§ 58-3-275. Closure of a block of business.
§ 58‑3‑275. Closure of a block of business.
(a) An insurer thatdetermines to create a closed block of business in this State shall no laterthan 60 days prior to the closure date:
(1) Notify theCommissioner in writing of the insurer's decision to cease sales of the policyform(s) and provide a reasonable estimate, based on sound actuarial principles,of the expected impact on future premiums of ceasing sales of the policyform(s). If the insurer's qualified actuary estimates that the expected impacton future annual premiums of ceasing sales of the policy form(s) exceeds fivepercent (5%) per annum, then the insurer shall comply with the requirements ofsubdivision (3) of this subsection. If each subsequent annual premium ratefiling results in an approved annual premium rate increase no greater than thelast premium rate increase approved when the block of insurance was open, plusfive percent (5%) per annum, then the insurer shall not be required to complywith the requirements of subdivision (3) of this subsection. If any subsequentannual premium rate filing results in an approved premium rate increase inexcess of five percent (5%) per annum more than the last premium rate increaseapproved while the block of insurance was open, then the insurer shall complywith the requirements of subdivision (3) of this subsection at the time thefiling is approved, unless the insurer can demonstrate to the satisfaction ofthe Commissioner that the portion of the increase that is due to the closing ofthe block is not more than five percent (5%) per annum.
(2) Inform each agentand broker selling the product of the decision and the date of closure.
(3) If required pursuantto subdivision (1) of this subsection, notify all affected policyholders of thedetermination and provide a statement of the general effect that might beexpected to result from the closure of the block. Notice shall comply with anyrules adopted pursuant to subsection (b) of this section.
(b) The Commissionermay adopt rules to carry out the purposes and provisions of this section,including rules establishing the language, content, format, and methods ofdistribution of the notices required by this section.
(c) As used in thissection, the term:
(1) "Accident andhealth insurance" means insurance against death or injury resulting fromaccident or from accidental means and insurance against disablement, disease,or sickness of the insured. This includes Medicare supplemental insurance, long‑termcare, nursing home, or home health care insurance, or any combination thereof,specified disease or illness insurance, hospital indemnity or other fixedindemnity insurance, short‑term limited duration health insurance, dentalinsurance, vision insurance, and medical, hospital, or surgical expenseinsurance or any combination thereof.
(2) "Block ofbusiness" means a particular policy form or contract of individualaccident and health insurance issued by an insurer.
(3) "Closed blockof business" means a block of business for which an insurer ceases toactively market, sell, and issue new contracts under a particular policy formin this State.
(4) "Closuredate" means the effective date that no new insureds will be issuedcoverage of the particular policy form(s).
(5) "Insurer"includes an insurance company subject to this Chapter, a service corporationorganized under Article 65 of this Chapter, a health maintenance organizationorganized under Article 67 of this Chapter, or a multiple employer welfarearrangement subject to Article 49 of this Chapter.
(6) "Policyholders"includes those applicants for the particular policy form that is being closedand for which the policy is not yet issued.
(d) This section doesnot apply when an insurer makes a decision to discontinue a particular policyform or contract of accident and health insurance coverage subject to Article68 of this Chapter, cancels or nonrenews the coverage, and offers replacementcoverage pursuant to G.S. 58‑68‑65(c)(1). (2005‑412, s. 2.)