§ 58-37-40. Plan of operation. - North Carolina Statutes

§58‑37‑40.  Plan of operation.

(a)        Within 60 daysafter the initial organizational meeting, the Facility shall submit to theCommissioner, for his approval, a proposed plan of operation, consistent withthe provisions of this Article, which shall provide for economical, fair andnondiscriminating administration and for the prompt and efficient provision ofmotor vehicle insurance to eligible risks. Should no plan be submitted withinthe aforesaid 60‑day period, then the Commissioner of Insurance shallformulate and place into effect a plan consistent with the provisions of thisArticle.

(b)        The plan ofoperation, unless sooner approved in writing, shall be deemed to meet therequirements of the Article if it is not disapproved by order of theCommissioner within 30 days from the date of filing. Prior to the disapprovalof all or any part of the proposed plan of operation the Commissioner shallnotify the Facility in what respect the plan of operation fails to meet thespecific requirements of this Article. The Facility shall, within 30 daysthereafter, submit for his approval a revised plan of operation which meets thespecific requirements of this Article. In the event the Facility fails tosubmit a revised plan of operation which meets the specific requirements ofthis Article within the aforesaid 30‑day period, the Commissioner shallenter an order accordingly and shall immediately thereafter formulate and placeinto effect a plan consistent with the provisions of this Article.

(c)        Any revision of theproposed plan of operation or any subsequent amendments to an approved plan ofoperation shall be subject to approval or disapproval by the Commissioner inthe manner herein provided in subsection (b) with respect to the initial planof operation.

(d)        Any order of theCommissioner with respect to the plan of operation or any revision or amendmentthereof shall be subject to court review as provided in G.S. 58‑2‑75.

(e)        Upon approval ofthe Commissioner of the plan so submitted or promulgation of a plan deemed approvedby the Commissioner, all insurance companies licensed to write motor vehicleinsurance in this State or any component thereof as a prerequisite to furtherengaging in writing the insurance shall formally subscribe to and participatein the plan so approved.

The plan of operation shallprovide for, among other matters, (i) the establishment of necessaryfacilities; (ii) the management of the Facility; (iii) the preliminaryassessment of all members for initial expenses necessary to commence operations;(iv) the assessment of members if necessary to defray losses and expenses; (v)the distribution of gains to defray losses incurred since September 1, 1977;(vi) the distribution of gains by credit or reduction of recoupment surchargesto policies subject to recoupment surcharges pursuant to this Article (theFacility may apportion the distribution of gains among the coverages eligiblefor cession pursuant to this Article); (vii) the recoupment of losses sustainedby the Facility since September 1, 1977, pursuant to this Article, which lossesmay be recouped by equitable pro rata assessment of companies or by way of asurcharge on motor vehicle policies issued by member companies or through theFacility; (viii) the standard amount (one hundred percent (100%) or anyequitable lesser amount) of coverage afforded on eligible risks which a membercompany may cede to the Facility; and (ix) the procedure by which reinsuranceshall be accepted by the Facility. The plan shall further provide that:

(1)        Members of the Boardof Governors shall receive reimbursement from the Facility for their actual andnecessary expenses incurred on Facility business, en route to perform Facilitybusiness, and while returning from Facility business plus a per diem allowanceof twenty‑five dollars ($25.00) a day which may be waived.

(2)        In order to obtain atransfer of business to the Facility effective when the binder or policy orrenewal thereof first becomes effective, the company must within 30 days of thebinding or policy effective date notify the Facility of the identification ofthe insured, the coverage and limits afforded, classification data, andpremium. The Facility shall accept risks at other times on receipt of necessaryinformation, but acceptance shall not be retroactive. The Facility shall acceptrenewal business after the member on underwriting review elects to again cedethe business.

(f)         The plan ofoperation shall provide that every member shall, following payment of any prorata assessment, begin recoupment of that assessment by way of a surcharge onmotor vehicle insurance policies issued by the member or through the Facilityuntil the assessment has been recouped. Any surcharge under this subsection orunder subsection (e) of this section shall be a percentage of premium adoptedby the Board of Governors of the Facility; and the charges determined on thebasis of the surcharge shall be combined with and displayed as a part of theapplicable premium charges. Recoupment of losses sustained by the Facilitysince September 1, 1977, with respect to nonfleet private passenger motorvehicles may be made only by surcharging nonfleet private passenger motorvehicle insurance policies. If the amount collected during the period ofsurcharge exceeds assessments paid by the member to the Facility, the membershall pay over the excess to the Facility on a date specified by the Board ofGovernors. If the amount collected during the period of surcharge is less thanthe assessments paid by the member to the Facility, the Facility shall pay thedifference to the member. Except as otherwise provided in this Article, theamount of recoupment shall not be considered or treated as a rate or premiumfor any purpose. The Board of Governors shall adopt and implement a plan forcompensation of agents of Facility members when recoupment surcharges areimposed; that compensation shall not exceed the compensation or commission ratenormally paid to the agent for the issuance or renewal of the automobileliability policy issued through the North Carolina Reinsurance Facilityaffected by the surcharge. However, the surcharge shall include an amountnecessary to recover the amount of the assessment to member companies and thecompensation paid by each member, under this section, to agents.

(g)        The plan ofoperation shall provide that all investment income from the premium on businessreinsured by the Facility shall be retained by or paid over to the Facility. Indetermining the cost of operation of the Facility, all investment income shallbe taken into consideration.

(h)        The plan ofoperation shall provide for audit of the annual statement of the Facility byindependent auditor approved by the Legislative Services Commission.

(i)         The Facility shallfile with the Commissioner revisions in the Facility plan of operation for hisapproval or modification. Such revisions shall be made for the purpose ofrevising the classification and rating plans for other than nonfleet privatepassenger motor vehicle insurance ceded to the Facility. (1973,c. 818, s. 1; 1975, c. 19, s. 18; 1977, c. 828, ss. 20, 21; 1981, c. 590; c.916, ss. 2, 3; 1985 (Reg. Sess., 1986), c. 1027, s. 34; 1987, c. 869, s. 5(1)‑5(3);1989, c. 424, s. 1; 1991, c. 720, s. 4; 1995, c. 517, s. 24; 1999‑132,ss. 8.5, 8.6.)