NRS: CHAPTER 685B - UNAUTHORIZED INSURERS; PROHIBITIONS, PROCESS AND ADVERTISING

[Rev. 6/29/2024 4:58:27 PM--2023]

CHAPTER 685B - UNAUTHORIZED INSURERS; PROHIBITIONS, PROCESS AND ADVERTISING

GENERAL PROVISIONS

NRS 685B.010 Purpose of chapter.

UNAUTHORIZED TRANSACTION OF INSURANCE

NRS 685B.030 Transaction of unauthorized insurance business unlawful; exceptions; venue; effect.

NRS 685B.035 Remedies available to Commissioner; limitation on granting authorization as surplus lines insurer or issuing license; statute of limitations for commencement of proceedings.

NRS 685B.040 Injunctive relief.

NRS 685B.050 Service of process on unauthorized insurer.

NRS 685B.060 Requirements for defense of action: Bond or other security or certificate of authority.

NRS 685B.070 Enforcement of foreign decrees.

NRS 685B.080 Penalty; liability for payment of premium taxes.

NRS 685B.083 Penalty for representing or aiding unauthorized insurer.

NRS 685B.087 Penalty for transaction of unauthorized insurance business.

FALSE ADVERTISING

NRS 685B.090 Short title.

NRS 685B.100 Prohibited misrepresentations; notice to supervisory officer of insurer’s domiciliary state or province.

NRS 685B.110 Action by Commissioner; penalty.

PERSONS SUBJECT TO REGULATION

NRS 685B.120 Person providing specified coverage; exception.

NRS 685B.130 Proof of regulation by Federal Government.

NRS 685B.140 Submission to examination of Commissioner.

NRS 685B.150 Information to be provided to agents, brokers and others.

NRS 685B.160 Statement of charges; notice of hearing.

NRS 685B.170 Order after hearing; administrative fines; modification of order.

NRS 685B.180 Review of order; time order becomes final.

NRS 685B.190 Administrative fine for violation of order.

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GENERAL PROVISIONS

NRS 685B.010 Purpose of chapter. 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.

(Added to NRS by 1971, 1681)

UNAUTHORIZED TRANSACTION OF INSURANCE

NRS 685B.020 Short title. NRS 685B.020 to 685B.087, inclusive, constitute and may be cited as the Unauthorized Insurers Act.

(Added to NRS by 1971, 1681)

NRS 685B.030 Transaction of unauthorized insurance business unlawful; exceptions; venue; effect.

1. As used in this section unless otherwise indicated, “insurer” includes:

(a) All corporations, associations, partnerships and natural persons engaged as principals in the business of insurance, including a fraternal benefit society, a nonprofit corporation offering dental, hospital and medical services, a health maintenance organization, a prepaid limited health service organization, an organization for dental care, a dental plan, an optometric plan or a similar health service plan; and

(b) Interinsurance exchanges and mutual benefit societies.

2. It is unlawful for any insurer to transact an insurance business in this State as set forth in subsection 3, without a certificate of authority from the Commissioner. This section does not apply to:

(a) Any transaction for which a certificate of authority is not required pursuant to NRS 680A.070.

(b) Attorneys at law acting in the ordinary relation of attorney and client in the adjustment of claims or losses.

(d) Transactions in this State relative to a policy issued or to be issued outside this State involving insurance on vessels, craft or hulls, cargoes, 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.

3. Any of the following acts in this State effected by mail or otherwise by or on behalf of an unauthorized insurer constitutes 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.

(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 after 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 that are resident, located or to be performed in this State. The provisions of this paragraph do not prohibit full-time salaried employees of a corporate insured from acting in the capacity of an insurance manager or buyer in placing insurance on behalf of such an 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 does not impair the validity of any act or contract of the insurer and does not prevent the insurer from defending any action at law or suit in equity in any court of this State, except that no insurer transacting insurance business in this State without a certificate of authority may 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 the insurer has obtained a certificate of authority. In the event of a failure by an unauthorized insurer to pay any claim or loss within the provisions of an insurance contract, any person who assisted or in any manner aided directly or indirectly in the procurement of the insurance contract is liable to the insured for the full amount of the claim or loss in the manner provided by the provisions of the insurance contract.

(Added to NRS by 1971, 1681; A 1971, 1940; 1987, 485; 1991, 2032; 1993, 2391)

NRS 685B.035 Remedies available to Commissioner; limitation on granting authorization as surplus lines insurer or issuing license; statute of limitations for commencement of proceedings.

1. If the Commissioner has reason to believe that an insurer has committed or engaged in, is committing or engaging in, or is about to commit or engage in any practice, transaction or act prohibited by NRS 685B.030, the Commissioner may:

(a) Apply to the district court for injunctive relief pursuant to NRS 685B.040 and for an order imposing an administrative fine pursuant to NRS 685B.080;

(b) Issue a statement of charges and a notice of an administrative hearing to be held before the Commissioner on those charges and serve the statement and notice upon the person so charged; or

(c) Issue a cease and desist order if the Commissioner deems, in his or her discretion, that the insurer’s conduct is injurious to the rights and interests of the public or policyholders in this State and that emergency action is imperatively required. If the Commissioner issues a cease and desist order pursuant to this paragraph, the Commissioner shall hold a hearing within 30 days after a request by the insurer in accordance with the provisions of NRS 679B.310.

2. Any statement of charges and notice of an administrative hearing pursuant to this section must be:

(a) Issued as provided in NRS 679B.320; and

(b) Served personally or by certified or registered mail.

3. After the Commissioner conducts a hearing pursuant to this section, the Commissioner shall issue an order pursuant to NRS 679B.360. If the Commissioner determines that the person being charged has engaged in a practice prohibited by this title, the Commissioner:

(a) Shall order the person to cease and desist from that practice;

(b) May order the person to pay an administrative fine pursuant to NRS 685B.080; and

(c) Shall order the person to pay premium taxes at the same rate of tax as imposed by law on the premiums of similar coverages written by authorized insurers. If the person fails to pay premium taxes on or before March 1 of the year in which the taxes are due, the person is liable for the penalties set forth in NRS 685A.190.

4. The Commissioner may modify or set aside, in whole or in part, any order issued by the Commissioner pursuant to this section, but any such action must be made before the expiration of the time for taking an appeal or before the official record of the proceeding has been filed with the court.

5. An order issued pursuant to this section:

(a) May be reviewed pursuant to NRS 679B.370.

(b) Becomes final:

(1) Upon the expiration of the time for taking an appeal, if no petition for judicial review has been filed; or

(2) Upon the final decision of the court.

6. If a person violates an order issued pursuant to this section, the Commissioner may, after notice and a hearing, impose an administrative fine of not more than $5,000 for each violation.

7. The Commissioner shall not, sooner than 1 year after the date on which an order pursuant to this section has been issued, grant an authorization as a surplus lines insurer or issue any license pursuant to this title to the violator.

8. Except as otherwise provided by specific statute, the Commissioner shall commence a proceeding pursuant to this section against a person for committing an act of unauthorized insurance not later than 5 years after the date on which the act occurred.

(Added to NRS by 1993, 2391; A 1995, 1620; 1997, 3030)

NRS 685B.040 Injunctive relief.

1. Whenever the Commissioner believes, from evidence satisfactory to the Commissioner, that any insurer is violating or is about to violate the provisions of NRS 685B.030, 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.

(Added to NRS by 1971, 1683)

NRS 685B.050 Service of process on unauthorized insurer.

1. Any act of transacting an insurance business as set forth in NRS 685B.030 by any unauthorized insurer is equivalent to and constitutes an irrevocable appointment by such an insurer, binding upon the insurer, the insurer’s executor or administrator, or successor in interest if a corporation, of the Commissioner or the successor in office of the Commissioner, to be the true and lawful attorney of such an 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 an insurer. Any act of transacting an insurance business in this state by any unauthorized insurer is signification of its agreement that any such lawful process in such a court action, suit or proceeding and any such notice, order, pleading or process in such an administrative proceeding before the Commissioner so served is of the same legal force and validity as personal service or process in this state upon such an insurer.

2. Service of process in such an action must be made by delivering to and leaving with the Commissioner, or some person in apparent charge of the office of the Commissioner, two copies thereof and by payment to the Commissioner of the fee prescribed by law. Service upon the Commissioner as attorney is 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 a court proceeding or to whom the notice, order, pleading or process in such an 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 or her which must show the day and hour of service. Such service is sufficient if:

(a) Notice of such service and a copy of the court process or the notice, order, pleading or process in such an 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 an 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 a court proceeding or of the Commissioner in an administrative proceeding, showing compliance therewith are filed with the clerk of the court in which such an 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 is 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 45 days after the date of filing of the affidavit of compliance.

5. For the purposes of this section, “process” in an action in a court includes only a summons or the initial documents served in such an action. The Commissioner is not required to serve any documents in such an action after the initial service of process.

6. 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.

(Added to NRS by 1971, 1683; A 1985, 611)

NRS 685B.060 Requirements for defense of action: Bond or other security or certificate of authority.

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 NRS 685B.050, 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 NRS 680A.330 against such insurer with respect to its application if the Commissioner 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 NRS 685B.050, may in the discretion of the Commissioner order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of paragraph (a) of subsection 1 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 NRS 685B.050, on the ground that such unauthorized insurer has not done any of the acts enumerated in NRS 685B.030.

(Added to NRS by 1971, 1685)

NRS 685B.070 Enforcement of foreign decrees.

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.

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 is 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.

(Added to NRS by 1971, 1685)

NRS 685B.080 Penalty; liability for payment of premium taxes.

1. 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 for each act or violation.

2. In addition to the penalties provided in subsection 1, such a violator is liable, personally, jointly and severally with any other person liable therefor, for the payment of premium taxes at the same rate of tax as imposed by law on the premiums of similar coverages written by authorized insurers.

(Added to NRS by 1971, 1686; A 1993, 2393; 2003, 3303; 2005, 2131)

NRS 685B.083 Penalty for representing or aiding unauthorized insurer. Any producer of insurance or surplus lines broker licensed in this State who in this State knowingly represents or aids an unauthorized insurer in violation of the Unauthorized Insurers Act is guilty of a category B felony and shall be punished as provided in NRS 193.130.

(Added to NRS by 2005, 2131)

NRS 685B.087 Penalty for transaction of unauthorized insurance business. Any insurer who transacts any unauthorized insurance business as set forth in NRS 685B.030 is guilty of a category B felony and shall be punished as provided in NRS 193.130.

(Added to NRS by 2005, 2131)

FALSE ADVERTISING

NRS 685B.090 Short title. This section and NRS 685B.100 and 685B.110 constitute and may be referred to as the Unauthorized Insurers False Advertising Process Act.

(Added to NRS by 1971, 1687)

NRS 685B.100 Prohibited misrepresentations; notice to supervisory officer of insurer’s domiciliary state or province. 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, the Commissioner shall notify the insurer and the insurance supervisory officer of the insurer’s domiciliary state or province by registered or certified mail.

(Added to NRS by 1971, 1687)

NRS 685B.110 Action by Commissioner; penalty.

1. If within 30 days following the giving of the notice provided for in NRS 685B.100 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 the Commissioner in respect to such matters would be to the interest of the public, the Commissioner shall take action against such insurer under the provisions of NRS 686A.180 (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 NRS 685B.100, the Commissioner 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 in such action may be made upon the Commissioner pursuant to NRS 685B.050 or 686A.180 or in any other lawful manner.

(Added to NRS by 1971, 1687)

PERSONS SUBJECT TO REGULATION

NRS 685B.120 Person providing specified coverage; exception.

1. Any person who provides coverage in this State for the cost of:

(a) Medical care;

(b) Surgery;

(d) Physical therapy;

(e) Speech-language pathology;

(f) Audiology;

(g) Professional care of mental health;

(h) Dental care;

(i) Hospital care;

(j) Ophthalmic care;

(k) Naprapathy; or

(l) Ambulance services,

Ê whether the coverage provides for direct payment, reimbursement or any other method of payment, is subject to regulation by the Division and to the provisions of this Code unless the person shows that while providing such coverage the person is subject to regulation by the Federal Government.

2. A nonprofit corporation that provides prepaid ambulance services is not subject to regulation by the Division or to the provisions of this Code if the corporation presents evidence satisfactory to the Commissioner that the corporation is subject to regulation by a political subdivision of this State pursuant to an exclusive franchise which limits the number of times any such prepaid services may be used to a defined number that are medically necessary.

(Added to NRS by 1983, 959; A 1991, 1628; 1993, 1917, 2593; 1995, 579; 2023, 1709)

NRS 685B.130 Proof of regulation by Federal Government. A person may show that the person is subject to regulation by an agency of the Federal Government by providing the Commissioner with the appropriate certificate or other document which permits the person to provide those services.

(Added to NRS by 1983, 960)

NRS 685B.140 Submission to examination of Commissioner. Any person who is unable to show, upon request by the Commissioner, that the person is subject to regulation by an agency of the Federal Government or, if the person is providing prepaid ambulance services, by a political subdivision of this State pursuant to an exclusive franchise, shall submit to an examination by the Commissioner to determine the organization and solvency of the person and to determine whether the person is in compliance with the applicable provisions of this Code.

(Added to NRS by 1983, 960; A 1993, 2593)

NRS 685B.150 Information to be provided to agents, brokers and others. An administrator who advertises or administers coverage in this State which is:

1. Of a kind described in NRS 685B.120; and

2. Provided by a person described in NRS 685B.140,

Ê shall inform each agent, broker or other person who advertises, procures, renews, continues, sells or negotiates or solicits the sale of such coverage of the elements of the coverage, including the amount of excess insurance or reinsurance in effect.

(Added to NRS by 1983, 960)

NRS 685B.160 Statement of charges; notice of hearing.

1. If the Commissioner has reason to believe that a person described in NRS 685B.140 is providing any type of coverage described in NRS 685B.120, the Commissioner may:

(a) Issue a statement of charges and a notice of a hearing to be held on those charges; and

(b) Serve the statement and notice upon the person so charged.

2. The statement and notice must be:

(a) Issued as provided in NRS 679B.320; and

(b) Served personally or by certified or registered mail.

(Added to NRS by 1983, 960)

NRS 685B.170 Order after hearing; administrative fines; modification of order.

1. After the Commissioner conducts a hearing pursuant to NRS 685B.160, the Commissioner shall issue an order pursuant to NRS 679B.360. If the Commissioner determines that the person being charged has engaged in a practice prohibited by this Code, the Commissioner shall order the person to cease and desist from that practice.

2. If the person knew or reasonably should have known that he or she was in violation of this Code, the Commissioner may order the person to pay an administrative fine of not more than $10,000 for each act or violation.

3. The Commissioner may modify or set aside, in whole or in part, any order issued by him or her pursuant to this section, but any such action must be made before the expiration of the period for appeal or before the official record in the proceeding has been filed with the court.

(Added to NRS by 1983, 960; A 1993, 2393)

NRS 685B.180 Review of order; time order becomes final.

1. An order issued pursuant to NRS 685B.170 may be reviewed pursuant to NRS 679B.370.

2. Such an order becomes final:

(a) Upon the expiration of the time for taking an appeal, if no petition for review has been filed; or

(b) Upon the final decision of the court.

(Added to NRS by 1983, 961)

NRS 685B.190 Administrative fine for violation of order. If a person violates an order issued pursuant to NRS 685B.170, the Commissioner may impose an administrative fine after giving notice and a hearing. Such a fine may not be more than $5,000 for each violation.

(Added to NRS by 1983, 961)