GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

S	1 

SENATE BILL 614

Short Title:  Insurance Licensing Amendments.	(Public)

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Sponsors: Senator Miller.

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Referred to:  Pensions & Retirement and Insurance.

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April 1, 1997

A BILL TO BE ENTITLED
AN ACT TO REVISE THE LICENSING LAWS ADMINISTERED BY THE DEPARTMENT OF INSURANCE, INCLUDING THE LAWS RELATING TO THE PAYMENT OF CIVIL MONEY PENALTIES, HEARING PROCEDURES, NOTICES OF ADDRESS CHANGES AND CRIMINAL CONVICTIONS, APPLICATIONS FOR LEARNER'S PERMITS, EXTENSIONS OF TIME FOR CONTINUING EDUCATION REQUIREMENTS, THE BASES UPON WHICH LICENSES MAY BE DENIED, REVOKED, OR SUSPENDED, THE NUMBER OF CONTINUING EDUCATION HOURS REQUIRED FOR BAIL BONDSMEN AND RUNNERS, AND THE BOND REQUIREMENT FOR VIATICAL SETTLEMENT PROVIDERS.
The General Assembly of North Carolina enacts:
PART I. CIVIL PENALTY LAW CHANGES.
Section 1.  G.S. 58-2-70 reads as rewritten:
"§ 58-2-70.  Civil penalties or restitution for violations; administrative procedure.
(a)	This section applies to any person who is subject to licensure or certification under this Chapter.
(b)	Whenever the Commissioner has reason to believe that any person has violated any of the provisions of this Chapter, and the violation subjects the license or certification of that person to suspension or revocation, the Commissioner may, after notice and opportunity for a hearing, proceed under the appropriate subsections of this section.
(c)	If, under subsection (b) of this section, the Commissioner finds a violation of this Chapter, the Commissioner may, in addition to or instead of suspending or revoking the license or certification, order the payment of a monetary penalty as provided in subsection (d) of this section or apply to the Superior Court of Wake County for an order directing payment of restitution as provided in subsection (e) of this section, or both. Each day during which a violation occurs constitutes a separate violation.
(d)	Upon a finding by the Commissioner of a violation as specified in subsection (c) of this section, the Commissioner shall direct the payment of a penalty of not less than one hundred dollars ($100.00) nor more than one thousand dollars ($1,000).  In determining the amount of the penalty, the Commissioner shall consider the degree and extent of harm caused by the violation, the amount of money that inured to the benefit of the violator as a result of the violation, whether the violation was committed willfully, and the prior record of the violator in complying or failing to comply with laws, rules, or orders applicable to the violator.  The penalty shall be payable to the Commissioner, who shall then forward the clear proceeds of which in accordance with Section 7 of Article IX of the North Carolina Constitution. Payment of the civil penalty under this section shall be in addition to payment of any other penalty for a violation of the criminal laws of this State.
(e)	Upon application of the Commissioner and a finding by the court of a violation as specified in subsection (c) of this section, the court may order the person who committed the violation to make restitution in an amount that would make whole any person harmed by the violation.
(f)	Restitution to any State agency for extraordinary administrative expenses incurred in the investigation and hearing of the violation may also be ordered by the court in such amount that would reimburse the agency for the expenses.
(g)	Nothing in this section prevents the Commissioner from negotiating a mutually acceptable agreement with any person as to the status of the person's license or certificate or as to any civil penalty or restitution.
(h)	Unless otherwise specifically provided for, all administrative proceedings under this Chapter are governed by Chapter 150B of the General Statutes." Section 2.  G.S. 143-143.13(c) reads as rewritten:
"(c)	In addition to the authority to deny, suspend, or revoke a license under this Article, the Board may impose a civil penalty upon any person violating the provisions of this Article. Upon a finding by the Board of a violation of this Article, the Board shall direct the payment of a penalty of not less than one hundred dollars ($100.00) nor more than five hundred dollars ($500.00).  In determining the amount of the penalty, the Board shall consider the degree and extent of harm caused by the violation, the amount of money that inured to the benefit of the violator as a result of the violation, whether the violation was committed willfully, and the prior record of the violator in complying or failing to comply with laws, rules, or orders applicable to the violator.  Each day during which a violation occurs constitutes a separate violation.  The penalty shall be payable to the Board, which shall then forward the clear proceeds of which in accordance with Section 7 of Article IX of the North Carolina Constitution.  Payment of the civil penalty under this section is in addition to payment of any other penalty for a violation of the criminal laws of this State.  Nothing in this subsection prevents the Board from negotiating a mutually acceptable agreement with any person as to the status of the person's license or certificate or as to any civil penalty."
PART II. NOTICES FROM INDIVIDUAL LICENSEES.
Section 3.  Article 2 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-2-69.  Notification of criminal convictions and changes of address; service of notice.
(a)	As used in this section:
(1)	'License' includes any license, certificate, registration, or permit issued under this Chapter.
(2)	'Licensee' means any person who holds a license.
(b)	Every applicant for a license shall inform the Commissioner of the applicant's residential address.  Every licensee shall give written notification to the Commissioner of any change of the licensee's residential address within 10 business days after the licensee moves into the licensee's new residence.  This requirement applies if the change of residential address is by governmental action and there has been no actual change of residence location; in which case the licensee must notify the Commissioner within 10 business days after the effective date of the change.  A violation of this subsection is not a ground for revocation, suspension, or nonrenewal of the license or for the imposition of any other penalty by the Commissioner.
(c)	If a licensee is convicted in any court of competent jurisdiction for any crime or offense other than a motor vehicle infraction, the licensee shall notify the Commissioner within 10 days after the date of the conviction.  As used in this subsection, 'conviction' includes an adjudication of guilt, a plea of guilty, or a plea of nolo contendere.
(d)	Notwithstanding any other provision of law, whenever the Commissioner is authorized or required to give any notice under this Chapter to a licensee, the notice may be given personally or by sending the notice by first-class mail to the licensee at the address that the licensee has provided to the Commissioner under subsection (b) of this section.
(e)	The giving of notice by mail under subsection (d) of this section is complete upon the expiration of four days after the deposit of the notice.  Proof of the giving of notice by mail may be made by the certificate of any employee of the Department."
PART III. INSURANCE AGENTS, BROKERS, AND ADJUSTERS.
Section 4.  G.S. 58-33-70 reads as rewritten:
"§ 58-33-70.  Special provisions for adjusters and motor vehicle damage appraisers.
(a)	It shall be unlawful and cause for revocation of license for a licensed adjuster to engage in the practice of law.
(b)	On behalf and on request of an insurer by which an agent or limited representative is appointed, the agent or limited representative may from time to time act as an adjuster and investigate and report upon claims without being licensed as an adjuster.  No agent or limited representative shall adjust any losses where the agent's or representative's remuneration for the sale of insurance is in any way dependent upon the adjustment of those losses.
(c)	Upon the filing of the application for an adjuster's license, the advance payment of the examination fee, and the filing with the Commissioner of a certificate signed by the applicant's employer, the Commissioner may issue a learner's permit authorizing the applicant to act as an adjuster for a learning period of 90 days without a requirement of any other license.  Not more than one learner's permit shall ever be issued to one individual.  The employer's certificate required by this subsection shall certify that:
(1)	The applicant is an individual of good character.
(2)	The applicant is employed by the signer of the certificate.
(3)	The applicant will operate as a student or learner under the instruction and general supervision of a licensed adjuster.
(4)	The employer will be responsible for the adjustment acts of the applicant during the learning period.
	(e)	The Commissioner may permit an experienced adjuster, who regularly adjusts in another state and who is licensed in the other state, to act as an adjuster in this State without a North Carolina license, for emergency insurance adjustment work, for a period of not exceeding 30 days, done for an employer who is an adjuster licensed by this State or who is a regular employer of one or more adjusters licensed by this State; provided that the employer shall furnish to the Commissioner a notice in writing immediately upon the beginning of any such emergency insurance adjustment work. As used in this subsection, 'emergency insurance adjustment work' includes adjusting of a single loss or losses arising out of a catastrophe common to all of those losses in any area declared to be a state of disaster by the Governor under G.S. 166A-6 or by the President of the United States under applicable federal law.
(f)	The Commissioner may permit an experienced motor vehicle damage appraiser who is regularly appraising in another state and who is licensed in the other state to act as a motor vehicle damage appraiser in this State without a North Carolina license for emergency motor vehicle damage appraisal work for a period not exceeding 30 days done for an employer who notifies the Commissioner, in writing, at the beginning of the period of emergency appraisal work and who is:
(1)	An insurance adjuster licensed by this State;
(2)	A motor vehicle damage appraiser licensed by this State;
(3)	A regular employer of one or more insurance adjusters licensed by this State; or
(4)	A regular employer of one or more motor vehicle damage appraisers licensed by this State."
Section 5.  G.S. 58-33-45 reads as rewritten:
"§ 58-33-45.  Suspension, revocation, or nonrenewal of licenses.
(a)	The Commissioner may suspend, revoke, or refuse to renew any license issued under this Article if, in accordance with the provisions of Article 3A of Chapter 150B, the Commissioner finds as to the licensee any one or more of the following conditions:
(1)	Any untrue material statement in the license application;
(2)	Any cause for which issuance of the license could have been refused had it then existed and been known to the Commissioner at the time of issuance;
(3)	Violation of, or noncompliance with, any insurance laws, or of any lawful rule, or order of the Commissioner or of a Commissioner of another state;
(4)	Obtaining or attempting to obtain any such license through misrepresentation or fraud;
(5)	Improperly withholding, misappropriating, or converting to his own use any moneys belonging to policyholders, insurers, beneficiaries or others received in the course of his insurance business;
(6)	Misrepresentation of the terms of any actual or proposed insurance contract;
(7)	Willfully overinsuring property;
(8)	Conviction of a misdemeanor involving moral turpitude, or conviction of a felony;
(9)	The person has been found guilty of any unfair trade practice or fraud;
(10)	In the conduct of his affairs under the license, the licensee has used fraudulent, coercive or dishonest practices, or has shown himself to be incompetent, untrustworthy, or financially irresponsible;
(11)	His license has been suspended or revoked in any other state, province, district, or territory;
(12)	The person has forged another's name to an application for insurance; or
(13)	The person has cheated on an examination for an insurance license.
	(c)	Repealed by Session Laws 1993, c. 504, s. 28.
(d)	For the purposes of investigation under this section, the Commissioner shall have all the power conferred upon him by G.S. 58-3-125.
(e)	The license of a partnership or corporation may be suspended, revoked, not continued, or refused if the Commissioner finds, after hearing, that an individual licensee's violation was known or should have been known by one or more of the partners, officers, or managers acting on behalf of the partnership or corporation and such violation was not reported to the Commissioner nor corrective action taken in relation thereto.
(f)	Upon the filing for protection under the United States Bankruptcy Code by any person licensed under this Article, or by any insurance agency in which such licensed person holds a position of employment, management or ownership, such person shall notify the Commissioner of the filing for protection within three business days after the filing.  Upon the appointment of a receiver by a court of this State for any person licensed under this Article, or for any insurance agency in which such licensed person holds a position of employment, management or ownership, such person shall notify the Commissioner of the appointment within three business days thereafter.  The willful failure to notify the Commissioner within three business days after the filing for protection or the appointment of a receiver shall, after hearing, cause the license of any person failing to make such notification to be suspended for a period of not less than 60 days nor more than three years, in the discretion of the Commissioner.
(g)	If the Commissioner refuses to grant a license, or suspends, or revokes a license, any appointment of such applicant or licensee shall likewise be revoked.  No individual whose license is revoked shall be issued another license without first complying with all requirements of this Article.
	(i)	No person shall be issued a license or appointment to enter the employment of any agency or person, which agency or person is at that time found by the Commissioner to be in violation of any of the insurance laws of this State, or which has been in any manner disqualified under the laws of this State to engage in the insurance business."
Section 6. G.S. 58-33-130(c) reads as rewritten:
"(c)	The license of any person who fails to comply with the continuing education requirements under this section shall lapse.  The Commissioner may, for good cause shown, grant extensions of time to licensees to comply with these requirements."
Section 7.  G.S. 58-33-130(h) reads as rewritten:
"(h)	Any licensee who, after obtaining an extension under subsection (c) of this section, offers evidence satisfactory to the Commissioner that the licensee has satisfactorily completed the required continuing professional education courses is in compliance with this section."
PART IV. BAIL BONDSMEN AND RUNNERS.
Section 8.  G.S. 58-71-50 reads as rewritten:
"§ 58-71-50. Qualification for bail bondsmen and runners.
(a)	An applicant for a license as a bail bondsman or runner shall furnish the Commissioner with a complete set of the applicant's fingerprints and a recent passport size full-face photograph of the applicant. The applicant's fingerprints shall be certified by an authorized law-enforcement officer. The fingerprints of every applicant shall be forwarded to the State Bureau of Investigation for a search of the applicant's criminal history record file, if any. If warranted, the State Bureau of Investigation shall forward a set of the fingerprints to the Federal Bureau of Investigation for a national criminal history record check. An applicant shall pay the cost of the State and any national criminal history record check of the applicant.
(b)	Every applicant for a license under this Article as a bail bondsman or runner must meet all of the following qualifications:
(1)	Be 18 years of age or over.
(2)	Be a resident of this State.
	(4)	Have knowledge, training, or experience of sufficient duration and extent to provide the competence necessary to fulfill the responsibilities of a licensee.
(5)	Have no outstanding bail bond obligations.
(6)	Have no current or prior violations of any provision of this Article or of Article 26 of Chapter 15A of the General Statutes or of any similar provision of law of any other state.
(7)	Not have been in any manner disqualified under the laws of this State or any other state to engage in the bail bond business."
Section 9.  G.S. 58-71-80 reads as rewritten:
"§ 58-71-80.  Grounds for denial, suspension, revocation or refusal to renew licenses.
(a)	The Commissioner may deny, suspend, revoke, or refuse to renew any license under this Article for any of the following causes:
(1)	For any cause sufficient to deny, suspend, or revoke the license under any other provision of this Article.
(2)	Violation of any laws of this State relating to bail in the course of dealings under the license issued by the Commissioner.
(3)	Material misstatement, misrepresentation or fraud in obtaining the license.
(4)	Misappropriation, conversion or unlawful withholding of moneys belonging to insurers or others and received in the conduct of business under the license.
(5)	Fraudulent or dishonest practices in the conduct of business under the license.
(6)	Conviction of a crime involving moral turpitude.
(7)	Failure to comply with or violation of the provisions of this Article or of any order, rule or regulation of the Commissioner.
(8)	When in the judgment of the Commissioner, the licensee has in the conduct of the licensee's affairs under the license, demonstrated incompetency, financial irresponsibility, or untrustworthiness; or that the licensee is no longer in good faith carrying on the bail bond business; or that the licensee is guilty of rebating, or offering to rebate, or offering to divide the premiums received for the bond.
(9)	For failing to pay any judgment or decree rendered on any forfeited undertaking in any court of competent jurisdiction.
(10)	For charging or receiving, as premium or compensation for the making of any deposit or bail bond, any sum in excess of that permitted by this Article.
(11)	For requiring, as a condition of executing a bail bond, that the principal agree to engage the services of a specified attorney.
(12)	For cheating on an examination for a license under this Article.
(13)	For entering into any business association or agreement with any person who is at that time found by the Commissioner to be in violation of any of the bail bond laws of this State, or who has been in any manner disqualified under the bail bond laws of this State or any other state, whereby the person has any direct or indirect financial interest in the bail bond business of the licensee or applicant.
(14)	For knowingly aiding or abetting others to evade or violate the provisions of this Article.
(15)	Any cause for which issuance of the license could have been refused had it then existed and been known to the Commissioner at the time of issuance.
	(c)	The Commissioner shall deny, revoke, or refuse to renew any license under this Article if the applicant or licensee is or has ever been convicted of a felony."
Section 10.  G.S. 58-71-71(a) reads as rewritten:
"(a)	In order to be eligible to take the examination required to be licensed as a runner or bail bondsman under G.S. 58-71-70, each person shall complete at least 16 hours of education in subjects pertinent to the duties and responsibilities of a runner or bail bondsman, including all laws and regulations related to being a runner or bail bondsman."
Section 11.  G.S. 58-71-71(b) reads as rewritten:
"(b)	Each year every licensee shall complete at least eight hours of continuing education in subjects related to the duties and responsibilities of a runner or bail bondsman before renewal of the license. This continuing education shall not include a written or oral examination. A person who receives his first license on or after January 1 of any year does not have to comply with this subsection until the period between his first and second license renewals."
Section 12.  G.S. 58-71-165 reads as rewritten:
"§ 58-71-165.  Monthly report required.
Each professional bail bondsman and surety bondsman shall file with the Commissioner a written report in form prescribed by the Commissioner regarding all bail bonds on which the bondsman is liable as of the first day of each month showing (i)	each individual bonded, (ii) the date the bond was given, (iii) the principal sum of the bond, (iv) the State or local official to whom given, and (v) the fee charged for the bonding service in each instance.  The report shall be filed on or before the fifteenth day of each month.  Any person who knowingly and willfully falsifies a report required by this section is guilty of a Class I felony."
Section 13.  G.S. 58-71-71(e) reads as rewritten:
"(e)	The license of any person who fails to comply with the continuing education requirements under this section shall lapse.  The Commissioner may, for good cause shown, grant extensions of time to licensees to comply with these requirements.  Any licensee who, after obtaining an extension under this subsection, offers evidence satisfactory to the Commissioner that the licensee has satisfactorily completed the required continuing professional education courses is in compliance with this section."
Section 14.  G.S. 58-71-85(a) reads as rewritten:
"(a)	The suspension or revocation of, or refusal to renew, any license under G.S. 58-71-80 shall be in accordance with the provisions of Chapter 150B of the General Statutes."
PART V. VIATICAL SETTLEMENT PROVIDERS.
Section 15.  G.S. 58-58-42(j) reads as rewritten:
"(j)	Authority to Adopt Standards. – The Commissioner may:
(1)	Adopt rules to implement this section.
(2)	Establish standards for evaluating reasonableness of payments under contracts. This authority includes regulation of discount rates used to determine the amount paid in exchange for assignment, transfer, sale, devise, or bequest of a benefit under a policy.
(3)	Establish appropriate registration and other regulatory requirements for brokers.
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PART VI. HOME INSPECTORS.
Section 16.  G.S. 143-151.45 reads as rewritten:
"§ 143-151.45.  Definitions.
The following definitions apply in this Article:
(1)	Associate home inspector. – An individual who is affiliated with or employed by a licensed home inspector to conduct a home inspection of a residential building on behalf of the licensed home inspector.
(2)	Board. – The North Carolina Home Inspector Licensure Board.
(3)	Compensation. – A fee or anything else of value.
(4)	Home inspection. – A written evaluation of two or more of the following components of a residential building: heating system, cooling system, plumbing system, electrical system, structural components, foundation, roof, masonry structure, exterior and interior components, or any other related residential housing component.
(5)	Home inspector. – An individual who engages in the business of performing home inspections for compensation.
(6)	Residential building. – A structure intended to be, or that is in fact, used as a residence by one or more individuals."
Section 17.  G.S. 143-151.52 reads as rewritten:
"§ 143-151.52.  Requirements to be licensed as an associate home inspector.
To be licensed as an associate home inspector, a person must do all of the following:
(1)	Submit a completed application to the Board upon a form provided by the Board.
(2)	Pass a licensing examination prescribed by the Board.
(3)	Pay the applicable fees.
(4)	Have a high school diploma or its equivalent.
(5)	Be employed by or affiliated with or intend to be employed by or affiliated with a licensed home inspector and submit a sworn statement by that licensed home inspector certifying that the licensed home inspector will actively supervise and train the applicant."
Section 18.  G.S. 143-151.53 reads as rewritten:
"§ 143-151.53.  Notification to applicant following evaluation of application.
If the Board finds that the applicant has not met fully the requirements for licensing, the Board shall refuse to issue the license and shall notify in writing the applicant of the denial, stating the grounds of the denial.  The application may also be denied for any reason for which a license may be suspended or revoked or not renewed under G.S. 143-151.56.  Within 30 days after service of the notification, the applicant may make a written demand upon the Board for a review to determine the reasonableness of the Board's action.  The review shall be completed without undue delay, and the applicant shall be notified promptly in writing as to the outcome of the review.  Within 30 days after service of the notification as to the outcome, the applicant may make a written demand upon the Board for a hearing under Article 3A of Chapter 150B of the General Statutes if the applicant disagrees with the outcome."
Section 19.  G.S. 143-151.56 reads as rewritten:
"§ 143-151.56.  Suspension, revocation, and refusal to renew license.
(a)	The Board may deny or refuse to issue or renew a license, may suspend or revoke a license, or may impose probationary conditions on a license if the license holder or applicant for licensure has engaged in any of the following conduct:
(1)	Employed fraud, deceit, or misrepresentation in obtaining or attempting to obtain or renew a license.
(2)	Committed an act of malpractice, gross negligence, or incompetence in the practice of home inspections.
(3)	Without having a current license, either performed home inspections for compensation or claimed to be licensed.
(4)	Engaged in conduct that could result in harm or injury to the public.
(5)	Been convicted of or pled guilty or nolo contendere to any misdemeanor involving moral turpitude or to any felony.
(6)	Been adjudicated incompetent.
(7)	Engaged in any act or practice that violates any of the provisions of this Article or any rule issued by the Board, or aided, abetted, or assisted any person in a violation of any of the provisions of this Article.
(b)	A denial of licensure, refusal to renew, suspension, revocation, or imposition of probationary conditions upon a license holder may be ordered by the Board after a hearing held in accordance with Article 3A of Chapter 150B of the General Statutes and rules adopted by the Board. An application may be made to the Board for reinstatement of a revoked license if the revocation has been in effect for at least one year."
PART VII. EFFECTIVE DATE.
Section 20.  Section 3 of this act becomes effective January 1, 1998. Sections 6, 7, 9, 13, 18, and 19 of this act become effective October 1, 1997, and Section 19 applies to applications for licensure or renewal submitted on or after that date. Section 4 of this act becomes effective September 1, 1997. The remainder of this act is effective when it becomes law.