GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION LAW 2001-180
AN ACT TO PROVIDE FOR SHARING OF INFORMATION PRODUCED BY, OBTAINED BY, OR DISCLOSED TO THE INSURANCE COMMISSIONER UNDER THE EXAMINATION LAW; AND TO CLARIFY THAT THE EXAMINATION LAW APPLIES TO ALL entities SUBJECT TO REGULATION BY THE INSURANCE COMMISSIONER.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 58-2-131(d) reads as rewritten:
"(d) The Commissioner may
conduct an examination of any insurer entity whenever the
Commissioner deems it to be prudent for the protection of policyholders or
the public, but shall at a minimum conduct a regular examination of every domestic
insurer not less frequently than once every five years. In scheduling and
determining the nature, scope, and frequency of examinations, the Commissioner
shall consider such matters as the results of financial statement analyses and
ratios, changes in management or ownership, actuarial opinions, reports of
independent certified public accountants, and other criteria as set forth in
the NAIC Examiners' Handbook."
SECTION 2. G.S. 58-2-131(e) reads as rewritten:
"(e) To complete an
examination of any insurer, entity, the Commissioner may
authorize an examination or investigation of any person, or the business of any
person, insofar as the examination or investigation is necessary or material to
the insurer entity under examination."
SECTION 3. G.S. 58-2-131(1) reads as rewritten:
"(l) Pending,
during, and after the examination of any insurer entity, the
Commissioner shall not make public the financial statement, findings, or
examination report, or any report affecting the status or standing of the insurer
entity examined, until the insurer entity examined has
either accepted and approved the final examination report or has been given a
reasonable opportunity to be heard on the report and to answer or rebut any
statements or findings in the report. The hearing, if requested, shall be
informal and private."
SECTION 4. G.S. 58-2-132 reads as rewritten:
"§ 58-2-132. Examination reports.
(a) All examination
reports shall comprise only facts appearing upon the books, records, or other
documents of the insurer, entity, its agents or other persons
examined, or as ascertained from the testimony of its officers or agents or
other persons examined concerning its affairs, and conclusions and
recommendations that the examiners find reasonably warranted from the facts.
(b) No later than 60 days
following completion of an examination, the examiners shall file with the
Department a verified written examination report under oath. Upon receipt of
the verified report, the Department shall send the report to the insurer entity
examined, together with a notice that affords the insurer entity
examined a reasonable opportunity of not more than 30 days to make a written
submission or rebuttal with respect to any matters contained in the examination
report. Within 30 days of after the date of the examination
report, the insurer entity examined shall file affidavits
executed by each of its directors stating under oath that they have received
and read a copy of the report.
(c) At the end of the 30 days provided for the receipt of written submissions or rebuttals, the Commissioner shall fully consider and review the report, together with any written submissions or rebuttals and any relevant parts of the examiners' work papers and enter an order:
(1) Adopting the
examination report as filed or with modifications or corrections. If the
examination report reveals that the insurer entity examined is
operating in violation of any law, rule, or prior order of the Commissioner,
the Commissioner may order the insurer entity examined to take
any action the Commissioner considers necessary and appropriate to cure the
violation; or
(2) Rejecting the examination report with directions to the examiners to reopen the examination to obtain additional data, documentation of the information, and refiling under subdivision (1) of this subsection; or
(3) Calling for an investigatory hearing with no less than 20 days' notice to the insurer for purposes of obtaining additional documentation, data, and testimony.
(d) All orders entered
under subdivision (c)(1) of this section shall be accompanied by findings and
conclusions resulting from the Commissioner's consideration and review of the
examination report, relevant examiner work papers, and any written submissions
or rebuttals. Any such order shall be considered a final administration
decision and shall be served upon the insurer entity examined by
certified mail. Any hearing conducted under subdivision (c)(3) of this section
shall be conducted as a nonadversarial confidential investigatory proceeding as
necessary for the resolution of any inconsistencies, discrepancies, or disputed
issues apparent on the face of the filed examination report or raised by or as
a result of the Commissioner's review of relevant work papers or by the written
submission or rebuttal of the insurer.entity examined. Within 20
days after the conclusion of any such hearing, the Commissioner shall enter an
order under subdivision (c)(1) of this section. The Commissioner may not
appoint a member of the Department's examination staff as an authorized
representative to conduct the hearing. The hearing shall proceed expeditiously
with discovery by the insurer entity examined limited to the
examiner's work papers that tend to substantiate any assertions set forth in
any written submission or rebuttal. The Commissioner may issue subpoenas for
the attendance of any witnesses or the production of any documents the
Commissioner considers to be relevant to the investigation, whether they are
under the control of the Department, the insurer, entity examined,
or other persons. The documents produced shall be included in the record, and
testimony taken by the Commissioner shall be under oath and preserved for the
record. Nothing in this section requires the Department to disclose any
information or records that would show the existence or content of any
investigation or activity of any federal or state criminal justice agency. In
the hearing, the Commissioner shall question the persons subpoenaed. Thereafter
the insurer entity examined and the Department may present
testimony relevant to the investigation. Cross-examination shall be conducted
only by the Commissioner. The insurer entity examined and the
Department may make closing statements and may be represented by counsel of
their choice.
(e) Upon completion of
the examination report under subdivision (c)(1) of this section, the
Commissioner shall hold the content of the examination report as private and
confidential information for the 30-day period provided for written submissions
or rebuttals. If after 30 days after the examination report has been submitted
to it, the insurer entity examined has neither notified the Commissioner
of its acceptance and approval of the report nor requested to be heard on the
report, the report shall then be filed as a public document and shall be open
to public inspection, as long as no court of competent jurisdiction has stayed
its publication. Nothing in the Examination Law prohibits the Commissioner from
disclosing the content of the examination report, preliminary examination
report or results, or any related matter, to an insurance regulator or to law
enforcement officials of this or any other state or country or of the United
States government at any time, as long as the person or agency receiving the
report or related matters agrees in writing and is authorized by law to hold it
confidential and in a manner consistent with this section. If the Commissioner
determines that further regulatory action is appropriate as a result of any
examination, the Commissioner may initiate such proceedings or actions as
provided by law.
(f) All working
papers, recorded information, documents, and copies thereof produced by,
obtained by, or disclosed to the Commissioner or any other person during in
connection with an examination or financial analysis shall be given
confidential treatment and is treatment, are not subject to subpoena
subpoena, and may shall not be made public by the
Commissioner or any other person, except to the extent provided in G.S.
58-2-131(l) or subsection (e) of this section.person. Access may
also be granted to the NAIC. Such parties must agree in writing before
receiving the information to give it the same confidential treatment as this
section requires, unless the prior written consent of the insurer to which it
pertains has been obtained. The provisions of this section do not prohibit the
Commissioner from taking any action provided for, or from exercising any power
conferred by, any provision of this Chapter to suspend or revoke the license of
any insurer. The Commissioner may use the documents,
materials, or other information in the furtherance of any regulatory or legal
action brought as part of the Commissioner's official duties.
(g) In order to assist in the performance of the Commissioner's duties, the Commissioner may:
(1) Share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to subsection (f) of this section, with other state, federal, and international regulatory agencies, with the NAIC, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, communication, or other information.
(2) Receive documents, materials, communications, or information, including otherwise confidential and privileged documents, materials, or information, from the NAIC, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information.
(3) Enter into agreements governing sharing and use of information consistent with this section.
(h) No waiver of an existing privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the Commissioner under this section or as a result of sharing as authorized in subsection (g) of this section.
(i) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this section shall be available and enforced in any proceeding in, and in any court of, this State.
(j) In this section, 'department,' 'insurance regulator,' 'law enforcement official or authority,' 'NAIC,' and 'regulatory official or agency' include employees, agents, consultants, and contractors of those entities."
SECTION 5. If any section or provision of this act is declared unconstitutional, preempted, or otherwise invalid by the courts, it does not affect the validity of the act as a whole or any part other than the part so declared to be unconstitutional, preempted, or otherwise invalid.
SECTION 6. This act is effective when it becomes law.
In the General Assembly read three times and ratified this the 31st day of May, 2001.
s/ Beverly E. Perdue
President of the Senate
s/ James B. Black
Speaker of the House of Representatives
s/ Michael F. Easley
Governor
Approved 12:09 p.m. this 7th day of June, 2001