Insurance consumers are urged to be cautious about the status of the company they are buying insurance from. An insurance company writing business in North Carolina can be either licensed or a nonadmitted insurer.
A licensed company is subject to the Department’s full regulatory authority: In most cases, when insurance is purchased from licensed companies consumers are protected in the event of an insurer’s bankruptcy. This protection is available to North Carolina residents through guaranty associations to the extent provided for in North Carolina laws.
When insurance is not available from a licensed insurer, a consumer may purchase insurance through a licensed surplus lines broker which is written by a nonadmitted insurer that is not licensed but has been determined to be an eligible surplus lines insurer. The consumer should be aware that the Department has limited regulatory authority over eligible surplus lines insurers and that there is no guaranty association protection. In these situations, the consumer should confirm the status of the insurance company.
Although only authorized companies or eligible surplus lines insurers may be engaged in the business of insurance in this state, unauthorized activity does occur from time to time. If a consumer is uncertain about a company’s status, please contact us at 855-408-1212.
It is equally important that insurance is purchased from a company that is financially sound. Financial ratings of companies can be obtained by visiting the public library and reviewing recent reports from rating agencies such as AM Best, Demotech, Duff & Phelps, Moody’s, Standard & Poor’s, or Weiss Research. A consumer can also visit our office and view the latest financial statements of any authorized company. The Department is prohibited from giving opinions about the financial condition of insurers. We will, however, provide basic financial data on any insurer to insurance consumers.
Finally, not all insurance entities are the same. Insurance purchased from certain entities may result in a subsequent assessment to the consumer because of poor performance by the entity. In these situations, the consumer may be jointly and severely liable in the event of the entity’s bankruptcy. The consumer should ask about the business form of the company – is it a nonassessable insurance company or some other form of risk-bearing entity, and what the difference means to you.
If you have questions, the Consumer Services Division of the Department of Insurance is here to help.
North Carolina Department of Insurance
325 N. Salisbury Street
Raleigh, NC 27603