2025 Insurance Legislative Changes: What Members Need to Know
IIANC is committed to keeping our members informed about legislative and regulatory developments that impact the independent insurance industry in North Carolina. As changes continue to emerge from the General Assembly and the North Carolina Department of Insurance (NCDOI), we’re providing timely updates to ensure you understand how new laws and effective dates may affect your business operations. Below is the bill information along with a summary of recent legislative updates, specifically those communicated by NCDOI and contained in HB 737 and the subsequent “mini budget” bill (SB 449), that are particularly relevant to our members.
Bill Information
Of note in the ‘mini budget’ bill (SB 449) passed by the General Assembly in October 2025 and signed into law by Governor Stein on October 22nd, was an adjustment of the effective date to January 1, 2027, of a provision dealing with rebating that was contained in Part VI of HB 737 passed earlier this year, that specifically:
- Repeals the law allowing insurers, insurance producers, or limited representatives to offer or provide products or services not specified in an insurance policy.
- Provides that the following acts do not constitute unfair or deceptive acts or practices: (i) engaging in an arrangement that would not violate certain provisions of the Bank Holding Company Act Amendments of 1972 or Home Owners' Loan Act; (ii) offering or providing value-added products or services that are not specified in the insurance policy at no or reduced cost, if the product or service meets certain criteria; (iii) offering or gifting noncash gifts, items, or services, if certain conditions are met; and (iv) conducting drawings or raffles, to the extent they are otherwise permitted by law, if certain conditions are met.
- Provides that the trade practices listed above are not prohibited rebates.
- Prohibits an insurer, producer, or representative of either from offering or providing insurance as an inducement to the purchase of another policy or from using the words "free," "no cost," or similar words in an advertisement, except for specified products or services.
Helpful Summary
Effective July 1, 2025 – Clarification on “Exchange of Business” Between Producers
- Defines “exchange of business” as forwarding insurance business from one duly licensed and appointed producer to another licensed and appointed producer for the same line of insurance.
- Allows producers to split commissions on exchanged business if both:
- Are licensed and appointed for all lines involved.
- Sign or include their National Producer Numbers (NPNs) on the insurer’s application.
- Provide written or electronic notice of the business exchange to both the insurer and the consumer.
- Act in good faith that the exchange complies with law.
- Does not restrict exchanges related to:
- Surplus lines, nonstandard, or professional liability business placed through a surplus lines producer or written at excess/individual rates or risk-sharing plans.
- Clarifies that commissions can be paid:
- To agency principals (owners, shareholders, partners, employees, etc.) for business placed through their licensed, appointed producers and for properly executed exchanges of business.
Effective October 1, 2025 – Insurance Fee Referral Cap
- Caps referral fees paid to unlicensed individuals at $50 per referral.
- Applies to personal lines referrals made on or after October 1, 2025.
- Violations may result in a fine up to $2,000 per occurrence.
- Title insurance is exempt from this limit.
Effective October 1, 2025 – Producer Education & Training Requirements
- Clarifies that applicants for an insurance producer license must meet all statutory education, training, or experience requirements, but eliminates a specific number of instructional hours or completion of a specific course for pre-licensing education.
Effective July 1, 2026 - Inexperienced Operator Continuous Coverage
New rules take effect to ensure inexperienced drivers maintain continuous liability insurance coverage and that insurer reporting to the DMV stays accurate and current.
1. Continuous Insurance Coverage Required
- Any driver who is subject to an “inexperienced operator premium surcharge” under G.S. 58-36-65(k) must have a liability insurance policy that includes the required surcharge.
- These drivers may not operate a vehicle unless the policy reflecting the surcharge is in force.
- The rule does not apply to individuals who prove financial responsibility by other authorized means (e.g., surety bond or self-insurance).
2. License Suspension Authority
- The Division of Motor Vehicles (DMV) may suspend the license of an operator who violates this continuous-coverage requirement (G.S. 20-309(a3)).
- This adds new enforcement authority under G.S. 20-16(a)(6a).
3. Expanded Insurer Reporting Insurers must now notify the DMV whenever:
- A person subject to the inexperienced-operator surcharge is added to or removed from a policy, or
- A policy covering such a person is canceled. (G.S. 20-309.2(a)(4))
4. DMV Record Accuracy
- DMV must reconcile insurer notices to ensure records correctly reflect insurance status for: o Each registered vehicle owner, and o Individuals subject to the inexperienced-operator surcharge. • A policy termination will not be recorded as a lapse if DMV records show the owner already has continuous coverage through another valid policy. (G.S. 20-309.2(a1))