Regulatory Compliance Consulting Firm

Westmont Wire

California Supreme Court Upholds $27.5 Million Penalty Against Mercury Insurance

On August 16, the California Supreme Court denied an appeal by Mercury and thus upheld a $27.5 million fine issued by the Department of Insurance against Mercury Insurance Company.  The California Court of Appeals previously denied the appeal on May 8, as reported in a May 10 Westmont Wire.

The Department of Insurance found Mercury to be in violation of Proposition 103 due to its charging unapproved agents fees of $50 to $150 in addition to Mercury’s approved rates to over 180,000 automobile insurance customers. Mercury collected these charges from September 1999 to August 2004 and attempted to justify them by incorrectly claiming that their agents were actually brokers. The Department found that merely labeling these agents as brokers did not change their status under Prop 103. They concluded that the scheme violated consumer interests by incentivizing agents to place business through Mercury instead of competitors.

For any questions about the California Insurance Department’s decision, or for inquiries regarding compliant agency and broker strategies, licensing and contracting please contact Westmont Associates.

North Carolina Adopts Changes to Its Surplus Lines Regulations


House Bill 220, recently signed into law by the Governor of North Carolina makes significant changes to North Carolina’s surplus lines requirements.

HB 220 removes the North Carolina Surplus Line Association’s obligation to submit an annually updated list of surplus lines licensees. The Bill also requires that the record of each contract which a surplus lines licensee places and maintains in its office, include a copy of the compliance agreement. Furthermore, HB 220 provides for a complete repeal of N.C. Gen. Stat. § 58-21-80, removing a surplus lines licensee’s quarterly reporting requirement. Reporting is no longer required to be on standardized forms prescribed by the Commissioner.

Additionally, HB 220 modifies the Department of Insurance’s ability to suspend, revoke, or refuse to renew a license. Under the amended N.C. Gen. Stat. § 58-21-95, the Department may no longer impose such penalties on a licensee for removing their office from North Carolina. The Bill further clarifies the Department’s powers to suspend or revoke a license by removing “Failure to maintain the required bond” from the list of punishable offenses and replacing that with “Failure to pay the stamping fee to the stamping office”. A bond is no longer required in North Carolina.

For any questions regarding House Bill 220, or for surplus lines regulatory inquiries, please contact Westmont Associates, Inc.

North Carolina Limits Insurer Investment Abilities

On July 26, 2019, Governor Roy Cooper signed House Bill 220, imposing a limit on the amount a domestic insurer may invest in its affiliates. After finding a loophole in the North Carolina Code, HB 220 amends N.C. Gen. Stat. § 58-19-10 to now state a domestic insurer may invest in the stock of one or more “affiliates or” subsidiaries, amounts that do not exceed the lesser of 10% of admitted assets or 50% of policyholders surplus. North Carolina’s investment laws, which had originally only focused on investments in subsidiaries, now apply to investments in an insurer’s affiliates as well.

For questions regarding North Carolina’s investment limitation, or any inquiries about insurance investment regulations, please contact Westmont Associates, Inc.



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