§ 58-22-20. Risk retention groups not chartered in this State.
§ 58‑22‑20. Riskretention groups not chartered in this State.
Risk retention groups thathave been chartered in states other than this State and that seek to dobusiness as risk retention groups in this state must observe and abide by thelaws of this State as follows:
(1) Notice of Operationsand Designation of Commissioner as Agent. Before offering insurance in thisState, a risk retention group shall submit to the Commissioner:
a. A statementidentifying the state or states in which the risk retention group is charteredand licensed as a liability insurance company, date of chartering, itsprincipal place of business, and such other information including informationon its membership, as the Commissioner may require to verify that the riskretention group is qualified under G.S. 58‑22‑10(10);
b. A copy of its planof operations or a feasibility study and revisions of such plan or studysubmitted to its state of domicile; provided, however, that the provisionrelating to the submission of a plan of operation or a feasibility study shallnot apply with respect to any line or classification of liability insurancethat (i) was defined in the Product Liability Risk Retention Act of 1981 beforeOctober 27, 1986, and (ii) was offered before that date by any risk retentiongroup that had been chartered and operating for not less than three yearsbefore that date;
c. The risk retentiongroup shall submit a copy of any revision to its plan of operation orfeasibility study required by G.S. 58‑22‑15(b) at the same timethat such revision is submitted to the Commissioner of its chartering state;and
d. A statement ofregistration that designates the Commissioner as its agent for the purpose ofreceiving service of legal process.
(2) Financial Condition. A risk retention group doing business in this State shall file with theCommissioner:
a. A copy of thegroup's financial statement submitted to its state of domicile, which shall becertified by an independent public accountant and contain a statement ofopinion on loss and loss adjustment expense reserves made by a member of theAmerican Academy of Actuaries or a qualified loss reserve specialist, undercriteria established by the NAIC or by the Commissioner;
b. A copy of eachexamination of the risk retention group as certified by the State insuranceregulator or public official conducting the examination;
c. Upon request by theCommissioner, a copy of any audit performed with respect to the risk retentiongroup; and
d. Such information asmay be required to verify its continuing qualification as a risk retentiongroup under G.S. 58‑22‑10(10).
(3) Taxation.
a. All premiums paidfor coverages within this State to risk retention groups shall be subject totaxation at the same rate and subject to the same payment procedures and to thesame interest, fines, and penalties for nonpayment as those applicable tosurplus lines insurance under Article 21 of this Chapter. Premiums paid bypurchasing groups are, however, taxed as provided in G.S. 58‑22‑35(b).
b. To the extent licensedagents or brokers are utilized pursuant to G.S. 58‑22‑60, theyshall report and pay the taxes for the premiums for risks that they have placedwith or on behalf of a risk retention group not chartered in this State. Suchagent or broker shall keep a complete and separate record of all policiesprocured from each such risk retention group, which record shall be open toexamination by the Commissioner, as provided in G.S. 58‑2‑185.These records shall, for each policy and each kind of insurance provided thereunder,include the following:
1. The limit ofliability;
2. The time periodcovered;
3. The effective date;
4. The name of the riskretention group that issued the policy;
5. The gross premiumcharged; and
6. The amount of returnpremiums, if any.
c. To the extent thatinsurance agents or brokers are not utilized or fail to pay the tax, each riskretention group shall pay the tax for risks insured within the State. Each riskretention group shall report to the Commissioner all premiums paid to it for risksinsured within the State.
(4) Compliance WithUnfair Claims Settlement Practices Law. A risk retention group and its agentsand representatives shall comply with G.S. 58‑3‑100(a)(5) and G.S.58‑63‑15(11).
(5) Deceptive, False, orFraudulent Practices. A risk retention group shall comply with the provisionsof Article 63 of this Chapter and Chapter 75 of the General Statutes regardingdeceptive, false, or fraudulent acts or practices.
(6) ExaminationRegarding Financial Condition. A risk retention group must submit to anexamination by the Commissioner to determine its financial condition if theinsurance regulator of the jurisdiction in which the group is chartered has notinitiated an examination or does not initiate an examination within 60 daysafter a request by the Commissioner. This examination shall be coordinated toavoid unjustified repetition and conducted in an expeditious manner and inaccordance with the Examiner Handbook of the NAIC.
(7) Notice toPurchasers. Any policy issued by a risk retention group shall contain in 10point type and contrasting color on the front page and the declaration page,the following notice:
"NOTICE
Thispolicy is issued by your risk retention group. Your risk retention group is notsubject to all of the insurance laws and regulations of your state. In theevent of the insolvency of your risk retention group, losses under this policywill not be paid by any insurance insolvency or guaranty fund in thisState."
(8) Prohibited ActsRegarding Solicitation or Sale. The following acts by a risk retention groupare prohibited:
a. The solicitation orsale of insurance by a risk retention group to any person who is not eligiblefor membership in such group; and
b. The solicitation orsale of insurance by, or operation of, a risk retention group that is in ahazardous financial condition or is financially impaired.
(9) Prohibition ofOwnership By An Insurance Company. No risk retention group shall be allowedto do business in this State if an insurance company is directly or indirectlya member or owner of such risk retention group, other than in the case of arisk retention group all of whose members are insurance companies.
(10) Prohibited Coverage. No risk retention group may offer insurance policy coverage prohibited or notauthorized by this Chapter or declared unlawful by the appellate courts of thisState.
(11) DelinquencyProceedings. A risk retention group not chartered in this State and doingbusiness in this State must comply with a lawful order issued in a voluntarydissolution proceeding or in a delinquency proceeding commenced by a stateinsurance commissioner if there has been a finding of financial impairmentafter an examination under G.S. 58‑22‑20(6).
(12) Penalties. A riskretention group that violates any provision of this Article is subject to G.S.58‑2‑70. (1985 (Reg. Sess., 1986), c. 1013, s. 8; 1987, c. 310, s. 1; c. 727,ss. 1, 2; 1993, c. 452, s. 37; 1995 (Reg. Sess., 1996), c. 747, s. 9; 2004‑199,s. 20(d).)