[Rev. 10/29/2015 1:31:51 PM]

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ê1971 Statutes of Nevada, Page 1553ê

 

CHAPTER 659, AB 628

Assembly Bill No. 628–Committee on Transportation

CHAPTER 659

AN ACT relating to vehicle licensing and registration; amending provisions relating to registration periods for vehicles, special permits for dealers and nonresidents, the issuance of special plates for antique vehicles, special parking permits for the physically handicapped, registration fees and fees for duplicate certificates and license plates; changing the registration period of mobile homes; and providing other matters properly relating thereto.

 

[Approved May 5, 1971]

 

The People of the State of Nevada, represented in Senate and Assembly,

do enact as follows:

 

      Section 1.  NRS 482.206 is hereby amended to read as follows:

      482.206  1.  Except as provided in subsection 4, every passenger car and motorcycle, and every trailer or semitrailer having an unladened weight of 3,500 pounds or less, except a converter dolly, shall, and every motortruck having an unladened weight of 5,000 or less pounds may be registered for a period of 12 consecutive months [from the month of the] beginning the first day of the month after the first registration by the owner in this state.

      2.  Every mobile home shall be registered [on a fiscal year basis.] for a period of 1 year commencing July 1 and ending June 30 of the following year.

      3.  Every other vehicle shall be registered on a calendar year basis.

      4.  Upon the application of the owner of a fleet of vehicles of a type referred to in subsection 1, the director may permit such an owner to register such fleet on a calendar year basis.

      Sec. 2.  NRS 482.280 is hereby amended to read as follows:

      482.280  1.  The registration of every vehicle referred to in subsection 1 of NRS 482.206 shall expire at midnight on the last day of the last month of the registration period. The registration of every vehicle referred to in subsection 3 of NRS 482.206 shall expire at midnight on December 31. The department shall mail to each holder of a valid registration certificate an application form for renewal registration for the following registration period. Such forms shall be mailed by the department in sufficient time to allow all applicants to mail the applications to the department and to receive new registration certificates and license plates, stickers, tabs or other suitable devices by mail prior to expiration of subsisting registrations. An applicant may, if he chooses, present the application to any agent or office of the department.

      2.  The department shall insert in each application form mailed as required by subsection 1 of this section the amount of privilege tax to be collected for the county under the provisions of NRS 482.260.

      3.  An owner who has made proper application for renewal of registration previous to the expiration of the current registration but who has not received the number plate or plates or registration card for the ensuing registration period is entitled to operate or permit the operation of such vehicle upon the highways upon displaying thereon the number plate or plates issued for the preceding registration period for such time as may be prescribed by the department as it may find necessary for issuance of such new plate or plates or registration card.


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ê1971 Statutes of Nevada, Page 1554 (Chapter 659, AB 628)ê

 

      4.  [Registration of a truck or trailer having an unladened weight of 3,650 pounds or more for a half year shall be permitted if the applicant files with the department an affidavit showing that such truck or trailer has not in fact been operated on the highways in this state during the first 6 months of the registration period.] The registration fees for a motor truck and truck tractor, and for any trailer or semitrailer having an unladened weight of 3,501 pounds or more shall be reduced by one-twelfth for each calendar month which has elapsed from the beginning of each calendar year, the fee so obtained, rounded to the nearest one-half dollar, but in no event to be less than $5.50.

      [5.  No fee shall be required for the month of December for a new vehicle required to be registered on the calendar year registration period which is delivered in good faith during that month, and the department shall register such new vehicle for the next succeeding registration period.]

      Sec. 3.  NRS 482.3212 is hereby amended to read as follows:

      482.3212  1.  The department shall issue to any dealer or rebuilder upon request, and upon payment of a fee of $8.25, a special permit, in a form to be determined by the department, for movement of any vehicle for the purposes of sale outside the State of Nevada, or for movement outside the state of any vehicle purchased by a nonresident. The permit shall be affixed to the vehicle to be so moved in a manner and position to be determined by the department, and shall expire [5] 15 days after issuance.

      2.  The department may issue a permit to a Nevada resident who desires to move an unregistered vehicle within the state upon the payment of a fee of $8.25. Such permit shall be valid for 24 hours.

      Sec. 4.  (Deleted by amendment.)

      Sec. 5.  NRS 482.384 is hereby amended to read as follows:

      482.384  1.  The department shall issue a special parking permit on and after January 1, 1968:

      (a) To any person holding a valid [operator’s] driver’s license issued pursuant to this chapter, who owns a motor vehicle, other than a commercial vehicle, and has a permanent physical handicap which impairs his mobility when not in a motor vehicle.

      (b) To any person who:

             (1) Does not hold a valid [operator’s] driver’s license; or

             (2) Owns or does not own a motor vehicle; and

             (3) Has a permanent physical handicap which impairs his driving ability and impairs his mobility when not in a motor vehicle; and

             (4) Has need to be driven by another person to a destination in a motor vehicle.

      2.  The department shall make such rules and regulations as are necessary to ascertain eligibility for such a parking permit.

      3.  Applications for a special parking permit shall be made to the department on forms prepared and provided by the department which shall require such information as is necessary to determine the applicant’s eligibility for such a permit, and shall be accompanied by:

      (a) A certificate from a licensed physician describing the extent of the applicant’s disability; and

      (b) Payment of a permit fee of $1.

      4.  Only one special parking permit may be issued to any one eligible applicant.


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ê1971 Statutes of Nevada, Page 1555 (Chapter 659, AB 628)ê

 

      5.  Each permit issued pursuant to this section shall expire on December 31 of the year of its issue.

      6.  No permit shall be valid for parking in any area on a highway where parking is prohibited by law.

      Sec. 6.  NRS 482.480 is hereby amended to read as follows:

      482.480  There shall be paid to the department for the registration or transfer of registration of motor vehicles, trailers and semitrailers, fees according to the following schedule:

      1.  For each stock passenger car, bus and each reconstructed or specially constructed passenger car, regardless of weight or number of passenger capacity, a registration fee of $5.50.

      2.  For every motorcycle, the sum of $3.50.

      3.  For every [truck] motortruck having an unladened weight of 3,500 pounds or less, as shown by a public weighmaster’s certificate, a registration fee of $9.

      4.  For every trailer or semitrailer having an unladened weight of 1,000 pounds or less, a flat registration fee of $2.50. For every trailer having an unladened weight of more than 1,000 pounds, but not more than 3,500 pounds, a flat registration fee of $5.50. For every trailer or semitrailer having an unladened weight of more than 3,500 pounds and less than 4,000 pounds, fees according to the following schedule:

 

3,501 to and including 3,549 pounds....................................................                $8

3,550 to and including 3,649 pounds....................................................                10

3,650 to and including 3,749 pounds....................................................                12

3,750 to and including 3,849 pounds....................................................                14

3,850 to and including 3,949 pounds....................................................                16

3,950 to and including 3,999 pounds....................................................                18

 

      5.  For every motortruck having an unladened weight of more than 3,500 pounds and less than 5,050 pounds, fees according to the following schedule:

 

3,501 to and including 3,549 pounds............................................................      $10

3,550 to and including 3,649 pounds............................................................        12

3,650 to and including 3,749 pounds............................................................        14

3,750 to and including 3,849 pounds............................................................        16

3,850 to and including 3,949 pounds............................................................        18

3,950 to and including 3,999 pounds............................................................        20

4,000 to and including 5,049 pounds............................................................        25

 

      6.  For every trailer or semitrailer having an unladened weight of 4,000 pounds or more, except mobile homes, [truck-tractor and semitrailer,] and for every [truck] motortruck having an unladened weight of 5,050 pounds or more, 50 cents per 100 pounds, or major fraction thereof, of unladened weight as shown by a public weighmaster’s certificate. At the time of weighing, each vehicle shall have in place each and every accessory and appliance belonging to and used on such vehicle in the transportation of property. Whenever a camper is attached to a motortruck the camper shall be considered as a load and the fees imposed by this section upon the motortruck shall be based on the unladened weight of the motortruck, exclusive of the camper.

      7.  For every mobile home, the registration fee shall be $5.50.


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ê1971 Statutes of Nevada, Page 1556 (Chapter 659, AB 628)ê

 

      8.  Except as provided in subsection 9, for each transfer of registration the fee shall be $2.

      9.  The fee for transfer of a registration to any motor vehicle enumerated in subsection 6 shall be $2 plus the excess, if any, of the fee which would have been payable for an original registration of such vehicle over the fee paid for registration of the vehicle from which the registration is transferred.

      10.  For each stock passenger car, bus, reconstructed or specially constructed passenger car, motorcycle, motortruck [, truck] and truck tractor there shall be an additional fee of [$1,] $1 for each registration, which shall be placed in a special fund to be used only for the purposes specified in NRS 481.145.

      Sec. 7.  NRS 482.500 is hereby amended to read as follows:

      482.500  Whenever any duplicate certificate of registration or ownership, decal or number plate [shall be lost or destroyed and a duplicate thereof shall be] is issued upon application the following fees shall be paid:

 

For a certificate of registration or ownership........................................           $2.00

For every number plate............................................................................             2.00

For every decal..........................................................................................             1.00

 

      Sec. 8.  NRS 482.515 is hereby amended to read as follows:

      482.515  1.  Whenever any vehicle shall be operated upon the public highways of this state without there having been paid therefor the registration or transfer fee required by this chapter, such fee shall be deemed delinquent; but in the case of vehicles purchased at a time when it is impossible to secure registration, registered dealers shall be empowered to affix a temporary permit, on a form to be provided by the department, attesting to such fact, which shall protect the purchaser of the vehicle for a period not to exceed [5] 10 days from the date of purchase, which date must be legibly affixed to the permit.

      2.  If such registration fee shall not be paid [within 30 days after the same becomes delinquent,] by the end of the expiration month, a penalty of $3 shall be added thereto. If such delinquency continues, and if the person liable for such fee has knowledge of the delinquency, a penalty of $3 shall be added for each 30 days or major fraction thereof during which the delinquency continues. The provisions of this section do not apply to vehicles which come within the provisions of sections 138 to 150, inclusive, of [this act.] chapter 383, Statutes of Nevada 1971.

      Sec. 9.  This act shall become effective at 12:01 a.m. on July 1, 1971.

 

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ê1971 Statutes of Nevada, Page 1557ê

 

CHAPTER 660, AB 416

Assembly Bill No. 416–Committee on Commerce

CHAPTER 660

AN ACT relating to insurance and the insurance business; enacting the Nevada Insurance Code, which, among other things, defines words and terms; provides powers and duties of the commissioner of insurance; imposes fees and taxes; regulates agents, brokers, solicitors, adjusters, motor vehicle physical damage appraisers, analysts, bail bondsmen, motor clubs, nonprofit hospital and medical and dental service corporations, fraternal benefit societies, reciprocal insurers and rates and rate service organizations; authorizes insurers and restricts unauthorized insurers; provides for the disposition of unclaimed funds of life insurers; specifies the kinds of insurance and the limits of risk; provides for reinsurance and surplus lines; regulates casualty, health, property, surety, title and life insurance and annuity contracts; provides for the formation, capitalization and financing of domestic stock and mutual insurers, their assets, liabilities, investments, deposits and powers; regulates and prohibits certain trade practices, fraud and insider trading of equity securities; provides for continuity of management of insurers during emergencies and the conservation, rehabilitation and liquidation of delinquent insurers; and provides penalties; repealing chapters 679 to 688, inclusive, and chapters 690 to 696, inclusive, of NRS, relating to insurance and the insurance business; and providing other matters properly relating thereto.

 

[Approved May 5, 1971]

 

The People of the State of Nevada, represented in Senate and Assembly,

do enact as follows:

 

 

NEVADA INSURANCE CODE

 

CHAPTER 1

 

SCOPE AND DEFINITIONS

 

      Section 1.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 2 to 19, inclusive, of this act.

 

SHORT TITLE.

 

      Sec. 2.  This Title shall be known and may be cited as the Nevada Insurance Code.

 

 

DEFINITIONS.

 

      Sec. 3.  As used in this code, unless the context otherwise requires, the words and terms defined in sections 4 to 14, inclusive, of this act shall have the meanings ascribed to them in sections 4 to 14, inclusive, of this act.

 

 

“AUTHORIZED,” “UNAUTHORIZED” INSURER DEFINED.

 

      Sec. 4.  1.  An “authorized” insurer is one duly authorized to transact insurance in this state under a subsisting certificate of authority issued by the commissioner.

      2.  An “unauthorized” insurer is one not so authorized.


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ê1971 Statutes of Nevada, Page 1558 (Chapter 660, AB 416)ê

 

“BONA FIDE RESIDENT” DEFINED.

 

      Sec. 4.1.  “Bona fide resident” means a person who actually resides in this state with domiciliary intent.

 

 

“CODE” DEFINED.

 

      Sec. 5.  “Code” means the Nevada Insurance Code.

 

 

“COMMISSIONER” DEFINED.

 

      Sec. 6.  “Commissioner” means the commissioner of insurance.

 

 

“DIRECTOR” DEFINED.

 

      Sec. 7.  “Director” means the director of the department of commerce.

 

 

“DIVISION” DEFINED.

 

      Sec. 8.  “Division” means the insurance division of the department of commerce.

 

 

“DOMESTIC,” “FOREIGN,” “ALIEN” INSURER DEFINED.

 

      Sec. 9.  1.  A “domestic” insurer is one formed under the laws of Nevada.

      2.  A “foreign” insurer is one formed under the laws of any jurisdiction other than this state.

      3.  An “alien” insurer is one formed under the laws of any country other than the United States of America or any of its states.

      4.  Except where distinguished by context, “foreign” insurer includes also “alien” insurer.

 

 

“INSURANCE” DEFINED.

 

      Sec. 10.  “Insurance” is a contract whereby one undertakes to pay or indemnify another as to loss from certain specified contingencies or perils, called “risks,” or to pay or grant a specified amount or determinable benefit in connection with ascertainable risk contingencies, or to act as surety.

 

 

“INSURER” DEFINED.

 

      Sec. 11.  “Insurer” includes every person engaged as principal and as indemnitor, surety or contractor in the business of entering into contracts of insurance.


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ê1971 Statutes of Nevada, Page 1559 (Chapter 660, AB 416)ê

 

“PERSON,” “INDIVIDUAL” DEFINED.

 

      Sec. 12.  1.  “Person” includes an individual, association, organization, society, reciprocal insurer, partnership, firm, syndicate, business trust, corporation and every legal entity.

      2.  An “individual” is a natural person.

 

 

“STATE” DEFINED.

 

      Sec. 13.  When used in context signifying a jurisdiction other than the State of Nevada, “state” means any state, district, commonwealth, territory or possession of the United States of America, and the Panama Canal Zone.

 

 

“TRANSACTING INSURANCE” DEFINED.

 

      Sec. 14.  In addition to other aspects of insurance operations to which provisions of this code by their terms apply, “transact” with respect to a business of insurance includes any of the following, by mail or otherwise or whether or not for the purpose of profit:

      1.  Solicitation or inducement.

      2.  Negotiations.

      3.  Effectuation of a contract of insurance.

      4.  Transaction of matters subsequent to effectuation and arising of such a contract.

 

 

PURPOSES; CONSTRUCTION.

 

      Sec. 15.  1.  The purposes of this code are to:

      (a) Protect policyholders and all having an interest under insurance policies;

      (b) Implement the public interest in the business of insurance;

      (c) Provide adequate standards of solidity of insurers, and of integrity and competence in conduct of their affairs in the home offices and in the field;

      (d) Improve and thereby preserve state regulation of insurance;

      (e) Insure that policyholders, claimants and insurers are treated fairly and equitably;

      (f) Encourage full cooperation of the office of commissioner with other regulatory bodies, both of this and other states and of the Federal Government;

      (g) Insure that the state has an adequate and healthy insurance market characterized by competitive conditions and the exercise of initiative;

      (h) Prevent misleading, unfair and monopolistic practices in insurance operations; and

      (i) Continue to provide the State of Nevada with a comprehensive, modern and adequate body of law, in response to the McCarran Act (Public Law 15, 79th Congress, 15 U.S.C. §§ 1011 to 1015, inclusive), for the effective regulation and supervision of insurance business transacted within, or affecting interests of the people of this state.


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ê1971 Statutes of Nevada, Page 1560 (Chapter 660, AB 416)ê

 

      2.  The provisions of this code shall be given reasonable and liberal construction for the fulfillment of these purposes.

 

 

COMPLIANCE REQUIRED.

 

      Sec. 16.  No person shall transact a business of insurance in Nevada, or relative to a subject of insurance resident, located or to be performed in Nevada or elsewhere, without complying with the applicable provisions of this code.

 

 

APPLICATION OF CODE TO PARTICULAR TYPES OF INSURERS.

 

      Sec. 17.  No provision of this code shall apply to:

      1.  Fraternal benefit societies (as identified in sections 673 to 730, inclusive, of this act) except as stated in sections 673 to 730, inclusive, of this act (fraternal benefit societies).

      2.  Hospital, medical or dental service corporations (as identified in sections 732 to 763, inclusive, of this act) except as stated in sections 732 to 763, inclusive, of this act (hospital, medical or dental service corporations).

      3.  Motor clubs (as identified in sections 765 to 813, inclusive, of this act) except as stated in sections 765 to 813, inclusive, of this act (motor clubs).

      4.  Bail bondsmen (as identified in sections 873 to 887, inclusive, of this act) except as stated in sections 873 to 887, inclusive, of this act (bail bondsmen).

 

 

PARTICULAR PROVISIONS PREVAIL.

 

      Sec. 18.  Provisions of this code relative to a particular kind of insurance or type of insurer or particular matter shall prevail over provisions relating to insurance in general or insurers in general or to such matter in general.

 

 

GENERAL PENALTY.

 

      Sec. 19.  1.  Unless the same is defined as a felony under any other law of this state, or punishment provided therefor classifies it otherwise, every violation of any provision of this code is a misdemeanor.

      2.  Every penalty imposed by this code shall be in addition to any applicable suspension, revocation or denial of a license or certificate of authority.

 

 

CHAPTER 2

 

COMMISSIONER OF INSURANCE

 

      Sec. 20.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 21 to 55, inclusive, of this act.


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ê1971 Statutes of Nevada, Page 1561 (Chapter 660, AB 416)ê

 

INSURANCE DIVISION.

 

      Sec. 21.  There shall continue to be an insurance division of the department of commerce.

 

 

COMMISSIONER OF INSURANCE: APPOINTMENT.

 

      Sec. 22.  1.  The chief officer of the division shall be the commissioner appointed as provided in NRS 232.250 and 232.270.

      2.  The commissioner shall not engage in any other occupation, business or activity that is in any way inconsistent with the performance of his duties as commissioner, nor shall he hold any other public office.

      3.  The commissioner shall not:

      (a) Directly or indirectly solicit or receive, or be in any manner concerned with soliciting or receiving, any assessment, subscription, contribution or service, whether voluntary or involuntary, for any political purpose whatever, from any person within or without the state.

      (b) Act as an officer or manager for any candidate, political party or committee organized to promote the candidacy or any person for any public office.

 

      Sec. 23.  [There is no section 23.]

 

 

COMMISSIONER’S BOND.

 

      Sec. 24.  1.  Upon entering the duties of his office, the commissioner shall execute and deliver a surety bond, in such form as may be prescribed by law, in favor of the State of Nevada, in the sum of $50,000, conditioned for the faithful performance of all duties required of him by law.

      2.  The premium on the bond shall be paid in the same manner as other expenses of the division are paid.

 

 

OFFICIAL SEAL.

 

      Sec. 25.  The division shall have an official seal, in form and design as designated by the commissioner and on file in the office of the secretary of state.

 

 

OFFICE.

 

      Sec. 26.  The buildings and grounds division of the department of administration shall furnish the division with suitable office space for the performance of its duties.

 

 

COMMISSIONER’S SALARY, EXPENSES.

 

      Sec. 27.  The commissioner shall receive the salary, per diem expense allowance and travel expenses as fixed by law.

 

 

CHIEF DEPUTY; DEPUTY.

 

      Sec. 28.  1.  The commissioner may appoint his chief deputy and deputy pursuant to the provisions of NRS 232.280.


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ê1971 Statutes of Nevada, Page 1562 (Chapter 660, AB 416)ê

 

      2.  The chief deputy shall be acting commissioner when the office of commissioner is vacant, or when the commissioner is unable to perform his duties because of mental or physical disability.

      3.  The chief deputy and deputy shall have such other powers and duties as the commissioner delegates and assigns to them.

      4.  The chief deputy and deputy shall devote their full time to the division and they shall receive salaries, per diem expense allowances and travel expenses as fixed by law.

 

 

STAFF.

 

      Sec. 29.  1.  The commissioner may employ such other technical, actuarial, rating, clerical and other assistants and examiners as the commissioner may reasonably require for execution of his duties, each of whom shall be in the classified service of the state. They shall receive salaries, per diem expense allowances and travel expenses as fixed by law.

      2.  The commissioner may contract for and procure services of examiners and other or additional specialized technical or professional assistance, on an independent contractor or fee basis, as the commissioner may reasonably require, and none of the individuals providing such services or assistance on such a contract or fee basis shall be in the classified service of the state.

      3.  Employees of the division shall be covered by surety bonds in such amounts as the commissioner may prescribe. The cost of any such bond shall be borne by the state.

 

 

PROHIBITED INTERESTS, REWARDS.

 

      Sec. 30.  1.  The commissioner, his deputy or any examiner, assistant or employee of the division shall not be connected with the management or be a stockholder, or be otherwise financially interested in any insurer, insurance holding company or its parent, subsidiaries or affiliates, insurance agency or broker, insurance trade association, premium finance company, adjuster or other licensee under this code, or be pecuniarily interested in any insurance transaction except as a policyholder or claimant under a policy, except that as to matters wherein a conflict of interests does not exist on the part of any such individual, the commissioner may employ or retain from time to time insurance actuaries, examiners, accountants, attorneys or other technicians who are independently practicing their professions even though from time to time similarly employed or retained by insurers or others.

      2.  Subsection 1 shall not be deemed to prohibit:

      (a) Receipt by any such individual of fully vested commissions or fully vested retirement benefits to which he is entitled by reason of services performed prior to becoming commissioner or prior to employment by the commissioner; or

      (b) Investment in shares of regulated diversified investment companies; or

      (c) Mortgage loans made under customary terms and in the ordinary course of business.


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ê1971 Statutes of Nevada, Page 1563 (Chapter 660, AB 416)ê

 

      3.  The commissioner shall not accept employment with any insurer, insurance holding company, its parent, subsidiaries or affiliates, insurance agency or broker, insurance trade association, premium finance company, adjuster or other licensee under this code for 1 year after leaving office.

      4.  Any person knowingly violating this section is guilty of a misdemeanor.

 

 

DELEGATION OF POWERS.

 

      Sec. 31.  1.  The commissioner may delegate to his deputy, examiner or an employee of the division the exercise or discharge in the commissioner’s name of any power, duty or function, whether ministerial, discretionary or of whatever character, vested in or imposed upon the commissioner.

      2.  The official act of any such person acting in the commissioner’s name and by his authority shall be deemed an official act of the commissioner.

 

 

GENERAL POWERS, DUTIES.

 

      Sec. 32.  1.  The commissioner shall:

      (a) Subject to the provisions of NRS 232.250, organize and manage the division, and direct and supervise all its activities;

      (b) Execute the duties imposed upon him by this code;

      (c) Enforce the provisions of this code;

      (d) Have the powers and authority expressly conferred upon him by or reasonably implied from the provisions of this code;

      (e) Conduct such examinations and investigations of insurance matters, in addition to examinations and investigations expressly authorized, as he may deem proper upon reasonable and probable cause to determine whether any person has violated any provision of this code or to secure information useful in the lawful enforcement or administration of any such provision; and

      (f) Have such additional powers and duties as may be provided by other laws of this state.

      2.  The commissioner is empowered, subject to applicable laws of this state, to direct all insurance transactions between the state and insurers.

 

 

RULES AND REGULATIONS: PROMULGATION; VIOLATION.

 

      Sec. 33.  1.  Subject to the applicable requirements and procedures of chapter 233B of NRS (Nevada Administrative Procedure Act), the commissioner may make reasonable rules and regulations for, or as an aid to, the administration or effectuation of any provision or provisions of this code. No such rule or regulation shall extend, modify or conflict with any law of this state or the reasonable implications thereof.

      2.  Willful violation of any such rule or regulation shall subject the violator to such suspension or revocation of a certificate of authority or license, or administrative fine in lieu of such suspension or revocation, as may be applicable under this code for violation of the provision to which such rule or regulation relates; but no penalty shall apply to any act done or omitted in good faith in conformity with any such rule or regulation, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.


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ê1971 Statutes of Nevada, Page 1564 (Chapter 660, AB 416)ê

 

such rule or regulation relates; but no penalty shall apply to any act done or omitted in good faith in conformity with any such rule or regulation, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.

 

 

ORDERS, NOTICES IN GENERAL.

 

      Sec. 34.  1.  Orders and notices of the commissioner shall be effective only when in writing signed by him or by his authority.

      2.  Except as otherwise expressly provided by law as to particular orders, every order of the commissioner shall state its effective date, and shall concisely state:

      (a) Its intent or purpose;

      (b) The grounds on which based; and

      (c) The provisions of this code pursuant to which action is taken or proposed to be taken; but failure to so designate a particular provision shall not deprive the commissioner of the right to rely thereon.

      3.  Except as provided as to particular procedures, an order or notice may be given by delivery to the person to be ordered or notified, or by mailing it, postage prepaid, addressed to such person at his principal place of business or residence as last of record in the division. The order or notice shall be deemed to have been given when deposited in a mail depository of the United States post office, and of which the affidavit of the individual who so mailed the order or notice shall be prima facie evidence.

 

 

MEASURES TO ENHANCE PUBLIC UNDERSTANDING OF COVERAGES OFFERED AND ENCOURAGE PRICE COMPETITION.

 

      Sec. 34.3.  1.  The commissioner shall:

      (a) Take measures to enhance the public understanding of insurance coverages purchased by consumers and encourage price competition among insurers.

      (b) Develop, promulgate and revise as he deems appropriate standard policies in each of the several areas of insurance appropriate for sale in the State of Nevada. These policies shall be known officially as the Standard Policies of the Commissioner of Insurance of the State of Nevada (short title: Nevada Standard Policies). The commissioner will give these policies and their effectiveness in loss instances appropriate publicity accompanied by such disseminations of supporting and explanatory information as he deems necessary for a progressively better public understanding of the insurance coverage purchased by the consumers.

      2.  The sale or offer for sale of any policy of any type by an insurer is conditioned upon an offer by the insurer also to sell the applicable Nevada Standard Policy or Policies together with a clear and prominent indication of the price quoted for the standard policy.

      3.  Endorsements changing or adding to coverage may be added to the standard policy and the price of the total insurance package may then differ from the price indicated for the standard policy.


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ê1971 Statutes of Nevada, Page 1565 (Chapter 660, AB 416)ê

 

standard policy and the price of the total insurance package may then differ from the price indicated for the standard policy.

 

 

ADVISORY COUNCILS.

 

      Sec. 34.5.  1.  The commissioner may create advisory councils and committees to assist him in dealing with regulatory problems. He may appoint members and may provide by rule for the creation, governance, duties and termination of any council or committee he establishes.

      2.  The commissioner may create at least one advisory council to represent the consumer interest in insurance, to be made up of members with no substantial interest in any aspect of the insurance industry, except as insureds.

 

 

PRIVATE OMBUDSMEN.

 

      Sec. 34.7.  The commissioner may by rule or regulation require any or all licensees or classes thereof to designate a special complaint representative, who may be an officer, employee or agent, to investigate and report on complaints received from insureds or other persons. In order to achieve some degree of independence and authority in such representatives, the commissioner may require that they report directly to the board of directors or other specified office, or that they have additional authority or status.

 

 

ENFORCEMENT.

 

      Sec. 35.  1.  The commissioner, upon the advice of and through the attorney general, may invoke the aid of the courts through injunction or other proper process, mandatory or otherwise, to enjoin any existing or threatened violation of any provision of this code, or to enforce any proper order made by him or action taken by him.

      2.  If the commissioner has reason to believe that any person has violated any provision of this code, or other law applicable to insurance operations, for which criminal prosecution in his opinion would be in order, he shall give the information relative thereto to the appropriate district attorney or to the attorney general. The district attorney or attorney general shall promptly institute such action or proceedings against such person as in his opinion the information may require or justify.

      3.  Except as otherwise specifically provided in this code, the attorney general shall act as legal counsel to the division and the commissioner in all matters pertaining to the administration and enforcement of this code.

 

 

RECORDS: INSPECTION; DESTRUCTION.

 

      Sec. 36.  1.  The commissioner shall carefully preserve in the division and in permanent form all papers and records relating to the business and transactions of the division, and shall hand the same over to his successor in office.


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ê1971 Statutes of Nevada, Page 1566 (Chapter 660, AB 416)ê

 

      2.  Except as otherwise provided by this code, the papers and records shall be open to public inspection.

      3.  The commissioner may destroy unneeded or obsolete records and filings in the division in accordance with provisions and procedures applicable in general to administrative agencies of this state.

      4.  The commissioner may classify as confidential certain records and information obtained from a governmental agency or other sources upon the express condition that they shall remain confidential, or be deemed confidential by the commissioner; but no filing required to be made with the commissioner under this code shall be deemed confidential unless expressly provided by law.

 

 

EVIDENTIARY EFFECT OF COMMISSIONER’S CERTIFICATES, CERTIFIED COPIES OF DOCUMENTS.

 

      Sec. 37.  1.  All certificates issued by the commissioner in accordance with the provisions of this code and all copies of documents filed in his office in accordance with the provisions of this code when certified by him shall be taken and received in all courts and public offices and by official bodies of this state as prima facie evidence of the facts therein stated.

      2.  A certificate by the commissioner under the seal of the division as to facts relating to insurers which would not appear from a certified copy of any of the documents or certificates specified in subsection 1 shall be taken and received in all courts and public offices and by official bodies as prima facie evidence of the facts therein stated.

 

 

ANNUAL REPORT.

 

      Sec. 38.  At the earliest practicable date after the annual financial statements have been received from the authorized insurers, the commissioner shall make a written report to the director showing, with respect to the preceding calendar year:

      1.  A summary of insurance business transacted in this state;

      2.  The commissioner’s recommendations as to amendment or supplementation of laws affecting insurance or the division; and

      3.  Such other matters as he deems to be in the public interest in regard to the division or the business of insurance in this state.

 

 

INTERSTATE COOPERATION.

 

      Sec. 39.  1.  The commissioner shall communicate on request of the insurance supervisory official of any state, province or county any information which it is his duty by law to ascertain respecting authorized insurers.

      2.  The commissioner may be a member of the National Association of Insurance Commissioners or any successor organization, and may participate in and support other cooperative activities of public officers having supervision of the business of insurance.


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ê1971 Statutes of Nevada, Page 1567 (Chapter 660, AB 416)ê

 

EXAMINATION OF INSURERS.

 

      Sec. 40.  1.  For the purpose of determining its financial condition, fulfillment of its contractual obligations and compliance with law, the commissioner shall, as often as he deems advisable, examine the affairs, transactions, accounts, records and assets of each authorized insurer, and of any person as to any matter relevant to the financial affairs of the insurer or to the examination. Except as otherwise expressly provided, he shall so examine each domestic insurer not less frequently than every 3 years. Examination of an alien insurer shall be limited to its insurance transactions, assets, trust deposits and affairs in the United States of America, except as otherwise required by the commissioner.

      2.  The commissioner shall in like manner examine each insurer applying for an initial certificate of authority to transact insurance in this state.

      3.  In lieu of making his own examination, the commissioner may, in his discretion, accept a full report of the last recent examination of a foreign or alien insurer, certified to by the insurance supervisory officer of another state.

      4.  As far as practical the examination of a foreign or alien insurer shall be made in cooperation with the insurance supervisory officers of other states in which the insurer transacts business.

 

 

EXAMINATION OF HOLDING COMPANIES, SUBSIDIARIES, AGENTS, PROMOTERS AND OTHERS.

 

      Sec. 41.  For the purpose of ascertaining compliance with law, or relationships and transactions between any such person and any insurer or proposed insurer, the commissioner may, as often as he deems advisable, examine the accounts, records, documents and transactions relating to such compliance or relationships of:

      1.  Any insurance agent, solicitor, broker, surplus lines broker, general agent, adjuster, insurer representative, bail bondsman, motor club agent or person holding himself out as any of the foregoing.

      2.  Any person having a contract under which he enjoys in fact the exclusive or dominant right to manage or control an insurer.

      3.  Any insurance holding company or other person holding the shares of voting stock or the policyholder proxies of a domestic insurer, for the purpose of controlling the management thereof, as voting trustee or otherwise.

      4.  Any subsidiary of the insurer.

      5.  Any person engaged in this state in, or proposing to be engaged in this state in, or holding himself out in this state as so engaging or proposing, or in this state assisting in, the promotion, formation or financing of an insurer or insurance holding corporation, or corporation or other group to finance an insurer or the production of its business.

 

 

CONDUCT OF EXAMINATION; ACCESS TO RECORDS; CORRECTIONS; PENALTY.

 

      Sec. 42.  1.  Whenever the commissioner determines to examine the affairs of any person, he shall designate one or more examiners and instruct them as to the scope of the examination.


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ê1971 Statutes of Nevada, Page 1568 (Chapter 660, AB 416)ê

 

instruct them as to the scope of the examination. The examiner shall, upon demand, exhibit his official credentials to the person under examination.

      2.  The commissioner shall conduct each examination in an expeditious, fair and impartial manner.

      3.  Upon any such examination the commissioner, or the examiner if specifically so authorized in writing by the commissioner, shall have power to administer oaths, and to examine under oath any individual as to any matter relevant to the affairs under examination or relevant to the examination.

      4.  Every person being examined, its officers, attorneys, employees, agents and representatives shall make freely available to the commissioner or his examiners the accounts, records, documents, files, information, assets and matters of such person in his possession or control relating to the subject of the examination and shall facilitate the examination.

      5.  If the commissioner or examiner finds any accounts or records to be inadequate, or inadequately kept or posted, he may employ experts to reconstruct, rewrite, post or balance them at the expense of the person being examined if such person has failed to maintain, complete or correct such records or accounting after the commissioner or examiner has given him written notice and a reasonable opportunity to do so.

      6.  Neither the commissioner nor any examiner shall remove any record, account, document, file or other property of the person being examined from the offices or place of such person except with the written consent of such person in advance of such removal or pursuant to an order of court duly obtained. This provision shall not be deemed to affect the making and removal of copies or abstracts of any such record, account, document or file.

      7.  Any individual who refuses without just cause to be examined under oath or who willfully obstructs or interferes with the examiners in the exercise of their authority pursuant to this section is guilty of a misdemeanor.

 

 

APPRAISAL OF ASSET.

 

      Sec. 43.  1.  If the commissioner deems it necessary to value any asset involved in such an examination, he may make written request of the person being examined to appoint one or more appraisers who by reason of education, experience or special training, and disinterest, are competent to appraise the asset. Selection of any such appraiser shall be subject to the written approval of the commissioner. If no such appointment is made within 10 days after the request therefor was delivered to such person, the commissioner may appoint the appraiser or appraisers.

      2.  Any such appraisal shall be expeditiously made, and a copy thereof furnished to the commissioner and to the person being examined.

      3.  The reasonable expense of the appraisal shall be borne by the person being examined.


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ê1971 Statutes of Nevada, Page 1569 (Chapter 660, AB 416)ê

 

EXAMINATION REPORTS: CONTENTS; PRIMA FACIE EVIDENCE IN CERTAIN PROCEEDINGS.

 

      Sec. 44.  1.  Upon completion of an examination, the examiner in charge shall make a true report thereof which shall comprise only facts appearing upon the books, records or other documents of the person examined, or as ascertained from the sworn testimony of its officers or agents or other individuals examined concerning its affairs, and such conclusions and recommendations as may reasonably be warranted from such facts. The report of examination shall be verified by the oath of the examiner in charge thereto.

      2.  Such a report of examination of an insurer so verified shall be prima facie evidence in any action or proceeding for the receivership, conservation or liquidation of the insurer brought in the name of the state against the insurer, its officers or agents upon the facts stated therein.

 

 

EXAMINATION REPORTS: DISTRIBUTION; HEARING.

 

      Sec. 45.  1.  The commissioner shall deliver a copy of the examination report to the person examined, together with a notice affording such person 10 days or such additional reasonable period as the commissioner for good cause may allow within which to review the report and recommend charges therein.

      2.  If so requested by the person examined, within the period allowed under subsection 1, or if deemed advisable by the commissioner without such request, the commissioner shall hold a hearing relative to the report and shall not file the report in the division for public inspection until after such hearing and his order thereon.

      3.  If no such hearing has been requested or held, the examination report, with such modifications, if any, thereof as the commissioner deems proper, shall be accepted by the commissioner and filed in the division for public inspection upon expiration of the review period provided for in subsection 1. The report shall in any event be so accepted and filed within 6 months after final hearing thereon, except that the commissioner may withhold from public inspection any examination report for so long as he deems such withholding to be necessary for the protection of the person examined against unwarranted injury or to be in the public interest.

      4.  The commissioner shall forward to the person examined a copy of the examination report as filed for public inspection, together with any recommendations or statements relating thereto which he deems proper.

      5.  If the report concerns the examination of a domestic insurer, a copy of the report, or a summary thereof approved by the commissioner, when filed for public inspection, or if withheld from public inspection under subsection 3, together with the recommendations or statements of the commissioner or his examiner, shall be presented by the insurer’s chief executive officer to the insurer’s board of directors or similar governing body at a meeting thereof which shall be held within 30 days next following receipt of the report in final form by the insurer. A copy of the report shall also be furnished by the secretary of the insurer, if incorporated, or by the attorney-in-fact if a reciprocal insurer, to each member of the insurer’s board of directors or board of governors, if a reciprocal insurer, and the certificate of the secretary or attorney-in-fact that a copy of the examination report has been so furnished shall be deemed to constitute knowledge of the contents of the report by each such member.


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ê1971 Statutes of Nevada, Page 1570 (Chapter 660, AB 416)ê

 

incorporated, or by the attorney-in-fact if a reciprocal insurer, to each member of the insurer’s board of directors or board of governors, if a reciprocal insurer, and the certificate of the secretary or attorney-in-fact that a copy of the examination report has been so furnished shall be deemed to constitute knowledge of the contents of the report by each such member.

 

 

EXAMINATION EXPENSE.

 

      Sec. 46.  1.  The expense of examination of an insurer, or of any person referred to in subsection 2 (management or control of an insurer under contract) or subsection 5 (promotion or financing of an insurer) of section 41 of this act, shall be borne by the person examined. Such expense shall include only the reasonable and proper hotel and travel expenses of the commissioner and his examiners and assistants, including expert assistance, reasonable compensation as to such examiners and assistants and incidental expenses as necessarily incurred in the examination. As to expense and compensation involved in any such examination the commissioner shall give due consideration to scales and limitations recommended by the National Association of Insurance Commissioners and outlined in the examination manual sponsored by that association.

      2.  Such person examined shall promptly pay to the commissioner the expenses of the examination upon presentation by the commissioner of a reasonably detailed written statement thereof.

 

 

EXAMINATION EXPENSE FUND.

 

      Sec. 47.  1.  There is continued in the state treasury the insurance examination fund for the use of the division. The commissioner shall promptly deposit with the state treasurer for the credit to such fund all moneys received by him pursuant to section 46 of this act.

      2.  Moneys for travel, per diem, compensation and other necessary and authorized expenses incurred by an examiner or other division representative in the examination of any person required to pay, and making payment of, the expense of examination pursuant to section 46 of this act shall be paid out of the insurance examination fund on claims as other claims against the state are paid, upon approval by the commissioner.

 

 

ADMINISTRATIVE PROCEDURES; HEARINGS IN GENERAL.

 

      Sec. 48.  1.  The commissioner may hold a hearing, without request by others, for any purpose within the scope of this code.

      2.  The commissioner shall hold a hearing:

      (a) If required by any other provision of this code; or

      (b) Upon written application for a hearing by a person aggrieved by any act, threatened act, or failure of the commissioner to act, or by any report, rule, regulation or order of the commissioner (other than an order for the holding of a hearing, or order on a hearing, or pursuant to such order of which hearing such person had notice). Any such application must be filed in the division within 60 days after such person knew or reasonably should have known, of such act, threatened act, failure, report, rule, regulation or order, unless a different period is provided for by other laws applicable to the particular matter, in which case such other law shall govern.


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ê1971 Statutes of Nevada, Page 1571 (Chapter 660, AB 416)ê

 

reasonably should have known, of such act, threatened act, failure, report, rule, regulation or order, unless a different period is provided for by other laws applicable to the particular matter, in which case such other law shall govern.

      3.  Any such application for a hearing shall briefly state the respects in which the applicant is so aggrieved, together with the grounds to be relied upon as a basis for the relief to be sought at the hearing.

      4.  If the commissioner finds that the application is made in good faith, that the applicant would be so aggrieved if his grounds are established and that such grounds otherwise justify the hearing, he shall hold the hearing within 30 days after filing of the application, unless postponed by mutual consent. Failure to hold the hearing upon application therefor of a person entitled thereto as provided in this section shall constitute a denial of the relief sought, and shall be the equivalent of a final order of the commissioner on hearing for the purpose of an appeal under section 54 of this act.

      5.  Pending the hearing and decision thereon, the commissioner may suspend or postpone the effective date of his previous action.

      6.  This section does not apply to hearings relative to matters arising under sections 341 to 372, inclusive, of this act (rates and rating organizations).

 

 

NOTICE OF HEARING.

 

      Sec. 49.  1.  Except where a different period is expressly provided, the commissioner shall give written notice of the hearing not less than 20 days in advance. The notice shall state the date, time and place of the hearing and specify the matters to be considered thereat. If the persons to be given notice are not specified in the provision pursuant to which the hearing is held, the commissioner shall give such notice to all persons whose pecuniary interest, to the commissioner’s knowledge or belief, are to be directly and immediately affected by the hearing.

      2.  If any person is entitled to a hearing by any provision of this code before any proposed action is taken, the notice of the hearing may be in the form of a notice to show cause, stating that the proposed action may be taken unless such person shows cause at a hearing to be held as specified in the notice why the proposed action should not be taken, and stating the basis of the proposed action.

      3.  If any such hearing is to be held for consideration of rules and regulations of the commissioner, or of other matters which, under subsection 1, would otherwise require separate notices to more than 30 persons, in lieu of other notice the commissioner may give notice of the hearing by publication thereof in a newspaper of general circulation in this state, at least once each week during the fourth and second weeks next preceding the week in which the hearing is to be held; but the commissioner shall mail such notice to all persons who had requested the same in writing in advance and shall pay to the commissioner the reasonable amount fixed by him to cover the cost thereof.

      4.  All such notices, other than published notices, shall be given as provided in section 34 of this act.


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ê1971 Statutes of Nevada, Page 1572 (Chapter 660, AB 416)ê

 

CONDUCT OF HEARING.

 

      Sec. 50.  1.  The commissioner may hold a hearing in Carson City, Nevada, or any other place of convenience to parties and witnesses, as the commissioner determines. The commissioner, or his deputy or assistant, shall preside at the hearing, and shall expedite the hearing and all procedures involved therein.

      2.  Any party to the hearing shall have the right to appear in person and by counsel, to be present during the giving of all evidence, to have a reasonable opportunity to inspect all documentary and other evidence and to examine and cross-examine witnesses, to present evidence in support of his interest and to have subpenas issued by the commissioner to compel attendance of witnesses and production of evidence in his behalf. Testimony may be taken orally or by deposition, and any party shall have such right of introducing evidence by interrogatories or deposition as may obtain in a district court.

      3.  Upon good cause shown the commissioner shall permit to become a party to the hearing by intervention, if timely, only such persons, not original parties thereto, whose pecuniary interests are to be directly and immediately affected by the commissioner’s order made upon the hearing.

      4.  Formal rules of pleading or evidence need not be observed at any hearing.

      5.  The commissioner shall cause a full stenographic record of the proceedings to be made. If transcribed, a copy of such record shall be part of the commissioner’s record of the hearing; and a copy shall be furnished to any other party to the hearing, at the request and expense of such other party. If no such record is transcribed, the commissioner shall prepare a summary record of the proceedings and evidence.

 

 

WITNESSES AND EVIDENCE.

 

      Sec. 51.  1.  The commissioner or any individual conducting a hearing, examination or investigation by his authority shall have power to subpena witnesses, compel their attendance, administer oaths, examine any person under oath relative to the subject of the hearing, examination or investigation, and to compel any person to subscribe to his testimony after it has been correctly reduced to writing, and, in connection therewith, to require the production of any books, papers, records, correspondence or other documents which he deems relevant to the inquiry. Any delegation by the commissioner of the power to administer oaths or of subpena shall be in writing.

      2.  A subpena issued pursuant to this section shall have the same force and effect and shall be served in the same manner as if issued from a court of record.

      3.  If any individual fails to obey a subpena, or refuses to testify as to any matter concerning which he may lawfully be interrogated, the commissioner may file his written report thereof and proof of service of his subpena in any court of competent jurisdiction in the county where the examination or hearing is being conducted, for such action as the court may determine.

      4.  Witness fees and mileage, if claimed, shall be allowed the same as for testimony in a court of record, but no officer, director, agent or employee of an insurer or person being examined or investigated shall be entitled to witness or mileage fees.


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ê1971 Statutes of Nevada, Page 1573 (Chapter 660, AB 416)ê

 

for testimony in a court of record, but no officer, director, agent or employee of an insurer or person being examined or investigated shall be entitled to witness or mileage fees.

      5.  Every person subpenaed under this section who willfully fails to appear at the time and place named in the subpena or to produce documents required by the subpena, or who refused to be sworn or answer as a witness, is guilty of a misdemeanor.

 

 

TESTIMONY COMPELLED; IMMUNITY FROM PROSECUTION.

 

      Sec. 52.  1.  If any individual asks to be excused from attending or testifying or from producing any books, papers, records, contracts, correspondence or other documents in connection with any examination, hearing or investigation being conducted by the commissioner or his examiner, on the ground that the testimony or evidence required of him may tend to incriminate him or subject him to a penalty or forfeiture, and nonetheless is directed by the attorney general to give such testimony or produce such evidence, he must comply with such direction; but he shall not thereafter be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he may have so testified or produced evidence, and no testimony so given or evidence produced shall be received against him upon any criminal action, investigation or proceeding. No such individual so testifying shall be exempt from:

      (a) Prosecution or punishment for any perjury committed by him in such testimony, and the testimony or evidence so given or produced shall be admissible against him upon any criminal action, investigation or proceeding concerning such perjury.

      (b) The refusal, suspension or revocation of any license, permission or authority conferred, pursuant to this code.

      2.  Any such individual may execute, acknowledge and file in the office of the commissioner and of the attorney general a statement expressly waiving such immunity or privilege in respect to any transaction, matter or thing specified in such statement, and thereupon the testimony of such individual or such evidence in relation to such transaction, matter or thing may be received or produced before any judge or justice, court, tribunal, grand jury or otherwise, and if such testimony or evidence is so received or produced such individual shall not be entitled to any immunity or privileges on account of any testimony or evidence he may so give or produce.

 

 

ORDER ON HEARING.

 

      Sec. 53.  1.  In the conduct of hearings under this code and making his order thereon, the commissioner shall act in a quasi-judicial capacity.

      2.  Except as otherwise provided in this subsection, within 30 days after termination of a hearing, or of any rehearing thereof or reargument thereon, or within such other period as may be specified in this code as to particular proceedings, the commissioner shall make his order on hearing covering matters involved in such hearing, and give a copy of the order to each party to the hearing in the same manner as notice of the hearing was given to such party.


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ê1971 Statutes of Nevada, Page 1574 (Chapter 660, AB 416)ê

 

covering matters involved in such hearing, and give a copy of the order to each party to the hearing in the same manner as notice of the hearing was given to such party. With respect to hearings held concerning merger, consolidation, bulk reinsurance, conversion, affiliation or change of control of a domestic insurer as provided in sections 580 to 617, inclusive, of this act (corporate powers, procedures of domestic stock and mutual insurers), where notice of the hearing was given to all stock holders and policy holders or to all stock holders or policy holders of an insurer involved, the commissioner is required to give a copy of the order on hearing to the corporation and insurer parties, to intervening parties, to a reasonable number of such stock holders or policy holders as representative of the class, and to other parties only upon written request of such parties.

      3.  The order shall contain:

      (a) A concise statement of facts found by the commissioner upon evidence adduced at the hearing;

      (b) A concise statement of the commissioner’s conclusions from the facts so found;

      (c) His order, and the effective date thereof; and

      (d) Citation of the provisions of this code upon which the order is based; but failure so to designate a particular provision shall not deprive the commissioner of the right thereafter to rely thereon.

      4.  The order may affirm, modify or rescind action theretofore taken or may constitute taking of new action within the scope of the notice of the hearing.

 

 

APPEAL FROM COMMISSIONER.

 

      Sec. 54.  1.  Except as to matters arising under sections 341 to 372, inclusive, of this act (rates and rating organizations), an appeal from the commissioner shall be taken only from an order on hearing, or as to a matter on which the commissioner has refused or failed to hold a hearing after application therefor under section 48 of this act, or as to a matter concerning which the commissioner has refused or failed to make his order on hearing as required by section 53 of this act.

      2.  Any person who was a party to such hearing or whose pecuniary interests are directly and immediately affected by any such refusal or failure, and who is aggrieved by such order, refusal or failure, may appeal from such order or upon any such matter within 60 days after:

      (a) The order on hearing has been mailed or delivered to the persons entitled to receive the same, or given by last publication thereof where delivery by publication is permitted; or

      (b) The commissioner has refused or failed to make his order on hearing as required under section 53 of this act; or

      (c) The commissioner has refused or failed to grant or hold a hearing as required under section 48 of this act.

      3.  The appeal shall be granted as a matter or right, and shall be taken to the district court of Carson City or of any county in which the petitioner resides or has his principal offices in this state.

      4.  The appeal shall be taken by filing in the court a verified petition stating the grounds upon which the review is sought, together with a bond with good and sufficient sureties to be approved by the court conditioned to pay all costs which may be assessed against the appellant or petitioner in such proceedings, and by serving a copy of the petition upon the commissioner.


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ê1971 Statutes of Nevada, Page 1575 (Chapter 660, AB 416)ê

 

with good and sufficient sureties to be approved by the court conditioned to pay all costs which may be assessed against the appellant or petitioner in such proceedings, and by serving a copy of the petition upon the commissioner. If the appeal is from the commissioner’s order on hearing, the petitioner shall also deliver to the commissioner a sufficient number of copies of the petition and the commissioner shall mail or otherwise furnish a copy thereof to the other parties to the hearing to the same extent as a copy of the commissioner’s order is required to be furnished to the hearing parties under section 53 of this act.

      5.  Upon receiving the petition for review, the commissioner shall cause to be prepared an official record certified by him, which shall contain a copy of all proceedings and orders of the commissioner appealed from and the transcript of testimony and evidence or summary record thereof made as provided in section 50 of this act. Within 30 days after the petition was served upon him the commissioner shall file such official record with the court in which the appeal is pending.

      6.  Upon filing of the petition for review the court shall have full jurisdiction of the proceeding. Such filing shall not stay the enforcement of the commissioner’s order or action appealed from unless so stayed by order of the court.

      7.  If the appeal is from the commissioner’s order on hearing, the review of the court shall be limited to matters shown by the commissioner’s official record; otherwise the review shall be de novo. The court shall have the power, by preliminary order, to settle questions concerning the completeness and accuracy of the commissioner’s official record.

      8.  In its discretion the court may remand the case to the commissioner for further proceedings in accordance with the court’s directions; or, in advance of judgment and upon a sufficient showing, the court may remand the case to the commissioner for the purpose of taking additional testimony or other proceedings. Subsection 5 of NRS 233B.140 shall apply to the appeals provided for herein.

      9.  From the judgment of the district court either the commissioner or other party to the appeal may appeal directly to the Supreme Court of the State of Nevada in the same manner as is provided in civil cases.

 

 

FINANCING OF ADMINISTRATION.

 

      Sec. 55.  1.  Except as otherwise expressly provided in this code, funds with which to carry out the administration and enforcement by the commissioner of this code shall be provided by legislative appropriation from the general fund and shall be paid out on claims as other claims against the state are paid.

      2.  No such claim shall be paid unless approved by the commissioner.

 

 

CHAPTER 3

 

AUTHORIZATION OF INSURERS AND GENERAL REQUIREMENTS

 

      Sec. 56.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 57 to 88, inclusive, of this act.


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ê1971 Statutes of Nevada, Page 1576 (Chapter 660, AB 416)ê

 

DEFINITIONS.

 

      Sec. 57.  As used in this code, unless the context otherwise requires, the words and terms defined in sections 58 to 61, inclusive, of this act shall have the meanings ascribed to them in sections 58 to 61, inclusive, of this act.

 

 

“CHARTER” DEFINED.

 

      Sec. 58.  “Charter” means certificate of incorporation, articles of incorporation, articles of agreement, articles of association, charter granted by legislative act, or other basic constituent document of a corporation, or the power of attorney of the attorney-in-fact of a reciprocal insurer.

 

 

“MUTUAL” INSURER DEFINED.

 

      Sec. 59.  A “mutual” insurer is an incorporated insurer without capital stock and the governing body of which is elected by its policy holders. This definition shall not be deemed to exclude as “mutual” insurers certain foreign insurers found by the commissioner to be organized on the mutual plan under the laws of their states of domicile, but having temporary share capital or providing for election of the insurer’s governing body on a reasonable basis.

 

 

“RECIPROCAL” INSURER DEFINED.

 

      Sec. 60.  A “reciprocal” insurer is an unincorporated aggregation of subscribers operating individually and collectively through an attorney-in-fact common to all such persons to provide reciprocal insurance among themselves.

 

 

“STOCK” INSURER DEFINED.

 

      Sec. 61.  A “stock” insurer is an incorporated insurer with its capital divided into shares and owned by its stock holders.

 

 

CERTIFICATE OF AUTHORITY REQUIRED; PENALTY.

 

      Sec. 62.  1.  No person shall act as an insurer and no insurer shall transact insurance in this state by mail or otherwise, except as authorized by a certificate of authority issued by the commissioner and then in full force and effect, and except as to such transactions as are expressly otherwise provided in this code.

      2.  No insurer formed under the laws of this state, and no foreign insurer from offices or by personnel or facilities located in this state, shall solicit insurance applications or otherwise transact insurance in another state or country unless it holds a subsisting certificate of authority granted to it by the commissioner authorizing it to transact the same kind or kinds of insurance in this state.


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ê1971 Statutes of Nevada, Page 1577 (Chapter 660, AB 416)ê

 

      3.  Any officer, director, agent, representative or employee of any insurer who willfully authorizes, negotiates, makes or issues any insurance contract in violation of this section is guilty of a misdemeanor.

 

 

EXCEPTIONS TO CERTIFICATE OF AUTHORITY REQUIREMENT.

 

      Sec. 63.  A certificate of authority shall not be required of an insurer with respect to any of the following:

      1.  Investigation, settlement or litigation of claims under its policies lawfully written in this state, or liquidation of assets and liabilities of the insurer (other than collection of new premiums), all as resulting from its former authorized operations in this state.

      2.  Except as provided in subsection 2 of section 62 of this act, transactions thereunder subsequent to issuance of a policy covering only subjects of insurance not resident, located or expressly to be performed in this state at time of issuance, and lawfully solicited, written and delivered outside this state.

      3.  Prosecution or defense of suits at law; but no insurer unlawfully transacting insurance in this state without a certificate of authority shall be permitted to institute or maintain (other than defend) any action at law or in equity in any court of this state, either directly or through an assignee or successor in interest, to enforce any right, claim or demand arising out of such an insurance transaction until such insurer or assignee or successor has obtained a certificate of authority. This provision does not apply to any suit or action by the duly constituted receiver, rehabilitator or liquidator of such an insurer, assignee or successor under laws similar to those contained in sections 815 to 871, inclusive, of this act (conservation, rehabilitation and liquidation).

      4.  Transactions pursuant to surplus lines coverages lawfully written under sections 275 to 296, inclusive, of this act (surplus lines).

      5.  A suit, action or proceeding for the enforcement or defense of its rights relative to its investments in this state.

      6.  Reinsurance, except as to a domestic reinsurer.

      7.  Transactions in this state involving group life insurance, group health or blanket health insurance, or group annuities where the master policy or contract of such groups was lawfully solicited, issued and delivered pursuant to the laws of a state in which the insurer was authorized to transact insurance, to a group organized for purposes other than the procurement of insurance, and where the policy holder is domiciled or otherwise has a bona fide situs.

 

 

GENERAL ELIGIBILITY FOR CERTIFICATE OF AUTHORITY.

 

      Sec. 64.  To qualify for and hold authority to transact insurance in this state, an insurer must be otherwise in compliance with this code and with its charter powers, and must be an incorporated stock or mutual insurer, or a reciprocal insurer, of the same general type as may be formed as a domestic insurer under this code, except that:


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ê1971 Statutes of Nevada, Page 1578 (Chapter 660, AB 416)ê

 

      1.  No foreign insurer shall be authorized to transact insurance in this state which does not maintain reserves as required by sections 115 to 133, inclusive, of this act (assets and liabilities), as applicable to the kind or kinds of insurance transacted by such insurer, wherever transacted in the United States of America, or which transacts business anywhere in the United States of America on the assessment plan, or stipulated premium plan, or any similar plan.

      2.  No insurer shall be authorized to transact a kind of insurance in this state unless duly authorized or qualified to transact such insurance in the state or country of its domicile.

      3.  No insurer shall be authorized to transact in this state any kind of insurance which is not within the definitions as set forth in sections 103 to 110, inclusive, of this act (kinds of insurance).

      4.  No such authority shall be granted or continued to any insurer while in arrears to the state for fees, licenses, taxes, assessments, fines or penalties accrued on business previously transacted in this state.

 

 

GENERAL ELIGIBILITY FOR CERTIFICATE OF AUTHORITY: OWNERSHIP; MANAGEMENT.

 

      Sec. 65.  1.  No foreign insurer which is directly or indirectly owned or controlled in whole or substantial part by any government or governmental agency shall be authorized to transact insurance in Nevada. Membership in a mutual insurer, or subscribership in a reciprocal insurer, or ownership of stock of an insurer by the Alien Property Custodian or similar officer of the United States of America, or ownership of stock or other security which does not have voting rights with respect to the management of the insurer, or supervision of an insurer by public authority, shall not be deemed to be an ownership or control of the insurer for the purposes of this subsection.

      2.  The commissioner shall not grant or continue authority to transact insurance in this state to any insurer or proposed insurer:

      (a) Of which any director, officer or other individual materially part of the management is found by him after investigation or upon reliable information to be incompetent, or dishonest, or untrustworthy, or of unfavorable business repute; or

      (b) Of which the managers are so lacking in insurance company managerial experience in operations of the kind proposed in this state as to make such operation, currently or prospectively, hazardous to or contrary to the best interests of the insurance-buying or investing public of this state; or

      (c) Which he has good reason to believe is affiliated directly or indirectly through ownership, control, management, reinsurance transactions or other business relations with any person or persons of unfavorable business repute; or

      (d) Whose business operations are or have been marked, to the injury of insurers, stock holders, policy holders, creditors or the public, by illegality, or by manipulation of assets, or of accounts, or of reinsurance, or by bad faith.


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ê1971 Statutes of Nevada, Page 1579 (Chapter 660, AB 416)ê

 

NAME OF INSURER.

 

      Sec. 66.  1.  No insurer shall be formed or authorized to transact insurance in this state which has or uses a name which is the same as or deceptively similar to that of another insurer already so authorized, without the written consent of such other insurer.

      2.  No life insurer shall be so authorized which has or uses a name deceptively similar to that of another insurer, other than a predecessor in interest, authorized to transact insurance in this state within the preceding 10 years if life insurance policies originally issued by such other insurer are still outstanding in this state.

      3.  No insurer shall be formed or authorized to transact insurance which has or uses a name the same as or deceptively similar to that of any foreign insurer not so authorized if such foreign insurer has within the next preceding 12 months signified its intention to secure an incorporation in this state under such name, or to do business as a foreign insurer in this state under such name, by filing notice of such intention with the commissioner, unless the written consent to the use of such name or deceptively similar name has been given by such foreign insurer.

      4.  No insurer shall be so authorized which has or uses a name which tends to deceive or mislead as to the type of organization of the insurer.

      5.  In case of conflict of names between two insurers, or a conflict otherwise prohibited under this section, the commissioner may permit (or shall require as a condition to the issuance of an original certificate of authority to an applicant insurer) the insurer to use in this state such supplementation or modification of its name or such business name as may reasonably be necessary to avoid the conflict.

      6.  Except as provided in subsection 5, an insurer shall conduct its business in this state in its own corporate (if incorporated) or proper (if a reciprocal insurer) name.

 

 

COMBINATIONS OF INSURING POWERS.

 

      Sec. 67.  An insurer which otherwise qualifies therefor may be authorized to transact any one kind or any combination of kinds of insurance as defined in sections 103 to 110, inclusive, of this act (kinds of insurance), except:

      1.  A life insurer may grant annuities and may be authorized to transact in addition only health insurance; but the commissioner may, if the insurer otherwise qualifies therefor, continue so to authorize any life insurer which immediately prior to the effective date of this act was lawfully authorized to transact in this state a kind or kinds of insurance in addition to life and health insurances and annuity business.

      2.  A reciprocal insurer shall not transact life insurance.

 

 

CAPITAL FUNDS REQUIRED.

 

      Sec. 68.  1.  Except as provided in subsection 2, to qualify for authority to transact any one kind of insurance as defined in sections 103 to 110, inclusive, of this act (kinds of insurance), or combinations of kinds of insurance as shown below, an insurer shall possess and thereafter maintain unimpaired paid-in capital stock (if a stock insurer) or unimpaired basic surplus (if a foreign mutual or a foreign reciprocal insurer) and free surplus not less than 50 percent of the minimum required capital stock or minimum required basic surplus, as the case may be, and when first so authorized shall possess initial free surplus, all in amounts not less than as determined from the following table:

 


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ê1971 Statutes of Nevada, Page 1580 (Chapter 660, AB 416)ê

 

to 110, inclusive, of this act (kinds of insurance), or combinations of kinds of insurance as shown below, an insurer shall possess and thereafter maintain unimpaired paid-in capital stock (if a stock insurer) or unimpaired basic surplus (if a foreign mutual or a foreign reciprocal insurer) and free surplus not less than 50 percent of the minimum required capital stock or minimum required basic surplus, as the case may be, and when first so authorized shall possess initial free surplus, all in amounts not less than as determined from the following table:

 

                                                                                 FOREIGN MUTUAL          RECIPROCAL

                                   6STOCK INSURERS8      6INSURERS8            6INSURERS8

                                      Minimum                          Minimum                      Minimum

        Kind or                  Required        Initial          Required      Initial        Required        Initial

       Kinds of                   Capital          Free              Basic          Free            Basic            Free

      Insurance                    Stock         Surplus          Surplus      Surplus        Surplus        Surplus

Life.....................          $200,000     $500,000       $200,000   $500,000            Not Applicable

Health.................            200,000       500,000         200,000     500,000     $200,000     $500,000

Life & Health......            300,000       750,000         300,000     750,000             Not applicable

Property..............            300,000       750,000         300,000     750,000       300,000       750,000

Casualty..............            300,000       750,000         300,000     750,000       300,000       750,000

Casualty & Health                               400,000      1,000,000     400,000    1,000,000       400,000      1,000,000

Surety.................            500,000    1,000,000         500,000  1,000,000       500,000    1,000,000

Marine & Transportation             ........ 300,000           750,000........ 300,000           750,000........ 300,000           750,000

Multiple line.......            500,000    1,000,000         500,000  1,000,000       500,000    1,000,000

Title....................            100,000       250,000               Not applicable                  Not applicable

 

      2.  A domestic insurer holding a valid certificate of authority to transact insurance in this state immediately prior to the effective date of this act may, if otherwise qualified therefor, continue to be so authorized while possessing the amount of paid-in capital stock (if a stock insurer) or surplus (if a mutual insurer) required by the laws of this state for such authority immediately prior to such effective date. The commissioner shall not grant such an insurer authority to transact any other or additional kinds of insurance unless it then fully complies with the requirements as to capital and surplus, as applied to all kinds of insurance which it then proposes to transact, as provided by this section for like foreign insurers applying for original certificates of authority under this code.

      3.  Capital and surplus requirements are based upon all the kinds of insurance transacted by the insurer in any and all areas in which it operates or proposes to operate, whether or not only a portion of such kinds are to be transacted in this state.

      4.  As to surplus required for qualification to transact one or more kinds of insurance and thereafter to be maintained, domestic mutual insurers are governed by sections 580 to 617, inclusive, of this act (corporate powers, procedures of domestic stock and mutual insurers), and domestic reciprocal insurers are governed by sections 646 to 671, inclusive, of this act (reciprocal insurers).


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ê1971 Statutes of Nevada, Page 1581 (Chapter 660, AB 416)ê

 

domestic reciprocal insurers are governed by sections 646 to 671, inclusive, of this act (reciprocal insurers).

 

 

INSURING COMBINATIONS WITHOUT ADDITIONAL

CAPITAL FUNDS.

 

      Sec. 69.  Without additional capital or additional surplus, an authorized insurer is also authorized:

      1.  If a life insurer, to grant annuities.

      2.  If a health insurer, to insure against congenital defects, as defined in section 104 of this act.

 

 

DEPOSIT REQUIREMENT IN GENERAL.

 

      Sec. 70.  1.  The commissioner shall not authorize an insurer to transact insurance in this state, other than an alien insurer or a title insurer, unless it makes and thereafter continuously maintains on deposit in this state, through the commissioner, cash or securities eligible for such deposit under the laws of this state of a fair market value not less than its minimum required capital stock (if a stock insurer) or minimum required basic surplus (if a mutual or reciprocal insurer), for the protection of the insurer’s policy holders or of its policy holders and creditors in the United States of America.

      2.  The commissioner shall not so authorize a title insurer unless it so deposits and maintains such cash or securities of fair market value not less than its minimum required capital stock as a guaranty fund for the security and protection of the holders of, or beneficiaries under, the title insurance contracts issued by the insurer.

      3.  The commissioner shall not so authorize an alien insurer unless it so makes and thereafter continuously maintains such a deposit, representing funds in excess of all the insurer’s liabilities under insurance contracts in force in the United States of America, of a fair market value of not less than that required under subsection 1, as to a like foreign insurer. The deposit shall be held in trust for the protection of all the insurer’s policy holders, or policy holders and creditors, in the United States of America.

      4.  In lieu of such a deposit made or maintained in this state, the commissioner shall accept the certificate in proper form of the public officer having general supervision of insurers in any other state to the effect that a deposit of like quality and amount, or part thereof, by such insurer is being maintained for like purposes in public custody or control pursuant to the laws of such state, if the commissioner is satisfied as to the like quality and amount of such deposit.

      5.  All such deposits in this state are subject to the applicable provisions of sections 165 to 189, inclusive, of this act (administration of deposits).

 

 

APPLICATION FOR CERTIFICATE OF AUTHORITY.

 

      Sec. 71.  To apply for an original certificate of authority an insurer shall file with the commissioner its written application therefor on forms as prescribed and furnished by the commissioner, accompanied by the applicable fees specified in section 90 of this act (fee schedule), stating under the oath of the president or vice president or other chief officer and the secretary of the insurer, or of the attorney-in-fact (if a reciprocal insurer), the insurer’s name, location of its home office or principal office in the United States (if an alien insurer), the kinds of insurance to be transacted, date of organization or incorporation, form of organization, state or country of domicile, and such additional information as the commissioner may reasonably require, together with the following documents, as applicable:

 


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ê1971 Statutes of Nevada, Page 1582 (Chapter 660, AB 416)ê

 

as prescribed and furnished by the commissioner, accompanied by the applicable fees specified in section 90 of this act (fee schedule), stating under the oath of the president or vice president or other chief officer and the secretary of the insurer, or of the attorney-in-fact (if a reciprocal insurer), the insurer’s name, location of its home office or principal office in the United States (if an alien insurer), the kinds of insurance to be transacted, date of organization or incorporation, form of organization, state or country of domicile, and such additional information as the commissioner may reasonably require, together with the following documents, as applicable:

      1.  If a corporation, a copy of its charter or certificate or articles of incorporation, together with all amendments thereto, or as restated and amended under the laws of its state or country of domicile, currently certified by the public officer with whom the originals are on file in such state or country.

      2.  If a domestic incorporated insurer or a mutual insurer, a copy of its bylaws, certified by the insurer’s corporate secretary.

      3.  If a reciprocal insurer, a copy of the power of attorney of its attorney-in-fact, certified by the attorney-in-fact; and if a domestic reciprocal insurer, the declaration provided for in section 651 of this act.

      4.  A complete copy of its financial statement as of not earlier than the December 31 next preceding in form as customarily used in the United States of America by like insurers, sworn to by at least two executive officers of the insurer or certified by the public insurance supervisory officer of the insurer’s state of domicile, or of entry into the United States of America (if an alien insurer).

      5.  A copy of the report of last examination made of the insurer within not more than the 3 years next preceding, certified by the public insurance supervisory officer of the insurer’s state of domicile, or of entry into the Unites States of America (if an alien insurer).

      6.  The appointment of the commissioner pursuant to section 81 of this act as its attorney to receive service of legal process.

      7.  If a foreign or alien insurer, a certificate of the public insurance supervisory officer of its state or country of domicile showing that it is authorized or qualified for authority to transact in such state or country the kinds of insurance proposed to be transacted in this state.

      8.  If a foreign insurer, a certificate as to a deposit if it is to be tendered pursuant to section 70 of this act.

      9.  If a life or health insurer, a copy of the insurer’s rate book and of each form of policy currently proposed to be issued in this state, and of the form of application therefor.

      10.  If an alien insurer, a copy of the appointment and authority of its United States manager, certified by its officer having custody of its records.

      11.  Designation by the insurer of its officer or representative authorized to appoint and remove its agents in this state.


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ê1971 Statutes of Nevada, Page 1583 (Chapter 660, AB 416)ê

 

ISSUANCE, REFUSAL OF AUTHORITY; OWNERSHIP

OF CERTIFICATE.

 

      Sec. 72.  1.  If upon completion of its application the commissioner finds that the insurer has met the requirements therefor under this code, he may issue to the insurer a proper certificate of authority; if he does not so find, the commissioner shall issue his order refusing such certificate.

      2.  The certificate, if issued, shall state the insurer’s name, home office address, state or country of organization, and the kinds of insurance the insurer is authorized to transact throughout Nevada. At the insurer’s request, the commissioner may issue a certificate of authority limited to particular types of insurance or coverages within a kind of insurance as defined in sections 103 to 110, inclusive, of this act (kinds of insurance).

      3.  Although issued and delivered to the insurer, the certificate of authority at all times shall be the property of the State of Nevada. Upon any expiration, suspension or termination thereof the insurer shall promptly deliver the certificate to the commissioner.

 

 

AMENDED CERTIFICATE OF AUTHORITY.

 

      Sec. 73.  Upon written application therefor by the insurer and due cause shown, the commissioner may amend the certificate of authority of an insurer as required by change of name or to show any change in the kinds of insurance the insurer may thereafter transact and is qualified to transact in this state. The insurer shall accompany such request with the fee for amendment as specified in section 90 of this act (fee schedule).

 

 

CONTINUANCE, EXPIRATION, REINSTATEMENT OF

CERTIFICATE OF AUTHORITY.

 

      Sec. 74.  1.  A certificate of authority shall continue in force as long as the insurer is entitled thereto under this code, and until suspended or revoked by the commissioner or terminated at the insurer’s request, subject, however, to continuance of the certificate by the insurer each year by:

      (a) Payment on or before March 1 of the continuation fee provided in section 90 of this act (fee schedule);

      (b) Due filing by the insurer of its annual statement for the next preceding calendar year as required by section 83 of this act; and

      (c) Payment by the insurer of premium taxes with respect to the preceding calendar year.

      2.  If not so continued by the insurer, its certificate of authority shall expire at midnight on the May 31 next following such failure of the insurer to continue it in force, unless earlier revoked for failure to pay taxes as provided in section 75 of this act. The commissioner shall promptly notify the insurer of the occurrence of any failure resulting in impending expiration of its certificate of authority.

      3.  The commissioner may, in his discretion, upon the insurer’s request within 3 months after expiration, reinstate a certificate of authority which the insurer has inadvertently permitted to expire, after the insurer has fully cured all its failures which resulted in the expiration, and upon payment by the insurer of the fee for reinstatement specified in paragraph (b) of subsection 1 of section 90 of this act (fee schedule).


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ê1971 Statutes of Nevada, Page 1584 (Chapter 660, AB 416)ê

 

authority which the insurer has inadvertently permitted to expire, after the insurer has fully cured all its failures which resulted in the expiration, and upon payment by the insurer of the fee for reinstatement specified in paragraph (b) of subsection 1 of section 90 of this act (fee schedule). Otherwise the insurer shall be granted another certificate of authority only after filing an application therefor and meeting all other requirements for an original certificate of authority in this state.

 

 

SUSPENSION OR REVOCATION OF CERTIFICATE OF

AUTHORITY: MANDATORY GROUNDS.

 

      Sec. 75.  1.  The commissioner shall refuse to continue or shall suspend or revoke an insurer’s certificate of authority:

      (a) If such action is required by any provision of this code; or

      (b) If a foreign insurer and it no longer meets the requirements for a certificate of authority, on account of deficiency of capital or surplus or otherwise; or

      (c) If a domestic insurer and it has failed to cure an impairment of capital or surplus within the time allowed therefor by the commissioner under this code or is otherwise no longer qualified for the certificate of authority; or

      (d) If the insurer’s certificate of authority to transact insurance therein is suspended or revoked by its state of domicile, or state of entry into the United States of America if an alien insurer; or

      (e) For failure of the insurer to pay taxes on its premiums as required by this code.

      2.  Except in case of insolvency or impairment of required capital or surplus, or suspension or revocation by another state as referred to in paragraph (d) of subsection 1, the commissioner shall give the insurer at least 20 days’ notice in advance of any such refusal, suspension or revocation under this section, and of the particulars of the reasons therefor. If the insurer requests a hearing thereon within such 20 days, such request shall automatically stay the commissioner’s proposed action until his order is made on such hearing.

 

 

SUSPENSION, LIMITATION OR REVOCATION OF

CERTIFICATE OF AUTHORITY: DISCRETIONARY

AND SPECIAL GROUNDS.

 

      Sec. 76.  1.  The commissioner may, in his discretion, refuse to continue or may suspend, limit or revoke an insurer’s certificate of authority if he finds after a hearing thereon, or upon waiver of hearing by the insurer, that the insurer has:

      (a) Violated or failed to comply with any lawful order of the commissioner; or

      (b) Willfully violated or willfully failed to comply with any lawful regulation of the commissioner; or

      (c) Violated any provision of this code other than those for violation of which suspension or revocation is mandatory.


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ê1971 Statutes of Nevada, Page 1585 (Chapter 660, AB 416)ê

 

      In lieu of such suspension or revocation, the commissioner may, in his discretion, levy upon the insurer, and the insurer shall pay forthwith, an administrative fine of not more than $2,000.

      2.  The commissioner shall suspend or revoke an insurer’s certificate of authority on any of the following grounds, if he finds after a hearing thereon that the insurer:

      (a) Is in unsound condition, or is being fraudulently conducted, or is in such condition or using such methods and practices in the conduct of its business as to render its further transaction of insurance in this state currently or prospectively hazardous or injurious to policy holders or to the public.

      (b) With such frequency as to indicate its general business practice in this state:

             (1) Has without just cause failed to pay, or delayed payment of, claims arising under its policies, whether the claim is in favor of an insured or is in favor of a third person with respect to the liability of an insured to such third person; or

             (2) Without just cause compels insureds or claimants to accept less than the amount due them or to employ attorneys or to bring suit against the insurer or such an insured to secure full payment or settlement of such claims.

      (c) Refuses to be examined, or if its directors, officers, employees or representatives refuse to submit to examination relative to its affairs, or to produce its books, papers, records, contracts, correspondence or other documents for examination by the commissioner when required, or refuse to perform any legal obligation relative to the examination.

      (d) Has reinsured all its risks in their entirety in another insurer.

      (e) Has failed to pay any final judgment rendered against it in this state upon any policy, bond, recognizance or undertaking as issued or guaranteed by it, within 30 days after the judgment became final or within 30 days after dismissal of an appeal before final determination, whichever date is the later.

      3.  The commissioner may, in his discretion and without advance notice or a hearing thereon, immediately suspend the certificate of authority of any insurer as to which proceedings for receivership, conservatorship, rehabilitation or other delinquency proceedings have been commenced in any state by the public insurance supervisory officer of such state.

 

 

ORDER AND NOTICE OF SUSPENSION, LIMITATION,

REVOCATION: EFFECT UPON AGENTS’ AUTHORITY.

 

      Sec. 77.  1.  All suspensions, limitations or revocations of, or refusals to continue, an insurer’s certificate of authority shall be by the commissioner’s order given to the insurer.

      2.  Upon issuance of the order, the commissioner shall forthwith give notice thereof to the insurer’s agents in this state of record in the division, and shall likewise suspend, limit or revoke the authority of such agents to represent the insurer.


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ê1971 Statutes of Nevada, Page 1586 (Chapter 660, AB 416)ê

 

DURATION OF SUSPENSION; INSURER’S OBLIGATIONS

DURING SUSPENSION PERIOD; REINSTATEMENT.

 

      Sec. 78.  1.  Suspension of an insurer’s certificate of authority shall be for such period as the commissioner specifies in the order of suspension, but not to exceed 1 year. During the suspension period the commissioner may rescind or shorten the suspension by his further order.

      2.  During the suspension period the insurer shall not solicit or write any new business in this state, but shall file its annual statement, pay fees, licenses and taxes as required under this code, and may service its business already in force in this state, as if the certificate of authority had continued in full force.

      3.  Upon expiration of the suspension period, if within such period the certificate of authority has not terminated, the insurer’s certificate of authority shall automatically reinstate unless the commissioner finds that the causes of the suspension, being other than a past event, are continuing, or that the insurer is otherwise not in compliance with the requirements of this code, and of which the commissioner shall give the insurer notice not less than 30 days in advance of expiration of the suspension period.

      4.  Upon reinstatement of the insurer’s certificate of authority, the authority of its agents in this state to represent the insurer shall likewise reinstate. The commissioner shall promptly notify the insurer and its agents in this state, of record in the division, of such reinstatement.

 

 

GENERAL CORPORATION LAWS INAPPLICABLE TO

FOREIGN INSURERS.

 

      Sec. 79.  The general corporation laws of this state shall not apply to foreign insurers holding certificates of authority to transact insurance in this state.

 

 

ADDITIONAL “TITLE”; PROPERTY INSURER.

 

      Sec. 80.  1.  A property insurer or multiple line insurer authorized to transact insurance in Nevada shall have the right to issue property insurance policies under its own name and under additional “titles” or under additional “titles” duly registered by the insurer with the commissioner.

      2.  The commissioner shall, upon the insurer’s request, furnish to the insurer the form required for such registration, and the insurer shall pay the fee for registration as specified in section 90 of this act (fee schedule). Registered titles shall be shown on the insurer’s certificate of authority and shall remain in effect for so long as the insurer’s certificate of authority is in effect, subject to earlier termination of the registration at the insurer’s request.

      3.  All business transacted by the insurer under additional titles shall be included in business and transactions of the insurer to be shown by its annual statement filed with the commissioner, for all purposes under this code.


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ê1971 Statutes of Nevada, Page 1587 (Chapter 660, AB 416)ê

 

COMMISSIONER PROCESS AGENT FOR CERTAIN INSURERS.

 

      Sec. 81.  1.  Before the commissioner may authorize it to transact insurance in this state, each insurer shall appoint the commissioner, and his successors in office, as its attorney to receive service of legal process issued against the insurer in this state. The appointment shall be made on a form as designated and furnished by the commissioner, and shall be accompanied by a copy of a resolution of the board of directors or like governing body of the insurer, if an incorporated insurer, showing that those officers who executed the appointment were duly authorized to do so on behalf of the insurer.

      2.  The appointment shall be irrevocable, shall bind the insurer and any successor in interest to the assets or liabilities of the insurer, and shall remain in effect as long as there is in force any contract of the insurer in this state or any obligation of the insurer arising out of its transactions in this state.

      3.  Service of such process against a foreign or alien insurer shall be made only by service thereof upon the commissioner.

      4.  Service of such process against a domestic insurer may be made as provided in this section, or in any other manner provided by Nevada Rules of Civil Procedure.

      5.  At the time of application for a certificate of authority the insurer shall file the appointment with the commissioner, together with a designation of the person to whom process against it served upon the commissioner is to be forwarded. The insurer may change such designation by a new filing.

 

 

SERVING PROCESS; TIME TO PLEAD.

 

      Sec. 82.  1.  Service of process against an insurer for whom the commissioner is attorney shall be made by delivering to and leaving with the commissioner, his deputy, or a person in apparent charge of his office during the commissioner’s absence, two copies of the process, together with the fee therefor as specified in section 90 of this act (fee schedule), taxable as costs in the action.

      2.  Upon such service the commissioner shall forthwith mail by certified mail one of the copies of such process, with the date and time of service of the same on the commissioner noted thereon, to the person currently designated by the insurer to receive the copy as provided in section 81 of this act. Service of process shall be complete when the copy has been so mailed.

      3.  Process served in the manner provided by this section shall for all purposes constitute valid and binding personal service upon the insurer within this state. If summons is served under this section, the time within which the insurer is required to appear shall be extended an additional 10 days beyond that otherwise allowed by Nevada Rules of Civil Procedure.

      4.  The commissioner shall keep a record of the day of service upon him of all legal process.


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ê1971 Statutes of Nevada, Page 1588 (Chapter 660, AB 416)ê

 

ANNUAL STATEMENT.

 

      Sec. 83.  1.  Each authorized insurer shall annually on or before March 1, or within any reasonable extension of time therefor which the commissioner for good cause may have granted on or before such date, file with the commissioner a full and true statement of its financial condition, transactions and affairs as of December 31 preceding. The statement shall be in the general form and context of, and require information as called for by, the form of annual statement as currently in general and customary use in the United States of America for the type of insurer and kinds of insurance to be reported upon, with any useful or necessary modification or adaptation thereof, supplemented by additional information required by the commissioner. The statement shall be verified by the oath of the insurer’s president or vice president and secretary or actuary, as applicable, or, in the absence of the foregoing, by two other principal officers; or if a reciprocal insurer, by the oath of the attorney-in-fact, or its like officers if a corporation.

      2.  The statement of an alien insurer shall be verified by its United States manager or other officer duly authorized, and shall relate only to the insurer’s transactions and affairs in the United States of America unless the commissioner requires otherwise. If the commissioner requires a statement as to such an insurer’s affairs throughout the world, the insurer shall file such statement with the commissioner as soon as reasonably possible.

      3.  The commissioner may refuse to continue, or may suspend or revoke, the certificate of authority of any insurer failing to file its annual statement when due.

      4.  At the time of filing, the insurer shall pay the fee for filing its annual statement as prescribed by section 90 of this act (fee schedule).

 

 

PENALTIES FOR LATE, FALSE ANNUAL STATEMENTS.

 

      Sec. 84.  1.  Any insurer failing, without just cause beyond the reasonable control of the insurer, to file its annual statement as required in section 83 of this act shall be required to pay a penalty of $100 for each day’s delay, but not to exceed $3,000 in aggregate amount, to be recovered in the name of the State of Nevada by the attorney general.

      2.  Any director, officer, agent or employee of any insurer who subscribes to, makes or concurs in making or publishing, any annual or other statement required by law, knowing the same to contain any material statement which is false, is guilty of a gross misdemeanor.

 

 

LOSS PREVENTION REPORTS AND PROGRAMS.

 

      Sec. 84.5.  1.  Every insurer shall submit an annual report to the commissioner on September 15, concerning its loss prevention and control programs, and on new conclusions it has reached as to the loss implications of its statistics, underwriting, claims files and operations.

      2.  Based on the reports of subsection 1, as well as other available information, the commissioner shall prepare each year a report on the loss prevention programs of insurers with recommendations for more effective loss prevention activity.


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ê1971 Statutes of Nevada, Page 1589 (Chapter 660, AB 416)ê

 

prevention programs of insurers with recommendations for more effective loss prevention activity.

 

 

RESIDENT AGENT; COUNTERSIGNATURE LAW.

 

      Sec. 85.  1.  Except as provided in section 86 of this act, no authorized insurer shall make, write, place or cause to be made or placed, any policy, duplicate policy or contract of insurance of any kind upon persons, property or risks resident, located or to be performed in this state, except through its duly appointed and licensed agents resident of this state, any one of whom shall countersign the same.

      2.  Where two or more insurers jointly issue a single policy, the policy may be countersigned, on behalf of all insurers appearing thereon, by a licensed agent resident in this state of any one such insurer.

      3.  In any case where it is necessary to execute an emergency bond and a commissioned agent authorized to execute such bond is not present, a manager or other employee of the insurer having authority under a power of attorney may execute such bond in order to produce a valid contract between the insurer and the obligee; but the bond shall subsequently be countersigned by a resident commissioned agent, who shall make and retain an adequate office record of the transaction.

      4.  Nothing contained in this section shall be construed as preventing the free and unlimited right to negotiate contracts by licensed nonresident agents or brokers outside this state, provided the policies, endorsements or evidence of such contracts covering properties or insurable interests in this state are countersigned by a resident agent of this state. Every such policy or contract shall be countersigned by a resident agent.

      5.  On such business produced by a licensed nonresident agent or broker, which is countersigned by a resident commissioned agent of this state, there shall be a division of the usual customary commission between the licensed nonresident producing agent or broker and the resident countersigning commissioned agent which shall produce for the latter a commission of at least 5 percent of the premium; but no countersignature commission or fee shall be required as to policies or contracts with an annual premium of $25 or less. The insurer issuing any such policy, contract or bond shall be responsible for payment to the countersigning agent of the countersignature fee or commission. Where the licensed nonresident agent or broker or the insurer assuming the risk desires the resident commissioned agent to render additional services during the life of a policy, then the compensation to the countersigning commissioned resident agent shall be a matter of contract between the parties in interest.

 

 

EXCEPTIONS TO RESIDENT AGENT COUNTERSIGNATURE LAW.

 

      Sec. 86.  Section 85 of this act does not apply to any of the following:

      1.  Life insurance and annuities.

      2.  Health insurance.

      3.  Policies covering property in transit while in the possession or custody of any common carrier, or the rolling stock or other property of any common carrier employed by it in the operation and maintenance of plant and business as a common carrier of freight or passengers, or both.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1590 (Chapter 660, AB 416)ê

 

any common carrier employed by it in the operation and maintenance of plant and business as a common carrier of freight or passengers, or both.

      4.  Reinsurance or retrocessions made by or for authorized insurers.

      5.  Bid bonds issued in connection with any public or private contract.

 

 

TRANSACTIONS WITH PARENT CORPORATION, SUBSIDIARIES AND AFFILIATES.

 

      Sec. 87.  1.  For the purposes of this section:

      (a) A “subsidiary” is a person of which either the insurer and the parent corporation or the insurer or the parent corporation holds practical control.

      (b) An “affiliated person” is a person controlled by any combination of the insurer, the parent corporation, a subsidiary or the principal stock holders or officers or directors of any of the foregoing.

      2.  No insurer shall engage directly or indirectly in any transaction or agreement with its parent corporation, or with any subsidiary or affiliated person which will result or tend to result in:

      (a) Substitution contrary to the interests of the insurer and through any method of any asset of the insurer with an asset or assets of inferior quality or lower fair market value; or

      (b) Deception as to the true operating results of the insurer; or

      (c) Deception as to the true financial condition of the insurer; or

      (d) Allocation to the insurer of a proportion of the expense of combined facilities or operations which is unfair and unfavorable to the insurer; or

      (e) Unfair or excessive charges against the insurer for services, facilities, supplies or reinsurance; or

      (f) Unfair and inadequate charges by the insurer for reinsurance, services, facilities or supplies furnished by the insurer to others; or

      (g) Payment by the insurer for services, facilities, supplies or reinsurance not reasonably needed by the insurer; or

      (h) Depletion of the insurer’s surplus, through payment of dividends or other distribution or withdrawal, below the amount thereof reasonably required for conduct of the insurer’s business and maintenance of growth with safety to policy holders.

      3.  In all transactions between the insurer and its parent corporation, or involving the insurer and any subsidiary or affiliated person, full recognition shall be given to the paramount duty and obligation of the insurer to protect the interests of policy holders, both existing and future.

 

 

RETALIATORY PROVISION.

 

      Sec. 88.  1.  When, by or pursuant to the laws of any other state or foreign country or province, any taxes, licenses and other fees, in the aggregate, and any fines, penalties, deposit requirements or other material requirements, obligations, prohibitions or restrictions are or would be imposed upon Nevada insurers doing business or that might seek to do business in such state, country or province, or upon the agents or representatives of such insurers or upon brokers or adjusters, which are in excess of such taxes, licenses and other fees, in the aggregate, or which are in excess of the fines, penalties, deposit requirements or other requirements, obligations, prohibitions or restrictions directly imposed upon similar insurers, or upon the agents or representatives of such insurers, or upon brokers, or upon adjusters, of such other state, country or province under the statutes of this state, so long as such laws of such other state, county or province continue in force or are so applied, the same taxes, licenses and other fees, in the aggregate, or fines, penalties or deposit requirements or other material requirements, obligations, prohibitions or restrictions of whatever kind shall be imposed by the commissioner upon the insurers, or upon the agents or representatives of such insurers, or upon brokers, of such other state, country or province doing business or seeking to do business in Nevada.


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ê1971 Statutes of Nevada, Page 1591 (Chapter 660, AB 416)ê

 

business in such state, country or province, or upon the agents or representatives of such insurers or upon brokers or adjusters, which are in excess of such taxes, licenses and other fees, in the aggregate, or which are in excess of the fines, penalties, deposit requirements or other requirements, obligations, prohibitions or restrictions directly imposed upon similar insurers, or upon the agents or representatives of such insurers, or upon brokers, or upon adjusters, of such other state, country or province under the statutes of this state, so long as such laws of such other state, county or province continue in force or are so applied, the same taxes, licenses and other fees, in the aggregate, or fines, penalties or deposit requirements or other material requirements, obligations, prohibitions or restrictions of whatever kind shall be imposed by the commissioner upon the insurers, or upon the agents or representatives of such insurers, or upon brokers, of such other state, country or province doing business or seeking to do business in Nevada. Any tax, license or other fee or other obligation imposed by any city, county or other political subdivision or agency of such other state, country or province on Nevada insurers or their agents, representatives or adjusters shall be deemed to be imposed by such state, country or province within the meaning of this section.

      2.  This section does not apply to:

      (a) Personal income taxes; or

      (b) Ad valorem taxes on real or personal property; or

      (c) Special purpose obligations or assessments imposed by another state in connection with particular kinds of insurance other than property insurance,

except that deductions, from premium taxes or other taxes otherwise payable, allowed on account of real or personal property taxes paid shall be taken into consideration by the commissioner in determining the propriety and extent of retaliatory action under this section.

      3.  For the purposes of this section the domicile of an alien insurer, other than insurers formed under the laws of Canada or a province thereof, shall be that state designated by the insurer in writing filed with the commissioner at the time of admission to this state or within 6 months after the effective date of this act, whichever date is the later, and may be any one of the following states:

      (a) That in which the insurer was first authorized to transact insurance; or

      (b) That in which is located the insurer’s principal place of business in the United States of America; or

      (c) That in which is held the largest deposit of trusteed assets of the insurer for the protection of its policy holders in the United States of America.

      If the insurer makes no such designation, its domicile shall be deemed to be that state in which is located its principal place of business in the United States of America.

      4.  The domicile of a Canadian insurer shall be the province of Canada in which its head office is located.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1592 (Chapter 660, AB 416)ê

 

CHAPTER 4

 

FEES AND TAXES

 

      Sec. 89.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 90 to 101, inclusive, of this act.

 

 

FEE SCHEDULE.

 

      Sec. 90.  The commissioner shall collect in advance and receipt for, and persons so served shall pay to the commissioner, fees, licenses and miscellaneous charges as follow:

      1.  Insurer’s certificate of authority:

      (a) Insurance, and each annual continuation:

             (1) For any one kind of insurance as defined in sections 103 to 110, inclusive, of this act      ...................................................................................................... $100

             (2) For two or more kinds of insurance as so defined........................              200

      (b) Reinstatement (section 74 of this act), 50 percent of the annual continuation fee otherwise required.

      (c) Registration of additional title (section 80 of this act).......................                25

             Annual renewal..........................................................................................                25

      2.  Charter documents (other than those filed with application for certificate of authority). Filing amendments to articles of incorporation, charter, bylaws, power of attorney (as to reciprocal insurers), and other constituent documents of the insurer, each document ......................................................................................................... $10

      3.  Annual statement of insurer. For filing annual statement................              $25

      4.  Service of process:

      (a) Filing of power of attorney.....................................................................                $5

      (b) Acceptance of service of process..........................................................                   5

      5.  Agents’ licenses and appointments:

      (a) Application for original resident agent’s license and issuance of license, if issued        $5

      (b) Appointment of resident agent:

             (1) Each insurer.........................................................................................                   2

             (2) Annual continuation of appointment, each insurer.....................                   2

      (c) Temporary license....................................................................................                   3

      (d) Limited license (section 215 of this act), each insurer, each year....                   2

      (e) Nonresident agents:

             (1) Nonresident agent’s license, other than as specified in paragraph (f), application and issuance, if issued......................................................................                15

             (2) Appointment of such agent, each insurer......................................                10

             (3) Annual continuation of appointment, each insurer.....................                10

      (f) Nonresident agent’s license qualifying under subsection 3 of section 223 of this act; same as for resident agent license under paragraphs (a) and (b).

      6.  Brokers:

      (a) Resident broker’s license:


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ê1971 Statutes of Nevada, Page 1593 (Chapter 660, AB 416)ê

 

             (1) Application for original resident broker’s license and issuance of license, if issued        $25

             (2) Annual continuation..........................................................................                25

      (b) Nonresident broker’s license:

             (1) Nonresident broker’s license (other than as specified in paragraph (c) below), application for original license and issuance, if issued....................................                           75

             (2) Annual continuation..........................................................................                75

      (c) Nonresident broker’s license, qualifying under subsection 4 of section 223 of this act, same as for resident broker’s license under paragraph (a).

      (d) Surplus lines broker’s license:

             (1) Surplus lines broker’s license, application and issuance, if issued                              10

             (2) Annual continuation..........................................................................                10

      7.  Solicitors:

      (a) Application for original license and issuance of license, if issued....                $2

      (b) Annual continuation................................................................................                   2

      8.  Managing general agents. Annual continuation, each insurer.........                $5

      9.  Adjusters:

      (a) Adjuster’s license:

             (1) Application for original adjuster’s license and issuance of license, if issued            $10

             (2) Annual continuation of license........................................................                10

      (b) Associate adjuster’s license:

             (1) Associate adjuster’s license (as defined in section 251 of this act), application and issuance of license, if issued....................................................                   5

             (2) Annual continuation..........................................................................                   5

      10.  Motor vehicle physical damage appraisers:

      (a) Application for original license and issuance of license, if issued....              $10

      (b) Annual continuation of license..............................................................                10

      11.  Life insurance analysts:

      (a) Application for original license and issuance of license, if issued....              $25

      (b) Annual continuation of license..............................................................                25

      12.  Examination for license:

      (a) Filing application for each examination, other than life insurance analyst, each kind of insurance....................................................................................................              $10

      (b) Life insurance analysts, filing application, each examination.........                25

      13.  Additional title, property insurers (section 80 of this act):

      (a) Original registration..................................................................................              $25

      (b) Annual continuation of registration......................................................                25

      14.  Insurance vending machines:

      (a) Filing application for license and issuance, if issued, each machine                          $20

      (b) Annual continuation of license, each machine...................................                20


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ê1971 Statutes of Nevada, Page 1594 (Chapter 660, AB 416)ê

 

      15.  Securities solicitation permit:

      (a) Application for permit.............................................................................            $100

      (b) Extension of permit..................................................................................                50

      16.  Securities salesman, domestic insurers:

      (a) Filing application for license and issuance, if issued..........................              $10

      (b) Annual continuation of license..............................................................                10

      17.  Rating organizations:

      (a) Filing application for license and issuance, if issued..........................            $100

      (b) Annual continuation of license..............................................................              100

      18.  Insurance laws, each copy, not less than cost.

      19.  Certified copy of insurer certificate of authority or of any license issued under this code   ........................................................................................................... $2

      20.  Copies of other documents on file in the division: A reasonable charge as fixed by the commissioner; and for certifying and affixing official seal...............                $1

      21.  Letter of clearance as to agent or broker..........................................                $2

      22.  Certificate of license status, agent or broker....................................                $2

 

 

STATE LICENSE EXCLUSIVE; EXCEPTION.

 

      Sec. 91.  1.  Notwithstanding the provisions of any general or special law, the possession of a license or certificate of authority issued under this code shall be authorization to transact such business as indicated in such license or certificate of authority, and shall be in lieu of all licenses, whether for regulation or revenue, required to transact insurance business within the State of Nevada; but each city, town or country may require a license for revenue purposes only for any insurance agent, broker, analyst, adjuster or managing general agent whose principal place of business is located within such city or town, or within the county outside the cities and towns of the county, respectively.

      2.  This section shall not be modified or repealed by any law of general application enacted after the effective date of this act unless expressly referred to or expressly repealed therein.

 

 

GENERAL PREMIUM TAX; PENALTY.

 

      Sec. 92.  1.  Each insurer and each formerly authorized insurer with respect to insurance transacted while an authorized insurer and property bondsman shall, on or before March 1 each year, or within any reasonable extension of time therefor which the commissioner may for good cause have granted on or before such date, file with the commissioner a report in such form as prescribed by the commissioner showing total premium income, including policy, membership and other fees and assessments, and all other considerations for insurance, bail or annuity contracts received by it during the next preceding calendar year on account of policies and contracts covering property, subjects or risks located, resident or to be performed in this state (with proper proportionate allocation of premiums as to such persons, property, subjects or risks in this state insured under policies and contracts covering persons, property, subjects or risks located or resident in more than one state), after deducting from such total premium income:


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1595 (Chapter 660, AB 416)ê

 

      (a) The amount of return premiums;

      (b) Premiums received for reinsurance on such property or risks; and

      (c) Dividends, savings and unabsorbed premium deposits returned to policyholders in cash or credited to their accounts.

      The report shall be verified by the oath or affirmation of the insurer’s president, vice president, secretary, treasurer or manager.

      2.  As used in subsection 1, “total premium income” does not include premiums or considerations received from life insurance policies or annuity contracts issued in connection with the funding of a pension, annuity or profit-sharing plan qualified or exempt under sections 401, 403, 404 or 501 of the United States Internal Revenue Code as now or hereafter amended or renumbered from time to time.

      3.  Funds accepted by a life insurer under an agreement which provides for an accumulation of funds to purchase annuities at future dates may for the purposes of the tax imposed by this section be considered as “total premium income” either upon receipt or upon the actual application of such funds to the purchase of annuities. However, any interest credited to funds accumulated while under the latter alternative shall also be included in “total premium income,” and any funds taxed upon receipt, including any interest later credited thereto, shall not be subject to taxation upon the purchase of annuities. Each life insurer shall signify on its premium tax return covering premiums for the calendar year 1971 its election between such two alternatives. Thereafter an insurer shall not change such election without the consent of the commissioner. Any such funds taxed as “total premiums” shall, in the event of withdrawal of the funds before their actual application to the purchase of annuities, be eligible to be included as “return premiums” under the provisions of subsection 1.

      4.  For the purposes of this section, “total premium income” as to title insurance includes the amount charged the insured for abstracting, title searching and title examination services performed by, or on behalf of, the insurer, its agent or underwritten title company.

      5.  For purposes of this section factory mutuals shall pay 2 percent on all gross premiums upon policies on risks located in this state in force on December 31 next preceding, after deducting from such gross premiums dividends and returns to policyholders computed at the average rate on annual policies expiring during the preceding year, whether actually paid or applied in part payment of any renewal premiums.

      6.  The commissioner may require at any time verified supplemental statements with reference to any matter pertinent to the proper assessment of the tax.

      7.  Coincidentally with the filing of such report each such insurer shall pay to the commissioner, for the privilege of transacting business in this state, a tax of 2 percent upon such net premiums and net considerations.

      8.  A domestic insurer doing business in a state in which such insurer is not licensed and to which the insurer does not pay a premium tax, shall report and pay the tax on such business to the State of Nevada as though such business were transacted in this state.

      9.  Payment, by an insurer, of the tax required in this section shall be in lieu of all taxes imposed by the state or any city, town or county upon premiums or upon income of insurers and of franchise, privilege or other taxes measured by income of the insurer.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1596 (Chapter 660, AB 416)ê

 

upon premiums or upon income of insurers and of franchise, privilege or other taxes measured by income of the insurer. This subsection shall not be modified or repealed by any law of general application enacted after the effective date of this act unless expressly referred to or expressly repealed therein.

      10.  Any insurer that fails to file the report or pay the tax as required by this section within the time for filing and payment as provided in this section shall in addition to any other applicable penalty pay a penalty equal to the rate of 10 percent upon the amount of tax assessed against it.

 

 

INDEPENDENTLY PROCURED COVERAGES: REPORT; TAX.

 

      Sec. 92.5.  1.  Every insured in this state who procures or causes to be procured or continues or renews insurance in an unauthorized foreign insurer, or any self-insurer in this state who so procures or continues excess loss, catastrophe or other insurance, upon a subject of insurance resident, located or to be performed within this state, other than insurance procured through a surplus line broker pursuant to the surplus line insurance law of this state or exempted from such law, shall within 30 days after the date such insurance was so procured, continued or renewed, file a written report of the same with the commissioner on forms prescribed by the commissioner and furnished to such an insured upon request. The report shall show:

      (a) The name and address of the insured or insureds.

      (b) The name and address of the insurer.

      (c) The subject of the insurance.

      (d) A general description of the coverage.

      (e) The amount of premium currently charged therefor.

      (f) Such additional pertinent information as is reasonably requested by the commissioner.

If any such insurance covers also a subject of insurance resident, located or to be performed outside this state, for the purposes of this section a proper pro rata portion of the entire premium payable for all such insurance shall be allocated as to the subjects of insurance resident, located or to be performed in this state.

      2.  Any insurance in an unauthorized insurer procured through negotiations or an application in whole or in part occurring or made within or from within this state, or for which premiums in whole or in part are remitted directly or indirectly from within this state, shall be deemed to be insurance procured or continued or renewed in this state within the intent of subsection 1.

      3.  For the general support of the government of this state there is levied upon the obligation, chose in action or right represented by the premium charged or payable for such insurance a tax at the rate of 2 percent of the gross amount of such premium. The insured shall withhold the amount of the tax from the amount of premium charged by and otherwise payable to the insurer for such insurance, and within 30 days after the insurance was so procured, continued or renewed, and coincidentally with the filing with the commissioner of the report provided for in subsection 1, the insured shall pay the amount of the tax to the state treasurer through the commissioner.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1597 (Chapter 660, AB 416)ê

 

      4.  If the insured fails to withhold from the premium the amount of tax levied in this section, the insured shall be liable for the amount thereof and shall pay the same to the commissioner within the time stated in subsection 3.

      5.  The tax imposed by this section if delinquent shall bear interest at the rate of 6 percent per annum, compounded annually.

      6.  The tax shall be collectible from the insured by civil action brought by the commissioner, and by the seizure, distraint and sale of any property of the insured situated in this state.

      7.  This section does not abrogate or modify, and shall not be construed or deemed to abrogate or modify, any other provision of this code.

      8.  This section does not apply to life or disability insurances.

 

 

TAX CREDIT IF REGIONAL HOME OFFICE IS IN NEVADA.

 

      Sec. 93.  1.  A domestic or foreign insurer which owns and substantially occupies and uses any building in this state as its home office or as a regional home office, as defined in subsection 2, shall be entitled to the following credits and deductions against the tax otherwise imposed under section 92 of this act:

      (a) An amount equal to 50 percent of the amount of the tax as determined under section 92 of this act; and

      (b) An amount equal to the full amount of ad valorem taxes paid by the insurer during the calendar year next preceding the filing of the report required by section 92 of this act, upon such home office or regional home office together with the land, as reasonably required for the convenient use of such office, upon which such home office or regional home office is situated.

      However, in no event shall such credits and deductions reduce the amount of tax payable to less than 20 percent of the tax otherwise payable by the insurer under section 92 of this act.

      2.  For the purposes of this section a “regional home office” means an office of the insurer performing for an area covering three or more states, the sales supervision, underwriting, issuing and servicing of the insurance business of the insurer, including also the following related functions: Actuarial, medical (where required), law, approval or rejection of applications for insurance and issuance of policies thereon, approval of payment of claims, maintenance of records to provide policy-holder information and service, advertising, publications, public relations and supervision and training of sales and service personnel.

      3.  The insurer shall on or before March 1 of each year furnish proof to the commissioner’s satisfaction, on forms furnished by or acceptable to the commissioner, as to its entitlement to the tax reduction provided for in this section.

      4.  Tax credit or reduction shall be allowed only with respect to calendar years during the entirety of which the insurer owned, occupied and used its home office or regional home office in this state.

      5.  If two or more insurers under common ownership or management and control jointly own in equal interest, and jointly occupy and use such a home office or regional home office in this state for the conduct and administration of their respective insurance businesses as provided in this section, each of such insurers shall be entitled to the credits and reductions provided for by this section if otherwise qualified therefor hereunder.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1598 (Chapter 660, AB 416)ê

 

section, each of such insurers shall be entitled to the credits and reductions provided for by this section if otherwise qualified therefor hereunder.

 

 

PREMIUM TAX: COLLECTION AND CREDITING; PAYMENT UNDER PROTEST.

 

      Sec. 94.  1.  The taxes imposed under section 92 of this act shall be collected by the commissioner and promptly paid by him to the state treasurer to the credit of the general fund.

      2.  If the tax is not paid by the insurer on or before the date required for payment, the tax shall then become delinquent, and payment thereof may be enforced by court action instituted on behalf of the state by the attorney general. The attorney general may employ additional counsel in the city where the home office of the insurer is located, subject to approval of compensation for such services by the state board of examiners.

      3.  Upon the tax becoming delinquent the commissioner shall suspend or revoke the insurer’s certificate of authority.

      4.  In event of dispute between an insurer and the state as to the amount of tax, if any, payable, the insurer shall have the right to pay under protest the tax in the amount assessed by the commissioner, without waiving or otherwise affecting any right of the insurer to recover any amount determined, through appropriate legal action taken by the insurer, to have been in excess of the amount of tax lawfully payable.

      5.  All taxes, fees, licenses, fines and charges collected by the commissioner under this code, including the general premium tax provided for under section 92 of this act, and as increased in any instances pursuant to section 88 of this act (retaliatory provision), shall be promptly paid by him to the state treasurer to the credit of the general fund.

 

      Sec. 95.  [There is no section 95.]

 

 

N.A.I.C. GENERAL EXPENSE ASSESSMENT.

 

      Sec. 96.  1.  Each authorized insurer shall on or before August 1 of each year pay to the commissioner such uniform amount, not to exceed $10, as the commissioner may require and give the insurer written notice thereof, to cover the assessment levied upon this state in the same calendar year by the National Association of Insurance Commissioners for the purpose of defraying:

      (a) The general expenses of such association; and

      (b) Reasonable and necessary travel and related expenses incurred by the commissioner and members of his staff in attending meeting of such association, its committees, subcommittees, hearings and its other official activities.

      2.  There is created in the state treasury a revolving fund designated the insurance division national association fund. The commissioner shall promptly transmit to the state treasurer all moneys received by him pursuant to subsection 1 for credit to this fund.


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ê1971 Statutes of Nevada, Page 1599 (Chapter 660, AB 416)ê

 

      3.  Upon presentation of proper vouchers approved by the commissioner, the state controller shall issue his warrants upon the fund, and the state treasurer shall pay the same out of the money credited to the fund.

 

 

VALUATION OF SECURITIES ASSESSMENT ON DOMESTIC LIFE INSURERS: PURPOSE OF SECTIONS 97 TO 101.

 

      Sec. 97.  The purpose of sections 97 to 101, inclusive, of this act is to provide a means of making funds, not in excess of $250,000 in any 1 year, available to the committee on valuation of securities in the National Association of Insurance Commissioners to defray the expense of such committee in the investigation, analysis and valuation of securities and the determination of the amortizability of bonds owned by insurers, and for the purpose of furnishing to the several states on a uniform basis information needed in the supervision of insurers licensed to transact business in the several states.

 

 

COMMISSIONER TO DISBURSE FUNDS.

 

      Sec. 98.  The commissioner is authorized to disburse in the manner provided in section 100 of this act, in cooperation with supervisory officers of other states, funds obtained through assessments for such purpose under the provisions of sections 97 to 101, inclusive, of this act.

 

 

COMMISSIONER TO OBTAIN BUDGET ESTIMATES, FINANCIAL REPORTS.

 

      Sec. 99.  1.  The commissioner shall periodically obtain from the committee on valuation of securities of the National Association of Insurance Commissioners a verified budget estimate of the receipts and expenses to be incurred by the committee for a stated period, not exceeding 1 year, with appropriate explanations of the estimates therein contained.

      2.  The commissioner shall require annually, and at such other times as he may deem it necessary or advisable, a certified audit of receipts and disbursements and statement of assets and liabilities showing the details of the financial operations of the committee on valuation of securities of the National Association of Insurance Commissioners.

 

 

ASSESSMENT ON DOMESTIC LIFE INSURERS; COMPUTATION; DEPOSITS AND DISBURSEMENTS.

 

      Sec. 100.  1.  If the commissioner is satisfied as to the reasonableness of the budget estimate as provided in section 99 of this act, he shall determine the portion of the funds required by such budget estimate to be assessed as provided in this section, by deducting from such budget estimate or from the sum of $250,000, whichever is lesser, any amounts received or receivable by the committee from other states whose laws do not substantially conform to the method of assessment provided by sections 97 to 101, inclusive, of this act, and applying to the remainder the proportion which the total investments in securities of domestic life insurers bears to the total investments in securities of life insurers domiciled in this and other states whose laws authorize and require assessments on substantially the same basis as herein provided.


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ê1971 Statutes of Nevada, Page 1600 (Chapter 660, AB 416)ê

 

not substantially conform to the method of assessment provided by sections 97 to 101, inclusive, of this act, and applying to the remainder the proportion which the total investments in securities of domestic life insurers bears to the total investments in securities of life insurers domiciled in this and other states whose laws authorize and require assessments on substantially the same basis as herein provided.

      2.  The commissioner shall thereafter, as soon as convenient, by notice stating the method of computation thereof, assess the amount to be paid on account of such expenses, pro rata, upon all domestic life insurers in the proportion which the total investments in securities of each domestic life insurer bears to the total investments in securities of all such insurers.

      3.  The total investments in securities of any life insurer for purposes of this section shall be the total admitted value of stocks and bonds reported as such in its annual statement last filed with the commissioner or other supervisory officer of its state of domicile prior to such assessment.

      4.  Upon receipt of such notice, each such insurer shall, within 30 days, pay the assessment to the commissioner, who shall remit such funds to the state treasurer as custodian thereof.

      5.  The state treasurer shall place such money in a fund to be known as the valuation of securities fund.

      6.  Upon presentation of proper vouchers approved by the commissioner, the state controller shall issue his warrants upon the fund, and the state treasurer shall pay the same out of the money credited to the fund. Such disbursement shall be made to the committee on valuation of securities of the National Association of Insurance Commissioners for the purposes provided in sections 97 to 101, inclusive, of this act.

 

 

REFUND OF OVERPAYMENTS.

 

      Sec. 101.  1.  Any person from whom fees, charges or taxes imposed by this act have been erroneously collected may apply to the commissioner for refund at any time within 1 year after the date such fees, charges or taxes were originally required to be paid or within 30 days after the date of payment of any additional tax, charge or fee.

      2.  If the amount of taxes, charges or fees due are found by the commissioner to be less than the amount paid, either by examination of the return or by allowance of a claim for overpayment filed by the payor, then upon presentation of proper vouchers by the commissioner, the state controller shall issue his warrants upon the appropriate fund and the state treasurer shall pay the same out of the money credited to that fund.

      3.  Whenever such a refund is found to be due an insurer, the commissioner, in lieu of preparing the proper vouchers for a cash refund, may authorize the insurer to credit the amount of the refund against the premium tax payable by it under section 92 of this act in the next following calendar year.

      4.  No cash refund shall be made unless the amount to be so refunded is $10 or more.


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ê1971 Statutes of Nevada, Page 1601 (Chapter 660, AB 416)ê

 

CHAPTER 5

 

KINDS OF INSURANCE; LIMITS OF RISK; REINSURANCE

 

      Sec. 102.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 103 to 113, inclusive, of this act.

 

 

DEFINITIONS NOT MUTUALLY EXCLUSIVE.

 

      Sec. 103.  1.  As used in this code, unless the context otherwise requires, the words and terms defined in sections 104 to 110, inclusive, of this act shall have the meanings ascribed to them in sections 104 to 110, inclusive, of this act.

      2.  It is intended that certain insurance coverages may come within the definitions of two or more kinds of insurance as defined in this chapter, and the inclusion of such coverage within one definition shall not exclude it as to any other kind of insurance within the definition of which such coverage is likewise reasonably includable.

 

 

“CASUALTY INSURANCE” DEFINED.

 

      Sec. 104.  1.  “Casualty insurance” includes:

      (a) Vehicle insurance.  Insurance against loss of or damage to any land vehicle or aircraft or any draft or riding animal or to property while contained therein or thereon or being loaded or unloaded therein or therefrom, from any hazard or cause, and against any loss, liability or expense resulting from or incidental to ownership, maintenance or use of any such vehicle, aircraft or animal, together with insurance against accidental injury to individuals, irrespective of legal liability of the insured, including the named insured, while in, entering, alighting from, adjusting, repairing, cranking, or caused by being struck by a vehicle, aircraft or draft or riding animal, if such insurance is issued as an incidental part of insurance on the vehicle, aircraft or draft or riding animal.

      (b) Liability insurance.  Insurance against legal liability for the death, injury or disability of any human being, or for damage to property; and provisions of medical, hospital, surgical, disability benefits to injured persons and funeral and death benefits to dependents, beneficiaries or personal representatives of persons killed, irrespective of legal liability of the insured, when issued as an incidental coverage with or supplemental to liability insurance.

      (c) Workmen’s compensation and employer’s liability.  Insurance of the obligations accepted by, imposed upon or assumed by employers under law for death, disablement or injury of employees.

      (d) Burglary and theft.  Insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud, vandalism, malicious mischief, confiscation, or wrongful conversion, disposal or concealment, or from any attempt at any of the foregoing, including supplemental coverage for medical, hospital, surgical and funeral expense incurred by the named insured or any other person as a result of bodily injury during the commission of a burglary, robbery or theft by another, and also, insurance against loss of or damage to moneys, coins, bullion, securities, notes, drafts, acceptances or any other valuable papers and documents, resulting from any cause.


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ê1971 Statutes of Nevada, Page 1602 (Chapter 660, AB 416)ê

 

or any other person as a result of bodily injury during the commission of a burglary, robbery or theft by another, and also, insurance against loss of or damage to moneys, coins, bullion, securities, notes, drafts, acceptances or any other valuable papers and documents, resulting from any cause.

      (e) Personal property floater.  Insurance upon personal effects against loss or damage from any cause.

      (f) Glass.  Insurance against loss or damage to glass, including its lettering, ornamentation and fittings.

      (g) Boiler and machinery.  Insurance against any liability and loss or damage to property or interest resulting from accidents to or explosions of boilers, pipes, pressure containers, machinery or appartus, and to make inspection of and issue certificates of inspection upon boilers, machinery and apparatus of any kind, whether or not insured.

      (h) Leakage and fire extinguishing equipment.  Insurance against loss or damage to any property or interest caused by the breakage or leakage of sprinklers, hoses, pumps and other fire-extinguishing equipment or apparatus, water pipes or containers, or by water entering through leaks or openings in buildings, and insurance against loss or damage to such sprinklers, hoses, pumps and other fire-extinguishing equipment or apparatus.

      (i) Credit and mortgage guaranty.  Insurance against loss or damage resulting from failure of debtors to pay their obligations to the insured, and insurance of real property mortgage lenders against loss by reason of nonpayment of the mortgage indebtedness.

      (j) Malpractice.  Insurance against legal liability of the insured, and against loss, damage or expense incidental to a claim of such liability, and including medical, hospital, surgical and funeral benefits to injured persons, irrespective of legal liability of the insured, arising out of the death, injury or disablement of any person, or arising out of damage to the economic interest of any person, as the result of negligence in rendering expert, fiduciary or professional service.

      (k) Elevator.  Insurance against loss of or damage to any property of the insured, resulting from the ownership, maintenance or use of elevators, except loss or damage by fire, and to make inspection of and issue certificates of inspection upon, elevators.

      (l) Congenital defects.  Insurance against congenital defects in human beings.

      (m) Livestock.  Insurance against loss or damage to livestock, and services of a veterinary for such animals.

      (n) Entertainments.  Insurance indemnifying the producer of any motion picture, television, radio, theatrical, sport, spectacle, entertainment, or similar production, event or exhibition against loss from interruption, postponement or cancellation thereof due to death, accidental injury or sickness of performers, participants, directors or other principals.

      (o) Miscellaneous.  Insurance against any other kind of loss, damage or liability properly a subject of insurance and not within any other kind of insurance as defined in this chapter, if such insurance is not disapproved by the commissioner as being contrary to law or public policy.

      2.  Provision of medical, hospital, surgical and funeral benefits, and of coverage against accidental death or injury, as incidental to and part of other insurance as stated under paragraphs (a) (vehicle), (b) (liability), (d) (burglary), (g) (boiler and machinery), (j) (malpractice), and (k) (elevator) of subsection 1 shall for all purposes be deemed to be the same kind of insurance to which it is so incidental, and shall not be subject to provisions of this code applicable to life and health insurances.


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ê1971 Statutes of Nevada, Page 1603 (Chapter 660, AB 416)ê

 

(d) (burglary), (g) (boiler and machinery), (j) (malpractice), and (k) (elevator) of subsection 1 shall for all purposes be deemed to be the same kind of insurance to which it is so incidental, and shall not be subject to provisions of this code applicable to life and health insurances.

 

 

“HEALTH INSURANCE” DEFINED.

 

      Sec. 105.  “Health insurance” is insurance of human beings against bodily injury, disablement or death by accident or accidental means, or the expense thereof, or against disablement or expense resulting from sickness, and every insurance appertaining thereto, together with provisions operating to safeguard contracts of health insurance against lapse in the event of strike or layoff due to labor disputes.

 

 

“LIVE INSURANCE” DEFINED.

 

      Sec. 106.  “Life insurance” is insurance on human lives. The transaction of life insurance includes the granting of endowment benefits, additional incidental benefits in the event of death or dismemberment by accident or accidental means, additional incidental benefits in the event of the insured’s disability, optional modes of settlement of proceeds of life insurance, and provisions operating to safeguard contracts of life insurance against lapse.

 

 

“MARINE AND TRANSPORTATION”, “WET MARINE” INSURANCE DEFINED.

 

      Sec. 107.  1.  “Marine and transportation insurance” includes:

      (a) Insurance against any kinds of loss or damage to:

             (1) Vessels, craft, aircraft, cars, automobiles and vehicles of every kind, as well as all goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidences of debt, valuable papers, bottomry and respondentia interests and all other kinds of property and interests therein, in connection with any and all risks or perils of navigation, transmit or transportation, including war risks, on or under any seas or other waters, on land or in the air, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the same or during any delays, storage, transshipment or reshipment incidental thereto, including marine builder’s risks and all personal property floater risks; and

             (2) Person or property in connection with a marine, inland marine, transit or transportation insurance, including liability for loss of or damage to either, arising out of or in connection with the construction, repair, operation, maintenance or use of the subject matter of such insurance (but not including life insurance or surety bonds or insurance against loss by reason of bodily injury to the person arising out of the ownership, maintenance or use of automobiles); and

             (3) Precious stones, jewels, jewelry, gold, silver and other precious metals, whether used in business or trade or otherwise and whether the same is in the course of transportation or otherwise; and


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ê1971 Statutes of Nevada, Page 1604 (Chapter 660, AB 416)ê

 

             (4) Bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot or civil commotion are the only hazards to be covered; piers, wharves, docks and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot or civil commotion; other aids to navigation and transportation, including dry docks and marine railways, against all risks.

      (b) “Marine protection and indemnity insurance,” meaning insurance against, or against legal liability of the insured for, loss, damage or expense arising out of, or incidental to, the ownership, operation, chartering, maintenance, use, repair or construction of any vessel, craft or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness or death or for loss of or damage to the property of another person.

      2.  For the purposes of this code, “wet marine and transportation” insurance is that part of “marine and transportation” insurance which includes only:

      (a) Insurance upon vessels, crafts, hulls and of interests therein or with relation thereto;

      (b) Insurance of marine builders’ risks, marine war risks and contracts of marine protection and indemnity insurance;

      (c) Insurance of freights and disbursements pertaining to a subject of insurance coming within this definition; and

      (d) Insurance of personal property and interests therein, in the course of exportation from or importation into any country, or in the course of transportation coastwise or on inland waters, including transportation by land, water or air from point of origin to final destination, in connection with any and all risks or perils of navigation, transit or transportation, and while being prepared for and while awaiting shipment, and during any delays, storage, transshipment or reshipment incident thereto.

 

 

“PROPERTY INSURANCE” DEFINED.

 

      Sec. 108.  1.  “Property insurance” is insurance on real or personal property of every kind and of every interest therein against loss or damage from any and all hazards or causes, and against loss consequential upon such loss or damage, other than noncontractual legal liability for any such loss or damage.

      2.  Property insurance does not include title insurance, as defined in section 110 of this act.

 

 

“SURETY INSURANCE” DEFINED.

 

      Sec. 109.  “Surety insurance” includes:

      1.  Fidelity insurance, which is insurance guaranteeing the fidelity of persons holding positions of public or private trust.

      2.  Insurance guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds, undertakings and contracts of suretyship.


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ê1971 Statutes of Nevada, Page 1605 (Chapter 660, AB 416)ê

 

      3.  Insurance indemnifying banks, bankers, brokers, financial or moneyed corporations or associations against loss, resulting from any cause, of bills of exchange, notes, bonds, securities, evidences of debt, deeds, mortgages, warehouse receipts or other valuable papers, documents, money, precious metals and articles made therefrom, jewelry, watches, gems, precious and semiprecious stones, including any loss while the same are being transported in armored motor vehicles, or by messenger, but not including any other risks of transportation or navigation, and also insurance against loss or damage to such an insured’s premises or to his furnishings, fixtures, equipment, safes and vaults therein, caused by burglary, robbery, theft, vandalism or malicious mischief, or any attempt thereat.

 

 

“TITLE INSURANCE” DEFINED.

 

      Sec. 110.  “Title insurance” is insurance of owners of real or personal property or others having an interest therein, or liens or encumbrances thereon, against loss by encumbrance, or defective titles, or invalidity, or adverse claim to title.

 

 

MULTIPLE LINE INSURERS.

 

      Sec. 111.  A multiple line insurer may transact:

      1.  Any two or more kinds of insurance, as defined in sections 104, 105, 107, 108, 109 and 110 of this act (casualty, health, marine and transportation, property, surety and title insurance), but a title insurer must be a stock insurer.

      2.  Life insurance if so authorized pursuant to subsection 1 of section 67 of this act (combinations of insuring powers).

 

 

LIMITS OF RISK.

 

      Sec. 112.  1.  No insurer shall retain any risk on any one subject of insurance, whether located or to be performed in this state or elsewhere, in an amount exceeding 10 percent of its surplus to policy holders.

      2.  A “subject of insurance” for the purposes of this section, as to insurance against fire and hazards other than windstorm, earthquake and other catastrophic hazards, includes all properties insured by the same insurer which are customarily considered by underwriters to be subject to loss or damage from the same fire or the same occurrence of any other hazard insured against.

      3.  Reinsurance ceded as authorized by section 113 of this act shall be deducted in determining the risk retained; but as to surety risks, reinsurance shall be allowed as a deduction only if such reinsurance is with an insurer authorized to transact such insurance in this state, and is in such form as to enable the obligee or beneficiary to maintain an action thereon against the reinsured jointly with the reinsurer, and upon recovering judgment against the reinsured to have recovery against the reinsurer for payment to the extent in which it may be liable under such reinsurance and in discharge thereof. As to surety risks, deduction shall also be made of the amount assumed by any authorized cosurety and the value of any security deposited, pledged or held subject to the surety’s consent and for the surety’s protection.


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ê1971 Statutes of Nevada, Page 1606 (Chapter 660, AB 416)ê

 

amount assumed by any authorized cosurety and the value of any security deposited, pledged or held subject to the surety’s consent and for the surety’s protection.

      4.  As to alien insurers, this section relates only to risks and surplus to policy holders of the insurer’s United States branch.

      5.  “Surplus of policy holders” for the purposes of this section, in addition to the insurer’s capital and surplus, includes any voluntary reserves which are not required pursuant to law, and shall be determined from the last sworn statement of the insurer on file with the commissioner, or by the last report of examination of the insurer, whichever is the more recent at time of assumption of risk.

      6.  This section does not apply to life or health insurance, annuities, title insurance, insurance of wet marine and transportation risks, workmen’s compensation insurance, employers’ liability coverages, or to any policy or type of coverage as to which the maximum possible loss to the insurer is not readily ascertainable on issuance of the policy.

      7.  Limits of risk as to newly formed domestic mutual insurers shall be as provided in section 572 of this act.

 

 

REINSURANCE.

 

      Sec. 113.  1.  An insurer may reinsure all or any part of an individual risk or of a particular class of risks in any other insurer, or accept such reinsurance from any other insurer; but no domestic insurer shall so reinsure with an unauthorized insurer unless the unauthorized insurer accepting the reinsurance is authorized to transact insurance in another state conforming to the same standards of solvency as would be required of such insurer if, at the time such reinsurance is effected, it was so authorized in this state, or unless, in the case of a group of individual, unincorporated alien insurers, it has assets held in trust for the benefit of its United States policyholders in a sum not less than $50,000,000, and is authorized to transact insurance in at least one state, or unless with the commissioner’s approval in advance. With the commissioner’s approval, a domestic insurer may reinsure all or substantially all of its risks in any other insurer, or similarly reinsure the risks of any other insurer, as provided in section 615 of this act (bulk reinsurance).

      2.  No credit shall be taken for the reserve or unearned premium liability on account of any such reinsurance unless the insurer accepting the reinsurance is authorized to transact insurance in this state or in another state conforming to the same standards of solvency as would be required of such insurer if, at the time such reinsurance is effected, it was so authorized in this state, or unless, in the case of a group of individual, unincorporated alien insurers, it has assets held in trust for the benefit of its United States policy holders in a sum not less than $50,000,000, and is authorized to transact insurance in at least one state.

      3.  Credit shall be allowed as an asset or as a deduction from liability, to any ceding insurer for reinsurance lawfully ceded to an assuming insurer qualified therefor under subsection 2; but no such credit shall be allowed in any case unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding insurer under the contracts reinsured without diminution because of the insolvency of the ceding insurer.


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ê1971 Statutes of Nevada, Page 1607 (Chapter 660, AB 416)ê

 

insurer on the basis of the liability of the ceding insurer under the contracts reinsured without diminution because of the insolvency of the ceding insurer.

      4.  Upon request of the commissioner an insurer shall promptly inform the commissioner in writing of the cancellation or any other material change of any of its reinsurance treaties or arrangements.

      5.  This section does not apply to wet marine and transportation insurance.

 

 

CHAPTER 6

 

ASSETS AND LIABILITIES

 

      Sec. 114.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 115 to 133, inclusive, of this act.

 

 

“ASSETS” DEFINED.

 

      Sec. 115.  In any determination of the financial condition of an insurer, there shall be allowed as assets only such assets as are owned by the insurer and which consist of:

      1.  Cash in the possession of the insurer, or in transit under its control, and including the true balance of any deposit in a solvent bank or trust company.

      2.  Investments, securities, properties and loans acquired or held in accordance with this code, and in connection therewith the following items:

      (a) Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest.

      (b) Declared and unpaid dividends on stock and shares, unless such amount has otherwise been allowed as an asset.

      (c) Interest due or accrued upon a collateral loan in an amount not to exceed 1 year’s interest thereon.

      (d) Interest due or accrued on deposits in solvent banks and trust companies, and interest due or accrued on other assets, if such interest is, in the judgment of the commissioner, a collectible asset.

      (e) Interest due or accrued on a mortgage loan, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of 18 months be allowed as an asset.

      (f) Rent due or accrued on real property if such rent is not in arrears for more than 3 months, and rent more than 3 months in arrears if the payment of such rent is adequately secured by property held in the name of the tenant and conveyed to the insurer as collateral.

      (g) The unaccrued portion of taxes paid prior to the due date on real property.

      3.  Premium notes, policy loans and other policy assets and liens on policies and certificates of life insurance and annuity contracts and accrued interest thereon, in an amount not exceeding the legal reserve and other policy liabilities carried on each individual policy.


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ê1971 Statutes of Nevada, Page 1608 (Chapter 660, AB 416)ê

 

policies and certificates of life insurance and annuity contracts and accrued interest thereon, in an amount not exceeding the legal reserve and other policy liabilities carried on each individual policy.

      4.  The net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurer.

      5.  Premiums in the course of collection, other than for life insurance, not more than 3 months past due, less commissions payable thereon. The foregoing limitation shall not apply to premiums payable directly or indirectly by the United States Government or by any of its instrumentalities.

      6.  Installment premiums other than life insurance premiums to the extent of the unearned premium reserve carried on the policy to which premiums apply.

      7.  Notes and like written obligations not past due, taken for premiums other than life insurance premiums, on policies permitted to be issued on such basis, to the extent of the unearned premium reserves carried thereon.

      8.  The full amount of reinsurance recoverable by a ceding insurer from a solvent reinsurer, which reinsurance is authorized under section 113 of this act.

      9.  Amounts receivable by an assuming insurer representing funds withheld by a solvent ceding insurer under a reinsurance treaty.

      10.  Deposits or equities recoverable from underwriting associations, syndicates and reinsurance funds, or from any suspended banking institution, to the extent deemed by the commissioner available for the payment of losses and claims and at values to be determined by him.

      11.  All such assets, whether or not consistent with the provisions of this section, as may be allowed pursuant to the annual statement form approved by the commissioner for the kinds of insurance to be reported upon therein.

      12.  As to a title insurer, its title plant and equipment reasonably necessary for the conduct of its abstract or title insurance business, at not to exceed the cost thereof.

      13.  Electronic and mechanical machines and related equipment constituting a data processing, recordkeeping or accounting system or systems if the cost of each such system is at least $25,000, which cost shall be amortized in full over a period not to exceed 10 years. The aggregate amount invested in all such systems shall not exceed 5 percent of the insurer’s assets.

      14.  Other assets, not inconsistent with the provisions of this section, deemed by the commissioner to be available for the payment of losses and claims at values to be determined by him.

 

 

ASSETS NOT ALLOWED.

 

      Sec. 116.  In addition to assets impliedly excluded by the provisions of section 115 of this act, the following expressly shall not be allowed as assets in any determination of the financial condition of an insurer:

      1.  Goodwill, trade names and other like intangible assets.

      2.  Advances to officers (other than policy loans) whether secured or not, and advances to employees, agents and other persons on personal security only.


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ê1971 Statutes of Nevada, Page 1609 (Chapter 660, AB 416)ê

 

      3.  Stock of such insurer, owned by it, or any equity therein or loans secured thereby, or any proportionate interest in such stock acquired or held through the ownership by such insurer of an interest in another firm, corporation or business unit.

      4.  Furniture, fixtures, furnishings, safes, vehicles, libraries, stationery, literature and supplies (other than data processing, recordkeeping and accounting systems authorized under subsection 13 of section 115 of this act), except:

      (a) In the case of title insurers such materials and plants as the insurer is expressly authorized to invest in under section 156 of this act; and

      (b) In the case of any insurer, such personal property as the insurer is permitted to hold pursuant to sections 135 to 163, inclusive, of this act (investments), or which is reasonably necessary for the maintenance and operation of real property lawfully acquired and held by the insurer other than real property used by it for home office, branch office and similar purposes.

      5.  The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of the insurer exceeds the aggregate value thereof as determined under this code.

 

 

DISALLOWANCE OF “WASH” TRANSACTIONS.

 

      Sec. 117.  1.  The commissioner shall disallow as an asset or as a credit against liabilities any reinsurance found by him after a hearing thereon to have been arranged for the purpose principally of deception as to the ceding insurer’s financial condition as of the date of any financial statement of the insurer. Without limiting the general purport of the foregoing provision, reinsurance of any substantial part of the insurer’s outstanding risks contracted for in fact within 4 months prior to the date of any such financial statement and canceled in fact within 4 months after the date of such statement, or reinsurance under which the reinsurer bears no substantial insurance risk or chance of net loss to itself, shall prima facie be deemed to have been arranged principally for the purpose of deception.

      2.  The commissioner shall disallow as an asset any deposit, funds or other assets of the insurer found by him after a hearing thereon:

      (a) Not to be in good faith the property of the insurer; and

      (b) Not freely subject to withdrawal or liquidation by the insurer at any time for the payment or discharge of claims or other obligations arising under its policies; and

      (c) To be resulting from arrangements made principally for the purpose of deception as to the insurer’s financial condition as at the date of any financial statement of the insurer.

      3.  The commissioner may suspend or revoke the certificate of authority of any insurer which has knowingly been a party to any such deception or attempted deception.

 

 

LIABILITIES: IN GENERAL.

 

      Sec. 118.  In any determination of the financial condition of an insurer, capital stock and liabilities to be charged against its assets shall include:


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ê1971 Statutes of Nevada, Page 1610 (Chapter 660, AB 416)ê

 

      1.  The amount of its capital stock outstanding, if any.

      2.  The amount, estimated to be consistent with the provisions of this code, necessary to pay all of its unpaid losses and claims incurred on or prior to the date of the statement, whether reported or unreported, together with the expenses of adjustment or settlement thereof.

      3.  With reference to life insurance policies and annuity contracts, and disability and accidental death benefits in or supplemental thereto:

      (a) The amount of reserves on life insurance policies and annuity contracts in force, valued according to the tables of mortality, rates of interest and methods adopted pursuant to this code which are applicable thereto.

      (b) Reserves for disability benefits, for both active and disabled lives.

      (c) Reserves for accidental death benefits.

      (d) Any additional reserves which may be required by the commissioner consistent with applicable customary and general practice in insurance accounting.

      4.  As to health insurance policies, the reserves required under section 122 of this act.

      5.  With reference to insurance other than specified in subsections 3 and 4, and other than title insurance, the amount of the unearned premium reserves computed in accordance with sections 120 and 121 of this act.

      6.  Taxes, expenses and other obligations due or accrued at the date of the statement.

 

 

LOSS RESERVE; CASUALTY INSURANCE.

 

      Sec. 119.  1.  As to casualty insurance transacted by it, each insurer shall maintain at all times reserves in an amount estimated in the aggregate to provide for payment of all losses and claims incurred, whether reported or unreported, which are unpaid and for which the insurer may be liable and to provide for the expenses of adjustment or settlement of losses and claims. The reserves shall be computed in accordance with regulations from time to time made by the commissioner, after due notice and hearing, upon reasonable consideration of the ascertained experience and the character of such kind of business for the purpose of adequately protecting the insured and the solvency of the insurer.

      2.  Whenever the loss and loss expense experience of the insurer show that reserves, calculated in accordance with such regulations, are inadequate, the commissioner may require the insurer to maintain additional reserves.

      3.  The minimum reserve requirements prescribed by the commissioner for unpaid losses and loss expenses incurred during each of the most recent 3 years for coverages included in the lines of business described in the insurer’s annual statement as workmen’s compensation, liability other than auto (B.I.), and auto liability (B.I.) shall not be less than the following: For workmen’s compensation, 65 percent of premiums earned during each year less the amount already paid for losses and expenses incidental thereto incurred during such year; for liability other than auto (B.I.) and auto liability (B.I.), 60 percent of premiums earned during each year less the amount already paid for losses and expenses incidental thereto incurred during such year.


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ê1971 Statutes of Nevada, Page 1611 (Chapter 660, AB 416)ê

 

other than auto (B.I.) and auto liability (B.I.), 60 percent of premiums earned during each year less the amount already paid for losses and expenses incidental thereto incurred during such year.

      4.  The commissioner may, by regulation, prescribe the manner and form of reporting pertinent information concerning the reserves provided for in this section.

 

 

UNEARNED PREMIUM RESERVE.

 

      Sec. 120.  1.  As to property, casualty and surety insurance the insurer shall maintain as a liability an unearned premium reserve on all policies in force.

      2.  Except as provided in section 121 of this act as to marine and transportation risks, the unearned premium reserve shall be equal to the unearned portion of gross premiums in force (after deduction of applicable reinsurance in solvent insurers) computed on an annual, monthly or more frequently pro rata basis.

 

 

UNEARNED PREMIUM RESERVE FOR MARINE AND TRANSPORTATION INSURANCE.

 

      Sec. 121.  As to marine and transportation insurance, the entire amount of premiums on trip risks not terminated shall be deemed unearned; and the commissioner may require the insurer to carry a reserve equal to 100 percent of premiums on trip risks written during the month ended as of the date of statement.

 

 

HEALTH INSURANCE POLICY RESERVES.

 

      Sec. 122.  For all health insurance policies the insurer shall maintain an active life reserve which shall place a sound value on its liabilities under such policies and be not less than the reserve according to appropriate standards set forth in regulations issued by the commissioner and, in no event, less in the aggregate than the pro rata gross unearned premiums for such policies.

 

 

TITLE INSURANCE RESERVES.

 

      Sec. 123.  1.  A title insurer shall annually set apart into a title insurance reserve fund a sum equal to 10 percent of its premiums collected during the year, until it has so accumulated an amount equal to 50 percent of its subscribed capital stock.

      2.  The title insurance reserve fund shall be maintained as further security to holders of the insurer’s title insurance contracts. If at any time the fund is impaired by reason of a loss, the impairment shall be cured in the same manner as provided in subsection 1 for accumulation of the fund. The reporting of a loss shall be deemed an impairment of the fund for the purposes of this section.


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ê1971 Statutes of Nevada, Page 1612 (Chapter 660, AB 416)ê

 

MORTGAGE GUARANTY CONTINGENCY RESERVE.

 

      Sec. 124.  1.  Casualty or surety insurers insuring real property mortgage lenders against loss by reason of nonpayment of the mortgage indebtedness by the borrower shall maintain a contingency reserve for the protection of policy holders against the effects of adverse economic cycles.

      2.  The insurer shall contribute to such contingency reserve 50 percent of net premiums (gross premiums less premiums returned to policy holders) written on such insurance remaining after establishment of the unearned premium reserve.

      3.  Subject to the commissioner’s approval, the contingency reserve shall be available for payment of losses only when the insurer’s incurred losses in any 1 calendar year exceed the rate formula expected losses by 10 percent of the related earned premiums.

 

 

STANDARD VALUATION LAW: VALUATION AND CALCULATION OF RESERVES: ACCEPTANCE OF VALUATION IN ANOTHER STATE OR JURISDICTION.

 

      Sec. 125.  1.  The commissioner shall, in the manner provided by sections 125 to 129, inclusive, of this act, annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurer doing business in this state, except that in the case of an alien insurer, such valuation shall be limited to its United States business.

      2.  The commissioner may certify the amount of any such reserves, specifying the mortality table or tables, rate or rates of interest and methods used in the calculation of such reserves.

      3.  The commissioner may:

      (a) Use any method, including group methods and the net level premium method, in the calculation of such reserves.

      (b) Use approximate averages for fractions of a year or other period to calculate such reserves.

      (c) In lieu of the valuation of the reserves required of any foreign or alien company, accept any valuation made, or caused to be made, by an insurance supervisory officer of any other state or jurisdiction if such valuation complies with the minimum standard required by sections 125 to 129, inclusive, of this act, and if the insurance officer of such other state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the commissioner when such certificate states the valuation to have been made in a specified manner according to which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of that state or jurisdiction.

      4.  Any such insurer which at any time has adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided in sections 125 to 129, inclusive, of this act may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum provided in such sections.


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ê1971 Statutes of Nevada, Page 1613 (Chapter 660, AB 416)ê

 

STANDARD VALUATION LAW: MINIMUM STANDARD FOR VALUATION OF POLICIES AND CONTRACTS.

 

      Sec. 126.  1.  The minimum standard for the valuation of all policies and contracts issued prior to the effective date of sections 433 to 440, inclusive, of this act (standard nonforfeiture law) shall be as follows:

      (a) The legal minimum standard for valuation of contracts issued prior to January 1, 1942, shall be a basis not lower than that used for the annual statement of the year during which such policies were issued, and for contracts issued on and after January 1, 1942, shall be the American Experience Table of Mortality with either Craig’s or Buttolph’s Extension for ages under 10, with interest at not more than 3.5 percent per annum. Such policies may provide for not more than 1-year preliminary term insurance by incorporating therein a clause plainly showing that the first year’s insurance under such contract is term insurance purchased by the whole or part of the premiums to be received during the first contract year.

      (b) The legal minimum standard for the valuation of group life insurance policies under which the premium rates are not guaranteed for a period in excess of 5 years shall be the American Men Ultimate Table of Mortality with interest at not more than 3.5 percent per annum.

      (c) The legal minimum standard for the valuation of industrial policies shall be the American Experience Table of Mortality or the Standard Industrial Mortality Table or the Substandard Industrial Mortality Table with interest at not more than 3.5 percent per annum by the net level premium method, or in accordance with their terms by the modified preliminary term method described in this section.

      (d) Reserves for all such policies and contracts may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by this subsection.

      2.  The minimum standard for the valuation of all policies and contracts issued on or after the effective date of sections 433 to 440, inclusive, of this act (standard nonforfeiture law), shall be the Commissioners reserve valuation method defined in section 127 of this act, 3.5 percent interest, and the following tables:

      (a) For all ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies, the Commissioners 1941 Standard Ordinary Mortality Table until the operative date of section 438 of this act, and, for all such policies issued on and after such date, the Commissioners 1958 Standard Ordinary Mortality Table, except that for any category of such policies issued on female risks all modified net premiums and present values referred to in sections 125 to 129, inclusive, of this act, may be calculated according to an age not more than 3 years younger than the actual age of the insured.

      (b) For all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies, the 1941 Standard Industrial Mortality Table for such policies issued prior to the operative date of section 437 of this act, and the Commissioners 1961 Standard Industrial Mortality Table for such policies issued on or after such operative date.


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ê1971 Statutes of Nevada, Page 1614 (Chapter 660, AB 416)ê

 

      (c) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the 1937 Standard Annuity Mortality Table, or, at the option of the insurer, the Annuity Mortality Table for 1949, Ultimate, or any modification of either of these tables approved by the commissioner.

      (d) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the Group Annuity Mortality Table for 1951, any modification of such table approved by the commissioner, or, at the option of the insurer, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts.

      (e) For total and permanent disability benefits in or supplementary to ordinary policies or contracts, for policies or contracts issued on or after January 1, 1966, the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefit; and for policies or contracts issued on or after the effective date of sections 433 to 440, inclusive, of this act (standard nonforfeiture law), and prior to January 1, 1966, either such tables or, at the option of the insurer, the Class (3) Disability Table (1926).

      (f) For accidental death benefits in or supplementary to policies, for policies issued on or after January 1, 1966, the 1959 Accidental Death Benefits Table; and for policies issued on or after the effective date of sections 433 to 440, inclusive, of this act (standard nonforfeiture law) and prior to January 1, 1966, either such table or, at the option of the insurer, the Inter-Company Double Indemnity Mortality Table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.

      (g) For group life insurance, for life insurance issued on the substandard basis and for special benefits, such tables as may be approved by the commissioner.

 

 

STANDARD VALUATION LAW: RESERVES; MODIFIED NET PREMIUMS; METHOD OF CALCULATION; MINIMUM AGGREGATE RESERVES.

 

      Sec. 127.  1.  Reserves, according to the Commissioners reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such policies over the then-present value of any future modified net premiums therefor.

      2.  The modified net premiums for any such policy shall be such a uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then-present value of such benefits provided for by the policy and the excess of:

      (a) A net level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; over

 


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ê1971 Statutes of Nevada, Page 1615 (Chapter 660, AB 416)ê

 

divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; over

      (b) A net 1-year term premium for such benefits provided for in the first policy year.

      3.  The net level annual premium referred to in paragraph (a) of subsection 2 shall not exceed the net level annual premium on the 19-year premium whole life plan for insurance of the same amount at an age 1 year higher than the age at issue of such policy.

      4.  Reserves according to the Commissioners reserve valuation method for life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums, for annuity and pure endowment contracts, for disability and accidental death benefits in all policies and contracts, and for all other benefits, except life insurance and endowment benefits in life insurance policies, shall be calculated by a method consistent with the principles of this section, except that any extra premiums charged because of impairments or special hazards shall be disregarded in the determination of modified net premiums.

      5.  In no event shall an insurer’s aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued on or after the effective date of sections 433 to 440, inclusive, of this act (standard nonforfeiture law) be less than the aggregate reserves calculated in accordance with the method set forth in this section and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies.

 

 

STANDARD VALUATION LAW: CALCULATION OF RESERVES ON HIGHER STANDARDS; RATE OF INTEREST; RESERVES FOR PARTICIPATING LIFE INSURANCE POLICIES.

 

      Sec. 128.  1.  Reserves for any category of policies, contracts or benefits as established by the commissioner, issued on or after the effective date of sections 433 to 440, inclusive, of this act (standard nonforfeiture law), may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard provided by subsection 2 of section 126 of this act, but the rate or rates of interest used shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for in such policies.

      2.  Reserves for participating life insurance policies issued on or after the effective date of sections 433 to 440, inclusive, of this act (standard nonforfeiture law) may, with the consent of the commissioner, be calculated according to a rate of interest lower than the rate of interest used in calculating the nonforfeiture benefits in such policies, but if such lower rate differs from the rate used in the calculation of the nonforfeiture benefits by more than one-half percent, the insurer issuing such policies shall file with the commissioner a plan providing for such equitable increases, if any, in the cash surrender values and nonforfeiture benefits in such policies as the commissioner shall approve.


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ê1971 Statutes of Nevada, Page 1616 (Chapter 660, AB 416)ê

 

STANDARD VALUATION LAW: DEFICIENCY RESERVE; WHEN TO BE MAINTAINED; AMOUNT.

 

      Sec. 129.  1.  If the gross premium charged by any life insurer on any policy or contract issued on or after the effective date of sections 433 to 440, inclusive, of this act (standard nonforfeiture law) is less than the net premium for the policy or contract according to the mortality table, rate of interest and method used in calculating the reserve thereon, there shall be maintained on such policy or contract a deficiency reserve in addition to all other reserves required by law.

      2.  For each such policy or contract the deficiency reserve shall be the present value, according to such standard, of an annuity of the difference between such net premium and the premium charged for such policy or contract, running for the remainder of the premium-paying period.

 

 

VALUATION OF BONDS.

 

      Sec. 130.  1.  All bonds or other evidences of debt having a fixed term and rate of interest held by an insurer may, if amply secured and not in default as to principal or interest, be valued as follows:

      (a) If purchased at par, at the par value.

      (b) If purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made, or in lieu of such method, according to such accepted method of valuation as is approved by the commissioner.

      2.  The purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase, plus actual brokerage, transfer, postage or express charges paid in the acquisition of such securities.

      3.  Unless otherwise provided by valuation established or approved by the commissioner, no such security shall be carried at above the call price for the entire issue during any period within which the security may be so called.

      4.  The commissioner shall have full discretion in determining the method of calculating values according to the rules set forth in this section.

 

 

VALUATION OF OTHER SECURITIES.

 

      Sec. 131.  1.  Securities, other than those referred to in section 130 of this act, held by an insurer shall be valued, in the discretion of the commissioner, at their market value, or at their appraised value, or at prices determined by him as representing their fair market value.

      2.  Preferred or guaranteed stocks or shares while paying full dividends may be carried at a fixed value in lieu of market value, at the discretion of the commissioner and in accordance with such method of computation as he may approve.

      3.  The stock of a subsidiary of an insurer shall be valued on the basis of the value of only such of the assets of such subsidiary as would constitute lawful investments of the insurer if acquired or held directly by the insurer.


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ê1971 Statutes of Nevada, Page 1617 (Chapter 660, AB 416)ê

 

constitute lawful investments of the insurer if acquired or held directly by the insurer.

 

 

VALUATION OF PROPERTY.

 

      Sec. 132.  1.  Real property acquired pursuant to a mortgage loan or contract for sale, in the absence of a recent appraisal deemed by the commissioner to be reliable, shall not be valued at an amount greater than the unpaid principal of the defaulted loan or contract plus interest due and accrued at the date of such acquisition, together with any taxes and expenses paid or incurred in connection with such acquisition, and the cost of improvements thereafter made by the insurer and any amounts thereafter paid by the insurer on assessments levied for improvements in connection with the property.

      2.  Other real property held by an insurer shall not be valued at an amount in excess of fair value as determined by recent appraisal. If valuation is based on an appraisal more than 3 years old, the commissioner may, at his discretion, call for and require a new appraisal in order to determine fair value.

 

 

VALUATION OF PURCHASE MONEY MORTGAGES.

 

      Sec. 133.  Purchase money mortgages on real property referred to in subsection 1 of section 132 of this act shall be valued in an amount not exceeding the acquisition cost of the real property covered thereby or 90 percent of the fair value of such real property, whichever is less.

 

 

CHAPTER 7

 

INVESTMENTS

 

      Sec. 134.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 135 to 163, inclusive, of this act.

 

 

SCOPE.

 

      Sec. 135.  This chapter, with the exception of section 163 of this act, applies only to domestic insurers.

 

 

ELIGIBLE INVESTMENTS.

 

      Sec. 136.  1.  Insurers shall invest in or lend their funds on the security of, and shall hold as invested assets, only eligible investments as prescribed in this chapter.

      2.  Any particular investment held by an insurer on the effective date of this act, which was a legal investment at the time it was made, and which the insurer was legally entitled to possess immediately prior to such effective date, shall be deemed to be an eligible investment.


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ê1971 Statutes of Nevada, Page 1618 (Chapter 660, AB 416)ê

 

      3.  Eligibility of an investment shall be determined as of the date of its making or acquisition, except as stated in subsection 2.

      4.  Any investment limitation based upon the amount of the insurer’s assets or particular funds shall relate to such assets or funds as shown by the insurer’s annual statement as of December 31 next preceding the date of acquisition of the investment by the insurer, or as shown by a current financial statement resulting from merger of another insurer, bulk reinsurance or change in capitalization.

      5.  No insurer shall pay any commission or brokerage for the purchase or sale of property in excess of that usual and customary at the time and in the locality where such purchases or sales are made, and complete information regarding all payments of commission and brokerage shall be reported in the next annual statement.

 

 

GENERAL QUALIFICATIONS.

 

      Sec. 137.  1.  No security or investment (other than real and personal property acquired under section 158 of this act (real property)) shall be eligible for acquisition unless it is interest bearing or interest accruing or entitled to dividends or is otherwise income earning, is not then in default in any respect, and the insurer is entitled to receive for its exclusive account and benefit the interest or income accruing thereon.

      2.  No security or investment shall be eligible for purchase at a price above its fair value or market value.

      3.  No provision of this chapter shall prohibit the acquisition by an insurer of other or additional securities or property if received as a dividend or as a lawful distribution of assets, or upon a debt or judgment, or under a lawful and bona fide agreement of bulk reinsurance, merger or consolidation. Any security or property so acquired which is not otherwise an eligible investment under this chapter shall be disposed of pursuant to section 159 of this act if real property, or pursuant to section 160 of this act if personal property or securities.

 

 

AUTHORIZATION, RECORD OF INVESTMENTS.

 

      Sec. 138.  1.  An insurer shall not make any investment or loan (other than policy loans or annuity contract loans of a life insurer) unless the same is authorized or ratified by the insurer’s board of directors or by a committee thereof charged with supervision of investments and loans.

      2.  The insurer shall maintain a full record of each investment, showing, among other pertinent information, the name of any officer, director or principal stock holder of the insurer having any direct, indirect or contingent interest in the securities, loan or property constituting the investment, or in the person in whose behalf the investment is made, and the nature of such interest.

 

 

DIVERSIFICATION.

 

      Sec. 139.  An insurer shall only invest in or hold as assets categories of investments within applicable limits as follows:


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ê1971 Statutes of Nevada, Page 1619 (Chapter 660, AB 416)ê

 

      1.  One person.  An insurer shall not at any one time have any combination of investments in or loans upon the security of obligations, property or securities of any one person (other than its lawful subsidiary) aggregating over 10 percent of the insurer’s assets. This shall not apply as to general obligations of the United States of America or of any state, or of Canada or any province thereof, or of the United States of Mexico, or include policy loans made under section 151 of this act.

      2.  Voting stock.  An insurer shall not invest in or hold at any one time more than 10 percent of the outstanding voting stock of any corporation, except as to voting rights of preferred stock during default of dividends. This subsection does not apply to stock of a subsidiary of the insurer acquired under section 147 of this act, or to controlling stock of an insurer acquired under section 146 of this act.

      3.  Minimum capital.  An insurer shall invest and maintain invested funds not less in amount than the minimum paid-in capital stock required under this code of a domestic stock insurer transacting like kinds of insurance, only in cash and the securities provided for under the following sections of this act: Sections 140 (public obligations), 141 (obligations, stock of certain federal and international agencies), 142 (corporate obligations), 150 (equipment trust certificates).

      4.  Revenue bonds of public utilities.  An insurer shall not have invested at any one time more than 25 percent of its assets in revenue bonds of public utilities described in section 142 of this act.

      5.  Corporate obligations.  An insurer shall not have invested at any one time more than 20 percent of its assets in other corporate obligations described in section 142 of this act.

      6.  Equipment trust certificates.  An insurer shall not have invested at any one time more than 20 percent of its assets in equipment trust certificates described in section 150 of this act.

      7.  Real property encumbrances.  An insurer shall not at any one time have more than 50 percent of its assets invested in obligations secured by real property mortgages, trust deeds, contracts of purchase or other similar encumbrances of real property.

      8.  Other specific limits.  Limits as to investments in the category of real property shall be as provided in section 158 of this act; and other specific limits shall apply as stated in this chapter dealing with other respective kinds of investments.

 

 

PUBLIC OBLIGATIONS.

 

      Sec. 140.  1.  An insurer may invest in bonds or other evidences of indebtedness, not in default as to principal or interest, which are valid and legally authorized obligations issued, assumed or guaranteed by the United States of America or by any state thereof, or by Canada or any of the provinces thereof, or by the United States of Mexico or any of the states thereof, or by any county, city, town, village, municipality or district therein or by any political subdivision thereof or by a public instrumentality of one or more of the foregoing, if, by statutory or other legal requirements applicable thereto, such obligations are payable, as to both principal and interest, from:


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ê1971 Statutes of Nevada, Page 1620 (Chapter 660, AB 416)ê

 

      (a) Taxes levied or required to be levied upon all taxable property or all taxable income within the jurisdiction of such governmental unit; or

      (b) Adequate special revenues pledged or otherwise appropriated or by law required to be provided for the purpose of such payment; but not including any obligation payable solely out of special assessments on properties benefited by local improvements unless adequate security is evidenced by the ratio of assessment to the value of the property or the obligation is additionally secured by an adequate guaranty fund required by law.

      2.  An insurer may invest in bonds or other evidences of indebtedness of political subdivisions of states of the United States of America or provinces of Canada payable from ad valorem taxes levied on all taxable property situated therein only if the total amount of such indebtedness after deducting sinking funds and all debts incurred for self-sustaining public works does not exceed 10 percent of the actual value of all taxable property therein on the basis of which the last assessment was made before the date of such investment.

 

 

OBLIGATIONS, STOCK OF CERTAIN FEDERAL AND INTERNATIONAL AGENCIES.

 

      Sec. 141.  An insurer may invest in the obligations, and in stock where stated, issued, assumed or guaranteed by the following agencies of the Government of the United States of America, or in which such government is a participant, whether or not such obligations are guaranteed by such government:

      1.  Farm Loan Bank.

      2.  Commodity Credit Corporation.

      3.  Federal Intermediate Credit Banks.

      4.  Federal Land Banks.

      5.  Central Bank for Cooperatives.

      6.  Federal Home Loan Banks, and stock thereof.

      7.  Federal National Mortgage Association, and stock thereof when acquired in connection with the sale of mortgage loans to such association.

      8.  International Bank for Reconstruction and Development.

      9.  Inter-American Development Bank.

      10.  Asian Development Bank.

      11.  Any other similar agency of, or participated in by, the Government of the United States of America and of similar financial quality.

 

 

CORPORATE OBLIGATIONS.

 

      Sec. 142.  1.  An insurer may invest any of its funds in obligations other than those eligible for investment under section 157 of this act (real property mortgages), if they are issued, assumed or guaranteed by any solvent institution created or existing under the laws of the United States of America, Canada or Mexico, or of any state, district, province or territory thereof, and are qualified under any of the following:

      (a) Obligations which are secured by adequate collateral security and bear fixed interest if during each of any 3, including the last 2, of the 5 fiscal years next preceding the date of acquisition by the insurer, the net earnings of the issuing, assuming or guaranteeing institution available for its fixed charges, as defined in section 143 of this act, have been not less than 1¼ times the total of its fixed charges for such year.


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ê1971 Statutes of Nevada, Page 1621 (Chapter 660, AB 416)ê

 

fiscal years next preceding the date of acquisition by the insurer, the net earnings of the issuing, assuming or guaranteeing institution available for its fixed charges, as defined in section 143 of this act, have been not less than 1¼ times the total of its fixed charges for such year. In determining the adequacy of collateral security not more than one-third of the total value of such required collateral shall consist of stock other than stock meeting the requirements of section 144 of this act (preferred or guaranteed stock).

      (b) Fixed interest-bearing obligations, other than those described in paragraph (a), if the net earnings of the issuing, assuming or guaranteeing institution available for its fixed charges for a period of 5 fiscal years next preceding the date of acquisition by the insurer have averaged per year not less than 1½ times its average annual fixed charges applicable to such period and if during the last year of such period such net earnings have been not less than 1½ times its fixed charges for such year.

      (c) Adjustment, income or other contingent interest obligations if the net earnings of the issuing, assuming or guaranteeing institution available for its fixed charges for a period of 5 fiscal years next preceding the date of acquisition by the insurer have averaged per year not less than 1½ times the sum of its average annual fixed charges and its average annual maximum contingent interest applicable to such period and if during each of the last 2 years of such period such net earnings have not been less than 1½ times the sum of its fixed charges and maximum contingent interest for such year.

      2.  No insurer shall invest in any such bonds or evidences of indebtedness in excess of 10 percent of any issue of such bonds or evidences of indebtedness or, subject to subsection 1 of section 139 of this act (diversification), more than an amount equal to 10 percent of the insurer’s admitted assets in any issue.

 

 

CORPORATE OBLIGATIONS: TERMS DEFINED.

 

      Sec. 143.  1.  Certain terms used are defined for the purposes of this chapter as follows:

      (a) “Fixed charges” includes interest on funded and unfunded debt, amortization of debt discount and rentals for leased properties.

      (b) “Institution” includes corporations, joint-stock associations and business trusts.

      (c) “Net earnings available for fixed charges” means net income after deducting operating and maintenance expenses, taxes other than federal and state income taxes, depreciation and depletion, but excluding extraordinary nonrecurring items of income or expense appearing in the regular financial statements of such institutions.

      (d) “Obligation” includes bonds, debentures, notes or other evidences of indebtedness.

      2.  If net earnings are determined in reliance upon consolidated earnings statements of parent and subsidiary institutions, such net earnings shall be determined after provision for income taxes of subsidiaries and after proper allowance for minority stock interest, if any; and the required coverage of fixed charges shall be computed on a basis including fixed charges and preferred dividends of subsidiaries other than those payable by such subsidiaries to the parent corporation or to any other of such subsidiaries, except that if the minority common stock interest in the subsidiary corporation is substantial, the fixed charges and preferred dividends may be apportioned in accordance with regulations prescribed by the commissioner.


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ê1971 Statutes of Nevada, Page 1622 (Chapter 660, AB 416)ê

 

by such subsidiaries to the parent corporation or to any other of such subsidiaries, except that if the minority common stock interest in the subsidiary corporation is substantial, the fixed charges and preferred dividends may be apportioned in accordance with regulations prescribed by the commissioner.

 

 

PREFERRED OR GUARANTEED STOCK.

 

      Sec. 144.  1.  An insurer may invest in preferred or guaranteed stocks or shares of any solvent institution existing under the laws of the United States of America, Canada or Mexico, or of any state or province thereof, if all of the prior obligations and prior preferred stocks, if any, of such institution at the date of acquisition of the investment by the insurer are eligible as investments under this chapter and if the net earnings of such institution available for its fixed charges during either of the last 2 years have been, and during each of the last 5 years have averaged, not less than 1½ times the sum of its average annual fixed charges, if any, its average annual maximum contingent interest, in any, and its average annual preferred dividend requirements. For the purposes of this section such computation shall refer to the fiscal years immediately preceding the date of acquisition of the investment by the insurer, and the term “preferred dividend requirement” shall be deemed to mean cumulative or noncumulative dividends, whether paid or not.

      2.  No insurer shall invest in any such preferred or guaranteed stocks in an amount in excess of 10 percent of any issue or such guaranteed or preferred stocks or, subject to subsection 1 of section 139 of this act (diversification), more than an amount equal to 10 percent of the insurer’s assets in any one issue.

 

 

COMMON STOCKS.

 

      Sec. 145.  An insurer may invest up to 25 percent of its assets in nonassessable (except as to bank or trust company stocks, and except for taxes) common stocks, other than insurance stocks, of any solvent corporation organized and existing under the laws of the United States of America, Canada or Mexico, or of any state or province thereof, if such corporation has had net earnings available for dividends on such stock in each of the 5 fiscal years next preceding acquisition by the insurer. If the issuing corporation has not been in legal existence for the whole of such 5 fiscal years but was formed as a consolidation or merger of two or more businesses of which at least one was in operation on a date 5 years prior to the investment, the test of eligibility of its common stock under this section shall be based upon consolidated pro forma statements of the predecessor or constituent institutions.

 

 

INSURANCE STOCKS.

 

      Sec. 146.  1.  An insurer may invest in the stocks of other solvent insurers formed under the laws of this or another state, which stocks meet the applicable requirements of sections 144 (preferred or guaranteed stock) and 145 (common stocks) of this act.


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ê1971 Statutes of Nevada, Page 1623 (Chapter 660, AB 416)ê

 

      2.  With the commissioner’s advance written consent an insurer may acquire and hold the controlling interest in the outstanding voting stock of another insurer formed under the laws of this or another state. All stocks under this subsection shall be subject to the limitation as to amount as provided in section 147 of this act. The commissioner shall not give his consent to any such acquisition if he finds that it would not be in the best interests of the insurers involved, or of their respective policy holders or stock holders, or that such acquisition would materially tend to lessen competition or to result in any monopoly in the insurance business.

 

 

STOCKS OF SUBSIDIARIES.

 

      Sec. 147.  1.  An insurer may invest in the stock of its subsidiary insurance corporation formed or acquired by it, or in the stock of its subsidiary business corporation or corporations formed and engaged solely in any one or more of the following businesses:

      (a) In any business necessary and incidental to the convenient operation of the insurer’s insurance business or to the administration of any of its lawful affairs;

      (b) Providing any actuarial, computer, data processing, accounting, claims, appraisal, collection, loss prevention or safety engineering and similar services;

      (c) Real property management and development;

      (d) Premium financing;

      (e) Financing of agents of the insurer;

      (f) Acting as investment adviser and principal underwriter or investment adviser or principal underwriter of a management company or management companies (mutual funds), registered as such under the Investment Companies Act of 1940;

      (g) Financial and investment counseling services;

      (h) Administration of self-insurance plans;

      (i) Administration of self-insured pension and similar plans, or the self-insured portions of such plans;

      (j) Securities broker-dealer;

      (k) Escrow services;

      (l) Trust services with respect to funds payable or paid by it under its insurance contracts.

      2.  For the purposes of this section a “subsidiary” is a corporation of which the insurer owns sufficient stock to give it effective control.

      3.  All of the insurer’s investments under this section shall be deemed to be common stocks for the purposes of the 25-percent-of-assets limitation imposed by section 145 of this act.

 

 

COMMON TRUST FUNDS; MUTUAL FUNDS.

 

      Sec. 148.  An insurer may invest in:

      1.  A bank’s common trust fund as defined in section 584 of the United States Internal Revenue Code of 1954; and

      2.  The securities of any open-end management type investment company or investment trust registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as from time to time amended, if such investment company or trust has assets of not less than $25,000,000 at the date of investment by the insurer.


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ê1971 Statutes of Nevada, Page 1624 (Chapter 660, AB 416)ê

 

to time amended, if such investment company or trust has assets of not less than $25,000,000 at the date of investment by the insurer.

 

 

BANKERS’ ACCEPTANCES, BILLS OF EXCHANGE.

 

      Sec. 149.  An insurer may invest in bankers’ acceptances and bills of exchange of the kinds and maturities made eligible by law for rediscount with Federal Reserve Banks, and generally accepted by banks or trust companies which are members of the Federal Reserve System.

 

 

EQUIPMENT TRUST CERTIFICATES.

 

      Sec. 150.  An insurer may invest in equipment trust obligations or certificates adequately secured and evidencing an interest in transportation equipment, wholly or in part within the United States of America or Canada, which obligations or certificates carry the right to receive determined portions of rental, purchase or other fixed obligatory payments to be made for the use of purchase of such transportation equipment.

 

 

POLICY LOANS.

 

      Sec. 151.  A life insurer may lend to its policy holder, upon pledge of the policy as collateral security, any sum not exceeding the cash surrender value of the policy, or may lend against pledge or assignment of any of its supplementary contracts or other contracts or obligations, so long as the loan is adequately secured by such pledge or assignment. Loans so made are eligible investments of the insurer.

 

 

COLLATERAL LOANS.

 

      Sec. 152.  An insurer may lend and thereby invest its funds upon the pledge of securities eligible for investment under this chapter. As of the date made, no such loan shall exceed in amount 90 percent of the market value of such collateral pledged. The amount so loaned shall be included pro rata in determining the maximum percentage of funds permitted under this chapter to be invested in the respective categories of securities so pledged.

 

 

SAVINGS AND SHARE ACCOUNTS.

 

      Sec. 153.  An insurer may invest in share or savings accounts of savings and loan or building and loan associations, or in savings accounts of banks, and in any one such institution only to the extent that the investment is insured by the Federal Savings and Loan Insurance Corporation or the Federal Deposit Insurance Corporation.

 

 

MISCELLANEOUS INVESTMENTS.

 

      Sec. 154.  1.  An insurer may make loans or investments not otherwise expressly permitted under this chapter, in an aggregate amount not over 5 percent of the insurer’s assets and not over 1 percent of such assets as to any one such loan or investment, if such loan or investment fulfills the requirements of section 137 of this act and otherwise qualifies as a sound investment.


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ê1971 Statutes of Nevada, Page 1625 (Chapter 660, AB 416)ê

 

over 5 percent of the insurer’s assets and not over 1 percent of such assets as to any one such loan or investment, if such loan or investment fulfills the requirements of section 137 of this act and otherwise qualifies as a sound investment. No such loan or investment shall be represented by:

      (a) Any item described in section 116 of this act (assets not allowed), or any loan or investment otherwise expressly prohibited.

      (b) Agents’ balances, or amounts advanced to or owing by agents, except as to policy loans, mortgage loans and collateral loans otherwise authorized under this chapter.

      (c) Any category of loans or investments expressly eligible under any other provision of this chapter.

      (d) Any asset theretofore acquired or held by the insurer under any other category of loans or investments eligible under this chapter.

      2.  The insurer shall keep a separate record of all loans and investments made under this section.

 

 

SPECIAL INVESTMENTS OF SEPARATE ACCOUNT FUNDS.

 

      Sec. 155.  The amounts allocated to each separate account established by the insurer pursuant to section 443 of this act (separate accounts), together with accumulations thereon, may be invested or reinvested in accordance with the provisions of section 443 of this act.

 

 

SPECIAL INVESTMENTS OF TITLE INSURERS.

 

      Sec. 156.  1.  A title insurer may invest funds in an amount not exceeding 50 percent of its subscribed capital stock in its abstract plant and equipment and in stocks of abstract companies.

      2.  In all statements and proceedings required for determination of the insurer’s condition, such investments shall be valued at the actual cost thereof, or at such lesser value as the insurer may estimate.

 

 

REAL PROPERTY MORTGAGES, DEEDS OF TRUST.

 

      Sec. 157.  1.  An insurer may invest in bonds or notes secured by mortgages or deeds of trust representing first liens upon unencumbered real property located in this or another state, or in Canada, subject to the following conditions:

      (a) The amount loaned, or the aggregate amount of bonds issued upon the security of a mortgage or deed of trust, shall not at the time of the investment exceed 75 percent of the fair market value of the real property. The value of the property shall be substantiated by the appraisal of a recognized or experienced real estate appraiser acceptable to the commissioner. Before making the investment, a certificate of the value of the property, based on such appraisal, shall be executed by the insurer’s board of directors or by an investment committee of the board of directors making or authorizing the investment on the insurer’s behalf.

      (b) There shall have been no default as to payment of any part of the principal or interest of any such bond or note.

      (c) The total investment in any one such note, or bond or bonds secured by the same real property, shall not exceed $30,000 or 2 percent of the insurer’s assets, whichever is the greater.


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ê1971 Statutes of Nevada, Page 1626 (Chapter 660, AB 416)ê

 

secured by the same real property, shall not exceed $30,000 or 2 percent of the insurer’s assets, whichever is the greater.

      (d) In applying the limitation under paragraph (a), there may be excluded from the amount invested that portion of the investment which is guaranteed by the commissioner for veteran affairs pursuant to the Servicemen’s Readjustment Act of 1944, as amended, or insured by the Federal Housing Administrator or other agency of the Government of the United States, or by an agency of the Government of Canada.

      2.  “Improved real property” means all farmland which has been reclaimed and is used for the purpose of husbandry, whether for tillage or pasture, and all real property within the limits of an incorporated village, town or city on which permanent buildings suitable for residence or commercial use are situated.

      3.  For the purposes of this section real property shall not be deemed to be encumbered:

      (a) By reason of the existence of taxes or assessments which are not delinquent, instruments creating or reserving mineral, oil or timber rights, rights-of-way, joint driveways, sewer rights, rights in walls, or by reason of building restrictions or other restrictive covenants; or

      (b) When such real property is subject to lease in whole or in part whereby rents or profits are reserved to the owner, if the security for such investment is a full and unrestricted first lien upon such real property and there is no condition or right of reentry or forfeiture under which such investments can be cut off, subordinated or otherwise disturbed.

 

 

REAL PROPERTY.

 

      Sec. 158.  1.  A domestic insurer may invest in real property only if used for the purposes or acquired in any manner, and within limits, set forth below:

      (a) The building in which it has its principal office, the land upon which the building stands, and such other real property as may be requisite for the insurer’s convenient accommodation in the transaction of its business. The amount so invested, and apportioned as to space actually so occupied or used, shall not aggregate more than 15 percent of the insurer’s assets; but the commissioner may authorize an insurer to increase the investment in such amount as he may determine if, upon proper showing made upon a hearing held by him, he finds that the 15-percent limitation is insufficient to provide reasonable and convenient accommodation for the insurer’s business.

      (b) Real property acquired in satisfaction or part payment of loans, mortgages, liens, judgments, decrees or debts previously owing to the insurer in the due course of its business.

      (c) Real property acquired in part payment of the consideration on the sale of other real property owned by it, if such transaction has effected a net reduction in the insurer’s investments in real property.

      (d) Real property acquired by gift or devise, or through merger, consolidation or bulk reinsurance of another insurer under this code.

      (e) Additional real property and equipment incidental thereto, if necessary or convenient for the purpose of enhancing the sale or other value or real property previously acquired or held under this section. Such real property and equipment, together with the real property for the enhancement of which it was acquired, shall be included together, for the purpose of applicable investment limits, and shall be subject to disposal under section 159 of this act at the same time and under the same conditions as apply to such enhanced real property.


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ê1971 Statutes of Nevada, Page 1627 (Chapter 660, AB 416)ê

 

property and equipment, together with the real property for the enhancement of which it was acquired, shall be included together, for the purpose of applicable investment limits, and shall be subject to disposal under section 159 of this act at the same time and under the same conditions as apply to such enhanced real property.

      (f) Real property, or any interest therein, acquired or held by purchase, lease or otherwise, other than real property to be used primarily for agricultural, ranch, mining, development of oil or mineral resources, recreational, amusement, hotel, motel or club purposes, acquired as an investment for production of income, or acquired to be improved or developed for such investment purposes pursuant to an existing program therefor. The insurer may hold, mortgage, improve, develop, maintain, manage, lease, sell, convey and otherwise dispose of real property acquired by it under this section. An insurer shall not have at any one time invested in real property under this paragraph more than 15 percent of its assets.

      2.  Total investments of the insurer in real property under this section shall not at any time exceed 25 percent of the insurer’s assets.

 

 

TIME LIMIT FOR DISPOSAL OF REAL PROPERTY.

 

      Sec. 159.  1.  Except as stated in subsection 2, or unless the insurer elects to hold the real property as an investment under paragraph (f) of subsection 1 of section 158 of this act:

      (a) An insurer shall dispose of real property acquired under paragraph (a) of subsection 1 of section 158 of this act within 5 years after it has ceased to be necessary for the convenient accommodation of the insurer in the transaction of its business.

      (b) An insurer shall dispose of real property acquired under paragraphs (b), (c) and (d) of subsection 1 of section 158 of this act within 3 years after the date of acquisition, unless used or to be used for the insurer’s accommodation under paragraph (a) of subsection 1 of section 158 of this act.

      2.  Upon proof satisfactory to him that the interests of the insurer will suffer materially by the forced sale thereof, the commissioner may by order grant a reasonable extension of the period, as specified in such order, within which the insurer shall dispose of any particular parcel of such real property.

 

 

TIME LIMIT FOR DISPOSAL OF OTHER INELIGIBLE PROPERTY AND SECURITIES.

 

      Sec. 160.  Any personal property or securities lawfully acquired by an insurer which it could not otherwise have invested in or loaned its funds upon at the time of such acquisition shall be disposed of within 3 years from the date of acquisition unless within such period the security has attained to the standard of eligibility; but any security or personal property acquired under any agreement of bulk reinsurance, merger or consolidation may be retained for a longer period if so provided in the plan for such reinsurance, merger or consolidation as approved by the commissioner under sections 613 to 615, inclusive, of this act. Upon application by the insurer and proof that forced sale of any such property or security would materially injure the interests of the insurer, the commissioner may extend the disposal period for an additional reasonable time.


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ê1971 Statutes of Nevada, Page 1628 (Chapter 660, AB 416)ê

 

application by the insurer and proof that forced sale of any such property or security would materially injure the interests of the insurer, the commissioner may extend the disposal period for an additional reasonable time.

 

 

FAILURE TO DISPOSE OF REAL PROPERTY OR SECURITIES: EFFECT, PENALTY.

 

      Sec. 161.  1.  Any real property, personal property or securities lawfully acquired and held by an insurer after expiration of the period for disposal thereof or any extension of such period granted by the commissioner as provided in sections 159 and 160 of this act shall not be allowed as an asset of the insurer.

      2.  The insurer shall forthwith dispose of any ineligible investment unlawfully acquired by it, and the commissioner shall suspend or revoke the insurer’s certificate of authority if the insurer fails to dispose of the investment within such reasonable time as the commissioner may, by his order, specify.

 

 

PROHIBITED INVESTMENTS AND INVESTMENT UNDERWRITING.

 

      Sec. 162.  1.  In addition to investments excluded pursuant to other provisions of this code, an insurer shall not acquire, invest in or lend its funds upon the security of:

      (a) Issued shares of its own capital stock, except as provided in section 597 of this act (purchase of own shares by stock insurer). No such shares shall be considered as an asset of the insurer in any determination of its financial condition.

      (b) Securities issued by any corporation or enterprise the controlling interest of which is, or will after such acquisition by the insurer be, held directly or indirectly by the insurer or any combination of the insurer and the insurer’s directors, officers, subsidiaries or controlling stock holders (other than a parent corporation), and the spouses and children of any of the foregoing individuals. Investments in controlled insurance corporations or subsidiaries under sections 146 and 147 of this act are not subject to the provisions of this section.

      (c) Any note or other evidence of indebtedness of any director, officer, employee or controlling stock holder of the insurer, or of the spouse or child of any of the foregoing individuals, except as to policy loans authorized under section 151 of this act.

      (d) Any real property in which any officer or director of the insurer has a financial interest.

      2.  No insurer shall underwrite or participate in the underwriting of an offering of securities or property of any other person. This section shall not be deemed to prohibit the insurer from being a subsidiary which is the principal underwriter of a registered investment company (mutual fund).

      3.  No insurer shall enter into any agreement to withhold from sale any of its securities or property, and the disposition of its assets shall at all times be within the control of the insurer.


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ê1971 Statutes of Nevada, Page 1629 (Chapter 660, AB 416)ê

 

INVESTMENTS OF FOREIGN INSURERS.

 

      Sec. 163.  The investment portfolio of a foreign or alien insurer shall be as permitted by the laws of its domicile if of a quality substantially equal to that required under this chapter for similar funds of like domestic insurers.

 

 

CHAPTER 8

 

ADMINISTRATION OF DEPOSITS; TRUSTEED ASSETS OF ALIEN INSURERS

 

      Sec. 164.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 165 to 189, inclusive, of this act.

 

 

Administration of Deposits

 

AUTHORIZED DEPOSITS OF INSURERS.

 

      Sec. 165.  The following deposits of insurers when made through the commissioner shall be accepted and held by him in trust, subject to the provisions of sections 165 to 176, inclusive, of this act:

      1.  Deposits required under this code for authority to transact insurance in this state.

      2.  Deposits of domestic insurers when made pursuant to the laws of other states, provinces and countries as a requirement for authority to transact insurance in such state, province or country.

      3.  Deposits in such additional amounts as are permitted to be made under section 172 of this act.

 

 

PURPOSE OF DEPOSIT.

 

      Sec. 166.  1.  Deposits made in this state under sections 70 and 88 (retaliatory provision) of this act shall be held in trust for the respective purposes stated in those sections.

      2.  A deposit made in this state by a domestic insurer transacting insurance in another state, province or country, and as required by the laws of such other state, province or country, shall be held for the protection of all the insurer’s policy holders or all its policy holders and creditors or for such other purpose or purposes as may be specified pursuant to such laws.

      3.  Deposits required under section 88 of this act (retaliatory provision) shall be held for such purposes as are required by such section, and as specified by the commissioner’s order requiring such deposit to be made.

 

 

SECURITIES ELIGIBLE FOR DEPOSIT.

 

      Sec. 167.  1.  All such deposits required under section 70 of this act for authority to transact insurance in this state shall consist of good interest-bearing or dividend-paying securities of kinds eligible for investment of the funds of domestic insurers under sections 135 to 163, inclusive, of this act (investments).


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ê1971 Statutes of Nevada, Page 1630 (Chapter 660, AB 416)ê

 

interest-bearing or dividend-paying securities of kinds eligible for investment of the funds of domestic insurers under sections 135 to 163, inclusive, of this act (investments).

      2.  All other deposits of a domestic insurer held in this state pursuant to the laws of another state, province or country shall be comprised of securities of the kinds described in subsection 1, and of such additional kind or kinds of securities required or permitted by the laws of such state, province or country.

      3.  Deposits of foreign insurers made in this state under section 88 of this act (retaliatory provision) shall consist of such assets as are required by the commissioner pursuant to such law.

      4.  Evidences of indebtedness secured by real property shall be eligible for deposit only if the real property securing such indebtedness is situated within the State of Nevada. The evidence of indebtedness so deposited shall be accompanied by a certificate from a duly authorized title insurer doing business in the county in which the real property is situated, showing that the indebtedness is a first lien against such real property, other than for real property taxes.

 

 

DEPOSITORY: ACCESS; COSTS.

 

      Sec. 168.  1.  Except as provided in section 169 of this act, deposits made in this state under this code shall be made through the commissioner, and upon his written order deposited with the state treasurer, who shall give his receipt therefor and hold in trust deposits made under this code for the purpose or purposes for which the respective deposits were so made, subject to the provisions of sections 165 to 176, inclusive, of this act.

      2.  The State of Nevada shall be responsible for the safekeeping of all securities or other assets deposited with the state treasurer through the commissioner under this code, and shall bear the costs of the depository.

 

 

CUSTODIAL ARRANGEMENTS.

 

      Sec. 169.  1.  In lieu of a deposit made as provided in section 168 of this act, the commissioner in his discretion may, upon written request of the insurer and where of greater convenience to the insurer, permit such deposit to be made with and held by the trust department of an established bank located in Nevada approved by the commissioner for the purpose, and under custodial arrangements likewise approved by him.

      2.  All such custodial arrangements shall comply in substance with the requirements of this code as to like deposits through the commissioner, as to amount, purposes, maintenance, replenishment, release and withdrawal, and as to the rights of the insurer therein.

      3.  The cost of any such custodianship shall be borne by the insurer. The State of Nevada shall have no responsibility for the safekeeping of any such deposit.

      4.  The commissioner may at any time, in his discretion, terminate any such custodial arrangement and require the deposit represented thereby to be made as otherwise provided for under sections 165 to 176, inclusive, of this act.


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ê1971 Statutes of Nevada, Page 1631 (Chapter 660, AB 416)ê

 

ASSIGNMENT, CONVEYANCE OF ASSETS OR SECURITIES.

 

      Sec. 170.  1.  The insurer shall assign to the commissioner and his successors in office in trust all securities being deposited with or through him under sections 165 to 176, inclusive, of this act which are not negotiable by delivery; or, in lieu of such assignment, the insurer may give the commissioner an irrevocable power of attorney authorizing him to transfer the securities or any part thereof for any purpose within the scope of sections 165 to 176, inclusive, of this act.

      2.  In the case of securities or assets held under custodial arrangements pursuant to section 169 of this act, the custodian’s receipt therefor shall be delivered to the commissioner in trust, if negotiable, or assigned to him so that legal title to such securities or assets is vested in the commissioner and his successors in office.

      3.  The insurer shall convey to the commissioner and his successors in office in trust any real property being deposited under this code.

      4.  Upon release to the insurer, or other person entitled thereto, of any such security or asset, the commissioner shall reassign or transfer or reconvey the same to such insurer or person; or, in the case of power of attorney given pursuant to subsection 1, he shall deliver the power of attorney, together with the securities covered thereby, to the insurer or person entitled thereto.

 

 

APPRAISAL.

 

      Sec. 171.  The commissioner may, in his discretion, prior to acceptance for deposit of any particular asset or security, or at any time thereafter while so deposited, have the same appraised or valued by competent appraisers. The reasonable costs of any such appraisal or valuation shall be borne by the insurer.

 

 

EXCESS DEPOSITS.

 

      Sec. 172.  1.  If assets deposited by an insurer under sections 165 to 176, inclusive, of this act are subject to material fluctuations in market value, the commissioner may, in his discretion, require the insurer to deposit and maintain on deposit additional assets in an amount reasonably necessary to assure that the deposit at all times has a market value of not less than the amount specified under the law by which the deposit is required.

      2.  An insurer may otherwise at its option deposit assets in an amount exceeding its deposit required or otherwise permitted under this code by not more than 20 percent of such required or permitted deposit, or $20,000, whichever is the larger amount, for the purpose of absorbing fluctuations in the value of assets deposited and to facilitate exchange and substitution of such assets. During the solvency of the insurer, any such excess shall be released to the insurer upon its request. During the insolvency of the insurer, such excess deposit shall be released only as provided in subsection 3 of section 176 of this act.


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ê1971 Statutes of Nevada, Page 1632 (Chapter 660, AB 416)ê

 

RIGHTS OF INSURER DURING SOLVENCY.

 

      Sec. 173.  So long as the insurer remains solvent and is in compliance with this code it may:

      1.  Demand, receive, sue for and recover the income from the assets deposited;

      2.  Exchange and substitute assets of equivalent or greater fair market value for the deposited assets; and

      3.  At any reasonable time inspect any such deposit.

 

 

LEVY UPON DEPOSIT.

 

      Sec. 174.  No judgment creditor or other claimant of an insurer shall have the right to levy upon any of the assets or securities held in this state as a deposit for the protection of the insurer’s policy holders or policy holders and creditors. Levy upon deposits made pursuant to section 88 of this act (retaliatory provision) shall be permitted if so provided in the commissioner’s order under which the deposit is required.

 

 

DEFICIENCY OF DEPOSIT.

 

      Sec. 175.  If for any reason the market value of assets of an insurer held on deposit in this state falls below the amount required under this code, the insurer shall promptly deposit other or additional assets eligible for deposit sufficient to cure the deficiency. If the insurer has failed to cure the deficiency within 20 days after receipt of notice thereof by registered mail from the commissioner, the commissioner shall forthwith revoke the insurer’s certificate of authority.

 

 

DURATION AND RELEASE OF DEPOSIT.

 

      Sec. 176.  1.  Every deposit made in this state by an insurer pursuant to this code shall be held as long as there is outstanding any liability of the insurer as to which the deposit was so required; or, if the deposit is required under section 88 of this act (retaliatory provision), the deposit shall be held for so long as the basis of such retaliation exists.

      2.  If the insurer has reinsured all its outstanding risks in another insurer or insurers, the commissioner may deliver to such assuming insurer or its assigns, after the expiration of 1 year from the effective date of such reinsurance, any assets or securities deposited with him under this code by the ceding insurer upon proof satisfactory to him that:

      (a) The assuming insurer has assumed and agreed to discharge all liabilities of every kind due and to become due which the deposit was to secure; and

      (b) The assuming insurer has on deposit in this state, or with public authority in another state, securities of quality, amount and value not less than the deposit required of the ceding insurer under this code and which will reasonably subsist for the security of the obligations of the ceding insurer so assumed.

      3.  If the insurer is subject to delinquency proceedings as defined in section 820 of this act, upon the order of a court of competent jurisdiction the commissioner shall yield the insurer’s assets held on deposit to the receiver, conservator, rehabilitator or liquidator of the insurer, or to any other properly designated officer or officers who succeed to the management and control of the insurer’s assets.


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the commissioner shall yield the insurer’s assets held on deposit to the receiver, conservator, rehabilitator or liquidator of the insurer, or to any other properly designated officer or officers who succeed to the management and control of the insurer’s assets.

 

 

Trusteed Assets of Alien Insurers

 

TRUSTEED ASSETS OF ALIEN INSURER.

 

      Sec. 177.  1.  An alien insurer may use Nevada as a state of entry to transact insurance in the United States of America by making and maintaining in this state a deposit of assets in trust with a bank or trust company approved by the commissioner.

      2.  The deposit, together with other trust deposits of the insurer held in the United States of America for the same purpose, shall be in an amount not less than as required of an alien insurer under section 70 of this act (deposit requirement in general), and shall consist of United States cash funds, public obligations of the government or states or political subdivisions of the United States of America, and obligations of corporations and institutions in the United States of America, all as eligible for the investment of funds of domesic insurers under sections 140, 141 and 142 of this act.

      3.  Such a deposit may be referred to as “trusteed assets.”

 

 

PURPOSE AND DURATION.

 

      Sec. 178.  The deposit provided for in section 177 of this act shall be for the benefit, security and protection of the policy holders, or policy holders and creditors, of the insurer in the United States of America, and shall be maintained as long as there is outstanding in the United States of America any liability of the insurer arising out of its insurance transactions therein.

 

 

TRUST AGREEMENT: APPROVAL.

 

      Sec. 179.  1.  The deposit referred to in section 177 of this act shall be made and maintained under a written trust agreement between the insurer and the trustee, consistent with the requirements of sections 177 to 189, inclusive, of this act, and shall be authenticated in such form and manner as the commissioner may designate or approve.

      2.  The agreement shall not be effective until filed with and approved by the commissioner in writing. The commissioner shall not approve any trust agreement found by him not to be in compliance with law, or the terms of which do not in fact provide reasonably adequate protection for the insurer’s policy holders or policy holders and creditors in the United State of America.

 

 

AMENDMENT OF TRUST AGREEMENT.

 

      Sec. 180.  A trust agreement may be amended, but the amendment shall not be effective until filed with and approved in writing by the commissioner as being in compliance with sections 177 to 189, inclusive, of this act.


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ê1971 Statutes of Nevada, Page 1634 (Chapter 660, AB 416)ê

 

commissioner as being in compliance with sections 177 to 189, inclusive, of this act.

 

 

WITHDRAWAL OF APPROVAL.

 

      Sec. 181.  The commissioner may withdraw his approval of any trust agreement or of any amendment thereof if he finds upon hearing, after notice thereof to the insurer and the trustee, that the requisites for such approval, as provided in sections 177 to 189, inclusive, of this act, have been found by him not to exist or no longer to exist.

 

 

TITLE TO TRUSTEED ASSETS.

 

      Sec. 182.  Title to the trusteed assets is vested in the trustee and its successors for the purposes of the trust deposit, and the trust agreement shall so provide.

 

 

ASSETS KEPT SEPARATE.

 

      Sec. 183.  The trustee shall keep the trusteed assets separate from other assets and shall maintain a record thereof sufficient to identify trusteed assets at all times.

 

 

STATEMENT OF TRUSTEE.

 

      Sec. 184.  1.  The trustee of trusteed assets shall from time to time file with the commissioner statements, in such form as the commissioner may designate and request in writing, certifying the character of such assets and the amounts and market value thereof.

      2.  If the trustee fails to file the statement within a reasonable time after request therefor by the commissioner, the commissioner may suspend or revoke the certificate of authority of the insurer.

 

 

EXAMINATION OF ASSETS.

 

      Sec. 185.  The commissioner may examine trusteed assets at any time in accordance with the same conditions and procedures as govern examination of insurers in general under this code.

 

 

WITHDRAWAL OF ASSETS.

 

      Sec. 186.  1.  The trust agreement shall provide, in substance, that no withdrawal of trusteed assets shall be made by the insurer or permitted by the trustee without the written authorization or approval of the commissioner in advance thereof, except as follows:

      (a) Any or all income, earnings, dividends or interest accumulations of the trusteed assets may be paid over to the United States manager of the insurer upon request of the insurer or the manager.

      (b) For substitution, coincidentally with such withdrawal, of other securities or assets of value at least equal in amount to those being withdrawn, if:


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             (1) Such substituted securities or assets are likewise such as are eligible for deposit under section 177 of this act;

             (2) Such withdrawal is requested in writing by the insurer’s United States manager pursuant to general or specific written authority previously given or delegated by the insurer’s board of directors or other similar governing body; and

             (3) A certified copy of such authority has been filed with the trustee.

      (c) For the purpose of making deposits required by law in any state in which the insurer is or thereafter becomes an authorized insurer, for the protection of the insurer’s policy holders or policy holders and creditors in such state or in the United States of America, if such withdrawal does not reduce the insurer’s deposit in this state to an amount less than the minimum deposit required under section 70 of this act. The trustee shall transfer any assets so withdrawn and in the amount so required to be deposited in the other state directly to the depositary required to receive the deposit in the other state, as certified in writing by the public officer having supervision of insurance in the other state.

      (d) For the purpose of transferring the trusteed assets to an official conservator, rehabilitator or liquidator pursuant to the order of a court of competent jurisdiction.

      2.  The commissioner shall so authorize or approve withdrawal of only such assets as are in excess of the amount of assets required to be so held in trust under section 70 of this act, or as may otherwise be consistent with the provisions of sections 177 to 189, inclusive, of this act.

      3.  If at any time the insurer becomes insolvent, or if its assets held in the United States of America are less in amount than the sum of its liabilities in the United States of America arising from its insurance transactions therein and the amount of the required deposit, upon determination thereof the commissioner shall in writing order the trustee to suspend the right of the insurer or any other person to withdraw assets as authorized under paragraphs (a), (b) and (c) of subsection 1, and the trustee shall comply with such order until further order of the commissioner.

 

 

SUBSTITUTION OF TRUSTEE.

 

      Sec. 187.  A new trustee or new trustees may be substituted for the original trustee of trusteed assets for any proper cause. Any such substitution shall be subject to the commissioner’s approval.

 

 

MEXICAN, CANADIAN INSURERS.

 

      Sec. 188.  The provisions of sections 177 to 189, inclusive, of this act applicable to a United States manager shall, in the case of insurers domiciled in Mexico or Canada, be deemed to refer to the president, vice president, secretary, treasurer or other comparable officer of the insurer.

 

 

OTHER PROVISIONS APPLICABLE.

 

      Sec. 189.  Sections 171 (appraisal) and 174 (levy upon deposit) of this act shall also apply to trusteed assets of an alien insurer.


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ê1971 Statutes of Nevada, Page 1636 (Chapter 660, AB 416)ê

 

CHAPTER 9

 

AGENTS, BROKERS AND SOLICITORS

 

      Sec. 190.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 191 to 238, inclusive, of this act.

 

 

SCOPE OF CHAPTER.

 

      Sec. 191.  Within the scope of this chapter are sections governing the qualification, licensing and related requirements of agents, brokers, solicitors, managing general agents and service representatives. Certain sections also apply to:

      1.  Surplus lines brokers, as specified in section 296 of this act;

      2.  Motor club agents as specified in sections 801 to 810, inclusive, of this act; and

      3.  Bail bondsmen as specified in sections 873 to 887, inclusive, of this act.

 

 

DEFINITIONS.

 

      Sec. 192.  As used in this code, unless the context otherwise requires, the words and terms defined in sections 193 to 198, inclusive, of this act shall have the meanings ascribed to them in sections 193 to 198, inclusive, of this act.

 

 

“AGENT,” “NONRESIDENT AGENT” DEFINED.

 

      Sec. 193.  1.  An “agent” is an individual, firm or corporation appointed by an insurer to solicit applications for insurance or annuity contracts or to negotiate for such contracts on its behalf, and if authorized to do so by the insurer, to effectuate and countersign insurance contracts.

      2.  A “nonresident” agent is an agent residing or (if a corporation) domiciled in a state other than Nevada or residing or domiciled in Canada.

 

 

“BROKER,” “NONRESIDENT BROKER” DEFINED.

 

      Sec. 194.  1.  A “broker” is an individual, firm or corporation who, not being an agent of the insurer, as an independent contractor and on behalf of the insured solicits, negotiates or procures insurance or annuity contracts or the renewal or continuation thereof for insureds or prospective insureds other than himself.

      2.  A “nonresident broker” is a broker residing or (if a corporation) domiciled in a state other than Nevada or residing or domiciled in Canada.

 

 

“GENERAL LINES” AGENT, “GENERAL LINES” BROKER,

“LIFE” AGENT, “HEALTH” AGENT DEFINED.

 

      Sec. 195.  1.  A “general lines” agent is an agent who transacts any one or more of the following kinds of insurance:


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ê1971 Statutes of Nevada, Page 1637 (Chapter 660, AB 416)ê

 

      (a) Property insurance.

      (b) Casualty insurance.

      (c) Surety insurance.

      (d) Health insurance, when transacted for an insurer also represented by the same agent as to property or casualty insurance.

      2.  A “general lines” broker is a broker who transacts any one or more of property, casualty or surety insurance.

      3.  A “life” agent is an agent who transacts life insurance or annuity business, and includes also the transaction of health insurance on behalf of an insurer for whom the agent is also licensed as to life insurance.

      4.  A “health” agent is an agent who transacts only health insurance.

 

 

“MANAGING GENERAL AGENT” DEFINED.

 

      Sec. 196.  1.  A “managing general agent” is an individual, firm or corporation appointed, as an independent contractor, by one or more insurers to exercise general supervision over the business of the insurer in this state, with authority to appoint and terminate appointments of agents for such insurers.

      2.  A managing general agent shall not solicit or negotiate insurance contracts covering subjects of insurance resident, located or to be performed in this state unless licensed as an agent by this state.

 

 

“SERVICE REPRESENTATIVE” DEFINED.

 

      Sec. 197.  1.  A “service representative” is an individual regularly employed on salary by an insurer, group of insurers or managing general agent who works in the field with and assists agents and solicitors in soliciting, negotiating and effectuating insurance for such insurer, group or managing general agent.

      2.  A service representative is not required to be licensed as such, nor shall he solicit or negotiate contracts of insurance.

 

 

“SOLICITOR” DEFINED.

 

      Sec. 198.  A “solicitor” is an individual employed by a general lines agent or general lines broker, other than a nonresident agent or nonresident broker, to solicit applications for insurance, other than life or health insurance or annuity contracts, as a representative of such agent or broker.

 

 

LICENSE REQUIRED; PENALTY.

 

      Sec. 199.  1.  No person shall in this state be, act as or hold himself out to be, with respect to subjects of insurance resident, located or to be performed in this state or elsewhere, an agent, broker or solicitor unless licensed as such under this code. No managing general agent, whether or not located in this state, shall be or act as such with respect to the business of an insurer in this state unless licensed as such under this code.

      2.  No agent, broker or solicitor shall take an application for, procure or place for others any kind of insurance as to which he is not then so licensed.


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ê1971 Statutes of Nevada, Page 1638 (Chapter 660, AB 416)ê

 

      3.  Except as provided in section 233 of this act (sharing of commissions), no agent shall place any insurance with any insurer as to which he does not then hold a license and an appointment as agent under this code.

      4.  In addition to or in lieu of any applicable denial, suspension or revocation of license or administrative fine, any person violating this section is guilty of a misdemeanor.

 

 

EXEMPTIONS FROM LICENSE REQUIREMENT.

 

      Sec. 200.  In addition to persons excluded by the terms thereof, the definitions of an agent, broker, solicitor or managing general agent shall not be deemed to include any of the following:

      1.  Salaried employees rendering solely clerical and administrative services in the office of the employer.

      2.  Salaried administrative and clerical employees of agents and brokers performing any functions in the office and under the supervision of the employer and receiving no commissions.

      3.  Salaried employees of insurers, or of organizations employed by insurers, engaged in inspecting, rating or classifying risks, or in general supervision of agents, and not in the solicitation or writing of insurance.

      4.  Officers of insurers or of an association of insurers engaged in the performance of their usual and customary executive duties, exclusive of field solicitation of insurance other than rendering assistance to or on behalf of a licensed agent but receiving no commission or other compensation directly dependent upon the amount of business transacted.

      5.  Persons completing or delivering declarations or certificates of coverage under running inland marine insurance contracts evidencing coverage thereunder, if:

      (a) Such persons receive no commissions directly or indirectly on such insurance; and

      (b) Such persons or their employers have an insurable interest in the risk evidenced by the certificate or declaration.

      6.  Persons who secure and furnish information for the purposes of group life insurance, group or blanket health insurance or annuity coverages, or for enrolling individuals under such plans or issuing certificates thereunder or otherwise assisting in administering such plans where no commission is paid for such services.

      7.  Service representatives.

 

 

PROHIBITION OF BANK AS LICENSEE.

 

      Sec. 200.5.  1.  For the purposes of this section, the following definitions shall apply:

      (a) “Bank” means any institution that accepts deposits that the depositor has a legal right to withdraw on demand.

      (b) “Bank holding company,” “company,” “parent,” “subsidiary,” “affiliate” and related terms shall be defined by the commissioner in order to effectuate the purposes of this section, which are to help maintain the separation between banking and the insurance business and to minimize the possibilities of unfair competitive activities by banks against insurance companies, agents and brokers.


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ê1971 Statutes of Nevada, Page 1639 (Chapter 660, AB 416)ê

 

      2.  No bank or bank holding company or its parent, subsidiaries or affiliates may directly or indirectly be licensed to sell insurance in this state except as to credit life and health insurance and credit property insurance, or be licensed or admitted as an insurer.

 

 

LICENSING AND APPOINTMENT FORMS.

 

      Sec. 201.  The commissioner shall prescribe and furnish all forms in connection with licensing and appointments required under this code.

 

 

GENERAL QUALIFICATIONS FOR INDIVIDUAL AGENT’S, BROKER’S OR SOLICITOR’S LICENSE.

 

      Sec. 202.  1.  For the protection of the people of this state, the commissioner shall not issue, continue or permit to exist any agent’s, broker’s or solicitor’s license except in compliance with this chapter. Any individual for whom such a license is issued, continued or permitted to exist must:

      (a) Be a bona fide resident of, and reside within, this state. This paragraph does not apply to:

             (1) An agent brought into this state by an insurer to replace an agent disabled, deceased or terminated; or

             (2) A licensed nonresident agent or nonresident broker of this state who otherwise qualifies for a license and is licensed as a resident within 60 days after he becomes a bona fide resident of this state. This subparagraph does not otherwise apply to nonresident agents and nonresident brokers.

      (b) If for a license as a general lines agent or as a broker, be not less than 21 years of age; if for a license as a life agent or health agent or as a solicitor, be not less than 18 years of age.

      (c) If for an agent’s license, have been appointed an agent by an authorized insurer, subject to the issuance of the license.

      (d) If for a solicitor’s license, be the bona fide employee of a licensed resident agent or a licensed resident broker as a solicitor, or be so employed subject to the issuance of the license.

      (e) If for a broker’s license, have had experience either as an agent, solicitor, managing general agent, adjuster or broker, or other special experience, education or training, all of sufficient content and duration reasonably necessary for competence in fulfilling the responsibilities of a broker.

      (f) Be competent, trustworthy and financially responsible.

      (g) Pass any examination required for the license under this chapter.

      2.  The commissioner shall not differentiate between persons entitled to act as agents, on the basis that such persons are engaged in other businesses to which the insurance agency is incidental or supplemental.

 

 

LICENSING OF FIRMS, CORPORATIONS.

 

      Sec. 203.  1.  A firm or corporation shall be licensed only as an agent or broker, resident or nonresident, or a managing general agent.

      2.  For licensing as an agent or broker, each general partner and each individual to act for the firm, or each individual to act for the corporation, shall be named in the license or registered with the commissioner, and shall qualify as though he were an individual licensee.


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ê1971 Statutes of Nevada, Page 1640 (Chapter 660, AB 416)ê

 

individual to act for the firm, or each individual to act for the corporation, shall be named in the license or registered with the commissioner, and shall qualify as though he were an individual licensee. The commissioner shall charge and the insurer or licensee shall pay a full additional license fee for each respective individual in excess of one named in the license or registered with the commissioner.

      3.  An individual who is not a resident of this state as provided in paragraph (a) of subsection 1 of section 202 of this act shall not be so named or registered as to the license of a resident agent or resident broker, and shall not exercise the license powers thereof.

      4.  A license as a resident agent or resident broker shall not be issued to a firm or corporation unless it maintains a principal place of business in this state, and the transaction of business under the license is specifically authorized in the firm’s partnership agreement or the corporation’s articles.

      5.  The licensee shall promptly notify the commissioner of all changes among its members, directors and officers, and among other individuals designated in or registered as to the license.

 

 

APPLICATION FOR AGENT’S, BROKER’S OR SOLICITOR’S LICENSE.

 

      Sec. 204.  1.  Written application for an agent’s, broker’s or solicitor’s license shall be filed with the commissioner by the applicant, accompanied by the applicable fee shown in section 90 of this act (fee schedule). The application form shall be accompanied by the applicant’s fingerprints, and shall require full answers to questions reasonably necessary to determine the applicant’s:

      (a) Identity and residence;

      (b) Business record or occupations for not less than the 2 years next preceding, with the name and address of each employer, if any;

      (c) Experience or instruction in the kind or kinds of insurance business he proposes to transact, and relative to the insurance laws of this state; and

      (d) Other facts reasonably required by the commissioner to determine the applicant’s qualifications for the license applied for.

      2.  If for an agent’s license, the application shall state the kinds of insurance proposed to be transacted, and be accompanied by a written appointment by an authorized insurer or insurers as agent for such kinds of insurance, subject to issuance of the license.

      3.  If for a solicitor’s license, the application shall be accompanied by the written requisition and certification by a licensed resident general lines agent or licensed resident broker, showing that the applicant is his bona fide employee, or is so employed as a solicitor subject to issuance of the license.

      4.  If the applicant for an agent’s or broker’s license is a firm or corporation, the application shall also show the names of all members, officers and directors, and shall designate each individual who is to exercise the license powers; and each such individual shall furnish information as to himself as though for an individual license.

      5.  The application shall show whether and where the applicant is now or ever was previously licensed anywhere as to insurance; whether any such license was ever refused, suspended, revoked or renewal or continuance refused; whether any insurer, general agent, agent or broker claims the applicant has ever had an agency contract canceled, and the facts thereof; and, if the applicant is a married woman, like information with respect to her husband.


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ê1971 Statutes of Nevada, Page 1641 (Chapter 660, AB 416)ê

 

or ever was previously licensed anywhere as to insurance; whether any such license was ever refused, suspended, revoked or renewal or continuance refused; whether any insurer, general agent, agent or broker claims the applicant has ever had an agency contract canceled, and the facts thereof; and, if the applicant is a married woman, like information with respect to her husband.

      6.  The application shall be verified by the applicant, and no applicant for a license under this chapter shall knowingly misrepresent or withhold any fact or information called for in the application form or in connection therewith.

 

 

APPLICATION FOR MANAGING GENERAL AGENT’S LICENSE.

 

      Sec. 205.  Application for a license as a managing general agent shall be made in writing by the applicant desiring a license as a managing general agent, and filed with the commissioner. The application shall be accompanied by the applicant’s fingerprints, by appointment of the applicant as a managing general agent by each insurer or underwriter department to be so represented, and by the license fee specified in section 90 of this act (fee schedule).

 

 

EXAMINATION FOR RESIDENT LICENSE; APPLICATION FOR EXAMINATION.

 

      Sec. 206.  1.  After completion and filing of an application with the commissioner as required by section 204 of this act, the commissioner shall subject each applicant for a license as a resident agent, resident broker or solicitor, unless exempted therefrom under section 207 of this act, to a written examination personally as to his competence to act as such agent, broker or solicitor.

      2.  If the applicant is a firm or corporation, the examination shall be taken by each individual who is to be named in or registered as to the license, as provided in section 203 of this act.

      3.  The examination of an applicant for an agent’s or broker’s license shall cover all the kinds of insurance to be transacted under the license, which shall include any one or more of the following kinds of insurance, without subdivision:

      (a) Life insurance.

      (b) Health insurance.

      (c) Property insurance.

      (d) Casualty insurance.

      (e) Surety insurance.

      4.  As to life insurers authorized to issue variable annuities in this state, the commissioner shall require applicants appointed by such insurers as agents to solicit such contracts in this state, in addition to the examination required as to life insurance, to take and pass successfully a supplemental written examination covering variable annuities and securities.

      5.  Examination of an applicant for a solicitor’s license shall cover all kinds of insurance, other than life or health insurances, as to which the appointing agent or broker is licensed.


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ê1971 Statutes of Nevada, Page 1642 (Chapter 660, AB 416)ê

 

      6.  Written application for the examination shall be filed with the commissioner by or on behalf of the applicant not less than 7 days prior to the date fixed for the examination, as provided in section 210 of this act, and shall be accompanied by the fee for each kind of insurance to be included in such application as specified in section 90 of this act (fee schedule). The examination fee shall be deemed earned when paid and shall not be refundable. The fee shall be applicable to an examination given within 3 months after the date of the application for examination, but not thereafter.

 

 

EXEMPTION FROM EXAMINATION FOR RESIDENT LICENSE.

 

      Sec. 207.  Except as provided in subsection 4 of section 216 of this act (continuation, expiration of license), section 206 of this act does not apply to and no such examination shall be required of:

      1.  Applicants with respect to life and health or life or health insurance who hold the chartered life underwriter (C.L.U.) designation. Applicants will be required to show such proof of holding the chartered life underwriter (C.L.U.) designation as may be required by the commissioner.

      2.  Applicants with respect to property, casualty and surety insurance (or any combination thereof) who hold the chartered property, casualty underwriter (C.P.C.U.) designation. Applicants will be required to show such proof of holding the chartered property, casualty underwriter (C.P.C.U.) designation as may be required by the commissioner.

      3.  Any applicant for a license covering the same kind or kinds of insurance as to which the applicant was licensed under a similar license in this state, other than a temporary license, within 1 year (exclusive of up to 2 years of service as a member of the Armed Forces of the United States) next preceding the date of application, unless the previous license was revoked, suspended or continuation thereof refused by the commissioner.

      4.  Any applicant for an agent’s license who is currently licensed as a broker or solicitor for the same kind or kinds of insurance, or has been so licensed within 1 year next preceding the date of the application unless such previous license was revoked, suspended or continuation thereof refused by the commissioner, and if a solicitor, has had at least 1 year of experience under his solicitor’s license satisfactory to the commissioner.

      5.  Any applicant for a broker’s license who has been licensed as an agent or solicitor in this state for the same kinds of insurance within 1 year preceding the date of the application, unless such previous license was revoked, suspended or continuation thereof refused by the commissioner; and if an agent has had at least 1 year, and if a solicitor has had at least 2 years, of experience under his agent’s or solicitor’s license, as the case may be, satisfactory to the commissioner.

      6.  Any applicant for a solicitor’s license who has been licensed as an agent, broker or solicitor in this state for the same kinds of insurance within 1 year next preceding the date of the application, unless such previous license was revoked, suspended or continuation thereof refused by the commissioner.

      7.  Applicants with respect to variable annuities who are, or within the next preceding 12 months have been, licensed or registered as securities broker-dealers under laws administered by the Securities and Exchange Commission or any successor agency of the Federal Government.


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ê1971 Statutes of Nevada, Page 1643 (Chapter 660, AB 416)ê

 

the next preceding 12 months have been, licensed or registered as securities broker-dealers under laws administered by the Securities and Exchange Commission or any successor agency of the Federal Government.

      8.  Persons representing public carriers under limited licenses issued under section 215 of this act (limited licenses).

      9.  Title insurance agents.

 

 

EXAMINATION FOR NONRESIDENT LICENSE.

 

      Sec. 208.  1.  After completion and filing of an application with the commissioner as required by section 204 of this act, the commissioner shall subject each applicant for a license as nonresident agent or nonresident broker personally to a written examination as to his competence to act as such agent or broker. Subsections 2 (firms and corporations), 3 (kinds of insurance), 4 (variable annuities and securities) and 6 (examination application and fee) of section 206 of this act are also applicable to such nonresidents.

      2.  The commissioner may, in his discretion, enter into a reciprocal arrangement with the public officer having supervision of the business of insurance in another state or in a province of Canada to accept, in lieu of the examination of the applicant as required in subsection 1, the certificate of such officer to the effect that the applicant is licensed as an insurance agent or broker, as the case may be, in such state or province and has complied with its qualifications and standards concerning:

      (a) Experience or training;

      (b) Reasonable familiarity with the broad principles of insurance licensing and regulatory laws and with the terms and conditions of insurance contracts of the kinds of insurance which the applicant proposes to transact in this state; and

      (c) A reasonably good general understanding of the obligations and duties of such an insurance broker or agent.

 

 

SCOPE OF EXAMINATION; REFERENCE MATERIAL.

 

      Sec. 209.  1.  Each examination for a license as an agent, broker or solicitor shall reasonably test the applicant’s competence and knowledge of the kinds of insurance, policies and transactions to be handled under the license applied for, of the duties and responsibilities of such a licensee, and of the pertinent laws of this state with which the applicant reasonably should be familiar.

      2.  The commissioner shall make available to applicants information as to the general scope of, and particular subjects to be covered by, the examination for a particular license, together with information as to published books and other reference sources which may be studied by the applicant in preparation for the examination.

 

 

CONDUCT OF EXAMINATIONS.

 

      Sec. 210.  1.  The commissioner shall cause examinations of resident applicants to be available not less frequently than monthly, at a place in this state reasonably accessible to applicants.


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ê1971 Statutes of Nevada, Page 1644 (Chapter 660, AB 416)ê

 

      2.  The commissioner shall make examinations for a license as a nonresident agent or nonresident broker available to applicants not less frequently than every 6 months; but at any earlier time after receipt of an application for such a license the commissioner may, in his discretion, forward the examination questions to the insurance supervisory officer of the state or Canadian province of the applicant’s residence for the purpose of having such officer administer the taking of the examination by the applicant in accordance with the instructions of the commissioner. In such event, the examination questions and answers, when completed by the applicant, shall be returned to and graded by the commissioner.

      3.  The applicant shall pay an examination application fee for each kind of insurance as to which he is to be examined.

      4.  The commissioner shall conduct and grade all examinations given by him or under his instructions in a fair and impartial manner and without unfair discrimination between individuals examined.

      5.  The commissioner shall require a waiting period of 6 months before reexamination of an applicant who has previously failed twice to pass an examination covering the same kind or kinds of insurance; and thereafter shall require a waiting period of 1 year if the same applicant twice again fails to pass the examination covering the same kind or kinds of insurance as before.

      6.  An additional examination fee shall be paid for each repeat of an examination.

 

 

ISSUANCE, REFUSAL OF LICENSE; REFUNDABILITY OF FEES.

 

      Sec. 211.  1.  If the commissioner finds that the application is complete, that the applicant has passed all required examinations and is otherwise qualified for the license applied for, he shall promptly issue the license. Otherwise, the commissioner shall refuse to issue the license and promptly notify the applicant and the appointing insurer (if the application is for an agent’s or managing general agent’s license) or the employer (if the application is for a solicitor’s license) of such refusal, stating the grounds thereof. But issuance of a license to a nonresident agent or nonresident broker otherwise fully qualified therefor is discretionary with the commissioner, and can be refused by the commissioner on any reasonable ground.

      2.  If the license is refused, the commissioner shall promptly refund the applicable appointment fee tendered with the application for the license. The application fee shall be deemed earned when paid and shall not be refunded.

 

 

LICENSE CONTENTS; NUMBER REQUIRED.

 

      Sec. 212.  1.  The license shall state the name and address of the licensee, the date of issue, general conditions relative to expiration or termination, the kind or kinds of insurance, if applicable, covered by the license, and such other information and conditions as the commissioner may deem proper and consistent with law.


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ê1971 Statutes of Nevada, Page 1645 (Chapter 660, AB 416)ê

 

      2.  The license of an agent or managing general agent shall not specify the name of any particular insurer or underwriter’s department by which the licensee is appointed, except as provided in subsection 5 as to limited licenses, and the licensee may, subject to section 214 of this act (life or health agents), represent as such agent or managing general agent, under the one license, as many insurers or underwriter’s departments as may appoint him therefor in accordance with this chapter.

      3.  The license of a solicitor shall show also the name and address of the employer agent or broker.

      4.  Each limited license issued under section 215 of this act shall show also the name of the insurer so represented, and a separate license shall be required as to each such insurer.

 

 

NAME OF LICENSEE; TRUE, FICTITIOUS NAMES.

 

      Sec. 213.  1.  Every unincorporated licensee or unincorporated applicant for a license under this chapter who desires the issuance of license under a fictitious name shall file with the commissioner a certified copy of the entry of the county clerk and of the affidavit made under chapter 602 of NRS; and every incorporated licensee and unincorporated applicant shall file with the commissioner in writing the corporation’s true name and also all fictitious names under which it conducts or intends to conduct business. After licensing, every such licensee shall file promptly with the commissioner written notice of any change in or discontinuance of any such name.

      2.  The commissioner may in writing disapprove the use of any true name (other than the bona fide natural name of an individual applicant or licensee) or any fictitious name used or proposed to be used by any applicant or licensee, on any of the following grounds:

      (a) The name interferes with or is deceptively similar to a name already filed and in use by another licensee;

      (b) Use of the name may mislead the public in any respect;

      (c) The name states or implies that the licensee or applicant is an insurer, motor club, hospital service plan or is entitled to engage in insurance activities not permitted under licenses held or applied for;

      (d) The name states or implies that the licensee is an underwriter. This paragraph shall not prevent an individual life agent licensee or an individual life insurance broker licensee from describing himself as an underwriter, or from using the designation “chartered life underwriter” if entitled thereto, or prevent a natural person who is a property and casualty licensee from using the designation “chartered property and casualty underwriter” if entitled thereto, or prevent an insurance agent or broker trade association from using a name containing “underwriter”; or

      (e) The licensee has already filed and not discontinued use of more than two names, including the true name. This paragraph shall not prevent a licensee who has lawfully purchased or succeeded to the business of other licensees from using for each such business not more than two additional names, true or fictitious, consisting of names used by his predecessors in the conduct of such businesses.


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ê1971 Statutes of Nevada, Page 1646 (Chapter 660, AB 416)ê

 

      3.  A licensee shall not use a name after written notice from the commissioner that such use is contrary to this section. If the commissioner determines that such is justified by mitigating circumstances, he may in writing permit use of the name to continue for a specified reasonable period upon conditions imposed by him for the protection of the public consistent with the purposes of this section.

      4.  Paragraphs (a), (c) and (d) of subsection 2 do not apply to the true name of any organization licensee which on July 1, 1965, held under such name any type of license similar to those provided for under this chapter, or to any fictitious name in use on July 1, 1965, by any individual or organization holding any type of license similar to those provided for under this chapter, if such fictitious name was filed with the commissioner on or before July 1, 1965.

 

 

MULTIPLE APPOINTMENTS: LIFE OR HEALTH AGENTS.

 

      Sec. 214.  1.  Except as provided in subsection 2, a life or health insurance agent may concurrently be licensed as to as many life or health insurers as duly file appointments of the licensee with the commissioner and pay the appointment fee.

      2.  Upon the filing of each appointment of the licensee or proposed licensee by a life or health insurer the commissioner shall promptly give written notice of the pending appointment to all other life or health insurers, as the case may be, as to whom the licensee has been licensed in this state within the 24 months next preceding, and shall allow such other insurers a reasonable period as specified in the notice within which to respond. If the commissioner finds that the applicant or licensee has a debit balance with any such other insurer which is not adequately secured or otherwise provided for to the obligee insurer’s satisfaction, and that such indebtedness is either acknowledged by the applicant or licensee or the insurer has secured a judgment therefor, the commissioner shall not effectuate the new appointment until after such debit balance has been adequately secured, or otherwise so provided for.

 

 

LIMITED LICENSES.

 

      Sec. 215.  1.  The commissioner may issue a limited agent’s license to applicants, qualified therefor under this chapter and representing public carriers, who in the course of such representation solicit or sell insurance incidentally to the transportation of persons or to the storage or transportation of property, and limited to insurance so transacted. No person so licensed shall hold concurrently another license under this chapter.

      2.  The fee for a limited license is specified in section 90 of this act (fee schedule).

 

 

CONTINUATION, EXPIRATION OF LICENSE.

 

      Sec. 216.  1.  Each broker’s, solicitor’s, nonresident broker’s, surplus lines broker’s and managing general agent’s license issued under this code shall continue in force until it expires or is suspended, revoked or otherwise terminated, but subject to payment to the commissioner at his office in Carson City, Nevada, annually on or before April 30 of the applicable continuation fee stated in section 90 of this act (fee schedule), accompanied by a written request for such continuation.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1647 (Chapter 660, AB 416)ê

 

in Carson City, Nevada, annually on or before April 30 of the applicable continuation fee stated in section 90 of this act (fee schedule), accompanied by a written request for such continuation. A request for continuation shall be made as follows:

      (a) For brokers’, nonresident brokers’, surplus lines brokers’ and managing general agents’ licenses, the request shall be made and signed by the licensee.

      (b) For solicitors’ licenses, the request shall be made and signed by the employer agent or broker.

      2.  Any license referred to in subsection 1 not so continued on or before April 30 shall be deemed to have expired at midnight on April 30; but the commissioner may effectuate a request for continuation received by him within 30 days thereafter if accompanied by an annual continuation fee of 150 percent of the fee otherwise required.

      3.  An agent’s or nonresident agent’s license shall continue in force while there is in effect, as to the licensee, as shown by the commissioner’s records, an appointment or appointments as agent of authorized insurers covering collectively all the kinds of insurance included in the agent’s license. Upon termination of all the licensee’s agency appointments as to a particular kind of insurance and failure to replace such appointment within 60 days thereafter, the license shall thereupon expire and terminate as to such kind of insurance; and the licensee shall promptly deliver his license to the commissioner for reissuance, without fee or charge, as to the kinds of insurance covered by the licensee’s remaining agency appointments. Upon termination of all the licensee’s agency appointments under the license, it shall forthwith terminate.

      4.  If the commissioner has reason to believe that any licensee agent, broker or solicitor has for any cause raised a reasonable question as to the competence of the licensee or of any individual designated to exercise the license powers of a firm or corporate licensee, the commissioner may require, as a condition to continuation of the license, that such licensee or individual take and pass to the commissioner’s satisfaction a written examination as required under this chapter of new applicants for a similar license.

      5.  The license of a managing general agent as to a particular insurer or underwriter’s department shall be terminated by the commissioner upon written request by any of such persons.

      6.  This section does not apply to temporary licenses issued under section 219 of this act.

 

 

APPOINTMENT OF AGENTS; CONTINUATION.

 

      Sec. 217.  1.  Each insurer appointing an agent, resident or nonresident, in this state shall file with the commissioner a written appointment specifying the kinds of insurance to be transacted by the agent for the insurer, and pay the appointment fee, or license fee in the case of limited licenses, as specified in section 90 of this act (fee schedule).

      2.  Subject to annual continuation by the insurer as provided in subsection 3, each appointment shall remain in effect until the agent’s license is revoked or otherwise terminated, or there is an earlier termination of the appointment.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1648 (Chapter 660, AB 416)ê

 

      3.  As soon as reasonably possible after commencement of each calendar year the commissioner shall furnish to each authorized insurer an alphabetical list of the names of all agents of the insurer in this state then of record in the division. The insurer shall indicate on such list those agents whose appointments or limited licenses are not to be continued in effect or whose appointments are to be modified as to the kinds of insurance covered, and on or before April 30 of the same year return the list to the commissioner together with payment of the annual continuation of appointment fee, or license fee in the case of limited licenses, in amounts as specified in section 90 of this act (fee schedule) as to those appointments or limited licenses not being terminated. Any appointment or license not so continued and not otherwise expressly terminated shall be deemed to have expired at midnight on April 30.

 

 

TERMINATION OF APPOINTMENT: AGENTS, SOLICITORS.

 

      Sec. 218.  1.  Subject to the agent’s contract rights, if any, an insurer may terminate an agency appointment, resident or nonresident, at any time. The insurer shall promptly give written notice of termination and the effective date thereof to the commissioner, on forms furnished by the commissioner, and to the agent if reasonably possible. The list of appointments not being continued referred to in section 217 of this act shall constitute such notice to the commissioner as to terminations so listed. The commissioner may require of the insurer reasonable proof that the insurer has also given such notice to the agent if reasonably possible.

      2.  Accompanying the notice of termination given the commissioner, the insurer shall file with him a statement of the cause, if any, for each termination. Any information or document so disclosed or furnished to the commissioner shall be deemed an absolutely privileged communication and shall not be admissible as evidence in any action or proceeding unless so permitted by the insurer in writing.

      3.  An agent or broker terminating the employment and license as such of a solicitor shall give like notice of such termination and proof to the commissioner, like information as to the reasons for such termination, with like status as a privileged communication unless such privilege is waived in writing by the agent or broker.

      4.  No agreement between the insurer and agent, or between employer agent or broker and licensed solicitor, shall affect the commissioner’s termination of the appointment or license if so requested by the insurer, or by the employer agent or broker, as the case may be.

 

 

TEMPORARY LICENSE AS AGENT OR BROKER.

 

      Sec. 219.  1.  The commissioner in his discretion may issue a temporary license as agent or broker, as the case may be, to or with respect to an individual otherwise qualified therefor but without requiring such individual to take an examination, in the following cases:

      (a) To the surviving spouse or next of kin, or to the administrator or executor or employee thereof, of a deceased licensed agent or broker, or to the spouse, next of kin, employee or legal guardian or employee thereof, of a licensed agent or broker disabled because of sickness, insanity or injury, if in either case the commissioner deems that such temporary license is necessary for the winding up or continuation of the agent’s or broker’s business;

 


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ê1971 Statutes of Nevada, Page 1649 (Chapter 660, AB 416)ê

 

thereof, of a licensed agent or broker disabled because of sickness, insanity or injury, if in either case the commissioner deems that such temporary license is necessary for the winding up or continuation of the agent’s or broker’s business;

      (b) To a member or employee of a firm, or officer or employee of a corporation, licensed as an agent or broker, upon the death or disablement of an individual designated under the license to exercise the powers thereof; or

      (c) To the designee of a licensed agent or broker entering upon active service in the Armed Forces of the United States of America.

      2.  The temporary license may cover the same kinds of insurance for which the agent or broker being replaced was licensed. The temporary licensee may represent under the license all insurers last represented by the replaced agent, without the necessity of new appointments of the licensee; but the licensee shall not be appointed as to any additional insurer or additional kind of insurance under such a temporary license. This subsection does not prohibit termination of its appointment by any insurer.

      3.  The temporary licensee shall have the same license powers and duties as under a permanent license.

      4.  Except as provided in this subsection, a temporary license shall continue only until the licensee can qualify for a permanent license under this chapter, but not more than 90 days from the date of issue. The commissioner may extend the license for an additional reasonable period, not to exceed 12 months, as to a temporary license issued under paragraph (a) of subsection 1.

      5.  The fee paid for a temporary license may be applied upon the fee required for a similar permanent license issued to the licensee upon or prior to expiration of the temporary license and covering the same kinds of insurance.

 

 

BROKER’S BOND.

 

      Sec. 220.  1.  Except as provided in subsection 3, every applicant for a resident or nonresident broker’s license shall file with the application, and thereafter maintain in force while so licensed, a bond in favor of the State of Nevada executed by an authorized surety insurer. The bond may be continuous in form with total aggregate liability limited to the payment of $5,000. The bond shall be conditioned upon full accounting and due payment to the person entitled thereto, of funds coming into the broker’s possession through insurance transactions under the license.

      2.  The bond shall remain in force until released by the commissioner, or until canceled by the surety. Without prejudice to any liability previously incurred thereunder, the surety may cancel the bond upon 30 days’ advance written notice to both the broker and the commissioner.

      3.  If a nonresident broker licensee’s state of domicile requires the applicant to post with the insurance supervisory officer of that state and keep in effect a bond not less in amount and for purposes similar to these required in this section, the commissioner may, in his discretion, waive the posting of a bond in this state.


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ê1971 Statutes of Nevada, Page 1650 (Chapter 660, AB 416)ê

 

BROKER’S AUTHORITY, COMMISSIONS; AGENT-BROKER COMBINATIONS.

 

      Sec. 221.  1.  A broker as such is not an agent or other representative of an insurer and does not have power by his own acts to obligate the insurer upon any risk or with reference to any insurance transaction.

      2.  An insurer or agent shall have the right to pay to a broker licensed under this chapter the customary commissions upon insurance placed through the broker.

      3.  A licensed agent may be licensed also as a broker and be a broker as to insurers for which he is not then licensed as an agent. The sole relationship between a broker and an insurer as to which he is then licensed as an agent, and as to transactions arising during the existence of such agency appointment, shall be that of insurer and agent, and not that of insurer and broker.

 

 

BROKER MUST PLACE BUSINESS WITH AGENT.

 

      Sec. 222.  1.  Except as otherwise provided by this code, no broker or nonresident broker shall place insurance covering property or risks within this state except with a duly licensed resident agent of an authorized insurer.

      2.  This section does not apply to life insurance, health insurance, annuity contracts or to coverages written under the Surplus Lines Law.

 

 

NONRESIDENT AGENTS, NONRESIDENT BROKERS: LICENSING; QUALIFICATIONS; RIGHTS; OBLIGATIONS; FEES.

 

      Sec. 223  1.  The commissioner may, in his discretion, issue a license as a nonresident agent or nonresident broker, as the case may be, to a licensed resident agent or licensed resident broker of another state or of a province of Canada who is qualified under this chapter for a license as resident agent or resident broker, as the case may be, of this state except as to residence and as otherwise expressly provided, if under the laws of such other state or province residents of this state are not prohibited or prevented from acting as nonresident agents or nonresident brokers therein.

      2.  In addition to other applicable requirements, the application for a license of such a nonresident shall be accompanied by a statement in writing of the insurance supervisory public officer of his state or province of residence showing that the applicant is currently licensed therein as an agent or broker, as the case may be, as to substantially the same kind or kinds of insurance as proposed to be transacted under the Nevada license applied for.

      3.  If the nonresident applicant or licensee resides within 50 miles of the boundary of the State of Nevada and his normal operations would include the transaction of insurance on both sides of that boundary, and if his state of domicile has a like reciprocal agreement concerning residents of this state, the license and appointment fees shall be the same as those of a like licensee resident of this state. Otherwise, applicable license and appointment fees shall be as provided for other nonresident applicants and licensees under section 90 of this act (fee schedule).


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ê1971 Statutes of Nevada, Page 1651 (Chapter 660, AB 416)ê

 

appointment fees shall be as provided for other nonresident applicants and licensees under section 90 of this act (fee schedule).

      4.  Except as to the countersignature requirement (section 85 of this act), and except as otherwise expressly provided, such a nonresident licensee shall have the right to solicit business within the State of Nevada, and shall otherwise have the same rights, duties and obligations as apply under this code to Nevada residents holding similar Nevada licenses.

 

 

NONRESIDENT AGENTS, BROKERS: SERVICE OF PROCESS, AGREEMENT TO APPEAR.

 

      Sec. 224.  1.  Every nonresident licensed by this state as an agent or broker under section 223 of this act shall appoint the commissioner in writing as his attorney upon whom may be served all legal process issued in connection with any action or proceeding brought or pending in this state against or involving the licensee and relating to transactions under his Nevada license. The appointment shall be irrevocable and shall continue in force for so long as any such action or proceeding could arise or exist. Duplicate copies of process shall be served upon the commissioner, or other individual in apparent charge of the division during the commissioner’s absence, accompanied by payment of the service process fee as specified in section 90 of this act (fee schedule). Upon such service the commissioner shall promptly forward a copy of the process by certified mail (with return receipt requested) to the nonresident licensee at his business address last of record with the division. Process served and the copy thereof forwarded as provided in this subsection shall for all purposes constitute personal service thereof upon the licensee.

      2.  Every such licensee shall likewise file with the commissioner his written agreement to appear before the commissioner pursuant to notice of hearing, show cause order or subpena issued by the commissioner and deposited, postage paid, by certified mail in a letter depository of the United States post office, addressed to the licensee at his address last of record in the division, and that upon failure of the licensee so to appear the licensee thereby consents to any subsequent suspension, revocation or refusal of the commissioner to continue the licensee’s license.

 

 

SOLICITORS: SPECIAL REQUIREMENTS.

 

      Sec. 225.  1.  A solicitor shall not concurrently be employed or licensed as to more than one agent or one broker.

      2.  The solicitor’s license shall cover all the kinds of insurance for which the employer agent or broker is licensed, except life and health insurance and annuities.

      3.  A solicitor shall not concurrently be licensed as an agent or broker, except as to life or health insurances.

      4.  A solicitor shall not have authority to bind risks or to countersign policies.

      5.  The transactions of a solicitor under his license shall be in the name of the employer agent or broker, and the agent or broker shall be responsible for the acts or omissions of the solicitor within the scope of his employment.


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ê1971 Statutes of Nevada, Page 1652 (Chapter 660, AB 416)ê

 

      6.  The solicitor shall maintain his office with that of the employer agent or broker, and records of his transactions under the license shall be maintained as a part of the records of the agent or broker.

      7.  The solicitor’s license shall remain in the custody of the employer agent or broker. Upon termination of such employment as a solicitor, the agent or broker shall give written notice thereof to the commissioner, as provided in section 218 of this act, and deliver the license to the commissioner for cancellation.

 

 

INSURANCE VENDING MACHINES.

 

      Sec. 226.  1.  A licensed resident agent or insurer may solicit for and issue personal travel accident insurance policies by means of mechanical vending machines supervised by the agent and placed at airports and similar places of convenience to the traveling public, if the commissioner finds that:

      (a) The policy provides reasonable coverage and benefits, is suitable for sale and issuance by vending machine, and that use of such a machine in a proposed location would be of material convenience to the public;

      (b) The type of machine proposed to be used is reasonably suitable for the purpose;

      (c) Reasonable means are provided for informing prospective purchasers of policy coverages and restrictions;

      (d) Reasonable means are provided for the refund of money inserted in defective machines and for which insurance so paid for is not received; and

      (e) The cost of maintaining such a machine at a particular location is reasonable in amount.

      2.  For each machine to be used, the commissioner shall issue to the agent upon his application a special vending machine license. The license shall specify the name and address of the insurer and agent, the name of the policy to be sold, the serial number and operating location of the machine. The license shall be subject to annual continuation, to expiration, suspension or revocation coincidentally with that of the agent. The commissioner shall also revoke the license of any machine as to which he finds that the license qualifications no longer exist. The license fee shall be as specified in section 90 of this act (fee schedule) for each license year or part thereof for each respective machine. Proof of the existence of a subsisting license shall be displayed on or about each machine in use in such manner as the commissioner reasonably requires.

 

 

PLACE OF BUSINESS; DISPLAY OF LICENSES.

 

      Sec. 227.  1.  Every resident general lines agent and resident general lines broker shall have and maintain in this state a place of business accessible to the public, wherein the licensee principally conducts transactions under his license. The address of such place shall appear upon the application for a license and upon the license, when issued, and the licensee shall promptly notify the commissioner in writing of any change thereof. Nothing in this section shall prohibit the maintenance of such place in the licensee’s residence in this state.


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ê1971 Statutes of Nevada, Page 1653 (Chapter 660, AB 416)ê

 

      2.  The licenses of the licensee, and those of solicitors employed by him, shall be conspicuously displayed in such place of business in a part thereof customarily open to the public.

      3.  The agent or broker shall keep at such place of business the records required under section 228 of this act.

      4.  This section does not apply to life insurance, annuity contracts or health insurance.

 

 

RECORDS OF GENERAL LINES AGENT, BROKER.

 

      Sec. 228.  1.  Every general lines agent and general lines broker shall keep complete records of transactions under his license and those of his solicitors. Such record shall show, for each insurance policy placed or countersigned by or through the licensee, not less than the names of the insurer and insured, the number and expiration date of, and premium payable as to, the policy or contract, the names of all other persons from whom business is accepted or to whom commissions are promised or paid, all premiums collected, and such additional information as the commissioner may reasonably require.

      2.  Such records shall be open to examination of the commissioner at all times, and the commissioner may at any time require the licensee to furnish to him, in such manner or form as he requires, any information kept or required to be kept in such records.

      3.  Records of a particular policy or contract may be destroyed 6 years after expiration of the policy or contract.

      4.  This section does not apply to life insurance, annuity contracts or health insurance.

 

 

FIDUCIARY FUNDS: AGENTS, BROKERS, SOLICITORS, SURPLUS LINES BROKERS, MOTOR CLUB AGENTS, BAIL BONDSMEN.

 

      Sec. 229.  1.  All funds of others received by any person in any way licensed or acting as an insurance agent, broker, solicitor, surplus lines broker, motor club agent or bail bondsman under any insurance policy or undertaking of bail, are received and held by such person in a fiduciary capacity. Any such person who diverts or appropriates such fiduciary funds to his own use is guilty of embezzlement.

      2.  Each such person who does not make immediate remittance of such funds to the insurer or other person entitled thereto, shall elect and follow with respect to funds received for the account of a particular insurer or person either of the following methods:

      (a) Remit received premiums (less applicable commissions, if any) and return premiums to the insurer or other person entitled thereto within 15 days after such receipt; or

      (b) Establish and maintain in a commercial bank or other established financial institution depositary in this state one or more accounts, separate from accounts holding his general personal, firm or corporate funds, and forthwith deposit and retain therein pending transmittal to the insurer or other person entitled thereto, all such premiums (net of applicable commissions, if any) and return premiums. Funds belonging to more than one principal may be so deposited and held in the same such account so long as the amount so held for each such principal is readily ascertainable from the records of the depositor.


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ê1971 Statutes of Nevada, Page 1654 (Chapter 660, AB 416)ê

 

principal may be so deposited and held in the same such account so long as the amount so held for each such principal is readily ascertainable from the records of the depositor. The depositor may commingle with such fiduciary funds in a particular such account such additional funds as he may deem prudent for the purpose of advancing premiums, establishing reserves for the payment of return commissions, or for other contingencies arising in his business of receiving and transmitting premiums or return premiums.

      3.  Such person may commingle with his own funds to an unlimited amount funds of a particular principal if the principal in writing in advance has specifically waived the segregation requirements of subsection 2.

      4.  Any commingling of funds with funds of any such person permitted under this section shall not alter the fiduciary capacity of such person with respect to the funds of others.

 

 

FAILURE TO REMIT PREMIUMS: NOTICE; SUSPENSION OF LICENSE.

 

      Sec. 230.  1.  If within 30 days after the contractual due date of any premium received by him, any agent, broker or surplus lines broker fails to remit the premium to the insurer or agency to whom it is owing, the insurer or agency, as the case may be, shall promptly report such failure to the commissioner in writing.

      2.  The commissioner may suspend the licenses of any such agent, broker or surplus lines broker so failing to remit, until the remittance has been made or the insurer or agency has filed with the commissioner a release of the indebtedness satisfactory to the commissioner.

      3.  The applicable procedures provided for in sections 234 (suspension, revocation, refusal of license) and 235 (certain procedure for suspension, revocation of license) of this act apply to suspensions of license under this section, except that the 12-month limit of suspension periods provided in section 234 of this act do not apply.

      4.  If the commissioner, by the admission of the agent, broker or surplus lines broker, or by examination of the records of the agent, broker or surplus lines broker, determines that the charged failure to remit is true, he may suspend the license without hearing.

 

 

COMMISSIONS: PAYMENT, ACCEPTANCE.

 

      Sec. 231.  1.  No insurer shall pay or allow to any person, directly or indirectly, any commission or compensation for soliciting, negotiating or effecting a contract of insurance or of annuity within this state, or with respect to any property or risk located in this state, unless at the time of such solicitation, negotiation or effectuation such person was duly licensed by this state as an agent or broker, resident or nonresident, as to the kind or kinds of insurance involved, and, if an agent, was duly appointed as an agent of the insurer as provided in section 217 of this act. This subsection does not apply to business placed pursuant to section 233 of this act.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1655 (Chapter 660, AB 416)ê

 

      2.  No person other than one entitled to the same as provided in subsection 1, shall accept any such commission or compensation.

      3.  This section shall not be deemed to prohibit payment of regular salaries to salaried employees or payment of compensation to licensed managing general agents for services rendered within the scope of their licenses issued under this chapter.

 

 

PAYMENT OF COMMISSIONS.

 

      Sec. 232.  An insurer shall pay a commission or compensation for or on account of the solicitation or negotiation in this state or elsewhere of insurance on property or risks in this state only to its agent, resident or nonresident, or to a broker, resident or nonresident, duly licensed as such under this code; but this shall not prohibit payment of regular salaries to salaried employees or compensation to managing general agents.

 

 

SHARING OF COMMISSIONS.

 

      Sec. 233.  1.  An agent or broker shall pay a commission or compensation for or on account of the solicitation or negotiation in this state of insurance on property or risks in this state only to his own duly licensed solicitor, or other like and duly licensed resident agent, of the insurer with whom such insurance was placed, or duly licensed broker, resident or nonresident. A nonresident agent shall pay a commission or compensation for or on account of the solicitation or negotiation in this state of insurance on property or risks in this state only to a duly licensed resident agent of the insurer in this state, or to a duly licensed broker, resident or nonresident, of this state.

      2.  No licensee shall accept any commission or compensation to which he is not entitled under this section or section 232 of this act.

      3.  Nothing in this code shall be deemed to prohibit payment, to or for the account of a former owner of an insurance agency or brokerage, of commissions or part thereof currently accruing on business of the agency or brokerage, as part of the purchase price of the agency or brokerage, whether or not such former owner is currently licensed as either a solicitor, agent or broker.

 

 

SUSPENSION, REVOCATION, LIMITATION AND REFUSAL OF LICENSE.

 

      Sec. 234.  1.  In addition to provisions therefor under other provisions of this chapter, the commissioner may suspend for not more than 12 months, or may revoke, limit or refuse to continue any license issued under this chapter or any surplus lines broker’s license if, after notice to the licensee and to the insurer represented (as to an agent or managing general agent), to the employer (as to a solicitor), and hearing (unless hearing is waived pursuant to section 235 of this act), he finds that as to the licensee any one or more of the following causes exist:

      (a) For any cause for which issuance of the license could have been refused had it then existed and been known to the commissioner.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1656 (Chapter 660, AB 416)ê

 

      (b) For willful violation of or willful noncompliance with any applicable provision of this code, or for willful violation of any lawful rule, regulation or order of the commissioner.

      (c) For intentional material misstatement in application for a license or in connection therewith.

      (d) For obtaining or attempting to obtain any such license by fraud or willful misrepresentation.

      (e) For misappropriation or conversion to his own use, or illegal withholding, of moneys belonging to policy holders, or insurers, or beneficiaries, or others and received in conduct of business under the license.

      (f) For material misrepresentation of the terms of any existing or proposed insurance contract.

      (g) If in conduct of his affairs under the license the licensee has used fraudulent, coercive or dishonest practices, or has shown himself to be incompetent, untrustworthy, financially irresponsible or a source of injury and loss to the public.

      (h) For aiding, abetting or assisting another person to violate any of the provisions of this code.

      2.  The commissioner shall forthwith revoke the license of:

      (a) Any licensed resident agent or resident broker who establishes his residence in another state.

      (b) Any licensee convicted by final judgment of a felony involving moral turpitude.

      3.  If a licensed agent or broker changes his address without written notice to the commissioner, and the commissioner after diligent effort is unable to locate the licensee, the commissioner may forthwith revoke the license. If the commissioner mails a letter by certified mail, with return receipt requested, addressed to the licensee at his address last of record with the division, and the letter is returned to the commissioner undelivered, such shall be deemed an adequate effort by the commissioner to locate the licensee.

      4.  The license of a firm or corporation may be suspended, revoked or refused also for any of such causes as relate to any individual designated in or registered as to the license to exercise its powers.

      5.  In addition to or in lieu of suspension, revocation or refusal to continue any such license for any of the causes specified in subsection 1, the commissioner may, in his discretion, impose an administrative fine upon the licensee of not less than $25 nor more than $500. The order levying the fine shall specify the date, not less than 15 days nor more than 30 days after the date of the order, before which the fine shall be paid. Upon failure of payment of the fine when due, the commissioner shall forthwith revoke the licenses of the licensee and the fine shall be recovered in a civil action brought in behalf of the commissioner by the attorney general. The commissioner shall forthwith deposit all such fines collected with the state treasurer.

 

 

CERTAIN PROCEDURE FOR SUSPENSION, REVOCATION OF LICENSE.

 

      Sec. 235.  1.  Notice of any hearing to be held under subsection 1 of section 234 of this act shall contain also a summary of the facts constituting the charge or charges against the licensee.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1657 (Chapter 660, AB 416)ê

 

      2.  The licensee may file with the commissioner a written waiver of the hearing at any time prior to the holding of the hearing, in which case the holding of the hearing shall be at the commissioner’s discretion. If the hearing is waived and not held, the commissioner may take such lawful action with respect to the licensee or license as may appear to him to be required or justified under facts as determined by him without the hearing, and no appeal shall lie therefrom.

      3.  All hearings shall otherwise be subject to the applicable provisions of sections 48 (administrative procedures; hearings in general) to 54, inclusive, (appeal from commissioner) of this act.

 

 

PROCEDURE FOLLOWING SUSPENSION, LIMITATION OR REVOCATION.

 

      Sec. 236.  1.  Upon suspension, limitation or revocation of any such license the commissioner shall forthwith notify the licensee thereof either in person or by mail addressed to the licensee at his address last of record in the division. Notice by mail shall be deemed effectuated when so mailed. The commissioner shall give like notice to the insurers represented, in the case of an agent or managing general agent license, and to the employer in the case of a solicitor license.

      2.  Suspension, limitation or revocation of the license of an agent or broker shall automatically revoke, limit or suspend the licenses of all solicitors employed by him.

      3.  The commissioner shall not again issue a license under this chapter to or as to any person whose license has been revoked, until after expiration of at least 1 year after such revocation has become final, and thereafter not until such person again qualifies therefor in accordance with the applicable provisions of this chapter. A person whose license has been revoked twice shall not again be eligible for any license under this code.

      4.  If the license of a firm or corporation is so suspended, limited or revoked, no member of such firm, or officer or director of such corporation, shall be licensed or be designated, in or as to any license, issued under this chapter, to exercise the powers thereof, during the period of such suspension or revocation, unless the commissioner determines upon substantial evidence that such member, officer or director was not personally at fault and did not knowingly aid, abet, assist or acquiesce in the matter on account of which the license was suspended or revoked.

 

 

RETURN OF LICENSE TO COMMISSIONER.

 

      Sec. 237.  1.  All licenses issued under this code, although issued and delivered to the licensee or his employer, shall at all times be the property of the State of Nevada. Upon any expiration, termination, suspension or revocation of the license, the licensee or other person having possession or custody of the license shall forthwith deliver it to the commissioner.

      2.  As to any license lost, stolen or destroyed while in the possession of any such licensee or person, the commissioner may accept in lieu of the return of the license, the affidavit of the licensee or other person responsible for or involved in the safekeeping of the license, concerning the facts of such loss, theft or destruction.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1658 (Chapter 660, AB 416)ê

 

PENALTIES.

 

      Sec. 238.  1.  The commissioner may inform the appropriate district attorney of any violation of any provision of this chapter.

      2.  In addition to any other penalty provided in this chapter any person violating any provision of this chapter is guilty of a misdemeanor.

 

 

CHAPTER 10

 

LIFE INSURANCE ANALYSTS

 

      Sec. 239.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 240 to 247, inclusive, of this act.

 

 

“LIFE INSURANCE ANALYST” DEFINED.

 

      Sec. 240.  1.  As used in this code, “life insurance analyst” is any person who as an independent contractor, for a fee or compensation other than from a life insurer, in any manner advises, or offers or purports to advise, any person actually or prospectively insured or named or to be named as beneficiary or having or to have an interest under any life insurance or annuity contract, existing or proposed, relative to his interests or rights under such contract.

      2.  Subsection 1 does not apply to:

      (a) An attorney while licensed to practice and actively practicing law in this state;

      (b) An officer or employee of a bank or trust company located in this state, compensated solely by salary by such bank or company for the offering or giving of advice referred to in subsection 1, incidental to other lawful services performed for the employer bank or trust company;

      (c) An actuary, and as such a member or associate of the American Academy of Actuaries;

      (d) Any individual compensated solely by salary by his employer, who offers or gives such advice to his employer or employees of his employer, or to members of his employer labor union or employer association and if the employer receives no remuneration for such offering or advice; or

      (e) The commissioner or employee of the division who gives such advice incidental to the discharge of his duties as such employee and who is compensated therefor solely by his salary as such employee.

      (f) A life insurance agent, licensed as such by this state.

      (g) A life insurance broker, licensed as such by this state.

 

 

LICENSE REQUIRED; PENALTY.

 

      Sec. 241.  1.  No person shall in this state be, act as, or hold himself out as being or acting as, a life insurance analyst unless then holding a license in full force and effect as such an analyst, issued by the commissioner under this chapter.

      2.  Any person violating any provision of this chapter is guilty of a gross misdemeanor.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1659 (Chapter 660, AB 416)ê

 

QUALIFICATIONS FOR LICENSE.

 

      Sec. 242.  For the protection of the people of this state the commissioner shall not issue, continue or permit to exist any life insurance analyst’s license except in compliance with this chapter. Any individual for whom such a license is issued, continued or permitted to exist must:

      1.  Be 21 or more years of age;

      2.  Be a bona fide resident of this state;

      3.  Not be an officer, employee or business associate of an insurer, agent or broker;

      4.  Have had experience in the analysis of life insurance and annuity contracts, or other special experience, education or training, all of sufficient content and duration reasonably necessary for competence in fulfilling the responsibilities of a life insurance analyst;

      5.  Have a thorough knowledge of life insurance contracts and annuity contracts;

      6.  Pass all written examinations required for the license under this chapter;

      7.  Be competent, trustworthy under highest fiduciary standards, financially responsible and of good reputation; and

      8.  Have filed the bond required by section 245 of this act.

 

 

APPLICATION FOR LICENSE.

 

      Sec. 243.  1.  An applicant for a license as a life insurance analyst shall execute under oath and file his written application therefor with the commissioner on a form prescribed and furnished by the commissioner, accompanied by his fingerprints and the applicable fee as shown in section 90 of this act (fee schedule). The application form shall require full answers to questions reasonably necessary to determine the applicant’s identity, residence, business experience, financial responsibility, expertise as to life insurance and annuity contracts, fiduciary trustworthiness and other qualifications for the license.

      2.  No applicant shall willfully misrepresent or withhold any fact or information called for in the application form or in connection therewith.

 

 

EXAMINATION FOR LICENSE; APPLICATION FOR EXAMINATION.

 

      Sec. 244.  1.  After completion and filing of the application as required by section 243 of this act, the commissioner shall subject each applicant for a license as life insurance analyst, unless exempted therefrom under subsection 2, to a written examination as to his competence to act as such an analyst.

      2.  No such examination shall be required of an applicant who:

      (a) Is a member or association of the American Academy of Actuaries; or

      (b) Holds the designation of “chartered life underwriter;” or

      (c) Has been similarly licensed by this state within 1 year next preceding his application for a license, unless the previous license was suspended or revoked or continuation refused by the commissioner.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1660 (Chapter 660, AB 416)ê

 

      3.  The examination shall be of such scope and character as to require, for successfully passing the same, a thorough knowledge and high expertise, as to the laws of this state relative to life insurance and annuities, as to life insurance and annuity principles and practices, and as to the principles, purposes, terms and conditions of life insurance contracts and annuity contracts, both individual and group.

      4.  The examination shall be conducted by the commissioner under the applicable provisions of section 210 of this act (conduct of examinations).

      5.  The applicant shall file his written application for the examination with the commissioner not less than 30 days prior to the date fixed for the examination, accompanied by the examination application fee specified in section 90 of this act (fee schedule). The examination application fee shall be deemed earned when paid, and shall not be subject to refund for any cause.

 

 

BOND.

 

      Sec. 245.  1.  Every applicant for a license as a life insurance analyst shall file with his application and maintain in effect while so licensed a bond issued by an authorized surety insurer in favor of the State of Nevada, continuous in form and providing for aggregate liability of $5,000.

      2.  The bond shall indemnify any person damaged by any fraudulent act or conduct of the licensee in transactions under his license, and shall be conditioned upon faithful accounting and application of all moneys coming into the licensee’s possession in connection with his activities as such a licensee.

      3.  The bond shall remain in force until released by the commissioner, or until canceled by the surety. Without prejudice to any liability previously incurred thereunder, the surety may cancel the bond upon 30 days’ advance written notice to both the licensee and the commissioner.

 

 

ISSUANCE, REFUSAL OF LICENSE.

 

      Sec. 246.  1.  If the commissioner finds that the application for a license as a life insurance analyst is complete, that the applicant has passed all required examinations and is otherwise qualified for the license, he shall promptly issue the license; otherwise, the commissioner shall refuse to issue the license and promptly notify the applicant thereof in writing, stating the grounds therefor.

      2.  If the license is refused, the commissioner shall promptly refund the license fee tendered with the application.

      3.  The license, if issued, shall state the name and address of the licensee, date of issue, general conditions relative to expiration or termination, and such other conditions as the commissioner deems proper for inclusion in the license certificate.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1661 (Chapter 660, AB 416)ê

 

OTHER PROVISIONS APPLICABLE.

 

      Sec. 247.  Each of the following provisions of this act to the extent reasonably applicable, shall also apply to life insurance analysts’ licenses and licensees:

      1.  Section 216 (continuation, expiration of license);

      2.  Section 234 (suspension, limitation, revocation, refusal of license);

      3.  Section 235 (certain procedure for suspension, limitation, revocation of license);

      4.  Section 236 (procedure following suspension, limitation, revocation); and

      5.  Section 237 (return of license to commissioner).

 

 

CHAPTER 11

 

ADJUSTERS

 

      Sec. 248.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 249 to 273, inclusive, of this act.

 

 

SCOPE, SHORT TITLE.

 

      Sec. 249.  This chapter applies to adjusters, as defined in section 250 of this act, and shall be known and may be cited as the Nevada Insurance Adjusters Law.

 

 

“ADJUSTER” DEFINED; EXCEPTIONS.

 

      Sec. 250.  1.  As used in this code, “adjuster” means any person who, for compensation as an independent contractor or for a fee or commission, investigates and settles, and reports to his principal relative to, claims arising under insurance contracts, on behalf solely of either the insurer or the insured.

      2.  An associate adjuster, as defined in section 251 of this act, or an attorney at law who adjusts insurance losses from time to time incidental to the practice of his profession, or an adjuster of ocean marine losses, or a salaried employee of an insurer, or a salaried employee of a managing general agent maintaining an underwriting office in this state, is not deemed to be an adjuster for the purposes of this chapter.

 

 

“INDEPENDENT,” “PUBLIC,” “ASSOCIATE” ADJUSTER DEFINED.

 

      Sec. 251.  As used in this code:

      1.  “Independent adjuster” means an adjuster representing the interests of the insurer.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1662 (Chapter 660, AB 416)ê

 

      2.  “Public adjuster” means an adjuster employed by and representing solely the financial interests of the insured named in the policy.

      3.  “Associate adjuster” means an employee of an adjuster who, under the direct supervision of the adjuster, assists in the investigation and settlement of insurance losses on behalf of his employer.

 

 

LICENSE REQUIRED; LIMITED LICENSE; PENALTY.

 

      Sec. 252.  1.  No person shall act as, or hold himself out to be, an adjuster or associate adjuster in this state unless then licensed as such under the applicable independent adjuster’s license, public adjuster’s license or associate adjuster’s license, as the case may be, issued under the provisions of this chapter.

      2.  For purposes of this chapter the commissioner may, in his discretion, issue a limited license to an adjuster handling claims under a contract of one or more of the kinds of insurance defined in sections 103 to 110, inclusive, of this act.

      3.  Any person violating the provisions of this section is guilty of a gross misdemeanor.

 

 

INDEPENDENT, PUBLIC ADJUSTERS: CONCURRENCY PROHIBITED.

 

      Sec. 253.  The commissioner may license an individual as either an independent adjuster or as a public adjuster. No individual shall be licensed concurrently under the same license or separate licenses as an independent adjuster and as a public adjuster.

 

 

EXCEPTIONS TO LICENSE REQUIREMENT: AGENTS, SINGLE OR CATASTROPHE LOSSES.

 

      Sec. 254.  1.  On behalf of, as authorized by, an insurer as to which he is licensed as an agent under sections 191 to 238, inclusive, of this act, an agent may from time to time act as an adjuster without a license as an adjuster; but no such agent shall act as an adjuster for an insurer with which he has a contract providing for compensation retrospectively contingent upon losses incurred under insurance sold or serviced by him.

      2.  No license shall be required of a nonresident salaried adjuster or independent adjuster for the adjustment in this state of one or more losses arising out of a catastrophe common to all such losses where such losses are designated to be a catastrophe by responsible insurance associations or the commissioner.

 

 

QUALIFICATIONS FOR INDIVIDUAL LICENSE.

 

      Sec. 255.  For the protection of the people of this state, the commissioner shall not issue or continue any license as an adjuster except in compliance with the provisions of this chapter. Any individual for whom such a license is issued or continued must:


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1663 (Chapter 660, AB 416)ê

 

      1.  Be at least 21 years of age;

      2.  Be a bona fide resident of this state, and have so resided therein for at least 90 days prior to his application for the license. The commissioner may, in his discretion, waive this residence requirement as to:

      (a) An adjuster theretofore licensed as such under the laws of another state and brought to Nevada by an employer firm or corporation licensed as an adjuster in this state to fill a vacancy in such firm or corporation in this state; or

      (b) An adjuster licensed as such in an adjoining state whose principal place of business is located within 50 miles of the boundary of this state;

      3.  Be competent, trustworthy, financially responsible and of good reputation;

      4.  Never have been convicted of a felony;

      5.  Have had at least 2 years’ recent experience with respect to handling of loss claims of sufficient character reasonably to enable him to fulfill the responsibilities of an adjuster;

      6.  Pass successfully all examinations required under this chapter;

      7.  Post the bond or bonds required under section 264 of this act; and

      8.  Not concurrently be licensed as an agent, broker, solicitor or surplus lines broker.

 

 

LICENSING FIRMS, CORPORATIONS.

 

      Sec. 256.  1.  A firm or corporation may be licensed either as an independent adjuster or public adjuster. If a firm, each general partner and each other individual to act for the firm under the license, and if a corporation each individual to act for the corporation under the license, shall be named in the license or registered with the commissioner, and shall qualify as though he were an individual licensee. The commissioner shall charge and the licensee shall pay a full additional license fee for each respective individual in excess of the one named in or registered as to the license.

      2.  Transaction of business under the license must be within the purposes stated in the firm’s partnership agreement or the corporation’s charter.

      3.  The licensee shall promptly notify the commissioner in writing of all changes among its members, directors, officers and other individuals designated in or registered as to the license.

 

 

APPLICATION FOR LICENSE; PENALTY.

 

      Sec. 257.  1.  The applicant for a license as an adjuster shall file a written application therefor with the commissioner on forms prescribed and furnished by the commissioner. As part of, or in connection with, the application the applicant shall furnish information as to his identity, personal history, experience, financial responsibility, business record and other pertinent matters as reasonably required by the commissioner to determine the applicant’s eligibility and qualifications for the license.

      2.  If the applicant is a firm or corporation, the application shall also show the names of all firm members, all corporate officers and directors, and shall designate each individual who is to exercise the license powers.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1664 (Chapter 660, AB 416)ê

 

and shall designate each individual who is to exercise the license powers. Each such member, officer, director and individual shall furnish information to the commissioner as though applying for an individual license.

      3.  If the applicant is a nonresident of this state, the application shall be accompanied by an appointment of the commissioner as process agent and agreement to appear pursuant to section 267 of this act.

      4.  The application shall be accompanied by the applicable license fee as specified in section 90 of this act (fee schedule).

      5.  No applicant for such a license shall willfully misrepresent or withhold any fact or information called for in the application form or in connection therewith. A violation of this subsection is a gross misdemeanor.

 

 

EXAMINATION FOR LICENSE; SCOPE, CONDUCT, FEE.

 

      Sec. 258.  1.  Each applicant for a license as an adjuster shall, prior to issuance of the license, personally take and pass to the commissioner’s satisfaction and examination in writing testing the applicant’s qualifications and competence as an adjuster and his knowledge of pertinent provisions of this code. This subsection shall not apply to any person holding a valid and effective Nevada license as an adjuster immediately prior to the effective date of this act.

      2.  The commissioner shall give examinations at such times and places within the state as he deems reasonably necessary; but the commissioner shall give an examination at least every 6 months if an application for a license is then pending.

      3.  The examination shall be taken by the applicant under the commissioner’s supervision.

      4.  If the applicant fails to pass the examination, the commissioner shall require a waiting period of at least 1 month before permitting the applicant to take a second examination; and if the applicant fails to pass the second examination, the commissioner shall require a waiting period of at least 6 months before and between any subsequent examinations of the same applicant.

      5.  The applicant shall file a written application with the commissioner for the examination at least 7 days before the examination date, accompanied by the applicable examination application fee specified in section 90 of this act (fee schedule). The fee shall be deemed earned when paid, and shall not be refundable.

 

 

ISSUANCE, REFUSAL OF LICENSE.

 

      Sec. 259.  1.  If the commissioner finds that the application is complete, that the applicant has passed all required examinations and is otherwise eligible and qualified for the license as an adjuster, the commissioner shall promptly issue the license; otherwise, the commissioner shall refuse to issue the license and promptly notify the applicant in writing of such refusal, stating the grounds thereof.

      2.  If the license is refused, the commissioner shall promptly refund to the applicant the license fee tendered with the application.

      3.  Section 213 of this act (name of licensee; true, fictitious names) shall also apply to adjuster licenses.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1665 (Chapter 660, AB 416)ê

 

LICENSE FORM, CONTENTS.

 

      Sec. 260.  1.  The commissioner shall prescribe the form of the adjuster license, which shall state:

      (a) The licensee’s name and business address;

      (b) The classification of the license, whether as an independent adjuster or as a public adjuster;

      (c) Date of issuance and general conditions as to expiration and termination;

      (d) That the bond or bonds required by section 264 of this act have been duly posted; and

      (e) Such other conditions as the commissioner deems proper.

      2.  The commissioner shall not issue a license in a trade name unless the name has been duly registered as provided by law.

 

 

CONTINUATION, EXPIRATION OF LICENSE.

 

      Sec. 261.  1.  Each adjuster’s license issued under this chapter shall continue in force until expired, suspended, revoked or otherwise terminated, but subject to payment to the commissioner at his office in Carson City, Nevada, annually on or before June 30 of the applicable continuation fee specified in section 90 of this act (fee schedule), accompanied by the written request of the licensee for such continuation.

      2.  Any license not so continued shall be deemed to have expired at midnight on June 30; but the commissioner may effectuate a request for continuation received by him within 30 days after June 30 if accompanied by an annual continuation fee of 150 percent of the fee otherwise required.

      3.  This section does not apply to temporary licenses issued under section 263 of this act.

 

 

ASSOCIATE ADJUSTERS; FEE; LICENSE; PENALTY.

 

      Sec. 262.  1.  Concurrently with an application for a license or for continuation of a license as an adjuster, the licensee shall register in writing with the commissioner the name and address of each associate adjuster employed by him or to be employed by him contingent upon issuance of the license, and shall furnish the commissioner such additional information concerning such employee and the past and proposed activities thereof as the commissioner may reasonably require.

      2.  Upon payment of the fee therefor as specified in section 90 of this act (fee schedule), the commissioner shall issue and deliver to the licensee adjuster a license as to each associate authorized by the state to act in behalf of the licensee.

      3.  The license of an associate adjuster shall be subject to continuance upon payment of the fee therefor specified in section 90 of this act (fee schedule), and shall expire and terminate at the same time as the license of the employer adjuster; but such a license shall be terminated by the commissioner promptly upon written request therefor by the employer adjuster.

      4.  No person shall be, act as, or hold himself out in this state to be an associate adjuster unless such a license has been issued as to such person by the commissioner and is then in force.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1666 (Chapter 660, AB 416)ê

 

person by the commissioner and is then in force. A violation of this provisions is a gross misdemeanor.

 

 

TEMPORARY LICENSE: INDEPENDENT ADJUSTER.

 

      Sec. 263.  1.  In the event of death or inability to act of a licensed independent adjuster, the commissioner may issue a temporary license as an independent adjuster to another individual qualified therefor except as to the taking and passing of the required examination, to enable such individual to continue the business of the deceased or disabled licensee.

      2.  The temporary license shall be valid for 6 months, or until the temporary licensee earlier qualifies for a regular license as an independent adjuster; but the commissioner may, in his discretion, extend the temporary license period as reasonably necessary while the temporary licensee is acting as an administrator or executor or is otherwise using the license in endeavoring to settle the estate of a deceased independent adjuster.

 

 

ADJUSTER’S BOND.

 

      Sec. 264.  1.  Before the issuance of an adjuster’s license the applicant shall file with the commissioner, and thereafter maintain in force while so licensed, a surety bond in favor of the people of the State of Nevada, executed by an authorized surety insurer approved by the commissioner, and conditioned on the accounting by the adjuster to any insured or insurer whose claim he is handling, for moneys or any settlement received in connection therewith.

      2.  The bond or bonds shall be for amounts as follows:

 

For an independent adjuster....................................................................        $5,000

For each associate adjuster.....................................................................           2,500

For a public adjuster.................................................................................           5,000

 

The bond may be continuous in form, and aggregate liability thereon may be limited to the payment of $10,000.

      3.  The bond shall remain in force until the surety is released from liability by the commissioner, or until canceled by the surety. Without prejudice to any prior liability accrued, the surety may cancel the bond upon 30 days’ advance written notice filed with the commissioner.

 

 

PLACE OF BUSINESS: DISPLAY OF LICENSE.

 

      Sec. 264.5.  1.  Every adjuster shall have and maintain in this state a place of business accessible to the public and from which the licensee principally conducts transactions under his license. The address of such place shall appear upon the application for a license and upon the license, when issued, and the licensee shall promptly notify the commissioner in writing of any change thereof. Nothing in this section shall prohibit the maintenance of such place in the licensee’s residence in this state.

      2.  The license of the licensee and those of associate adjusters employed by him shall be conspicuously displayed in such place of business in a part thereof customarily open to the public.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1667 (Chapter 660, AB 416)ê

 

RECORDS.

 

      Sec. 265.  1.  Each adjuster shall keep at his business address shown on his license a record of all transactions under the license.

      2.  The record shall include:

      (a) A copy of all investigations or adjustments undertaken.

      (b) A statement of any fee, commission or other compensation received or to be received by the adjuster on account of such investigation or adjustment.

      3.  The adjuster shall make such records available for examination by the commissioner at all times, and shall retain the records for at least 3 years.

 

 

RESPONSIBILITY FOR EMPLOYEES.

 

      Sec. 266.  All business transacted by an adjuster under his license shall be in his name, and he shall be responsible for the acts or omissions of his employees within the scope of their employment.

 

 

NONRESIDENT ADJUSTERS: PROCESS.

 

      Sec. 267.  Nonresidents of this state who are granted licenses as adjusters pursuant to subsection 2 of section 255 of this act shall also be subject to section 224 of this act (nonresident agents, brokers: Service of process, agreement to appear).

 

 

SUSPENSION, REVOCATION OR LIMITATION OF LICENSE: GROUNDS.

 

      Sec. 268.  1.  The commissioner may suspend, revoke, limit or refuse to continue any adjuster’s license or associate adjuster’s license:

      (a) For any cause specified in any other provision of this chapter;

      (b) For any such applicable cause as for revocation of an agent’s or broker’s license under section 234 of this act; or

      (c) If the licensee has for compensation represented or attempted to represent both the insurer and the insured in the same transaction.

      2.  The license of a firm or corporation may be suspended, revoked, limited or continuation refused for any cause which relates to any individual designated in or with respect to the license to exercise its powers.

      3.  The holder of any license which has been suspended or revoked shall forthwith surrender the license to the commissioner.

 

 

SUSPENSION, REVOCATION PROCEDURE.

 

      Sec. 269.  Sections 235 (certain procedure for suspension, revocation of license), 236 (procedure following suspension, revocation) and 237 (return of license to commissioner) of this act shall also apply to suspension, revocation, limitation or refusal to continue adjusters’ licenses and associate adjusters’ licenses, except where in conflict with the express provisions of this chapter.


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ê1971 Statutes of Nevada, Page 1668 (Chapter 660, AB 416)ê

 

DURATION OF SUSPENSION.

 

      Sec. 270.  Every order suspending any license shall specify the period during which the suspension shall be effective, which period shall in no event exceed 12 months.

 

 

COMMISSIONER MAY LEVY FINE; PAYMENT, COLLECTION.

 

      Sec. 271.  1.  In addition to or in lieu of the suspension, revocation or refusal to renew any adjuster’s license for any of the causes referred to in section 268 of this act (suspension, revocation of license: grounds), after hearing thereon or upon waiver of hearing by the licensee, the commissioner may levy upon the licensee an administrative fine in any amount not less than $25 nor more than $250.

      2.  In his order levying the fine the commissioner shall specify a period of not less than 15 days nor more than 30 days from the date of the order within which the fine shall be paid in full.

      3.  If the fine is not paid when due, the commissioner shall revoke the license involved, if not already revoked, and the fine shall be recovered in a civil action brought by the attorney general in the commissioner’s behalf.

      4.  The commissioner shall deposit any fine collected by him hereunder with the state treasurer for credit to the insurance division regulatory revolving fund.

 

 

COURT MAY IMPOSE FINE IN LIEU OF COMMISSIONER’S PENALTY.

 

      Sec. 272.  1.  Upon the hearing of an appeal from the commissioner’s order suspending, revoking or refusing to continue any license issued under the provisions of this chapter, the court, if it finds that the licensee is guilty of a violation of the law, and if it deems the suspension, revocation or refusal too severe a penalty under the facts as found, may impose a fine of not more than $500 in lieu thereof. Payment of the fine within 10 days thereafter shall reinstate, restore or continue the license.

      2.  If it appears that a license of the licensee has theretofore been suspended, revoked or refused for a similar offense, the court shall not have jurisdiction to impose a fine in lieu of the action required by the order appealed from.

 

 

REINSTATEMENT OF LICENSE; RELICENSING; LIMITATIONS.

 

      Sec. 273.  The commissioner shall not reinstate the adjuster’s license of or relicense any licensee or former licensee whose license has been suspended or revoked until any cause for such suspension or revocation, not being a cause continuing in character, arising after issuance of the license no longer exists, or until any fine theretofore levied on the licensee under sections 271 or 272 of this act has been fully paid.


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ê1971 Statutes of Nevada, Page 1669 (Chapter 660, AB 416)ê

 

CHAPTER 11.5

 

MOTOR VEHICLE PHYSICAL DAMAGE APPRAISERS

 

      Sec. 273.1.  Title 57 of NRS is hereby amended by adding a new chapter to consist of the provisions set forth as sections 273.2 to 273.16, inclusive, of this act.

 

 

“MOTOR VEHICLE PHYSICAL DAMAGE APPRAISER” DEFINED.

 

      Sec. 273.2.  As used in this code “motor vehicle physical damage appraiser” means any person, partnership, association or corporation who, for a separate fee, practices as a business the appraising of damages to motor vehicles insured under automobile physical damage policies or on behalf of third-party claimants.

 

 

LICENSE REQUIRED; EXCEPTIONS.

 

      Sec. 273.3.  1.  No person shall act as a motor vehicle physical damage appraiser for motor vehicle physical damage claims on behalf of any insurance company or firm or corporation engaged in the adjustment or appraisal of motor vehicle claims unless such person has:

      (a) Secured a license from the commissioner.

      (b) Paid the applicable license fee.

      2.  Any person who has been engaged in the business as a motor vehicle physical damage appraiser for a period of 2 consecutive years immediately prior to January 1, 1972, shall be granted a license upon application to the commissioner without further qualification.

      3.  The provisions of this section do not apply to:

      (a) A licensed insurance adjuster.

      (b) An employee of any authorized insurer, motor club, motor vehicle dealer or auto body repair shop.

 

 

BOND.

 

      Sec. 273.4.  1.  Before the issuance of a motor vehicle physical damage appraiser’s license the applicant shall file with the commissioner, and thereafter maintain in force while so licensed, a surety bond in the amount of $2,500 in favor of the people of the State of Nevada, executed by an authorized surety insurer approved by the commissioner, and conditioned for the faithful performance of required duties.

      2.  The bond shall remain in force until the surety is released from liability by the commissioner, or until canceled by the surety. Without prejudice to any prior liability accrued, the surety may cancel the bond upon 30 days’ advance written notice filed with the commissioner.

 

 

APPLICATION FOR LICENSE; PENALTY.

 

      Sec. 273.5.  1.  The applicant for a license as a motor vehicle physical damage appraiser shall file a written application therefor with the commissioner on forms prescribed and furnished by the commissioner. As part of, or in connection with, the application the applicant shall furnish information as to his identity, personal history, experience, financial responsibility, business record and other pertinent matters as reasonably required by the commissioner to determine the applicant’s eligibility and qualifications for the license.


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ê1971 Statutes of Nevada, Page 1670 (Chapter 660, AB 416)ê

 

of, or in connection with, the application the applicant shall furnish information as to his identity, personal history, experience, financial responsibility, business record and other pertinent matters as reasonably required by the commissioner to determine the applicant’s eligibility and qualifications for the license.

      2.  If the applicant is a firm or corporation, the application shall also show the names of all firm members, all corporate officers and directors, and shall designate each individual who is to exercise the license powers. Each such member, officer, director and individual shall furnish information to the commissioner as though applying for an individual license.

      3.  The application shall be accompanied by the applicable license fee as specified in section 90 of this act (fee schedule).

      4.  No applicant for such a license shall willfully misrepresent or withhold any fact or information called for in the application form or in connection therewith. A violation of this subsection is a gross misdemeanor.

 

 

EXAMINATION NOT REQUIRED.

 

      Sec. 273.6.  No examination of an applicant for a license as a motor vehicle physical damage appraiser shall be required by the commissioner.

 

 

ISSUANCE, REFUSAL OF LICENSE.

 

      Sec. 273.7.  1.  If the commissioner finds that the application is complete and the applicant is otherwise eligible and qualified for the license as a motor vehicle physical damage appraiser, the commissioner shall promptly issue the license; otherwise, the commissioner shall refuse to issue the license and promptly notify the applicant in writing of such refusal, stating the grounds thereof.

      2.  If the license is refused, the commissioner shall promptly refund to the applicant the license fee tendered with the application.

      3.  Section 213 of this act (name of licensee; true, fictitious names) shall also apply to motor vehicle physical damage appraiser licenses.

 

 

LICENSE FORM, CONTENTS.

 

      Sec. 273.8.  1.  The commissioner shall prescribe the form of the motor vehicle physical damage appraiser license, which shall state:

      (a) The licensee’s name and business address;

      (b) Date of issuance and general conditions as to expiration and termination;

      (c) That the bond required by section 273.4 of this act has been duly filed; and

      (d) Such other conditions as the commissioner deems proper.

      2.  The commissioner shall not issue a license in a trade name unless the name has been duly registered as provided by law.

 

 

CONTINUATION, EXPIRATION OF LICENSE.

 

      Sec. 273.9.  1.  Each motor vehicle physical damage appraiser’s license issued under this chapter shall continue in force until expired, suspended, revoked or otherwise terminated, but subject to payment to the commissioner at his office in Carson City, Nevada, annually on or before June 30 of the applicable continuation fee specified in section 90 of this act (fee schedule), accompanied by the written request of the licensee for such continuation.


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ê1971 Statutes of Nevada, Page 1671 (Chapter 660, AB 416)ê

 

commissioner at his office in Carson City, Nevada, annually on or before June 30 of the applicable continuation fee specified in section 90 of this act (fee schedule), accompanied by the written request of the licensee for such continuation.

      2.  Any license not so continued shall be deemed to have expired at midnight on June 30; but the commissioner may effectuate a request for continuation received by him within 30 days after June 30 if accompanied by an annual continuation fee of 150 percent of the fee otherwise required.

 

 

PLACE OF BUSINESS: DISPLAY OF LICENSE.

 

      Sec. 273.10.  1.  Every motor vehicle physical damage appraiser shall have and maintain in this state a place of business accessible to the public and from which the licensee principally conducts transactions under his license. The address of such place shall appear upon the application for a license and upon the license, when issued, and the licensee shall promptly notify the commissioner in writing of any change thereof. Nothing in this section shall prohibit the maintenance of such place in the licensee’s residence in this state.

      2.  The license of the licensee shall be conspicuously displayed in such place of business in a part thereof customarily open to the public.

 

 

RECORDS.

 

      Sec. 273.11.  1.  Each motor vehicle physical damage appraiser shall keep at his business address shown on his license a record of all transactions under the license.

      2.  The record shall include:

      (a) A copy of all appraisals undertaken.

      (b) A statement of any fee, commission or other compensation received or to be received by the appraiser on account of such appraisal.

      3.  The appraiser shall make such records available for examination by the commissioner at all times, and shall retain the records for at least 3 years.

 

 

SUSPENSION, REVOCATION OF LICENSE: GROUNDS.

 

      Sec. 273.12.  1.  The commissioner may suspend, revoke, limit or refuse to continue any motor vehicle physical damage appraiser’s license:

      (a) For any cause specified in any other provision of this chapter;

      (b) For any such applicable cause as for revocation of an agent’s or broker’s license under section 234 of this act; or

      (c) If the licensee has for compensation represented or attempted to represent both the insurer and the insured in the same transaction.

      2.  The license of a firm or corporation may be suspended, revoked, limited or continuation refused for any cause which relates to any individual designated in or with respect to the license to exercise its powers.

      3.  The holder of any license which has been suspended or revoked shall forthwith surrender the license to the commissioner.


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ê1971 Statutes of Nevada, Page 1672 (Chapter 660, AB 416)ê

 

SUSPENSION, LIMITATIONS, REVOCATION PROCEDURE.

 

      Sec. 273.13.  Sections 235 (certain procedure for suspension, revocation of license), 236 (procedure following suspension, revocation) and 237 (return of license to commissioner) of this act shall also apply to suspension, revocation, limitation or refusal to continue motor vehicle physical damage appraiser’s licenses, except where in conflict with the express provisions of this chapter.

 

 

DURATION OF SUSPENSION.

 

      Sec. 273.14.  Every order suspending any license shall specify the period during which the suspension shall be effective, which period shall in no event exceed 12 months.

 

 

COMMISSIONER MAY LEVY FINE; PAYMENT, COLLECTION.

 

      Sec. 273.15.  1.  In addition to or in lieu of the suspension, revocation or refusal to renew any motor vehicle physical damage appraiser’s license for any of the causes referred to in section 273.12 of this act (suspension, limitation, revocation of license: grounds), after hearing thereon or upon waiver of hearing by the licensee, the commissioner may levy upon the licensee an administrative fine in any amount not less than $25 nor more than $250.

      2.  In his order levying the fine the commissioner shall specify a period of not less than 15 days nor more than 30 days from the date of the order within which the fine shall be paid in full.

      3.  If the fine is not paid when due, the commissioner shall revoke the license involved, if not already revoked, and the fine shall be recovered in a civil action brought by the attorney general in the commissioner’s behalf.

      4.  The commissioner shall deposit any fine collected by him hereunder with the state treasurer for credit to the general fund.

 

 

COURT MAY IMPOSE FINE IN LIEU OF COMMISSIONER’S PENALTY.

 

      Sec. 273.16.  1.  Upon the hearing of an appeal from the commissioner’s order suspending, revoking or refusing to continue any license issued under the provisions of this chapter, the court, if it finds that the licensee is guilty of a violation of the law, and if it deems the suspension, revocation or refusal too severe a penalty under the facts as found, may impose a fine of not more than $500 in lieu thereof. Payment of the fine within 10 days thereafter shall reinstate, restore or continue the license.

      2.  If it appears that a license of the licensee has theretofore been suspended, revoked or refused for a similar offense, the court shall not have jurisdiction to impose a fine in lieu of the action required by the order appealed from.


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ê1971 Statutes of Nevada, Page 1673 (Chapter 660, AB 416)ê

 

CHAPTER 12

 

SURPLUS LINES

 

      Sec. 274.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 275 to 296, inclusive, of this act.

 

 

SHORT TITLE.

 

      Sec. 275.  This chapter constitutes and may be cited as the Surplus Lines Law.

 

 

EXEMPTIONS.

 

      Sec. 276.  The Surplus Lines Law shall not apply to reinsurance, or to the following insurances when placed by general lines agents or general lines brokers or surplus lines brokers licensed as such by this state:

      1.  Wet marine and transportation insurance;

      2.  Insurance of subjects located, resident or to be performed wholly outside of this state, or on vehicles or aircraft owned and principally garaged outside this state;

      3.  Insurance of property and operations of railroads engaged in interstate commerce;

      4.  Insurance of aircraft of common carriers, or cargo of such aircraft, or against liability, other than employer’s liability, arising out of the ownership, maintenance or use of such aircraft; or

      5.  Insurance of automobile bodily injury and property damage liability risks when written in Mexican insurers and covering in Mexico and not in the United State of America.

 

 

“BROKER,” “EXPORT” DEFINED.

 

      Sec. 277.  As used in this chapter:

      1.  Unless the context otherwise requires, “broker” means a surplus lines broker duly licensed as such under this chapter.

      2.  To “export” means to place in an unauthorized insurer under this chapter insurance covering a subject of insurance resident, located or to be performed in Nevada.

 

 

CONDITIONS FOR EXPORT.

 

      Sec. 278.  If certain insurance coverages cannot be procured from authorized insurers, such coverages, designated in this chapter as “surplus lines,” may be procured from unauthorized insurers, subject to the following conditions:

      1.  The insurance must be procured through a surplus lines broker licensed as such under this chapter.

      2.  The full amount of insurance required must not be procurable, after diligent effort has been made to do so, from a majority of insurers authorized to transact and actually transacting the particular class of insurance business in this state.


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ê1971 Statutes of Nevada, Page 1674 (Chapter 660, AB 416)ê

 

after diligent effort has been made to do so, from a majority of insurers authorized to transact and actually transacting the particular class of insurance business in this state.

      3.  The insurance must not be so exported for the purpose of procuring it at a premium rate lower than would be accepted by any authorized insurer; difference in rates alone will not support the export of the insurance if any authorized insurer is able and willing to carry the risk.

      4.  Differences, bearing directly upon the cost of insurance, in the terms of policies which otherwise provide substantially the same coverage will not support the export of the insurance.

 

 

BROKER’S AFFIDAVIT.

 

      Sec. 279.  1.  At the time of effecting any surplus lines insurance the broker shall execute an affidavit, in the form prescribed or accepted by the commissioner, setting forth facts from which it can be determined whether such insurance was eligible for export under section 278 of this act.

      2.  The broker shall file this affidavit with the report of coverage within 30 days after the insurance was so effected, as required under rules and regulations adopted pursuant to section 295 of this act.

 

 

OPEN LINES FOR EXPORT.

 

      Sec. 280.  1.  The commissioner may by order declare eligible for export generally and without compliance with subsections 2, 3 and 4 of section 278 of this act and section 279 of this act any class or classes of insurance coverage or risk for which he finds that there is not a reasonable or adequate market among authorized insurers either as to acceptance of the risk, contract terms, or premium or premium rate. Any such order shall continue in effect during the existence of the conditions upon which predicated, but subject to earlier termination by the commissioner.

      2.  The broker shall file with or as directed by the commissioner a memorandum as to each such coverage placed by him in an unauthorized insurer, in such form and context as the commissioner may reasonably require for the identification of the coverage and determination of the tax payable to the state relative thereto.

      3.  The broker, or a licensed Nevada agent of the authorized insurer or a general lines broker, may also place with authorized insurers any insurance coverage made eligible for export generally under subsection 1, and without regard to rate or form filings which may otherwise be applicable to the authorized insurer. As to coverages so placed in an authorized insurer the premium tax thereon shall be reported and paid by the insurer as required generally under sections 90 to 101, inclusive, of this act.

 

 

ELIGIBLE SURPLUS LINES INSURERS.

 

      Sec. 281.  1.  A broker shall not knowingly place surplus lines insurance with an insurer that is unsound financially, or that is ineligible under this section.


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ê1971 Statutes of Nevada, Page 1675 (Chapter 660, AB 416)ê

 

      2.  No insurer shall be eligible for the acceptance of surplus lines risks under this chapter unless it has surplus as to policy holders not less in amount than that required of a like domestic insurer formed under this code and transacting the same kind or kinds of insurance, and, if an alien insurer, unless it has and maintains in a bank or trust company which is a member of the United States Federal Reserve System a trust fund established under terms reasonably adequate for the protection of all of its policy holders in the United States of America in an amount of not less than $500,000. In the case of a group of individual unincorporated insurers, such trust fund shall be not less than $50,000,000. The commissioner may require larger trust funds than those set forth above if in his judgment the volume of business being transacted or proposed to be transacted warrants such larger amounts.

      3.  The commissioner may from time to time compile or approve a list of all surplus lines insurers deemed by him to be eligible currently, and may mail a copy of such list to each broker at his office last of record with the commissioner. This subsection shall not be deemed to require the commissioner to determine the actual financial condition or claims practices of any unauthorized insurer; and the status of eligibility, if granted by the commissioner, shall indicate only that the insurer appears to be sound financially and to have satisfactory claims practices, and that the commissioner has no credible evidence to the contrary. While any such list is in effect the broker shall restrict to the insurers so listed all surplus lines business placed by him.

 

 

EVIDENCE OF THE INSURANCE; CHANGES; PENALTY.

 

      Sec. 282.  1.  Upon placing a surplus lines coverage, the broker shall promptly issue and deliver to the insured evidence of the insurance consisting either of the policy as issued by the insurer, or, if such policy is not then available, the surplus lines broker’s certificate. Such a certificate shall be executed by the broker and shall show the description and location of the subject of the insurance, coverage, conditions and term of the insurance, the premium and rate charged and taxes collected from the insured, and the name and address of the insured and insurer. If the direct risk is assumed by more than one insurer, the certificate shall state the name and address and proportion of the entire direct risk assumed by each such insurer.

      2.  No broker shall issue any such certificate or any cover note, or purport to insure or represent that insurance will be or has been granted by any unauthorized insurer, unless he has prior written authority from the insurer for the insurance, or has received information from the insurer in the regular course of business that such insurance has been granted, or an insurance policy providing the insurance actually has been issued by the insurer and delivered to the insured.

      3.  If after the issuance and delivery of any such certificate there is any change as to the identity of the insurers, or the proportion of the direct risk assumed by an insurer as stated in the broker’s original certificate, or in any other material respect as to the insurance evidenced by the certificate, the broker shall promptly issue and deliver to the insured a substitute certificate accurately showing the current status of the coverage and the insurers responsible thereunder.


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ê1971 Statutes of Nevada, Page 1676 (Chapter 660, AB 416)ê

 

substitute certificate accurately showing the current status of the coverage and the insurers responsible thereunder.

      4.  If a policy issued by the insurer is not available upon placement of the insurance and the broker has issued and delivered his certificate as provided in this section, upon request therefor by the insured the broker shall as soon as reasonably possible procure from the insurer its policy evidencing such insurance and deliver such policy to the insured in replacement of the broker’s certificate theretofore issued.

      5.  Any surplus lines broker who knowingly or negligently issues a false certificate of insurance or who fails promptly to notify the insured of any material change with respect to such insurance by delivery to the insured of a substitute certificate as provided in subsection 3 shall be subject to the penalty provided by section 19 of this act or to any greater applicable penalty otherwise provided by law.

 

 

ENDORSEMENT OF CONTRACT.

 

      Sec. 283.  Every insurance contract procured and delivered as a surplus lines coverage pursuant to this chapter shall be countersigned by the broker who procured it, and shall have conspicuously stamped upon it:

 

This insurance contract is issued pursuant to the Nevada insurance laws by an insurer neither licensed by nor under the supervision of the Nevada insurance division.

 

 

SURPLUS LINES INSURANCE VALID.

 

      Sec. 284.  Insurance contracts procured as surplus lines coverage from unauthorized insurers in accordance with this chapter shall be fully valid and enforcible as to all parties, and shall be given recognition in all matters and respects to the same effect as like contracts issued by authorized insurers.

 

 

LIABILITY OF INSURER.

 

      Sec. 285.  1.  As to a surplus lines risk which has been assumed by an unauthorized insurer pursuant to the Surplus Lines Law, and if the premium thereon has been received by the surplus lines broker who placed such insurance, in all questions thereafter arising under the coverage between the insurer and the insured the insurer shall be deemed to have received the premium due to it for such coverage; and the insurer shall be liable to the insured for losses covered by such insurance, and for unearned premiums which may become payable to the insured upon cancellation of such insurance, whether or not in fact the broker is indebted to the insurer with respect to such insurance or for any other cause.

      2.  Each unauthorized insurer assuming a surplus lines risk under the Surplus Lines Law shall be deemed thereby to have subjected itself to the terms of this section.


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ê1971 Statutes of Nevada, Page 1677 (Chapter 660, AB 416)ê

 

SURPLUS LINES BROKERS: LICENSING.

 

      Sec. 286.  1.  No person shall in this state be, act as, or hold himself out as a surplus lines broker, with respect to subjects of insurance resident, located or to be performed in this state or elsewhere, unless then licensed as such by a license issued by the commissioner pursuant to this chapter.

      2.  Any person while licensed by this state as a resident general lines agent or as a general lines broker, who is deemed by the commissioner to be competent and trustworthy with respect to the handling of surplus lines, may be licensed as a surplus lines broker upon application, payment of the license fee, and filing of the bond required by section 287 of this act.

      3.  Application for the license shall be made to the commissioner on forms designated and furnished by him.

      4.  The license fee shall be as specified in section 90 of this act (fee schedule).

      5.  The license and licensee shall be subject to the applicable provisions of sections 191 to 238, inclusive, of this act as specified in section 296 of this act (other provisions applicable).

 

 

BROKER’S BOND.

 

      Sec. 287.  1.  Before the issuance of a license as surplus lines broker, the applicant therefor shall file with the commissioner and thereafter maintain in force while so licensed a bond in favor of the State of Nevada in the penal sum, aggregate liability, of $5,000, with authorized surety insurers approved by the commissioner. The bond shall be conditioned that the licensee will conduct business under the license in accordance with the provisions of this chapter, will duly account for and pay to persons entitled thereto funds received by him in transactions under his license, and will pay to the state treasurer, through the commissioner, the taxes provided in section 292 of this act.

      2.  The bond shall remain in force until released by the commissioner, or until canceled by the surety. Without prejudice to any liability previously incurred thereunder, the surety may cancel the bond upon 30 days’ advance written notice to both the broker and the commissioner.

 

 

SUSPENSION, REVOCATION OF BROKER’S LICENSE.

 

      Sec. 288.  1.  In addition to other grounds therefor, the commissioner may suspend or revoke any surplus lines broker’s license:

      (a) If the broker fails to file the annual statement or to remit the tax as required by sections 291 and 292 of this act; or

      (b) If the broker fails to maintain an office in this state, or to keep the records, or to allow the commissioner to examine his records as required by this chapter, or if he removes his records from the state; or

      (c) If the broker places a surplus lines coverage in an insurer other than as authorized under this chapter.

      2.  Upon suspending or revoking the broker’s surplus lines license the commissioner may also suspend or revoke all other licenses of or as to the same individual under this code.


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ê1971 Statutes of Nevada, Page 1678 (Chapter 660, AB 416)ê

 

commissioner may also suspend or revoke all other licenses of or as to the same individual under this code.

 

 

BROKER MAY ACCEPT BUSINESS FROM AGENTS, BROKERS; COMPENSATION.

 

      Sec. 289.  A licensed surplus lines broker may accept surplus lines business from any resident agent or resident broker licensed in this state for the kind of insurance involved, and may compensate the agent or broker therefor.

 

 

RECORDS OF BROKER.

 

      Sec. 290.  1.  Each broker shall keep in his office in this state a full and true record of each surplus lines coverage procured by him, including a copy of each daily report, if any, a copy of each certificate of insurance issued by him, and such of the following items as may be applicable:

      (a) Amount of the insurance;

      (b) Gross premium charged;

      (c) Return premium paid, if any;

      (d) Rate of premium charged upon the several items of property;

      (e) Effective date of the contract, and the terms thereof;

      (f) Name and address of each insurer on the direct risk and the proportion of the entire risk assumed by such insurer if less than the entire risk;

      (g) Name and address of the insured;

      (h) Brief general description of the property or risk insured and where located or to be performed; and

      (i) Other information as may be required by the commissioner.

      2.  The record shall not be removed from this state and shall be open to examination by the commissioner or his representative at all times within 5 years after issuance of the coverage to which it relates.

 

 

ANNUAL STATEMENT OF BROKER.

 

      Sec. 291.  1.  Each broker shall on or before March 1 of each year file with the commissioner a statement verified by the broker of all surplus lines insurance transacted by him during the preceding calendar year.

      2.  The statement shall be on forms as prescribed and furnished by the commissioner, and shall contain such information as the commissioner may reasonably require.

 

 

TAX ON SURPLUS LINES; “PREMIUM.”

 

      Sec. 292.  1.  On or before March 1 of each year each broker shall pay to the commissioner, or as provided in paragraph (c) of subsection 1 of section 295 of this act (brokers’ association), a tax on surplus lines coverages written by him in unauthorized insurers during the preceding calendar year at the same rate of tax as imposed by law on the premiums of like coverages written by authorized insurers.


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ê1971 Statutes of Nevada, Page 1679 (Chapter 660, AB 416)ê

 

      2.  For the purposes of the Surplus Lines Law the “premium” on surplus lines coverages shall include only the gross amount charged by the insurer for the insurance, and shall not include any additional amount charged for state or federal tax, examination fee or expense of the broker.

      3.  If a surplus lines insurance contract covers risks or exposures only partially in this state, the tax so payable shall be computed on that portion of the premium properly allocable to the risks or exposures located in this state.

      4.  The commissioner shall promptly deposit all such taxes collected by him with the state treasurer, to the credit of the general fund.

 

 

FAILURE TO FILE STATEMENT, PAY TAX; PENALTIES.

 

      Sec. 293.  Every surplus lines broker who fails to make and file the annual statement as required under section 291 of this act, or fails to pay the tax required by section 292 of this act, prior to April 1 after the due date of such statement or tax, shall be liable for a penalty of $25 for each day of delinquency, beginning with April 1, but not to exceed in the aggregate $500 or an amount equal to the amount of the delinquent tax, whichever is the larger. The tax may be collected by distraint, or the tax and fine may be recovered by an action instituted by the commissioner, in the name of the state, the attorney general representing him, in any court of competent jurisdiction. The fine, when so collected, shall be paid to the state treasurer for credit to the general fund.

 

 

SUIT AGAINST SURPLUS LINES INSURERS; VENUE; PROCESS.

 

      Sec. 294.  1.  An unauthorized insurer effecting insurance under the provisions of the Surplus Lines Law shall be deemed to be transacting insurance in this state as an unlicensed insurer, and may be sued in a district court of this state upon any cause of action arising against it in this state under any insurance contract entered into by it under this chapter.

      2.  Service of legal process against the insurer may be made in any such action by service of two copies thereof upon the commissioner, and payment of the service of process fee specified in section 90 of this act (fee schedule). The commissioner shall forthwith mail a copy of the process served to the person designated by the insurer in the policy for the purpose, by prepaid registered or certified mail with return receipt requested. If no such person is so designated in the policy, the commissioner shall in like manner mail a copy of the process to the broker through whom the insurance was procured, or to the insurer at its principal place of business, addressed to the address of the broker or insurer, as the case may be, last of record with the commissioner. Upon service of process upon the commissioner and mailing of the same in accordance with this subsection, the court shall be deemed to have jurisdiction in personam of the insurer.

      3.  The defendant insurer shall have 40 days from the date of service of the summons and complaint upon the commissioner within which to plead, answer or defend any such suit.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1680 (Chapter 660, AB 416)ê

 

      4.  An unauthorized insurer entering into such an insurance contract shall be deemed thereby to have authorized service of process against it in the manner and to the effect provided in this section. Any such contract, if issued, shall contain a provision stating the substance of this section, and designating the person to whom the commissioner shall mail process as provided in subsection 2.

 

 

RULES AND REGULATIONS; BROKERS’ ASSOCIATION.

 

      Sec. 295.  1.  The commissioner may make or approve and adopt reasonable rules and regulations, consistent with the Surplus Lines Law, for any and all of the following purposes:

      (a) Effectuation of the law;

      (b) Establishment of procedures through which determination is to be made as to the eligibility of particular proposed coverages for export; and

      (c) Establishment, procedures and operations of any voluntary organization of surplus lines brokers or others designed to assist such brokers to comply with the Surplus Lines Law, and for the collection on behalf of the state and remission to the commissioner of the tax on surplus lines coverages provided for in section 292 of this act.

      2.  Such rules and regulations shall be subject to the procedures and carry the penalty provided by section 33 of this act.

 

 

OTHER PROVISIONS APPLICABLE.

 

      Sec. 296.  In addition to those referred to in other provisions of the Surplus Lines Law, the following provisions of sections 191 to 238, inclusive, of this act (agents, brokers and solicitors) shall, to the extent applicable and not inconsistent with the express provisions of this chapter, also apply to surplus lines brokers:

      1.  Section 216 (continuation, expiration of license);

      2.  Section 229 (fiduciary funds);

      3.  Section 230 (failure to remit premiums);

      4.  Section 234 (suspension, revocation, refusal of license);

      5.  Section 235 (certain procedure for suspension, limitation or revocation of license);

      6.  Section 236 (procedure following suspension, revocation);

      7.  Section 237 (return of license to commission); and

      8.  Section 238 (penalties).

 

 

CHAPTER 13

 

UNAUTHORIZED INSURERS: PROHIBITIONS, PROCESS AND ADVERTISING

 

      Sec. 297.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 298 to 308, inclusive, of this act.


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ê1971 Statutes of Nevada, Page 1681 (Chapter 660, AB 416)ê

 

PURPOSE OF CHAPTER.

 

      Sec. 298.  The purpose of this chapter is to subject certain persons and insurers to the jurisdiction of the commissioner and the courts of this state in suits by or on behalf of the state. The legislature declares that it is concerned with the protection of residents of this state against acts by insurers not authorized to do an insurance business in this state, by the maintenance of fair and honest insurance markets, by protecting authorized insurers which are subject to regulation from unfair competition by unauthorized insurers, and by protecting against the evasion of the insurance regulatory laws of this state. In furtherance of such state interest, the legislature provides methods in this chapter for substituted service of process upon such insurers in any proceeding, suit or action in any court and substituted service of any notice, order, pleading or process upon such insurers in any proceeding by the commissioner to enforce or effect full compliance with the insurance laws of this state. In so doing, the state exercises its powers to protect residents of this state and to define what constitutes transacting an insurance business in this state, and also exercises powers and privileges available to this state by virtue of Public Law 79-15, (1945), 79th Congress of the United States, Chapter 20, 1st Sess., S. 340, 59 Stat. 33; 15 U.S.C. §§ 1011 to 1015, inclusive, as amended, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states.

 

 

UNAUTHORIZED INSURERS ACT: SHORT TITLE.

 

      Sec. 299.  Sections 299 to 305, inclusive, of this act constitute and may be cited as the Unauthorized Insurers Act.

 

 

UNLAWFUL TRANSACTION OF INSURANCE BUSINESS; EXCEPTED CONTRACTS AND ACTIVITIES.

 

      Sec. 300.  1.  As used in this section unless otherwise indicated, “insurer” includes:

      (a) All corporation, associations, partnerships and individuals engaged as principals in the business of insurance; and

      (b) Interinsurance exchanges and mutual benefit societies.

      2.  It is unlawful for any insurer to transact insurance business in this state as set forth in subsection 2, without a certificate of authority from the commissioner; but this section does not apply to:

      (a) The lawful transaction of surplus lines insurance pursuant to subsection 4 of section 63 of this act.

      (b) The lawful transaction of reinsurance by insurers pursuant to subsection 6 of section 63 of this act.

      (c) Transactions in this state 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.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1682 (Chapter 660, AB 416)ê

 

      (d) Attorneys at law acting in the ordinary relation of attorney and client in the adjustment of claims or losses.

      (e) Transactions in this state involving group life and group sickness and accident or blanket sickness and accident insurance or group annuities where the master policy of such groups was lawfully issued and delivered in and pursuant to the laws of a state in which the insurer 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 pursuant to subsection 7 of section 63 of this act.

      (f) Transactions in this state involving any policy of insurance or annuity contract issued prior to the effective date of this act.

      (g) Transactions in this state relative to a policy issued or to be issued outside this state involving insurance on vessels, craft or hulls, cargos, 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.

      (h) Transactions in this state involving contracts of insurance issued to one or more industrial insureds, but nothing in this section shall relieve an industrial insured from taxation lawfully imposed upon independently procured insurances. An “industrial insured” is defined as an insured:

             (1) 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;

             (2) Whose aggregate annual premiums for insurance on all risks total at least $25,000; and

             (3) Which has at least 25 full-time employees.

      3.  Any of the following acts in this state effected by mail or otherwise by or on behalf of an unauthorized insurer is deemed to constitute the transaction of an insurance business in this state:

      (a) The making of or proposing to make, as an insurer, an insurance contract.

      (b) The making of 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.

      (c) The taking or receiving of any application for insurance.

      (d) The receiving or collection of any premium, commission, membership fees, assessments, dues or other consideration for any insurance or any part thereof.

      (e) The issuance or delivery of contracts of insurance to residents of this state or to persons authorized to do business in this state.

      (f) Directly or indirectly acting as an agent for or otherwise representing or aiding on behalf of another any person or insurer 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, a 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 insurer in the transaction of insurance with respect to subjects of insurance resident, located or to be performed in this state.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1683 (Chapter 660, AB 416)ê

 

assisting a person or insurer in the transaction of insurance with respect to subjects of insurance resident, located or to be performed in this state. The provisions of this paragraph shall not operate to prohibit full-time salaried employees of a corporate insured from acting in the capacity of an insurance manager or buyer in placing insurance in behalf of such employer.

      (g) The transaction of any kind of insurance business specifically recognized as transacting an insurance business within the meaning of the statutes relating to insurance.

      (h) The transacting or proposing to transact any insurance business in substance equivalent to any of the provisions of paragraphs (a) to (g), inclusive, in a manner designed to evade the provisions of the statutes.

      4.  The venue of an act committed by mail is at the point where the matter transmitted by mail is delivered and takes effect.

      5.  The failure of an insurer transacting insurance business in this state to obtain a certificate of authority shall not impair the validity of any act or contract of such insurer and shall not prevent such insurer from defending any action at law or suit in equity in any court of this state, but no insurer transacting insurance business in this state without a certificate of authority shall be permitted to maintain an action in any court of this state to enforce any right, claim or demand arising out of the transaction of such business until such insurer has obtained a certificate of authority.

      In the event of failure of any such unauthorized insurer to pay any claim or loss within the provisions of such insurance contract, any person who assisted or in any manner aided directly or indirectly in the procurement of such insurance contract shall be liable to the insured for the full amount of the claim or loss in the manner provided by the provisions of such insurance contract.

 

 

INJUNCTIVE RELIEF AGAINST VIOLATORS.

 

      Sec. 301.  1.  Whenever the commissioner believes, from evidence satisfactory to him, that any insurer is violating or is about to violate the provisions of section 300 of this act, the commissioner may, through the attorney general, cause a complaint to be filed in the district court seeking to enjoin and restrain such insurer from continuing such violation or engaging therein or doing any act in furtherance thereof.

      2.  The district court has jurisdiction of the proceeding and has the power to make and enter an order or judgment awarding such preliminary or final injunctive relief as in its judgment is proper.

 

 

SERVICE OF PROCESS ON UNAUTHORIZED INSURER.

 

      Sec. 302.  1.  Any act of transacting an insurance business as set forth in section 300 of this act by any unauthorized insurer is equivalent to and shall constitute an irrevocable appointment by such insurer, binding upon him, his executor or administrator, or successor in interest if a corporation, of the commissioner or his successor in office, to be the true and lawful attorney of such insurer upon whom may be served all lawful process in any action, suit 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 an insurance business in this state by such insurer.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1684 (Chapter 660, AB 416)ê

 

process in any action, suit 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 an insurance business in this state by such insurer. Any act of transacting an insurance business in this state by any unauthorized insurer shall be signification of its agreement that any such lawful process in such court action, suit or proceeding and any such notice, order, pleading or process in such administrative proceeding before the commissioner so served shall be of the same legal force and validity as personal service or process in this state upon such insurer.

      2.  Service of process in such action shall be made by delivering to and leaving with the commission, or some person in apparent charge of his office, two copies thereof and by payment to the commissioner of the fee prescribed by law. Service upon the commissioner as such attorney shall be service upon the principal.

      3.  The commissioner shall forthwith forward by certified mail one of the copies of such process or such notice, order, pleading or process in proceedings before the commissioner to the defendant in such court proceeding or to whom the notice, order, pleading or process in such administrative proceeding is addressed or directed at its last-known principal place of business and shall keep a record of all process so served on him which shall show the day and hour of service. Such service is sufficient, provided:

      (a) Notice of such service and a copy of the court process or the notice, order, pleading or process in such administrative proceeding are sent within 10 days thereafter by certified mail by the plaintiff or the plaintiff’s attorney in the court proceeding or by the commissioner in the administrative proceeding to the defendant in the court proceeding or to whom the notice, order, pleading or process in such administrative proceeding is addressed or directed at the last-known principal place of business of the defendant in the court or administrative proceeding.

      (b) The defendant’s receipt or receipts issued by the post office with which the letter is certified, 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 the plaintiff or the plaintiff’s attorney in court proceeding or of the commissioner in administrative proceeding, showing compliance therewith are filed with the clerk of the court in which such action, suit or proceeding is pending or with the commissioner in administrative proceedings, on or before the date the defendant in the court or administrative proceedings is required to appear or respond thereto, or within such further time as the court or commissioner may allow.

      4.  No plaintiff shall be entitled to a judgment or determination by default in any court or administrative proceeding in which court process or notice, order, pleading or process in proceedings before the commissioner is served under this section until the expiration of 45 days from the date of filing of the affidavit of compliance.

      5.  Nothing in this section limits or affects the right to serve any process, notice, order or demand upon any person or insurer in any other manner permitted by law.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1685 (Chapter 660, AB 416)ê

 

DEFENSE OF ACTION BY UNAUTHORIZED INSURER: BOND.

 

      Sec. 303.  1.  Before any unauthorized insurer files or causes to be filed any pleading in any court action, suit or proceeding or any notice, order, pleading or process in an administrative proceeding before the commissioner instituted against such person or insurer, by service made as provided in section 302 of this act, such insurer shall either:

      (a) Deposit with the clerk of the court in which such action, suit or proceeding is pending, or with the commissioner in administrative proceedings before the commissioner, cash or securities, or file with such clerk or the commissioner a bond with good and sufficient sureties, to be approved by the clerk or the commissioner in an amount to be fixed by the court or commissioner sufficient to secure the payment of any final judgment which may be rendered in such action or administrative proceeding; or

      (b) Procure a certificate of authority to transact the business of insurance in this state. In considering the application of an insurer for a certificate of authority, for the purposes of this paragraph the commissioner need not assert the provisions of section 88 of this act against such insurer with respect to its application if he determines that such company would otherwise comply with the requirements for such certificate of authority.

      2.  The commissioner, in any administrative proceeding in which service is made as provided in section 302 of this act, may in his discretion order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of paragraph (a) and to defend such action.

      3.  Nothing in subsection 1 shall be construed to prevent an unauthorized insurer from filing a motion to quash a writ or to set aside service thereof made in the manner provided in section 302 of this act, on the ground that such unauthorized insurer has not done any of the acts enumerated in section 300 of this act.

 

 

ENFORCEMENT OF FOREIGN DECREES.

 

      Sec. 304.  1.  As used in this section:

      (a) “Foreign decree” means any decree or order in equity of a court located in a reciprocal state, including a court of the United States located therein, against any insurer incorporated or authorized to do business in this state.

      (b) “Qualified party” means a state regulatory agency acting in its capacity to enforce the insurance laws of its state.

      (c) “Reciprocal state” means any state or territory of the United States the laws of which contain procedures substantially similar to those specified in this section for the enforcement of decrees or orders in equity issued by courts located in other states or territories of the United States, against any insurer incorporated or authorized to do business in such state or territory.


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ê1971 Statutes of Nevada, Page 1686 (Chapter 660, AB 416)ê

 

      2.  The attorney general upon request of the commissioner may proceed in the courts 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.

      3.  The commissioner shall determine which states and territories qualify as reciprocal states and shall maintain at all times an up-to-date list of such states.

      4.  A copy of any foreign decree authenticated in accordance with federal statutes may be filed in the office of the clerk of any district court of this state. The clerk, upon verifying with the commissioner that the decree or order qualified as a foreign decree shall treat the foreign decree in the same manner as a decree of a district court of this state. A foreign decree so filed has the same effect and shall be deemed 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 of this state and may be enforced or satisfied in like manner.

      5.  At the time of the filing of the foreign decree, the attorney general shall make and file with the clerk of the court an affidavit setting forth the name and last-known post office address of the defendant.

      Promptly upon the filing of the foreign decree and the affidavit, the clerk shall mail notice of the filing of the foreign decree to the defendant at the address given and to the commissioner and shall make a note of the mailing in the docket. In addition, the attorney general may mail a notice of the filing of the foreign decree to the defendant and to the commissioner and may file proof of mailing with the clerk. Lack of mailing notice of filing by the clerk shall not affect the enforcement proceedings if proof of mailing by the attorney general has been filed.

      No execution or other process for enforcement of a foreign decree filing under this section shall issue until 30 days after the date the decree if filed.

      6.  If the defendant shows the district court:

      (a) That an appeal 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.

      (b) Any ground upon which enforcement of a decree of any district court of this state would be stayed, the court shall stay enforcement of the foreign decree for an appropriate period, upon requiring the same security for satisfaction of the decree which is required in this state.

      7.  Any person filing a foreign decree shall pay to the clerk of the court $35. Fees for docketing, transcription or other enforcement proceedings shall be the same as are provided for decrees of the district court.

      Sec. 305.  Any unauthorized insurer who transacts any unauthorized act of an insurance business as set forth in the Unauthorized Insurers Act may be fined not more than $10,000.


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ê1971 Statutes of Nevada, Page 1687 (Chapter 660, AB 416)ê

 

UNAUTHORIZED INSURERS FALSE ADVERTISING PROCESS ACT: TITLE.

 

      Sec. 306.  Sections 306 to 308, inclusive, of this act constitute and may be referred to as the Unauthorized Insurers False Advertising Process Act.

 

 

NOTICE TO DOMICILIARY SUPERVISORY OFFICIAL.

 

      Sec. 307.  No unauthorized insurer through any estimate, illustration, circular, pamphlet, letter, announcement, statement or any other means or medium shall misrepresent to any person in this state its financial condition or the terms of any contract issued or to be issued by it or the advantages thereof, or the dividends or share to be received thereon. Whenever the commissioner has reason to believe that any such insurer is so misrepresenting, he shall notify the insurer and the insurance supervisory officer of the insurer’s domiciliary state or province by registered or certified mail.

 

 

ACTION BY COMMISSIONER.

 

      Sec. 308.  1.  If within 30 days following the giving of the notice provided for in section 307 of this act the insurer has not ceased such dissemination, and if the commissioner has reason to believe that such insurer is soliciting, issuing or delivering contracts of insurance to residents of this state or collecting premiums on such contracts or performing any other transaction in connection with such insurance, and that a proceeding by him in respect to such matters would be to the interest of the public, he shall take action against such insurer under the provisions of section 327 of this act (trade practices act, service of process on unauthorized insurers).

      2.  If upon such hearing the commissioner finds that the insurer has misrepresented as referred to in section 307 of this act, he shall by order on such hearing require the insurer to cease and desist from such violation, and shall mail a copy of the order by registered or certified mail to the insurer at its principal place of business last of record with the commissioner and to the insurance supervisory officer of the insurer’s domiciliary state or province. Each violation thereafter of such desist order shall subject the insurer to a penalty of $2,000, to be recovered by a civil action brought against the insurer by the commissioner. Service of process upon the insurer is such action may be made upon the commissioner pursuant to sections 302 or 327 of this act or in any other lawful manner.

 

 

CHAPTER 14

 

TRADE PRACTICES AND FRAUDS

 

      Sec. 309.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 310 to 339, inclusive, of this act.


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ê1971 Statutes of Nevada, Page 1688 (Chapter 660, AB 416)ê

 

PURPOSE OF CHAPTER.

 

      Sec. 310.  The purpose of this chapter is to regulate trade practices in the business of insurance in accordance with the intent of Congress as expressed in the Act of Congress approved March 9, 1945, being c. 20, 59 Stat. 33, also designated as 15 U.S.C. §§ 1011 to 1015, inclusive, by defining, or providing for the determination of, all such practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined.

 

 

UNFAIR METHODS, DECEPTIVE ACTS PROHIBITED.

 

      Sec. 311.  No person shall engage in this state in any practice which is defined in sections 312 to 324, inclusive, of this act as, or determined pursuant to section 326 of this act to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.

 

 

MISREPRESENTATION, FALSE ADVERTISING OF POLICIES.

 

      Sec. 312.  No person shall:

      1.  Make, issue, circulate or cause to be made, issued or circulated, any estimate, circular or statement misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby or the dividends or share of the surplus to be received thereon; or

      2.  Make any false or misleading statement as to the dividends or share of surplus previously paid on similar policies; or

      3.  Make any misleading representation or any misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates; or

      4.  Use any name or title of any policy or class of policies misrepresenting the true nature thereof.

 

 

FALSE INFORMATION, ADVERTISING.

 

      Sec. 313.  No person shall make, publish, disseminate, circulate or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, any advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading.

 

 

“TWISTING” PROHIBITED.

 

      Sec. 314.  No person shall make or issue, or cause to be made or issued, any written or oral statement misrepresenting or making misleading comparison as to the terms, conditions, benefits or advantages of any insurance policy for the purpose of inducing, or attempting or tending to induce, any other person to lapse, forfeit, surrender, borrow against, retain, exchange, convert or otherwise deal with or dispose of any insurance policy.


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ê1971 Statutes of Nevada, Page 1689 (Chapter 660, AB 416)ê

 

induce, any other person to lapse, forfeit, surrender, borrow against, retain, exchange, convert or otherwise deal with or dispose of any insurance policy.

 

 

REPLACEMENT OF LIFE INSURANCE.

 

      Sec. 315.  In addition to other powers of the commissioner in respect thereto, the commissioner may by regulation require persons who replace or offer or propose to replace existing life insurance with other life insurance, to leave with the policy holder written, signed and dated statements which fully and accurately compare the terms, conditions and benefits of the existing policy with the proposed policy.

 

 

FALSIFICATION OF RECORDS; MISLEADING FINANCIAL STATEMENTS.

 

      Sec. 316.  1.  No person shall make or cause to be made any false entry in any book, report or statement of any insurer with intent to injure or defraud the insurer or any other person, or to deceive any officer of the insurer, or the commissioner or any examiner appointed to examine the affairs of the insurer. Any person who violates, or with like intent aids or abets any such violation of, this subsection is guilty of a felony.

      2.  No person shall with intent to deceive the insurer, or the commissioner or any examiner appointed to examine into the insurer’s affairs, willfully omit to make a true entry of any material fact pertaining to the insurer’s business in any book, report or statement of the insurer. A violation of this subsection shall be subject to the same penalty as prescribed in subsection 1.

      3.  No person shall file with any supervisory or other public officer, or make, publish, disseminate, circulate or deliver to any person, or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false statement of the financial condition of an insurer with intent to deceive.

      4.  No person shall advertise the capital or assets of an insurer without in the same advertisement setting forth the amount of the insurer’s liabilities.

 

 

DEFAMATION.

 

      Sec. 317.  No person shall make, publish, disseminate or circulate, directly or indirectly, or aid, abet or encourage the making, publishing, disseminating or circulating of any oral or written statement or any pamphlet, circular, article or literature which is false, or maliciously critical of or derogatory to an insurer, or of an organization proposing to become an insurer, and which is calculated to injure any person engaged or proposing to engage in the business of insurance.

 

 

BOYCOTT, COERCION AND INTIMIDATION.

 

      Sec. 318.  No person shall enter into any agreement to commit, or by any concerted action commit, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or any monopoly in, any business of insurance.


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ê1971 Statutes of Nevada, Page 1690 (Chapter 660, AB 416)ê

 

resulting in or tending to result in unreasonable restraint of, or any monopoly in, any business of insurance.

 

 

UNFAIR DISCRIMINATION: LIFE INSURANCE, ANNUITIES AND HEALTH INSURANCE.

 

      Sec. 319.  1.  No person shall make or permit any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract.

      2.  No person shall make or permit any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees or rates charged for any policy or contract of health insurance or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever.

 

 

REBATES: LIFE, HEALTH AND ANNUITY CONTRACTS.

 

      Sec. 320.  Except as otherwise expressly provided by law, no person shall knowingly:

      1.  Permit to be made or offer to make or make any contract of life insurance, life annuity or health insurance, or agreement as to such contract, other than as plainly expressed in the contract issued thereon, or pay or allow, or give or offer to pay, allow or give, directly or indirectly, or knowingly accept, as an inducement to such insurance or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any paid employment or contract for services of any kind, or any valuable consideration or inducement whatever not specified in the contract; or

      2.  Directly or indirectly give or sell or purchase or offer or agree to give, sell, purchase, or allow as an inducement to such insurance or annuity or in connection therewith, whether or not to be specified in the policy or contract, any agreement of any form or nature promising returns and profits, or any stocks, bonds or other securities, or interest present or contingent therein or as measured thereby, of any insurer or other corporation, association or partnership, or any dividends or profits accrued or to accrue thereon.

 

 

EXCEPTIONS TO DISCRIMINATION, REBATES, STOCK INDUCEMENTS PROVISION: LIFE, HEALTH AND ANNUITY CONTRACTS.

 

      Sec. 321.  1.  Nothing in sections 319 and 320 of this act shall be construed as including within the definition of discrimination or rebates any of the following practices:

      (a) In the case of any contract of life insurance or life annuity, paying bonuses to policy holders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, provided that any such bonuses or abatement of premiums shall be fair and equitable to policy holders and for the best interests of the insurer and its policy holders.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1691 (Chapter 660, AB 416)ê

 

provided that any such bonuses or abatement of premiums shall be fair and equitable to policy holders and for the best interests of the insurer and its policy holders.

      (b) In the case of life insurance policies issued on the debit plan, making allowance to policy holders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expense.

      (c) Readjusting the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year.

      (d) Reducing the premium rate for policies of large amounts, but not exceeding savings in issuance and administration expenses reasonably attributable to such policies as compared with policies of similar plan issued in smaller amounts.

      (e) Reducing the premium rates for life or health insurance policies or annuity contracts on salary savings, payroll deduction, preauthorized check, bank draft or similar plans in amounts reasonably commensurate with the savings made by the use of such plans.

      (f) Extending credit for the payment of any premium, and for which credit a reasonable rate of interest is charged and collected.

      2.  Nothing in this chapter shall be construed as including within the definition of securities as inducements to purchase insurance the selling or offering for sale, contemporaneously with life insurance, of mutual fund shares or face amount certificates of regulated investment companies under offerings registered with the Securities and Exchange Commission where such shares or such face amount certificates or such insurance may be purchased independently of and not contingent upon purchase of the other, at the same price and upon similar terms and conditions as where purchased independently.

 

 

UNFAIR DISCRIMINATION, REBATES PROHIBITED: PROPERTY, CASUALTY, SURETY, TITLE INSURANCE.

 

      Sec. 322.  1.  No property, casualty, surety or title insurer or underwritten title company or any employee or representative thereof, and no broker, agent or solicitor shall pay, allow or give, or offer to pay, allow or give, directly or indirectly, as an inducement to insurance, or after insurance has been effected, any rebate, discount, abatement, credit or reduction of the premium named in a policy of insurance, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified or provided for in the policy, except to the extent provided for in an applicable filing with the commissioner as provided by law.

      2.  No title insurer or underwritten title company shall:

      (a) Pay, directly or indirectly, to the insured or any person acting as agent, representative, attorney or employee of the owner, lessee, mortgagee, existing or prospective, of the real property or interest therein which is the subject matter of title insurance or as to which a service is to be performed, any commission or part of its fee or charges or other consideration as inducement or compensation for the placing of any order for a title insurance policy or for performance of any escrow or other service by the insurer or underwritten title company with respect thereto; or

 


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1692 (Chapter 660, AB 416)ê

 

to be performed, any commission or part of its fee or charges or other consideration as inducement or compensation for the placing of any order for a title insurance policy or for performance of any escrow or other service by the insurer or underwritten title company with respect thereto; or

      (b) Issue any policy or perform any service in connection with which it or any agent or other person has paid or contemplates paying any commission, rebate or inducement in violation of this section.

      3.  No insured named in a policy or any employee or such insured shall knowingly receive or accept, directly or indirectly, any such rebate, discount, abatement, credit or reduction of premium, or any such special favor or advantage or valuable consideration or inducement.

      4.  No such insurer shall make or permit any unfair discrimination between insureds or property having like insuring or risk characteristics, in the premium or rates charged for insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the insurance.

      5.  Nothing in this section shall be construed as prohibiting the payment of commissions or other compensation to licensed agents, brokers or solicitors; or as prohibiting the extension of credit to an insured for the payment of any premium and for which credit a reasonable rate of interest is charged and collected; or as prohibiting any insurer from allowing or returning to its participating policy holders, members or subscribers, dividends, savings or unabsorbed premium deposits. As to title insurance, nothing in this section shall prohibit bulk rates or special rates for customers of prescribed classes if such bulk or special rates are provided for in the currently effective schedule of fees and charges of the title insurer or underwritten title company.

      6.  This section does not apply to wet marine and transportation insurance.

 

 

REBATES, INDUCEMENTS: PENALTY.

 

      Sec. 323.  1.  Any person violating the provisions of sections 320 or 322 of this act is guilty of a misdemeanor.

      2.  No agent or broker violating any of such provisions shall be entitled to receive any commission for the sale of any policy on which any rebate or inducement prohibited by sections 320 or 322 of this act has been given or offered, and the full amount of any commission so paid may be recovered by the insurer so paying.

      3.  The amount of any insurance upon which the insured has knowingly received or accepted, either directly or indirectly, any unlawful rebate of the premium or agent’s, solicitor’s or broker’s commission shall be reduced in such proportion as the amount or value of such rebate, commission or other consideration so received by the insured bears to the total premium on such policy.

      4.  A title insurer or underwritten title company shall be liable to the State of Nevada for five times the amount of any unlawful commission or rebate paid in violation of section 322 of this act, which amount may be recovered by the commissioner in addition to any other penalty imposed by law.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1693 (Chapter 660, AB 416)ê

 

SECURITIES, ADVISORY BOARD PROFIT CONTRACTS AS INDUCEMENT TO INSURANCE.

 

      Sec. 324.  Except as provided in subsection 2 of section 321 of this act (contemporaneous sales of life insurance and mutual fund shares), no person shall sell, agree or offer to sell, or give or offer to give, directly or indirectly in any manner whatsoever, as an inducement to insurance or in connection therewith, any stock, shares, bonds or other securities of any kind, or any advisory board contract or other contract or agreement of any kind offering or promising returns and profits.

 

 

DESIST ORDERS FOR PROHIBITED PRACTICES.

 

      Sec. 325.  1.  If the commissioner has cause to believe that any person is engaged in any unfair method of competition or act or practice defined or prohibited in sections 312 to 339, inclusive, of this act, he shall order such person to cease and desist therefrom. The commissioner shall deliver such order to such person directly or by certified or registered mail, return receipt requested. If the person fails to comply therewith within 20 days after he has received the cease and desist order and does not make written request for a hearing thereon within such time, he shall forfeit to the people of this state not to exceed $500 for each violation committed thereafter, such penalty to be recovered by an action prosecuted by the commissioner.

      2.  If a hearing is so requested, the commissioner shall hold a hearing, and thereafter proceed as provided under this code with respect to hearings in general.

      3.  If after such a hearing the violation is confirmed by final order of the commissioner, the violator shall be subject to the penalty provided in subsection 1, together with the payment of the costs of the hearing as determined by the commissioner.

      4.  No order of the commissioner pursuant to this section or order of court to enforce it shall in any way relieve or absolve any person affected by such order from any other liability, penalty or forfeiture applicable under the law.

 

 

PROCEDURES AS TO UNDEFINED PRACTICES.

 

      Sec. 326.  1.  If the commissioner believes that any person engaged in the insurance business is in the conduct of such business engaging in this state in any method of competition or in any act or practice not defined in this chapter which is unfair or deceptive and that a proceeding by him in respect thereto would be in the public interest, the commissioner shall, after a hearing of which notice and of the charges against such person are given him, make a written report of his findings of fact relative to such charges and serve a copy thereof upon such person and any intervenor at the hearing.

      2.  If such report charges a violation of this chapter and if such method of competition, act or practice has not been discontinued, the commissioner may, through the attorney general, at any time after 20 days after the service of such report cause an action to be instituted in the district court of the county wherein the person resides or has his principal place of business to enjoin and restrain such person from engaging in such method, act or practice.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1694 (Chapter 660, AB 416)ê

 

the district court of the county wherein the person resides or has his principal place of business to enjoin and restrain such person from engaging in such method, act or practice. The court shall have jurisdiction of the proceeding and shall have power to make and enter appropriate orders in connection therewith and to issue such writs or orders as are ancillary to its jurisdiction or necessary in its judgment to prevent injury to the public pendente lite; but the State of Nevada shall not be required to give security before the issuance of any such order or injunction under this section. If a stenographic record of the proceedings in the hearing before the commissioner was made, a certified transcript thereof including all evidence taken and the report and findings shall be received in evidence in such action.

      3.  If the court finds that:

      (a) The method of competition complained of is unfair or deceptive; and

      (b) The proceedings by the commissioner with respect thereto are to the interest of the public; and

      (c) The findings of the commissioner are supported by the weight of the evidence,

it shall issue its order enjoining and restraining the continuance of such method of competition, act or practice.

      4.  Either party may appeal from such final judgment or order or decree of court in a like manner as provided for appeals in civil cases.

      5.  If the commissioner’s report made under subsection 1 or order on hearing made under section 53 of this act does not charge a violation of this chapter, then any intervenor in the proceedings may appeal therefrom within the time and in the manner provided in this code for appeals from the commissioner generally.

 

 

SERVICE UPON UNAUTHORIZED INSURERS.

 

      Sec. 327.  1.  Service of all process, statements of charges and notices under this chapter upon unauthorized insurers shall be made by delivering to and leaving with the commissioner or some person in apparent charge of his office two copies thereof, or in the manner provided for by subsection 2 of section 302 or this act (service of process).

      2.  The commissioner shall forward all such process, statements of charges and notices to the insurer in the manner provided in subsection 3 of section 302 of this act.

      3.  No default shall be taken against any such unauthorized insurer until expiration of 30 days after the date of forwarding by the commissioner under subsection 2, or date of service of process if under subsection 2 of section 302 of this act.

      4.  Section 302 of this act applies to all process, statements of charges and notices under this section.

 

 

INTERLOCKING OWNERSHIP, MANAGEMENT.

 

      Sec. 328.  1.  Any insurer may retain, invest in or acquire the whole or any part of the capital stock of any other insurer or insurers, or have a common management with any other insurer or insurers, unless such retention, investment, acquisition or common management is inconsistent with any other provision of this code, or unless by reason thereof the business of such insurers with the public is conducted in a manner which substantially lessens competition generally in the insurance business or tends to create any monopoly therein.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1695 (Chapter 660, AB 416)ê

 

a common management with any other insurer or insurers, unless such retention, investment, acquisition or common management is inconsistent with any other provision of this code, or unless by reason thereof the business of such insurers with the public is conducted in a manner which substantially lessens competition generally in the insurance business or tends to create any monopoly therein.

      2.  Any person otherwise qualified may be a director of two or more insurers which are competitors, unless the effect thereof is to lessen substantially competition between insurers generally or tends materially to create any monopoly.

 

 

POLITICAL CONTRIBUTIONS PROHIBITED; PENALTY.

 

      Sec. 329.  1.  No insurer shall directly or indirectly pay or use, or offer, consent or agree to pay or use, any money or property for or in aid of any political party, committee or organization, or for or in aid of any corporation or other body organized or maintained for political purposes, or for or in aid of any candidate for political office, or for nomination for such office, or for any political purpose whatsoever, or for the reimbursement or indemnification of any person for money or property so used.

      2.  Any officer, director, stock holders, attorney or agent of any insurer which violates any of the provisions of this section who participates in, aids, abets or advises, or consents to any such violation, and any person who solicits or knowingly receives any money or property in violation of this section is guilty of a misdemeanor; and any officer or director abetting in any contribution made in violation of this section shall be liable to the insurer for the amount so contributed.

      3.  This section does not prohibit reasonable and otherwise lawful expenditures by an insurer for presentation of information relative to proposed legislation affecting the insurer.

 

 

FAVORED AGENT OR INSURER.

 

      Sec. 330.  1.  No person shall require, directly or indirectly, or through any trustee, director, officer, agent or employee or affiliate, as a condition, agreement or understanding to selling or furnishing any other person any loan, or extension thereof, credit, sale, goods, property, contract, lease or service, that such other person shall place, continue (other than as to life insurance) or renew any policy of insurance of any kind through any particular agent, broker or insurer. No agent, broker or insurer shall knowingly participate in any such prohibited plan or transaction. No person shall fix a price charged for such thing or service, or discount from or rebate upon price, on the condition, agreement or understanding that any insurance is to be obtained through a particular agent, broker or insurer.

      2.  Subsection 1 does not prevent:

      (a) The exercise by any such person upon a reasonable basis of any right to approve or disapprove of the insurer and representative to underwrite the insurance. Such basis shall relate only to the adequacy and terms of the coverage with respect to the interest of the vendor, lendor, lessor or provider of service to be insured thereunder, the financial standards to be met by the insurer, and the ability of the insurer or representative to service the policy.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1696 (Chapter 660, AB 416)ê

 

provider of service to be insured thereunder, the financial standards to be met by the insurer, and the ability of the insurer or representative to service the policy.

      (b) The exercise by the vendor, lender, lessor or provider of service of the right to furnish or renew the insurance, and to charge the account of the other person with the costs thereof, if such other person fails to deliver such insurance to the lender, vendor, lessor or provider of service, where otherwise called for and in order, at least 15 days prior to expiration of the existing policy.

 

 

SERVICE AND PROCESSING CHARGES PROHIBITED.

 

      Sec. 331.  No mortgagee, lessor, vendor or other person whose interest is insured under an insurance policy paid for by another shall make, receive or accept any monetary charge or fee paid or payable by such other person, for handling, servicing or processing the insurance policy, or endorsements thereon or cancellation thereof.

 

      Sec. 332.  [There is no section 332.]

 

 

ILLEGAL DEALING IN PREMIUMS; EXCESS CHARGES FOR INSURANCE.

 

      Sec. 333.  1.  No person shall willfully collect any sum as premium or charge for insurance, which insurance is not then provided or is not in due course to be provided (subject to acceptance of the risk by the insurer) by an insurance policy issued by an insurer as authorized by this code.

      2.  No person shall willfully collect as premium or charge for insurance any sum in excess of the premium or charge applicable to such insurance and as specified in the policy, in accordance with the applicable classifications and rates as filed with and approved by the commissioner; or, in cases where classifications, premiums or rates are not required by this code to be so filed and approved, such premiums and charges shall not be in excess of those specified in the policy and fixed by the insurer. This subsection shall not be deemed to prohibit:

      (a) The charging and collection, by surplus lines brokers licensed under sections 275 to 296, inclusive, of this act, of the amount of applicable state and federal taxes and nominal service charge to cover communication expenses, in addition to the premium required by the insurer.

      (b) The charging and collection, by a life insurer, of amounts actually to be expended for medical examination of any applicant for life insurance or for reinstatement of a life insurance policy.

 

      Sec. 334.  [There is no section 334.]

 

 

INSURANCE AS INDUCEMENT.

 

      Sec. 335.  1.  No person shall arrange, provide or participate in any plan to offer or effect any kind or kinds of insurance or annuities in this state as an inducement to the purchase or rental by the public of any property or services, without a separate charge to the insured for such insurance.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1697 (Chapter 660, AB 416)ê

 

property or services, without a separate charge to the insured for such insurance.

      2.  This section does not apply to:

      (a) Insurance written in connection with a subscription to newspapers of general circulation;

      (b) Insurance issued to credit unions or members thereof in connection with the purchase of shares in such credit union;

      (c) Insurance offered as guarantee to the performance of goods and designed to protect the purchasers or users of such goods;

      (d) Title insurance;

      (e) Life or health insurance written in connection with an indebtedness for the purpose of paying the balance of the indebtedness on death or disability of the individual insured; or

      (f) Services provided by motor clubs.

 

 

REVOCATION, SUSPENSION OF NEVADA LICENSE FOR VIOLATION OF TRADE PRACTICES LAWS OF OTHER STATE.

 

      Sec. 336.  The commissioner may revoke or suspend the license of any person domiciled or resident in Nevada and licensed to transact insurance in Nevada as insurer, agent, broker or otherwise, upon a hearing and proof that such person, as the result of a hearing before the commissioner, director or superintendent of insurance or insurance department of another state, or in a judicial proceeding in another state, has been found to have violated the insurance laws of that state relating to unfair methods of competition or unfair or deceptive acts or practices in the conduct of the business of insurance, and as a result thereof either has had his license revoked or suspended in that state or has been found guilty of failing to comply with any order, decree or judgment issued pursuant to such hearing or judicial proceeding in that state.

 

 

KNOWLEDGE OF INSURER OF PROHIBITED ACTS.

 

      Sec. 337.  No insurer shall be held guilty of having committed any of the acts prohibited by this chapter by reason of the act of any agent, solicitor or employee not an officer, director or department head thereof, unless an officer, director or department head of the insurer has knowingly permitted such act or has had prior knowledge thereof.

 

 

INSURER NAME: DECEPTIVE USE PROHIBITED.

 

      Sec. 338.  No person who is not an insurer shall assume or use any name which deceptively implies or suggests that it is an insurer.

 

 

FALSE APPLICATIONS, CLAIMS, PROOFS OF LOSS.

 

      Sec. 339.  1.  No agent, broker, solicitor, examining physician, applicant or other person shall knowingly or willfully:


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1698 (Chapter 660, AB 416)ê

 

      (a) Make any false or fraudulent statement or representation in or with reference to any application for insurance; or

      (b) For the purpose of obtaining any money or benefit, present or cause to be presented a false or fraudulent claim, or any proof in support of such a claim for the payment of the loss upon a contract of insurance; or

      (c) Prepare, make or subscribe a false or fraudulent account, certificate, affidavit or proof of loss, or other document or writing, with intent that the same may be presented or used in support of such a claim.

      2.  A violation of this section is a felony.

 

 

CHAPTER 15

 

RATES AND RATE SERVICE ORGANIZATIONS

 

      Sec. 340.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 341 to 360, inclusive, of this act.

 

 

CONSTRUCTION AND PURPOSES.

 

      Sec. 341.  1.  This chapter shall be liberally construed to achieve the purposes stated in subsection 2, which shall constitute an aid and guide to interpretation but not an independent source of power.

      2.  The purposes of this chapter are to:

      (a) Protect policyholders and the public against the adverse effects of excessive, inadequate or unfairly discriminatory rates;

      (b) Encourage, as the most effective way to produce rates that conform to the standards of paragraph (a), independent action by and reasonable price competition among insurers;

      (c) Provide formal regulatory controls for use if independent action and price competition fail;

      (d) Authorize cooperative action among insurers in the rate-making process, and to regulate such cooperation in order to prevent practices that tend to bring about monopoly or to lessen or destroy competition;

      (e) Encourage the most efficient and economic marketing practices; and

      (f) Regulate the business of insurance in a manner that will preclude application of federal antitrust laws.

 

 

DEFINITIONS.

 

      Sec. 342.  In this chapter, unless contrary to context:

      1.  “Market segment” means any line or kind of insurance or, if it is described in general terms, any subdivision thereof or any class of risks or combination of classes.

      2.  “Rate service organization” means any person, other than an employee of an insurer, who assists insurers in rate making or filing by:

      (a) Collecting, compiling and furnishing loss or expense statistics;


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1699 (Chapter 660, AB 416)ê

 

      (b) Recommending, making or filing rates or supplementary rate information; or

      (c) Advising about rate questions, except as an attorney giving legal advice.

      3.  “Supplementary rate information” includes any manual or plan of rates, statistical plan, classification, rating schedule, minimum premium, policy fee, rating rule, rate-related underwriting rule and any other information prescribed by rule of the commissioner.

 

 

SCOPE OF APPLICATION.

 

      Sec. 343.  This chapter applies to all kinds and lines of direct insurance written on risks or operations in this state by any insurer authorized to do business in this state, except:

      1.  Ocean marine insurance;

      2.  Workmen’s compensation insurance;

      3.  Contracts issued by fraternal benefit societies;

      4.  Life insurance other than credit life insurance;

      5.  Variable and fixed annuities; and

      6.  Group and blanket accident and sickness insurance other than credit accident and sickness insurance.

 

 

EXEMPTIONS.

 

      Sec. 344.  The commissioner may by rule exempt any person or class of persons or any market segment from any or all of the provisions of this chapter, if and to the extent that he finds their application unnecessary to achieve the purposes of this chapter.

 

 

RATE STANDARDS.

 

      Sec. 345.  1.  Rates shall not be excessive, inadequate or unfairly discriminatory, nor shall an insurer charge any rate which if continued will have or tend to have the effect of destroying competition or creating a monopoly.

      2.  Rates are presumed not to be excessive if a reasonable degree of price competition exists at the consumer level with respect to the class of business to which they apply. In determining whether a reasonable degree of price competition exists, the commissioner shall consider all relevant tests, including:

      (a) The number of insurers actively engaged in the class of business and their market shares;

      (b) The existence of rate differentials in that class of business;

      (c) Whether long-run profitability for insurers generally of the class of business is unreasonably high in relation to its riskiness; and

      (d) Consumer knowledge in regard to the market in question.

      If such competition does not exist, rates are excessive if they are likely to produce a long-run profit that is unreasonably high in relation to the riskiness of the class of business, or if expenses are unreasonably high in relation to the services rendered.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1700 (Chapter 660, AB 416)ê

 

      3.  Rates are inadequate if they are clearly insufficient, together with the investment income attributable to them, to sustain projected losses and expenses in the class of business to which they apply.

      4.  One rate is unfairly discriminatory in relation to another in the same class if it clearly fails to reflect equitably the differences in expected losses and expenses. Rates are not unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense factors, or like expense factors but different loss exposures, so long as the rates reflect the differences with reasonable accuracy. Rates are not unfairly discriminatory if they are averaged broadly among persons insured under a group, franchise or blanket policy.

 

 

RATING METHODS.

 

      Sec. 346.  In determining whether rates comply with the standards under section 345, the following criteria shall be applied:

      1.  Due consideration shall be given to past and prospective loss and expense experience within and outside of this state, to catastrophe hazards and contingencies, to trends within and outside of this state, to loadings for leveling premium rates over time or for dividends or savings to be allowed or returned by insurers to their policyholders, members or subscribers, and to all other relevant factors, including the judgment of technical personnel.

      2.  Risks may be classified in any reasonable way for the establishment of rates and minimum premiums, except that classifications may not be based on race, color, creed or national origin. Rates thus produced may be modified for individual risks in accordance with rating plans or schedules which establish reasonable standards for measuring probable variations in hazards, expenses, or both.

      3.  The expense provisions included in the rates to be used by an insurer may reflect the operating methods of the insurer and, so far as it is credible, its own expense experience.

      4.  The rates may contain an allowance permitting a profit that is not unreasonable in relation to the riskiness of the class of business.

 

 

FILING OF RATES.

 

      Sec. 347.  Every authorized insurer and every rate service organization licensed under section 353 which has been designated by any insurer for the filing of rates under subsection 2 of section 349 shall file with the commissioner all rates and supplementary rate information and all changes and amendments thereof made by it for use in this state on or before the date the rates become effective.

 

 

FILINGS OPEN TO INSPECTION.

 

      Sec. 348.  Each filing and any supporting information filed under this chapter shall, as soon as filed, be open to public inspection at any reasonable time. Copies may be obtained by any person on request and upon payment of a reasonable charge therefor.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1701 (Chapter 660, AB 416)ê

 

DELEGATION OF RATE-MAKING AND RATE-FILING OBLIGATION.

 

      Sec. 349.  1.  An insurer may itself establish rates and supplementary rate information for any market segment based on the factors in section 346, or it may use rates and supplementary rate information prepared by a rate service organization, with average expense factors determined by the rate service organization or with such modification for its own expense and loss experience as the credibility of that experience allows.

      2.  An insurer may discharge its obligation under section 347 by giving notice to the commissioner that it uses rates and supplementary rate information prepared by a designated rate service organization, with such information about modifications thereof as are necesary fully to inform the commissioner. The insurer’s rates and supplementary rate information shall be those filed from time to time by the rate service organization, including any amendments thereto as filed, subject, however, to the modifications filed by the insurer.

 

 

DELAYED EFFECTS OF RATES.

 

      Sec. 350.  1.  If the commissioner finds that competition is not an effective regulator of the rates charged or that a substantial number of companies are competing irresponsibly through the rates charged, or that there are widespread violations of this chapter, in any kind or line of insurance or subdivision thereof or in any rating class or rating territory, he may promulgate a rule requiring that in the kind or line of insurance or subdivision thereof or rating class or rating territory comprehended by the finding any subsequent changes in the rates or supplementary rate information be filed with him at least 15 days before they become effective. He may extend the waiting period for not to exceed 15 additional days by written notice to the filer before the first 15-day period expires.

      2.  By rule, the commissioner may require the filing of supporting data as to any or all kinds or lines of insurance or subdivisions thereof or classes of risks or combinations thereof as he deems necessary for the proper functioning of the rate monitoring and regulation process. The supporting data shall include:

      (a) The experience and judgment of the filer, and, to the extent it wishes or the commissioner requires, of other insurers or rate service organizations;

      (b) Its interpretation of any statistical data relied upon;

      (c) Descriptions of the actuarial and statistical methods employed in setting the rates; and

      (d) Any other relevant matters required by the commissioner.

      3.  A rule promulgated under subsection 1 shall expire no more than 1 year after issue. The commissioner may renew the rule if he deems it necessary.

      4.  Whenever a filing is not accompanied by such information as the commissioner has required under subsection 2, he may so inform the insurer and the filing shall be deemed to be made when the information is furnished.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1702 (Chapter 660, AB 416)ê

 

DISAPPROVAL OF RATES.

 

      Sec. 351.  1.  If the commissioner finds that a rate is not in compliance with section 345, he shall order that its use be discontinued for any policy issued or renewed after a date specified in the order.

      2.  Within 1 year after the effective date of an order under subsection 1, no rate promulgated to replace a disapproved one may be used until it has been filed with the commissioner and not disapproved within 30 days thereafter.

      3.  Whenever an insurer has no legally effective rates as a result of the commissioner’s disapproval of rates or other act, the commissioner shall on request specify interim rates for the insurer that are high enough to protect the interests of all parties and may order that a specified portion of the premiums be placed in an escrow account approved by him. When new rates become legally effective, the commissioner shall order the escrowed funds or any overcharge in the interim rates to be distributed appropriately, except that refunds to policyholders that are de minimis shall not be required.

 

 

SPECIAL RESTRICTIONS ON INDIVIDUAL INSURERS.

 

      Sec. 352.  The commissioner may by order require that a particular insurer file any or all of its rates and supplementary rate information 15 days prior to their effective date, if and to the extent that he finds, after a hearing, that the protection of the interests of its insureds and the public in this state requires closer supervision of its rates because of the insured’s financial condition or rating practices. He may extend the waiting period for any filing for not to exceed 15 additional days by written notice to the insurer before the first 15-day period expires. A filing not disapproved before the expiration of the waiting period shall be deemed to meet the requirements of this chapter, subject to the possibility of subsequent disapproval under section 351.

 

 

OPERATION AND CONTROL OF RATE SERVICE ORGANIZATION.

 

      Sec. 353.  1.  No rate service organization shall provide any service relating to the rates of any insurance subject to this chapter, and no insurer shall utilize the services of such organization for such purposes unless the organization has obtained a license under section 354.

      2.  No rate service organization shall refuse to supply any services for which it is licensed in this state to any insurer authorized to do business in this state and offering to pay the fair and usual compensation for the services.

 

 

LICENSING.

 

      Sec. 354.  1.  A rate service organization applying for a license as required by section 353 shall include with its application:


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ê1971 Statutes of Nevada, Page 1703 (Chapter 660, AB 416)ê

 

      (a) A copy of its constitution, charter, articles of organization, agreement, association or incorporation, and a copy of its bylaws, plan of operation and any other rules or regulations governing the conduct of its business;

      (b) A list of its membership and subscribers;

      (c) The name and address of one or more residents of this state upon whom notices, process affecting it or orders of the commissioner may be served;

      (d) A statement showing its technical qualifications for acting in the capacity for which it seeks a license; and

      (e) Any other relevant information and documents that the commissioner may require.

      2.  Every organization which has applied for a license under subsection 1 shall thereafter promptly notify the commissioner of every material change in the facts or in the documents on which its application was based.

      3.  If the commissioner finds that the applicant and the natural persons through whom its acts are competent, trustworthy and technically qualified to provide the services proposed, and that all requirements of law are met, he shall issue a license specifying the authorized activity of the applicant. He shall not issue a license if the proposed activity would tend to create a monopoly or to lessen or destroy price competition.

      4.  Licenses issued pursuant to this section shall remain in effect until the licensee withdraws from the state or until the license is suspended or revoked.

      5.  Any amendment to a document filed under paragraph (a) of subsection 1 shall be filed at least 30 days before it becomes effective. Failure to comply with this subsection shall be a ground for revocation of the license granted under subsection 3.

 

 

BINDING AGREEMENTS BY INSURERS.

 

      Sec. 355.  No insurer shall assume any obligation to any person other than a policyholder or other companies under common control to use or adhere to certain rates or rules, and no other person shall impose any penalty or other adverse consequence for failure of an insurer to adhere to certain rates or rules.

 

 

RECORDING AND REPORTING OF EXPERIENCE.

 

      Sec. 356.  1.  The commissioner shall promulgate or approve reasonable rules, including rules providing statistical plans, for use thereafter by all insurers in the recording and reporting of loss and expense experience, in order that the experience of such insurers may be made available to him. No insurer shall be required to record or report its experience on a classification basis inconsistent with its own rating system.

      2.  The commissioner may designate one or more rate service organizations to assist him in gathering such experience and making compilations thereof, which shall be made available to the public.


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ê1971 Statutes of Nevada, Page 1704 (Chapter 660, AB 416)ê

 

EXAMINATION OF RATE SERVICE ORGANIZATIONS.

 

      Sec. 357.  1.  Whenever he deems it necessary in order to inform himself about any matter related to the enforcement of the insurance laws, the commissioner may examine the affairs and condition of any rate service organization under subsection 1 of section 353. So far as reasonably necessary for an examination under this subsection, the commissioner may examine the accounts, records, documents or evidences of transactions, so far as they relate to the examinee, of any officer, manager, general agent, employee, person who has executive authority over or is in charge of any segment of the examinee’s affairs, person controlling or having a contract under which he has the right to control the examinee whether exclusively or with others, person who is under the control of the examinee, or any person who is under the control of a person who controls or has a right to control the examinee whether exclusively or with others. On demand every examinee under this subsection shall make available to the commissioner for examination any of its own accounts, records, documents or evidences of transactions and any of those of the persons listed in this subsection.

      2.  The commissioner shall examine every licensed rate service organization at intervals to be established by rule.

      3.  In lieu of all or part of an examination under subsections 1 and 2, or in addition to it, the commissioner may order an independent audit by certified public accountants or actuarial evaluation by actuaries approved by him of any person subject to the examination requirement. Any accountant or actuary selected shall be subject to rules respecting conflicts of interest promulgated by the commissioner. Any audit or evaluation under this subsection shall be subject to subsections 6 to 15, inclusive, so far as appropriate.

      4.  In lieu of all or part of an examination under this section, the commissioner may accept the report of an audit already made by certified public accountants or actuarial evaluation by actuaries approved by him, or the report of an examination made by the insurance department of another state.

      5.  An examination may but need not cover comprehensively all aspects of the examinee’s affairs and condition. The commissioner shall determine the exact nature and scope of each examination, and in doing so shall take into account all relevant factors, including but not limited to the length of time the examinee has been operating, the length of time he has been licensed in this state, the nature of the services provided, the nature of the accounting records available and the nature of examinations performed elsewhere.

      6.  For each examination under this section, the commissioner shall issue an order stating the scope of the examination and designating the examiner in charge. Upon demand a copy of the order shall be exhibited to the examinee.

      7.  Any examiner authorized by the commissioner shall, so far as necessary to the purposes of the examination, have access at all reasonable hours to the premises and to any books, records, files, securities, documents or property of the examinee and to those of persons under subsection 1 so far as they relate to the affairs of the examinee.


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ê1971 Statutes of Nevada, Page 1705 (Chapter 660, AB 416)ê

 

      8.  The officer, employees and agents of the examinee and of persons under subsection 1 shall comply with every reasonable request of the examiners for assistance in any matter relating to the examination. No person shall obstruct or interfere with the examination in any way other than by legal process.

      9.  If the commissioner finds the accounts or records to be inadequate for proper examination of the condition and affairs of the examinee or improperly kept or posted, he may employ experts to rewrite, post or balance them at the expense of the examinee.

      10.  The examiner in charge of an examination shall make a proposed report of the examination which shall include such information and analysis as is ordered in subsection 6, together with the examiner’s recommendations. Preparation of the proposed report may include conferences with the examinee or his representatives at the option of the examiner in charge. The proposed report shall remain confidential until filed under subsection 11.

      11.  The commissioner shall serve a copy of the proposed report upon the examinee. Within 20 days after service, the examinee may serve upon the commissioner a written demand for a hearing on the contents of the report. If a hearing is demanded, the commissioner shall give notice and hold a hearing under sections 48 to 54, inclusive, of this act, except that on demand by the examinee the hearing shall be private. Within 60 days after the hearing or if no hearing is demanded then within 60 days after the last day on which the examinee might have demanded a hearing, the commissioner shall adopt the report with any necessary modifications and file it for public inspection, or he shall order a new examination.

      12.  The commissioner shall forward a copy of the examination report to the examinee immediately upon adoption, except that if the proposed report is adopted without change, the commissioner need only so notify the examinee.

      13.  The examinee shall forthwith furnish copies of the adopted report to each member of its board of directors or other governing board.

      14.  The commissioner may furnish, without cost or at a price to be determined by him, a copy of the adopted report to the insurance commissioner of each state in the United States and of each foreign jurisdiction in which the examinee is licensed and to any other interested person in this state or elsewhere.

      15.  In any proceeding by or against the examinee or any officer or agent thereof the examination report as adopted by the commissioner shall be admissible as evidence of the facts stated therein. In any proceeding by or against the examinee, the facts asserted in any report properly admitted in evidence shall be presumed to be true in the absence of contrary evidence.

      16.  The reasonable costs of an examination under this section shall be paid by the examinee except as provided in subsection 19. The costs shall include the salary and expenses of each examiner and any other expenses which may be directly apportioned to the examination.

      17.  The amount payable under subsection 16 shall become due 10 days after the examinee has been served a detailed account of the costs.

      18.  The commissioner may require any examinee, before or from time to time during an examination to deposit with the state treasurer such deposits as the commissioner deems necessary to pay the costs of the examination.


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ê1971 Statutes of Nevada, Page 1706 (Chapter 660, AB 416)ê

 

such deposits as the commissioner deems necessary to pay the costs of the examination. Any deposit and any payment made under subsections 16 and 17 shall be credited to the general fund in the state treasury.

      19.  On the examinee’s request or on his own motion, the commissioner may pay all or part of the costs of an examination, whenever he finds that, because of the frequency of examinations or other factors, imposition of the costs would place an unreasonable burden on the examinee. The commissioner shall include in his annual report information about any instance in which he applied this subsection.

      20.  Deposits and payments under subsections 16 to 19, inclusive, shall not be deemed to be a tax or license fee within the meaning of any statute. If any other state charges a per diem fee for examination of examinees domiciled in this state, any examinee domiciled in that other state shall be required to pay the same fee when examined by the commissioner of insurance of this state.

 

 

UNAVAILABILITY OF ESSENTIAL INSURANCE COVERAGE; MANDATORY PLANS.

 

      Sec. 358.  1.  If the commissioner finds after a hearing that in any part of this state any essential insurance coverage is not readily available in the voluntary market, and that the public interest requires such availability, he may by rule either promulgate plans to provide such insurance coverages for any risks in this state which are equitably entitled to but otherwise unable to obtain such coverage, or may call upon the industry to prepare plans for his approval.

      2.  The plan promulgated or prepared under subsection 1 shall:

      (a) Give consideration to the need for adequate and readily accessible coverage, to alternative methods of improving the market affected, to the preferences of the insurers and agents, to the inherent limitations of the insurance mechanism, to the need for reasonable underwriting standards, and to the requirement of reasonable loss-prevention measures;

      (b) Establish procedures that will create minimum interference with the voluntary market;

      (c) Spread the burden imposed by the facility equitably and efficiently within the industry; and

      (d) Establish procedures for applicants and participants to have grievances reviewed by an impartial body.

      3.  Each plan shall require participation by all insurers doing any business in this state of the types covered by the specific plan and all agents licensed to represent such insurers in this state for the specified types of business, except that the commissioner may exclude classes of persons for administrative convenience or because it is not equitable or practicable to require them to participate in the plan.

      4.  The plan may provide for optional participation by insurers not required to participate under subsection 3.

      5.  Each plan shall provide for the method of classifying risks and making and filing rates applicable thereto.

      6.  The plan shall specify the basis of participation of insurers and agents and the conditions under which risks must be accepted.

      7.  Every participating insurer and agent shall provide to any person seeking coverages of kinds available in the plans the services prescribed in the plans, including full information on the requirements and procedures for obtaining coverage under the plans whenever the business is not placed in the voluntary market.


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ê1971 Statutes of Nevada, Page 1707 (Chapter 660, AB 416)ê

 

seeking coverages of kinds available in the plans the services prescribed in the plans, including full information on the requirements and procedures for obtaining coverage under the plans whenever the business is not placed in the voluntary market.

      8.  The plan shall specify what commission rates shall be paid for business placed in the plans.

      9.  If the commissioner finds that the lack of cooperating insurers or agents in an area makes the functioning of the plan difficult, he may order that the plan set up a branch service office or take other appropriate steps to insure that service is available.

      10.  The existing assigned risk plan set up under former NRS 694.390 shall continue unless changed in accordance with this chapter.

 

 

STATE CONTRIBUTION FOR FEDERALLY REINSURED LOSSES.

 

      Sec. 359.  1.  The commissioner is authorized to assess each insurance company authorized to do business in this state an aggregate amount sufficient to provide a fund to reimburse the Secretary of Housing and Urban Development in the manner set forth in section 1223 (a) (1) of the National Housing Act as amended by section 1103 of the Urban Property Protection and Reinsurance Act of 1968, P.L. 90-448, 82 Stat. 476. The assessment shall be on those lines reinsured during the current year in this state by the Secretary of Housing and Urban Development pursuant to such act. The assessment shall be in the proportion that the premiums earned during the preceding calendar year by each such company in this state bear to the aggregate premiums earned on those lines in this state by all insurers. The fund may be provided in whole or in part from appropriations by the legislature.

      2.  Rates used by an insurer shall not be deemed excessive because they contain an amount reasonably calculated to recoup assessments made under this section.

 

 

VOLUNTARY RISK SHARING PLANS.

 

      Sec. 360.  Insurers doing business within this state are authorized to prepare voluntary plans providing any specified kind, line or class of insurance coverage or subdivision or combination thereof for all or any part of this state in which such insurance is not readily available in the voluntary market and in which the public interest requires the availability of such coverage. Such plans shall be submitted to the commissioner and if approved by him may be put into operation.

 

 

CHAPTER 15.5

 

PROTECTION AGAINST INSURER INSOLVENCY

 

      Sec. 361.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 362 to 372.5, inclusive, of this act.


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ê1971 Statutes of Nevada, Page 1708 (Chapter 660, AB 416)ê

 

SCOPE, PURPOSE AND CONSTRUCTION.

 

      Sec. 362.  1.  This chapter applies to all kinds and lines of direct insurance, except variable annuities and variable value life insurance contracts, and to all insurers authorized to do business in this state except fraternal benefit societies, assessable mutual corporations, and hospital, medical and dental service corporations.

      2.  The purpose of this chapter is to maintain public confidence in the promises of insurers by providing a mechanism for protecting insureds in this state from excessive delay and loss in the event of liquidation of insurers and by assessing the cost of such protection among insurers.

      3.  This chapter shall be liberally construed to effect the purpose stated in subsection 2 which shall constitute an aid and guide to interpretation but not an independent source of power.

 

 

ORGANIZATION AND ADMINISTRATION OF FUND.

 

      Sec. 363.  1.  There is created a fund to be known as the insurance security fund, hereinafter referred to in this chapter as the “fund.” The fund shall consist of all payments made by insurers under section 370 of this act, of the earnings resulting from investments under section 366 of this act and of the amounts recovered under section 369 of this act.

      2.  The fund shall be divided into three separate accounts, one for life insurance and annuities, one for disability insurance and one for all other covered insurance.

      3.  The commissioner shall be administrator of the fund. He shall receive no additional compensation for administering it.

      4.  The fund’s necessary expenses of administration in connection with an actual liquidation shall be charged to the fund. All other expenses shall be charged to the budget of the office of the commissioner.

      5.  No one shall be personally liable for any obligation of the fund, and the rights of creditors shall be solely against the assets of the fund.

 

 

BOARD OF THE FUND.

 

      Sec. 364.  1.  The fund shall have a board of not less than five or more than 11 members. The attorney general, the state treasurer and the commissioner shall be ex officio members with full right to vote. The commissioner shall be chairman of the board. The other members shall represent domestic and foreign or alien insurers subject to this chapter. They shall be selected through a procedure to be specified in a rule promulgated by the commissioner. The rule may provide that instead of individual persons, particular insurers or associations of insurers can be selected as members of the board, to act through any duly authorized representative.

      2.  The board shall:

      (a) Adopt rules for the administration of this chapter, including its own procedure;

      (b) Create committees for each of the accounts of the fund, and delegate to them any of the powers under paragraphs (c) to (f), inclusive;

      (c) Reduce awards under subsection 3 of section 367 of this act;


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ê1971 Statutes of Nevada, Page 1709 (Chapter 660, AB 416)ê

 

      (d) Determine the rate of assessments under section 370 of this act;

      (e) Decide on appeals under section 368 of this act and subsection 8 of section 370 of this act; and

      (f) Approve the plan of distribution under subsection 1 of section 371 of this act.

      3.  The members of the board shall receive no compensation for their services as members but shall be entitled to reimbursement for all reasonable and necessary expenses incurred in connection with the performance of their duties as members.

 

 

CUSTODY OF ASSETS.

 

      Sec. 365.  The state treasurer shall be custodian of the fund. He shall not receive additional compensation for his services as custodian, but his reasonable and necessary expenses in performing his duties as custodian shall be charged to the fund.

 

 

INVESTMENTS.

 

      Sec. 366.  The fund shall be invested by the state board of finance. All income from the investments shall be credited to the fund.

 

 

ELIGIBLE CLAIMS.

 

      Sec. 367.  1.  Payment shall be made under this chapter for a claim that:

      (a) Arises out of an insurance policy or annuity issued by an insurer which was authorized to do the insurance business in this state either at the time the policy or annuity was issued or when the insured event occurred; and

      (b) Arises out of a class of business with respect to which the insurer is not exempt from assessment under subsection 2 of section 371 of this act; and

      (c) Has been approved in the liquidation of the insurer issuing the policy or annuity, carried out under chapter 34 of this code or under the similar laws of another state or foreign country; and

      (d) Is a member of one of the classes of claims under subsection 2.

      2.  A claim shall not be paid unless it is:

      (a) The claim of a policyholder or an insured of, or a beneficiary under, a policy or annuity, who at the time of the insured event or of the liquidation order was a resident of this state; or

      (b) The claim of a person having an insurable interest in or related to property which was situated in this state at the time of the insured event; or

      (c) A claim under a liability or workmen’s compensation insurance policy, if:

             (1) Either the insured or the third party claimant was a resident of this state at the time of the insured event; or

             (2) The claim is for bodily or personal injuries suffered in this state or by a person who when he suffered the injuries was a resident of this state; or


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ê1971 Statutes of Nevada, Page 1710 (Chapter 660, AB 416)ê

 

             (3) The claim is for damage to property situated in this state at the time of damage.

      (d) The claim of a direct or indirect assignee of a person who except for the assignment might have claimed under paragraphs (a) or (b).

      3.  Payments under this chapter shall be limited to the amount by which the allowance on any claim exceeds $200 and, if the insurer is not liquidated under chapter 34 of this code, to the amount in excess of $200 for which the claim would be allowable in a liquidation under chapter 34 of this code, as determined under subsection 2 of section 368 of this act.

 

 

PROCEDURE FOR PAYMENT.

 

      Sec. 368.  1.  The claims found by the administrator to be eligible under section 367 of this act shall be paid out of the fund as soon as they have been approved or settled under section 847 of this act or the corresponding laws of another jurisdiction, subject to the board’s power under paragraph (b) of subsection 2 of section 364 of this act to reduce the amount of the award.

      2.  For each claim found by the administrator to be eligible under section 367 of this act and approved or settled as specified in subsection 1, the administrator shall execute a certificate, upon receipt of which the state treasurer shall pay the indicated amount to the claimant. If in the judgment of the administrator, an improper award is made or an excessive amount is awarded in a liquidation under the laws of another jurisdiction, he may recommend to the board that the award shall be paid only in part out of the fund, and the board shall thereupon determine the amount to be paid.

      3.  If the administrator finds that a claim for which the claimant has requested payment out of the fund is not eligible under section 367 of this act or the board reduces the amount of the award, the administrator shall notify the claimant in writing and advise him of his rights under section 369 of this act.

 

 

APPEAL AND REVIEW.

 

      Sec. 369.  1.  A claimant whose claim has been declared to be ineligible or reduced by the administrator may appeal to the board within 30 days after the claimant has been notified of the administrator’s decision and of his rights under this section.

      2.  Decisions of the board under subsection 1 and subsection 2 of section 368 of this act shall be subject to judicial review.

 

 

SUBROGATION AND COOPERATION.

 

      Sec. 370.  1.  Upon payment to any claimant under section 368 of this act the fund shall be subrogated to the claimant’s full right of recovery against the insurer, its conservator or liquidator. The fund shall retain the amount it has paid to the claimant and expended to enforce the recovery, and pay over any balance to the claimant.


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ê1971 Statutes of Nevada, Page 1711 (Chapter 660, AB 416)ê

 

      2.  The claimant shall cooperate with the fund in pursuing its rights under subsection 1 and if cooperation is unreasonably withheld, the fund shall have a right to recover from the claimant any payment made to him.

 

 

ASSESSMENTS.

 

      Sec. 371.  1.  All insurers to which this chapter applies shall be subject to assessments as provided in this section.

      2.  If the commissioner finds that a foreign or alien insurer is subject to another guaranty fund plan providing substantially the same protection to claimants under section 367 of this act as would be provided by this chapter, he shall exempt the insurer from assessments on the classes of business to which the other plan applies.

      3.  As soon as practicable after a liquidation order as specified in subsection 1 of section 368 of this act has been issued, the administrator shall make an estimate of the amount that will be necessary to make the payments provided by this chapter, separately for each of the accounts of subsection 2 of section 363 of this act and shall submit the estimate to the board, together with his recommendation for the assessment to be levied.

      4.  The board shall fix assessments separately for each account as a percentage of the gross premiums and other consideration received for direct insurance and annuities written in this state in the classes protected by the account, less return premiums and dividends paid in cash to policyholders or applied in part payment of premiums, as reported in the most recent annual statements. Assessments may be made payable in one sum or in installments.

      5.  The maximum assessment upon an insurer in any year shall be 2 percent of the assessable premiums as defined in subsection 4.

      6.  No assessment shall be levied as long as the assets held by the appropriate account of the fund are sufficient to cover all estimated payments for liquidations in process.

      7.  After the rate of assessment has been fixed by the board, the administrator shall send to each insurer a statement of the exact amount to be paid by it. The assessments or installments shall be paid and collected in the same manner as premium taxes or license fees under section 92 of this act.

      8.  Any insurer may, within 10 days after receipt of the statement under subsection 7, appeal to the board with respect to the amount of the assessment demanded by the administrator. The decision of the board on this appeal is subject to judicial review. However, there shall be no delay in payment by reason of the pendency of an appeal or of review.

      9.  Rates used by an insurer shall not be deemed excessive because they contain an amount reasonably calculated to recoup assessments made under this chapter.

 

 

DISPOSAL OF UNUSED ASSETS.

 

      Sec. 372.  After the termination of all liquidations initiated in any year in either account of the fund, all surplus assets left in that account and attributable to those liquidations shall be redistributed among those who paid assessments, in proportion to the amounts they paid.


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ê1971 Statutes of Nevada, Page 1712 (Chapter 660, AB 416)ê

 

who paid assessments, in proportion to the amounts they paid. After all claims against the fund arising from such liquidations have been paid, partial distributions may be made as dividends are received from the liquidations.

 

 

UNFAIR TRADE PRACTICES.

 

      Sec. 372.5.  It is unfair trade practice for any insurer or agent to make use in any manner of the protection given policyholders by this chapter as a reason for buying insurance from him.

 

 

CHAPTER 16

 

THE INSURANCE CONTRACT

 

      Sec. 373.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 374 to 403.9, inclusive, of this act.

 

 

SCOPE OF CHAPTER.

 

      Sec. 374.  This chapter applies to all insurance contracts and annuity contracts other than:

      1.  Reinsurance.

      2.  Policies or contracts not issued for delivery in this state nor delivered in this state.

      3.  Wet marine and transportation insurance.

 

 

“POLICY” DEFINED.

 

      Sec. 375.  As used in this code, “policy” means the written contract of or written agreement for or effecting insurance, by whatever name called, and includes all clauses, riders, endorsements and papers which are a part thereof.

 

 

“PREMIUM” DEFINED; WAIVER AUTHORIZED.

 

      Sec. 376.  1.  As used in this code, “premium” is the consideration for insurance, by whatever named called. Any “assessment,” or any “membership,” “policy,” “survey,” “inspection,” “service” or similar fee or other charge in consideration for an insurance contract or procurement thereof is part of the premium.

      2.  With respect to any kind of insurance and any type of insurance contract, the insurer may provide for waiver of payment of premium for such causes and subject to such terms and conditions as may be specified in the contract.

 

 

INSURABLE INTEREST: PERSONAL INSURANCE.

 

      Sec. 377.  1.  Any individual of competent legal capacity may procure or effect an insurance contract upon his own life or body for the benefit of any person.


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ê1971 Statutes of Nevada, Page 1713 (Chapter 660, AB 416)ê

 

of any person. But no person shall procure or cause to be procured any insurance contract upon the life or body of another individual unless the benefits under such contract are payable to the individual insured or his personal representatives, or to a person having, at the time when such contract was made, an insurable interest in the individual insured.

      2.  If the beneficiary, assignee or other payee under any contract made in violation of this section receives from the insurer any benefits thereunder accruing upon the death, disablement or injury of the individual insured, the individual insured or his executor or administrator, as the case may be, may maintain an action to recover such benefits from the person so receiving them.

      3.  As used in this section, “insurable interest” as to such personal insurance means that every individual has an insurable interest in the life, body and health of himself, and of other persons as follows:

      (a) In the case of individuals related closely by blood or by law, a substantial interest engendered by love and affection; and

      (b) In the case of other persons, a lawful and substantial economic interest in having the life, health or bodily safety of the individual insured continue, as distinguished from an interest which would arise only by, or would be enhanced in value by, the death, disablement or injury of the individual insured.

      4.  An individual prior to or after the effective date of this act party to a contract or option for the purchase or sale of an interest in a business partnership or firm, or of shares of stock of a corporation or of an interest in such shares, has an insurable interest in the life, body and health of each individual party to such contract and for the purposes of such contract only, in addition to any insurable interest which may otherwise exist as to such individual.

      5.  An insurer shall be entitled to rely upon all statements, declarations and representations made by an applicant for insurance relative to the insurable interest of the applicant in the insured; and no insurer shall incur legal liability except as set forth in the policy, by virtue of any untrue statements, declarations or representations so relied upon in good faith by the insurer.

 

 

INSURABLE INTEREST: EXCEPTION WHEN CERTAIN INSTITUTIONS DESIGNATED BENEFICIARY.

 

      Sec. 378.  1.  Life insurance contracts may be entered into in which the person paying the consideration for the insurance has no insurable interest in the life of the individual insured, where charitable, benevolent, educational or religious institutions or their agencies are designated irrevocably as the beneficiaries thereof.

      2.  In making such contracts the person paying the premium shall make and sign the application therefor as owner, and shall designate irrevocably a charitable, benevolent, educational or religious institution or an agency thereof as the beneficiary or beneficiaries of such contract. The application shall be signed also by the individual whose life is to be insured.

      3.  Nothing in this section shall prohibit any combination of the applicant, premium payer, owner and beneficiary from being the same person.


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ê1971 Statutes of Nevada, Page 1714 (Chapter 660, AB 416)ê

 

      4.  Such a contract shall be valid and binding among the parties thereto, notwithstanding the absence otherwise of an insurable interest in the life of the individual insured.

 

 

INSURABLE INTEREST: PROPERTY.

 

      Sec. 379.  1.  No contract of insurance of property or of any interest in property or arising from property shall be enforcible as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss.

      2.  “Insurable interest” as used in this section means any actual, lawful and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction or pecuniary damage or impairment.

 

 

POWER TO CONTRACT: PURCHASE OF INSURANCE AND ANNUITIES BY MINORS.

 

      Sec. 380.  1.  Any person of competent legal capacity may contract for insurance.

      2.  Any minor not less than 16 years of age may, notwithstanding his minority, contract for or own annuities or insurance, or affirm by novation or otherwise preexisting contracts for annuities or insurance, upon his own life, body, health, property, liabilities or other interests, or on the person of another in whom the minor has an insurable interest. Notwithstanding such minority such a minor shall be deemed competent to exercise all rights and powers with respect to or under:

      (a) Any annuity or insurance contract upon his own life, body or health; or

      (b) Any contract which such minor effected upon his own property, liabilities or other interests; or

      (c) Any contract effected or owned by the minor on the person of another, as might be exercised by a person of full legal age.

      Such a minor may at any time surrender his interest in any such contracts and give valid discharge for any benefit accruing or money payable thereunder. Such a minor shall not, by reason of his minority, be entitled to rescind, avoid or repudiate the contract, or to rescind, avoid or repudiate any exercise of a right or privilege thereunder, except that such a minor, not otherwise emancipated, shall not be bound by any unperformed agreement to pay, by promissory note or otherwise, any premium on any such annuity or insurance contract.

      3.  All insurance contracts made by a minor under the age of 16 years shall be made only with the written consent of a parent or guardian, and the exercise of all contractual rights under such contracts, or the surrender thereof, or the giving of a valid discharge for any benefit accruing or money payable thereunder shall have the written consent of a parent or guardian if made or given while such minor is under the age of 16 years.

      4.  All such contracts made by a minor not of the age of 21 years which may result in any personal liability for assessment shall have the written assumption of any such liability by a parent or guardian in consideration of the issuance of the contract. Such assumption shall be in a form approved by the commissioner, reasonably designed to inform the parent or guardian of the liability thus assumed.


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ê1971 Statutes of Nevada, Page 1715 (Chapter 660, AB 416)ê

 

form approved by the commissioner, reasonably designed to inform the parent or guardian of the liability thus assumed. Such assumption of liability may be made a part of and included with any written consent of such parent or guardian required under the provisions of this section, and it may be provided therein that such assumption shall cover only up to the anniversary date of the policy nearest the insured’s birthday upon which he attains the age of 21 years.

      5.  Any annuity contract or policy of life or health insurance procured by or for a minor under subsections 2 or 3, shall be made payable either to the minor or his estate or to a person having an insurable interest in the life of the minor.

 

 

CONSENT OF INSURED: LIFE, HEALTH INSURANCE.

 

      Sec. 381.  No life or health insurance contract upon an individual, except a contract of group life insurance or of group or blanket health insurance, shall be made or effectuated unless at the time of the making of the contract the individual insured, being of competent legal capacity to contract, applies therefor or has consented thereto in writing, except in the following cases:

      1.  A spouse may effectuate such insurance upon the other spouse.

      2.  Any person having an insurable interest in the life of a minor, or any person upon whom a minor is dependent for support and maintenance, may effectuate insurance upon the life of or pertaining to such minor.

      3.  Family policies may be issued insuring any two or more members of a family on an application signed by either parent, a stepparent, a guardian, or by a husband or wife.

 

 

ALTERATION OF APPLICATION: LIFE AND HEALTH INSURANCE.

 

      Sec. 382.  No alteration of any written application for any life or health insurance policy shall be made by any person other than the applicant without his written consent, except that insertions may be made by the insurer, for administrative purposes only, in such manner as to indicate clearly that such insertions are not to be ascribed to the applicant.

 

 

APPLICATION AS EVIDENCE.

 

      Sec. 383.  1.  No application for the issuance of any life or health insurance policy or annuity contract shall be admissible in evidence in any action relative to such policy or contract, unless a true copy of the application was attached to or otherwise made a part of the policy or contract when issued. This subsection does not apply to industrial life insurance policies.

      2.  If any policy of life or health insurance delivered in this state is reinstated or renewed, and the insured or the beneficiary or assignee of the policy makes written request to the insurer for a copy of the application, if any, for such reinstatement or renewal, the insurer shall, within 30 days after receipt of such request at its home office, deliver or mail to the person making such request a copy of such application reproduced by any legible means.


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ê1971 Statutes of Nevada, Page 1716 (Chapter 660, AB 416)ê

 

30 days after receipt of such request at its home office, deliver or mail to the person making such request a copy of such application reproduced by any legible means. If such copy is not so delivered or mailed after having been so requested, the insurer shall be precluded from introducing the application in evidence in any action or proceeding based upon or involving the policy or its reinstatement or renewal. In the case of such a request from a beneficiary or assignee, the time within which the insurer is required to furnish a copy of such application shall not begin to run until after receipt of evidence satisfactory to the insurer of the beneficiary’s or assignee’s vested interest in the policy or contract.

      3.  As to kinds of insurance other than life or health insurance, no application for insurance signed by or on behalf of the insured shall be admissible in evidence in any action between the insured and the insurer arising out of the policy so applied for, if the insurer has failed, at the expiration of 30 days after receipt by the insurer of written demand therefor by or on behalf of the insured, to furnish to the insured a copy of such application reproduced by any legible means.

 

 

REPRESENTATIONS IN APPLICATIONS.

 

      Sec. 384.  All statements and descriptions in any application for an insurance policy or annuity contract, by or in behalf of the insured or annuitant, shall be deemed to be representations and not warranties. Misrepresentations, omissions, concealment of facts and incorrect statements shall not prevent a recovery under the policy or contract unless either:

      1.  Fraudulent; or

      2.  Material either to the acceptance of the risk, or to the hazard assumed by the insurer; or

      3.  The insurer in good faith would either not have issued the policy or contract, or would not have issued it at the same premium rate, or would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise.

 

 

FILING, APPROVAL OF FORMS.

 

      Sec. 385.  1.  No life or health insurance policy or annuity contract form, whether individual, group or blanket, or application form where a written application is required and is to be made a part of the policy or contract, or printed rider or endorsement form or form of renewal certificate, or form of individual certificate or statement of coverage to be issued under group or blanket contracts, shall be delivered or issued for delivery in this state, unless the form has been filed with and approved by the commissioner. This subsection does not apply to any special rider or endorsement which relates to the manner of distribution of benefits or to the reservation of rights and benefits under life or health insurance policies, which special riders or endorsements are used at the request of the individual policy holder, contract holder or certificate holder. As to group insurance policies effectuated and delivered outside this state but covering persons resident in this state, the group certificates to be delivered or issued for delivery in this state shall be filed, for informational purposes only, with the commissioner at his request.


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ê1971 Statutes of Nevada, Page 1717 (Chapter 660, AB 416)ê

 

persons resident in this state, the group certificates to be delivered or issued for delivery in this state shall be filed, for informational purposes only, with the commissioner at his request.

      2.  Every such filing shall be made not less than 30 days in advance of any such delivery. At the expiration of 30 days the form so filed shall be deemed approved unless prior thereto it has been affirmatively approved or disapproved by order of the commissioner. Approval of any such form by the commissioner shall constitute a waiver of any unexpired portion of such waiting period. The commissioner may extend by not more than an additional 30 days the period within which he may so affirmatively approve or disapprove any such form, by giving notice to the insurer of such extension before expiration of the initial 30-day period. At the expiration of any such period as so extended, and in the absence of such prior affirmative approval or disapproval, any such form shall be deemed approved. The commissioner may at any time, after notice and for cause shown, withdraw any such approval.

      3.  Any order of the commissioner disapproving any such form or withdrawing a previous approval shall state the grounds therefor and the particulars thereof in such detail as reasonably to inform the insurer thereof. Any such withdrawal of a previously approved form shall be effective at the expiration of such period, not less than 30 days after the giving of notice of withdrawal, as the commissioner shall in such notice prescribe.

      4.  The commissioner may, by order, exempt from the requirements of this section for so long as he deems proper any insurance document or form or type thereof specified in such order, to which, in his opinion, this section may not practicably be applied, or the filing and approval of which are, in his opinion, not desirable or necessary for the protection of the public.

      5.  Appeals from orders of the commissioner disapproving any such form or withdrawing a previous approval may be taken as provided in sections 48 to 54, inclusive, of this act.

 

 

GROUNDS FOR DISAPPROVAL.

 

      Sec. 386.  The commissioner shall disapprove any form filed under section 385 of this act, or withdraw any previous approval thereof, only on one or more of the following grounds:

      1.  The form is in any respect in violation of or does not comply with this code.

      2.  The form contains, or incorporates by reference where such incorporation is otherwise permissible, any inconsistent, ambiguous or misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract, or any provision or provisions prejudicial to the interest of the insured or policy holder.

      3.  The form has any title, heading or other indication of its provisions which is misleading, or is printed in such size of type or manner of reproduction as to be difficult to read.

      4.  As to an individual health insurance policy, if the benefits provided therein are unreasonable in relation to the premium charged, or if it contains any unjust, unfair, inequitable or prejudicial provision or provisions.


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ê1971 Statutes of Nevada, Page 1718 (Chapter 660, AB 416)ê

 

it contains any unjust, unfair, inequitable or prejudicial provision or provisions.

      5.  As to a life insurance or individual health insurance policy, if it contains a provision or provisions such as to encourage misrepresentation.

 

 

STANDARD PROVISIONS: IN GENERAL.

 

      Sec. 387.  1.  Insurance contracts shall contain such standard or uniform provisions as are required by the applicable provisions of this code pertaining to contracts of particular kinds of insurance. The commissioner may waive the required use of a particular provision in a particular insurance policy form if:

      (a) He finds such provision unnecessary for or unrelated to the protection of the insured and inconsistent with the purposes of the policy; and

      (b) The policy is otherwise approved by him.

      2.  No policy shall contain any provision inconsistent with or contradictory to any standard or uniform provision used or required to be used, but the commissioner may approve any substitute provision which is, in his opinion, not less favorable in any particular to the insured, owner or beneficiary than the provisions otherwise required.

      3.  In lieu of the provisions required by this code for contracts for particular kinds of insurance, substantially similar provisions required by the law of the domicile of a foreign or alien insurer may be used when approved by the commissioner.

      4.  A policy issued by a domestic insurer for delivery in another jurisdiction may contain any provision required or permitted by the laws of such jurisdiction.

 

 

CHARTER, BYLAW PROVISIONS.

 

      Sec. 388.  1.  No policy shall contain any provision purporting to make any portion of the charter, bylaws or other constituent document of the insurer (other than the subscriber’s agreement or power of attorney of a reciprocal insurer) a part of the contract unless such portion is set forth in full in the policy.

      2.  Any policy provision in violation of this section is invalid.

 

      Sec. 389.  [There is no section 389.]

 

 

EXECUTION OF POLICIES.

 

      Sec. 390.  1.  Every insurance policy shall be executed in the name of and on behalf of the insurer by its officer, attorney-in-fact, employee or representative duly authorized by the insurer.

      2.  A facsimile signature of any such executing individual may be used in lieu of an original signature.

      3.  No insurance contract issued prior to or after the effective date of this act and which is otherwise valid shall be rendered invalid by reason of the apparent execution thereof on behalf of the insurer by the imprinted facsimile signature of an individual not authorized so to execute as of the date of the policy.


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ê1971 Statutes of Nevada, Page 1719 (Chapter 660, AB 416)ê

 

UNDERWRITERS’ AND COMBINATION POLICIES.

 

      Sec. 391.  1.  Two or more authorized insurers may jointly issue, and shall be jointly and severally liable on, an underwriters’ policy bearing their names. Any one insurer may issue policies in the name of an underwriter’s department and such policy shall plainly show the true name of the insurer.

      2.  Two or more insurers may, with the approval of the commissioner, issue a combination policy which shall contain provisions substantially as follows:

      (a) That the insurers executing the policy shall be severally liable for the full amount of any loss or damage, according to the terms of the policy, or for specified percentages or amounts thereof, aggregating the full amount of insurance under the policy; and

      (b) That service of process, or of any notice or proof of loss required by such policy, upon any of the insurers executing the policy, shall constitute service upon all such insurers.

      3.  This section does not apply to cosurety obligations.

 

 

VALIDITY AND CONSTRUCTION OF NONCOMPLYING FORMS.

 

      Sec. 392.  1.  A policy delivered or issued for delivery after the effective date of this act to any person in this state in violation of this code but otherwise binding on the insurer, shall be held valid, but shall be construed as provided in this code.

      2.  Any condition, omission or provision not in compliance with the requirements of this code and contained in any policy, rider or endorsement issued after the effective date of this act and otherwise valid shall not thereby be rendered invalid but shall be construed and applied in accordance with such condition, omission or provision as would have applied had the same been in full compliance with this code.

 

 

DELIVERY OF POLICY.

 

      Sec. 393.  1.  If the original policy is delivered or is so required to be delivered to or for deposit with any vendor, mortgagee or pledgee of any motor vehicle, in which policy any interest of the vendee, mortgagor or pledgor in or with reference to such vehicle is insured, a duplicate of such policy setting forth the name and address of the insurer, insurance classification of vehicle, type of coverage, limits of liability, premiums for the respective coverages and duration of the policy, or memorandum thereof containing the same such information, shall be delivered by the vendor, mortgagee or pledgee to each such vendee, mortgagor or pledgor named in the policy or coming within the group of persons designated in the policy to be so included. If the policy does not provide coverage of legal liability for injury to persons or damage to the property of third parties, a statement of such fact shall be printed, written or stamped conspicuously on the face of such duplicate policy or memorandum.

      2.  This section does not apply to inland marine floater policies.


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ê1971 Statutes of Nevada, Page 1720 (Chapter 660, AB 416)ê

 

ASSIGNABILITY.

 

      Sec. 394.  1.  The purpose of this section is to confirm and clarify the right under the present law of this state to provide for an assignment by which a person covered by a life or health insurance policy may divest himself of all incidents of ownership provided by such policy, including the conversion privileges of such policy.

      2.  Any person insured under a life or health insurance policy may make an assignment of all or any part of his incidents of ownership under such policy, including, but not limited to, the privilege to have issued to him an individual policy of life or health insurance pursuant and subject to the provisions of this code and the right to name a beneficiary. Subject to the terms of the policy or agreement between the insured, the policyholder and the insurer relating to assignment of incidents of ownership thereunder, such an assignment by an insured, made either before or after the effective date of this act, is valid for the purpose of vesting in the assignee all of such incidents of ownership so assigned. Such as assignment shall not prejudice the insurer on account of any payment it may make or individual policy it may issue prior to receipt of notice of the assignment.

 

 

PAYMENT DISCHARGES INSURER.

 

      Sec. 395.  Whenever the proceeds of or payments under a life or health insurance policy or annuity contract issued prior to or after the effective date of this act become payable in accordance with the terms of such policy or contract, or the exercise of any right or privilege thereunder, and the insurer makes payment thereof in accordance therewith or in accordance with any written assignment thereof, the person then designated as being entitled thereto shall be entitled to receive such proceeds or payments and to give full acquittance therefor, and such payments shall fully discharge the insurer from all claims under the policy or contract unless, before payment is made, the insurer has received at its home office written notice by or on behalf of some other person that such other person claims to be entitled to such payment or some interest in the policy or contract.

 

 

FORMS FOR PROOF OF LOSS TO BE FURNISHED.

 

      Sec. 396.  Upon receiving due notice of a claim of loss under an insurance contract issued or assumed by it, and insurer shall promptly furnish to the insured claimant such forms of proof of loss as it may require, for completion by such person, but such insurer shall not, by reason of the requirement so to furnish forms, have any responsibility for or with reference to the completion of such proof or the manner of any such completion or attempted completion.

 

 

MINOR MAY GIVE ACQUITTANCE.

 

      Sec. 397.  1.  Any minor domiciled in this state who has attained the age of 18 years shall be deemed competent to receive and to give full acquittance and discharge for a payment or payments in an aggregate amount not exceeding $3,000 in any 1 year made by a life insurer under the maturity, death or settlement agreement provisions in effect or elected by such minor under a life insurance policy or annuity contract, if such policy, contract or agreement provides for payment to such minor.


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ê1971 Statutes of Nevada, Page 1721 (Chapter 660, AB 416)ê

 

acquittance and discharge for a payment or payments in an aggregate amount not exceeding $3,000 in any 1 year made by a life insurer under the maturity, death or settlement agreement provisions in effect or elected by such minor under a life insurance policy or annuity contract, if such policy, contract or agreement provides for payment to such minor. No such minor shall be deemed competent to alienate the right to or to anticipate or commute such payments. This section does not restrict the rights of minors set forth in section 380 of this act.

      2.  If a guardian of the property of any such minor is duly appointed and written notice thereof is given to the insurer at its home office, any such payment thereafter falling due shall be paid to the guardian for the account of the minor, unless the policy or contract under which the payment is made expressly provides otherwise.

      3.  This section does not require any insurer making any such payment to determine whether any other insurer may be effecting a similar payment to the same minor.

 

 

CLAIMS ADMINISTRATION NOT WAIVER.

 

      Sec. 398.  Without limitation of any right or defense of an insurer otherwise, none of the following acts by or on behalf of an insurer shall be deemed to constitute a waiver of any provision of a policy or of any defense of the insurer thereunder:

      1.  Acknowledgment of the receipt of notice of loss or claim under the policy.

      2.  Furnishing forms for reporting a loss or claim, for giving information relative thereto, or for making proof of loss, or receiving or acknowledging receipt of any such forms or proofs completed or uncompleted.

      3.  Investigating any loss or claim under any policy or engaging in negotiations looking toward a possible settlement of any such loss or claim.

 

 

PAYMENT NOT TO CONSTITUTE ADMISSION OF LIABILITY OR WAIVER OF DEFENSES.

 

      Sec. 398.5.  1.  No payment or payments made by any person, or by his insurer by virtue of a liability insurance policy, on account of bodily injury or death or damage to or loss of property of another shall constitute an admission of liability or waiver of defenses as to such injury, death, loss or damage, or be admissible in evidence in any action brought against the insured person or his insurer for damages, indemnity or benefits arising out of such injury, death, loss or damage, unless pleaded as a defense to the action.

      2.  All such payments shall be credited upon any settlement made by, or judgment rendered in such an action against, the payor or his insurer, and in favor of any person to whom or on whose account payment was made.


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ê1971 Statutes of Nevada, Page 1722 (Chapter 660, AB 416)ê

 

EXEMPTION OF PROCEEDS AND VALUES, LIFE INSURANCE AND ANNUITY CONTRACTS.

 

      Sec. 399.  1.  If a policy of insurance, whether issued prior to or after the effective date of this act, is effected by any person on his own life, or on another life, in favor of a person other than himself, or, except in cases of transfer with intent to defraud creditors, if a policy of life insurance is assigned or in any way made payable to any such person, the lawful beneficiary or assignee thereof, other than the insured or the person so effecting such insurance or executors or administrators of such insured or the person so effecting such insurance, shall be entitled to its proceeds and avails against the creditors and representatives of the insured and of the person effecting the same, whether or not the right to change the beneficiary is reserved or permitted and whether or not the policy is made payable to the person whose life is insured or to the executors or administrators of such person if the beneficiary or assignee predeceases such person. Such proceeds and avails shall be exempt from all liability for any debt of the beneficiary existing at the time the proceeds and avails are made available for his use; but subject to the statute of limitations, the amount of any premiums for such insurance paid with intent to defraud creditors, with interest thereof, shall inure to their benefit from the proceeds of the policy. The insurer issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms, unless, before such payment, the insurer has received written notice at its home office, by or in behalf of a creditor, of a claim to recover for transfer made or premiums paid with intent to defraud creditors, with specification of the amount claimed along with such facts as will assist the insurer to ascertain the particular policy.

      2.  For the purposes of subsection 1, a policy shall also be deemed to be payable to a person other than the insured if and to the extent that a facility-of-payment clause or similar clause in the policy permits the insurer to discharge its obligation after the death of the individual insured by paying the death benefits to a person as permitted by such clause.

      3.  This section does not apply to insurance issued pursuant to this code to a creditor covering his debtors, to the extent that such proceeds are applied to payment of the obligation for the purpose of which the insurance was so issued.

 

 

EXEMPTION OF PROCEEDS: HEALTH INSURANCE.

 

      Sec. 400.  1.  Except as may otherwise be expressly provided by the policy or contract, the proceeds and avails of all contracts of health insurance and of provisions providing benefits on account of the insured’s disability which are supplemental to life insurance or annuity contracts effected prior to or after the effective date of this act shall be exempt from all liability for any debt of the insured, and from any debt of the beneficiary existing at the time the proceeds are made available for his use.

      2.  This section does not apply to insurance issued pursuant to this code to a creditor covering his debtors, to the extent that such proceeds are applied to payment of the obligation for the purpose of which the insurance was so issued.


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ê1971 Statutes of Nevada, Page 1723 (Chapter 660, AB 416)ê

 

are applied to payment of the obligation for the purpose of which the insurance was so issued.

 

 

EXEMPTION OF PROCEEDS: GROUP INSURANCE.

 

      Sec. 401.  1.  A policy of group life insurance or group health insurance or the proceeds thereof payable to the individual insured or to the beneficiary thereunder shall not be liable, either before or after payment, to be applied by any legal or equitable process to pay any debt or liability of such insured individual or his beneficiary or of any other person having a right under the policy. The proceeds thereof, when not made payable to a named beneficiary or to a third person pursuant to a facility-of-payment clause, shall not constitute a part of the estate of the individual insured for the payment of his debts.

      2.  This section does not apply to group insurance issued pursuant to this code to a creditor covering his debtors, to the extent that such proceeds are applied to payments of the obligation for the purpose of which the insurance was so issued.

 

 

EXEMPTION OF PROCEEDS, ANNUITY CONTRACTS: ASSIGNABILITY OF RIGHTS.

 

      Sec. 402.  1.  The benefits, rights, privileges and options which under any annuity contract issued prior to or after the effective date of this act are due or prospectively due the annuitant shall not be subject to execution nor shall the annuitant be compelled to exercise any such rights, powers or options, nor shall creditors be allowed to interfere with or terminate the contract, except:

      (a) As to amounts paid for or as premium on any such annuity with intent to defraud creditors, with interest thereon, and of which the creditor has given the insurer written notice at its home office prior to the making of the payment to the annuitant out of which the creditor seeks to recover. Any such notice shall specify the amount claimed or such facts as will enable the insurer to ascertain such amount, and shall set forth such facts as will enable the insurer to ascertain the annuity contract, the annuitant and the payment sought to be avoided on the ground of fraud.

      (b) The total exemption of benefits presently due and payable to any annuitant periodically or at stated times under all annuity contracts under which he is an annuitant shall not at any time exceed $350 per month for the length of time represented by such installments, and such periodic payments in excess of $350 per month shall be subject to garnishee execution to the same extent as are wages and salaries.

      (c) If the total benefits presently due and payable to any annuitant under all annuity contracts under which he is an annuitant, at any time exceed payment at the rate of $350 per month, then the court may order such annuitant to pay to a judgment creditor or apply on the judgment, in installments, such portion of such excess benefits as to the court may appear just and proper, after due regard for the reasonable requirements of the judgment debtor and his family, if dependent upon him, as well as any payments required to be made by the annuitant to other creditors under prior court orders.


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ê1971 Statutes of Nevada, Page 1724 (Chapter 660, AB 416)ê

 

any payments required to be made by the annuitant to other creditors under prior court orders.

      2.  If the contract so provides, the benefits, rights, privileges or options accruing under such contract to a beneficiary or assignee shall not be transferable or subject to commutation, and if the benefits are payable periodically or at stated times, the same exemptions and exceptions contained in this section for the annuitant shall apply with respect to such beneficiary or assignee.

 

 

RETENTION OF PROCEEDS OF POLICY BY INSURER.

 

      Sec. 403.  1.  Any life insurer shall have power to hold payment of proceeds, as has been agreed to in writing by the insurer and the insured or beneficiary. The insurer shall not be required to segregate funds so held but may hold them as a part of its general corporate assets.

      2.  The provisions of this section shall not impair or affect any rights of creditors under sections 399 or 402 of this act.

 

 

CANCELLATIONS AND NONRENEWALS; SCOPE OF APPLICATION.

 

      Sec. 403.1.  1.  Sections 403.1 to 403.9, inclusive, of this act apply to all contracts of insurance the general terms of which are required to be approved or are subject to disapproval by the commissioner, except as otherwise provided by statute or by rule under subsection 3.

      2.  The contract may provide terms more favorable to policyholders than are required by sections 403.1 to 403.9, inclusive, of this act.

      3.  The commissioner may by rule exempt from sections 403.1 to 403.9, inclusive, of this act classes of insurance contracts where the policyholders do not need protection against arbitrary termination.

      4.  The rights provided by sections 403.1 to 403.9, inclusive, of this act shall be in addition to and shall not prejudice any other rights the policyholder may have at common law or under other statutes.

      5.  Nothing in sections 403.1 to 403.9, inclusive, of this act shall be construed to prevent the rescission or reformation of any life or disability insurance contract not otherwise denied by the terms of the contract or by any other statute.

 

 

MIDTERM CANCELLATION.

 

      Sec. 403.2.  1.  No insurance policy that has been in effect for at least 70 days or that has been renewed may be canceled by the insurer prior to the expiration of the agreed term or 1 year from the effective date of the policy or renewal, whichever is less, except on any one of the following grounds:

      (a) Failure to pay a premium when due; and

      (b) Such grounds as are specified in the policy.

The commissioner shall not disapprove grounds for cancellation specified in the policy which are reasonably necessary to protect the insurer against material misrepresentations and against substantial changes in the risk it has assumed, except to the extent that it should reasonably foresee such changes.


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ê1971 Statutes of Nevada, Page 1725 (Chapter 660, AB 416)ê

 

in the policy which are reasonably necessary to protect the insurer against material misrepresentations and against substantial changes in the risk it has assumed, except to the extent that it should reasonably foresee such changes.

      2.  No cancellation under subsection 1 shall be effective until in the case of paragraph (a) of subsection 1 at least 10 days and in the case of paragraph (b) of subsection 1 at least 30 days after the first class mailing or delivery of a written notice to the policyholder.

 

 

ANNIVERSARY CANCELLATION.

 

      Sec. 403.3.  A policy issued for a term longer than 1 year may be canceled by the insurer by giving notice 30 days prior to any anniversary date as provided in subsection 1 of section 403.4 of this act for nonrenewals.

 

 

NONRENEWAL.

 

      Sec. 403.4.  1.  Subject to subsection 2, a policyholder has a right to have his policy renewed, on the terms then being applied by the insurer to persons, similarly situated, for an additional period of time equivalent to the expiring term if the agreed term is 1 year or less, or for 1 year if the agreed term is 1 year or less, or for 1 year if the agreed term is longer than 1 year, unless at least 30 days prior to the date of expiration provided in the policy the insurer mails first class or delivers to him a notice of intention not to renew the policy beyond the agreed expiration date.

      2.  This section does not apply if the policyholder has accepted replacement coverage or has requested or agreed to nonrenewal, or if the policy is expressly designated as nonrenewable by a clause approved or deemed to be approved by the commissioner.

 

 

RENEWAL WITH ALTERED TERMS.

 

      Sec. 403.5.  If the insurer offers or purports to renew the policy but on different terms, including different rates, the policyholder shall, for 30 days after he receives notice calling his attention to the changes in the policy, have the option of canceling it. If he elects to cancel, the insurer shall refund to him the excess of the premium paid by him above the pro rata premium for the expired portion of the new term.

 

 

INFORMATION ABOUT GROUNDS.

 

      Sec. 403.6.  If a notice of cancellation or nonrenewal under sections 403.1 to 403.9, inclusive, of this act does not state with reasonable precision the facts on which the insurer’s decision is based, the insurer must supply that information within 5 days after receipt of a written request by the policyholder. No notice shall be effective unless it contains adequate information about the policyholder’s right to make such request.


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ê1971 Statutes of Nevada, Page 1726 (Chapter 660, AB 416)ê

 

INFORMATION ABOUT PLANS.

 

      Sec. 403.7.  No notice under sections 403.1 to 403.9, inclusive, of this act shall be effective unless it contains adequate instructions enabling the policyholder to apply for insurance through any voluntary or mandatory risk-sharing plan under sections 358 and 360 of this act existing at the time of the notice, for which the policyholder may be eligible.

 

 

IMMUNITY.

 

      Sec. 403.8.  There shall be no liability on the part of and no cause of action of any nature shall arise against any insurer, its authorized representative, its agents, its employees, or any firm, person or corporation furnishing to the insurer information as to reasons for cancellation or nonrenewal, for any statement made by them in complying with sections 403.1 to 403.9, inclusive, of this act, or for the providing of information pertaining thereto.

 

 

PROHIBITED CANCELLATION AND NONRENEWAL.

 

      Sec. 403.9.  No insurer shall cancel or refuse to renew an automobile liability insurance policy solely because of the age, residence, race, color, creed, national origin, ancestry or occupation of anyone who is an insured.

 

 

CHAPTER 17

 

LIFE INSURANCE AND ANNUITY CONTRACTS

 

      Sec. 404.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 405 to 444, inclusive, of this act.

 

 

SCOPE OF CHAPTER.

 

      Sec. 405.  This chapter, with the exception of section 443 of this act, applies only to contracts of life insurance, endowment and annuities, other than reinsurance, group life insurance and group annuities.

 

 

“ANNUITY” DEFINED.

 

      Sec. 406.  For the purposes of this code an “annuity” is a contract under which obligations are assumed to make periodic payments for a specific term or terms or where the making or continuance of all or some such payments, or the amount of any such payment, is dependent upon continuance of human life, except payments made pursuant to optional modes of settlement under the authority of section 106 of this act (“life insurance” defined). Such a contract which includes extra benefits of the kinds set forth in sections 105 (“health insurance” defined) and 106 (“life insurance” defined) of this act shall nevertheless be deemed to be an annuity if such extra benefits constitute a subsidiary or incidental part of the entire contract.


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ê1971 Statutes of Nevada, Page 1727 (Chapter 660, AB 416)ê

 

“INDUSTRIAL LIFE INSURANCE” DEFINED.

 

      Sec. 407.  For the purposes of this code, “industrial life insurance” is that form of life insurance written under policies of a face amount of $2,500 or less bearing the words “industrial policy” or “weekly premium policy” or words of similar import imprinted on the face thereof as part of the descriptive matter, and under which premiums are payable monthly or more often.

 

 

STANDARD PROVISIONS REQUIRED.

 

      Sec. 408.  1.  No policy of life insurance other than pure endowments, with or without return of premiums or of premiums and interest, shall be delivered or issued for delivery in this state unless it contains in substance all of the applicable provisions required by sections 409 to 420, inclusive, of this act. This section does not apply to annuity contracts or to any provision of a life insurance policy, or contract supplemental thereto, relating to disability benefits or to additional benefits in the event of death by accident or accidental means.

      2.  Any of such provisions or portions thereof not applicable to single premium or nonparticipating or term policies or insurance granted in exchange for lapsed or surrendered policies shall to that extent not be incorporated therein.

 

 

PAYMENT OF PREMIUMS.

 

      Sec. 409.  There shall be a provision relating to the time and place of payment of premiums.

 

 

GRACE PERIOD.

 

      Sec. 410.  There shall be a provision that a grace period of 30 days or, at the option of the insurer, of 1 month of not less than 30 days or of 4 weeks in the case of industrial life insurance policies the premiums for which are payable more frequently than monthly shall be allowed within which the payment of any premium after the first may be made, during which period of grace the policy shall continue in full force. The insurer may impose an interest charge not in excess of 6 percent per annum for the number of days of grace elapsing before the payment of the premium, and, whether or not such interest charge is imposed, if a claim arises under the policy during such period of grace the amount of any premium due or overdue, together with interest and any deferred installment of the annual premium, may be deducted from the policy proceeds. Grace shall date from the premium due date specified in the policy.

 

 

ENTIRE CONTRACT.

 

      Sec. 411.  There shall be a provision that except as otherwise expressly provided by law, the policy and the application therefor, if a copy of such application is endorsed upon or attached to the policy when issued, shall constitute the entire contract between the parties, and that all statements contained in the application shall, in the absence of fraud, be deemed representations and not warranties.


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ê1971 Statutes of Nevada, Page 1728 (Chapter 660, AB 416)ê

 

all statements contained in the application shall, in the absence of fraud, be deemed representations and not warranties.

 

 

INCONTESTABILITY.

 

      Sec. 412.  There shall be a provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of not more than 2 years after its date of issue, except for nonpayment of premiums, and, at the insurer’s option, provisions relating to benefits in the event of total and permanent disability and provisions granting additional benefits specifically against death by accident or accidental means.

 

 

MISSTATEMENT OF AGE.

 

      Sec. 413.  There shall be a provision that if the age of the insured or of any other person whose age is considered in determining the premium or benefit has been misstated, any amount payable or benefit accruing under the policy shall be such as the premium would have purchased at the correct age or ages.

 

 

DIVIDENDS.

 

      Sec. 414.  1.  There shall be a provision in participating policies that, beginning not later than the end of the third policy year, the insurer shall annually ascertain and apportion the divisible surplus, if any, that will accrue on the policy anniversary or other dividend date specified in the policy, provided the policy is in force and all premiums to that date are paid. Except as hereinafter provided, any dividend becoming payable shall at the option of the party entitled to elect such option be either:

      (a) Payable in cash; or

      (b) Applied to any one of such other dividend options as may be provided by the policy.

      If any such other dividend options are provided, the policy shall further state which option shall be automatically effective if such party has not elected some other option. If the policy specifies a period within which such other dividend option may be elected, such period shall be not less than 30 days following the date on which such dividend is due and payable. The annually apportioned dividend shall be deemed to be payable in cash within the meaning of paragraph (a), even though the policy provides that payment of such dividend is to be deferred for a specified period, provided such period does not exceed 6 years from the date of apportionment and that interest will be added to such dividend at a specified rate.

      2.  Renewable term policies of 10 years or less may provide that the surplus accrued to such policies shall be determined and apportioned each year after the second policy year, and accumulated during each renewal period, and that at the end of the renewal period, on renewal of the policy by the insured, the insurer shall apply the accumulated surplus as an annuity for the next succeeding renewal term in the reduction of premiums.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1729 (Chapter 660, AB 416)ê

 

annuity for the next succeeding renewal term in the reduction of premiums.

      3.  In participating industrial life insurance policies, in lieu of the provision required in subsection 1, there shall be a provision that, beginning not later than the end of the fifth policy year, the policy shall participate annually in the divisible surplus, if any, in the manner set forth in the policy.

      4.  This section does not apply to insurance issued under nonforfeiture provisions of lapsed or surrendered policies.

 

 

POLICY LOAN.

 

      Sec. 415.  1.  There shall be a provision that after 3 full years’ premiums have been paid and after the policy has a cash surrender value and while no premium is in default beyond the grace period for payment, the insurer will advance, on proper assignment or pledge of the policy and on the sole security thereof, at a specified or variable rate of interest as shall be specified by the commissioner, an amount equal to or, at the option of the party entitled thereto, less than the loan value of the policy. The loan value of the policy shall be at least equal to the cash surrender value at the end of the then-current policy year, and the insurer may deduct, either from such loan value or from the proceeds of the loan, any existing indebtedness not already deducted in determining such cash surrender value, including any interest then accrued but not due, any unpaid balance of the premium for the current policy year, and interest on the loan to the end of the current policy year. The policy may also provide that if interest on any indebtedness is not paid when due it shall then be added to the existing indebtedness and shall bear interest at the same rate, and that if and when the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value thereof, then the policy shall terminate and become void, but not until at least 30 days’ notice has been mailed by the insurer to the last address of record with the insurer, of the insured or other policy owner and of any assignee of record at the insurer’s home office. The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any premium to the insurer, for 3 months after application therefor. Such provision shall also contain a table showing in figures the loan values each year during the first 20 years of the policy, or during the term of the policy, whichever is shorter. The policy, at the insurer’s option, may provide for an automatic premium loan.

      2.  This section does not apply to term policies, or to term insurance benefits provided by rider or supplemental policy provisions or to industrial life insurance policies.

 

 

TABLE OF INSTALLMENTS.

 

      Sec. 416.  In case the policy provides that the proceeds may be payable in installments which are determinable at issue of the policy, there shall be a table showing the amounts of the guaranteed installments.


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ê1971 Statutes of Nevada, Page 1730 (Chapter 660, AB 416)ê

 

REINSTATEMENT.

 

      Sec. 417.  There shall be a provision that unless:

      1.  The policy has been surrendered for its cash surrender value; or

      2.  Its cash surrender value has been exhausted; or

      3.  The paid-up term insurance, if any, has expired,

the policy will be reinstated at any time within 3 years (or 2 years in the case of industrial life insurance policies) from the date of premium default upon written application therefor, the production of evidence of insurability satisfactory to the insurer, the payment of all premiums in arrears and the payment or reinstatement of any other indebtedness to the insurer upon the policy, all with interest at a rate not exceeding 6 percent per annum compounded annually.

 

 

PAYMENT OF CLAIMS.

 

      Sec. 418.  There shall be a provision that when the benefits under the policy become payable by reason of the death of the insured, settlement shall be made upon receipt of due proof of death and, at the insurer’s option, surrender of the policy and proof of the interest of the claimant or surrender of proof. If an insurer specifies a particular period prior to the expiration of which settlement shall be made, such period shall not exceed 2 months from the receipt of such proofs.

 

 

BENEFICIARY: INDUSTRIAL POLICIES.

 

      Sec. 419.  1.  An industrial life insurance policy shall have the name of the beneficiary designated thereon or in the application or other form if attached to the policy, with a reservation of the right to designate or change the beneficiary after the issuance of the policy, unless such beneficiary is irrevocably designated.

      2.  The policy may also provide that:

      (a) No designation or change of beneficiary shall be binding on the insurer until endorsed on the policy by the insurer, and that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured.

      (b) If the beneficiary designated in the policy does not make a claim under the policy or does not surrender the policy with due proof of death within the period stated in the policy, which shall not be less than 30 days after the death of the insured, or if the beneficiary is the estate of the insured, or is a minor, or dies before the insured, or is not legally competent to give a valid release, then the insurer may make any payment thereunder to the executor or administrator of the insured, or to any relative of the insured by blood or legal adoption or connection by marriage, or to any person appearing to the insurer to be equitably entitled thereto by reason of having been named beneficiary, or by reason of having incurred expense for the maintenance, medical attention or burial of the insured.

      3.  The policy may also include a similar provision applicable to any other payment due under the policy.


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ê1971 Statutes of Nevada, Page 1731 (Chapter 660, AB 416)ê

 

TITLE.

 

      Sec. 420.  There shall be a title on the policy, briefly describing the same.

 

 

EXCLUDED OR RESTRICTED COVERAGE.

 

      Sec. 421.  A clause in any policy of life insurance providing that such policy shall be incontestable after a specified period shall preclude only a contest of the validity of the policy, and shall not preclude the assertion at any time of defenses based upon provisions in the policy which exclude or restrict coverage, whether or not such restrictions or exclusions are excepted in such clause.

 

 

STANDARD PROVISIONS: ANNUITY AND PURE ENDOWMENT CONTRACTS.

 

      Sec. 422.  1.  No annuity or pure endowment contract, other than a reversionary annuities (also called survivorship annuities) or group annuities and except as stated in this section, shall be delivered or issued for delivery in this state unless it contains in substance each of the provisions specified in sections 423 to 428, inclusive, of this act. Any of such provisions not applicable to single-premium annuities or single-premium pure endowment contracts shall not, to that extent, be incorporated therein.

      2.  This section does not apply to contracts for deferred annuities included in, or upon the lives of beneficiaries under, life insurance policies.

 

 

ANNUITIES: GRACE PERIOD.

 

      Sec. 423.  In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision that there shall be a period of grace of 1 month, but not less than 30 days, within which any stipulated payment to the insurer falling due after the first may be made, subject at the option of the insurer to an interest charge thereon at a rate to be specified in the contract but not exceeding 6 percent per annum for the number of days of grace elapsing before such payment, during which period of grace the contract shall continue in full force; but in case a claim arises under the contract on account of death prior to expiration of the period of grace before the overdue payment to the insurer or the deferred payments of the current contract year, if any, are made, the amount of such payments, with interest on any overdue payments, may be deducted from any amount payable under the contract in settlement.

 

 

ANNUITIES: INCONTESTABILITY.

 

      Sec. 424.  If any statements, other than those relating to age, sex and identity are required as a condition to issuing an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, and subject to section 426 of this act, there shall be a provision that the contract shall be incontestable after it has been in force during the lifetime of the person or of each of the persons as to whom such statements are required, for a period of 2 years from its date of issue, except for nonpayment of stipulated payments to the insurer; and at the option of the insurer such contract may also except any provisions relative be benefits in the event of disability and any provisions which grant insurance specifically against death by accident or accidental means.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1732 (Chapter 660, AB 416)ê

 

and subject to section 426 of this act, there shall be a provision that the contract shall be incontestable after it has been in force during the lifetime of the person or of each of the persons as to whom such statements are required, for a period of 2 years from its date of issue, except for nonpayment of stipulated payments to the insurer; and at the option of the insurer such contract may also except any provisions relative be benefits in the event of disability and any provisions which grant insurance specifically against death by accident or accidental means.

 

 

ANNUITIES: ENTIRE CONTRACT.

 

      Sec. 425.  In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision that the contract shall constitute the entire contract between the parties or, if a copy of the application is endorsed upon or attached to the contract when issued, a provision that the contract and the application therefor shall constitute the entire contract between the parties.

 

 

ANNUITIES: MISSTATEMENT OF AGE OR SEX.

 

      Sec. 426.  In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision that if the age or sex of the person or persons upon whose life or lives the contract is made, or of any of them, has been misstated, the amount payable or benefits accruing under the contract shall be such as the stipulated payment or payments to the insurer would have purchased according to the correct age or sex and that if the insurer makes or has made any overpayment or overpayments on account of any such misstatement, the amount thereof, with interest at the rate to be specified in the contract but not exceeding 6 percent per annum, may be charged against the current or next succeeding payment or payments to be made by the insurer under the contract.

 

 

ANNUITIES: DIVIDENDS.

 

      Sec. 427.  If an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, is participating, there shall be a provision that the insurer shall annually ascertain and apportion any divisible surplus accruing on the contract.

 

 

ANNUITIES: REINSTATEMENT.

 

      Sec. 428.  In an annuity or pure endowment contract, other than a reversionary or group annuity, there shall be a provision that the contract may be reinstated at any time within 1 year from the default in making stipulated payments to the insurer, unless the cash surrender value has been paid, but all overdue stipulated payments and any indebtedness to the insurer on the contract shall be paid or reinstated with interest thereon at a rate to be specified in the contract but not exceeding 6 percent per annum payable annually, and in cases where applicable the insurer may also include a requirement of evidence of insurability satisfactory to the insurer.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1733 (Chapter 660, AB 416)ê

 

also include a requirement of evidence of insurability satisfactory to the insurer.

 

 

STANDARD PROVISIONS: REVERSIONARY ANNUITIES.

 

      Sec. 429.  1.  Except as stated in this section, no contract for a reversionary annuity shall be delivered or issued for delivery in this state unless it contains in substance each of the following provisions:

      (a) Any such reversionary annuity contract shall contain the provisions specified in sections 423 to 427, inclusive, of this act except that under section 423 the insurer may at its option provide for an equitable reduction of the amount of the annuity payments in settlement of an overdue payment in lieu of providing for deduction of such payments from an amount payable upon settlement under the contract.

      (b) In such reversionary annuity contracts there shall be a provision that the contract may be reinstated at any time within 3 years from the date of default in making stipulated payments to the insurer, upon production of evidence of insurability satisfactory to the insurer, and upon condition that all overdue payments and any indebtedness to the insurer on account of the contract are paid, or, within the limits permitted by the then cash values of the contract, reinstated, with interest as to both payments and indebtedness at a rate to be specified in the contract but not exceeding 6 percent per annum compounded annually.

      2.  This section does not apply to group annuities or to annuities included in life insurance policies, and any of such provisions not applicable to single premium annuities shall not to that extent be incorporated therein.

 

 

LIMITATION OF LIABILITY.

 

      Sec. 430.  1.  No policy of life insurance shall be delivered or issued for delivery in this state if it contains any of the following provisions:

      (a) A provision limiting the time within which an action at law or in equity may be commenced on such a policy to less than 3 years after the cause of action has accrued.

      (b) A provision which excludes or restricts liability for death caused in a certain specified manner or occurring while the insured has a specified status, except that a policy may contain provisions excluding or restricting coverage as specified therein in the event of death under any one or more of the following circumstances:

             (1) Death as a result, directly or indirectly, of war, declared or undeclared, or of action by military forces, or of any act or hazard of such war or action, or of service in the military, naval or air forces or in civilian forces auxiliary thereto, or from any cause while a member of such military, naval or air forces of any country at war, declared or undeclared, or of any country engaged in such military action;

             (2) Death as a result of aviation or any air travel or flight;

             (3) Death as a result of a specified hazardous occupation or occupations or avocation;

             (4) Death while the insured is a resident outside the continental United States of America and Canada; or


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ê1971 Statutes of Nevada, Page 1734 (Chapter 660, AB 416)ê

 

             (5) Death within 2 years from the date of issue of the policy as a result of suicide, while sane or insane.

      2.  A policy which contains any exclusion or restriction pursuant to paragraph (b) shall also provide that in the event of death under the circumstances to which any such exclusion or restriction is applicable, the insurer will pay an amount not less than a reserve determined according to the Commissioners reserve valuation method upon the basis of the mortality table and interest rate specified in the policy for the calculation of nonforfeiture benefits (or if the policy provides for no such benefits, computed according to a mortality table and interest rate determined by the insurer and specified in the policy) with adjustment for indebtedness or dividend credit.

      3.  This section does not apply to group life insurance, health insurance, reinsurance or annuities, or to any provision in a life insurance policy or contract supplemental thereto relating to disability benefits or to additional benefits in the event of death by accident or accidental means.

      4.  Nothing contained in this section prohibits any provision which in the opinion of the commissioner is more favorable to the policy holder than a provision permitted by this section.

 

 

PROHIBITED PROVISIONS.

 

      Sec. 431.  1.  No life insurance policy, other than industrial life insurance, shall be delivered or issued for delivery in this state, if it contains any of the following provisions:

      (a) A provision by which the policy purports to be issued or to take effect more than 1 year before the original application for the insurance was made.

      (b) A provision for any mode of settlement at maturity of the policy of less value than the amount insured under the policy, plus dividend additions, if any, less any indebtedness to the insurer on or secured by the policy and less any premium that may by the terms of the policy be deducted.

      (c) A provision to the effect that the agent soliciting the insurance is the agent of the person insured under the policy, or making the acts or representations of such agent binding upon the person so insured under the policy.

      2.  No policy of industrial life insurance shall contain any of the following provisions:

      (a) A provision by which the insurer may deny liability under the policy for the reason that the insured has previously obtained other insurance from the same insurer.

      (b) A provision giving the insurer the right to declare the policy void because the insured has had any disease or ailment, whether specified or not, or because the insured has received institutional, hospital, medical or surgical treatment or attention, except a provision which gives the insurer the right to declare the policy void if the insured has, within 2 years prior to the issuance of the policy, received institutional, hospital, medical or surgical treatment or attention and if the insured or claimant under the policy fails to show that the condition occasioning such treatment or attention was not of a serious nature or was not material to the risk.


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ê1971 Statutes of Nevada, Page 1735 (Chapter 660, AB 416)ê

 

under the policy fails to show that the condition occasioning such treatment or attention was not of a serious nature or was not material to the risk.

      (c) A provision giving the insurer the right to declare the policy void because the insured has been rejected for insurance, unless such right is conditioned upon a showing by the insurer that knowledge of such rejection would have led to a refusal by the insurer to make such contract.

 

 

PROVISIONS REQUIRED BY LAW OF OTHER JURISDICTION.

 

      Sec. 432.  The policies of a foreign life insurer when issued in this state may contain any provision which the law of the state, territory, district or country under which the insurer is organized prescribes shall be in such policies, and the policies of a domestic life insurer may, when issued or delivered in any other state, territory, district or country, contain any provisions required by the law thereof, anything in this chapter to the contrary notwithstanding.

 

 

STANDARD NONFORFEITURE LAW.

 

      Sec. 433.  1.  Sections 433 to 440, inclusive, of this act shall be known as the Standard Nonforfeiture Law. Except as provided in sections 437 and 438 of this act, sections 433 to 440, inclusive, of this act shall apply to policies of life insurance issued on and after January 1, 1962, unless the commissioner deferred such application to a date not later than January 1, 1964, with respect to an insurer for good cause shown.

      2.  In the case of policies issued on or after the date sections 433 to 440, inclusive, of this act became applicable as defined in subsection 1, no policy of life insurance, except as stated in section 440 of this act, shall be issued or delivered in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the commissioner are at least as favorable to the defaulting or surrendering policy holder:

      (a) In the event of default in any premium payment, the insurer will grant, upon proper request made not later than 60 days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of the value specified in sections 433 to 440, inclusive, of this act.

      (b) Upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums have been paid for at least 3 full years in the case of ordinary insurance or 5 full years in the case of industrial insurance, the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of the amount specified in sections 433 to 440, inclusive, of this act.

      (c) A specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make such election elects another available option not later than 60 days after the due date of the premium in default.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1736 (Chapter 660, AB 416)ê

 

      (d) If the policy has become paid up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the insurer will pay, upon surrender of the policy within 30 days after any policy anniversary, a cash surrender value of the amount specified in sections 433 to 440, inclusive, of this act.

      (e) A statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first 20 policy years or during the term of the policy, whichever is shorter. Such values and benefits shall be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the insurer on the policy.

      (f) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered, and an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the insurer on the policy.

      (g) If a detailed statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that such method of computation has been filed with the insurance supervisory officer of the state in which the policy is delivered.

      (h) A statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively shown in the policy.

      3.  Any of the provisions required by subsection 2 which are not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy.

      4.  Each insurer shall reserve the right to defer the payment of any cash surrender value for a period of 6 months after demand therefor with surrender of the policy.

 

 

CASH SURRENDER VALUE.

 

      Sec. 434.  1.  Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by section 433 of this act, shall be an amount not less than the excess, if any, of the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of:

      (a) The then-present value of the adjusted premiums, as defined in sections 436 to 438, inclusive, of this act, corresponding to premiums which would have fallen due on and after such anniversary; and

      (b) The amount of any indebtedness to the insurer on the policy.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1737 (Chapter 660, AB 416)ê

 

      2.  Any cash surrender value available within 30 days after any policy anniversary under any policy paid up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit, whether or not required by section 433 of this act, shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the insurer on the policy.

 

 

PAID-UP NONFORFEITURE BENEFIT.

 

      Sec. 435.  Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if none is provided for, that cash surrender value which would have been required by sections 433 to 440, inclusive, of this act, in the absence of the condition that premiums shall have been paid for at least a specified period.

 

 

CALCULATION OF ADJUSTED PREMIUMS.

 

      Sec. 436.  1.  Except as provided in subsection 4, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding any extra premiums charged because of impairments or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of:

      (a) The then-present value of the future guaranteed benefits provided for by the policy;

      (b) Two percent of the amount of insurance, if the insurance is uniform in amount, or of the equivalent uniform amount, as defined in this section, if the amount of insurance varies with duration of the policy;

      (c) Forty percent of the adjusted premium for the first policy year; and

      (d) Twenty-five percent of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less.

      2.  In applying the percentages specified in paragraphs (c) and (d) of subsection 1, no adjusted premium shall be deemed to exceed 4 percent of the amount of insurance or uniform amount equivalent thereto. The date of issue of a policy for the purpose of this section shall be the date as of which the rated age of the insured is determined.

      3.  In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for the purpose of this section shall be deemed to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy, except that, in the case of a policy providing a varying amount of insurance issued on the life of a child under 10 years of age, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age 10 were the amount provided by such policy at age 10.


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ê1971 Statutes of Nevada, Page 1738 (Chapter 660, AB 416)ê

 

varying amount of insurance issued on the life of a child under 10 years of age, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age 10 were the amount provided by such policy at age 10.

      4.  The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to (A) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during the period for which premiums for such term insurance benefits are payable, by (B) the adjusted premiums for such term insurance, the foregoing items (A) and (B) being calculated separately and as specified in subsections 1 and 2, except that, for the purposes of paragraphs (b), (c) and (d) of subsection 1, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (B) shall be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in (A).

      5.  Except as provided in sections 437 and 438 of this act, all adjusted premiums and present values referred to in sections 433 to 440, inclusive, of this act shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1941 Standard Ordinary Mortality Table, but for any category or ordinary insurance on female risks, adjusted premiums and present values may be calculated according to an age not more than 3 years younger than the actual age of the insured, and such calculations for all policies of industrial insurance shall be made on the basis of the 1941 Standard Industrial Mortality Table. All calculations shall be made on the basis of the rate of interest, not exceeding 3.5 percent per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, but in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than 130 percent of the rates of mortality according to such applicable table. The calculation of any adjusted premiums and present values for insurance issued on a substandard basis may be based on such other table of mortality as may be specified by the insurer and approved by the commissioner.

 

 

BASIS FOR CALCULATING ADJUSTED PREMIUMS ON INDUSTRIAL INSURANCE AFTER OPERATIVE DATE OF THIS SECTION.

 

      Sec. 437.  1.  In the case of industrial policies issued on or after the operative date of this section, as provided in subsection 2, all adjusted premiums and present values referred to in sections 433 through 440, inclusive, of this act shall be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table and the rate of interest, not exceeding 3.5 percent per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, except that:


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ê1971 Statutes of Nevada, Page 1739 (Chapter 660, AB 416)ê

 

      (a) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1961 Industrial Extended Term Insurance Table.

      (b) For insurance issued on a substandard basis, the calculations of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the insurer and approved by the commissioner.

      2.  After July 1, 1963, any insurer may file with the commissioner a written notice of its election to comply with the provisions of this section after a specified date before January 1, 1968. After the filing of such notice, upon such specified date, this section shall become operative with respect to the industrial policies thereafter issued by such insurer. If an insurer makes no such election, the operative date of this section for such insurer shall be January 1, 1968.

 

 

BASIS FOR CALCULATING ADJUSTED PREMIUMS AND PRESENT VALUES ON ORDINARY POLICIES ISSUED AFTER OPERATIVE DATE OF THIS SECTION; ELECTION TO COME UNDER THIS SECTION; OPERATIVE DATE OF THIS SECTION AS TO INSURER FAILING TO MAKE ELECTION.

 

      Sec. 438.  1.  In the case of ordinary policies issued on or after the operative date of this section, all adjusted premiums and present values referred to in section 433 to 440, inclusive, of this act, shall be calculated on the basis of the Commissioners 1958 Standard Ordinary Mortality Table and the rate of interest, not exceeding 3.5 percent per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, except that:

      (a) For any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than 3 years younger than the actual age of the insured;

      (b) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1958 Extended Term Insurance Table.

      (c) The calculation of adjusted premiums and present values for insurance issued on a substandard basis may be based on such other table of mortality as may be specified by the insurer and approved by the commissioner.

      2.  Any insurer may file with the commissioner a written notice of its election to comply with the provisions of this section after a specified date before January 1, 1966. After the filing of such notice, this section shall become operative upon such specified date with respect to the ordinary policies thereafter issued by such insurer.

      3.  If an insurer makes no such election, the operative date of this section for such insurer shall be January 1, 1966.


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ê1971 Statutes of Nevada, Page 1740 (Chapter 660, AB 416)ê

 

CALCULATION OF CASH SURRENDER VALUE AND PAID-UP NONFORFEITURE BENEFIT.

 

      Sec. 439.  1.  Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary.

      2.  All values referred to in sections 434 to 438, inclusive, of this act, may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death.

      3.  The net value of any paid-up additions, other than paid-up term additions, shall not be less than the dividends used to provide such additions.

      4.  Notwithstanding the provisions of section 434 of this act, additional benefits payable:

      (a) In the event of death or dismemberment by accident or accidental means;

      (b) In the event of total and permanent disability;

      (c) As reversionary annuity or deferred reversionary annuity benefits;

      (d) As term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, sections 433 to 440, inclusive, of this act, would not apply; and

      (e) As term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child’s age is 26, is uniform in amount after the child’s age is 1, and has not become paid up by reason of the death of a parent of the child; and

      (f) As other policy benefits additional to life insurance and endowment benefits; and

      (g) Premiums for all such additional benefits,

shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by sections 433 to 440, inclusive, of this act, and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.

 

 

INSURANCE TO WHICH SECTIONS 433 TO 439 NOT APPLICABLE.

 

      Sec. 440.  Sections 433 to 439, inclusive, of this act shall not apply to any:

      1.  Reinsurance, group insurance, pure endowment, annuity or reversionary annuity contract;

      2.  Term policy of uniform amount, or the renewal thereof, of 15 years or less expiring before age 66, for which uniform premiums are payable during the entire term of the policy; or

      3.  Term policy of decreasing amount on which each adjusted premium, calculated as specified in sections 436 to 438, inclusive, of this act, is less than the adjusted premium, calculated in the same manner, on a 15-year term policy issued at the same age and for the same initial amount of insurance.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1741 (Chapter 660, AB 416)ê

 

      4.  Policy which shall be delivered outside this state by an agent or other representative of the company issuing the policy.

 

 

INCONTESTABILITY, LIMITATION OF LIABILITY AFTER REINSTATEMENT, OR AS TO DISABILITY AND ACCIDENTAL DEATH BENEFITS.

 

      Sec. 441.  1.  A reinstated policy of life insurance or an annuity contract may be contested on account of fraud or misrepresentation of facts material to the reinstatement only for the same period following reinstatement and with the same conditions and exceptions as the policy provides with respect to contestability after original issuance.

      2.  When any life insurance policy or annuity contract is reinstated such reinstated policy or contract may exclude or restrict liability to the same extent that such liability could have been or was excluded or restricted when the policy or contract was originally issued, and such exclusion or restriction shall be effective from the date of reinstatement.

      3.  After 3 years from the date of issue of a life insurance policy or of a supplemental contract thereto providing total and permanent disability benefits or additional benefits in the event of death by accident or accidental means, no misstatements, except fraudulent misstatements, made by the applicant in the application for the policy shall be used to deny a claim for such total and permanent disability commencing, or for such additional benefits in the event of death by accident or accidental means occurring, after the expiration of such 3-year period. This subsection shall not be so construed as to preclude the assertion at any time of defenses based upon provisions with respect to such benefits which exclude or restrict coverage.

 

 

PARTICIPATING, NONPARTICIPATING POLICIES: ACCOUNTING, ALLOCATIONS, DIVIDENDS.

 

      Sec. 442.  1.  A life insurer issuing both participation and nonparticipating policies shall maintain such accounting records as are necessary for it to determine dividends to participating policy holders on an equitable basis.

      2.  For the purposes of such accounting records the insurer shall make a reasonable allocation between participating and nonparticipating policies of the expenses of such general operations or functions as are jointly shared. Any allocation of expense between the respective categories shall be made upon a reasonable basis, to the end that each category shall bear a just portion of joint expense involved in the administration of the business of such category.

      3.  No policy after the effective date of this act shall provide for, and no life insurer or representative shall, after the effective date of this act, knowingly offer or promise payment, credit or distribution of participating “dividends,” “earnings,” “profits” or “savings,” by whatever name called, to participating policies out of such profits, earnings or savings on nonparticipating policies. This subsection does not restrict the generality of section 320 of this act (rebates).


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1742 (Chapter 660, AB 416)ê

 

SEPARATE ACCOUNTS.

 

      Sec. 443.  1.  A domestic life insurer may establish one or more separate accounts, and may allocate thereto amounts (including without limitation proceeds applied under optional modes of settlement or under dividend options) to provide for life insurance or annuities (and benefits incidental thereto), payable in fixed or variable amounts or both, subject to the following:

      (a) The income, gains and losses, realized or unrealized, from assets allocated to a separate account shall be credited to or charged against the account, without regard to other income, gains or losses of the company.

      (b) Except as may be provided with respect to reserves for guaranteed benefits and funds referred to in paragraph (c):

             (1) Amounts allocated to any separate account and accumulations thereon may be invested and reinvested without regard to any requirements or limitations prescribed by the laws of this state governing the investments of life insurance companies; and

             (2) The investments in such separate account or accounts shall not be taken into account in applying the investment limitations otherwise applicable to the investments of the company.

      (c) Except with the approval of the commissioner and under such conditions as to investments and other matters as he may prescribe, which shall recognize the guaranteed nature of the benefits provided, reserves for:

             (1) Benefits guaranteed as to dollar amount and duration; and

             (2) Funds guaranteed as to principal amount or stated rate of interest,

shall not be maintained in a separate account.

      (d) Unless otherwise approved by the commissioner, assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, then as provided under the terms of the contract or the rules or other written agreement applicable to such separate account; but unless otherwise approved by the commissioner, the portion of any of the assets of such separate account equal to the company’s reserve liability with regard to the guaranteed benefits and funds referred to in paragraph (c) shall be valued in accordance with the rules otherwise applicable to the company’s assets.

      (e) Amounts allocated to a separate account in the exercise of the power granted by this section shall be owned by the company, and the company shall not be, nor hold itself out to be, a trustee with respect to such amounts. If and to the extent so provided under the applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the company may conduct.

      (f) No sale, exchange or other transfer of assets may be made by a company between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, in case of a transfer into a separate account, such transfer is made solely to establish the account pursuant to subsection 6 or to support the operation of the contracts with respect to the separate account to which the transfer is made, and unless such transfer, whether into or from a separate account, is made:

 


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1743 (Chapter 660, AB 416)ê

 

to establish the account pursuant to subsection 6 or to support the operation of the contracts with respect to the separate account to which the transfer is made, and unless such transfer, whether into or from a separate account, is made:

             (1) By a transfer of cash; or

             (2) By a transfer of securities having a readily determinable market value, provided that such transfer of securities is approved by the commissioner.

The commissioner may approve other transfers among such accounts if, in his opinion, such transfers would not be inequitable.

      (g) To the extent such company deems it necessary to comply with any applicable federal or state laws, such company, with respect to any separate account, including without limitation any separate account which is a management investment company or a unit investment trust, may provide for persons having an interest therein appropriate voting and other rights and special procedures for the conduct of the business of such account, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants and the selection of a committee, the members of which need not be otherwise affiliated with such company, to manage the business of such account.

      2.  Any contract providing benefits payable in variable amounts delivered or issued for delivery in this state, including a group contract and any certificate issued thereunder, shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of such variable benefits. Any such contract under which the benefits vary to reflect investment experience, including a group contract and any certificate in evidence of variable benefits issued thereunder, shall state that such dollar amount will so vary and shall contain on its first page a statement to the effect that the benefits thereunder are on a variable basis.

      3.  No company shall deliver or issue for delivery within this state variable contracts unless it is licensed or organized to do a life insurance or annuity business in this state, and the commissioner is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this state. In this connection, the commissioner shall consider among other things:

      (a) The history and financial condition of the company;

      (b) The character, responsibility and fitness of the officers and directors of the company; and

      (c) The law and regulations under which the company is authorized in the state of domicile to issue variable contracts.

If the company is a subsidiary of an admitted life insurance company, or affiliated with such company through common management or ownership, it may be deemed by the commissioner to have met the provisions of this subsection if either it or the parent or the affiliated company meets the requirements hereof.

      4.  Notwithstanding any other provision of law, the commissioner has sole authority to regulate the issuance and sale of variable contracts, and to issue such reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of this section.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1744 (Chapter 660, AB 416)ê

 

to issue such reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of this section.

      5.  Except for sections 423, 428 and 429 of this act in the case of a variable annuity contract and sections 410, 415, 416, 417, 433 through 440, inclusive, and 458 of this act in the case of a variable life insurance policy and except as otherwise provided in this code, all pertinent provisions of this code shall apply to separate accounts and contracts relating thereto. Any individual variable life insurance contract, delivered or issued for delivery in this state, shall contain grace, reinstatement and nonforfeiture provisions appropriate to such a contract. Any individual variable annuity contract, delivered or issued for delivery in this state, shall contain grace and reinstatement provisions appropriate to such a contract. The reserve liability for variable contracts shall be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.

      6.  A domestic life insurer which establishes one or more separate accounts pursuant to this section may participate therein by allocating and contributing to such separate account funds which otherwise might be invested pursuant to subsection 1 of section 139, and section 145 of this act. The insurer shall have a proportionate interest in any such account, along with all other participating contract holders, to the extent of its participation therein, and with respect thereto shall also be subject to all the provisions of section 155 of this act applicable to separate account contract holders generally. The aggregate amount so allocated or contributed by such an insurer to one or more separate accounts shall not, without the consent of the commissioner, exceed the greater of:

      (a) One hundred thousand dollars;

      (b) One percent of its admitted assets as of December 31 next preceding; or

      (c) Five percent of its surplus as to policy holders as of December 31 next preceding.

      All funds allocated or contributed by the insurer to a separate account for the purpose of participation therein shall be included in applying the limitations upon investments otherwise specified in this code. The insurer shall be entitled to withdraw at any time in whole or in part its participation in any separate account to which funds have been allocated or contributed and to receive upon withdrawal its proportional share of the value of the assets of the separate account at the time of withdrawal.

 

 

PROHIBITED POLICY PLANS.

 

      Sec. 444.  1.  No life insurer shall after the effective date of this act deliver or issue for delivery in this state:

      (a) As part of or in combination with any life insurance, endowment or annuity contract, any agreement or plan, additional to the rights, dividends and benefits arising out of any such contract, which provides for the accumulation of profits over a period of years and for payment of all or any part of such accumulated profits only to members or policy holders of a designated group or class who continue as members or policy holders until the end of a specified or ascertainable period of years.


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ê1971 Statutes of Nevada, Page 1745 (Chapter 660, AB 416)ê

 

holders of a designated group or class who continue as members or policy holders until the end of a specified or ascertainable period of years.

      (b) Any “registered” policy; that is, any policy (other than one “registered” as a security under applicable state or federal law) purporting to be “registered” or otherwise specially recorded, with any agency of the State of Nevada, or of any other state, or with any bank, trust company, escrow company or other institution other than the insurer, or purporting that any reserves, assets or deposits are held, or will be so held, for the special benefit or protection of the holder of such policy, by or through any such agency or institution.

      (c) Any policy or contract under which any part of the premium or of funds or values arising from the policy or contract or from investment of reserves, or from mortality savings, lapses or surrenders, in excess of the normal reserves or amounts required to pay death, endowment and nonforfeiture benefits in respective amounts as specified in or pursuant to the policy or contract, are on a basis not involving insurance or life contingency features:

             (1) To be placed in special funds or segregated accounts or specially designated places; or

             (2) To be invested in specially designated investments or types thereof,

and the funds or earnings thereon to be divided among the holders of such policies or contracts, or their beneficiaries or assignees. This paragraph does not apply to any contract authorized under section 443 of this act.

      (d) Any policy providing for the segregation of policy holders into mathematical groups and providing benefits for a surviving policy holder arising out of the death of another policy holder of such group, or under any other similar plan.

      (e) Any policy providing benefits or values for surviving or continuing policy holders contingent upon the lapse or termination of the policies of other policy holders, whether by death or otherwise.

      (f) Any policy providing that one the death of anyone not specifically named therein, the owner or beneficiary of the policy shall receive the payment or granting of anything of value. This provision shall not be deemed to prohibit family policies insuring unspecified members of a family, nor be deemed to prohibit payment to unspecified beneficiaries of a class which has been expressly designated as such by the insured or policy owner.

      (g) Any policy containing or referring to one or more of the following provisions or statements:

             (1) Investment returns or profit sharing, other than as a participation in the divisible surplus of the insurer under a regular participation provision as provided for in section 414 of this act.

             (2) Special treatment in the determination of any dividend that may be paid as to such policy.

             (3) Reference to premiums as “deposits.”

             (4) Relating policy holder interest or returns to those of stock holders.

             (5) That the policy holder as a member of a select group will be entitled to extra benefits or extra dividends not available to policy holders generally.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1746 (Chapter 660, AB 416)ê

 

entitled to extra benefits or extra dividends not available to policy holders generally.

      2.  This section does not prohibit the provision, payment, allowance or apportionment of regular dividends or “savings” under regular participating forms of policies or contracts.

 

 

CHAPTER 18

 

GROUP LIFE INSURANCE

 

      Sec. 445.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 446 to 471, inclusive, of this act.

 

 

SHORT TITLE; SCOPE OF CHAPTER.

 

      Sec. 446.  1.  This chapter may be known and cited as the Group Life Insurance Law.

      2.  This chapter applies only to group life insurance and wholesale life insurance.

      3.  This chapter does not apply to any group life insurance contract entered into or issued prior to the effective date of this act, or to any extensions, renewals or modifications thereof or amendments thereto whenever made.

 

 

“WHOLESALE LIFE INSURANCE” DEFINED.

 

      Sec. 447.  1.  As used in this code, “wholesale life insurance” is that plan of life insurance, other than salary savings life insurance or pension trust insurance and annuities, issued to:

      (a) Three or more employees of any corporation, copartnership or individual employer or any governmental corporation, agency or department thereof; or

      (b) Ten or more members, employees or employees of members of any trade or professional association, or of a labor union, or of any association of members in the same or related occupations, profession or industry having had an active existence for at least 2 years, where such association or union has a constitution or bylaws and is formed in good faith for purposes other than that of obtaining insurance,

where such persons, with or without their dependents are issued the same form of an individual policy on the plan, varying only as to amounts of coverage applied for by such persons and under an arrangement whereby the premiums on such policies may be paid to the insurer periodically by the employer, with or without payroll deductions, or by the insured or association or union for its members, or by some designated person acting on behalf of such employer, association or union. The term “employees” as used in this section shall be deemed to include the officers, managers, employees and retired employees of the employer and the individual proprietor or partners if the employer is an individual or partnership.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1747 (Chapter 660, AB 416)ê

 

      2.  Each policy issued under this section shall provide that the coverage shall terminate when the insured individual no longer qualifies for such policy under this section; but the policy may provide that it may be continued in force or be replaced with another policy if the premium, benefits and other relevant factors of the continued or replacement policy are the same as those of a similar individual policy not issued under or pursuant to this section.

 

 

GROUP CONTRACTS MUST MEET GROUP REQUIREMENTS.

 

      Sec. 448.  1.  No life insurance policy shall be delivered or issued for delivery in this state insuring the lives of more than one individual unless it is:

      (a) On a group formed for a purpose other than that of obtaining insurance; and

      (b) In compliance with the other applicable provisions of this chapter.

      2.  Subsection 1 does not apply to life insurance policies insuring only individuals:

      (a) Related by blood, marriage or legal adoption; or

      (b) Having a common interest through ownership of a business enterprise, or a substantial legal interest or equity therein, and who are actively engaged in the management thereof; or

      (c) Otherwise having an insurance interest in each other’s lives.

 

      Secs. 449 to 456.  [There are no sections 449 to 456, inclusive.]

 

 

PROVISIONS REQUIRED IN GROUP CONTRACTS.

 

      Sec. 457.  No policy of group life insurance shall be delivered in this state unless it contains in substance the provisions set forth in sections 457 to 468, inclusive, of this act or provisions which in the opinion of the commissioner are more favorable to the persons insured, or at least as favorable to the persons insured and more favorable to the policy holder; except:

      1.  Sections 463 to 467, inclusive, of this act do not apply to policies issued to a creditor to insure debtors of such creditor;

      2.  The standard provisions required for individual life insurance policies do not apply to group life insurance policies; and

      3.  If the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision or provisions which in the opinion of the commissioner is or are equitable to the insured persons and to the policy holder; but nothing in this subsection shall be construed to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies.

 

 

GRACE PERIOD.

 

      Sec. 458.  The group life insurance policy shall contain a provision that the policy holder is entitled to a grace period of 31 days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policy holder has given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1748 (Chapter 660, AB 416)ê

 

the death benefit coverage shall continue in force, unless the policy holder has given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policy holder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during such grace period.

 

 

INCONTESTABILITY.

 

      Sec. 459.  The group life insurance policy shall contain a provision that the validity of the policy shall not be contested, except for nonpayment of premium, after it has been in force for 2 years from its date of issue; and that no statement made by any person insured under the policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of 2 years during such person’s lifetime nor unless it is contained in a written instrument signed by him.

 

 

APPLICATION: STATEMENTS DEEMED REPRESENTATIONS.

 

      Sec. 460.  The group life insurance policy shall contain a provision:

      1.  That a copy of the application, if any, of the policy holder shall be attached to the policy when issued and become a part of the contract;

      2.  That all statements made by the policy holder or by the persons insured shall be deemed representations and not warranties; and

      3.  That no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or to his beneficiary.

 

 

INSURABILITY.

 

      Sec. 461.  The group life insurance policy shall contain a provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of his coverage.

 

 

MISSTATEMENT OF AGE.

 

      Sec. 462.  The group life insurance policy shall contain a provision specifying an equitable adjustment of premiums or of benefits or both to be made if the age of a person insured has been misstated, such provision to contain a clear statement of the method of adjustment to be used.

 

 

PAYMENT OF BENEFITS.

 

      Sec. 463.  The group life insurance policy shall contain a provision that any sum becoming due by reason of the death of the person insured shall be payable to the beneficiary designated by the person insured, subject to the provision of the policy if there is no designated beneficiary, as to all or any part of such sum, living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of such sum not exceeding $500 to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1749 (Chapter 660, AB 416)ê

 

shall be payable to the beneficiary designated by the person insured, subject to the provision of the policy if there is no designated beneficiary, as to all or any part of such sum, living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of such sum not exceeding $500 to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured.

 

 

CERTIFICATE: FILING; APPROVAL.

 

      Sec. 464.  1.  The group life policy shall contain a provision that the insurer will issue to the policy holder for delivery to each person insured a certificate setting forth a statement in summary form of the essential features of the insurance coverage of such employee or member, to whom benefits thereunder are payable, and the rights and conditions set forth in sections 465, 466 and 467 of this act. If dependents are included in the coverage, only one statement need be issued for each family unit.

      2.  The commissioner may, in his discretion, require the form of each such certificate proposed to be delivered in this state under a group policy not made under the laws of this state, to be filed with him by the insurer for informational purposes only.

 

 

CONVERSION ON TERMINATION OF ELIGIBILITY.

 

      Sec. 465.  The group life insurance policy shall contain a provision that if the insurance on a person covered under the policy ceases because of termination of employment or of membership in the class or classes eligible for coverage under the policy, such person shall be entitled to have issued to him by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits, provided application for the individual policy shall be made, and the first premium paid to the insurer, within 31 days after such termination, and provided further that:

      1.  The individual policy shall, at the option of such person, be on any one of the forms, except term insurance, then customarily issued by the insurer at the age and for the amount applied for;

      2.  The individual policy shall be in an amount not in excess of the amount of life insurance which ceases because of such termination less the amount of any life insurance for which such person is or becomes eligible under the same or any other group policy within 31 days after such termination, but any amount of insurance which has matured on or before the date of such termination as an endowment payable to the person insured, whether in one sum or in installments or in the form of an annuity, shall not, for the purposes of this section, be included in the amount which is considered to cease because of such termination; and

      3.  The premium on the individual policy shall be at the insurer’s then-customary rate applicable to the form and amount of the individual policy, to the class of risk to which such person then belongs, and to his age attained on the effective date of the individual policy.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1750 (Chapter 660, AB 416)ê

 

CONVERSION ON TERMINATION OF POLICY.

 

      Sec. 466.  The group life insurance policy shall contain a provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of such termination whose insurance terminates and who has been so insured for at least 5 years prior to such termination date shall be entitled to have issued to him by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided by section 465 of this act, except that the group policy may provide that the amount of such individual policy shall not exceed the smaller of:

      1.  The amount of the person’s life insurance protection ceasing because of the termination or amendment of the group policy, less the amount of any life insurance for which he is or becomes eligible under any group policy issued or reinstated by the same or another insurer within 31 days after such termination; and

      2.  $2,000.

 

 

DEATH PENDING CONVERSION.

 

      Sec. 467.  The group life insurance policy shall contain a provision that if a person insured under the policy dies during the period within which he would have been entitled to have an individual policy issued to him in accordance with sections 465 or 466 of this act and before such an individual policy has become effective, the amount of life insurance which he would have been entitled to have issued to him under such individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefor has been made.

 

 

INFORMATION TO DEBTOR.

 

      Sec. 468.  A policy issued to a creditor to insure debtors of such creditor shall contain a provision that the insurer will furnish to the policy holder for delivery to each debtor insured under the policy a form which will contain a statement that the life of the debtor is insured under the policy and that any death benefit paid thereunder by reason of his death shall be applied to reduce or extinguish the indebtedness.

 

 

NOTICE AS TO CONVERSION RIGHT.

 

      Sec. 469.  1.  If any individual insured under a group life insurance policy delivered in this state after the effective date of this act becomes entitled under the terms of such policy to have an individual policy of life insurance issued to him without evidence of insurability, subject to the making of an application and payment of the first premium within the period specified in such policy, and if such individual is not given notice of the existence of such right at least 15 days prior to the expiration date of such period, then the individual shall have an additional period within which to exercise such right; but nothing contained in this section shall be construed to continue any insurance beyond the period provided in such policy.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1751 (Chapter 660, AB 416)ê

 

be construed to continue any insurance beyond the period provided in such policy.

      2.  This additional period shall expire 15 days next after the individual is given such notice, but in no event shall such additional period extend beyond 60 days next after the expiration date of the period provided in such policy.

      3.  Written notice presented to the individual or mailed by the policy holder to the last-known address of the individual or mailed by the insurer to the last-known address of the individual as furnished by the policy holder shall constitute notice for the purpose of this section.

 

 

READJUSTMENT OF PREMIUM.

 

      Sec. 470.  Any group life insurance contract may provide for a readjustment of the premium rate based upon the experience thereunder.

 

 

APPLICATION OF DIVIDENDS; RATE REDUCTIONS.

 

      Sec. 471.  1.  If a policy dividend is declared after the effective date of this act or a reduction in rate is made after the effective date of this act or continued for the first or any subsequent year of insurance under any policy of group life insurance issued before or after the effective date of this act to any policy holder, the excess, if any, of the aggregate dividends or rate reductions under such policy and all other group insurance policies of the policy holder over the aggregate expenditure for insurance under such policies made from funds contributed by the policy holder, or by an employer of insured persons, or by a union or association to which the insured persons belong, including expenditures made in connection with administration of such policies, shall be applied by the policy holder for the sole benefit of insured employees or members.

      2.  This section does not apply to debtor groups.

 

 

CHAPTER 19

 

HEALTH INSURANCE CONTRACTS

 

      Sec. 472.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 473 to 508, inclusive, of this act.

 

 

SHORT TITLE.

 

      Sec. 473.  This chapter may be cited as the Uniform Health Policy Provision Law.

 

 

SCOPE OF CHAPTER.

 

      Sec. 474.  Nothing in this chapter applies to or affects:

      1.  Any policy of liability or workmen’s compensation insurance with or without supplementary expense coverage therein.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1752 (Chapter 660, AB 416)ê

 

      2.  Any group or blanket policy, except as to section 508 (definition of terms) of this act.

      3.  Life insurance, endowment or annuity contracts, or contracts supplemental thereto which contain only such provisions relating to health insurance as:

      (a) Provide additional benefits in case of death or dismemberment or loss of sight by accident or accidental means; or as

      (b) Operate to safeguard such contracts against lapse, or to give a special surrender value or special benefit or an annuity if the insured or annuitant becomes totally and permanently disabled, as defined by the contract or supplemental contract.

      4.  Reinsurance.

 

 

SCOPE, FORMAT OF POLICY.

 

      Sec. 475.  No policy of health insurance shall be delivered or issued for delivery to any person in this state unless it otherwise complies with this code, and complies with the following:

      1.  The entire money and other considerations therefor shall be expressed therein;

      2.  The time when the insurance takes effect and terminates shall be expressed therein;

      3.  It shall purport to insure only one person, except that a policy may insure, originally or by subsequent amendment, upon the application of an adult member of a family, who shall be deemed the policy holder, any two or more eligible members of that family, including the husband, wife, dependent children or any children under a specified age which shall not exceed 19 years and any other person dependent upon the policy holder;

      4.  The style, arrangement and overall appearance of the policy shall give no undue prominence to any portion of the text, and every printed portion of the text of the policy and of any endorsements or attached papers shall be plainly printed in light-faced type of a style in general use, the size of which shall be uniform and not less than 10 points with a lower case unspaced alphabet length not less than 120 points (the “text” shall include all printed matter except the name and address of the insurer, the name or the title of the policy, the brief description, if any, and captions and subcaptions);

      5.  The exceptions and reductions of indemnity shall be set forth in the policy and, other than those contained in sections 477 to 499, inclusive, of this act, shall be printed, at the insurer’s option, either included with the benefit provision to which they apply, or under an appropriate caption such as “Exceptions,” or “Exceptions and Reductions,” except that if an exception or reduction specifically applies only to a particular benefit of the policy, a statement of such exception or reduction shall be included with the benefit provision to which it applies;

      6.  Each such form, including riders and endorsements, shall be identified by a form number in the lower left-hand corner of the first page thereof; and

      7.  The policy shall contain no provision purporting to make any portion of the charter, rules, constitution or bylaws of the insurer a part of the policy unless such portion is set forth in full in the policy, except in the case of the incorporation of, or reference to, a statement of rates or classification of risks, or short-rate table filed with the commissioner.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1753 (Chapter 660, AB 416)ê

 

the case of the incorporation of, or reference to, a statement of rates or classification of risks, or short-rate table filed with the commissioner.

 

 

REQUIRED PROVISIONS: CAPTIONS; OMISSIONS; SUBSTITUTIONS.

 

      Sec. 476.  1.  Except as provided in subsection 2, each such policy delivered or issued for delivery to any person in this state shall contain the provisions specified in sections 477 to 489, inclusive, of this act, in the words in which the same appear, except that the insurer may, at its option, substitute for one or more of such provisions corresponding provisions of different wording approved by the commissioner which are in each instance not less favorable in any respect to the insured or the beneficiary. Each such provision shall be preceded individually by the applicable caption shown, or, at the option of the insurer, by such appropriate individual or group captions or subcaptions as the commissioner may approve.

      2.  If any such provision is in whole or in part inapplicable to or inconsistent with the coverage provided by a particular form of policy, the insurer, with the approval of the commissioner, shall omit from such policy any inapplicable provision or part of a provision, and shall modify any inconsistent provision or part of a provision in such manner as to make the provision as contained in the policy consistent with the coverage provided by the policy.

 

 

ENTIRE CONTRACT; CHANGES.

 

      Sec. 477.  There shall be a provision as follows:

 

       Entire Contract; Changes: This policy, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. No change in this policy shall be valid until approved by an executive officer of the insurer and unless such approval is endorsed hereon or attached hereto. No agent has authority to change this policy or to waive any of its provisions.

 

 

TIME LIMIT ON CERTAIN DEFENSES.

 

      Sec. 478.  There shall be a provision as follows:

 

       Time Limit on Certain Defenses:

       1.  After 3 years from the date of issue of this policy no misstatements, except fraudulent misstatements, made by the applicant in the application for such policy shall be used to void the policy or to deny a claim for loss incurred or disability (as defined in the policy) commencing after the expiration of such 3-year period.

 

      The foregoing policy provision shall not be so construed as to affect any legal requirement for avoidance of a policy or denial of a claim during such initial 3-year period, nor to limit the application of sections 491 to 493, inclusive, of this act in the event of misstatement with respect to age or occupation or other insurance.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1754 (Chapter 660, AB 416)ê

 

      A policy which the insured has the right to continue in force subject to its terms by the timely payment of the premium until at least age 50 or, in the case of a policy issued after age 44, for at least 5 years from its date of issue, may contain in lieu of the foregoing the following provision (from which the clause in parentheses may be omitted at the insurer’s option): “Incontestable: After this policy has been in force for a period of three years during the lifetime of the insured (excluding any period during which the insured is disabled), it shall become incontestable as to the statements contained in the application.”

 

       2.  No claim for loss incurred or disability (as defined in the policy) commencing after 3 years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy.

 

 

GRACE PERIOD.

 

      Sec. 479.  There shall be a provision as follows:

 

       Grace period: A grace period of .......... (insert a number not less than “7” for weekly premium policies, “10” for monthly premium policies and “31” for all other policies) days will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force.

 

      A policy in which the insurer reserves the right to refuse any renewal shall have, at the beginning of the above provision:

 

       Unless not less than 30 days prior to the premium due date the company has delivered to the insured or has mailed to his last address as shown by the records of the insurer written notice of its intention not to renew this policy beyond the period for which the premium has been accepted.

 

 

REINSTATEMENT.

 

      Sec. 480.  1.  There shall be a provision as follows:

 

       Reinstatement: If any renewal premium be not paid within the time granted the insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly authorized by the insurer to accept such premium, without requiring in connection therewith an application for reinstatement, shall reinstate the policy; provided, however, that if the insurer or such agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy will be reinstated upon approval of such application by the insurer or, lacking such approval, upon the 45th day following the date of such conditional receipt unless the insurer has previously notified the insured in writing of its disapproval of such application. The reinstated policy shall cover only loss resulting from such accidental injury as may be sustained after the date of reinstatement and loss due to such sickness as may begin more than 10 days after such date.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1755 (Chapter 660, AB 416)ê

 

loss resulting from such accidental injury as may be sustained after the date of reinstatement and loss due to such sickness as may begin more than 10 days after such date. In all other respects the insured and insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium, subject to any provisions endorsed herein or attached hereto in connection with the reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than 60 days prior to the date of reinstatement.

 

      2.  The last sentence of subsection 1 may be omitted from any policy which the insured has the right to continue in force subject to its terms by the timely payment of premiums:

      (a) Until at least age 50; or

      (b) In the case of a policy issued after age 44, for at least 5 years from its date of issue.

      3.  Pursuant to the last sentence in subsection 1, the insurer shall apply the premium accepted in such manner as to place the policy currently in force, exclusive of any applicable grace period, but not in any event to any period more than 60 days prior to the date of reinstatement.

 

 

NOTICE OF CLAIM.

 

      Sec. 481.  1.  There shall be a provision as follows:

 

       Notice of Claim: Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or on behalf of the insured or the beneficiary to the insurer at .............................. (insert the location of such office as the insurer may designate for the purpose), or to any authorized agent of the insurer, with information sufficient to identify the insured, shall be deemed notice to the insurer.

 

      2.  In a policy providing a loss-of-time benefit which may be payable for at least 2 years, an insurer may at its option insert the following between the first and second sentence of subsection 1:

 

       Subject to the qualifications set forth below, if the insured suffers loss of time on account of disability for which indemnity may be payable for at least 2 years, he shall, at least once in every 6 months after having given notice of the claim, give to the insurer notice of continuance of said disability, except in the event of legal incapacity. The period of 6 months following any filing of proof by the insured or any payment by the insurer on account of such claim or any denial of liability in whole or in part by the insurer shall be excluded in applying this provision. Delay in the giving of such notice shall not impair the insured’s right to any indemnity which would otherwise have accrued during the period of 6 months preceding the date on which such notice is actually given.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1756 (Chapter 660, AB 416)ê

 

CLAIM FORMS.

 

      Sec. 482.  There shall be a provision as follows:

 

       Claim Forms: The insurer, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not furnished within 15 days after the giving of such notice the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.

 

 

PROOFS OF LOSS.

 

      Sec. 483.  There shall be a provision as follows:

 

       Proofs of Loss: Written proof of loss must be furnished to the insurer at its office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within 90 days after the termination of the period for which the insurer is liable and in case of claim for any other loss within 90 days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than 1 year from the time proof is otherwise required.

 

 

TIME OF PAYMENT OF CLAIMS.

 

      Sec. 484.  There shall be a provision as follows:

 

       Time of Payment of Claims: Indemnities payable under this policy for any loss, other than loss for which this policy provides any periodic payment, will be paid immediately upon receipt of due written proof of such loss. Subject to due written proof of loss, all accrued indemnities for loss for which this policy provides periodic payment will be paid .............................. (insert period for payment which must not be less frequently than monthly) and any balance remaining unpaid upon the termination of liability will be paid immediately upon receipt of due written proof.

 

 

PAYMENT OF CLAIMS.

 

      Sec. 485.  1.  There shall be a provision as follows:

 

       Payment of Claims: Indemnity for loss of life will be payable in accordance with the beneficiary designation and the provisions respecting such payment which may be prescribed herein and effective at the time of payment. If no such designation or provision is then effective, such indemnity shall be payable to the estate of the insured. Any other accrued indemnities unpaid at the insured’s death may, at the option of the insurer, be paid either to such beneficiary or to such estate. All other indemnities will be payable to the insured.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1757 (Chapter 660, AB 416)ê

 

      2.  The following provisions, or either of them, may be included with the provision in subsection 1 at the option of the insurer:

 

       If any indemnity of this policy shall be payable to the estate of the insured, or to an insured or beneficiary who is a minor or otherwise not competent to give a valid release, the insurer may pay such indemnity, up to an amount not exceeding $............... (insert an amount which shall not exceed $1,000), to any relative by blood or connection by marriage of the insured or beneficiary who is deemed by the insurer to be equitably entitled thereto. Any payment made by the insurer in good faith pursuant to this provision shall fully discharge the insurer to the extent of such payment.

       Subject to any written direction of the insured in the application or otherwise all or a portion of any indemnities provided by this policy on account of hospital, nursing, medical or surgical services may, at the insurer’s option and unless the insured requests otherwise in writing not later than the time of filing proofs of such loss, be paid directly to the hospital or person rendering such services; but it is not required that the service be rendered by a particular hospital or person.

 

 

PHYSICAL EXAMINATION, AUTOPSY.

 

      Sec. 486.  There shall be a provision as follows:

 

       Physical Examinations and Autopsy: The insurer at its own expense shall have the right and opportunity to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim hereunder and to make an autopsy in case of death where it is not forbidden by law.

 

 

LEGAL ACTIONS.

 

      Sec. 487.  There shall be a provision as follows:

 

       Legal Actions: No action at law or in equity shall be brought to recover on this policy prior to the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of 3 years after the time written proof of loss is required to be furnished.

 

 

CHANGE OF BENEFICIARY.

 

      Sec. 488.  1.  There shall be a provision as follows:

 

       Change of Beneficiary: Unless the insured makes an irrevocable designation of beneficiary, the right to change of beneficiary is reserved to the insured and the consent of the beneficiary or beneficiaries shall not be requisite to surrender or assignment of this policy or to any change of beneficiary or beneficiaries, or to any other changes in this policy.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1758 (Chapter 660, AB 416)ê

 

      2.  The first clause of the provision set forth in subsection 1, relating to the irrevocable designation of beneficiary, may be omitted at the insurer’s option.

 

 

RIGHT TO EXAMINE AND RETURN POLICY.

 

      Sec. 489.  1.  Except as to nonrenewable accident policies and individual credit health insurance policies, every individual health insurance policy shall contain a provision therein or in a separate rider attached thereto when delivered, stating in substance that the person to whom the policy is issued shall be permitted to return the policy within 10 days of its delivery to such person and to have a refund of the premium paid if after examination of the policy the purchaser is not satisfied with it for any reason. The provision shall be set forth in the policy under an appropriate caption, and if not so printed on the face page of the policy adequate notice of the provision shall be printed or stamped conspicuously on the face page.

      2.  The policy may be so returned to the insurer at its home or branch office or to the agent through whom it was applied for, and thereupon shall be void as from the beginning and as if the policy had not been issued.

 

 

OPTIONAL POLICY PROVISIONS.

 

      Sec. 490.  Except as provided in section 476 of this act, no such policy delivered or issued for delivery to any person in this state shall contain provisions respecting the matters set forth in sections 491 to 498, inclusive, of this act, unless such provisions are in the words in which the same appear in the applicable section, except that the insurer may, at its option, use in lieu of any such provision a corresponding provision of different wording approved by the commissioner which is not less favorable in any respect to the insured or the beneficiary. Any such provision contained in the policy shall be preceded individually by the appropriate caption or, at the option of the insurer, by such appropriate individual or group captions or subcaptions as the commissioner may approve.

 

 

EXTENDED DISABILITY BENEFIT.

 

      Sec. 490.1.  Any health insurance policy may contain a provision for payment not exceeding $500 as an extended disability benefit upon the insured’s death from any cause, which benefit shall not be construed as life insurance.

 

 

CHANGE OF OCCUPATION.

 

      Sec. 491.  There may be a provision as follows:

 

       Change of Occupation: If the insured be injured or contracts sickness after having changed his occupation to one classified by the insurer as more hazardous than that stated in this policy or while doing for compensation anything pertaining to an occupation so classified, the insurer will pay only such portion of the indemnities provided in this policy as the premium paid would have purchased at the rates and within the limits fixed by the insurer for such more hazardous occupation.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1759 (Chapter 660, AB 416)ê

 

insurer as more hazardous than that stated in this policy or while doing for compensation anything pertaining to an occupation so classified, the insurer will pay only such portion of the indemnities provided in this policy as the premium paid would have purchased at the rates and within the limits fixed by the insurer for such more hazardous occupation. If the insured changes his occupation to one classified by the insurer as less hazardous than that stated in this policy, the insurer, upon receipt of proof of such change of occupation, will reduce the premium rate accordingly, and will return the excess pro rata unearned premium from the date of change of occupation or from the policy anniversary date immediately preceding receipt of such proof, whichever is the more recent. In applying this provision, the classification of occupational risk and the premium rates shall be such as have been last filed by the insurer prior to the occurrence of the loss for which the insurer is liable or prior to date of proof of change in occupation with the state official having supervision of insurance in the state where the insured resided at the time this policy was issued; but if such filing was not required, then the classification of occupational risk and the premium rates shall be those last made effective by the insurer in such state prior to the occurrence of the loss or prior to the date of proof of change in occupation.

 

 

MISSTATEMENT OF AGE.

 

      Sec. 492.  There may be a provision as follows:

 

       Misstatement of Age: If the age of the insured has been misstated, all amounts payable under this policy shall be such as the premium paid would have purchased at the correct age.

 

 

COORDINATION OF BENEFITS: SAME INSURER.

 

      Sec. 492.5.  There may be a provision as follows:

 

       If an accident or sickness or accident and sickness policy or policies previously issued by the insurer to the insured be in force concurrently herewith, making the aggregate indemnity for................. (insert type of coverage or coverages) in excess of $................. (insert maximum limit of indemnity or indemnities), the excess shall be void and all premiums paid for such excess shall be returned to the insured or to his estate.

 

Or, in lieu thereof:

 

       Insurance effective at any one time on the insured under this policy and like policy or policies in this insurer is limited to the one policy elected by the insured, his beneficiary or his estate, as the case may be, and the insurer will return all premiums paid for all other such policies.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1760 (Chapter 660, AB 416)ê

 

COORDINATION OF BENEFITS: ALL COVERAGES.

 

      Sec. 493.  1.  There may be a provision as follows:

 

       Coordination of Benefits: If, with respect to a person covered under this policy, benefits for allowable expense incurred during a claim determination period under this policy, together with benefits for allowable expense during such period under all other valid coverage (without giving effect to this provision or to any “coordination of benefits provision” applying to such other valid coverage), exceed the total of such person’s allowable expense during such period, this insurer shall be liable only for such proportionate amount of the benefits for allowable expense under this policy during such period as (a) the total allowable expense during such period bears to (b) the total amount of benefits payable during such period for such expense under this policy and all other valid coverage (without giving effect to this provision or to any “coordination of benefits provision” applying to such other valid coverage) less in both (a) and (b) any amount of benefits for allowable expense payable under other valid coverage which does not contain a “coordination of benefits provision.” In no event shall this provision operate to increase the amount of benefits for allowable expense payable under this policy with respect to a person covered under this policy above the amount which would have been paid in the absence of this provision. This insurer may pay benefits to any insurer providing other valid coverage in the event of overpayment by such insurer. Any such payment shall discharge the liability of this insurer as fully as if the payment had been made directly to the insured, his assignee or his beneficiary. If this insurer pays benefits to the insured, his assignee or his beneficiary, in excess of the amount which would have been payable if the existence of other valid coverage had been disclosed, this insurer shall have a right of action against the insured, his assignee or his beneficiary to recover the amount which would not have been paid had there been a disclosure of the existence of the other valid coverage. The amount of other valid coverage which is on a provision of service basis shall be computed as the amount the services rendered would have cost in the absence of such coverage.

       For the purposes of this provision:

       (1) “Allowable expense” means 100 percent of any necessary, reasonable and customary item of expense which is covered, in whole or in part, as a hospital, surgical, medical or major medical expense under this policy or under any other valid coverage.

       (2) “Claim determination period” with respect to any covered person means the initial period of ............... (insert period of not less than 30 days) and each successive period of a like number of days, during which allowable expense covered under this policy is incurred on account of such person. The first such period begins on the date when the first such expense is incurred, and successive periods shall begin when such expense is incurred after expiration of a prior period.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1761 (Chapter 660, AB 416)ê

 

or, in lieu thereof:

 

       (2) “Claim determination period” with respect to any covered person means each ............... (insert calendar or policy period of not less than a month) during which allowable expense covered under this policy is incurred on account of such person.

       (3) “Coordination of benefits provision” means this provision and any other provision which may reduce an insurer’s liability because of the existence of benefits under other valid coverage.

 

      2.  The foregoing policy provisions may be inserted in all policies providing hospital, surgical, medical or major medical benefits for which the application includes a question as to other coverages subject to this provision. If the policy provision stated in subsection 1 is included in a policy which also contains the policy provision stated in section 494 of this act, there shall be added to the caption of the provision stated in subsection 1 of the phrase “expense-incurred benefits.” The insurer may make this provision applicable to either or both:

      (a) Other valid coverage with other insurers; and

      (b) Other valid coverage with the same insurer.

      The insurer shall include in this provision a definition of “other valid coverage” approved as to form by the commissioner. Such term may include hospital, surgical, medical or major medical benefits provided by individual or family-type coverage, government programs or workmen’s compensation. Such term shall not include any group insurance, automobile medical payments or third party liability coverage. The insurer shall not include a subrogation clause in the policy. The insurer may require, as part of the proof of claim, the information necessary to administer this provision.

      3.  If by application of any of the foregoing provisions the insurer effects a material reduction of benefits otherwise payable under the policy, the insurer shall refund to the insured any premium unearned on the policy by reason of such reduction of coverage during the policy year current and that next preceding at the time the loss commenced, subject to the insurer’s right to provide in the policy that no such reduction of benefits or refund will be made unless the unearned premium to be so refunded amounts to $5 or such larger sum as the insurer may so specify.

 

 

RELATION OF EARNINGS TO INSURANCE.

 

      Sec. 494.  1.  There may be a provision as follows:

 

       Relation of Earnings to Insurance: After the loss-of-time benefit of this policy has been payable for 90 days, such benefit will be adjusted, as provided below, if the total amount of unadjusted loss-of-time benefits provided in all valid loss-of-time coverage upon the insured should exceed ............... percent of the insured’s earned income; provided, however, that if the information contained in the application discloses that the total amount of loss-of-time benefits under this policy and under all other valid loss-of-time coverage expected to be effective upon the insured in accordance with the application for this policy exceeded ...............


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ê1971 Statutes of Nevada, Page 1762 (Chapter 660, AB 416)ê

 

application for this policy exceeded ............... percent of the insured’s earned income at the time of such application, such higher percentage will be used in place of ............... percent. Such adjusted loss-of-time benefit under this policy for any month shall be only such proportion of the loss-of-time benefit otherwise payable under this policy as (a) the product of the insured’s earned income and ............... percent (or, if higher the alternative percentage described at the end of the first sentence of this provision) bears to (b) the total amount of loss-of-time benefits payable for such month under this policy and all other valid loss-of-time coverage on the insured (without giving effect to the “overinsurance provision” in this or any other coverage) less in both (a) and (b) any amount of loss-of-time benefits payable under other valid loss-of-time coverage which does not contain an “overinsurance provision.” In making such computation, all benefits and earnings shall be converted to a consistent (insert “weekly” if the loss-of-time benefit of this policy is payable weekly, “monthly” if such benefit is payable monthly, etc.) basis. If the numerator of the foregoing ratio is zero or is negative, no benefit shall be payable under this policy. In no event shall this provision (1) operate to reduce the total combined amount of loss-of-time benefits for such month payable under this policy and all other valid loss-of-time coverage below the lesser of $300 and the total combined amount of loss-of-time benefits determined without giving effect to any “cordination of benefits provision,” nor (2) operate to increase the amount of benefits payable under this policy above the amount which would have been paid in the absence of this provision, nor (3) take into account or operate to reduce any benefit other than the loss-of-time benefit.

       For purposes of this provision:

       (A) “Earned income,” except where otherwise specified, means the greater of the monthly earnings of the insured at the time disability commences and his average monthly earnings for a period of 2 years immediately preceding the commencement of such disability, and shall not include any investment income or any other income not derived from the insured’s vocational activities.

       (B) “Coordination of benefits provision” includes this provision and any other provision with respect to any loss-of-time coverage which may have the effect of reducing an insurer’s liability if the total amount of loss-of-time benefits under all coverage exceeds a stated relationship to the insured’s earnings.

 

      2.  If the policy provision stated in subsection 1 is included in a policy which also contains the policy provision stated in section 493 of this act, there shall be added to the caption of the provision stated in subsection 1 the phrase “loss-of-time benefits.”

      3.  The foregoing provision may be included only in a policy which provides a loss-of-time benefit which may be payable for at least 52 weeks, which is issued on the basis of selective underwriting of each individual application, and for which the application includes a question designed to elicit information necessary either to determine the ratio of the total loss-of-time benefits of the insured to the insured’s earned income or to determine that such ratio does not exceed the percentage of earnings, not less than 60 percent selected by the insurer and inserted in lieu of the blank factor above.


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ê1971 Statutes of Nevada, Page 1763 (Chapter 660, AB 416)ê

 

or to determine that such ratio does not exceed the percentage of earnings, not less than 60 percent selected by the insurer and inserted in lieu of the blank factor above. The insurer may require, as part of the proof of claim, the information necessary to administer this provision. If the application indicates that other loss-of-time coverage is to be discontinued, the amount of such other coverage shall be excluded in computing the alternative percentage in the first sentence of the overinsurance provision. The policy shall include a definition of “valid loss-of-time coverage,” approved as to form by the commissioner, which definition shall not include group insurance, benefits provided by union welfare plans, employer or employee benefit plans, workmen’s compensation or employer’s liability statute or third party liability. The insurer shall not include a subrogation clause in the policy.

      4.  If by application of any of the foregoing provisions the insurer effects a material reduction of benefits otherwise payable under the policy, the insurer shall refund to the insured any premium unearned on the policy by reason of such reduction of coverage during the policy year current and that next preceding at the time the loss commenced, subject to the insurer’s right to provide in the policy that no such reduction of benefits or refund will be made unless the unearned premium to be so refunded amounts to $5 or such larger sum as the insurer may so specify.

 

 

UNPAID PREMIUMS.

 

      Sec. 495.  There may be a provision as follows:

 

       Unpaid Premium: Upon the payment of a claim under this policy, any premium then due and unpaid or covered by any note or written order may be deducted therefrom.

 

 

CONFORMITY WITH STATE STATUTES.

 

      Sec. 496.  There may be a provision as follows:

 

       Conformity with State Statutes: Any provision of this policy which, on its effective date is in conflict with the statutes of the state in which the insured resides on such date is hereby amended to conform to the minimum requirements of such statutes.

 

 

ILLEGAL OCCUPATION.

 

      Sec. 497.  There may be a provision as follows:

 

       Illegal Occupation: The insurer shall not be liable for any loss to which a contributing cause was the insured’s commission of or attempt to commit a felony or to which a contributing cause was the insured’s being engaged in an illegal occupation.

 

 

INTOXICANTS AND NARCOTICS.

 

      Sec. 498.  There may be a provision as follows:

 

       Intoxicants and Narcotics: The insurer shall not be liable for any loss sustained or contracted in consequence of the insured’s being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.


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ê1971 Statutes of Nevada, Page 1764 (Chapter 660, AB 416)ê

 

being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.

 

 

RENEWABILITY.

 

      Sec. 499.  Health insurance policies, other than accident insurance only policies, in which the insurer reserves the right to refuse renewal on an individual basis, shall provide in substance in a provision thereof or in an endorsement thereon or rider attached thereto that subject to the right to terminate the policy upon nonpayment of premium when due, such right to refuse renewal may not be exercised so as to take effect before the renewal date occurring on, or after and nearest, each policy anniversary (or in the case of lapse and reinstatement, at the renewal date occurring on, or after and nearest, each anniversary of the last reinstatement), and that any refusal of renewal shall be without prejudice to any claim originating while the policy is in force. (The parenthetic reference to lapse and reinstatement may be omitted at the insurer’s option.)

 

 

ORDER OF CERTAIN PROVISIONS.

 

      Sec. 500.  The provisions which are the subject of sections 477 to 499, inclusive, of this act, or any corresponding provisions which are used in lieu thereof in accordance with such sections shall be printed in the consecutive order of the provisions in such sections or, at the option of the insurer, any such provision may appear as a unit in any part of the policy, with other provisions to which it may be logically related, provided that the resulting policy shall not be in whole or in part unintelligible, uncertain, ambiguous, abstruse or likely to mislead a person to whom the policy is offered, delivered or issued.

 

 

THIRD PARTY OWNERSHIP.

 

      Sec. 501.  The word “insured,” as used in this chapter, shall not be construed as preventing a person other than the insured with a proper insurable interest from making application for and owning a policy covering the insured or from being entitled under such a policy to any indemnities, benefits and rights provided therein.

 

 

REQUIREMENTS OF OTHER JURISDICTIONS.

 

      Sec. 502.  1.  Any policy of a foreign or alien insurer, when delivered or issued for delivery to any person in this state, may contain any provision which is not less favorable to the insured or the beneficiary than the provisions of this chapter and which is prescribed or required by the law of the state or country under which the insurer is organized.

      2.  Any policy of a domestic insurer may, when issued for delivery in any other state or country, contain any provision permitted or required by the laws of such other state or country.


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ê1971 Statutes of Nevada, Page 1765 (Chapter 660, AB 416)ê

 

POLICIES ISSUED FOR DELIVERY IN ANOTHER STATE.

 

      Sec. 503.  If any policy is issued by a domestic insurer for delivery to a person residing in another state, and if the insurance commissioner or corresponding public officer of such other state has informed the commissioner that any such policy is not subject to approval or disapproval by such officer, the commissioner may by ruling require that the policy meet the standards set forth in sections 475 to 502, inclusive, of this act.

 

 

CONFORMING TO STATUTE.

 

      Sec. 504.  1.  No policy provision which is not subject to this chapter shall make a policy, or any portion thereof, less favorable in any respect to the insured or the beneficiary than the provisions thereof which are subject to this chapter.

      2.  A policy delivered or issued for delivery to any person in this state in violation of this chapter shall be held valid but shall be construed as provided in this chapter. When any provision in a policy subject to this chapter is in conflict with any provision of this chapter, the rights, duties and obligations of the insurer, the insured and the beneficiary shall be governed by the provisions of this chapter.

 

 

AGE LIMIT.

 

      Sec. 505.  If any such policy contains a provision establishing, as an age limit or otherwise, a date after which the coverage provided by the policy will not be effective, and if such date falls within a period for which a premium is accepted by the insurer or if the insurer accepts a premium after such date, the coverage provided by the policy will continue in force subject to any right of termination until the end of the period for which the premium has been accepted. If the age of the insured has been misstated and if, according to the correct age of the insured, the coverage provided by the policy would not have become effective, or would have ceased prior to the acceptance of such premium or premiums, then the liability of the insurer shall be limited to the refund of all premiums paid for the period not covered by the policy.

 

 

FILING OF RATES.

 

      Sec. 506.  Each insurer issuing individual health insurance policies for delivery in this state shall, before use thereof, file with the commissioner its premium rates and classification of risks pertaining to such policies. The insurer shall adhere to its rates and classifications as filed with the commissioner. The insurer may change such filings from time to time as it deems proper.

 

 

FRANCHISE HEALTH INSURANCE LAW.

 

      Sec. 507.  1.  Health insurance on a franchise plan is hereby declared to be that form of health insurance issued to:

      (a) Three or more employees of any corporation, copartnership or individual employer or any governmental corporation, agency or department thereof; or

 


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ê1971 Statutes of Nevada, Page 1766 (Chapter 660, AB 416)ê

 

individual employer or any governmental corporation, agency or department thereof; or

      (b) Ten or more members, employees or employees of members of any trade or professional association or of a labor union or of any other association having had an active existence for at least 2 years where such association or union has a constitution or bylaws and is formed in good faith for purposes other than that of obtaining insurance,

where such persons with or without their dependents, are issued the same form of an individual policy varying only as to amounts and kinds of coverage applied for by such persons under an arrangement whereby the premiums on such policies may be paid to the insurer periodically by the employer, with or without payroll deductions, or by the insured, or the association or union for its members, or by some designated person acting on behalf of such employer or association or union. The term “employees” as used in this section shall be deemed to include the officers, managers and employees and retired employees of the employer and the individual proprietor or partners if the employer is an individual proprietor or partnership.

      2.  Each policy issued under this section shall provide that the coverage shall terminate when the insured individual no longer qualifies for such policy under this section; but the policy may provide that it may be continued in force or be replaced with another policy if the premium, benefits and other relevant factors of the continued or replacement policy are the same as those of a similar individual policy not issued under or pursuant to this section.

 

 

DEFINITIONS OF TERMS USED IN POLICIES.

 

      Sec. 508.  As used in any policy of health insurance delivered, issued for delivery or used in this state, unless otherwise provided in the policy or in an endorsement thereon or in a rider attached thereto:

      1.  “Accidental death” means death by accident exclusively and independently of all other causes.

      2.  “Confinement to house” or “house confinement” includes the activities of a convalescent not able to be gainfully employed.

      3.  “Medical or surgical services” includes also services within the scope of his license rendered by any individual while duly licensed by the State of Nevada under any of the following chapters of NRS: 631 (dentistry); 633 (osteopathy); 634 (chiropractic); 635 (podiatry); or 636 (optometry).

      4.  “Total disability” means inability to perform the duties of any gainful occupation for which the insured is reasonably fitted by training, experience and accomplishment.

 

      Sec. 509.  [There is no section 509.]

 

 

CHAPTER 20

 

GROUP AND BLANKET HEALTH INSURANCE

 

      Sec. 510.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 511 to 520, inclusive, of this act.


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ê1971 Statutes of Nevada, Page 1767 (Chapter 660, AB 416)ê

 

SCOPE OF CHAPTER; SHORT TITLE.

 

      Sec. 511.  1.  This chapter may be cited as the Group or Blanket Health Insurance Law.

      2.  This chapter applies only to group health insurance contracts and to blanket health insurance contracts as provided for in this chapter.

 

 

“GROUP HEALTH INSURANCE” DEFINED; ELIGIBLE GROUPS AND BENEFITS.

 

      Sec. 512.  1.  “Group health insurance” is hereby declared to be that form of health insurance covering groups of two or more persons, formed for a purpose other than obtaining insurance.

      2.  Any group health policy which contains provisions for the payment by the insurer of benefits for expenses incurred on account of hospital, nursing, medical or surgical services for members of the family or dependents of a person in the insured group may provide for the continuation of such benefit provisions, or any part or parts thereof, after the death of the person in the insured group.

      3.  The commissioner may, in his discretion, require the form of each certificate proposed to be delivered in this state under a group health policy not made under the laws of this state to be filed with him by the insurer for informational purposes only.

 

 

REQUIRED PROVISIONS IN GROUP POLICIES.

 

      Sec. 513.  Each such group health insurance policy shall contain in substance the following provisions:

      1.  A provision that, in the absence of fraud, all statements made by applicants or the policy holders or by an insured person shall be deemed representations and not warranties, and that no statement made for the purpose of effecting insurance shall void such insurance or reduce benefits unless contained in a written instrument signed by the policy holder or the insured person, a copy of which has been furnished to such policy holder or to such person or his beneficiary.

      2.  A provision that the insurer will furnish to the policy holder for delivery to each employee or member of the insured group a statement in summary form of the essential features of the insurance coverage of such employee or member and to whom benefits thereunder are payable. If dependents are included in the coverage, only one statement need be issued for each family unit.

      3.  A provision that to the group originally insured may be added from time to time eligible new employees or members or dependents, as the case may be, in accordance with the terms of the policy.

 

 

DIRECT PAYMENT OF HOSPITAL, MEDICAL SERVICES.

 

      Sec. 514.  Any group health policy may provide that all or any portion of any indemnities provided by any such policy on account of hospital, nursing, medical or surgical services may, at the insurer’s option, be paid directly to the hospital or person rendering such services. Payments so made shall discharge the insurer’s obligation.


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ê1971 Statutes of Nevada, Page 1768 (Chapter 660, AB 416)ê

 

EXTENDED DISABILITY BENEFIT.

 

      Sec. 514.1.  Any group health policy may provide for payment not exceeding $500 as an extended disability benefit upon the insured’s death from any cause, which benefit shall not be construed as life insurance.

 

 

READJUSTMENT OF PREMIUMS; DIVIDENDS.

 

      Sec. 515.  1.  Any contract of group health insurance may provide for the readjustment of the rate of premium based upon the experience thereunder. If a policy dividend is declared after the effective date of this act or a reduction in rate is made after the effective date of this act or continued for the first or any subsequent year of insurance under any policy of group health insurance issued prior to or after the effective date of this act to any policy holder, the excess, if any, of the aggregate dividends or rate reductions under such policy and all other group insurance policies of the policy holder over the aggregate expenditure for insurance under such policies made from funds contributed by the policy holder, or by an employer of insured persons, or by a union or association to which the insured persons belong, including expenditures made in connection with administration of such policies, shall be applied by the policy holder for the sole benefit of insured employees or members.

      2.  This section does not apply as to debtor groups.

 

 

“BLANKET HEALTH INSURANCE” DEFINED.

 

      Sec. 516.  “Blanket health insurance” is that form of health insurance covering groups of persons as enumerated in one of the following subsections under a policy or contract issued to:

      1.  Any common carrier or to any operator, owner or lessee of a means of transportation, who or which shall be deemed the policy holder, covering a group of persons who may become passengers defined by reference to their travel status on such common carrier or such means of transportation.

      2.  An employer, who shall be deemed the policy holder, covering any group of employees, dependents or guests, defined by reference to specified hazards incident to an activity or activities or operations of the policy holder.

      3.  A college, school or other institution of learning, a school district or districts, or school jurisdictional unit, or to the head, principal or governing board of any such educational unit, who or which shall be deemed the policy holder, covering students, teachers or employees.

      4.  A religious, charitable, recreational, educational or civic organization, or branch thereof, which shall be deemed the policy holder, covering any group of members or participants defined by reference to specified hazards incident to an activity or activities or operations sponsored or supervised by such policy holder.

      5.  A sports team, camp or sponsor thereof, which shall be deemed the policy holder, covering members, campers, employees, officials or supervisors.

      6.  A volunteer fire department, first aid, civil defense or other such volunteer organization, which shall be deemed the policy holder, covering any group of members or participants defined by reference to specified hazards incident to an activity or activities or operations sponsored or supervised by such policy holder.


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ê1971 Statutes of Nevada, Page 1769 (Chapter 660, AB 416)ê

 

volunteer organization, which shall be deemed the policy holder, covering any group of members or participants defined by reference to specified hazards incident to an activity or activities or operations sponsored or supervised by such policy holder.

      7.  A newspaper or other publisher, which shall be deemed the policy holder, covering its carriers.

      8.  An association, including a labor union, which has a constitution and bylaws and which has been organized and is maintained in good faith for purposes other than that of obtaining insurance, which shall be deemed the policy holder, covering any group of members or participants defined by reference to specified hazards incident to an activity or activities or operations sponsored or supervised by such policy holder.

      9.  Cover any other risk or class of risks which, in the discretion of the commissioner, may be properly eligible for blanket health insurance. The discretion of the commissioner may be exercised on an individual risk basis or class of risks, or both.

 

 

FILING AND REQUIRED PROVISIONS IN BLANKET POLICIES.

 

      Sec. 517.  Any insurer authorized to write health insurance in this state shall have the power to issue blanket health insurance. No such blanket policy, except as provided in subsection 4 of section 385 (filing, approval of forms) of this act, may be issued or delivered in this state unless a copy of the form thereof has been filed in accordance with section 385 of this act. Every such blanket policy shall contain provisions which in the opinion of the commissioner are not less favorable to the policy holder and the individual insured than the following:

      1.  A provision that the policy, including endorsements and a copy of the application, if any, of the policy holder and the persons insured shall constitute the entire contract between the parties, and that any statement made by the policy holder or by a person insured shall in the absence of fraud be deemed a representation and not a warranty, and that no such statements shall be used in defense to a claim under the policy, unless contained in a written application. Such person, his beneficiary or assignee shall have the right to make a written request to the insurer for a copy of such application, and the insurer shall, within 15 days after the receipt of such request at its home office or any branch office of the insurer, deliver or mail to the person making such request a copy of such application. If such copy is not so delivered or mailed, the insurer shall be precluded from introducing such application as evidence in any action based upon or involving any statements contained therein.

      2.  A provision that written notice of sickness or of injury must be given to the insurer within 20 days after the date when such sickness or injury occurred. Failure to give notice within such time shall not invalidate or reduce any claim if it is shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible.

      3.  A provision that the insurer will furnish either to the claimant or to the policy holder for delivery to the claimant such forms as are usually furnished by it for filing proof of loss.


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ê1971 Statutes of Nevada, Page 1770 (Chapter 660, AB 416)ê

 

furnished by it for filing proof of loss. If such forms are not furnished before the expiration of 15 days after giving of such notice, the claimant shall be deemed to have complied with the requirements of the policy as to proof of loss upon submitting, within the time fixed in the policy for filing proof of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.

      4.  A provision that in the case of a claim for loss of time for disability, written proof of such loss must be furnished to the insurer within 90 days after the commencement of the period for which the insurer is liable, and that subsequent written proofs of the continuance of such disability must be furnished to the insurer at such intervals as the insurer may reasonably require, and that in the case of a claim for any other loss, written proof of such loss must be furnished to the insurer within 90 days after the date of such loss. Failure to furnish such proof within such time shall not invalidate or reduce any claim if it is shown not to have been reasonably possible to furnish such proof and that such proof was furnished as soon as was reasonably possible.

      5.  A provision that all benefits payable under the policy other than benefits for loss of time will be payable immediately upon receipt of due written proof of such loss, and that, subject to due proof of loss, all accrued benefits payable under the policy for loss of time will be paid not less frequently than monthly during the continuance of the period for which the insurer is liable, and that any balance remaining unpaid at the termination of such period will be paid immediately upon receipt of such proof.

      6.  A provision that the insurer at its own expense shall have the right and opportunity to examine the person of the insured when and so often as it may reasonably require during the pendency of claim under the policy and also the right and opportunity to make an autopsy where it is not prohibited by law.

      7.  A provision that no action at law or in equity shall be brought to recover under the policy prior to the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of the policy and that no such action shall be brought after the expiration of 3 years after the time written proof of loss is required to be furnished.

 

 

APPLICATION AND CERTIFICATES.

 

      Sec. 518.  1.  An individual application need not be required from a person covered under a blanket health policy or contract, nor shall it be necessary for the insurer to furnish each person a certificate, if such person does not pay all or part of the premium for such insurance.

      2.  The commissioner may, by rule or regulation, require the delivery of an individual certificate or a statement of the coverage to individuals insured under such a blanket policy or contract who are either required to make an individual written application or pay part or all of the premium therefor, and applying to such classes of cases and circumstances, specified in such rule or regulation, as the commissioner may find such delivery to be reasonably necessary and practicable.


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ê1971 Statutes of Nevada, Page 1771 (Chapter 660, AB 416)ê

 

PAYMENT OF BENEFITS UNDER BLANKET POLICY.

 

      Sec. 519.  1.  Except as provided in subsection 2, all benefits under any blanket health policy or contract shall be payable to the person insured, or to his designated beneficiary or beneficiaries, or to his estate, except that if the person insured is a minor or otherwise not competent to give a valid release, such benefits may be made payable to his parent, guardian or other person actually supporting him.

      2.  The policy may provide that all or a portion of any indemnities provided by any such policy on account of hospital, nursing, medical or surgical services may, at the option of the insurer and unless the insured requests otherwise in writing not later than the time of filing proofs of such loss, be paid directly to the hospital or person rendering such services; but the policy may not require that the service be rendered by a particular hospital or person. Payment so made shall discharge the obligation of the insurer with respect to the amount of insurance so paid.

 

 

LEGAL LIABILITY OF POLICY HOLDERS FOR DEATH, INJURY TO MEMBER INSURED UNDER BLANKET POLICY.

 

      Sec. 520.  Nothing contained in sections 516 to 519, inclusive, of this act shall be deemed to affect the legal liability of policy holders for death of or injury to any member insured under a blanket insurance policy.

 

 

CHAPTER 21

 

CREDIT LIFE AND HEALTH INSURANCE

 

      Sec. 521.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 522 to 535, inclusive, of this act.

 

 

SCOPE OF CHAPTER.

 

      Sec. 522.  All life insurance and all health insurance in connection with loans or other credit transactions shall be subject to the provisions of this chapter; but insurance in connection with a loan or other credit transaction of 10 years’ duration or more shall not be subject to this chapter after the effective date of this act, nor shall insurance be subject to this chapter where the issuance thereof is an isolated transaction on the part of the insurer not related to an agreement or a plan or regular course of conduct for insuring debtors of the creditor.

 

 

DEFINITIONS.

 

      Sec. 523.  For the purposes of this chapter:

      1.  “Credit health insurance” means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled as defined in the policy.


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ê1971 Statutes of Nevada, Page 1772 (Chapter 660, AB 416)ê

 

indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is disabled as defined in the policy.

      2.  “Credit life insurance” means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction.

      3.  “Creditor” means the lender of money or vendor of goods, services or property, including a lessor under a lease intended as a security, rights or privileges, for which payment is arranged through a credit transaction, or any successor to the right, title or interest of any such lender or vendor, and an affiliate, associate or subsidiary of any of them or any director, officer or employee of any of them or any other person in any way associated with any of them.

      4.  “Debtor” means a borrower of money or a purchaser or lessee of goods, services, property, rights or privileges for which payment is arranged through a credit transaction.

      5.  “Indebtedness” means the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction.

 

 

FORMS OF CREDIT LIFE INSURANCE AND CREDIT HEALTH INSURANCE.

 

      Sec. 524.  Credit life insurance and credit health insurance shall be issued only in the following forms:

      1.  Individual policies of life insurance issued to debtors on the term plan.

      2.  Individual policies of health insurance issued to debtors on a term plan, or disability benefit provisions in individual policies of credit life insurance.

      3.  Group policies of life insurance issued to creditors providing insurance upon the lives of debtors on term plan.

      4.  Group policies of health insurance issued to creditors on a term plan insuring debtors, or disability benefit provisions in group credit life insurance policies to provide such coverage.

 

 

AMOUNTS OF CREDIT LIFE INSURANCE.

 

      Sec. 525.  1.  The amount of credit life insurance shall not exceed the total amount repayable under the contract of indebtedness and, where an indebtedness is repayable in substantially equal installments, the amount of insurance shall at no time exceed the scheduled or actual amount of unpaid indebtedness, whichever is greater.

      2.  Notwithstanding the provisions of subsection 1, insurance on agricultural credit transactions and other credit transactions not providing for amortization of the indebtedness and not exceeding 2 years in duration may be written up to the amount of the loan commitment on a nondecreasing or level term plan.

      3.  Notwithstanding the provisions of subsection 1, or any other section, insurance on educational credit transaction commitments may be written for the amount of the portion of such commitment that has not been advanced by the creditor.


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ê1971 Statutes of Nevada, Page 1773 (Chapter 660, AB 416)ê

 

AMOUNTS OF CREDIT HEALTH INSURANCE.

 

      Sec. 526.  The total amount of periodic indemnity payable by credit health insurance in the event of disability, as defined in the policy, shall not exceed the aggregate of the periodic scheduled unpaid installments of the indebtedness; and the amount of each periodic indemnity payment shall not exceed the original indebtedness divided by the number of periodic installments.

 

 

TERM OF INSURANCE.

 

      Sec. 527.  The term of any credit life insurance or credit health insurance shall, subject to acceptance by the insurer, commence on the date when the debtor becomes obligated to the creditor, or the date when the debtor applies for such insurance, whichever is later, except that, where a group policy provides coverage with respect to the existing obligations, the insurance on a debtor with respect to such indebtedness shall commence on the effective date of the policy or the effective date of the coverage, whichever is later. Where evidence of insurability is required and such evidence is furnished more than 30 days after the date when the debtor becomes obligated to the creditor, the term of the insurance may commence on the date on which the insurer determines the evidence to be satisfactory, and in such event there shall be an appropriate refund or adjustment of any charge to the debtor for insurance. The term of such insurance shall not extend more than 15 days beyond the scheduled maturity date of the indebtedness except when extended without additional cost to the debtor. If the indebtedness is discharged due to renewal or refinancing prior to the scheduled maturity date, the insurance in force shall be terminated before any new insurance may be issued in connection with the renewed or refinanced indebtedness. In all cases of such termination prior to scheduled maturity, a refund shall be paid or credited as provided in section 530 of this act.

 

 

PROVISIONS OF POLICIES AND CERTIFICATES OF INSURANCE; DISCLOSURE TO DEBTORS.

 

      Sec. 528.  1.  All credit life insurance and credit health insurance shall be evidenced by an individual policy, or in the case of group insurance by a certificate of insurance, which individual policy or group certificate shall be delivered to the debtor.

      2.  Each individual policy or group certificate of such insurance shall, in addition to other requirements of law:

      (a) Set forth the name and home office address of the insurer, the name or names of the debtor or in the case of a certificate under a group policy, the identity by name or otherwise of the debtor;

      (b) Set forth the premium rate or amount of payment, if any, by the debtor separately for credit life insurance and credit health insurance, and a description of the coverage, including the amount and term thereof, and any exceptions, limitations and restrictions; and

      (c) State that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness and, wherever the amount of insurance may exceed the unpaid indebtedness, that any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate; and

 


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1774 (Chapter 660, AB 416)ê

 

extinguish the unpaid indebtedness and, wherever the amount of insurance may exceed the unpaid indebtedness, that any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate; and

      (d) Provide for refund of premiums, as required by section 530 of this act.

      3.  The individual policy or group certificate of insurance shall be delivered to the insured debtor at the time the indebtedness is incurred except as provided in this section.

      4.  If a debtor makes a separate payment for credit life or credit health insurance and an individual policy or group certificate of insurance is not delivered to the debtor at the time the indebtedness is incurred, a copy of the application for such policy or a notice of proposed insurance shall be delivered at such time to the debtor. The copy of the application for or notice of proposed insurance shall:

      (a) Be signed by the debtor;

      (b) Set forth the identity by name or otherwise of the person or persons insured;

      (c) Set forth the rate or amount of payment by the debtor, if any, separately for credit life insurance and credit health insurance;

      (d) Contain a statement that within 30 days, if the insurance is accepted by the insurer, there will be delivered to the debtor an individual policy or group certificate of insurance containing the name and home office address of the insurer, a description of the amount, term and coverage including any exceptions, limitations and restrictions; and

      (e) Refer exclusively to insurance coverage, and shall be separate and apart from the loan, sale or other credit statement of account, instrument or agreement, unless the information required by this subsection is prominently set forth therein.

      Upon acceptance of the insurance by the insurer and within 30 days of the date upon which the indebtedness is incurred, the insurer shall cause the individual policy or group certificate of insurance to be delivered to the debtor. Such application or notice of proposed insurance shall state that upon acceptance by the insurer, the insurance shall become effective as provided in section 527 of this act.

      5.  If the named insurer does not accept the risk, then the debtor shall receive a policy or certificate of insurance setting forth the name and home office of the substituted insurer and the amount of the premium to be charged, and if the amount of premium is less than that set forth in the notice of proposed insurance an appropriate refund shall be made.

 

 

FILING, EFFECTIVENESS AND WITHDRAWAL.

 

      Sec. 529.  1.  All such policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements and riders delivered or issued for delivery in this state and the schedule of premium rates pertaining thereto shall be filed with the commissioner.

      2.  The commissioner shall, within 30 days after the filing of any such policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements and riders, disapprove any such form if the table of premium rates charged or to be charged appears by reasonable assumptions to be excessive in relation to benefits, or if it contains provisions which are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of the coverage, or are contrary to any provision of this code or of any rule or regulation promulgated thereunder.


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ê1971 Statutes of Nevada, Page 1775 (Chapter 660, AB 416)ê

 

the table of premium rates charged or to be charged appears by reasonable assumptions to be excessive in relation to benefits, or if it contains provisions which are unjust, unfair, inequitable, misleading, deceptive or encourage misrepresentation of the coverage, or are contrary to any provision of this code or of any rule or regulation promulgated thereunder. In determining whether to disapprove any such forms the commissioner shall give due consideration to past and prospective loss experience within and outside this state, to underwriting practice and judgment to the extent appropriate, and to all other relevant factors within and outside this state.

      3.  If the commissioner notifies the insurer that the form is disapproved, it is unlawful thereafter for such insurer to issue or use such form. In such notice, the commissioner shall specify the reason for his disapproval and state that a hearing will be granted within 20 days after a request in writing by the insurer. No such policy, certificate of insurance, notice of proposed insurance, or any application, endorsement or rider shall be issued or used until the expiration of 30 days after it has been so filed, unless the commissioner gives his prior written approval thereto.

      4.  The commissioner may, at any time after a hearing held not less than 20 days after written notice to the insurer, withdraw his approval of any such form on any ground set forth in subsection 2. The written notice of such hearing shall state the reason for the proposed withdrawal.

      5.  The insurer shall not issue such forms or use them after the effective date of such withdrawal.

      6.  If a group policy has been delivered in this state before the effective date of this act, or has been or is delivered in another state before or on or after the effective date of this act, the insurer shall be required to file only the group certificate and notice of proposed insurance delivered or issued for delivery in this state as specified in subsections 2 and 4 of section 528 of this act, and such forms shall be approved by the commissioner if they conform with the requirements specified in such subsections and if the schedules of premium rates applicable to the insurance evidenced by such certificate or notice are not in excess of the insurer’s schedules of premium rates filed with the commissioner. The premium rate in effect on existing group policies may be continued until the first policy anniversary date following the effective date of this act.

 

 

PREMIUMS AND REFUNDS.

 

      Sec. 530.  1.  Any insurer may revise its schedules of premium rates from time to time, and shall file such revised schedules with the commissioner. No insurer shall issue any credit life insurance or credit health insurance policy for which the premium rate exceeds that determined by the schedules of such insurer as then on file with the commissioner.

      2.  Each individual policy or group certificate shall provide that in the event of termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund of an amount paid by the debtor for insurance shall be paid or credited promptly to the person entitled thereto. The commissioner shall prescribe a minimum refund and no refund which would be less than such minimum need be made. The formula to be used in computing such refund shall be filed with and approved by the commissioner.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1776 (Chapter 660, AB 416)ê

 

in computing such refund shall be filed with and approved by the commissioner.

      3.  If a creditor requires a debtor to make any payment for credit life insurance or credit health insurance and an individual policy or group certificate of insurance is not issued, the creditor shall immediately give written notice to such debtor and shall promptly make an appropriate credit to the account.

      4.  The amount charged to a debtor for any credit life insurance or credit health insurance shall not exceed the premiums charged by the insurer, as computed at the time the charge to the debtor is determined.

      5.  Nothing in this chapter shall be construed to authorize any payments for insurance now prohibited under any statute, or rule thereunder, governing credit transactions.

 

 

PREMIUM: HOW COLLECTED.

 

      Sec. 531.  The insurance premium or other identifiable charge for credit life insurance or credit health insurance may be collected from the insured or included in the principal of any loan or other transaction at the time such transaction is completed.

 

 

PREMIUMS AND GAINS NOT DEEMED INTEREST.

 

      Sec. 532.  The premium or cost of credit life insurance or credit health insurance when issued through any creditor shall not be subject to sections 471 (application of dividends; rate reductions) and 515 (readjustment of premiums; dividends) of this act and shall not be deemed interest or charges, or consideration, or an amount in excess of permitted charges in connection with the loan or other credit transaction, and any gain or advantage to the creditor arising out of the premium or commission or dividend from the issuance of such insurance shall not be deemed a violation of any other law, general or special, civil or criminal, of the State of Nevada.

 

 

ISSUANCE OF POLICIES.

 

      Sec. 533.  All policies of credit life insurance and credit health insurance shall be delivered or issued for delivery in this state only by an insurer authorized to do an insurance business therein, and shall be issued only through holders of licenses or authorizations issued by the commissioner.

 

 

CLAIMS.

 

      Sec. 534.  1.  All claims shall be promptly reported to the insurer or its designated claim representative, and the insurer shall maintain adequate claim files. All claims shall be settled as soon as possible and in accordance with the terms of the insurance contract.

      2.  All claims shall be paid either by draft drawn upon the insurer or by check of the insurer to the order of the claimant to whom payment of the claim is due pursuant to the policy provisions, or upon direction of such claimant to one specified.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1777 (Chapter 660, AB 416)ê

 

by check of the insurer to the order of the claimant to whom payment of the claim is due pursuant to the policy provisions, or upon direction of such claimant to one specified.

      3.  No plan or arrangement shall be used whereby any person other than the insurer or its designated claim representative is authorized to settle or adjust claims. The creditor shall not be designated as claim representative for the insurer in adjusting claims; but a group policy holder may, by arrangement with the group insurer, draw drafts or checks in payment of claims due to the group policy holder subject to audit and review by the insurer.

 

 

EXISTING INSURANCE; CHOICE OF INSURER.

 

      Sec. 535.  When credit life insurance or credit health insurance is required as additional security for any indebtedness, the debtor shall, upon request to the creditor, have the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by him or of procuring and furnishing the required coverage through any insurer authorized to transact an insurance business within this state.

 

 

CHAPTER 22

 

CASUALTY INSURANCE CONTRACTS

 

      Sec. 536.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 537 to 540, inclusive, of this act.

 

 

CONTRACTS SUBJECT TO GENERAL PROVISIONS.

 

      Sec. 537.  All contracts of casualty insurance covering subjects resident, located or to be performed in this state are subject to the applicable provisions of sections 374 to 403, inclusive, of this act (the insurance contract), and to other applicable provisions of this code.

 

 

UNINSURED VEHICLE COVERAGE; INSOLVENCY OF INSURER.

 

      Sec. 538.  1.  No policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle shall be delivered or issued for delivery in this state with respect to any such motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages, from owners or operators of uninsured or hit-and-run motor vehicles, for bodily injury, sickness or disease, including death, resulting from the ownership, maintenance or use of such uninsured or hit-and-run motor vehicle; but no such coverage shall be required in or supplemental to a policy issued to the State of Nevada or any political subdivision thereof, or where rejected in writing, on a form furnished by the insurer describing the coverage being rejected, by an insured named therein, or upon any renewal of such policy unless the coverage is then requested in writing by the named insured.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1778 (Chapter 660, AB 416)ê

 

rejected in writing, on a form furnished by the insurer describing the coverage being rejected, by an insured named therein, or upon any renewal of such policy unless the coverage is then requested in writing by the named insured. The coverage required in this section may be referred to as “uninsured vehicle coverage.”

      2.  The amount of coverage to be so provided shall be not less than the minimum limits for bodily injury liability insurance provided for under the Motor Vehicle Safety Responsibility Act (chapter 485 of NRS).

      3.  For the purposes of this section the term “uninsured motor vehicle” also includes, subject to the terms and conditions of such coverage, an insured other motor vehicle where:

      (a) The liability insurer of such other motor vehicle is unable because of its insolvency to make payment with respect to the legal liability of its insured within the limits specified in its policy; and

      (b) The occurrence out of which such legal liability arose took place while the uninsured motor vehicle coverage required under paragraph (a) was in effect; and

      (c) The insolvency of the liability insurer of such other motor vehicle existed at the time of, or within 1 year after, such occurrence.

      Nothing contained in this subsection shall be deemed to prevent any insurer from providing insolvency protection to its insureds under more favorable terms.

      4.  In the event of payment to any person under uninsured motor vehicle coverage, and subject to the terms of such coverage, to the extent of such payment the insurer shall be entitled to the proceeds of any settlement or recovery from any person legally responsible for the bodily injury as to which such payment was made, and to amounts recoverable from the assets of the insolvent insurer of the other motor vehicle.

 

 

ARBITRATION PROVISION NOT BINDING.

 

      Sec. 539.  No provision for arbitration contained in an automobile liability or motor vehicle liability insurance policy delivered, issued for delivery or renewed in this state is binding upon the named insured or any person claiming under him.

 

 

POLICY PROVIDING CERTAIN AUTOMOBILE COVERAGE IN MEXICO.

 

      Sec. 540.  An authorized casualty insurer may issue through its licensed agents an automobile insurance policy in which coverage for liability resulting from bodily injury and property damage occurring in Mexico is provided by an insurer authorized to transact and transacting such insurance in Mexico under the laws of Mexico, in a portion of such policy or endorsement thereon or rider attached thereto executed by or on behalf of such other insurer, and whether or not such other insurer is authorized to transact insurance in this state.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1779 (Chapter 660, AB 416)ê

 

CHAPTER 23

 

PROPERTY INSURANCE CONTRACTS

 

      Sec. 541.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provision set forth as section 542 of this act.

 

 

CONTRACTS SUBJECT TO GENERAL PROVISIONS.

 

      Sec. 542.  All contracts of property insurance covering subjects located in this state are subject to the applicable provisions of sections 374 to 403, inclusive, of this act (the insurance contract), and to other applicable provisions of this code.

 

 

CHAPTER 24

 

SURETY INSURANCE CONTRACTS

 

      Sec. 543.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 544 to 546, inclusive, of this act.

 

 

CONTRACTS SUBJECT TO GENERAL PROVISIONS.

 

      Sec. 544.  All contracts of surety insurance covering subjects located or to be performed in this state are subject to the applicable provisions of sections 374 to 403, inclusive, of this act (the insurance contract), and to other applicable provisions of this code.

 

 

CORPORATE BONDS SATISFY LEGAL REQUIREMENTS.

 

      Sec. 545.  1.  Whenever a bond, undertaking, recognizance, guaranty or other obligation is required, permitted, authorized or allowed, or whenever the performance of any act, duty or obligation, or forbearance is required, permitted, authorized or allowed to be secured or guaranteed, such bond, undertaking, recognizance or other obligation, or such security or guaranty, may be executed by an insurer authorized in this state to transact surety insurance, and such insurers are authorized and empowered to execute all such instruments.

      2.  In case two or more of such insurers execute any such instrument, each of such insurers is hereby authorized and empowered to limit its liability therein to an amount less than the aggregate penalty of such instrument and also to limit its liability to a pro rata part of any and all losses under such instrument.

      3.  The execution by any such insurer of such bond, undertaking, recognizance, guaranty or other obligation by an officer, attorney in fact or other authorized representative shall be sufficient and be accepted as and be a full compliance with every law or other requirement now in force or that may hereafter be enacted or made that such bond, undertaking, recognizance, guaranty or like obligation be required or permitted or be executed by a surety or sureties, or that such surety or sureties be residents, house holders or free holders, or possess any other qualifications.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1780 (Chapter 660, AB 416)ê

 

or that may hereafter be enacted or made that such bond, undertaking, recognizance, guaranty or like obligation be required or permitted or be executed by a surety or sureties, or that such surety or sureties be residents, house holders or free holders, or possess any other qualifications.

 

 

ESTOPPEL TO DENY POWER.

 

      Sec. 546.  Any insurer which executes any surety contract as surety shall be estopped, in any proceeding to enforce the liability which it has assumed to incur, to deny its power to execute such contract or assume such liability.

 

 

CHAPTER 25

 

TITLE INSURANCE CONTRACTS

 

      Sec. 547.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 548 to 551, inclusive, of this act.

 

 

SCOPE OF CHAPTER.

 

      Sec. 548.  This chapter applies to all insurers transacting title insurance as defined in section 110 of this act, but does not apply to persons engaged in the business of compiling abstracts of title or the issuance of certificates of title where no liability is assumed in express terms for a specified amount.

 

 

“UNDERWRITTEN TITLE COMPANY” DEFINED.

 

      Sec. 549.  As used in this code, “underwritten title company” means any person engaged in the business of preparing title searches, title examinations and certificates or abstracts of title and upon the basis of which title insurance policies may be issued by a title insurer.

 

 

ADOPTION, PRINTING AND AVAILABILITY TO PUBLIC OF SCHEDULE OF FEES AND CHARGES FOR TITLE POLICIES, ESCROW AND OTHER SERVICES; SCHEDULES; RATING SERVICES AND JOINT INSURING.

 

      Sec. 550.  1.  Every title insurer and every underwritten title company shall adopt, print and make available to the public the schedule of fees and charges for policies of title insurance.

      2.  Such schedule:

      (a) Shall show to the public the total premium, as defined in subsection 4 of section 92 of this act, for each type of policy regularly issued by the insurer, either by a statement of the particular charge for each type of policy in given amounts of coverage or by a statement of the charge per unit of the amount of coverage, or a combination of the two.

      (b) May include a statement that additional charges are made when unusual conditions of title are encountered or when special or unusual risks are insured against and that additional charges are made for special services rendered in connection with the issuance of a policy, the handling of an escrow, or the performance of other service.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1781 (Chapter 660, AB 416)ê

 

unusual conditions of title are encountered or when special or unusual risks are insured against and that additional charges are made for special services rendered in connection with the issuance of a policy, the handling of an escrow, or the performance of other service.

      (c) May provide different fees or charges for policies covering property in different counties, and for other services rendered in different counties, or separate schedules may be adopted for policies covering property in different counties, and for other services rendered in different counties.

      3.  Every title insurer and underwritten title company shall file with the commissioner the schedule of fees and charges, and every modification thereof, which it proposes to use. The filing shall state the effective date thereof, which shall be not less than 15 days after the date of the filing. The commissioner may by order suspend or modify the requirement of filing as to a specific service, the charges for which cannot practically be determined before the service is performed.

      4.  A title insurer may be a member or subscriber, and use the services, of a title insurance rating organization, and engage in joint underwriting and joint reinsurance of title insurance risks, in the same manner, with the same effect, and subject to the same applicable terms and conditions, as provided with respect to property and casualty insurances under sections 341 to 372, inclusive, of this act (rates and rating organizations).

 

 

TYPE, SIZE, DATING AND DISPLAY OF SCHEDULES; FURNISHING COPIES; CHANGE OR AMENDMENT OF SCHEDULES; FILE OF SCHEDULES, CHANGES AND AMENDMENTS.

 

      Sec. 551.  1.  The schedules provided for in section 550 of this act shall:

      (a) Be printed in type not smaller than 10-point;

      (b) Be dated to show the date they became effective; and

      (c) So long as they are effective, be kept at all times readily available to the public and prominently displayed in a public place in each of the offices of the title insurer or underwritten title company in the State of Nevada, and in each of the offices of any person authorized to issue the policy of title insurance of such insurer, or to perform the service of such insurer or underwritten title company, in the particular county to which they relate.

      2.  On request, copies of such schedules shall be furnished to the public.

      3.  All or any part of any schedule may be changed or amended at any time or from time to time. Each change or amendment shall be printed and dated to show the effective date of such change or amendment. No change or amendment shall become effective until at least 15 days after it has been filed with the commissioner and been displayed in the offices mentioned in subsection 1 in the same manner as provided for the display of schedules, and no change or amendment increasing fees or charges shall apply to policies or services ordered prior to the effective date of such change or amendment.


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ê1971 Statutes of Nevada, Page 1782 (Chapter 660, AB 416)ê

 

      4.  Each title insurer and each underwritten title company shall keep a complete file of its schedules and of all changes and amendments thereto until at least 5 years after they have ceased to be in effect, and such file shall be available for inspection by the commissioner at any appropriate time.

 

 

CHAPTER 26

 

FORMATION, CAPITALIZATION OF DOMESTIC STOCK, MUTUAL INSURERS; FINANCING OF INSURERS AND HOLDING CORPORATIONS

 

      Sec. 552.  Title 57 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 553 to 578, inclusive, of this act.

 

 

SCOPE OF PROVISIONS.

 

      Sec. 553.  This chapter applies to the formation, after the effective date of this act, of domestic stock and mutual insurers, to the capitalization of domestic stock insurers, and to the financing of domestic insurers of all types and of insurance holding corporations thereof.

 

 

INCORPORATION.

 

      Sec. 554.  1.  The general corporation laws of this state shall govern the incorporation of domestic stock and mutual insurers formed after the effective date of this act, where not in conflict with the express provisions of this code. In case of such conflict the express provisions of this code shall govern.

      2.  Such a domestic insurer shall be incorporated by not less than five individuals, each of whom must be a citizen of the United States of America. The articles of incorporation shall state the name and residence address of each of the true incorporators, and dummy incorporators shall not be used.

      3.  The articles of incorporation shall also state:

      (a) The names and addresses of each proposed director or officer who is not an incorporator;

      (b) The kind or kinds of insurance proposed to be transacted, in accordance with the definitions thereof contained in sections 103 to 110, inclusive, of this act;

      (c) If to be a stock insurer, the amount of authorized capital, the number of shares into which divided, and the par value of each such share, which par value shall be not less than $1. Shares without nominal or par value shall not be authorized. All authorized shares shall be of one class, with one vote per outstanding share and equal rights between outstanding shares as to dividends and distributions, and in all other respects; and

      (d) If to be a mutual insurer, the contingent liability of policy holders for payment of losses and expenses of the insurer, which liability shall be not less than one nor more than six times the policy holder’s premium at the annual rate for a term of 1 year, as specified in the articles of incorporation.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1783 (Chapter 660, AB 416)ê

 

for payment of losses and expenses of the insurer, which liability shall be not less than one nor more than six times the policy holder’s premium at the annual rate for a term of 1 year, as specified in the articles of incorporation. Such contingent liability may be rendered inoperative pursuant to the provisions of section 605 of this act (nonassessable policies).

      4.  The articles of incorporation of a proposed stock insurer shall require that all shares be issued at a price not less than par value, and shall not provide for stock options.

 

 

AMENDMENT OF ARTICLES OF INCORPORATION; APPROVAL OF COMMISSIONER; APPLICABILITY TO EXISTING INSURERS.

 

      Sec. 555.  1.  An amendment of articles of incorporation of a domestic insurer shall not be filed or accepted for filing with the secretary of state unless first submitted to and approved by the commissioner.

      2.  The insurer shall deliver executed quadruplicate originals of the proposed articles of amendment to the commissioner. If the commissioner finds the same to be in accordance with law, he shall endorse his approval on each set of the articles of amendment and return the same to the insurer. The insurer shall then file the original set with the secretary of state, one set with the commissioner, and otherwise as required by law. If the commissioner does not so find, he shall not approve the proposed articles of amendment, but shall return all sets to the insurer together with his written statement of the reasons for nonapproval.

      3.  After the effective date of this act, no existing domestic stock or mutual insurer shall amend its articles of incorporation in any way which would conflict with the requirements of this code as to a newly formed similar domestic insurer; but an existing domestic stock insurer with preferred stock already as part of its authorized capital shall have the right to increase or decrease the amount of the same or modify the rights and priorities thereof as otherwise permitted by law.

 

 

SOLICITATION PERMIT REQUIRED; PENALTY.

 

      Sec. 556.  1.  No person forming or proposing to form a domestic insurer, or insurance holding corporation thereof, or corporation to be attorney-in-fact for a domestic insurer, or proposing to secure funds for the formation or financing of a domestic reciprocal insurer, or production of insurance business therefore, or for an insurance holding corporation holding or proposing to hold securities of a domestic insurer, or for an attorney-in-fact corporation of a domestic reciprocal insurer, or for the formation or financing of a syndicate, association, firm, partnership or organization for any such purposes, shall in this state advertise or offer for sale any securities or policies, or solicit or receive any funds, subscriptions, applications, premiums or memberships, except as authorized by a currently effective permit (hereinafter in this chapter sometimes referred to as a “solicitation permit”) issued by the commissioner.

      2.  Every person violating this section is guilty of a felony.


…………………………………………………………………………………………………………………

ê1971 Statutes of Nevada, Page 1784 (Chapter 660, AB 416)ê

 

“INSURANCE HOLDING CORPORATION” DEFINED; MASSACHUSETTS TRUSTS.

 

      Sec. 557.  1.  As used in this code, an insurance holding corporation is a corporation, whether or not incorporated under the laws of this state, owning or holding, or proposing to own or hold, a controlling stock interest in a domestic stock insurer. Shares owned directly or indirectly by the corporation or by its subsidiary or affiliate corporation, firm or organization, or by its officers, directors or principal stock holders, shall be deemed to be owned or held by the corporation for the purposes of this section.

      2.  For the purposes of this chapter that type of organization known as a “Massachusetts trust” shall be deemed to be a corporation.

 

 

EXEMPTIONS.

 

      Sec. 558.  Section 556 of this act does not apply to:

      1.  Sales of securities not involving a public offering, and under a plan filed with and not disapproved by the commissioner; that is, sales on which no commission or other compensation is payable resulting from offers privately made to not over 20 persons (other than banks, savings associations, investment companies registered as such under the Investment Companies Act of 1940, registered securities dealers, investment houses and other financial institutions) within a 12-month period, and where all persons (including such banks, associations, companies, dealers, houses and institutions) so acquiring such securities do so for investment purposes only and not with a view to further distribution. The commissioner shall disapprove any such plan within 10 days after filing, or within such reasonable additional period as the commissioner may request within such 10 days, if found by him to be:

      (a) Unfair to any existing or proposed other holders of securities of the insurer; or

      (b) Unlawful.

      2.  Sales of securities by an insurance holding corporation for purposes which do not include the financing, directly or indirectly, of a domestic insurer.

      3.  Stock of the insurer or insurance holding corporation to be offered and sold (without payment of com