GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 1991
CHAPTER 784
AN ACT TO PROVIDE FOR IMPROVEMENTS IN THE OPERATIONS OF THE FAIR AND BEACH PLANS.
The General Assembly of North Carolina enacts:
Section 1. G.S. 58-45-35 reads as rewritten:
"§ 58-45-35. Persons eligible to apply to Association for coverage; contents of application.
(a) Any person having an
insurable interest in insurable property, may, on or after the effective date
of the plan of operation, be entitled to apply to the Association for such
coverage and for an inspection of the property. Such application may be made
on behalf of the applicant by a broker or agent authorized by him. A
broker or agent authorized by the applicant may apply on the applicant's
behalf. Each application shall contain a statement as to whether or
not there are any unpaid premiums due from the applicant for essential property
insurance on the property.
The term 'insurable interest' as used in this subsection
shall be deemed to include any lawful and substantial economic interest
in the safety or preservation of property from loss, destruction or pecuniary
damage.
(b) If the Association
determines that the property is insurable and that there is no unpaid premium
due from the applicant for prior insurance on the property, the Association Association,
upon receipt of the premium, or such portion thereof, part of the
premium, as is prescribed in the plan of operation, shall cause to be
issued a policy of essential property insurance and shall offer additional
extended coverage, optional perils endorsements, crime insurance, separate
policies of windstorm and hail insurance, or their successor forms of coverage,
for a term of one year. Any policy issued pursuant to under the
provisions of this section shall be renewed annually, upon application
therefor, application, so long as the property meets the definition
of 'insurable property' set forth in G.S. 58-45-5(5).
(c) If the Association,
for any reason, denies an application and refuses to cause to be issued an
insurance policy on insurable property to any applicant or takes no action on
an application within the time prescribed in the plan of operation, such the
applicant may appeal to the Commissioner and the Commissioner, or a
member of his staff designated by him, or the Commissioner's designee
from the Commissioner's staff, after reviewing the facts, may direct the
Association to issue or cause to be issued an insurance policy to the
applicant. In carrying out his the Commissioner's duties pursuant
to under this section, the Commissioner may request, and the
Association shall provide provide, any information the
Commissioner deems necessary to a determination concerning the reason for the
denial or delay of the application.
(d) An agent who is licensed under Article 33 of this Chapter as an agent of a company which is a member of the Association established under this Article shall not be deemed an agent of the Association.
(e) Policies of windstorm
and hail insurance provided for in subsection (b) of this section are available
only for risks for which essential property insurance has been written by
licensed insurers. Whenever such other essential property insurance
written by licensed insurers includes replacement cost coverage, the
Association shall also offer replacement cost coverage. In order to be
eligible for a policy of windstorm and hail insurance, the applicant shall
provide the Association, along with the premium payment for the windstorm and
hail insurance, a certificate that the essential property insurance is in
force. Notwithstanding G.S. 58-45-45, the rates, rating plans, and
rating rules for windstorm and hail insurance shall be filed by the Association
with the Commissioner for his approval. The policy forms for
windstorm and hail insurance shall be filed by the Association with the
Commissioner for his approval before they may be used."
Sec. 2. G.S. 58-45-45 reads as rewritten:
"§ 58-45-45. Rates, rating plans, rating rules, and forms applicable.
(a) Except as
provided in subsection (b) of this section, the The rates, rating
plans, rating rules, and forms applicable to the insurance written by the
Association shall be in accordance with the most recent manual rates or
adjusted loss costs and forms that are legally in effect in the
State. No special surcharge, other than those presently in effect, may be
applied to the property insurance rates of properties located in the beach
area.
(b) The rates, rating plans, and rating rules for the separate policies of windstorm and hail insurance described in G.S. 58-45-35(b) shall be filed by the Association with the Commissioner for the Commissioner's approval, disapproval, or modification. The provisions of Articles 40 and 41 of this Chapter shall govern the filings."
Sec. 3. G.S. 58-46-55 reads as rewritten:
"§ 58-46-55. Rates, rating plans, rating rules, and forms applicable.
The rates, rating plans, rating rules, and forms applicable
to the insurance written by the association shall be in accord accordance
with the most recent manual rates or adjusted loss costs and forms
that are legally in effect in this State. No special surcharge, other than
those presently in effect, may be applied to the property insurance rates of
properties located in the geographic areas to which this Article applies."
Sec. 4. G.S. 58-45-5(5) reads as rewritten:
"(5) 'Insurable property'
means real property at fixed locations in the beach areas Beach
area of the State as that term is hereinafter defined or the
tangible personal property located therein, but shall not include insurance on
motor vehicles, vehicles or farm and manufacturing risks, risks;
which property is determined by the Association, after inspection and pursuant
to under the criteria specified in the plan of operation, to be in
an insurable condition: Provided, however, condition. However, any
one and two family dwellings built in substantial accordance with the Federal
Manufactured Home Construction and Safety Standards, any predecessor or
successor federal or State construction or safety standards, and any further
construction or safety standards promulgated by the association and approved by
the Commissioner, or the North Carolina Uniform Residential Building Code and
any structure or building built in substantial compliance with the North
Carolina Building Code, including the design-wind requirements, which is not
otherwise rendered uninsurable by reason of use or occupancy, shall be an
insurable risk within the meaning of this Article, but Article.
However, none of the following factors shall be considered in determining
insurable condition: neighborhood, area, location, environmental hazards beyond
the control of the applicant or owner of the property shall not be
considered in determining insurable condition. Provided further, that property.
Also, any structure commenced begun on or after January 1,
1970, not built in substantial compliance with the Federal Manufactured Home
Construction and Safety Standards, any predecessor or successor federal or
State construction or safety standards, and any further construction or safety
standards promulgated by the association and approved by the Commissioner, or
the North Carolina Uniform Residential Building Code or the North Carolina
Building Code, including the design-wind requirements therein, shall not be an
insurable risk. The owner or applicant shall furnish with the application
proof in the form of a certificate from a local building inspector, contractor,
engineer or architect that the structure is built in substantial accordance
with the Federal Manufactured Home Construction and Safety Standards, any
predecessor or successor federal or State construction or safety standards, and
any further construction or safety standards promulgated by the association and
approved by the Commissioner, or the North Carolina Uniform Residential
Building Code or the North Carolina Building Code; provided, however, such
an individual certificate shall not be necessary in those cases where
the structure is located within a political subdivision which has certified to
the Association on an annual basis that it is enforcing the North Carolina
Uniform Residential Building Code or the North Carolina Building Code and has
no plans to discontinue enforcing these codes during that year."
Sec. 5. G.S. 58-45-30 reads as rewritten:
"§ 58-45-30. Directors to submit plan of operation to Commissioner; review and approval; amendments.
(a) Within 90 days after April 17, 1969, the directors of the Association shall submit to the Commissioner for his review and approval, a proposed plan of operation. Such proposed plan shall set forth the number, qualifications, terms of office, and manner of election of the members of the board of directors, and shall grant proper credit annually to each member of the Association for essential property insurance voluntarily written in the beach area and shall provide for the efficient, economical, fair and nondiscriminatory administration of the Association and for the prompt and efficient provision of essential property insurance in the beach areas of North Carolina so as to promote orderly community development in those areas and to provide means for the adequate maintenance and improvement of the property in such areas. Such proposed plan may include a preliminary assessment of all members for initial expenses necessary to the commencement of operation; the establishment of necessary facilities; management of the Association; plan for the assessment of members to defray losses and expenses; underwriting standards; procedures for the acceptance and cession of reinsurance; procedures for determining the amounts of insurance to be provided to specific risks; time limits and procedures for processing applications for insurance and for such other provisions as may be deemed necessary by the Commissioner to carry out the purposes of this Article.
(b) The proposed plan shall be reviewed by the Commissioner and approved by him if he finds that such plan fulfills the purposes provided by G.S. 58-45-1. In the review of the proposed plan the Commissioner may, in his discretion, consult with the directors of the Association and may seek any further information which he deems necessary to his decision. If the Commissioner approves the proposed plan, he shall certify such approval to the directors and the plan shall become effective 10 days after such certification. If the Commissioner disapproves all or any part of the proposed plan of operation he shall return the same to the directors with his written statement for the reasons for disapproval and any recommendations he may wish to make. The directors may alter the plan in accordance with the Commissioner's recommendation or may within 30 days from the date of disapproval return a new plan to the Commissioner. Should the directors fail to submit a proposed plan of operation within 90 days of April 17, 1969, or a new plan which is acceptable to the Commissioner, or accept the recommendations of the Commissioner within 30 days after his disapproval of the plan, the Commissioner shall promulgate and place into effect a plan of operation certifying the same to the directors of the Association. Any such plan promulgated by the Commissioner shall take effect 10 days after certification to the directors: Provided, however, that until a plan of operation is in effect, pursuant to the provisions of this Article, any existing temporary placement facility may be continued in effect on a mandatory basis on such terms as the Commissioner may determine.
(c) The directors
of the Association may, subject to the approval of the Commissioner, amend the
plan of operation at any time. The Commissioner may review the plan of
operation at any time he the Commissioner deems expedient or
prudent, but not less than once in each calendar year. After review of such
the plan the Commissioner may amend the plan after consultation with
the directors and upon certification to the directors of such the amendment.
(d) The
Commissioner may designate the kinds of property insurance policies on
principal residences to be offered by the association, including insurance
policies under Article 36 of this Chapter, and the commission rates to be paid
to agents or brokers for these policies, if he the Commissioner finds,
after a hearing held in accordance with G.S. 58-2-50, that the public interest
requires the designation. The provisions of Chapter 150B do not apply to
any procedure under this paragraph, except that G.S. 150B-39 and G.S. 150B-41
shall apply to a hearing under this paragraph. Within 30 days after the receipt
of notification from the Commissioner of a change in designation pursuant to
this paragraph, the association shall submit a revised plan and articles of
association for approval in accordance with this section.
(e) The Association shall, subject to the Commissioner's approval or modification, provide in the plan of operation for coverage for appropriate classes of manufacturing risks.
(f) As used in this section, 'plan of operation' includes all written rules, practices, and procedures of the Association, except for staffing and personnel matters."
Sec. 6. G.S. 58-46-20 is amended by adding a new subsection to read:
"(d) As used in this section and in G.S. 58-46-15, 'FAIR Plan', 'plan of operation', and 'articles of association' include all written rules, practices, and procedures of the Association, except for staffing and personnel matters."
Sec. 7. Article 45 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-45-85. Assessment; inability to pay.
If any insurer fails, by reason of insolvency, to pay any assessment as provided in this Article, the amount assessed each insurer shall be immediately recalculated, excluding the insolvent insurer, so that its assessment is assumed and redistributed among the remaining insurers. Any assessment against an insolvent insurer shall not be a charge against any special deposit fund held under the provisions of Article 5 of this Chapter for the benefit of policyholders."
Sec. 8. Within 30 days after the effective date of this act, the North Carolina Insurance Underwriting Association and the North Carolina Joint Underwriting Association shall file, with the Commissioner of Insurance for approval or modification, all written rules, practices, and procedures that are in effect on that date.
Sec. 9. This act is effective upon ratification.
In the General Assembly read three times and ratified this the 29th day of June, 1992.
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James C. Gardner
President of the Senate
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Daniel Blue, Jr.
Speaker of the House of Representatives