§ 58-28-45. Unauthorized Insurers; prohibited acts. - North Carolina Statutes

§ 58‑28‑45. Unauthorized Insurers; prohibited acts.

(a)        No  person shall inthis State act as agent for any insurer not authorized to transact business inthis State, or negotiate for or place or aid in placing insurance coverage inthis State for another with any such insurer.

(b)        No  person shall inthis State aid any unauthorized insurer in effecting insurance or intransacting insurance business in this State, either by fixing rates, byadjusting or investigating losses, by inspecting or examining risks, by actingas attorney‑in‑fact or as attorney for service for process, orotherwise, except as provided in this section or in G.S. 58‑16‑35.

(c)        No  person shallmake, negotiate for or place, or aid in negotiating or placing any insurancecontract in this State for another who is an applicant for insurance coveringany property or risk in another state, territory or district of the UnitedStates with any insurer not authorized to transact insurance business in thestate, territory or district wherein such property or risk or any part thereofis located.

(d)        Subsections (a),(b), and (c) of this section do not apply to contracts of reinsurance, or tocontracts of insurance made through surplus lines licensees as provided inArticle 21 of this Chapter, nor do they apply to any insurer not authorized inthis State, or its representatives, in investigating, adjusting losses orotherwise complying in this State with the terms of its insurance contractsmade in a state wherein the insurer was authorized; provided, the property orrisk insured under such contracts at the time such contract was issued waslocated in such other state. A motor vehicle used and kept garaged principallyin another state shall be deemed to be located in such state.

(e)       (1)        Repealedby Session Laws 1985, c. 666, s. 40.

(2)        Such service ofprocess shall be made by delivering and leaving with the Commissioner or tosome person in apparent charge of his office two copies thereof and the paymentto him of such fees as may be prescribed by law. The Commissioner shallforthwith mail by registered mail one of the copies of such process to thedefendant at its last known principal place of business, and shall keep arecord of all such process so served upon him. Such service of process issufficient provided notice of such service and a copy of the process are sentwithin 10 days thereafter by registered mail by plaintiff's attorney to thedefendant at its last known principal place of business, and the defendant'sreceipt, or receipt issued by the post office with which the letter isregistered, showing the name of the sender of the letter and the name andaddress of the person to whom the letter is addressed, and the affidavit ofplaintiff's attorney showing a compliance herewith are filed with the clerk ofthe court in which such action is pending on or before the date the defendantis required to appear, or within such further time as the court may allow.However, no plaintiff or complainant shall be entitled to a judgment by defaultunder this subdivision (2) until the expiration of 30 days from the date of thefiling of the affidavit of compliance.

(3)        Service of processin any such action, suit or proceeding shall be in addition to the mannerprovided in the preceding subdivision (2) be valid if served upon any personwithin this State who, in this State on behalf of such insurer, is

a.         Solicitinginsurance, or

b.         Making any contractof insurance or issuing or delivering any policies or written contracts ofinsurance, or

c.         Collecting orreceiving any premium for insurance; and a copy of such process is sent within10 days thereafter by registered mail by plaintiff's attorney to the defendantat the last known principal place of business of the defendant, and thedefendant's receipt, or the receipt issued by the post office with which theletter is registered, showing the name of the sender of the letter and the nameand address of the person to whom the letter is addressed, and the affidavit ofplaintiff's attorney showing a compliance herewith are filed with the clerk ofthe court in which such action is pending on or before the date the defendantis required to appear, or within such further time as the court may allow.

d.         Nothing in thissubsection (e) shall limit or abridge the right to serve process, notice ordemand upon any insurer in any other manner now or hereafter permitted by law.

(f)         No unauthorizedinsurer shall institute or file, or cause to be instituted or filed, any suit,action or proceeding in this State to enforce any right, claim or demandarising out of the transaction of business in this State until such insurershall have obtained a license to transact insurance business in this State.Nothing in this subsection shall be construed to require an unauthorizedinsurance company to obtain a license before instituting or filing, or causingto be instituted or filed, any suit, action or proceeding either in connectionwith any of its investments in this State or in connection with any contractissued by it at a time when it was authorized to do business in the state wheresuch contract was issued.

(g)       (1)        Beforeany unauthorized insurer shall file or cause to be filed any pleading in anyaction, suit or proceeding instituted against it, such unauthorized insurershall either

a.         File with the clerkof the court in which such action, suit or proceeding is pending a bond withgood and sufficient sureties, to be approved by the court, in an amount to befixed by the court sufficient to secure the payment of any final judgment whichmay be rendered in such action or

b.         Procure a license totransact the business of insurance in this State.

(2)        The court in anyaction, suit or proceeding in which service is made in the manner prescribed insubdivisions (2) and (3) of subsection (e) may order such postponement as maybe necessary to afford the defendant reasonable opportunity to comply with theprovisions of subdivision (1) of this subsection (g) and to defend such action.

(3)        Nothing insubdivision (1) of this subsection (g) shall be construed to prevent anunauthorized insurer from filing a motion to quash a writ or to set asideservice thereof made in the manner provided in subdivisions (2) and (3) ofsubsection (e) on the ground either

a.         That no policy orcontract of insurance has been issued or delivered to a citizen or resident ofthis State or to a corporation authorized to do business therein, or

b.         That such insurerhas not been transacting business in this State, or

c.         That the person onwhom service was made pursuant to subdivision (3) of subsection (e) was notdoing any of the acts enumerated therein.

(h)        Except as providedin G.S. 58‑33‑95, any person violating subsection (a), (b), (c), or(k) of this section shall be guilty of a Class H felony and shall be fined notless than one thousand dollars ($1,000) nor more than five thousand dollars($5,000). Any person violating subsections (e), (f), and (g) of this sectionshall be guilty of a Class 1 misdemeanor and shall only be fined not less thanone thousand dollars ($1,000) nor more than five thousand dollars ($5,000). Forthe purposes of the fine imposed by this subsection, each day during which aviolation occurs constitutes a separate violation.

(i), (j)   Repealed by SessionLaws 2007‑305, s. 1, effective December 1, 2007, and applicable tooffenses or acts committed on or after that date.

(k)        No person shall actas an officer, director, or controlling person for a person who is engaged in aviolation of subsection (a), (b), or (c) of this section. As used in thissubsection, "controlling" has the same meaning as in G.S. 58‑19‑5(2).

(l)         In addition to anyother penalties or remedies provided by law, any person who violates thissection shall be strictly liable for any losses or unpaid claims if anunauthorized insurer fails to pay in full or in part any claim or loss withinthe provisions of any insurance contract issued by or on behalf of theunauthorized insurer in violation of this Article. The liability imposed bythis subsection shall be joint and several if more than one person violatesthis section.

(m)       A civil action maybe filed under this section regardless of whether a criminal action is broughtor a criminal conviction is obtained for the act alleged in the civil action. (1899, c. 54, s. 105; Rev.,s. 4763; C.S., s. 6424; 1945, c. 386; 1985, c. 666, ss. 20, 40; 1987, c. 864,s. 17; 1993, c. 539, s. 454; 1994, Ex. Sess., c. 24, s. 14(c); 1999‑132,s. 9.1; 2004‑166, s. 3; 2007‑305, s. 1.)