GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2015

H                                                                                                                                                   3

HOUSE BILL 287

Committee Substitute Favorable 4/14/15

Committee Substitute #2 Favorable 7/28/15

Short Title:        Amend Insurance Laws.‑AB	(Public)
Sponsors:
Referred to:

March 19, 2015

A BILL TO BE ENTITLED

AN ACT TO MAKE CONFORMING AND CLARIFYING CHANGES TO THE LAWS GOVERNING PROFESSIONAL EMPLOYER ORGANIZATIONS, INSURANCE COMPANY DEPOSITS, CONTINUING CARE RETIREMENT COMMUNITIES, HEALTH INSURANCE EXTERNAL REVIEW, HEALTH INSURANCE FIDUCIARIES, and INSURANCE COMPANY NAMES; TO PROVIDE FOR A STUDY OF THE HEALTH INSURANCE PREMIUM RATE REVIEW PROCESS AND MONEYS FROM THE INSURANCE REGULATORY FUND TO IMPLEMENT THAT STUDY, AS RECOMMENDED BY THE DEPARTMENT OF INSURANCE; and to allow AN ITEMIZED INDIVIDUAL INCOME TAX DEDUCTION FOR INVESTORS WHO INCUR LOSSES FROM CRIMINALLY FRAUDULENT INVESTMENT ARRANGEMENTS.

The General Assembly of North Carolina enacts:

CONFORMING AND CLARIFYING CHANGES

SECTION 1.  G.S. 58‑89A‑60(d) reads as rewritten:

"(d)      Every applicant shall furnish the Commissioner a complete set of fingerprints and a recent photograph of each officer, director, and controlling person in a form prescribed by the Commissioner of each officer, director, and controlling person.Commissioner. Each set of fingerprints shall be certified by an authorized law enforcement officer.

Upon request by the Department, the Department of Public Safety shall provide to the Department from the State and National Repositories of Criminal Histories the criminal history of any applicant and the officer, director, and controlling person of any applicant. Along with the request, the Department shall provide to the Department of Public Safety the fingerprints of the person that is the subject of the request, a form signed by the person that is the subject of the request consenting to the criminal record check and use of fingerprints and other identifying information required by the State and National Repositories, and any additional information required by the Department of Public Safety. The person's fingerprints shall be forwarded to the State Bureau of Investigation for a search of the State's criminal history record file, and the State Bureau of Investigation may forward a set of fingerprints to the Federal Bureau of Investigation for a national criminal history record check. The Department shall keep all information obtained pursuant to this subsection confidential. The Department of Public Safety may charge a fee to offset the cost incurred by it to conduct a criminal record check under this section. The fee shall not exceed the actual cost of locating, editing, researching, and retrieving the information.

In the event that an applicant has secured a professional employer organization license in another state in which the professional employer organization's controlling persons have completed a criminal background investigation within 12 months of this application, a certified copy of the report from the appropriate authority of that state may satisfy the requirement of this subsection. This subsection also applies to a change in a controlling party of a professional employer organization. For purposes of investigation under this subsection, the Commissioner shall have all the power conferred by G.S. 58‑2‑50 and other applicable provisions of this Chapter."

SECTION 2.  G.S. 58‑5‑55(a) reads as rewritten:

"(a)       In addition to other requirements of Articles 1 through 64 of this Chapter, all domestic stock insurance companies shall deposit their required statutory capital with the Commissioner.Commissioner, and all domestic nonstock insurance companies shall deposit their required statutory surplus with the Commissioner. Such deposits shall be under the exclusive control of the Commissioner for the protection of policyholders."

SECTION 3.  G.S. 58‑64‑80 reads as rewritten:

"§ 58‑64‑80.  Advisory Committee.

There shall be a nine member Continuing Care Advisory Committee appointed by the Commissioner. The Committee shall consist of at least two residents of facilities, two representatives of the North Carolina Association of Nonprofit Homes for the Aging,LeadingAge North Carolina, one individual who is a certified public accountant and is licensed to practice in this State, one individual skilled in the field of architecture or engineering, and one individual who is a health care professional."

SECTION 4.  G.S. 58‑50‑82(b)(1) reads as rewritten:

"§ 58‑50‑82.  Expedited external review.

"(1)      Notify the insurer that made the noncertification, noncertification appeal decision, or second‑level grievance review decision which is the subject of the request that the request has been received and provide a copy of the request. The Commissioner shall also request any information from the insurer necessary to make the preliminary review set forth in G.S. 58‑50‑80(b)(2) and require the insurer to deliver the information not later than one business day after the request was made."

SECTION 5.  G.S. 58‑50‑40(c) reads as rewritten:

"(c)       Any insurance fiduciary who violates subsection (b) of this section shall be guilty of a Class H felony.the following felony offense:

(1) If the total value of losses suffered as a result of an insurance fiduciary's violation of subsection (b) of this section is one hundred thousand dollars ($100,000) or more, the violation is a Class F felony.

(2) If the total value of losses suffered as a result of an insurance fiduciary's violation of subsection (b) of this section is less than one hundred thousand dollars ($100,000), the violation is a Class H felony."

SECTION 6.  G.S. 58‑3‑50 reads as rewritten:

"§ 58‑3‑50.  Companies must do business in own name; emblems, insignias, etc.

Every insurance company or group of companies must conduct its business in the State in, and the policies and contracts of insurance issued by it shall be headed or entitled only by, its proper or corporate name or names. There shall not appear on the policy anything that would indicate that it is the obligation of any other than the company or companies responsible for the payment of losses under the policy, though it will be permissible to stamp or print on the policy, the name or names of the department or general agency issuing the same, and the group of companies with which the company is financially affiliated. The use of any emblem, insignia, or anything other than the true and proper corporate name of the company or group of companies shall be permitted only with the approval of the Commissioner.Commissioner, provided that, with the exception of policies subject to the provisions of Article 36 of this Chapter, a coverage within a policy may be issued by more than one company, so long as the policy clearly identifies the company responsible for each coverage."

HEALTH INSURANCE PREMIUM RATE REVIEW MODERNIZATION STUDY

SECTION 7.(a)  Authorization. – The Department of Insurance shall study and evaluate the need for and the expected impact of modernization in the Department's regulatory processes and requirements related to health insurance premium rate review.

SECTION 7.(b)  Elements of Study. – As part of the study and evaluation, the Department shall, at a minimum, include the following:

(1)        Consideration and evaluation of other states' health insurance rate review laws, requirements, and processes.

(2)        Consideration and evaluation of the expected impact of modernization on the costs of health insurance for businesses and consumers.

(3)        Consideration and evaluation of the expected impact of modernization on insurers' and the State's operations and costs.

(4)        Consideration and evaluation of federal provisions relating to rate review of health insurance premium rates and the expected impact of modernization in light of the federal requirements.

SECTION 7.(c)  Report. – The Department of Insurance shall submit a report with its findings and recommendations to the 2015 General Assembly when it reconvenes in 2016. The report may include proposed legislation and any other recommendations requiring legislative action.

SECTION 7.(d)  Consultants. – The Commissioner of Insurance may hire consultants to assist the Department in completing its duties under this section.

SECTION 7.(e)  Funding. – There is appropriated from the Insurance Regulatory Fund created under G.S. 58‑6‑25 to the Department of Insurance the sum of one hundred fifty thousand dollars ($150,000) for the 2015‑2016 fiscal year for the purposes of conducting the study described by this section. Unspent and unencumbered funds remaining on June 30, 2017, shall revert to the Fund.

INDIVIDUAL INCOME TAX ITEMIZED DEDUCTION FOR INVESTORS WHO INCUR LOSSES FROM CRIMINALLY FRAUDULENT INVESTMENT ARRANGEMENTS

SECTION 8.  G.S. 105‑153.5(a) reads as rewritten:

"(a)       Deduction Amount. – In calculating North Carolina taxable income, a taxpayer may deduct from adjusted gross income either the standard deduction amount provided in subdivision (1) of this subsection or the itemized deduction amount provided in subdivision (2) of this subsection that the taxpayer claimed under the Code. The deduction amounts are as follows:

…

(2)        Itemized deduction amount. – An amount equal to the sum of the items listed in this subdivision. The amounts allowed under this subdivision are not subject to the overall limitation on itemized deductions under section 68 of the Code:

…

c. The amount allowed as a deduction for losses incurred from criminally fraudulent investment arrangements under section 165(c)(2) of the Code."

EFFECTIVE DATE

SECTION 9.  Section 4 of this act becomes effective January 1, 2016. Section 8 of this act becomes effective for taxable years beginning on or after January 1, 2014. The remainder of this act is effective when it becomes law.