§ 58-63-15. Unfair methods of competition and unfair or deceptive acts or practices defined.
§58‑63‑15. Unfair methods of competition and unfair or deceptiveacts or practices defined.
The following are herebydefined as unfair methods of competition and unfair and deceptive acts orpractices in the business of insurance:
(1) Misrepresentations andFalse Advertising of Policy Contracts. Making, issuing, circulating, orcausing to be made, issued or circulated, any estimate, illustration, circularor statement misrepresenting the terms of any policy issued or to be issued orthe benefits or advantages promised thereby or the dividends or share of thesurplus to be received thereon, or making any false or misleading statement asto the dividends or share or surplus previously paid on similar policies, ormaking any misleading representation or any misrepresentation as to thefinancial condition of any insurer, or as to the legal reserve system uponwhich any life insurer operates, or using any name or title of any policy orclass of policies misrepresenting the true nature thereof, or making any misrepresentationto any policyholder insured in any company for the purpose of inducing ortending to induce such policyholder to lapse, forfeit, or surrender hisinsurance.
(2) False Informationand Advertising Generally. Making, publishing, disseminating, circulating, orplacing before the public, or causing, directly or indirectly, to be made,published, disseminated, circulated, or placed before the public, in anewspaper, magazine or other publication, or in the form of a notice, circular,pamphlet, letter or poster, or over any radio station, or in any other way, anadvertisement, announcement or statement containing any assertion,representation or statement with respect to the business of insurance or withrespect to any person in the conduct of his insurance business, which isuntrue, deceptive or misleading.
(3) Defamation. Making, publishing, disseminating, or circulating, directly or indirectly, oraiding, abetting or encouraging the making, publishing, disseminating orcirculating of any oral or written statement or any pamphlet, circular, articleor literature which is false, or maliciously critical of or derogatory to thefinancial condition of an insurer, and which is calculated to injure any personengaged in the business of insurance.
(4) Boycott, Coercionand Intimidation. Entering into any agreement to commit, or by any concertedaction committing, any act of boycott, coercion or intimidation resulting in ortending to result in unreasonable restraint of, or monopoly in, the business ofinsurance.
(5) False FinancialStatements. Filing with any supervisory or other public official, or making,publishing, disseminating, circulating or delivering to any person, or placingbefore the public, or causing directly or indirectly, to be made, published,disseminated, circulated, delivered to any person, or placed before the public,any false statement of financial condition of an insurer with intent todeceive.
Making anyfalse entry in any book, report or statement of any insurer with intent todeceive any agent or examiner lawfully appointed to examine into its conditionor into any of its affairs, or any public official to whom such insurer isrequired by law to report, or who has authority by law to examine into itscondition or into any of its affairs, or, with like intent, willfully omittingto make a true entry of any material fact pertaining to the business of suchinsurer in any book, report or statement of such insurer.
(6) Stock Operations andInsurance Company Advisory Board Contracts. Issuing or delivering orpermitting agents, officers, or employees to issue or deliver, agency companystock or other capital stock, or benefit certificates or shares in any common‑lawcorporation, or securities or any special or any insurance company advisoryboard contracts or other contracts of any kind promising returns and profit asan inducement to insurance.
(7) UnfairDiscrimination.
a. Making or permittingany unfair discrimination between individuals of the same class and equalexpectation of life in the rates charged for any contract of life insurance orof life annuity or in the dividends or other benefits payable thereon, or inany other of the terms and conditions of such contract.
b. Making or permittingany unfair discrimination between individuals of the same class and ofessentially the same hazard in the amount of premium, policy fees, or ratescharged for any policy or contract of accident or health insurance or in thebenefits payable thereunder, or in any of the terms or conditions of suchcontract, or in any other manner whatever.
c. Making or permittingany unfair discrimination between or among individuals or risks of the sameclass and of essentially the same hazard by refusing to issue, refusing torenew, cancelling, or limiting the amount of insurance coverage on a propertyor casualty risk because of the geographic location of the risk, unless:
1. The refusal orlimitation is for the purpose of preserving the solvency of the insurer and isnot a mere pretext for unfair discrimination, or
2. The refusal,cancellation, or limitation is required by law.
d. Making or permittingany unfair discrimination between or among individuals or risks of the sameclass and of essentially the same hazard by refusing to issue, refusing torenew, cancelling, or limiting the amount of insurance coverage on aresidential property risk, or the personal property contained therein, becauseof the age of the residential property, unless:
1. The refusal orlimitation is for the purpose of preserving the solvency of the insurer and isnot a mere pretext for unfair discrimination, or
2. The refusal,cancellation, or limitation is required by law.
(8) Rebates.
a. Except as otherwiseexpressly provided by law, knowingly permitting or offering to make or makingany contract of life insurance, life annuity or accident and health insurance,or agreement as to such contract other than as plainly expressed in thecontract issued thereon, or paying or allowing, or giving or offering to pay,allow, or give, directly or indirectly, as inducement to such insurance, orannuity, any rebate of premiums payable on the contract, or any special favoror advantage in the dividends or other benefits thereon, or any valuableconsideration or inducement whatever not specified in the contract; or giving,or selling, or purchasing or offering to give, sell, or purchase as inducementto such insurance or annuity or in connection therewith, any stocks, bonds, orother securities of any insurance company or other corporation, association, orpartnership, or any dividends or profits accrued thereon, or anything of valuewhatsoever not specified in the contract.
b. Nothing insubdivision (7) or paragraph a of subdivision (8) of this section shall beconstrued as including within the definition of discrimination or rebates anyof the following practices:
1. In the case of anycontract of life insurance or life annuity, paying bonuses to policyholders orotherwise abating their premiums in whole or in part out of surplus accumulatedfrom nonparticipating insurance, provided, that any such bonuses or abatementof premiums shall be fair and equitable to policyholders and for the bestinterests of the company and its policyholders;
2. In the case of lifeinsurance policies issued on the industrial debit plan, making allowance topolicyholders who have continuously for a specified period made premiumpayments directly to an office of the insurer in an amount which fairlyrepresents the saving in collection expense;
3. Readjustment of therate of premium for a group insurance policy based on the loss or expenseexperienced thereunder, at the end of the first or any subsequent policy yearof insurance thereunder, which may be made retroactive only for such policyyear.
c. No insurer oremployee thereof, and no broker or agent shall pay, allow, or give, or offer topay, allow, or give, directly or indirectly, as an inducement to insurance, orafter insurance has been effected, any rebate, discount, abatement, credit orreduction of the premium named in a policy of insurance, or any special favoror advantage in the dividends or other benefits to accrue thereon, or anyvaluable consideration or inducement whatever, not specified in the policy ofinsurance. Nothing herein contained shall be construed as prohibiting thepayment of commissions or other compensation to regularly appointed andlicensed agents and to brokers duly licensed by this State; nor as prohibitingany participating insurer from distributing to its policyholders dividends,savings or the unused or unabsorbed portion of premiums and premium deposits.
(9) Advertising ofHealth, Accident or Hospitalization Insurance. In all advertising ofpolicies, certificates or service plans of health, accident or hospitalizationinsurance, except those providing group coverage, where details of benefitsprovided by a particular policy, certificate or plan are set forth in anyadvertising material, such advertising material shall contain reference to themajor exceptions or major clauses limiting or voiding liability contained inthe policy, certificate or plan so advertised. The references to suchexceptions or clauses shall be printed in a type no smaller than that used toset forth the benefits of the policy, certificate or plan. In all advertising ofsuch policies, certificates or plans which contain a cancellation provision ora provision that the policies, certificates or plans may be renewed at theoption of the company or medical service corporation only, such advertisingmaterial shall contain clear and definite reference to the fact that thepolicies, certificates or plans are cancellable or that the same may be renewedat the option of the company only.
Inadvertising, sale, or solicitation for sale of any insurance policy representedor advertised to afford coverages and benefits supplemental to or in additionto Medicare coverage, all such advertising materials, except for advertisementswhich have as their objective the creation of a desire to inquire further aboutan insurance product and do nothing more than generally describe the productand invite inquiries for costs and further details of the coverage, includinglimitations, exclusions, reductions or limitations and terms under which thepolicy may be continued in force, in whatever medium, and all solicitation andpresentations for the sale of such policies, shall contain specific referencesto major exclusions or major exceptions that may result in voiding liability orin a reduction of benefits below those primarily advertised. When suchpolicies contain a coordination of benefits clause whereby benefits are limitedby or prorated with other outstanding coverages, such provision shall be calledto the attention of the prospective purchaser by conspicuously printed type nosmaller than 10 point type. When such policies are advertised to providecoverage above Medicare payments, but contain provisions limiting benefits tothose approved for payment by Medicare under Part B, such limitation inbenefits shall be called to the attention of the prospective purchaserregardless of the advertising medium; and when policies containing suchprovisions are delivered, there shall be incorporated therein the language oraffixed thereto a sticker in conspicuously printed type no smaller than 10 pointtype stating: CAUTION: POLICY BENEFITS ARE LIMITED TO THOSE APPROVED BYMEDICARE FOR PAYMENT. Any person engaged in the solicitation or sale ofsuch supplemental Medicare policies in this State shall, as a part of theapplication, determine and list on the application all policies of Medicaresupplement or other health insurance currently in force that cover theprospective insured. In compiling such information, the person is entitled torely upon information furnished by the prospective purchaser or insured.
(10) Soliciting, etc.,Unauthorized Insurance Contracts in Other States. Soliciting, advertising orentering into insurance contracts in foreign states and any other jurisdictionin which such domestic insurer is not licensed in accordance with the laws ofsuch state or jurisdiction, except as provided in G.S. 58‑14‑5.
(11) Unfair ClaimSettlement Practices. Committing or performing with such frequency as toindicate a general business practice of any of the following: Provided,however, that no violation of this subsection shall of itself create any causeof action in favor of any person other than the Commissioner:
a. Misrepresentingpertinent facts or insurance policy provisions relating to coverages at issue;
b. Failing toacknowledge and act reasonably promptly upon communications with respect toclaims arising under insurance policies;
c. Failing to adopt andimplement reasonable standards for the prompt investigation of claims arisingunder insurance policies;
d. Refusing to payclaims without conducting a reasonable investigation based upon all availableinformation;
e. Failing to affirm ordeny coverage of claims within a reasonable time after proof‑of‑lossstatements have been completed;
f. Not attempting ingood faith to effectuate prompt, fair and equitable settlements of claims inwhich liability has become reasonably clear;
g. Compelling [the]insured to institute litigation to recover amounts due under an insurancepolicy by offering substantially less than the amounts ultimately recovered inactions brought by such insured;
h. Attempting to settlea claim for less than the amount to which a reasonable man would have believedhe was entitled;
i. Attempting tosettle claims on the basis of an application which was altered without noticeto, or knowledge or consent of, the insured;
j. Making claimspayments to insureds or beneficiaries not accompanied by [a] statement settingforth the coverage under which the payments are being made;
k. Making known toinsureds or claimants a policy of appealing from arbitration awards in favor ofinsureds or claimants for the purpose of compelling them to accept settlementsor compromises less than the amount awarded in arbitration;
l. Delaying theinvestigation or payment of claims by requiring an insured claimant, or thephysician, of [or] either, to submit a preliminary claim report and thenrequiring the subsequent submission of formal proof‑of‑loss forms,both of which submissions contain substantially the same information;
m. Failing to promptlysettle claims where liability has become reasonably clear, under one portion ofthe insurance policy coverage in order to influence settlements under otherportions of the insurance policy coverage; and
n. Failing to promptlyprovide a reasonable explanation of the basis in the insurance policy inrelation to the facts or applicable law for denial of a claim or for the offerof a compromise settlement.
(12) Misuse of Borrowers'Confidential Information. Soliciting, accepting, or using any informationfrom a lender concerning policies of insurance held by such lender as amortgagee of real property, except from a lender who is an insurer where theloan has been made by or sold or held for sale to such insurer. Provided,however, this subdivision shall not apply to the use of such information by alender for the solicitation of life or accident and health insurance.
(13) Overinsurance inCredit or Loan Transactions. In connection with a loan or extension of creditsecured by real or personal property or both, requiring the applicant toprocure property and casualty insurance against any one risk which results incoverage which exceeds the replacement value of the secured property at thetime of the loan or extension of credit. In connection with a secured or unsecuredloan or extension of credit, requiring the applicant to procure life or healthinsurance against any one risk which exceeds the amount of the loan. Inconnection with a loan secured by both real and personal property, requiringcredit property insurance, as defined in G.S. 58‑57‑90, on thepersonal property. For the purposes of this subsection "amount ofloan" shall be deemed to be the amount of principal and accrued interestto be paid by the debtor including other allowable charges. (1949,c. 1112; 1955, c. 850, s. 3; 1967, c. 935, s. 2; 1975, c. 668; 1983, c. 831;1985 (Reg. Sess., 1986), c. 1027, ss. 18, 20; 1987, c. 787, ss. 1, 3.)