S.L. 1967-1111

NORTH CAROLINA GENERAL ASSEMBLY

1967 SESSION

CHAPTER 1111

SENATE BILL 482

AN ACT AMENDING CHAPTER 58 OF THE GENERAL STATUTES OF NORTH CAROLINA, SO AS TO PROVIDE FOR AND PERMIT THE ADOPTION OF A VOLUNTARY PLAN WHEREBY ADEQUATE FIRE AND EXTENDED COVERAGE INSURANCE WILL BE OFFERED AND MADE AVAILABLE TO OWNERS OF PROPERTY IN THE COASTAL AREA OF THE STATE, AND IN THE ABSENCE OF SUCH A VOLUNTARY PLAN TO PERMIT THE COMMISSIONER OF INSURANCE TO FORMULATE A FAIR AND EQUITABLE PLAN TO PROVIDE FOR ADEQUATE FIRE AND EXTENDED COVERAGE IN SUCH AREA.

WHEREAS, the business of insurance has been declared to be a business affected with and affecting the public interest of this State; and

WHEREAS, it has come to the attention of the General Assembly that along the several coastal counties of North Carolina that many owners of property in such area have been unable, and are now unable to procure adequate insurance coverage against the risks of fire and extended coverage; and

WHEREAS, it appears that such situation has existed for several years and is due to a measurable extent to the reluctance and refusal of a substantial number of companies licensed in this State to write fire and extended coverage insurance upon such property; and

WHEREAS, it appears that in many instances the refusal to write, the refusal to renew, or the cancellation of policies, is without good and just cause, and is based on restricted and stringent underwriting procedures; and

WHEREAS, the reluctance and refusal of some of the licensed insurers of this State to offer adequate coverage in the coastal county area has, in the past, and is now tending to impede the normal economic growth and well-being of such area; and

WHEREAS, the entire State of North Carolina is in some measure affected by this impediment to growth and well-being; and

WHEREAS, this matter is of such serious nature that it requires and demands remedial legislation: Now, therefore,

The General Assembly of North Carolina do enact:

Section 1. Chapter 58 of the General Statutes of North Carolina is hereby amended by adding thereto a new Article immediately after the present Article 18 and immediately before the present Article 19, to be designated as "Article 18A", and reading as follows:

"ARTICLE 18A.

"Fire and Extended Coverage for Beach Area Property.

"§ 58-173.1. Fire and Casualty Companies to Submit Plan to Commissioner for Fire and Extended Coverage; Commissioner to Formulate Plan if None Submitted or Approved. The Commissioner of Insurance, after consultation with representatives of insurance carriers licensed to write fire and extended coverage insurance in this State, shall consider for approval a reasonable plan and procedures which such insurance carriers may submit to him for the voluntary writing of fire and extended coverage in the 'beach area' of the 'seacoast territory (Zone 1)' as hereinafter defined in this Article, and after a public hearing.

"The Commissioner of Insurance may, approve any such plan and procedures thus submitted to him, if he finds such plan and procedures to be adequate for the purposes of this Act. In the event no plan is approved by the Commissioner of Insurance, or in the event no plan is submitted by the insurance carriers, the Commissioner of Insurance, in the exercise of his discretion, and after a public hearing, shall formulate and put into effect a reasonable plan and procedures for the writing of fire and extended coverage insurance upon insurable properties in the 'beach area'. For the purposes of this Section, an insurable risk is one which meets the standards of insurability prevailing throughout the insurance industry for fire and extended coverage as it relates to 'beach properties'.

"§ 58-173.2. Companies to Report Rejection of Application for Fire and Extended Coverage and to Report Cancellation of Existing Policies Giving Reasons. Every licensed insurer writing fire and extended coverage in the State of North Carolina, upon its cancellation of or refusal to write or renew any policy of fire and extended coverage insurance upon property located in the 'beach area', as the same is hereinafter defined, shall, within 20 days of such cancellation or refusal to write or renew, furnish to the North Carolina Commissioner of Insurance a written report stating that it has cancelled, refused to write or renew fire or extended coverage on the property in question, giving the name and address of the applicant or policyholder, the location and description of the risk, along with an explanation giving the actual reason or reasons for its cancellation, refusal to write or renew such policy of insurance.

"Such report and explanation shall be privileged, and shall not constitute grounds for any cause of action against the insurer, its representative, or any person, firm or corporation, who in good faith furnishes to the Commissioner of Insurance the information upon which the reasons are based.

"Provided, however, that such reports shall not be required in the case of policies which are cancelled or nonrenewed for nonpayment of premium, transfer of ownership of property, cancellation by insured, termination of agency, change of insurance to other companies, and other reasons acceptable to the Commissioner of Insurance. Written reports of refusal to write which are filed with the North Carolina Fire Insurance Rating Bureau under the terms of a voluntary plan approved by the Commissioner of Insurance shall be deemed to comply with the requirements of this Section, provided such reports are filed in duplicate and one copy thereof is submitted to the Commissioner of Insurance.

"§ 58-173.3. Agents to Report to Commissioner of Insurance Failure to Take and Submit Applications. Every insurance agent licensed to write fire and extended coverage insurance in the State, who shall refuse to take and submit an application for fire and extended coverage insurance to an insurer for whom he is licensed, upon property within the 'beach area', as hereinafter defined, must, if requested in writing by the policyholder or applicant for insurance, within 20 days of such refusal to take and submit the application, furnish to the North Carolina Commissioner of Insurance a written report giving the name and address of the applicant, the location and description of the risk and an explanation of the actual reason or reasons for the refusal to take and submit the application. Such report and explanation shall be privileged and shall not constitute grounds for any cause of action against the agent, or any person, firm or corporation who in good faith furnishes to the Insurance Commissioner the information upon which the reasons are based in compliance with this Section.

"§ 58-173.4. Commissioner of Insurance to Make Periodic Reports to the Legislative Research Commission with Respect to Fire and Extended Coverage Insurance in the 'Beach Area'. When a voluntary plan as provided in this Article, or in the absence of a voluntary plan, any plan formulated by the Commissioner of Insurance shall be put into effect, the Commissioner of Insurance may make periodic reports to the Legislative Research Commission concerning the results of the plan, the amount of fire and extended coverage insurance written with respect to property in the 'beach area' and any other information which may be useful to the Legislative Research Commission. The Commissioner of Insurance may at the request of the Legislative Research Commission, make such supplemental reports and submit such supplemental data concerning the success of any plan adopted as may be requested by the Legislative Research Commission. For the purpose of the reports which may be filed hereunder, the Commissioner of Insurance may require the North Carolina Fire Insurance Rating Bureau to furnish such pertinent data and statistics in such manner and on such forms as he may approve.

"§ 58-173.5. Companies to Report on Fire and Extended Coverage Insurance in All Zones of North Carolina at Least Annually. Every licensed insurer writing fire and extended coverage insurance in the State of North Carolina, except any town or county mutual insurance association as is authorized by G.S. 58-77(5)d., shall on or before July first of each year file with the North Carolina Commissioner of Insurance a comprehensive and detailed report, which report shall, among other things, disclose: (1) the amount of insurance written by such insurer and the number of risks it has insured against fire and extended coverage in the 'beach area' within the State of North Carolina; and (2) the gross insurance premiums by zones and 'beach area' collected for the insurance or renewal of fire and extended coverage insurance in each zone and the 'beach area' within the State of North Carolina.

"Licensed insurers writing fire and extended coverage insurance in the State of North Carolina and required to report under this Section may adopt a form for the purpose of reporting the information required by this Section, which form shall be subject to the approval of the North Carolina Commissioner of Insurance.

"§ 58-173.6. Definition of 'Beach Area'. 'Beach area' as used in this Article shall consist of the following areas within the State of North Carolina: All localities South and East of the Inland Waterway from the South Carolina line to Fort Macon (Beaufort Inlet), thence South and East of Core, Pamlico, Roanoke and Currituck Sounds to the Virginia line, being those portions of land generally known as the Outer Banks.

"§58-173.7. Definition of 'Seacoast Territory (Zone 1)'. 'Seacoast territory (Zone 1)' as used in this Article shall consist of the following counties: Beaufort, Brunswick, Camden, Carteret, Chowan, Craven, Currituck, Dare, Hyde, Jones, New Hanover, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Tyrrell and Washington.

"§ 58-173.8. Commissioner of Insurance Authorized to Promulgate Reasonable Rules and Regulations. The Commissioner of Insurance shall have authority to make reasonable rules and regulations, not inconsistent with the law, to enforce, carry out and make effective the provisions of this Article. The Commissioner of Insurance shall also have authority to propose and promulgate reasonable regulations with respect to any voluntary plan adopted pursuant to the provisions of this Article. The Commissioner of Insurance shall not be liable for any act or omission in connection with the administration of the duties imposed upon him by the provisions of this Article, except upon proof of malfeasance."

Sec. 2. If any provision of this Act or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are declared to be severable.

Sec. 3. This Act shall not apply with respect to any policy or policies of fire or extended coverage insurance already in existence covering property in the 'beach area', but the same shall be applicable to policies of insurance which are written or renewed on or after the adoption of a plan pursuant to the provisions of this Act.

Sec. 4. This Act shall become effective from and after its ratification.

In the General Assembly read three times and ratified, this the 4th day of July, 1967.