G.S. 58-24-135 reads as rewritten:
"§ 58-24-135. Examination of societies; no adverse publications.
(a) The
Commissioner, or any person he or she may appoint, may examine any domestic,
foreign or alien society transacting or applying for admission to transact
business in this State in the same manner as authorized for examination of
domestic, foreign or alien insurers. Requirements of notice and an opportunity
to respond before findings are made public as provided in the laws regulating
insurers shall also be applicable to the examination of societies.
(b) The expense
of each examination and of each valuation, including compensation and actual
expense of examiners, shall be paid by the society examined or whose
certificates are valued, upon statements furnished by the Commissioner."
(j) G.S. 58-48-60(b) reads as rewritten:
"(b) To aid in the
detection and prevention of insurer insolvencies, the board of directors may,
upon majority vote, request that the Commissioner order an examination of any
member insurer which the board in good faith believes may be in a financial
condition hazardous to the policyholders or the public. Within 30 days of
the receipt of such request, the Commissioner shall begin such examination.
The examination may be conducted as an NAIC examination or may be conducted by
such persons as the Commissioner designates. The cost of such
examination shall be paid by the Association and the The examination
report shall be treated as are other examination reports. In no event
shall such examination report be released to the board of directors prior to
its release to the public, but this shall not preclude the Commissioner from
complying with subsection (c) below. The Commissioner shall notify the
board of directors when the examination is completed. The request for an
examination shall be kept on file by the Commissioner but it shall not be open
to public inspection prior to the release of the examination report to the
public."
(k) G.S. 58-62-56(e) reads as rewritten:
"(e) The Board may, upon
majority vote, request that the Commissioner order an examination of any member
insurer that the Board in good faith believes may be delinquent. Within
30 days of the receipt of the request, the Commissioner shall begin the
examination. The examination may be conducted as an NAIC examination or
may be conducted by persons the Commissioner designates. The cost of
the examination shall be paid by the Association; and the The examination
report shall be treated as are other examination reports. In no event
shall the examination report be released to the Board before its release to the
public; but this does not preclude the Commissioner from complying with
subsection (a) of this section. The Commissioner shall notify the Board
when the examination is completed. The request for an examination shall
be kept on file by the Commissioner, but shall not be open to public inspection
before the release of the examination report to the public."
(l) G.S. 58-65-105 reads as rewritten:
"§ 58-65-105. Visitations and examinations.
The Commissioner of Insurance or any deputy or examiner or
other person whom he may appoint shall have the power of visitations and
examination into the affairs of any such corporation and free access to all the
books, papers and documents that relate to the business of the corporation, and
may summon and qualify witnesses under oath to examine its officers, agents, or
employees or other persons in relation to the affairs, transactions and
conditions of the corporation, the actual expense of which shall be paid by
the association so examined. corporation."
(m) G.S. 58-67-100(c) is repealed.
(n) This section becomes effective July 1, 1995.
INSURANCE REGULATORY CHARGE ADMINISTRATIVE CHANGE
Sec. 3. (a) G.S. 58-6-25 reads as rewritten:
"§ 58-6-25. Insurance regulatory charge.
(a) Charge Levied. -
There is levied on each insurance company an annual charge to defray the cost to
the Department of regulating the insurance industry and other industries
and the general administrative expenses of the State incident thereto. industry.
As used in this section, the term 'insurance company' means a company that
pays the gross premiums tax levied in G.S. 105-228.5 and G.S. 105-228.8, except
that the term does not include a hospital, medical, or dental service
corporation regulated under Articles 65 and 66 of this Chapter. The term
'insurance company' does not include a company regulated under Article 67 of
this Chapter. The charge levied in this section is in addition to all
other fees and taxes. The charge shall be at a percentage rate of the company's
premium tax liability for the taxable year. In determining an insurance
company's premium tax liability for a taxable year, additional taxes imposed by
G.S. 105-228.8 shall be disregarded.
(b) Rates. - The rate of the charge for the 1991 taxable year shall be six and five-tenths percent (6.5%). For subsequent taxable years, the rate shall be the percentage rate established by the General Assembly. When the Department prepares its budget request for each upcoming fiscal year, the Department shall propose a percentage rate of the charge levied in this section. The Governor shall submit that proposed rate to the General Assembly each fiscal year. The General Assembly shall set by law the percentage rate of the charge levied in this section. The percentage rate may not exceed the rate necessary to generate funds sufficient to defray the estimated cost of the operations of the Department for each upcoming fiscal year, including a reasonable margin for a reserve fund. The amount of the reserve may not exceed one-third of the estimated cost of operating the Department for each upcoming fiscal year. In calculating the amount of the reserve, the General Assembly shall consider all relevant factors that may affect the cost of operating the Department or a possible unanticipated increase or decrease in North Carolina premiums or other charge revenue.
(c) Returns; When Payable. - The charge levied on each insurance company is payable at the time the insurance company remits its premium tax. If the insurance company is required to remit installment payments of premiums tax under G.S. 105-228.5 for a taxable year, it shall also remit installment payments of the charge levied in this section for that taxable year at the same time and on the same basis as the premium tax installment payments. Each installment payment shall be equal to at least thirty-three and one-third percent (33.3%) of the insurance company's regulatory charge liability incurred in the immediately preceding taxable year.
Every insurance company shall, on or before the date the charge levied in this section is due, file a return on a form prescribed by the Commissioner. The report shall state the company's total North Carolina premiums for the taxable year and shall be accompanied by any supporting documentation that the Commissioner may by rule require.
(d) Use of Proceeds. -
The Department of Insurance Regulatory Fund is created in the
State treasury. treasury, under the control of the Office of State
Budget and Management. The proceeds of the charge levied in this section
and all fees collected under Articles 69 through 71 of this Chapter and under
Articles 9 and 9C of Chapter 143 of the General Statutes shall be credited to
the Fund. The Fund shall be placed in an interest-bearing account and any
interest or other income derived from the Fund shall be credited to the Fund.
Moneys in the Fund may be spent only pursuant to appropriation by the General
Assembly and in accordance with the line item budget enacted by the General
Assembly. The Fund is subject to the provisions of the Executive Budget Act,
except that no unexpended surplus of the Fund shall revert to the General
Fund. All money credited to the Fund shall be used only to pay to
reimburse the General Fund for money appropriated to State agencies to pay the
expenses of the Commissioner and the Department that are incurred
in regulating the insurance industry and other industries in this State and
the general administrative expenses of the State incident thereto. industry."
(b) This section becomes effective July 1, 1995.
CHILD SUPPORT FOR CHILDREN
Sec. 4. (a) G.S. 105A-13 reads as rewritten:
"§ 105A-13. Disposition of proceeds collected; collection assistance fees.
(a) Upon effecting final setoffs, the Department shall periodically write checks to the respective claimant agencies for the net proceeds collected on their behalf.
(b) Each year the
Department shall calculate determine its actual cost of
collection as a percentage of the immediately preceding year's collections
under the Setoff Debt Collection Act and under the Setoff Debt
Collection Act for the immediately preceding year and shall calculate the
percentage that cost represents of the preceding year's collections, excluding
collections of child support arrearages under G.S. 105A-2(1)d. The
Department shall retain that percentage from the gross proceeds collected
by the Department through setoff for the current fiscal year. year,
other than the gross proceeds collected of child support arrearages under G.S.
105A-2(1)d."
(b) This section becomes effective January 1, 1996.
CONFORMING CHANGE
Sec. 4.1. Section 28.2(c) of Chapter 324 of the 1995 Session Laws (House Bill 229) is repealed.
Sec. 5. This act becomes effective as provided therein.
In the General Assembly read three times and ratified this the 30th day of June, 1995.
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Dennis A. Wicker
President of the Senate
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Harold J. Brubaker
Speaker of the House of Representatives