Could the North Carolina General Assembly require licensed insurers to write insurance in areas where it is not readily available?

Plain-English summary

Two legislators asked five questions about whether insurers may decline to write insurance or appoint agents in parts of North Carolina, what limits apply, and whether the General Assembly could require wider availability. The AG said the first four questions had been answered in a 1995 opinion to Insurance Commissioner James Long, attached it, and reaffirmed its analysis. This record does not contain that enclosure, so it cannot supply the earlier opinion's answers about current insurer or agent discretion.

The 2001 opinion addresses the fifth question: the General Assembly's authority. It cites decisions allowing legislation within constitutional limits and requiring occupational regulation to bear a reasonable relationship to public welfare without imposing an unreasonable burden compared with the likely benefit. The AG notes that Indemnity Co. v. Ingram had rejected a law requiring all general-liability insurers to also write medical-malpractice insurance.

At the time, Chapter 58, Article 42 authorized the Insurance Commissioner, after a hearing and findings of unavailable insurance and public need, to establish mandatory or voluntary risk-sharing plans for specified kinds of insurance. Participation in a plan was required of insurers licensed for that kind of insurance, their relevant agents, and rating organizations, subject to a solvency-impairment exclusion. The AG said the delegated power inherently included requiring insurers to write in various geographical areas.

Article 42 was then scheduled to expire July 1, 2001. The AG saw no legal reason the General Assembly could not extend it or directly use the power it had delegated, provided the legislature made appropriate findings of need in the areas and applied the requirement to insurers licensed to write the covered kinds of insurance. The opinion did not itself order any insurer to write statewide.

Currency note

This opinion was issued in 2001 and refers to a then-pending statutory sunset. Check current insurance statutes and the missing 1995 enclosure before using it for a current insurer or agent availability question.

What this means for you

If you study a geographic insurance-availability proposal: The opinion supports legislative action grounded in findings of need and limited to insurers licensed for the relevant coverage. It identifies constitutional limits through Ingram and the existing Article 42 plan mechanism.

If you are an insurer or agent: This stored opinion does not answer whether you could decline a particular area under then-existing law. It sends those first four questions to the separate 1995 advisory opinion.

Common questions

Did the 2001 opinion say insurers may refuse to write in particular ZIP codes?
No direct answer appears in the surviving text. It refers that question to the 1995 opinion, whose enclosure is not stored here.

Could the General Assembly require broader geographic availability?
The AG said it could extend Article 42 or directly exercise its delegated power, with appropriate findings of need in affected areas and only for insurers licensed to write the kinds of insurance covered.

Did Article 42 itself require all licensed insurers to participate in every plan?
It required insurers licensed for the particular kind of insurance covered by a plan to participate. The quoted statute also required the Commissioner to exclude a participant if participation would impair solvency.

Did the opinion decide a statewide agent-appointment mandate?
It includes that issue in the legislators' question but refers the first four questions on insurer and agent choices to the unavailable 1995 opinion. Its detailed analysis concerns the legislature's power over insurance availability.

Citations

• G.S. § 58-42-1: plan authority and findings quoted in the opinion.
• G.S. § 58-42-10: required participation and solvency exception quoted in the opinion.
• G.S. 58-42-55: Article 42 sunset date stated in the opinion.
• Moore v. Knightdale Bd. of Elections, 331 N.C. 1, 413 S.E.2d 541 (1992): legislative authority cited by the AG.
• Butler v. Peters, Comr. of Motor Vehicles, 52 N.C. App. 357, 278 S.E.2d 283 (1981): police-power standard cited by the AG.
• Indemnity Co. v. Ingram, 290 N.C. 457, 226 S.E.2d 498 (1976): insurance mandate and constitutional limit discussed in the opinion.

Source

• Landing page: https://ncdoj.gov/opinions/availability-of-writing-of-insurance-by-geographical-location/

Original opinion text

• Do insurance companies in general have the option of choosing not to write insurance in certain geographic areas of the State?
• If the answer is yes, are there any limitations placed upon the company?
• Do insurance companies in general have the option of choosing not to appoint agents in certain geographic areas of the State?
• If the answer is yes, are there any limitations placed upon the company?
• Can the General Assembly either require insurance companies to write insurance and appoint agents in all geographic areas of the State or prohibit them from withdrawing from certain geographic areas in the State?

After reviewing the questions presented, we note that questions one through four have previously been addressed in an advisory opinion to Commissioner of Insurance, James E. Long, dated October 27, 1995. Having reviewed the analysis presented in that opinion, we conclude that the opinion remains valid. A copy of the opinion is enclosed for your information, in response to questions one through four.

Your remaining question relates to the authority of the General Assembly. This question was not addressed in the October 27 opinion. Since it is now before us for consideration, our analysis must continue.

"[T]he General Assembly is free to implement legislation as long as that legislation does not offend some specific constitutional provision." Moore v. Knightdale Bd. of Elections, 331 N.C. 1, 5, 413 S.E.2d 541, 543 (1992). "The rule is that a statute or ordinance which curtails the right of any person to engage in any occupation can be sustained as a valid exercise of police power only if it is reasonably necessary to promote the public health, morals, order, safety or general welfare." Butler v. Peters, Comr. of Motor Vehicles, 52 N.C. App. 357, 359, 278 S.E.2d 283, 284 (1981). The legislative power is ". . . subject to the general limitation thereof that the interference with individual liberty, or with the right of an owner of property to use it as he sees fit, must have a reasonable relation to the accomplishment of the legislative purpose and must not be unreasonable in degree, in comparison with the probable public benefit." Indemnity Co. v. Ingram, 290 N.C. 457, 466, 226 S.E.2d 498, 504 (1976). In Indemnity Co. v. Ingram, the Supreme Court of North Carolina held that the General Assembly could not require all insurance companies licensed to write policies of general liability insurance to also write medical malpractice insurance.

In Article 42 of Chapter 58 of the North Carolina General Statutes, the General Assembly has in fact authorized the Commissioner of Insurance to establish mandatory or voluntary risk sharing plans for any kind of insurance not readily available in the voluntary market. This Article expires on July 1, 2001. G.S. 58-42-55. The authority granted to the Commissioner is a legal and valid delegation of legislative authority.

As stated in G.S. § 58-42-1:

(a) If the Commissioner finds, after a hearing held in accordance with Article 3A of Chapter 150B of the General Statutes, that in all or any part of this State, any amount or kind of insurance authorized by G.S. 58-7-15(4) through G.S. 58-7-15(22) is not readily available in the voluntary market and that the public interest requires the availability of that insurance, he may either:

(1) Promulgate plans to provide insurance coverage for any risks in this State that are, based on reasonable underwriting standards, entitled to obtain but are otherwise unable to obtain coverage; or

(2) Call upon insurers to prepare plans for his approval.

G.S. § 58-42-10 describes those required to participate, as follows:

(a) Each plan shall require participation:

(1) By all insurers licensed in this State to write the kinds of insurance covered by the specific plan;

(2) By all agents licensed to represent those insurers for that kind of insurance; and

(3) By every rating organization that makes rates for that kind of insurance.

(b) The Commissioner shall exclude from each plan any person if participation would impair the solvency of that person.

Inherent in the power delegated to the Commissioner of Insurance under Article 42 is a requirement that insurance companies write insurance in various geographical areas of the State.

As noted above, G.S. § 58-42-1 is scheduled to expire on July 1, 2001. We see no legal reason the General Assembly cannot extend this legislation. We also see no legal reason the General Assembly could not exercise directly the power it has already delegated to the Commissioner of Insurance provided it makes appropriate findings of the need for insurance in those areas, and further provided that the insurers are licensed to write the kinds of insurance covered. See Indemnity Co. v. Ingram.

We trust that this advisory opinion will be helpful. If you have further questions regarding this matter, please do not hesitate to contact us.

Sincerely,

Reginald L. Watkins Senior Deputy Attorney General

Ted R. Williams Special Deputy Attorney General