North Carolina Department of Insurance. Wayne Goodwin Commissioner. Legislative Overview for Joint Appropriations Subcommittee on General Government

Transcription

1 North Carolina Department of Insurance Wayne Goodwin Commissioner Legislative Overview for Joint Appropriations Subcommittee on General Government March 3, 2011

2 North Carolina Department of Insurance Legislative Overview Table of Contents (Page Numbers) Department of Insurance Statutory Authority... 1 Mission Statement... 1 Department Goals and Objectives... 1 Organization Chart... 3 Fiscal Data/Continuation Budget, include all sources... 4 Brief Description of all Divisions Recommended Budget Summary of Recommended Budget Statistical Data Total Agency Vacancy Summary Retirement Eligibility Fund Administration Fund Consumer Protection Fund Fund Administration Organization Chart Fund Consumer Protection Fund Organization Chart Fund Administration Fiscal Data Fund Consumer Protection Fund Fiscal Data Fund Company Services Group Fund Company Services Group Organization Chart Fund Company Services Group Fiscal Data Fund Technical Service Group Fund Technical Service Group Organization Chart Fund Technical Service Group Fiscal Data Fund Public Services Group Fund Public Services Group Organization Chart Fund Public Services Group Fiscal Data Fund Office of State Fire Marshal Fund Office of State Fire Marshal Organization Chart Fund Office of State Fire Marshal Fiscal Data Fund Ombudsman Services Group Fund Ombudsman Services Group Organization Chart Worksheet I for the Division %,/10%/15% reductions for divisions submitted to the Governor Non-Profit Grant Data... A 1

3 North Carolina Department of Insurance Statutory Authority Constitution of North Carolina Article 3, Section 7 and General Statutes of North Carolina Chapter 58. Article 3, Section 7 of the Constitution of North Carolina creates the Office of Commissioner of Insurance and provides for the Commissioner s election every four years. The Executive Organization Act of 1971, specifically Article 8 of General Statute Chapter 143A, re-created the Department of Insurance. The Commissioner of Insurance is designated the head of the Department by NCGS 143A-73. NCGS143A-74 states that the Commissioner shall have such powers and duties as are conferred on him by Chapter 143A, delegated to him by the Governor, and conferred by the State Constitution. Under NCGS 143A-6 (a), the Commissioner is vested with the powers and duties of the Department. Article 2 of North Carolina General Statute Chapter 58 also establishes the Department of Insurance and designates the Commissioner as the chief officer of the Department. (See NCGS and NCGS ). In addition, NCGS (1) requires the Commissioner to see that all laws of the State that he is statutorily responsible for administering are faithfully executed; and gives him the authority to adopt rules to enforce, carry out, and make effective the provisions of those laws. He is also given the authority to make rules that are not contrary to those laws and that will prevent persons he regulates from engaging in practices injurious to the public. Mission Statement The North Carolina Department of Insurance serves the citizens of North Carolina through consumer protection and education, safety training and promotion, and regulation of specified activities and industries. This is accomplished by: Assuring an optimum marketplace in which consumers can readily purchase fairly priced insurance products from sound, responsive entities; Educating the public in loss prevention, safety awareness and developing life safety standards; Maintaining a well-managed, fiscally-responsible organization staffed by knowledgeable, courteous, professional employees. At all times, the affairs of the department are conducted in an open, ethical manner and in the best interests of the public. Goals and Objectives Ensure that consumers' insurance investments are protected through company licensure, solvency surveillance, and rate and policy form regulation to assure that products offered meet appropriate state and federal laws and industry standards, and are priced fairly but sufficiently to support a sustainable business for the insurers offering them. Ensure that the purchasers of insurance and other products sold by other regulated entities are treated fairly at the time of marketing and sale and over the life of their purchase by licensing and enforcing continuing education requirements for the individuals and entities who engage in sales, investigating complaints received from consumers and licensees about the conduct of a Page 1

4 licensee, and performing market conduct surveillance to confirm that those who sell and issue the products purchased comply with applicable regulatory requirements. Protect consumers, policyholders, and insurance companies from fraud and illegal behavior by investigating and seeking criminal prosecution of parties who commit fraudulent acts against consumers, policyholders, or insurers. Assist consumers who have questions or problems about insurance or other products regulated by the department or about the federal Medicare Program and its related products, by deploying staff and a network of trained volunteer counselors to provide information and investigate complaints as appropriate. Provide general educational information about insurance products and their availability and the rights of the public and of policyholders with respect to insurance and the federal Medicare Program and Medicare-related insurance in order to inform and empower consumers by publishing and distributing print and electronic newsletters and brochures and by engaging in public speaking, building networks of partner organizations, and other effective forms of outreach. Create and maintain a regulatory organization that employs balanced policies and efficient processes for the benefit of North Carolina citizens by promoting an attractive business climate for insurance companies, insurance agents, and other entities and individuals regulated by the department, who are vital in serving the public. Protect the well-being and safety of citizens and visitors to North Carolina through the creation and maintenance of building codes, annual building inspection, training of fire and rescue personnel, inspections and ratings of fire departments, and the promotion of injury prevention education to reduce property loss and improve public safety. Protect state agencies and local governments and their capital investments by insuring and procuring insurance and providing risk management consulting for government entities, conducting fire, life safety, and electrical code inspections of state facilities, and providing interpretations of state electrical code to protect and reduce property loss. Maintain and enhance the existence of a well-trained knowledgeable staff through training and development opportunities to achieve the department's goals of protecting consumers and public safety and promoting an attractive business climate for the types of entities and individuals that it regulates. Conduct all administrative functions effectively and in compliance with state and federal laws and regulations, and departmental policies, ensuring the safeguarding of state resources while achieving departmental missions and goals. Page 2

5 North Carolina Department of Insurance Overview Wayne Goodwin Commissioner of Insurance Teresa Berry Executive Assistant II George Urko Internal Audit Louis Belo Chief Deputy Commissioner Mark Edwards Assistant Commissioner Stewart Johnson General Counsel Donna Champion Executive Assistant I Angie Brogden Executive Assistant I Rose Williams Chief Legislative Counsel James Newman Chief Fiscal Officer Ray Martinez Company Services Group Ernest Nickerson Technical Services Group Angela Ford Public Services Group Carla Obiol Ombudsman Services Group Tim Bradley Office of State Fire Marshal Joan Creasman Western Regional Office Vicky Young Legis. Affairs Prog. Coord. Ronald Condrey Personnel Officer Jeff Trendel Regulatory Actions Robert Mack Property & Casualty Bob Lisson Consumer Services Kevin Robertson Seniors' Health ins. Info. Program Kelly Williams Prevention, Programs & Grants Joan Buck Eastern Regional Office Kelly Ricketts Special Asst. to Commissioner Larry Brewer Information Systems Tony Riddick Financial Evaluation Ted Hamby Life and Health Etta Maynard Agent Services & Cont. Ed. Program Susan Nestor Healthcare Review Program Chris Noles Engineering Kristin Milam Public Information Kevin Conley Actuarial Services Tracy Biehn Market Regulation Al Koehler Criminal Investigations Carla Obiol NC Consumer Assistance Program Joseph Sadler Manufactured Building Steve Sloan State Fire & Rescue Commission Larry Hughes Training & Inspection Jack Cooke Risk Management Page 3

6 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended General Fund General Fund Total Requirements $37,838,550 $38,822,402 $38,832,813 $38,829,013 $38,829,013 Receipts $ 7,797,092 $ 7,859,846 $ 7,870,257 $ 5,370,257 $ 5,370,257 General fund Appropriation $30,041,458 $30,962,556 $30,962,556 $33,458,756 $33,458,756 Less: Recommended Adjustments $ - $ - $ - $ - $ - Adjusted General Fund Appropriation $30,041,458 $30,962,556 $30,962,556 $33,458,756 $33,458,756 Expenditures by Category: Personal Services (531xxx) - $31,167,076 Purchases Service (532xxx) - $ 6,120,437 Supplies (533xxx) - $ 171,723 Property, Plant & Equipment (534xxx) - $ 223,686 Other Expenses & Adjustment (535xxx) - $ 255,274 Aid & Public Assistance (536xxx) - $ 49,000 InterGovernmental Transaction (538xxx) - $ 835,206 Page 4

7 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data General Fund Page 5

8 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended Budget Code Safety Worker s Comp. Total Requirements $ 1,900,000 $ 1,561,846 $1,561,846 $ 4,500,000 $ 4,500,000 Receipts $ - $ - $ - $ - $ - General fund Appropriation $ 1,900,000 $ 1,561,846 $1,561,846 $ 4,500,000 $ 4,500,000 Less: Recommended Adjustments $ - $ - $ - $ - $ - Adjusted General Fund Appropriation $ 1,900,000 $ 1,561,846 $1,561,846 $ 4,500,000 $ 4,500,000 Expenditures by Category: InterGovernmental Transaction (538xxx) - $1,561,846 (Transferred to BC 63902/6000 VSWC) Page 6

9 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended Special Revenues Special Revenue, Interest Bearing Total Requirements $40,669,796 $33,946,565 $33,946,565 $33,946,565 $33,946,565 Receipts $32,313,922 $34,259,465 $34,259,465 $34,259,465 $34,259,465 Change in Fund Balance $ -8,355,874 $ 312,900 $ 312,900 $ 312,900 $ 312,900 Less: Recommended Adjustments $ - $ - $ - $ - $ - Change in Fund Balance $ -8,355,874 $ 312,900 $ 312,900 $ 312,900 $ 312,900 Expenditures by Category: Personal Services (531xxx) - $ 364,486 Purchases Service (532xxx) - $ 208,119 Supplies (533xxx) - $ 10,700 Property, Plant & Equipment (534xxx) - $ 8,975 Other Expenses & Adjustment (535xxx) - $ 1,500 Aid & Public Assistance (536xxx) - $ 5,330,032 InterGovernmental Transaction (538xxx) - $28,022,753 Page 7

10 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended Special Fund Special Revenue, Non-Interest Total Requirements $ 1,054,078 $ 1,354,983 $ 1,354,983 $ 1,354,983 $ 1,354,983 Receipts $ 935,898 $ 1,354,983 $ 1,354,983 $ 1,354,983 $ 1,354,983 Change in Fund Balance $ -118,180 $ - $ - $ - $ - Less: Recommended Adjustments $ - $ - $ - $ - $ - Change in Fund Balance $ -118,180 $ - $ - $ - $ - Expenditures by Category: Personal Services (531xxx) - $ 334,319 Purchases Service (532xxx) - $ 131,665 Supplies (533xxx) - $ 2,825 Property, Plant & Equipment (534xxx) - $ 5,754 Other Expenses & Adjustment (535xxx) - $ 80,248 Aid & Public Assistance (536xxx) - $ 780,228 InterGovernmental Transaction (538xxx) - $ 19,944 Page 8

11 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended Special Fund Special Revenue, Interest Bearing, Private Grant/Board Total Requirements $ 150,239 $ 245,533 $ 245,533 $ 245,533 $ 245,533 Receipts $ 82,317 $ 168,554 $ 168,554 $ 168,554 $ 168,554 Change in Fund Balance $ -67,922 $ -76,979 $ -76,979 $ -76,979 $ -76,979 Less: Recommended Adjustments $ - $ - $ - $ - $ - Change in Fund Balance $ -67,922 $ -76,979 $ -76,979 $ -76,979 $ -76,979 Expenditures by Category: Purchases Service (532xxx) - $ 116,155 Supplies (533xxx) - $ 12,395 Property, Plant & Equipment (534xxx) - $ 10,600 Other Expenses & Adjustment (535xxx) - $ 12,631 Aid & Public Assistance (536xxx) - $ 93,752 Page 9

12 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended General Fund Special Revenue, Non-Interest, Private Grants Total Requirements $ 220,726 $ 92,692 $ 92,692 $ 92,692 $ 92,692 Receipts $ 232,253 $ 82,049 $ 82,049 $ 82,049 $ 82,049 Change in Fund Balance $ 11,527 $ -10,643 $ -10,643 $ -10,643 $ -10,643 Less: Recommended Adjustments $ - $ - $ - $ - $ - Change in Fund Balance $ 11,527 $ -10,643 $ -10,643 $ -10,643 $ -10,643 Expenditures by Category: Purchases Service (532xxx) - $ 58,088 Supplies (533xxx) - $ 15,053 Property, Plant & Equipment (534xxx) - $ 19,144 Other Expenses & Adjustment (535xxx) - $ 407 Page 10

13 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended Trust Fund Trust Fund, Firemen s Relief - Equipment Total Requirements $ 6,692,999 $ 5,975,386 $ 5,975,386 $ 5,975,386 $ 5,975,386 Receipts $ 5,418,442 $ 5,975,386 $ 5,975,386 $ 5,975,386 $ 5,975,386 Change in Fund Balance $ -1,274,557 $ - $ - $ - $ - Less: Recommended Adjustments $ - $ - $ - $ - $ - Change in Fund Balance $ -1,274,557 $ - $ - $ - $ - Expenditures by Category: Aid & Public Assistance (536xxx) - $ 5,884,470 InterGovernmental Transaction (538xxx) - $ 90,916 Page 11

14 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended Trust Fund Trust Fund - Vol. Safety Worker s Comp. Total Requirements $ 6,036,295 $ 6,885,094 $ 6,885,094 $ 6,885,094 $ 6,885,094 Receipts $ 6,079,237 $ 6,885,094 $ 6,885,094 $ 6,885,094 $ 6,885,094 Change in Fund Balance $ 42,942 $ - $ - $ - $ - Less: Recommended Adjustments $ - $ - $ - $ - $ - Change in Fund Balance $ 42,942 $ - $ - $ - $ - Expenditures by Category: Purchases Service (532xxx) - $ 1,597,609 Other Expenses & Adjustment (535xxx) - $ 5,287,485 Fund includes in the receipts, General Fund Appropriations (13901), and premiums paid by volunteers. Page 12

15 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended General Fund Trust Fund, State. Property Fire Fund and Auto Fund Total Requirements $23,535,481 $17,761,268 $17,761,268 $18,761,268 $18,761,268 Receipts $25,084,162 $17,261,268 $17,261,268 $17,261,268 $17,261,268 Change in Fund Balance $ 1,548,681 $ -500,000 $ -500,000 $ -1,500,000 $ -1,500,000 Less: Recommended Adjustments $ - $ - $ - $ - $ - Change in Fund Balance $ 1,548,681 $ -500,000 $ -500,000 $ -1,500,000 $ -1,500,000 Expenditures by Category: Purchases Service (532xxx) - $14,029,616 Other Expenses & Adjustment (535xxx) - $ 1,031,017 InterGovernmental Transaction (538xxx) - $ 2,700,635 Page 13

16 North Carolina Department of Insurance Brief Description of all Divisions Administration Administration is responsible for the management of all divisions in the Department. Provide staff for: Personnel Division responsible for recruitment and staffing and all related personnel duties. The Controller s Office is responsible for all the financial duties for the department. Public Information Office is responsible for all public affairs, events and media-print and electronic. The Legal Division provides internal legal advice to all sections of the department. The chief counsel acts as liaison with the AG s Office and acts as hearing officer in administrative hearings. The division is also involved with and litigation hearings on all statutory Rate Bureau rate filing, and administrative matters including license suspension/revocation and wrong doings by insurance companies. The Information Technology Services Division (ITS) handles the IT needs for the agency. The Company Services Group is comprised of the Actuarial Services, Financial Evaluation Division, Regulatory Action Division as well as the RAD Trust. The Actuarial Services Division assists in the review of company and bureau rate filings and rate related issues. They also conduct actuarial studies and special projects to support financial evaluation work as well as other areas of the Department. The Financial Evaluation Division regulates and monitors: all authorized insurers; entities that self-insure for worker s compensation; and third party administrators. The division also conducts financial examinations or audits of all insurers and related entities in order to ensure that they comply with state laws including the payment of premium taxes and other fees which come to the state. The Regulatory Actions Division is responsible for monitoring and working closely with troubled companies and administers the financial and regulatory functions associated with companies in receivership. The Regulatory Actions Division works with the RAD Trust in administering the estates of all insurance entities placed into rehabilitation or liquidation in NC. The Technical Services Group is comprised of Life & Health, Market Regulation and Property & Casualty Divisions. The work performed by divisions in this group work with centers on policy issues, taking into consideration how they are implemented in insurance products and day-today company operations. Property & Casualty Division review rates, rules and forms for the North Carolina Rate Bureau, North Carolina Reinsurance Facility, N. C. Insurance Underwriting Association (NCIUA), N. C. Joint Underwriting Association (NCJUA, Fair Plan) and licensed property and casualty insurance companies. They also licenses statically organizations (formerly rating and advisory organizations) and joint underwriting associations, along with reviewing rate, rule and policy form filing made by these entities. The Life and Health Division is responsibility for the review and approval of rate, rules and policy form filing submitted by life and health insurance companies and issuance of license for third party administrators and Viatical settlement and life settlement providers. Page 14

17 The Market Examinations Division monitors insurance company market practices, especially as they affect consumers. They conduct field examinations of domestic and foreign insurers and their representatives. The Public Services Group is comprised of the Agent Services, Consumer Services and the Criminal Investigations Divisions. The Agent Services Division is responsible for the regulation of all agents, brokers, limited representatives, appraisers, adjusters, premium finance companies, collection agencies, motor clubs, bail bondsmen, surety agents and bail bond runners authorized to do business in North Carolina. This includes prelicensing education, continuing education, agency examinations and administrative actions. The Consumer Services Division assists North Carolina consumers by responding to insurance questions and resolving matters associated with premium calculations, cancellations, claims and changes in terms and conditions of insurance policies. A staff of consumer specialists advises and acquaints consumers with courses of action they may pursue to resolve their particular insurance problem. The Criminal Investigations Division conducts criminal investigations of insurance-related crimes committed by policyholders, claimants, insurance producers and insurance companies. The division also conducts criminal investigations involving bail bonding, collection agency and premium finance activities. Office of State Marshal (OSFM) serves in a variety of functions. OSFM administers and enforces life safety standards throughout the state, promotes risk management practices throughout state government and maintains a sound insurance program for state agencies. OSFM is comprised of the following six divisions: The Engineering Division is comprised of the following sections: code consultant, state property plan review, mechanical review, home inspection, inspector certification, building code council and handicapped accessibility. This division administers the state building code and provides staff to the North Carolina Building Code Council, the North Carolina Code Official Qualifications Board and the Home Inspectors Licensing Board. The Manufactured Building Division works to assure that construction standards for manufactured homes are maintained and that warranty obligations under state law are met. The division monitors handling of consumer complaints, licenses the makers of manufactured homes, dealers, sales representatives and setup contractors and acts as staff for the North Carolina Manufactured Housing Board. The Risk Management Division administers the self-insurance funds for state-owned property and vehicles, and procures from private insurance companies other types of insurance needed by the state agencies and universities. This division inspects all stateowned facilities for fire and life safety and inspects all new state-owned facilities for Electrical Code compliance. Training and Inspection Division trains fire departments, rescue squads, and instructors to improve fire and rescue protection statewide. The Division provides special schools, development of training programs and teaching outlines, and specialist training directed to instructors. This division provides continuous upgrades to the training of the state s emergency workers. Fire and Rescue Commission Division serves as staff to the Fire and Rescue Commission and handles the state's voluntary certification system comprised of 40,000 individuals, and the State Fire and Rescue Incident Reporting System. Page 15

18 The Prevention, Program, and Grants Division administers the Firemen's Relief Fund, Rescue Relief Fund, assists all divisions within the OSFM with development of programs and brochures and provides direction and support for injury prevention programs statewide. The division also administers matching dollar-for-dollar grants to volunteer fire departments and rescue squads and offers fire prevention education in the public schools. Ombudsman Services Group is comprised of The Seniors Health Insurance Information Program (SHIIP), HealthCare Review Program and the NC Consumer Assistance Program (NCCAP). The NCCAP relates to the Federal Health Care Reform Act. Page 16

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45 North Carolina Department of Insurance Budget Summary Recommended Recommended Number of Fund Division Name Appropriation Appropriation Positions Budget Code Administration $ 6,372,704 $ 6,372, appropriated 1.54 receipts 1200 Company Services Group $ 7,572,506 $ 7,572, appropriated 1300 Technical Services Group $ 5,671,123 $ 5,671, appropriated 9.00 federal receipts 1400 Public Services Group $ 6,272,794 $ 6,272, appropriated including 20 law enforcement 1500 Office of State Fire Marshal $ 7,084,629 $ 7,084, appropriated receipts 1600 Ombudsman Service Group $ - $ Reserves and Transfers $ 485,000 $ 485, Budget Code Consumer Protection Fund $ - $ receipts Budget Code Home Inspector Licensure $ - $ receipts 2556 Manufact. Build. Fed $ - $ receipts Page 43

46 North Carolina Department of Insurance Statistics Insurance Agents and Companies Total number of licenses for insurance agents: Agents in NC - 271,350; out of state - 455,931 Total calls or written inquiries /questions from agents - 69,886 Total number of insurers authorized by Department to operate in NC - 1,656 Citizens Total consumer complaints/questions/requests for assistance for information from Consumer Division: 8,600 written correspondence and 85,000 telephone calls Total citizens assisted by Senior s Health Insurance Information Program for 2010: 114,683 consumers and had documented savings of $8,625,699 Total number of Firefighters trained by DOI - 19,240 Total number of Voluntary Fire Departments in NC - 1,316 Total number of Voluntary FF and EMS workers - 51,000 Total Voluntary Safety Workers Compensation (VFF & EMS) participants - 45,663 Total Voluntary Fire and Rescue Departments participating in VSWC Fund - 1,218 Total Number of fire departments whose insurance rating improved since Department operations Total employees: (1) appropriated (reimbursed by non - tax receipts) (2) Federal receipt supported - 31 (3) Other receipt supported - 32 Total budget for DOI - $37,838,550 Total funding for DOI: (1) From appropriated/insurance Special Fund Receipts (Surcharge fee) - $30,041,458 (2) Other Fees & receipts - $ 7,797,092 Total Federal funds received annually by DOI: $ 6,121,449 Support of the State General Fund Total annual insurance Premium Taxes transferred to State General Fund: $460,714,046 Total annual Surplus Lines Premium Taxes transferred to State General Fund: $26,134,614 Total other fees collected and paid to the State General Fund: $ 27,066,424 Total reimbursement from DOI to the State from insurance fund: $32,486,004 Other Comments: Total dollars saved by successfully representing the state in insurance rate hearings and negotiations resulting in refunds during the last two years - $890,000,000 Since the Department of Insurance has been regulating insurance companies, there has not been a single domestic company (estate) or state guaranty association that has failed to pay legal obligations owed to insureds (including citizens and entities in NC) Page 44

47 Vacancy Report as of 2/18/2011 North Carolina Department of Insurance Fund # Position Date Vacant Funding Source Fund Type $ 1100 Controller's Office Processing Assistant III 09/01/2009 Appropriated - Reimbursed General 28, Information Systems Networking Analyst 01/19/2011 Appropriated - Reimbursed General 55, Financial Evaluation & Anlys Insurance Company Examiner 01/04/2011 Appropriated - Reimbursed General 70, Financial Evaluation & Anlys Insurance Company Examiner 07/01/2010 Appropriated - Reimbursed General 51, Life & Health Insurance Regulatory Analyst II 02/01/2011 Appropriated - Reimbursed General 57, Life & Health Office Assistant IV 12/20/2010 Appropriated - Reimbursed General 33, Market Regulation Office Assistant IV 04/13/2009 Appropriated - Reimbursed General 25, Agent Services Processing Assistant III 01/04/2011 Appropriated - Reimbursed General 29, Manufactured Building Processing Assistant IV 11/10/2010 Appropriated - Reimbursed General 36, SHIIP Program Assistant V 12/01/2010 Appropriated - Reimbursed General 36, Health Care Reform-Fed-Premium Rev Insurance Company Examiner 08/01/2010 Federal - Time Limited General 88, Health Care Reform-Fed-Premium Rev Insurance Regulatory Analyst III 08/01/2010 Federal - Time Limited General 69, Health Care Reform-Fed-Premium Rev Office Assistant IV 08/01/2010 Federal - Time Limited General 32, Health Care Reform-Fed-Premium Rev Insurance Regulatory Analyst I 08/01/2010 Federal - Time Limited General 54, Health Care Reform-Fed-Premium Rev Insurance Regulatory Analyst I 08/01/2010 Federal - Time Limited General 54, Health Care Reform-Fed-Premium Rev Insurance Regulatory Analyst I 08/01/2010 Federal - Time Limited General 54, NC Consumer Assist. Program Insurance Complaint Analyst 10/01/2010 Federal - Time Limited General 52, NC Consumer Assist. Program Insurance Complaint Analyst 10/01/2010 Federal - Time Limited General 52, NC Consumer Assist. Program Program Assistant V 10/01/2010 Federal - Time Limited General 34, NC Consumer Assist. Program Insurance Complaint Analyst 10/01/2010 Federal - Time Limited General 52, NC Consumer Assist. Program Insurance Complaint Analyst 10/01/2010 Federal - Time Limited General 52, NC Consumer Assist. Program Insurance Complaint Analyst 10/01/2010 Federal - Time Limited General 52, NC Consumer Assist. Program Utilization Review Analyst 10/01/2010 Federal - Time Limited General 56, Manufactured Building Processing Assistant III 12/12/2005 Federal Special Rev. 27, , Overall Result 1,156, Budget Amount Number of Days Position FTE Page 45

48 North Carolina Department of Insurance Retirement Eligibility Position count for employees within three years of retirement: Fund Division Pos # Title fte 1200 Company Services Group Ins Co Examiner Manager Property & Casualty Administrative Assistant II Investigation Investigator-insuran Engineering Engineer Engineering Engineer Engineering Engineering/Architectural Sup Prevention, Programs & Grants Administrative Assistant II Manufactured Building Engineering/Architectural Sup Risk Management Administrative Officer II 1.00 Total 9.00 Position count for employees with thirty years of service: Fund Division Pos # Title fte 1100 Controllers Accountant Controllers Accounting Director Controllers Departmental Purchasing Officer I Information Systems Information Technology Manager Personnel Agency/University HR Director I Personnel Office Assistant III Actuarial Services Office Assistant IV Administration Attorney IV Financial Evaluation Insurance Company Examiner Regulatory Actions Administrative Officer I Property & Casualty Insurance Regulatory Analyst II Property & Casualty Insurance Regulatory Analyst III Investigation Insurance Investigation Asst Supv Investigation Investigator-insuran State Fire & Trng Comm Administrative Assistant I Administration Attorney III 0.90 Total Page 46

49 North Carolina Department of Insurance Fund Code 1100 Administration Statutes NCGS 58 Article 2 NCGS NCGS NCGS NCGS 150B - Article 3A Duties/Responsibilities The Administrative Services Group is responsible for the management of all divisions in the Department and includes Personnel, Controller's Office, Public Information Office, General Counsel, Information Systems, and Legislative Office. Chief deputy commissioner. Other deputies, actuaries, examiners and employees. Powers and duties of commissioner. Serve as Department s hearing officers. Major Responsibilities - Administration Personnel Division is responsible for recruitment and staffing and all related personnel duties. Controller s Office is responsible for all the financial duties for the department. Public Information Office is responsible for all public affairs, events and media print and electronic. General Counsel provides internal legal advice to all parts of the department. The chief counsel acts as liaison with the AG s Office and acts as hearing officer in administrative hearings. The division is also involved with and litigates hearings on all statutory Rate Bureau rate filing, and administrative matters including license suspension/revocation and wrong doings by insurance companies. Information Technology Systems Department handles all IT needs for the agency. Legislative Office acts on behalf of the Commissioner in the General Assembly with respect to legislative matters. The Office serves as liaison to the members of the General Assembly on insurance-related issues, and provides oversight in rule-making procedures for the Department. Regional Offices Western Office (29 western most counties) and Eastern Office (32 eastern most counties) offices. These offices serve their counties for consumer complaints, and agent inquires, inquires on manufactured housing, state building codes, fire and rescue, and SHIIP. They provide meeting and training space. During the period, the regional offices: Received 83,413 in-person and telephone contacts with citizens, including insurance industry and all Departmental regulated entities. Handled 7,557 cases regarding consumer complaints and other inquiries. Coordinated local grants of over $9.6 million in fire and rescue grant funds. Regional office personnel also facilitated appropriate audits of equipment/property purchased with these funds. Page 47

50 North Carolina Department of Insurance Budget Code Fund Code 2001 Consumer Protection Fund Statutes NCGS Duties/Responsibilities Consumer Protection Fund. Consumer Protection Fund is a fund established by the General Assembly and is part of the continuation budget for the agency. Moneys credited to the Fund shall be used for the purpose of retaining outside actuarial and economic consultants, legal counsel, and court reporting services in review and analysis of rate filings, asset recovery of companies placed in liquidation, and any civil litigations commenced against the Commissioner or his deputies. The fund is also used for salaries and operations of the staff to support the activities. The budget shall be $485, plus any funds carried forward in the reserve amount up to $250, Page 48

51 North Carolina Department of Insurance Administration Wayne Goodwin Commissioner Teresa Berry Executive Assistant Louis Belo Chief Deputy Commissioner Mark Edwards Assistant Commissioner Rose Williams Attorney Ronnie Condrey Personnel Officer Personnel Analyst 1.00 fte Staff Development Spec 1.00 fte Personnel Technician 1.00 fte Jim Newman Chief Fiscal Officer Accountant 4.00 fte Accounting Technician 1.00 fte Accounting Clerk 3.00 fte Donna Champion Executive Assistant Larry Brewer Chief Information Officer IT Manager - Bus. & Tech fte Bus. & Tech. Specialist fte Bus. & Tech. Applic. Analyst 6.00 fte Special Asst., Regional Affairs 2.00 fte Administrative Assistant 2.00 fte Ins. Communication Spec fte Angie Brogden Executive Assistant Director of Public Affairs 1.00 fte Information & Comm Spec fte Paralegal 1.00 fte Vicky Young Legis. Affairs Prog. Coord. Stewart Johnson Attorney Supervisor (0.80 fte) Paralegal 0.80 fte Kelly Ricketts Special Asst. to Commissioner Personnel Asst 1.00 fte Office Asst fte Processing Assistant 4.00 fte Dept. Purchasing Officer 1.00 fte Purchasing Technician 1.00 fte Networking Specialist 1.00 fte Networking Analyst 2.00 fte Tech. Support Specalist 1.00 fte Tech. Support Analyst 3.00 fte Page 49

52 North Carolina Department of Insurance Consumer Protection Fund Stewart Johnson Attorney Supervisor (0.20 fte) Paralegal 0.20 fte Attorney 1.90 fte Paralegal 1.00 fte Page 50

53 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended General Fund Administration Total Requirements $ 5,798,744 $ 6,166,451 $ 6,486,888 $ 6,486,888 $ 6,486,888 Receipts $ 1,601,731 $ 2,614,184 $ 2,614,184 $ 114,184 $ 114,184 General fund Appropriation $ 4,197,013 $ 3,552,267 $ 3,872,704 $ 6,372,704 $ 6,372,704 Less: Recommended Adjustments $ - $ - $ - $ - $ - Adjusted General Fund Appropriation $ 4,197,013 $ 3,552,267 $ 3,872,704 $ 6,372,704 $ 6,372,704 Expenditures by Category: Personal Services (531xxx) - $ 4,808,444 Purchases Service (532xxx) - $ 1,286,220 Supplies (533xxx) - $ 29,497 Property, Plant & Equipment (534xxx) - $ 22,089 Other Expenses & Adjustment (535xxx) - $ 20,201 Page 51

54 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended Special Revenue Budget Code Consumer Protection Fund Total Requirements $ 373,331 $ 485,000 $ 485,000 $ 485,000 $ 485,000 Receipts $ 487,379 $ 485,000 $ 485,000 $ 485,000 $ 485,000 Change in Fund Balance $ 114,048 $ - $ - $ - $ - Less: Recommended Adjustments $ - $ - $ - $ - $ - Change in Fund Balance $ 114,048 $ - $ - $ - $ - Expenditures by Category: Personal Services (531xxx) - $ 364,486 Purchases Service (532xxx) - $ 116,939 Supplies (533xxx) - $ 2,000 Property, Plant & Equipment (534xxx) - $ 975 Other Expenses & Adjustment (535xxx) - $ 600 Page 52

55 North Carolina Department of Insurance Fund Code 1200 Company Services Group Actuarial Services Division Statutes Duties/Responsibilities NCGS Used during financial examinations to review financial statement items for compliance with minimum standards. NCGS Enables request for data from insurance companies for professional liability insurance. NCGS Enables request for data from insurance companies for various surveys of insurance industry practices. NCGS Enables review of the effect on premium rates of closing a health insurance offering. NCGS 58-7 Used to review funding agreements, reinsurance activities, and insurance products involving separate accounts. NCGS Used to review proposed assumption reinsurance agreements. NCGS NCGS NCGS NCGS NCGS NCGS NCGS 58-87A (Property and Casualty statutes) NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS (Life and Health) NCSG Used to review risk-based capital reports. Used to review Multiple Employer Welfare Arrangements - Specific Stop Loss Limits, Licensing process. Used to review Small Employer Premium Rate Restrictions. Used to review Prima Facie Credit Insurance Rates; Refund Calculations. Used to review rate filing from Blue Cross Blue Shield. Used to review HMO Rate Filing. Used to review PEO rate, specific stop loss limits, licensing. Allows DOI to review activities, rates, and policy forms of North Carolina State Property Fire Fund. Allows DOI to review activities, rates, and policy forms of North Carolina Rate Bureau (auto, homeowners, workers compensation insurance). Allows DOI to review activities, rates, and policy forms of North Carolina Reinsurance Facility (for drivers who cannot obtain auto liability insurance). Allows DOI to review rates and policy forms of property casualty insurers. Allows DOI to review rates and policy forms of property casualty insurers (slight differences from 58-40). Allows DOI to review activities, rates, and policy forms of North Carolina Beach Plan. Allows DOI to review rates and policy forms of workers compensation self insurance funds. Allows DOI to review activities of North Carolina Insurance Guaranty Association. Allows DOI to review rates of insurers writing credit insurance. Allows DOI to review activities, rates, and policy forms of North Carolina health insurers. Page 53

56 Statutes NCGS NCGS NCGS NCGS NCGS NCGS NCGS Duties/Responsibilities Allows DOI to review, approve, or disapprove activities, rates, and policy forms of health insurers. Allows DOI to review activities, rates, and policy forms of Medicare Supplement insurers. Allows DOI to review activities, rates, and policy forms of long term care insurers. Allows DOI to review fairness and rates for life insurance settlement options; used to review reserves and nonforfeiture values for life insurance and annuity products and reserves reported in financial statements. Allows DOI to review activities of North Carolina Life & Health Insurance Guaranty Association. Allows DOI to review activities, rates, and policy forms of hospital, medical, or dental service insurers. Allows DOI to review activities, rates, and policy forms of HMO's. Major Responsibilities Actuarial Services assists other Department of Insurance divisions in regard to all aspects of actuarial science. Divisions that receive actuarial assistance include the: Consumer Services Division in regard to consumer complaints on rate increases and with general questions concerning insurance; Property and Casualty Division in reviewing rate filings, loss cost filings, form filings and statistical filings; Rate counsel when preparing for and conducting rate hearings. The division also provides actuarial assistance in the preparation of briefs during the appeals process up to and including the North Carolina Supreme Court; Financial Analysis Section with reviewing Actuarial Opinions and Memorandums, reviewing of HMO claim reserves and various other projects; Financial Examination Section with analysis of claim reserves and the proper accounting of reserve items; Life and Health and Financial Evaluation Divisions in regard to the licensing of new Health Maintenance Organizations (HMOs) and the review of expansion and material modification requests, and the annual licensing of Multiple Employer Welfare Arrangements (MEWAs) and Professional Employer Organizations (PEOs); Life and Health Division with reviewing individual accident and health insurance and HMO rate revisions, review of unusual life, annuity and health insurance products, and review of actuarial aspects of proposed rules and legislation pertaining to life and health insurance; Other government agencies that have received actuarial assistance including the General Assembly s Research Division with cost estimates on proposed legislation that involves insurance pricing in some way, or with various other projects that require actuarial science for proper evaluation. Page 54

57 Financial Evaluation Division Statutes Duties/Responsibilities NCGS 58 The Financial Evaluation Division regulates all authorized insurers, entities that self-insure for workers compensation, certain third party administrators, managing general agents, accredited reinsurers, professional employer organizations and continuing care retirement communities, for compliance with the solvency laws of this state. The ultimate objective of this regulation is to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. All the Articles referenced below allow the Financial Evaluation Division to accomplish its regulatory goals. Several Articles of Chapter and one Article of Chapter 97 allows the division to accomplish these goals. NCGS (Definitions) - used by Financial Evaluation Division ( Financial ) for its definitions of terms (Commissioner, Department, Foreign Company, NAIC, Domestic Company, Person, etc.) that are used by Financial and are referenced throughout the various articles of Chapter 58 that apply to duties of Financial. GS Also contains definitions that are used by Financial. NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS (Powers and duties of Commissioner) provides the Commissioner with the authority to among other things, receive and thoroughly examine each financial statement required by Articles 1 through 64 of Chapter 58. Financial performs the thorough examinations of the financial statements. (Examinations, hearings, and investigations) Financial personnel conduct examinations, testify at hearings regarding those examinations and conducts financial investigations. (License surrenders) Due to one or more violations or failure to comply with various provisions of Articles 1 through 67 of Chapter 58, Financial may seek to revoke the license of a regulated entity. Provides Financial with authority over all insurance companies that operate or wish to operate in NC. Financial grants licenses, collects fees, etc. (Examinations) Financial personnel conducts on-site financial condition examinations of insurance companies and other similar or related entities under North Carolina jurisdiction to determine financial condition, legality and propriety of operations and fair and equitable treatment of all policyholders. The work is guided by state laws and regulations, departmental policies and procedures, and the National Association of Insurance Commissioners. (Examination Reports) Financial personnel issues financial condition examination reports based on the examination conducted under GS An Examination Report is prepared based on the results of the field examination. Further defines who is an insurer that is subject to regulation by Financial. Requires insurance companies to file annual, quarterly and sometimes monthly (depending upon the financial condition of the insurer) financial statement with Financial. Financial performs financial analysis of the filings and conducts financial condition examinations. Page 55

58 Statutes NCGS NCGS NCGS NCGS NCGS NCGS NCGS , NCGS , NCGS , NCGS , NCGS NCGS NCGS NCGS through NCGS Article 5 Article 6 Article 7 Duties/Responsibilities Requires insurance companies to keep records of their business. Such records are examined during financial condition examinations conducted by Financial. The records are also requested by Financial analysts during their review of insurance company filings. Requires insurance company or any person having insurance company records in their possession to exhibit those records to Department personnel, which includes Financial personnel. Used by Financial to compare and calculate financial ratios of insurance companies to assess their financial condition and ability to meet their obligations to policyholders. This information is compiled by the National Association of Insurance Commissioners based on the insurance company filings required under GS Makes the workpapers compiled by Financial personnel confidential. Requires insurance to file electronically certain documents and filings required by Chapter 58. Requires the insurance company to do business in its own name and the name that was approved by Financial when the company was licensed. Make certain requirements publication of financial data and the financial statement reporting premium and loss reserve that is used by Financial in determining the financial condition of an insurance company. Contains insurance company licensing provisions that are used by Financial in licensing determinations. Limits the amount of risk a company can have. This is monitored by Financial. Requires all insurance companies authorized to transact business in NC to make certain filings with the National Association of Insurance companies. These filings are reviewed by Financial personnel. Addresses deposits and bonds by insurance companies. It is financial personnel that determines the amount of the deposit, ensures the deposits are made, maintained and liquidated as necessary. Deposits are pledged and held by NC to protect policyholders and claimants. They are held in a custodial financial institution. Addresses license fees and taxes. The license fees are determined and collected by Financial personnel during its initial and annual review of the insurance company. Contains laws that reduced the likelihood that the insurance companies, which the Department has authorized to operate in NC, will fail or to mitigate the effect of any of these entities insolvency on the insurance consumers of NC. Every section in Article 7 assists Financial personnel in this goal. Page 56

59 Statutes Article 8 Article 9 Article 10, Part 1 Article 10, Part 2 Article 10, Part 5 Article 10, Part 7 Article 11 Article 12 Article 13 Article 15 Article 16 Article 19 Article 21 Duties/Responsibilities Addresses the laws and references to other laws within Chapter 58 that apply to insurance in NC that are organized as mutual insurance companies (owned by the policyholders). Financial personnel are responsible for enforcing these laws. (Reinsurance Intermediaries) is handled by Financial personnel. Addresses conversions of stock and mutual insurance companies, which are reviewed and approved by Financial personnel. Covers assumption reinsurance transactions, including policyholder notice requirements and rights. This is handled by Financial personnel. (Mortgage Guaranty Insurance) deals with specific requirements for this line of business. There are approximately 16 such domestic companies in NC. This is handled by Financial personnel. Outlines requirements for annual financial reporting by insurance companies and their independent auditors. Financial examiners are responsible for reviewing compliance with the provisions of Part 7. Provide Financial with authority to monitor the financial condition of insurance companies that operate as Assessment Companies. Provides Risk-Based Capital Requirements, which is handled by Financial personnel. The Asset Protection Act is to require insurers to maintain unencumbered assets in amounts equal to policyholder-related liabilities and minimum required surplus. The Asset Protection Act is handled by Financial personnel. Provides Financial with the authority to regulate the financial condition of Reciprocal Insurance. Used by Financial to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. Provides Financial with the authority to initial authorize and continually monitor the financial condition of foreign insurance companies. Financial personnel evaluates the operations and financial condition of these out-ofstate insurance companies (foreign insurance companies) applying to transact insurance business in North Carolina to determine compliance with admissions requirements. Requires that insurance companies disclose pertinent information relating to changes in control of an insurer; disclose material transactions and relationships between the insurer and its affiliates. This Article, which is handled by Financial, provides standards governing material transactions between an insurer and its affiliates. Financial personnel use the provisions of Article 21 (Surplus Lines Act) to protect NC insurance consumers. The purpose of this Article is to permit surplus lines insurance to be placed with reputable and financially sound nonadmitted insurers. It encourages admitted insurers to provide new and innovative types of insurance to consumers. Page 57

60 Statutes Article 22 Article 24 Article 25 Article 26 Article 28 GS Article 47 Article 64 Article 65 Article 67 Article 89A Chapter 97, Article 4 Duties/Responsibilities Article 22 (Liability Risk Retention) is used by Financial to regulate the formation and operation of risk retention and purchasing groups in NC. It is also used by Financial personnel to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. (Fraternal Benefit Societies) is used by Financial to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. (Fraternal Orders) is used by Financial personnel to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. (Real Estate Title Insurance Companies) is used by Financial personnel to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. (Unauthorized Insurers) is used by Financial to abate and prevent the practices of unauthorized insurers within NC, and to provide methods for effectively enforcing the laws of NC against such practices. Financial personnel may examine the affairs of the NC Insurance Underwriting Association. (Workers Compensation Self-Insurance for Employer Groups) is used by Financial personnel to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. (Continuing Care Retirement Communities) is used by Financial personnel to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. (Hospital, Medical and Dental Service Corporation) - is used by Financial personnel to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. (HMO Act) is used by Financial personnel to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. (Professional Employer Organizations) - is used by Financial personnel to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. Used by Financial personnel to reduce the likelihood of any of these entities failing or to mitigate the effect of any of these entities' insolvency on the insurance consumers of this state. Page 58

61 Statutes NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS Duties/Responsibilities (Examinations) Financial personnel conducts on-site financial condition examinations of insurance companies and other similar or related entities under North Carolina jurisdiction to determine financial condition, legality and propriety of operations and fair and equitable treatment of all policyholders. The work is guided by state laws and regulations, departmental policies and procedures, and the National Association of Insurance Commissioners. (Examination Reports) Financial personnel issues financial condition examination reports based on the examination conducted under GS An Examination Report is prepared based on the results of the field examination. Further defines who is an insurer that is subject to regulation by Financial. Requires insurance companies to file annual, quarterly and sometimes monthly (depending upon the financial condition of the insurer) financial statement with Financial. Financial performs financial analysis of the filings and conducts financial condition examinations. Requires insurance companies to keep records of their business. Such records are examined during financial condition examinations conducted by Financial. The records are also requested by Financial analysts during their review of insurance company filings. Requires insurance company or any person having insurance company records in their possession to exhibit those records to Department personnel, which includes Financial personnel. Used by Financial to compare and calculate financial ratios of insurance companies to assess their financial condition and ability to meet their obligations to policyholders. This information is compiled by the National Association of Insurance Commissioners based on the insurance company filings required under GS Makes the workpapers compiled by Financial personnel confidential. Requires insurance to file electronically certain documents and filings required by Chapter 58. Requires the insurance company to do business in its own name and the name that was approved by Financial when the company was licensed. Major Responsibilities The Financial Evaluation Division is part of the Company Services Group and is comprised of the Company Admission, Financial Analysis, Financial Examination and Special Entities sections. The Financial Evaluation Division regulates all authorized insurers, entities that selfinsure for workers compensation, certain third party administrators, managing general agents, accredited reinsurers, professional employer organizations and continuing care retirement communities, for compliance with the solvency laws of this state. The ultimate objective of this regulation is to reduce the likelihood of any of these entities failing and/or to mitigate the effect of any of these entities insolvency on the insurance consumers of this state. Page 59

62 Company Admissions Section The Company Admissions Section evaluates the operations and financial condition of outof-state insurance companies (foreign insurance companies) applying to transact insurance business in North Carolina to determine compliance with admissions requirements. This section also reviews and evaluates the proposed operations of new insurance companies proposing to incorporate in North Carolina (domestic insurance companies) to determine compliance with state laws. In addition, this section evaluates and registers the following entities: risk retention groups, risk purchasing groups, surplus lines insurance companies and companies seeking accredited reinsurer status in North Carolina. Financial Analysis Section The Financial Analysis Section of the Financial Evaluation Division is primarily responsible for the continuous monitoring, through financial analysis, of all insurers authorized to transact business in North Carolina. The section is also responsible for the review of initial and renewal reinsurance intermediary license or exemption applications, and rendering a decision on those applications. Upon licensure or exemption, the intermediaries are monitored by this section for compliance with the applicable insurance laws, and action is taken as appropriate to address any failure by an intermediary to comply with the applicable insurance laws. Financial Examination Section The Financial Examination Section conducts on-site examinations of insurance companies and other similar or related entities under North Carolina jurisdiction to determine financial condition, legality and propriety of operations and fair and equitable treatment of all policyholders. The primary responsibility of the section is to conduct risk focused examinations (i.e. audits) of financial statement data reported by various regulated insurance entities to determine compliance with the state laws and statutory accounting principles. Full-scope examinations of domestic insurers are required, by law, to be performed no later than every five years in order to effectively monitor their operations and overall financial condition. Special Entities Section The Special Entities Section is responsible is for the licensing of non-traditional insurance related entities that consists of Professional Employer Organizations, Continuing Care Retirement Communities, and Group and Individual Employers who desire to self-insure their workers compensation liabilities. The section also performs financial and regulatory reviews on these entities to ensure financial continuity and statutory oversight. Regulatory Action Division Statutes Duties/Responsibilities NCGS 58-2 Powers and Duties of the Commissioner provides the commissioner with the authority to among other things, receive and thoroughly examine each financial statement required by Articles 1 through 64 of this chapter. NCGS NCGS Article 7 Examinations, hearings, and investigations. Contains laws that reduce the likelihood that the insurance companies, which the Department has authorized to operate in NC, will fail or to mitigate the effect of these entities insolvency on the insurance consumers of NC. Every section in Article 7 assists Regulatory Actions with this goal. Page 60

63 Statutes NCGS Article 30 Duties/Responsibilities Contains laws that protect the interests of policyholders, claimants, creditors, and the public generally with minimum interference with the normal prerogatives of the owners and managers of insurers. Major Responsibilities The primary responsibilities of the Regulatory Actions Division are to work closely with troubled companies and to administer the financial and regulatory functions associated with companies in receivership. They closely monitor the financial condition and operations of domestic insurance entities deemed to be troubled or in a hazardous financial condition. For these insurance entities, the ultimate goal of the Division is to determine whether the insurance entity can be prevented from going into formal delinquency proceedings and returned to sound financial condition and good business practices. RAD Trust The establishment of the Regulatory Actions Division Group Master Trust (RAD Trust) was approved by the Superior Court of Wake County, North Carolina on July 5, The Commissioner of Insurance was named as the Grantor. The RAD Trust was created to provide resources for administrative and accounting functions to help administer and manage insurance entities placed in liquidation. Page 61

64 North Carolina Department of Insurance Company Services Group Ray Martinez Senior Deputy Commissioner Admin. Secretary 1.00 fte Bus. & Tech Applic. Spec fte Office Assistant 1.00 fte Technology Support Analyst 1.00 fte Jeff Trendell Ins Co Examiner Director Tony Riddick Ins Co Examiner Director Kevin Conley Actuary Ins. Co. Examiner Mgr fte Ins. Co. Examiner Director fte Ins. Co. Examiner Mgr fte Life, Accident & Health Actuary 3.00 fte Administrative Officer 2.00 fte Ins. Company Examiner fte Admin. Secretary 1.00 fte Property & Casualty Actuary 4.00 Admin. Assistant 4.00 fte Processing Assistant 1.00 fte Office Assistant 1.00 Program Assistant 1.00 fte Attorney 0.50 fte Page 62

65 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended General Fund Company Services Group Total Requirements $ 7,125,121 $ 7,791,611 $ 7,738,822 $ 7,735,022 $ 7,735,022 Receipts $ 44,756 $ 162,516 $ 162,516 $ 162,516 $ 162,516 General fund Appropriation $ 7,080,365 $ 7,629,095 $ 7,576,306 $ 7,572,506 $ 7,572,506 Less: Recommended Adjustments $ - $ - $ - $ - $ - Adjusted General Fund Appropriation $ 7,080,365 $ 7,629,095 $ 7,576,306 $ 7,572,506 $ 7,572,506 Expenditures by Category: Personal Services (531xxx) - $ 7,094,994 Purchases Service (532xxx) - $ 451,926 Supplies (533xxx) - $ 22,571 Property, Plant & Equipment (534xxx) - $ 52,254 Other Expenses & Adjustment (535xxx) - $ 44,521 InterGovernmental Transaction (538xxx) - $ 125,345 Page 63

66 North Carolina Department of Insurance Fund Code 1300 Technical Services Group Property & Casualty Division Statutes Duties/Responsibilities NCGS 58-8 Mutual Insurance Companies. NCGS Surplus Lines. NCGS Real Estate Title Insurance Companies. NCGS Title Insurance Companies and Land Mortgage Companies Issuing Collateral Loan Certificates. NCGS Licensing of Agents, Brokers, Limited representatives and Adjusters. NCGS NCRB. NCGS NC Motor Vehicle Reinsurance Facility. NCGS Regulation of Insurance Rates. NCGS Insurance Regulatory Reform Act. NCGS General Regulations of Business Fire Insurance. NCGS Property Insurance Policies. NCGS Essential Property Insurance for Beach Area Property. NCGS Fair Access to Insurance Requirements. NCGS Regulation of Credit Insurance. NCGS Unfair Trade Practices. Major Responsibilities Property & Casualty Division licenses rating organizations, advisory organizations and joint underwriting associations, along with reviewing rate, rule and policy form filing made by these entities. Also, they review the rates, rules and policy form filings for the NC Rate Bureau, NC Reinsurance Facility, NC Insurance Underwriting Association (Beach Plan), NC Joint Underwriters Association (Fair Plan) and licensed property and casualty insurance companies. State law permits insurance companies that are unlicensed to write insurance on risks in this state as surplus lines companies provided there is compliance with applicable statutes and rules. Surplus lines taxes are the responsibility of specially licensed agents. This division receives and reviews the tax forms and collects and processes the premium taxes submitted by these agents. All premium taxes received are transferred to the State s General Fund. The following chart reflects surplus lines activity for the years 2005 through 2009 with tax reported at 5% of gross premiums charged. The taxes shown are in addition to the regular premium taxes. Surplus Lines Premium Taxes No. of Policies Premium Tax Generated ,771 $516,807, $25,842, ,102 $508,249, $25,389, ,855 $523,549, $26,511, ,959 $492,998, $24,921, ,729 $504,454, $25,185, Page 64

67 A key function of the Property and Casualty Division is the review of forms, rules and rate filings. These filings must be carefully analyzed. During , a total of 53,856 filings were reviewed. Forms, Rates and Rules Reviewed Companies and Organizations , , , , ,724 Total 53,856 Life & Health Division Statutes Duties/Responsibilities NCGS Forms to be approved by the Commissioner. Prior approval of all life, accident, health, and annuity insurance forms. NCGS Multiple employer welfare arrangements; license required; penalty. Licensure requirement for Multiple Employer Welfare Arrangements (MEWAs) and plan requirements. NCGS Insurers, preferred provider organizations, and preferred provider benefit plans. Provider contracting. NCGS Form, classification and rates to be approved by Commissioner. General approval authority over Accident & Health (A&H) forms and review authority over premium rates for A&H business. NCGS Group or blanket accident and health insurance; approval of forms and filing of rates. Authority over group and blanket A&H policy forms and rates. NCGS NCGS NCGS 58 Article 54 NCGS 58 Article 55 NCGS Definition of franchise accident and health insurance. Authority over franchise A&H policies. Approval by Commissioner of forms, classification and rates; hearing; exceptions Prior approval authority over individual A&H premium rates. Medicare Supplement Insurance Minimum Standards. Regulations of Medicare supplement insurance. Long-Term Care Insurance. Regulation of long-term care insurance. License required. Licensure requirements for Third Party Administrator (TPA). NCGS Part 1 of Article 58 General Provisions NCGS Application of Article. Authority over all credit life, accident and health, property, family leave, and involuntary unemployment insurance. Provisions related to the regulation of life insurance and annuity contracts. License requirements. Licensure requirements for Viatical Settlement Providers. Major Responsibilities The Life and Health Division is responsible for the review and approval of rate, rule and policy form filings submitted by life and health insurance companies and issuance of licenses for third Page 65

68 party administrators. This division plays a pivotal role for the Department in the monitoring and analysis of local, state, and national life and health insurance trends. The division also monitors and regulates certain activities of managed care entities such as health maintenance organizations (HMOs) and managed care indemnity health insurers, including their arrangements with Preferred Provider Organizations (PPOs) with an emphasis on assuring company procedure and operational policy meet compliance requirements in North Carolina. Oversight of Multiple Employer Welfare Arrangements (MEWAs) with an emphasis on assuring company procedure and operational policy meet compliance requirements in North Carolina. The Division accomplishes its work through several types of activities such as review of document filings required of companies, data collection, review collaboration with actuarial division and the financial division, analysis, and reporting; meeting with industry representatives, health care providers, legislative representatives, and other interested parties. Market Regulation Division Statutes Duties/Responsibilities NCGS Certain workers' compensation insurance policy cancellations prohibited. NCGS Insured was not provided at least 45 days notice of nonrenewal. NCGS North Carolina Motor Vehicle Reinsurance Facility. NCGS Definitions. NCGS General obligations of insurers. NCGS General obligations of agents. NCGS The Facility; functions; administration. NCGS Plan of operation. NCGS Termination of insurance. NCGS Physical damage insurance availability. NCGS Filing requirements; duties of the Commissioner. NCGS Insurance Information and Privacy Protection Act. NCGS Notice of insurance information practices. NCGS Federal privacy disclosure notice requirements. NCGS Privacy notice and disclosure requirement exceptions. NCGS Content of disclosure authorization forms. NCGS Investigative consumer reports. NCGS Reasons for adverse underwriting decisions. NCGS Information concerning previous adverse underwriting decisions. NCGS Previous adverse underwriting decisions. NCGS Disclosure limitations and conditions. NCGS NCGS NCGS NCGS NCGS NCGS NCGS Certain policy cancellations prohibited. Notice of nonrenewal, premium rate increase, or change in coverage required. Notice of renewal of policies with premium rate or coverage changes. Policy form and rate filings; punitive damages; data required to support filings. Persons eligible to apply to Association for coverage; contents of application. Participation in association. General Accident and health Insurance Regulations. Page 66

69 Statutes NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS Duties/Responsibilities Application. Insurers, preferred provider organizations and preferred provider benefit plans. Utilization Review. Insurer grievance procedures. Purpose, Scope and Definitions. Notice of right to external review. Exhaustion of Internal Grievance Process. Standard External Review. Expedited External Review. Binding Nature of External Review. External review reporting requirements. Disclosure requirements. Health care plans; formation; approval; offerings. Required healthcare plan provisions. Accident and health policy provisions. Pharmacy of choice. Direct access to obstetrician-gynecologists. Group accident and health insurance defined. Medicare Supplement Insurance Minimum Standards. Loss ratio standards and filing requirements. Long-Term Care Insurance. Additional requirements. Third Party Administrators. Written agreement necessary. Responsibilities of the insurer. License required. Regulation of Credit Insurance. Forms to be filed with Commissioner; approval or disapproval by Commissioner. Credit life insurance rate standards. Credit accident and health insurance rate standards. Premium refunds or credits. Claims. Policies to be issued to a person possessing the sickle cell trait or hemoglobin C trait. Standard nonforfeiture provisions. Standard nonforfeiture law for individual deferred annuities. Interest payments on death benefits. Notice of nonpayment of premium required before nonforfeiture. General rules relating to solicitation. Adoption of Buyer's Guide; requirements. Page 67

70 Statutes NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS NCGS Duties/Responsibilities Maximum rate of interest on policy loans. Unfair methods of competition or unfair and deceptive acts or practice prohibited. Unfair methods of competition and unfair or deceptive acts or practices defined. Hospital, Medical and Dental Service Corporations. Hospital, physician and dentist contracts. Coverage for mammograms and cervical cancer screening. (Title effective January 1, 2004). Health Maintenance Organization Act. Establishment of Health maintenance organizations. Additional HMO information. Management and exclusive agreements; custodial agreements. Powers of health maintenance organizations. Evidence of coverage and premiums for health care services. Prohibited Practices. Master group contracts, filing requirement; required and prohibited provisions. Examinations. Confidentiality of medical information. Health Insurance Portability and Accountability. Guaranteed renewability of coverage for employers in the group market. Disclosure of information. Major Responsibilities The Market Regulation Division monitors insurance company market practices, especially as they affect consumers. They conduct field examination on a regular rotation so that all insurance companies domiciled in NC are examined on at least a five-year cycle. In addition to regularly scheduled market conduct examinations, the division takes other regulatory actions in response to market activities that are determined to be in violation of state laws. In 2007, the Department collected $491,526 in administrative penalty, $130,000 in 2008, and $75,252 in 2009 resulting from noncompliance with applicable laws. In 2007 a total of $1,954,024 was recovered and refunded to consumers as a result of a market conduct examination; the amount recovered and refunded in 2008 was $2,079,033 and in 2009 $981,301. Year Life & Health Exams Property & Casualty Exams General Exams Compliance Exams Target Exams Page 68

71 North Carolina Department of Insurance Technical Services Group Ernest Nickerson Senior Deputy Commissioner Administrative Secretary 1.00 fte Robert Mack Insurance Regulatory Director Ted Hamby Insurance Regulatory Director Tracy Biehn Insurance Regulatory Director Health Care Reform Act - Fed Premium Review Time-limited federal positions Insurance Regulatory Analyst 7.00 fte Insurance Regulatory Analyst fte Ins. Reg. Assist. Director 2.00 fte Life & Health Actuary 1.00 fte time-limited Attorney 1.00 fte time-limited Administrative Assistant 1.00 fte Office Assistant 2.00 fte Insureance Regulatory Analyst fte Insurance Company Examiner 1.00 fte time-limited Insurance Regulatroy Analyst 4.00 fte time-limited Office Assistant 1.00 fte Office Assistant 2.00 fte Investigator - Insurance 1.00 fte time-limited Program Assistant 1.00 fte time-limited Program Assistant 1.00 fte Office Assistant 1.00 fte time-limited Page 69

72 North Carolina Department of Insurance CONTINUATION BUDGET Fiscal Data Actual Certified Authorized Recommended Recommended General Fund Technical Services Group Total Requirements $ 7,120,004 $ 6,730,877 $ 6,463,229 $ 6,463,229 $ 6,463,229 Receipts $ 1,774,185 $ 792,106 $ 792,106 $ 792,106 $ 792,106 General fund Appropriation $ 5,345,819 $ 5,938,771 $ 5,671,123 $ 5,671,123 $ 5,671,123 Less: Recommended Adjustments $ - $ - $ - $ - $ - Adjusted General Fund Appropriation $ 5,345,819 $ 5,938,771 $ 5,671,123 $ 5,671,123 $ 5,671,123 Expenditures by Category: Personal Services (531xxx) - $ 5,655,168 Purchases Service (532xxx) - $ 874,554 Supplies (533xxx) - $ 20,426 Property, Plant & Equipment (534xxx) - $ 89,328 Other Expenses & Adjustment (535xxx) - $ 22,401 Aid & Public Assistance (536xxx) - $ 49,000 InterGovernmental Transaction (538xxx) - $ 20,000 Page 70