Twisting, in insurance, refers to the illegal practice of inducing a policyholder to drop an existing insurance policy and purchase a new one from the same or a different insurer, to the detriment of the policyholder. This often involves misrepresentation or incomplete comparison of the policies. North Carolina Administrative Code (NCAC) Title 11, Chapter 12, specifically addresses unfair trade practices, including twisting. While the exact rule number may vary, the regulations generally prohibit misrepresenting the terms of a policy, making misleading comparisons, or using incomplete comparisons to induce a policyholder to lapse, surrender, or convert an existing policy. Penalties for twisting can include suspension or revocation of the agent’s license, fines, and potential civil liability for damages suffered by the policyholder. The North Carolina Department of Insurance actively investigates and prosecutes cases of twisting to protect consumers. Agents must ensure they provide accurate and complete information and avoid any actions that could be construed as detrimental to the policyholder’s best interests.

North Carolina requires licensed insurance agents to complete continuing education (CE) courses to maintain their licenses. The specific requirements are outlined in North Carolina General Statute 58-33-125 and related regulations. Generally, agents must complete a certain number of CE credit hours biennially, with a portion of those hours often dedicated to ethics and North Carolina law updates. The exact number of required hours varies depending on the license type. Failure to meet the CE requirements can result in the suspension or revocation of the agent’s license. The North Carolina Department of Insurance monitors compliance through various methods, including requiring agents to report their completed CE credits through an approved tracking system. The Department also conducts audits to verify the accuracy of reported credits and may impose penalties for non-compliance. Agents are responsible for tracking their CE credits and ensuring they meet all requirements before their license renewal date.

The North Carolina Rate Bureau (NCRB) is a statutorily created organization responsible for establishing rates for certain types of insurance in North Carolina. Its primary purpose is to ensure that rates are adequate, not excessive, and not unfairly discriminatory. The NCRB’s rate-setting authority primarily applies to property insurance (specifically homeowners insurance), automobile insurance, and workers’ compensation insurance. When establishing rates, the NCRB considers various factors, including historical loss data, expenses, investment income, and trends in claims frequency and severity. The NCRB also takes into account legal and regulatory requirements, as well as actuarial principles. The rate-making process involves a detailed analysis of statistical data and a public hearing process where interested parties can provide input. The Commissioner of Insurance ultimately approves or disapproves the rates proposed by the NCRB.

The North Carolina Unfair Trade Practices Act (NCUTPA), codified in Chapter 75 of the North Carolina General Statutes, prohibits unfair methods of competition and unfair or deceptive acts or practices in trade or commerce. In the context of insurance, this includes misrepresenting policy terms, failing to promptly investigate and settle claims, and engaging in coercive sales tactics. Examples of violations include: misrepresenting the benefits or terms of an insurance policy, failing to pay a legitimate claim without reasonable justification, delaying claim payments unreasonably, and using high-pressure sales tactics to force a consumer to purchase a policy. A consumer who believes they have been subjected to an unfair trade practice can file a complaint with the North Carolina Department of Insurance. They may also have the right to pursue a private cause of action in court, seeking damages and potentially treble damages if the violation is found to be willful.

The North Carolina Department of Insurance (NCDOI) is the primary regulatory body for the insurance industry in North Carolina. Its key functions include licensing insurance companies and agents, regulating insurance rates and policy forms, investigating consumer complaints, and enforcing insurance laws and regulations. The NCDOI ensures compliance through various means, including conducting financial examinations of insurance companies to assess their solvency, reviewing policy forms to ensure they comply with state law, investigating allegations of fraud and unfair trade practices, and imposing penalties for violations of insurance regulations. The NCDOI also provides consumer education and outreach programs to help consumers understand their insurance rights and responsibilities. The Commissioner of Insurance, an elected official, heads the NCDOI and is responsible for overseeing all aspects of insurance regulation in the state.

To obtain an insurance producer license in North Carolina, applicants must meet several requirements outlined in North Carolina General Statute 58-33. This includes completing pre-licensing education courses from an approved provider, passing the state licensing examination for the specific lines of authority (e.g., life, health, property, casualty), and submitting an application to the North Carolina Department of Insurance (NCDOI). Resident applicants must be residents of North Carolina. Non-resident applicants must hold a valid insurance producer license in their home state. Non-resident applicants may be eligible for license reciprocity, which allows them to obtain a North Carolina license without completing pre-licensing education or examination, provided their home state has similar licensing requirements. All licensed producers are subject to continuing education requirements to maintain their licenses, as detailed in NCGS 58-33-125.

North Carolina law places specific restrictions on the use of credit information in underwriting and rating personal insurance policies, primarily to protect consumers from unfair discrimination. Insurers are permitted to use credit information as one factor among many, but they cannot base an adverse underwriting decision (e.g., denial of coverage, cancellation, or non-renewal) solely on credit information. Furthermore, insurers must adhere to specific guidelines regarding the use of credit scores, including obtaining updated credit information at least every three years if the policy is continuously renewed. Insurers must also provide consumers with certain disclosures, including informing them that their credit information may be used in the underwriting or rating process, and providing them with the reasons for any adverse action taken based on credit information. These regulations are designed to ensure that credit information is used fairly and transparently in the insurance process, as outlined in North Carolina General Statute 58-39-15 and related administrative rules.

The North Carolina Commissioner of Insurance possesses the authority to issue a cease and desist order when there is reasonable cause to believe that any person is engaged, has engaged, or is about to engage in any unfair method of competition or any unfair or deceptive act or practice as defined in Article 3A of Chapter 58 of the North Carolina General Statutes. Specifically, N.C.G.S. § 58-63-30 outlines the procedures for such orders. The Commissioner must provide notice and an opportunity for a hearing before issuing a final cease and desist order. This power is crucial for protecting consumers from misleading or fraudulent insurance practices. It also ensures fair competition among insurers by preventing practices that could unfairly disadvantage competitors. The Commissioner’s ability to swiftly halt such activities is essential for maintaining the integrity of the insurance market and safeguarding public trust. Failure to comply with a cease and desist order can result in further penalties, including fines and license revocation.

North Carolina General Statute § 58-33-56(h) addresses the permissible sharing of commissions by licensed insurance producers. It stipulates that a licensed insurance producer may share commissions with another licensed insurance producer holding the same line of authority. This means that both individuals must be properly licensed and authorized to sell the specific type of insurance for which the commission is being shared. Sharing commissions with unlicensed individuals or producers licensed in different lines of authority is strictly prohibited. Violations of this statute can result in disciplinary actions by the North Carolina Department of Insurance, including fines, suspension, or revocation of the producer’s license. The purpose of this regulation is to ensure that individuals receiving commissions are qualified and accountable for their actions in the insurance transaction, thereby protecting consumers and maintaining professional standards within the industry.

“Twisting” is a prohibited sales practice in North Carolina, defined as knowingly making any misleading representations or incomplete or fraudulent comparisons of insurance policies or insurers for the purpose of inducing a policyholder to lapse, forfeit, surrender, terminate, retain, or convert an insurance policy, or take out a policy with another insurer. This practice violates North Carolina General Statute § 58-63-15(7). The key elements of twisting include: (1) Misleading or fraudulent representations or comparisons; (2) Intent to induce a policyholder to take a detrimental action regarding their existing policy; and (3) The action must benefit the agent or a new insurer at the expense of the policyholder. For example, an agent convinces a client to surrender a whole life policy with accumulated cash value to purchase a term life policy with a lower premium, without properly explaining the loss of cash value and long-term benefits, solely to earn a higher commission on the new policy. This would be considered twisting.

North Carolina Administrative Code 11 NCAC 12.0301 et seq. outlines the continuing education (CE) requirements for licensed insurance producers in North Carolina. Producers are generally required to complete 24 credit hours of approved CE courses every two years, prior to their license renewal date. At least 3 of these hours must be in ethics. Certain specialized licenses may have additional or specific CE requirements. Failure to complete the required CE hours by the renewal date can result in penalties, including fines, suspension of the producer’s license, or even revocation. Producers are responsible for tracking their CE credits and ensuring that they are reported to the North Carolina Department of Insurance through approved CE providers. The purpose of these requirements is to ensure that insurance producers maintain a current understanding of insurance laws, regulations, and industry best practices, thereby protecting consumers and promoting professionalism within the industry.

The North Carolina Rate Bureau (NCRB) is a statutorily created organization responsible for filing rates, rules, and forms for certain property and casualty insurance lines in North Carolina. Its primary function is to ensure that rates are reasonable, adequate, and not unfairly discriminatory. The NCRB’s jurisdiction typically includes homeowners insurance, automobile insurance (specifically, private passenger auto liability and physical damage), and workers’ compensation insurance. Chapter 58 of the North Carolina General Statutes governs the NCRB’s operations. The NCRB proposes rates based on loss data and other relevant factors, and these rates are subject to review and approval by the North Carolina Commissioner of Insurance. While the NCRB proposes rates, the Commissioner ultimately determines whether those rates are fair and comply with state law. This process impacts insurance rates for consumers by providing a mechanism for regulatory oversight and ensuring that rates are based on sound actuarial principles.

Appealing a decision by the North Carolina Department of Insurance regarding a licensing matter is governed by Chapter 150B of the North Carolina General Statutes, the Administrative Procedure Act. Generally, an individual has 30 days from the date of the Department’s decision to file a petition for a contested case hearing with the Office of Administrative Hearings (OAH). The petition must clearly state the grounds for the appeal and the relief sought. The OAH will then conduct a hearing, where the appellant can present evidence and arguments to challenge the Department’s decision. After the hearing, an Administrative Law Judge (ALJ) will issue a recommended decision. The Commissioner of Insurance then reviews the ALJ’s recommendation and issues a final agency decision. If the appellant is still dissatisfied, they can appeal the Commissioner’s final decision to the North Carolina Court of Appeals. Strict adherence to the timelines and procedures outlined in Chapter 150B is crucial for a successful appeal.

North Carolina General Statute § 58-39-1 et seq. regulates the use of credit information in underwriting and rating personal insurance policies. Insurers are permitted to use credit information, but they must adhere to specific requirements. They must disclose to the applicant that credit information may be used, and they must obtain the applicant’s consent to obtain and use their credit report. Adverse actions, such as denying coverage or increasing premiums, based solely on credit information are generally prohibited. Insurers must consider other underwriting factors in addition to credit information. Furthermore, insurers are required to re-underwrite policies using updated credit information at least once every three years, unless the policyholder requests otherwise. The statute also provides consumers with the right to dispute inaccuracies in their credit reports and requires insurers to take corrective action if errors are found. The purpose of these regulations is to balance the insurer’s need to assess risk with the consumer’s right to fair and accurate treatment.