Alabama State Regulations & NAIC Insurance Law

Licensing

To apply for an Alabama resident producer’s license, you must:

• Be at least 18 years old.
• Be an Alabama resident before you submit your application. Alabama’s licensing law defines a producer’s home state as the state where the producer maintains a principal place of residence or principal place of business (Ala. Code § 27-7-1(3)).

Under the Beason-Hammon Taxpayer and Citizen Protection Act, Alabama must verify the citizenship of all applicants. There are sixteen acceptable identifiers. Your official driver’s license (front and back) is one option, and any one of the approved identifiers can be used as proof.

Pre-licensing course and exam

Alabama’s prelicensing education rule was repealed effective January 1, 2024 (Ala. Admin. Code r. 482-1-147-.03), and a resident applicant must pass the examination for the lines of authority applied for, which may be taken as separate or combined examinations (Ala. Admin. Code r. 482-1-147-.06(8)), apart from the exemptions the statute lists, such as limited lines (Ala. Code § 27-7-5(a)).

An Alabama producer licensing examination is passed with a score of 70 or more out of 100 (Ala. Admin. Code r. 482-1-147-.06(4)). An individual who fails two examinations for a line of insurance may not take another for that line until three months after the last failed examination, and after two more failures, not until six months after the last unsuccessful examination (Ala. Code § 27-7-4.3(e)).

Fingerprints/background check

The Commissioner reviews an applicant’s background before issuing a license, and many states require applicants to submit fingerprints for a state and FBI criminal history check as part of the application. Alabama is one of them: Alabama requires a criminal history record check on each initial resident applicant for a producer license, and each must submit a full set of fingerprints for state and FBI criminal history record checks; limited lines producers are excepted (Ala. Code § 27-7-4.4).

Controlled business

Controlled business is insurance written on the producer’s own life, property or interests, or on those of the producer’s family, employer or a business the producer controls.

Non-resident license

A producer licensed in another state can obtain an Alabama nonresident license without taking Alabama’s examination. Under the NAIC’s Producer Licensing Model Act, which most states have adopted in some form, a nonresident receives the license if the person:

• Is currently licensed as a resident, and in good standing, in the home state
• Has applied (the home-state application or the Uniform Application) and paid the fees
• Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Under the same model, a producer who moves to another state files a change of address, with certification from the new home state, within 30 days. A licensed producer who moves into a state applies for a resident license there within 90 days and does not repeat prelicensing education or the examination for lines already held. Alabama’s statute has both rules: a resident producer who moves from Alabama to another state files a change of address and provides certification from the new resident state within 30 days of the change of legal residence, with no fee or license application (Ala. Code § 27-7-28(c)), and a producer licensed in another state who moves to Alabama applies for a resident license within 90 days of establishing legal residence, with no prelicensing education or examination for any line of authority previously held (Ala. Code § 27-7-29.1(b)). An applicant previously licensed in another state for the same lines of authority is also exempt from the examination if that license is current, or the application is received within 90 days of its cancellation and the applicant was in good standing (Ala. Code § 27-7-29.1(a)).

Alabama follows the model: unless denied under its disciplinary grounds, a nonresident receives an Alabama producer license if the person has submitted the home-state application or the Uniform Application, has requested the license and paid the fees, lives in a home state that awards nonresident producer licenses to Alabama residents on the same basis, and is currently licensed as a resident and in good standing in the home state (Ala. Code § 27-7-28(a)).

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:

• The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
• A member or employee of a business entity producer, on the death or disability of its designated producer
• The designee of a producer entering active military service

Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.

The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts. Alabama’s statute names the same three cases and the public-interest case, and gives the Commissioner the same powers: to limit a temporary licensee’s authority by order, to require a suitable sponsor who is a licensed producer or insurer and assumes responsibility for all of the temporary licensee’s acts, and to impose other similar requirements designed to protect insureds and the public (Ala. Code § 27-7-23(a), (f)).

Alabama may issue a temporary producer license, without an examination or prelicensing course, where it is necessary for servicing an insurance business, for example to the surviving spouse or court-appointed personal representative of a producer who dies or becomes disabled; it is valid for not over six months and may not be renewed, except once when the producer has a disabling or confining illness or injury (Ala. Code § 27-7-23). An applicant in a course of study approved by the Commissioner and supervised by the insurer may also hold a temporary license for six months pending the examination (Ala. Code § 27-7-24).

Military service

An Alabama producer who cannot comply with license renewal procedures because of military service or another extenuating circumstance, such as a long-term medical disability, may request a waiver of those procedures, and of any examination requirement or other fine or sanction imposed for failing to comply with them (Ala. Code § 27-7-14.1(d)).

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

An Alabama producer license is renewed every two years, based on the licensee’s month and year of birth (Ala. Admin. Code r. 482-1-110-.04). A license held by a producer born in an odd-numbered year expires, if not renewed, at the end of the producer’s birth month in every odd-numbered year, and one held by a producer born in an even-numbered year at the end of the birth month in every even-numbered year; an initial license does not expire within its first 90 days but continues until the next biennial expiration date (Ala. Admin. Code r. 482-1-110-.04(2)(a)).

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

An Alabama producer who lets a license lapse may reinstate it without passing an examination within 12 months of the renewal fee’s due date, and a renewal fee received after the due date carries a penalty of double the unpaid renewal fee (Ala. Code § 27-7-14.1(c)). Under the Department’s rule, a license not renewed by its expiration date may still be renewed during the first 30 days after it expires, with reinstatement retroactive to the expiration date (Ala. Admin. Code r. 482-1-110-.04).

Continuing education

All states, including Alabama, have continuing education requirements that must be met to renew any major lines (life, health, property, liability) insurance license.

Individuals licensed in the state of Alabama must complete continuing education, part of which must cover ethics, prior to renewing their license. The number of hours required is set by state law and published by the state insurance department. In Alabama, a producer or service representative licensed for the life or property lines of authority, or for bail bonds, completes at least 24 classroom hours of approved courses with each biennial renewal, 3 of them on insurance producer ethics, unless exempt (a producer licensed for less than twelve months at the first renewal is one); one employed to work only in the office of the employer, and not licensed as a nonresident in any other state, completes at least 12 classroom hours instead, 2 of them on ethics (Ala. Admin. Code r. 482-1-110-.03(2); Ala. Admin. Code r. 482-1-110-.05(1), (4), (5)).

Notice of change of name or address

An Alabama producer reports a change of name, mailing address or email address within 30 days; there is no fee for the report, but failing to report within 30 days carries a $50 penalty (Ala. Admin. Code r. 482-1-147-.07(8)).

The model also requires a producer to report to the regulator within 30 days any administrative action taken against the producer in another state or by another government agency, counted from the final disposition, and any criminal prosecution in any jurisdiction, counted from the initial pretrial hearing date. Alabama’s statute requires both reports within 30 days: an administrative action taken in another jurisdiction or by another governmental agency in Alabama, counted from the final disposition, and a criminal prosecution in any jurisdiction, counted from the initial pretrial hearing date (Ala. Code § 27-7-39). A producer who does business under any name other than their legal name must notify the regulator before using it.

Company regulations

An insurance company must be authorized by the Department of Insurance to conduct business in Alabama. To receive a certificate of authority, the company applies to the Commissioner and files its charter or articles of incorporation, financial statements showing that it meets the state’s capital and surplus requirements, and the other documents and fees the state requires.

Capital and surplus requirement

A company that has been authorized to conduct insurance business in Alabama must maintain minimum standards as a corporation. The certificate of authority allows the insurer to conduct business in the state only if it maintains the minimum capital or permanent surplus required. In Alabama, the Commissioner must suspend or revoke the certificate of authority of an insurer that no longer meets the requirements for the authority originally granted, on account of deficiency of assets or otherwise (Ala. Code § 27-3-20(a)(2)). For a domestic insurer, the Commissioner first gives time to cure: when a domestic stock insurer’s capital becomes impaired, or a domestic mutual insurer’s assets fall below its liabilities and its required minimum surplus, the Commissioner at once serves notice on the insurer to make good the deficiency within 60 days, and an insurer that does not is deemed insolvent and placed in delinquency proceedings (Ala. Code §§ 27-27-2, 27-27-41(a), (c)).

Duties of the Commissioner of Insurance

The Alabama Commissioner of Insurance is a state executive position in the Alabama government. The Commissioner is the chief executive of the Alabama Department of Insurance, which regulates insurance companies operating in Alabama. The Commissioner of insurance is appointed by the governor.

The Commissioner is responsible for establishing and enforcing regulations in the Alabama insurance market in a manner that protects consumers and encourages economic development.

Those duties include:

• Investigate all claims and complaints of legal violations relating to insurance.

• If the Commissioner finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution. In Alabama, when the Commissioner has reason to believe a person has violated a provision of the insurance title for which criminal prosecution would be in order, the Commissioner gives the information to the Attorney General or the district attorney having jurisdiction (Ala. Code § 27-2-19).

• Monitor transactions of all companies including domestic, foreign, and alien insurance companies.

• Examine the financial condition of insurers; the NAIC’s model examination law calls for every insurer to be examined at least once every five years. Alabama’s Commissioner examines each authorized insurer as often as the Commissioner deems appropriate, and at a minimum examines every insurer licensed in the state at least once every five years, to determine its financial condition, its ability to fulfill its obligations and its compliance with the law (Ala. Code § 27-2-21(a)).

• Audit the books and records of any resident producer as frequently as necessary. Under the NAIC’s examination model, the regulator may examine any person subject to its authority, nonresident producers included, as often as it considers appropriate. In Alabama, the Commissioner may examine a producer’s accounts, records, documents and transactions when the Commissioner has reason to believe the producer has violated or is violating the insurance title, or upon a complaint by an Alabama resident indicating that a violation may exist (Ala. Code § 27-2-20(a)).

• Collect all fees associated with producers and insurers.

• Determine and administer fines associated with violations for insurers and producers.

• Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.

• Approve documentation used by insurance companies such as forms and rates.

The Commissioner also oversees the state Fire Marshal’s Office, which investigates “suspicious fires and explosions,” and enforces the state’s fire code through building inspections.

Sidenote

Know this...

Under Alabama’s insurance code, the Commissioner does not have the authority to arrest, issue injunctions or sentence jail time.

In Alabama, investigators of the Department’s Insurance Fraud Unit have the powers of law enforcement officers, including the power of arrest (Ala. Code § 27-12A-40).

Suspend, revoke or non-renew

The DOI has the authority to suspend, revoke, or refuse to renew a license for:

• Providing false information on the application for an insurance license.

• Providing incorrect, misleading, incomplete, or materially untrue information in any application or in any communication to the Commissioner (Ala. Code § 27-7-19(a)(2)).

• Being found guilty of a violation or the noncompliance of insurance regulations and laws…

• Committing fraud while attempting to obtain an insurance license.

• Improperly withholding, misappropriating or converting any money or property belonging to insurers, insureds or others that was received in the course of business.

• Providing false information in reference to the terms and conditions of an insurance contract.

• Having been convicted of a felony.

• Having admitted or been found to have committed any insurance unfair trade practice or fraud.

• Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.

• Having had a prior insurance license revoked or suspended in a state other than Alabama. In Alabama, the ground is having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory (Ala. Code § 27-7-19(a)(11)).

• Using another person’s identity and forging their name on an insurance application.

• Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

If the DOI finds that a producer has violated the state’s insurance laws, the DOI may order the producer to cease and desist. The recipient of a cease and desist order has not had his/her registration suspended or revoked, but is required to stop or limit the activity addressed in the order.

Hearing and penalties

A person facing action by the Commissioner is entitled to notice and an opportunity for a hearing, within time limits set by Alabama law, and may ask a court to review the final order. Under Alabama’s trade practices law the hearing comes first: the Commissioner serves a statement of the charges and notice of a hearing, and issues a cease and desist order only if, after the hearing, a violation is found (Ala. Code § 27-12-18).

In an Alabama proceeding against a licensee, the licensee files a written answer within 30 days after being served with the complaint, and notice of the hearing is served at least 20 days before the hearing date (Ala. Code § 27-7-37(d), (e)). A party aggrieved by the Commissioner’s order on hearing may appeal within 30 days after the order is mailed or delivered (Ala. Code § 27-2-32(a)).

A violation of the insurance laws can bring a civil penalty in addition to action against a license. Some violations are also crimes.

In Alabama, unless a greater fine is specifically provided elsewhere in the code, a person may, after a hearing, be subject to a civil fine of up to $10,000 per violation, in addition to or instead of probation, denial, suspension or revocation of a license (Ala. Code § 27-7-19(c)).

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice. Alabama’s own statute bars an insurer from refusing, without just cause, to pay or settle claims under its policies with such frequency as to indicate a general business practice (Ala. Code § 27-12-24), and the Department’s rule sets minimum standards for the investigation and disposition of property and casualty claims (Ala. Admin. Code r. 482-1-125).

• Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form.

• Failing, in the case of claims denials or offers of compromise settlement, to promptly provide a reasonable and accurate explanation of the basis for such actions.

• Refusing to pay claims without conducting a reasonable investigation.

• Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.

• Denying a claim without conducting a thorough investigation.

• Attempting to settle or settling a claim for less than the amount a reasonable person would believe the insured or beneficiary was entitled to by reference to written or printed advertising material accompanying or made part of an application.

Policy forms

Insurers file their policy forms with the Commissioner.

In Alabama, a policy or annuity contract form, an application form made part of the policy, or a rider or endorsement form may not be delivered or issued for delivery until it has been filed with and approved by the Commissioner. It is filed at least 30 days before delivery and is deemed approved at the end of that period unless the Commissioner has approved or disapproved it; the Commissioner may extend the period by up to 30 more days (Ala. Code § 27-14-8).

Under the usual conformity rule, which many states’ insurance codes write into law, a policy provision that conflicts with state law does not make the policy invalid: the policy is read as amended to conform to the law. In Alabama, a policy provision that does not comply with the insurance title does not make the policy invalid; the policy is construed and applied as if the provision complied with the title (Ala. Code § 27-14-16).

Record maintenance

An Alabama producer keeps complete records of the transactions under the producer’s license, at the producer’s place of business, for at least three years (two years for limited lines credit insurance business), furnishes the Commissioner a verified copy on request, and shows an insured the records of the insured’s policies on demand at any reasonable time during business hours (Ala. Code § 27-7-33).

Fraudulent producer representation

An insurance producer who represents to the public that he/she is licensed to conduct insurance business in Alabama, but is not licensed for that line of authority, is in violation of regulation. Any means of public communication using advertisements, letterheads, circulars, business cards, and other methods of representation are included in the definition of impersonating a licensed producer. In Alabama, the test is the license: no person may sell, solicit or negotiate insurance for any class of insurance unless licensed for that line of authority (Ala. Code § 27-7-4(a)).

A producer found guilty of conducting business in Alabama in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

• Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited. Under the NAIC’s model act, any estimate, illustration or statement that misrepresents a policy’s benefits, advantages, conditions or terms is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

• Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.

• Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation under the NAIC’s model act (twisting). Alabama’s twisting statute reaches such a statement when it misrepresents, or makes misleading incomplete comparisons of, a policy’s terms, conditions or benefits (Ala. Code § 27-12-6).

False advertising

Making, publishing or circulating an advertisement, announcement or statement about the business of insurance that is untrue, deceptive or misleading is an unfair trade practice under state law, based on the NAIC’s model act. The medium does not matter: the rule reaches newspapers, magazines, radio and television, and also notices, circulars, pamphlets, letters, posters and any other way of placing the statement before the public. Under the model act, such a statement is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice. Some state laws adopt this condition, and others reach a single such statement. Alabama’s trade practices law has no separate false-advertising section, and Alabama’s advertising rules cover life insurance and annuities (Ala. Admin. Code r. 482-1-132) and disability insurance (Ala. Admin. Code r. 482-1-013).

Defamation

Defamation of an insurer is an unfair trade practice under state law, based on the NAIC’s model act: making, publishing or circulating an oral or written statement that is false, or maliciously critical of or derogatory to the financial condition of an insurer, and that is calculated to injure such insurer. Some states’ laws reach further, to a statement calculated to injure any person engaged in the business of insurance. Spreading an untrue rumor that a competing insurer is about to fail is the classic example.

Boycott, coercion and intimidation

In Alabama, no person may 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 monopoly in, the business of insurance (Ala. Code § 27-12-8).

False financial statements

Knowingly making a false or fraudulent statement or representation in, or relative to, an application for insurance is prohibited in Alabama (Ala. Code § 27-12-23), and so is making or circulating a false statement of an insurer’s financial condition, or a false entry in its books, with intent to deceive (§ 27-12-7).

Illegal inducements

Offering anything of value not specified in the policy (money, a service, a favor or a gift) as an inducement to buy insurance is prohibited unless state law expressly allows it, and any agreement made as part of the sale must be written into the policy.

Alabama prohibits rebating: no person may give or offer, as an inducement to life insurance, an annuity or disability insurance, any rebate of premiums or any valuable consideration or inducement not specified in the contract (Ala. Code § 27-12-12(a)), and no property, casualty or surety insurer, agent or broker may give a rebate, discount, abatement, credit or reduction of the premium named in a policy, except as provided in rating systems the Commissioner has approved (Ala. Code § 27-12-14(a)). For life and disability insurance and annuities, the law expressly does not treat certain practices as rebates, among them paying policyholders bonuses or abating their premiums out of surplus accumulated from nonparticipating insurance, when fair and equitable to policyholders, and issuing policies on a salary savings, bank draft or payroll deduction plan at a reduced rate reasonably related to the savings (Ala. Code § 27-12-13).

Under Alabama’s rule on free gifts, a gift offered to invite an inquiry or a quote from the insurance-buying public, and not as an inducement to enter into an insurance contract, may be worth no more than $100, one gift per individual or family, and may not be cash (Ala. Admin. Code r. 482-1-088-.04(1); Ala. Admin. Code r. 482-1-088-.05(1)).

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act prohibits:

• Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
• Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
• Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
• In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind. Alabama’s own unfair discrimination provision covers life insurance, annuities and disability insurance: it bars unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity contracts, and in the premiums, fees, rates, benefits or terms of disability insurance (Ala. Code § 27-12-11).

Errors & Omissions

Errors & Omissions (E&O) insurance is a type of professional liability insurance that protects insurance agents if they are sued for negligent performance of their duties. E&O only covers honest mistakes resulting in (financial) damage to customers/prospects. There is no coverage for intentional misconduct, criminal acts, or regulatory fines.

Rebating

Alabama licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance. Alabama’s statutes are broader. For life insurance, annuities and disability insurance, no person may give or offer, as an inducement, any rebate of premiums, any special favor or advantage in the dividends or other benefits, or any valuable consideration or inducement not specified in the contract (Ala. Code § 27-12-12(a)). For property, casualty and surety insurance, no insurer or its employee, and no broker, agent or solicitor, may give or offer, as an inducement to insurance or after the insurance has been effected, any rebate, discount, abatement, credit or reduction of the premium, any special favor or advantage in the dividends or other benefits, or any valuable consideration or inducement not specified in the policy (Ala. Code § 27-12-14(a)).

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

The splitting or sharing of commissions with a licensed producer is allowed. Both parties must be licensed in the line of business in which the proposed commission is to be split. Under the NAIC’s model act, a commission may also be paid to an insurance agency, or to a person who does not sell, solicit or negotiate insurance. Both rules are in Alabama’s own statute: a producer may divide or share commissions only with other producers licensed as to the same kinds of insurance (Ala. Code § 27-7-35(a)), and an insurer or producer may pay or assign commissions to an insurance agency or to persons who do not sell, solicit or negotiate insurance in Alabama, unless the payment would violate the trade practices law (Ala. Code § 27-7-35.1(d)).

Twisting

Alabama’s twisting rule is about the policy: it bars statements misrepresenting, or making misleading incomplete comparisons of, a policy’s terms, conditions or benefits to induce a policyholder to lapse, forfeit, surrender, retain, exchange or convert it (Ala. Code § 27-12-6). Any written or oral statements used to induce the lapse, termination, exchange, or surrender of an insurance contract based on inaccurate information is prohibited.

Under the NAIC’s model act, twisting is a misrepresentation made to induce a policyholder to lapse, forfeit, surrender, exchange or convert a policy. A false or maliciously critical statement about a competing insurer’s finances, made to injure it, is defamation.

Unfair marketing practices

The DOI is responsible for establishing minimum standards for the full and fair disclosure of policy content. It also requires the standardization and simplification of the terms used to describe insurance coverage. Advertising may not involve the following:

• Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.

• Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

In Alabama, the advertising rules are written for life insurance and annuities (Ala. Admin. Code r. 482-1-132) and for disability insurance (Ala. Admin. Code r. 482-1-013). A deceptive practice in property or casualty advertising that no section of Alabama’s trade practices law defines is reached through a hearing, a written report of the Commissioner’s findings and a court injunction sought through the Attorney General (Ala. Code § 27-12-21).

Gramm-Leach Bliley Act (GLBA)

This law repealed the parts of the Glass-Steagall Act of 1933 that kept commercial banks and securities firms apart, and allowed the consolidation of commercial banks, investment institutions and insurance companies. GLBA established a framework of responsibilities of federal and state regulators for these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.

McCarran-Ferguson Act

Federal law signed in 1945 in which Congress declared that the insurance industry would be regulated at the state level. Grants insurers a limited exemption from federal antitrust legislation. Since 2021 the exemption does not cover the business of health insurance, apart from narrow activities such as sharing historical loss data (15 U.S.C. § 1013(c)).

National Association of Insurance Commissioners (NAIC)

The U.S. standard-setting and regulatory support organization is created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA, 15 U.S.C. 1681) regulates consumer reporting agencies and the use of consumer reports, such as credit reports, MIB records and investigative reports, including in insurance underwriting.

• When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
• When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

The federal Privacy Act of 1974 governs how federal agencies handle personal information. It does not apply to private insurers. An insurer’s use of an applicant’s personal information is governed by the FCRA, the Gramm-Leach-Bliley Act and state insurance privacy law.

In states that adopted the NAIC’s Insurance Information and Privacy Protection Model Act, an authorization to collect personal information signed with an application is valid for no more than 30 months for life, health or disability insurance and one year for property or casualty insurance.

Under the same model act, a person told of an adverse underwriting decision may ask in writing, within 90 business days of the notice, for the specific reasons for it, which must be given within 21 business days of the request.

Telemarketing

The National Do Not Call Registry is a list of telephone numbers whose owners do not want to receive telemarketing calls. Telemarketers may not call registered numbers without the person’s permission or an established business relationship, and unsolicited sales calls:

• May be made only between 8 a.m. and 9 p.m. in the recipient’s local time under federal rules; Alabama’s own rule is narrower, allowing live solicitation calls to Alabama consumers only between 8 a.m. and 8 p.m. and none on Sundays or holidays (Ala. Admin. Code r. 770-X-5-.17(2)(b))
• Must give the caller’s name, the name of the company the call is made for, and a telephone number or address at which that company can be contacted

CAN-SPAM

A commercial email must:

• Be identified clearly as an advertisement
• Carry accurate header information and a subject line that is not deceptive
• Include the sender’s valid physical postal address
• Offer a way to opt out, and the sender must honor an opt-out within 10 business days

Insurance guaranty association

Every state has a property and casualty insurance guaranty association that pays covered claims when a member insurer becomes insolvent. Insurers licensed to write the covered lines in the state must belong to it, and it is funded by assessments on its members.

Alabama’s property and casualty guaranty association is the Alabama Insurance Guaranty Association, and member insurers must belong to it as a condition of their authority to transact insurance in the state (Ala. Code § 27-42-6). It pays the full amount of a covered claim for workers’ compensation benefits, up to $10,000 per policy for the return of unearned premium, and up to $300,000 per claim, or the policy limits if less, for all other covered claims (Ala. Code § 27-42-8(a)(1)).

Auto insurance state minimum

A state’s financial responsibility law sets the minimum liability an auto policy must carry, written as a split limit: the first number is bodily injury liability per person, the second bodily injury liability per accident, and the third property damage liability per accident, each in thousands of dollars.

Alabama requires auto liability coverage of at least $25,000 for bodily injury to or death of one person, $50,000 for bodily injury to or death of two or more persons in one accident and $25,000 for property damage in one accident, or 25/50/25 (Ala. Code § 32-7-6(c); Ala. Code § 32-7A-4(b)).

Cancellation and nonrenewal notice

Alabama’s limits on cancelling a personal auto liability policy, one naming an individual and insuring private passenger or other light non-business vehicles (Ala. Code § 27-23-20(1)), do not apply to a policy in effect less than 60 days when notice of cancellation is mailed or delivered, unless it is a renewal (Ala. Code § 27-23-21(b)). For a policy they cover, a cancellation notice is effective only if mailed or delivered at least 20 days before the effective date, or at least 10 days, with the reason, when the cancellation is for nonpayment of premium (Ala. Code § 27-23-23).