North Dakota's insurance law is Title 26.1 of the North Dakota Century Code (N.D.C.C.). The rules are in Title 45 of the North Dakota Administrative Code. Two features set North Dakota apart and get tested:

• the insurance commissioner is elected
• workers' compensation is a monopolistic state fund, Workforce Safety & Insurance

General regulatory concepts are covered in the national Insurance Regulation guide. This guide covers North Dakota's own rules, with citations.

About the exam

North Dakota's exams are given by PSI (PSI Services LLC) under contract with the Department.

• No combined exams. Life and A&H are separate exams, and so are property and casualty.
• Personal Lines is its own license with its own reduced exam. A full P&C license also covers personal lines sales (N.D. Admin. Code 45-02-02-04).
• An applicant for the surety line takes the casualty exam.
• PSI may include a few unscored experimental items.
• Candidates may retest an unlimited number of times, paying the fee each time.
• A passing score is valid for one year (45-02-02-03).
• No prelicensing course is required in North Dakota. Candidates must pass the PSI exam for each line.
• After passing, apply through NIPR on the NAIC uniform application. The NPN serves as the license number.

The regulator

• The insurance commissioner is elected by the voters (N.D. Const. art. V, sec. 2) for a four-year term.
• The commissioner sees that the insurance laws are faithfully executed. The commissioner reports insurer violations to the attorney general (26.1-01-03).
• Examinations. Every licensed insurer is examined at least once every five years (26.1-03-19.2). The commissioner may examine the books of insurers and producers at the insurer's expense (26.1-26-48).
• Fines. Administrative fines of up to $10,000 per violation of Title 26.1 (26.1-01-03.3), plus restitution of direct financial loss. The commissioner can't decide whether a policy claim is owed.
• Cease and desist (26.1-01-03.1). A person may request a hearing in writing within 30 days of the order. The hearing is held within 10 days of the request. With no request, the order becomes permanent. A person who doesn't appear is in default.
• Injunctions are sought in the district court of Burleigh County (26.1-01-03.2).
• Where no specific penalty applies, a violation of Title 26.1 is an infraction (26.1-01-10).
• Premium tax (26.1-03-17): 2% on life premiums, 1.75% on accident and health and all other lines.
• An insurer needs a certificate of authority from the commissioner to transact insurance. North Dakota imposes no resident countersignature requirement, except as a reciprocal measure (26.1-11-07).

Producer licensing

Definitions (26.1-26-02)

• An insurance producer is a person required to be licensed to sell, solicit or negotiate insurance.
• Solicit means attempting to sell, or urging a person to apply for a particular kind of insurance from a particular company.
• Negotiate means conferring with or advising a buyer about the terms of a particular contract.
• The license by itself creates no authority to bind an insurer.

Who the producer represents

• A producer who solicits an application represents the insurer in a dispute (26.1-26-06).
• A producer not appointed by the insurer where the policy is placed represents the insured (26.1-26-07).
• An insurer that accepts business from an unlicensed person thereby acknowledges that person as its producer (26.1-26-05).

Lines of authority (26.1-26-11)

• Life includes fixed and indexed annuities. Variable products are a separate line that requires a securities license first (45-02-02-11).
• Accident and health or sickness includes disability.
• Property covers direct and consequential loss to property.
• Casualty covers legal liability.
• Personal lines covers P&C sold to individuals and families for noncommercial purposes.

Qualifications (26.1-26-13.3, 26.1-26-15)

• Age 18.
• Competence, trustworthiness, financial responsibility, and good personal and business reputation.
• A criminal history record check, paid for by the applicant.
• A person convicted of a felony involving dishonesty or breach of trust may not take part in the business of insurance (26.1-02.1-02.1).
• Applicants who don't answer a Department request within 20 days may have the application treated as withdrawn. Application fees aren't refunded.

Residency (26.1-26-19, 26.1-26-25)

• A person may be a resident by living in North Dakota or keeping a principal place of business there.
• A resident license is void if the producer also holds a resident license in another state.
• Producers moving in apply within 90 days with no exam for lines already held.

Nonresidents

• They're licensed on reciprocity (26.1-26-20).
• They report a move to a new home state within 30 days.
• They meet CE by meeting their home state's requirement.
• Their license may be suspended without a hearing if the resident license is revoked (26.1-26-42.1).

Business entities designate a licensed principal producer and report changes in that person's status within 10 working days. An entity may hold only the lines its principal producer holds.

Temporary licenses (26.1-26-26) last up to 180 days without an exam. They're issued to service business after a producer's death, disability or military service. They're never issued just because someone failed the exam.

License term and continuing education

• License term. A North Dakota license continues in perpetuity unless it's suspended, revoked or surrendered, the licensee dies, or the licensee fails CE or the biennial continuation filing and fee (26.1-26-31).
• Continuation. It's due by the last day of the birth month following each two-year anniversary of issuance. The Department allows a 90-day window to renew. Missing it cancels the license.
• CE (26.1-26-31.1):
  • 24 hours each two-year period, including 3 hours of ethics.
  • Up to 12 excess hours carry over.
  • A credit hour is 60 minutes, with at least 50 minutes of instruction.
  • Prelicensing, prospecting and sales-skills courses don't count.
  • Active participation in an insurance organization can earn up to 4 hours per period, no more than 2 a year, and never toward ethics.
• Exemptions.
  • A producer who was 62 or older on January 1, 2010, and whose age plus years of licensure equal 85.
  • Producers licensed only for credit, travel, title, surety, bail or legal expense.
• Extensions and records.
  • An extension of up to one year must be requested 30 days before the period ends.
  • Licensees keep certificates for one year after the reporting deadline. The producer, not the provider, is responsible for the CE record.
• Product training:
  • one-time 4-hour annuity course, verified by the insurer (26.1-34.2-03.1)
  • 8 hours of long-term care training, then 4 hours every two years

Appointments and terminations

• A producer may not act as an insurer's agent unless appointed (26.1-26-13.1). The insurer files within 30 days from the later of the agency contract date or the first application submitted.
• Appointments end if renewal fees aren't paid before May 1 (26.1-26-32).
• Terminations (26.1-26-34):
  • The insurer notifies the commissioner within 30 days after the effective date, with or without cause.
  • The insurer sends the producer a copy within 15 days. For-cause copies go by certified mail or overnight carrier.
  • The producer may file comments within 30 days.
  • Reports made without actual malice are immune.
• P&C agency terminations (26.1-39-22). After an agency contract ends, the insurer must let the producer renew business for one year, with 60 days' notice of nonrenewal for business that fails underwriting. This doesn't apply if the producer failed to pay over money owed after written demand.

Reporting and conduct

• Monitoring the regulatory email address on file is the producer's sole responsibility (26.1-26-33.1).
• Assumed names must be reported before use (26.1-26-25.1).
• Premiums are fiduciary funds. Misappropriating or converting them is a ground for discipline (26.1-26-42(10)).
• Commissions go only to licensed persons. Renewal commissions may go to someone who was licensed at the time of sale (26.1-26-04).
• Service fees (26.1-26-04.1). A producer may charge a disclosed, signed fee, kept 5 years. Fees may not be charged on personal lines accounts: homeowners, personal auto, personal life and health. A disclosed, agreed fee for paying agency-billed premiums by credit card is allowed.
• Controlled business (26.1-26-53). A license may not be used mainly to insure the licensee's own, family or employer interests. That's presumed when such commissions exceed 35% of all commissions in 12 months.
• Client loans. A producer may not borrow from a person met through insurance business, or sold a policy, within the past 10 years. Banks, immediate family and prior approval are the exceptions (45-02-02-14.1).
• Consultants must serve the client alone and use a signed written agreement kept 2 years. A consultant license can't be held together with a producer license in any line (26.1-26-35, 26.1-26-41).
• Lawsuits against licensees must be filed within the earlier of 2 years from discovery or 6 years from the service (26.1-26-51).
• Acting without a license is willfully a Class C felony (26.1-26-03).

Discipline (26.1-26-42, 26.1-26-50)

• Grounds include:
  • forgery
  • selling unnecessary or excessive coverage
  • knowingly accepting business from an unlicensed person
  • contacting a complainant to get a complaint dropped
  • discipline in another state, except for CE noncompliance
  • not complying with a child support order
• Civil fines run up to $10,000 per violation.
• A denied applicant may request a hearing within 30 days. It's held within 30 days of the request (26.1-26-40).

Unfair trade practices (26.1-04)

• The listed practices (26.1-04-03) include:
  • misrepresentation, including inducing a lapse or surrender, which is twisting
  • false advertising, including calling insurance "free"
  • defamation
  • boycott, coercion and intimidation
  • false financial statements
  • stock as an inducement
  • unfair discrimination, including consideration of a person's status as a domestic abuse victim
  • refusing to insure solely because of race, color, creed, sex or national origin
  • blindness-based refusals
• Refunds. Unearned premium must be refunded within 30 days of cancellation.
• Rebating (26.1-04-06):
  • Both the producer who gives and the insured who accepts a rebate violate the law.
  • Gifts, meals or entertainment are allowed up to $100 in retail value per person per year. A "person" includes the client's spouse. Gift cards for specific goods (gas, a car wash) are allowed. Cash, cash cards and premium discounts aren't.
  • A gift can't be conditioned on a quote or a purchase.
  • Charitable donations in any amount are allowed if they aren't an inducement.
  • Value-added loss-control or health services related to the coverage are allowed.
• Lenders may set reasonable requirements for the insurer used, but can't require a particular company or producer (26.1-04-04).
• Unfair claim practices (26.1-04-03(9)) are violations when done without just cause with a frequency showing a general business practice. Claims staff pay can't be based on denials or claim quotas.
• Penalties (26.1-04-13, 26.1-04-14):
  • up to $1,000 per act and $10,000 in total
  • $5,000 per act and $50,000 in six months if the person knew or should have known
  • up to $10,000 per violation of a final cease and desist order

Fraud (26.1-02.1)

• Duty to report. Anyone in the business of insurance who knows of or reasonably believes there is a fraudulent insurance act must report it to the commissioner. Reporters acting without malice are immune.
• Criminal penalties are graded by value:
  • Class C felony for more than $1,000 up to $10,000
  • Class B for more than $10,000 up to $50,000
  • Class A above $50,000
• Prosecution deadlines. Felony prosecutions start within 3 years of discovery.
• Administrative penalties run up to $10,000 per act, plus restitution.
• Rewards. People required to report, such as producers, can't collect fraud rewards.
• Fraud unit investigators have peace officer arrest powers.

Privacy and federal rules

• North Dakota's privacy rule is opt-in. Insurers need the consumer's authorization before sharing nonpublic personal information with nonaffiliated third parties. An authorization lasts no longer than 24 months (45-14-01).
• Federal rules on the exam:
  • FCRA permits consumer reports for insurance underwriting and requires adverse-action notices.
  • GLBA requires an opt-out chance under federal law.
  • Telemarketing calls are limited to 8 a.m. to 9 p.m.
  • CAN-SPAM opt-outs must be honored within 10 business days.

Surplus lines

• A surplus lines producer must hold a producer license for the lines written (26.1-26-17).
• Placement is allowed with an eligible surplus lines insurer when the full coverage isn't available from admitted insurers (26.1-44-03).
• The tax is 1.75% of gross premium and fees (26.1-44-03.1).

Guaranty associations

Common exam traps

• The commissioner is elected for four years.
• The vendor is PSI. Each exam is 110 items in 150 minutes, and 70% passes.
• No prelicensing education is required. Scores are valid for one year.
• CE is 24 hours with 3 ethics, and up to 12 hours carry over.
• Appointments are filed within 30 days, and renewal fees are due before May 1.
• Gifts are allowed up to $100 per person per year, but never cash.
• Controlled business is presumed above 35% of commissions.