Insurance Regulation and Licensing
Who regulates
Insurance is state-regulated under the McCarran-Ferguson Act. In North Carolina the Commissioner of Insurance is an elected statewide official who heads the Department of Insurance, also serves as State Fire Marshal, and holds rulemaking and enforcement authority. Insurers need a certificate of authority to transact business; the Department runs market conduct examinations and financial surveillance, and the North Carolina Rate Bureau files rates for several property and auto lines.
Who may touch a claim
Three concepts candidates routinely confuse:
- License - personal to the individual, issued by the state (producer, adjuster, public adjuster).
- Appointment - company-specific authority an insurer grants a licensed producer.
- Certificate of authority - belongs to the insurer, never to the person.
Adjusters must be licensed and must act within the scope of that license class. Continuing education and timely renewal are conditions of holding the license, and nonresident adjusters generally qualify through reciprocity.
Conduct rules
Chapter 58, Article 63 prohibits unfair trade practices and unfair claim settlement practices - misrepresenting policy provisions, failing to respond promptly, and refusing to pay without a reasonable investigation. Rebating, twisting, and commingling premium are prohibited, and producers hold premium in a fiduciary capacity. Complaints go to the Department, which may fine, suspend, or revoke.
Traps
Claiming the Commissioner is appointed (he or she is elected); acting before appointment; assuming a license travels across states or across license classes; and confusing public adjusters (who represent the insured) with company or independent adjusters.
Rule of thumb
Before opening a file, confirm three things: the insurer's authority to write the risk, your license class and status, and your appointment. If any one is missing, you are engaged in unlicensed activity.