26.1-02 General Provisions - North Dakota Statutes

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CHAPTER 26.1-02GENERAL PROVISIONS26.1-02-01. Definitions. In chapters 26.1-02 through 26.1-04, unless the context orsubject matter otherwise requires:1."Domestic" means incorporated or formed in this state.2."Foreign", when used without limitation, means formed by the authority of any state
or government other than this state.3."Foreign decree" means any decree or order in equity of a court located in a
reciprocal state, including a court of the United States, against any insurer
incorporated or authorized to do business in this state.4."Insurance company" includes any corporation, association, benefit society,
exchange, partnership, or individual engaged as principal in the business of
insurance.5."Qualified party" means a state regulatory agency acting in its capacity to enforce
the insurance laws of its state.6."Reciprocal state" means any state the laws of which contain procedures
substantially similar to those specified in this chapter for the enforcement of decrees
or orders in equity issued by courts located in other states, against any insurance
company incorporated or authorized to do business in that state.26.1-02-01.1. Definition of limited benefit policy - Application. In this title, "limitedbenefit policy" means a policy or certificate issued under a group insurance policy that provides
coverage for accident-only, credit, dental, vision, medicare supplement, long-term care, or
disability income insurance; coverage issued as a supplement to liability insurance, or
automobile medical payment or no-fault insurance; or a policy or certificate of specified disease,
hospital confinement indemnity, or any other type of limited benefit health insurance. Any statute
that becomes effective after January 1, 1997, and affects accident and health insurance, or any
hospital, medical, or major medical policy, whether issued on a group or individual basis, does
not apply to a limited benefit policy unless the statute specifically identifies application to a limited
benefit policy.26.1-02-02.Duty of commissioner before granting or renewing certificate ofauthority. The commissioner must be satisfied by examination and evidence that an insurance
company is legally qualified to transact business in this state, including compliance with section
26.1-03-11, before granting a certificate of authority to the company to issue policies or make
insurance contracts. A certificate of authority issued under this title remains in force in perpetuity
if the required renewal fee is paid by April thirtieth of each year and the commissioner is satisfied
that the documents required by section 26.1-03-11 have been filed, the statements and
evidences of investment required of the company have been furnished, the required capital or
surplus or both, securities, and investments remain secure, and all other requirements of law are
met. Any company which neglects to pay the renewal fee by April thirtieth forfeits twenty-five
dollars for each day's neglect.26.1-02-03.Inquiry into condition of company - Information supplied tocommissioner - Penalty. The commissioner may address to any insurance company doing or
applying for permission to do business in this state any inquiries in relation to the company's
activities, condition, or any other matter connected with the company's transactions.Thecompany shall reply in writing to such an inquiry within twenty days of receipt of the inquiry
unless within that twenty days the company requests and the commissioner grants an extension
of time. It is a violation of this title for a person to knowingly supply the commissioner with false,
misleading, or incomplete information.Page No. 126.1-02-04. Company controlled by foreign government prohibited - Penalty. Aninsurance company or other insurance entity financially owned or financially controlled by any
foreign government outside the United States may not do any insurance business in this state.
The commissioner may not grant a license or issue a certificate of authority to any insurance
company or other insurance entity financially owned or financially controlled by any foreign
government outside the United States to transact any insurance business in this state. This
section does not affect any insurance company qualified to do business in this state before
January 2, 1955.26.1-02-05. Unauthorized insurance prohibited - Exceptions. An insurance companymay not transact insurance business in this state, as set forth in section 26.1-02-06, without a
certificate of authority from the commissioner. This section does not apply to:1.The lawful transaction of surplus lines insurance.2.The lawful transaction of reinsurance by insurers.3.Transactions involving a policy lawfully solicited, written, and delivered outside of this
state covering only subjects of insurance not resident, located, or expressly to be
performed in this state at the time of issuance, and which transactions are
subsequent to the issuance of such policy.4.Transactions involving life insurance, health insurance, or annuities provided to
educational or religious or charitable institutions organized and operated without
profit to any private shareholder or individual, for the benefit of the institutions and
individuals engaged in the service of the institutions.5.Attorneys acting in the ordinary relation of attorney and client in the adjustment of
claims or losses.6.Transactions involving group life, accident, and health, or blanket accident and
health insurance, or group annuities if the master policy of the group was lawfully
issued and delivered in and pursuant to the laws of a state in which the insurance
company was authorized to do an insurance business, to a group organized for
purposes other than the procurement of insurance, and where the policyholder is
domiciled or otherwise has a bona fide situs.7.Transactions involving any insurance policy or annuity contract issued before July 1,
1973.8.Transactions relative to a policy issued or to be issued outside this state involving
insurance on vessels, craft or hulls, cargoes, marine builder's risk, marine protection
and indemnity or other risk, including strikes and war risks commonly insured under
ocean or wet marine forms of policy.9.Transactions involving insurance contracts issued to one or more industrial insureds;
provided, that this does not relieve an industrial insured from taxation imposed upon
independently procured insurance. An industrial insured is an insured:a.Which procures the insurance of any risk or risks other than life and annuity
contracts by use of the services of a full-time employee acting as an insurance
manager or buyer or the services of a regularly and continuously retained
qualified insurance consultant;b.Whose aggregate annual premiums for insurance on all risks total at least
twenty-five thousand dollars; andc.Which has at least twenty-five full-time employees.Page No. 226.1-02-05.1. Group life and health insurance trust filing - Exemption requirements.Any insurance company claiming an exemption under subsection 6 of section 26.1-02-05 from a
requirement that the company have a certificate of authority to do business in this state or
comply with the insurance laws of this state shall provide the following information to the
insurance commissioner for the commissioner's approval of the exemption:1.A copy of the trust agreement for the group.2.A full copy of the master contract.3.A copy of the certificate of insurance to be issued or sold in this state.4.A copy of the application for the certificate of insurance.5.A copy of a disclosure statement used in the solicitation of the insurance indicating
that the protection of North Dakota's insurance laws will not be provided to the
holders of certificates of insurance issued by the group.6.An assurance that only one type of insurance coverage may be included in each
mailing or mass market solicitation.7.Such other information as the commissioner deems necessary to assure that the
group is organized for purposes other than the procurement of insurance or
otherwise meets the requirements of subsection 6 of section 26.1-02-05.No company may issue or deliver a policy of insurance or issue or deliver for issue a certificate of
insurance in this state without a certificate of authority unless it has first been granted approval in
writing to do so by the commissioner under this section.26.1-02-06. Insurance transactions defined - Venue. Any of the following acts in thisstate effected by mail or otherwise by or on behalf of an unauthorized insurance company
constitutes the transaction of an insurance business in this state:1.Making or proposing to make, as an insurance company, an insurance contract.2.Making or proposing to make, as guarantor or surety, any contract of guaranty or
suretyship as a vocation and not merely incidental to any other legitimate business
or activity of the guarantor or surety.3.Taking or receiving of any application for insurance.4.Receiving or collecting any premium, commission, membership fees, assessments,
dues, or other consideration for any insurance or any part thereof.5.Issuing or delivering an insurance contract to residents of this state or to persons
authorized to do business in this state.6.Directly or indirectly acting as an insurance producer for or otherwise representing or
aiding on behalf of another, any person or insurance company in the solicitation,
negotiation, procurement, or effectuation of insurance or renewals thereof or in the
dissemination of information as to coverage or rates, or forwarding of applications, or
delivery of policies or contracts, or inspection of risks, or fixing of rates, or
investigation or adjustment of claims or losses, or in the transaction of matters
subsequent to effectuation of the contract and arising out of it, or in any other
manner representing or assisting a person or insurance company in the transaction
of insurance with respect to subjects of insurance resident, located, or to be
performed, in this state.This subsection does not prohibit full-time salariedemployees of a corporate insured from acting in the capacity of an insurance
manager or buyer in placing insurance on behalf of the employer.Page No. 37.Transacting any kind of insurance business specifically recognized as transacting an
insurance business within the meaning of the statutes relating to insurance.8.Transacting or proposing to transact any insurance business in substance equivalent
to any of the foregoing in a manner designed to evade these statutes.The venue of an act committed by mail is at the point where the matter transmitted by mail is
delivered and takes effect.26.1-02-07.Unauthorized contracts valid.The failure of an insurance companytransacting insurance business in this state to obtain a certificate of authority does not impair the
validity of any act or contract of the company and does not prevent the company from defending
any civil action in any court of this state, but a company transacting insurance business in this
state without a certificate of authority may not maintain a civil action in any court of this state to
enforce any right, claim, or demand arising out of the transaction of insurance business until the
company has obtained a certificate of authority.26.1-02-08.Liability of unauthorized company.If any unauthorized insurancecompany fails to pay any claim or loss within the provisions of its insurance contract, any person
who assisted or in any manner aided, directly or indirectly, in the procurement of the insurance
contract is liable to the insured for the full amount of the claim or loss in the manner provided by
the contract.26.1-02-09.Restraint of violations - Jurisdiction.Whenever the commissionerbelieves that any insurance company is violating or is about to violate this chapter, the
commissioner, through the attorney general of this state, may cause a complaint to be filed in the
district court of Burleigh County to enjoin and restrain the company from continuing or engaging
in any violation or doing any act in furtherance thereof. The court may make and enter an order
or judgment awarding preliminary or final injunctive relief as in its judgment is proper.26.1-02-10.Agent for service of process - Unauthorized company.Any act oftransacting insurance business as set forth in this chapter by any unauthorized insurance
company is an irrevocable appointment by the company, binding upon the company, its executor
or administrator, or successor in interest if a corporation, of the secretary of state or the
secretary's successor in office, as the attorney of the company upon whom may be served all
lawful process in any action or proceeding in any court by the commissioner or by the state and
upon whom may be served any notice, order, pleading, or process in any proceeding before the
commissioner and which arises out of transacting insurance business in this state by the
company. Any act of transacting insurance business in this state by any unauthorized company
signifies its agreement that any lawful process in any court action or proceeding and any notice,
order, pleading, or process in any administrative proceeding before the commissioner so served
is of the same legal force and validity as personal service of process in this state upon the
company.26.1-02-11. Service of process - How made. Service of process is made by deliveringto the secretary of state, or some person in apparent charge of the secretary of state's office, two
copies thereof and by payment to the secretary of state of the fee prescribed by law.Thesecretary of state immediately shall forward by registered mail one copy to the defendant in a
court proceeding, or to whom the process is addressed or directed in an administrative
proceeding, at its last reasonably ascertainable address. The secretary of state shall keep a
record of the date and hour of service. This service is sufficient if notice of the service and a
copy of the process is mailed within ten days thereafter by certified mail to the defendant by the
plaintiff or the plaintiff's attorney in a court proceeding, or to whom the process is addressed or
directed by the commissioner in an administrative proceeding, at its last reasonably
ascertainable address, and the defendant's receipt issued by the post office with which the letter
is registered, showing the name of the sender of the letter and the name and address of the
person or insurer to whom the letter is addressed, and an affidavit of mailing showing compliance
herewith is filed with the clerk of the court in which the proceeding is pending, or with the
commissioner in an administrative proceeding. No judgment or determination by default may bePage No. 4entered in any proceeding until the expiration of forty-five days from the date of filing of the
affidavit of compliance.This section does not limit or affect the right to serve any process upon any person orinsurer in any other manner permitted by law.26.1-02-12.Pleading by unauthorized insurance company - When permitted.Before any unauthorized insurance company files or causes to be filed any pleading in any court
proceeding instituted against the company by service made as provided in section 26.1-02-11,
the company shall either:1.File with the clerk of the court in which the proceeding is pending a cash or other
bond with good and sufficient sureties, to be approved by the clerk, in an amount
fixed by the court sufficient to secure payment of any final judgment which may be
rendered in the action; or2.Procure a certificate of authority to transact the business of insurance in this state.
In considering the application for a certificate of authority, for the purposes of this
subsection, the commissioner need not assert section 26.1-11-06 against the
company with respect to its application if the commissioner determines that the
company would otherwise comply with the requirements for the certificate of
authority.26.1-02-13. Enforcement of decisions or orders. The attorney general upon requestof the commissioner may proceed in the court of this state or any reciprocal state to enforce an
order or decision in any court proceeding or in any administrative proceeding before the
commissioner.26.1-02-14. List of reciprocal states. The commissioner shall determine which statesqualify as reciprocal states and shall maintain at all times an up-to-date list of reciprocal states.26.1-02-15.Filing and status of foreign decrees.A certified copy of any foreigndecree may be filed in the office of the clerk of any district court of this state and concurrently in
the office of the commissioner with information showing which district court is being used. The
clerk, upon receiving verification from the commissioner, shall treat the foreign decree in the
same manner as a decree of the district court. A filed foreign decree has the same effect as a
decree of a district court of this state, and is subject to the same procedures, defenses, and
proceedings for reopening, vacating, or staying as a decree of a district court and may be
enforced or satisfied in like manner.26.1-02-16. Verification - Notice of filing. At the time a foreign decree is filed in thisstate, the commissioner shall make and file with the clerk of the appropriate district court an
affidavit setting forth the name and last-known post-office address of the defendant and verifying
that the decree or order is a foreign decree. Promptly upon receipt of the affidavit, the clerk shall
mail notice of the filing of the foreign decree to the defendant at the address contained in the
affidavit and to the commissioner and shall make a note of the mailing in the docket.26.1-02-17.Enforcement of foreign decrees - Time limit.No execution or otherprocess for enforcement of a foreign decree may issue until thirty days after the date the decree
is filed.26.1-02-18.Stay of enforcement.If the defendant shows the district court that anappeal from the foreign decree is pending or will be taken, or that a stay of execution has been
granted, the court shall stay enforcement of the foreign decree until the appeal is concluded, the
time for appeal expires, or the stay of execution expires or is vacated, upon proof that the
defendant has furnished the security for the satisfaction of the decree required by the state in
which it was rendered.If the defendant shows the district court any ground upon whichenforcement of a decree of any district court of this state would be stayed, the court shall stayPage No. 5enforcement of the foreign decree for an appropriate period, upon requiring the same security for
satisfaction of the decree as would be required in this state.26.1-02-19. Fees. Any person filing a foreign decree shall pay a filing fee as prescribedin subdivision d of subsection 1 of section 27-05.2-03 to the clerk of court. Fees for docketing,
transcriptions, or other enforcement proceedings are as provided for decrees of the district court.26.1-02-20. Reinsurance permitted - Limitations. Except as otherwise provided bythis section and section 26.1-02-22, any insurance company organized or admitted to transact
business in this state, including a mutual company, may reinsure any part or all of any risk taken
by it in any insurance company or insurer licensed in any state or any insurance company or
insurer not so licensed or any nonprofit health service corporation whether or not licensed in this
state provided it was approved or accepted by the commissioner, if that company or insurer or
nonprofit health service corporation conforms to the same standards of solvency which would be
required if, at the time the reinsurance is effected, it was licensed in this state. A county mutual
insurance company also may reinsure with any other county mutual insurance company. No
reinsurance, however, may be effected with any company disapproved therefor by written order
of the commissioner filed in the commissioner's office.A domestic insurance companyorganized to engage in the business of life, accident, or health insurance may not reinsure its
risks or any part thereof without complying with chapter 26.1-07.26.1-02-21. Reinsurance - Treatment upon insolvency, liquidation, or dissolution.1.Credit may not be allowed, as an admitted asset or as a deduction from liability, to
any ceding insurer for reinsurance unless the reinsurance contract provides, in
substance, that in the event of the insolvency of the ceding insurer, the reinsurance
must be payable under one or more contracts reinsured by the assuming insurer on
the basis of reported claims allowed by the liquidation court or proof of payment of
the claim by a guaranty association without diminution because of the insolvency of
the ceding insurer. The payments must be made directly to the ceding insurer or to
the ceding insurer's domiciliary liquidator except if:a.The contract or other written agreement specifically provides another payee of
such reinsurance in the event of the insolvency of the ceding insurer; orb.The assuming insurer, with the consent of the direct insured, has assumed
such policy obligations of the ceding insurer as direct obligations of the
assuming insurer to the payees under the policies and in substitution for the
obligations of the ceding insurer to the payees.2.Notwithstanding subsection 1, if a life and health insurance guaranty association has
elected to succeed to the rights and obligations of the insolvent insurer under the
contract of reinsurance, the reinsurer's liability to pay covered reinsured claims
continues under the contract of reinsurance, subject to the payment to the reinsurer
of the reinsurance premiums for such coverage. Payment for such reinsured claims
may only be made by the reinsurer pursuant to the direction of the guaranty
association or the guaranty association's designated successor. Any payment made
at the direction of the guaranty association or the guaranty association's designated
successor by the reinsurer will discharge the reinsurer of all further liability to any
other party for the claim payment.3.The reinsurance agreement may provide that the domiciliary liquidator of an
insolvent ceding insurer shall give written notice to the assuming insurer of the
pendency of a claim against such ceding insurer on the contract reinsured within a
reasonable time after the claim is filed in the liquidation proceeding. During the
pendency of the claim, any assuming insurer may investigate the claim and
interpose, at the assuming insurer's own expense, in the proceeding in which the
claim is to be adjudicated any defenses the assuming insurer determines available
to the ceding insurer, or the ceding insurer's liquidator. The expense may be filed asPage No. 6a claim against the insolvent ceding insurer as a class 7 claim under section
26.1-06.1-41 to the extent of a proportionate share of the benefit which may accrue
to the ceding insurer solely as a result of the defense undertaken by the assuming
insurer. If two or more assuming insurers are involved in the same claim and a
majority in interest elect to interpose one or more defenses to the claim, the expense
must be apportioned in accordance with the terms of the reinsurance agreement as
though the expense had been incurred by the ceding insurer.26.1-02-22.Accepting reinsurance of unauthorized company prohibited.Aninsurance or surety company may not assume the whole or any part of any risk covering property
located in this state, as a reinsurance company or in any other manner, insured by any insurance
company not authorized to transact business in this state.26.1-02-23. Revocation of company's authority to do business in this state. Thecommissioner shall revoke the certificate of authority of an insurance, bonding, surety, or
indemnity company immediately if, at any time after examination, the commissioner has reason
to believe that:1.Any annual statement or other report required to be submitted by an officer or agent
of the company pursuant to this title is false; or2.The company is practicing discrimination against individual risks in the issue or
cancellation of policies, bonds, or other insurance contracts or corporate suretyship.26.1-02-24. Copy of revocation to be mailed to company - Company to discontinuebusiness - Setting aside of revocation. If the certificate of authority of an insurance, bonding,
surety, or indemnity company is revoked pursuant to section 26.1-02-23, the commissioner shall
mail a copy of the revocation to the company or to the agents thereof in this state. Thereafter,
the company and its agents may not issue any new policy, bond, or surety contract nor renew
any policy, bond, or surety contract previously issued. The revocation may not be set aside, nor
may a new certificate of authority be issued, until satisfactory evidence has been submitted to the
commissioner showing that the company is in the condition set forth in its annual statement or
other report, or that the discrimination alleged has not been practiced, or that the practice of
discrimination will cease immediately, as the case may be, and that this title has been complied
with by the company.26.1-02-24.1.Definition.For the purpose of this section and section 26.1-02-24.2,"fraudulent insurance act" means an act committed by any person who, knowingly and with intent
to defraud, presents, causes to be presented, or prepares with knowledge or belief that it will be
presented to or by an insurer, purported insurer, insurance producer, or any agent thereof, any
written statement as part of, or in support of, an application for the issuance of, or the rating of an
insurance policy for commercial insurance, or a claim for payment or other benefit pursuant to an
insurance policy for commercial or personal insurance which the person knows to contain
materially false information concerning any fact material thereto; or conceals, for the purpose of
misleading, information concerning any fact material thereto.26.1-02-24.2. Immunity from liability. In the absence of fraud or bad faith, no person issubject to civil liability of any kind, including for libel and slander, by virtue of filing reports, without
malice, or furnishing other information, without malice, required by the insurance laws of this
state or required by the commissioner, and no civil cause of action of any nature may arise
against such person for any of the following:1.Any information relating to suspected fraudulent insurance acts furnished to or
received from law enforcement officials, their agents and employees.2.Any information relating to suspected fraudulent insurance acts furnished to or
received from other persons subject to the provisions of section 26.1-02-24.1 and
this section.Page No. 73.Any such information furnished in reports to the insurance fraud bureau, national
association of insurance commissioners, or any organization established to detect
and prevent fraudulent insurance acts, their agents, employees or designees, nor is
the commissioner or any employee of the insurance fraud bureau, in the absence of
fraud or bad faith, subject to civil liability and no civil cause of actions of any nature
may arise against such person by virtue of the publication of any report or bulletin
related to the official activities of the insurance fraud bureau.Nothing herein isintended to abrogate or modify in any way any common law or statutory privilege or
immunity heretofore enjoyed by any person.26.1-02-24.3. Insurance counseling programs - Volunteers - Immunity from liability.A person who, on a volunteer basis, provides services or performs duties on behalf of the
insurance commissioner for an insurance counseling program is immune from civil liability for
any act or omission resulting in damage or injury if at the time of the act or omission the person
who caused the damage or injury was acting in good faith, in the exercise of reasonable and
ordinary care, and in the scope of that person's duties as a volunteer and the act or omission did
not constitute willful misconduct or gross negligence. This section does not grant immunity to a
person causing damage as a result of the negligent operation of a motor vehicle.26.1-02-25. Penalty. Any unauthorized insurance company or other insurance entity orany representative or agent of the company or entity that transacts any unauthorized act of
insurance business as provided by this chapter is guilty of a class C felony.26.1-02-26. Accounting practices and procedures manual. The commissioner shalladopt by rule the accounting practices and procedures manual published by the national
association of insurance commissioners.The provisions of the accounting practices andprocedures manual adopted by the commissioner govern the statutory accounting practices of all
insurance companies, including health maintenance organizations, licensed to do business in this
state. Any reference to the accounting practices and procedures manual in this title means the
manual the commissioner adopts by rule, unless specifically stated otherwise.26.1-02-27. Disclosing nonpublic personal information.1.An insurance company, nonprofit health service corporation, or health maintenance
organization may not disclose to a nonaffiliated third party a customer's nonpublic
personal information contrary to the provisions of title V of the Gramm-Leach-Bliley
Act [Pub. L. 106-102; 113 Stat. 1436] or contrary to the rules adopted by the
commissioner under this section.2.a.The commissioner shall adopt rules necessary to carry out this section.b.The rules must be consistent with and not more restrictive than the model
regulation adopted by the national association of insurance commissioners
entitled "Privacy of Consumer Financial and Health Information Regulation".c.Notwithstanding subdivision b and subject to the exceptions, including the
affiliate sharing exception provided for in the national association of insurance
commissioners' model regulation, the rules may prohibit the disclosure of
nonpublic personal health and financial information concerning an individual
unless an authorization is obtained from the individual whose nonpublic
personal health and financial information is sought to be disclosed.3.This section does not create a private right of action.26.1-02-28.Child support insurance data match.Before paying a claim under acontract of insurance issued in this state, an insurer or government self-insurance pool may
exchange information about the claimant with the department of human services or its designee.
This section applies notwithstanding any provision of law making the information confidential. A
person is immune from suit or any liability under any federal or state law, including chapterPage No. 812.1-13 or 44-04, for acting in good faith under this section. The court shall award reasonable
attorney's fees and costs against any person that commences an action that is subsequently
dismissed by reason of the immunity granted by this section.Page No. 9Document Outlinechapter 26.1-02 general provisions