February 4, Joint Appropriations Subcommittee on General Government. Department: Statutory Authority: Agency Mission: Divisions:

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1 February 4, 2011 Joint Appropriations Subcommittee on General Government Department: Statutory Authority: Agency Mission: Divisions: 1. Name: North Carolina Department of Insurance Constitution of North Carolina Article III, Section 7 and General Statutes of North Carolina Chapter 58 The North Carolina Department of Insurance serves the citizens of North Carolina through consumer protection and education, safety training and promotion, and regulation of specified activities and industries. This is accomplished by: Assuring an optimum marketplace in which consumers can readily purchase fairly priced insurance products from sound, responsive entities; Educating the public in loss prevention, safety awareness and developing life safety standards; Maintaining a well-managed, fiscally-responsible organization staffed by knowledgeable, courteous, professional employees. At all times, the affairs of the department are conducted in an open, ethical manner and in the best interests of the public. The Department of Insurance is made up of six groups Company Services, Technical Healthcare Services, Public Services, Ombudsman Services, Administrative Services and the Office of the State Fire Marshal (OSFM). Company Services Group The Company Services Group is comprised of the Actuarial Services, Financial Evaluation, Regulatory Action Divisions and RAD Trust. The Actuarial Services Division assists in the review of company and bureau rate filings and rate related issues. The division also conducts actuarial studies and special projects to support financial analysis and examination work as well as other areas of the Department. The Financial Evaluation division is comprised of the Company Admissions, Financial Analysis, Financial Examination, and Special Entities sections. This division regulates and monitors all authorized insurers; entities that selfinsure for workman s compensation; certain third party administrators; managing agents; accredited reinsurers; professional employer organizations (PEOs) and continuing care retirement communities for compliance with the solvency laws of the state. The division is responsible for working with all insurers and related entities in order to ensure that they comply with state laws requiring the payment of premium taxes and other fees which come to the state. The Regulatory Actions Division administers the estates of all insurance entities placed into rehabilitation or liquidation in North Carolina. They are also responsible for monitoring all troubled insurance entities, including supervisions and work-outs. 1

2 The RAD Trust works with the Regulatory Actions Division in administering the estates of all insurance entities placed into rehabilitation or liquidation in NC. 2. Name: 3. Name: Technical Healthcare Services Group The Technical Healthcare Services Group is comprised of Life & Health, Market Regulation and Property & Casualty Divisions. The Life & Health Division is responsible for the review and approval of rate, rules and policy form filing submitted by life and health insurance companies and issuance of license for third party administrators. They monitor and analyze local, state and national life and health trends. They also monitor and regulate certain activities of managed care entities such as HMO s (Health Maintenance Organization), PPO s (Preferred Provider Organization) and MEWA s (Multiple Employer Welfare Arrangements) assuring that company procedure and operational policies meet compliance requirements with NC. The Market Regulation Division monitors insurance company market practices, especially as they affect consumers. They conduct field examination on a regular rotation so that all insurance companies domiciled in NC are examined on at least a five-year cycle. Property & Casualty Division licenses rating organizations, advisory organizations and joint underwriting associations, along with reviewing rate, rule and policy form filing made by these entities. Also, they review the rates, rules and policy form filings for the NC Rate Bureau, NC Reinsurance Facility, NC Insurance Underwriting Association (Beach Plan), NC Joint Underwriters Association (Fair Plan) and licensed property and casualty insurance companies. Public Services Group The Public Services Group is comprised of the Agent Services, Consumer Services and the Investigations Divisions. The Agent Services Division is responsible for the regulation of all agents, brokers, limited representatives, appraisers, adjusters, premium finance companies, collection agencies, motor clubs, bail bondsmen, surety agents and bail bond runners authorized to do business in North Carolina. This includes prelicensing education, continuing education, agency examinations and administrative actions. The division is responsible for notifying and working with agents, agent companies, and others that are monitored and controlled by the state Department of Insurance concerning compliance with state insurance regulations, and with the renewal of licenses and the payment of licenses and fees which are to be paid to the state. The Consumer Services Division assists North Carolina consumers by answering insurance questions and resolving their insurance problems. A staff of consumer specialists advises and acquaints consumers with courses of action they may pursue to resolve their particular insurance problem. The Criminal Investigations Division conducts criminal investigations of 2

3 insurance- related crimes committed by policyholders, claimants, insurance producers and Insurance companies. The division also conducts criminal investigations involving bail bonding, collection agency and premium finance companies. 4. Name: 5. Name: Ombudsman Services Group The Ombudsman Services Group is comprised of Health Care Review, the Seniors Health Information Insurance Programs (SHIIP) and the North Carolina Consumer Assistance Program (NCCAP). The majority of these positions are federally funded. The Healthcare Review Program (HCR) offers external review services, which consists of helping consumers receive an independent medical review of a health plan denial and offers another option for resolving coverage disputes between a covered person and their Insurer. The Seniors Health Insurance Information Program (SHIIP) provides health insurance information, counseling and assistance to Medicare beneficiaries and/or family members. The program is coordinated in each county through an existing human service agency such as Council on Aging office, Senior Center or a Cooperative Extension office. There are 110 SHIIP Coordinating sites in the state beginning in October 2005, these site setup regular counseling schedules and clinics staffed by SHIPP volunteers for person needing information and assistance on Medicare Part D. SHIIP communications specialists are available five days a week to answer insurance questions. North Carolina Consumer Assistance Program (NCCAP) assist consumers with the filing of complaints and appeals, provide information and assistance with the external appeal process, collect, track, and quantify problems and inquiries encountered by consumers, educate consumers on their rights and responsibilities with respect to group health plans and health insurance coverage, and will assist consumers with enrollment in group health plan or health insurance coverage by providing information, referrals, and assistance. This office will also collect and report data to the Secretary of the U.S. DHHS on the types of problems and inquiries encountered by consumers. Administrative Services Group The Administrative Services Group is responsible for the management of all divisions in the Department as well as the staff responsibilities of personnel, controller's office, media/public relations, legal department, information systems, legislative liaison and regional offices. The Administrative Group is responsible for the management of all divisions in the Department as well as the staff responsibilities of personnel, controller's office, media/public relations and legislative liaison. Personnel responsible for recruitment and staffing and all related personnel duties. The Controller Office is responsible for all the financial duties for the department. 3

4 Public Relations Office is responsible for all public affairs, events and media print and electronic. The Legal Department provides internal legal advice to all parts of the department. It acts as liaison with the AG s Office and acts as hearing officer in administrative hearings. They are also involved with and litigate hearings on all statutory Rate Bureau rate filing, and administrative matters including license suspension/revocation and wrong doings by insurance companies. The ITS department takes care of the entire department IT needs. The department has two regional offices western (29 western most counties) and eastern (32 eastern most counties) offices These offices serve their corresponding counties for consumer complaints, agent inquires, inquires on manufactured housing, state building codes, fire and rescue, SHIIP. They serve as the link to the Raleigh Office. 6. Name: The Office of State Marshal (OSFM) The Commissioner of Insurance also serves as the State Fire Marshal by General Statute. The Office of State Marshal (OSFM) serves in a variety of functions. OSFM administers and enforces life safety standards throughout the state, promotes risk management practices throughout state government and maintains a sound insurance program for state agencies. OSFM is comprised of the following sixdivisions: Engineering and Codes; Manufactured Building; Risk Management; Fire and Rescue Training and Inspections; Programs, Prevention and Grants and the Fire and Rescue Commission. The Engineering Division is comprised of seven sections: code consultant, state property plan review, and mechanical, home inspection, inspector certification building code council and handicapped accessibility. This division administers the state building code and provides staff to the North Carolina Building Code Council, the North Carolina Code Official Qualifications Board and the Home Inspectors Licensing Board. The Manufactured Building Division works to assure that construction standards for manufactured homes are maintained and that warranty obligations under state law are met. The division monitors handling of consumer complaints, licenses the makers of manufactured homes, dealers, sales representatives and setup contractors and acts as staff for the North Carolina Manufactured Housing Board. The Risk Management Division administers the self-insurance funds for state owned property and vehicles, and procures from private insurance companies other types of insurance needed by the state agencies and universities. This division inspects all state-owned facilities for fire and life safety and inspects all new state-owned facilities for Electrical Code compliance. Also, the division assists local governments with property and casualty insurance programs and makes available professional liability coverages for law enforcement officers, public officials and employees of any political subdivision in the State. This division also provides staff, administration, and research services to the Public Officers and Employees 4

5 Liability Insurance Commission (POELlC). The Fire and Rescue Training and Inspection Division trains fire departments, rescue squads, and instructors to improve fire and rescue protection statewide. The Division provides special schools, development of training programs and teaching outlines, and specialist training directed to instructors. This division provides continuous upgrade to the training of our states emergency workers. The Program Development, Prevention, and Grants Division administers the Firemen's Relief Fund, Rescue Relief Fund, assists all divisions within the OSFM with development of programs and brochures and provides direction and support for injury prevention programs statewide. The division also administers matching dollar-for-dollar grants to volunteer fire departments and rescue squads and offers fire prevention education in the public schools. The Fire and Rescue Commission Division serves as staff to the Fire and Rescue Commission and handles the state's voluntary certification system comprised of 16 levels and 40,000 individuals, as well as the State Fire and Rescue Incident Reporting System. Fiscal Year Budget and Personnel (General Fund only): Budget Total Requirements : $38,854,553. Receipts: $7,891,997. General Fund Appropriation: $30,962,556. Personnel Total Positions: Receipted Positions: General Fund Supported Positions: Note: All positions within DOI are 100% funded by (non-tax) receipts. Some of the positions are initially appropriated and the appropriations are then refunded by the Department. The remainders of the agency positions are funded by non-state grants. Even if positions are abolished, the funds remaining are dedicated funds and cannot be transferred to the State General Fund. DOI does receive some appropriations but all of the appropriations are paid back (plus interest) to the state s general fund. 5