Biennial Report of the North Dakota Insurance Department as of June 30, 2003 Financial Condition of Insurance Companies and Activity Report of the Insurance Department Jim Poolman Insurance Commissioner Part of this report has been generated through information received from the National Association of Insurance Commissioners. If your company failed to file a financial statement with the National Association of Insurance Commissioners, it will not be on this report. If your company filed in prior years but failed to file this year, it may be on the report but no figures will be shown. If you find inaccuracies or have questions about the report, you are requested to contact the insurance company directly for verification of the statistics. Thank you. November 2003 Honorable John Hoeven Honorable Al Jaeger Governor Secretary of State State of North Dakota State of North Dakota 600 East Boulevard Avenue 600 East Boulevard Avenue Bismarck, ND 58505 Bismarck, ND 58505 Gentlemen: As Commissioner of Insurance for the State of North Dakota, I am pleased to submit to you the Biennial Report of the North Dakota Insurance Department for the period ending June 30, 2003, as required by N.D. Cent. Code § 26.1-01-03(7). Sincerely, Jim Poolman Commissioner N.D. Insurance Department NORTH DAKOTA INSURANCE DEPARTMENT MISSION STATEMENT It is the mission of the North Dakota Insurance Department to protect the public good by fairly and effectively administering the laws of North Dakota. We are committed to vigorous consumer protection efforts while fostering a strong, competitive marketplace that provide consumers with choices and access to high-quality insurance products and services at competitive prices. In pursuit of our mission, we will treat all of our constituencies with the highest ethical standards and respect they deserve. TABLE OF CONTENTS Department Functions ................................................. 1 The Insurance Industry in North Dakota .................................... 2 The Insurance Department: Division by Division ............................. 3 Consumer Protection - Property and Casualty Division ................... 4 Consumer Protection - Life and Health Division ......................... 4 Senior Health Insurance Counseling Program .......................... 4 Agent Licensing and Investigations Division ........................... 7 Legal Division .................................................. 11 Examinations and Company Licensing Division ........................ 12 Special Funds Division ........................................... 13 Administration Division........................................... 14 Summary of Insurance-Related Legislation Enacted in 2003 ................... 15 Summary of Regulations Adopted ....................................... 19 Insurance Commissioners Since Statehood ................................ 21 Insurance Premium Tax Receipts........................................ 22 Analysis of Cash Receipts ............................................. 23 Departmental Expenditures ............................................ 23 Fire and Tornado Fund ................................................ 24 State Bonding Fund .................................................. 29 Petroleum Tank Release Compensation Fund .............................. 34 Classification and Number of Insurance Companies Licensed in North Dakota .... 38 Companies Licensed ................................................. 39 Miscellaneous Entities ................................................ 42 Company Changes (Mergers, Name Changes, and Redomestications) .......... 45 Company Actions (Suspensions, Revocations, and Withdrawals) ............... 52 Financial Statement of Nondomiciled Life Insurance Companies ............... 53 Financial Statement of Nondomiciled Property and Casualty Insurance Companies ....................................................... 113 Financial Statement of Licensed Domiciled Life Insurance Companies .......... 170 Financial Statement of Licensed Domiciled Property and Casualty Insurance Companies ....................................................... 171 Financial Statement of Licensed Nondomiciled Fraternal Insurance Companies . 173 Financial Statement of Licensed Nondomiciled Title Insurance Companies ...... 176 Financial Statement of County Mutual Insurance Companies ................. 178 Financial Statement of Nonprofit Health Service Corporations, Health Maintenance Organizations, and Limited Health Service Organizations .................... 180 Financial Statement of Prepaid Legal Service Companies ................... 181 North Dakota Insurance Department 600 East Boulevard Avenue, Dept. 401 Bismarck, ND 58505 (701) 328-2440 Fax: (701) 328-4880 Consumer Hotline: 1-800-247-0560 Website: www.state.nd.us/ndins Commissioner ........................ Jim Poolman Deputy Commissioner ............ Douglas L. Holloway Administrative Assistant .............. Janice A. Steinle Public Information Officer ................ Cecily Cook DEPARTMENT FUNCTIONS It is the mission of the North Dakota Insurance Department to protect the public good by fairly and effectively administering the laws of North Dakota. We are committed to vigorous consumer protection efforts while fostering a strong, competitive marketplace that provides consumers with choices and access to high-quality insurance products and services at competitive prices. In pursuit of our mission, we will treat all of our constituencies with the highest ethical standards and respect they deserve. The insurance industry in the United States is one that is regulated solely by the states. It is, therefore, vitally important that the North Dakota Insurance Department be as strong as it possibly can be, to ensure North Dakotans have the best protection possible. It is also incumbent upon the Department to adapt to changing market conditions with a changing regulatory environment. The Department worked hard over the last legislative session to pass numerous bills that have bolstered consumer protection and privacy rights of North Dakota citizens. In addition to the legislative milestones that protect consumers, the Department has also focused its attention on maintaining a healthy and competitive marketplace for the insurance industry. Even in the face of catastrophic weather conditions, we have successfully kept insurers in the marketplace and we continue to work closely with providers to make sure that consumers have choices with whom to do their business. The Department also has worked to improve our response time with regard to company product filings, so that innovative products and services can reach North Dakota consumers more quickly than ever before. Today, the turn-around time on all company filings is less than 60 days, with an average turn-around time a mere fraction of that time which is a marked improvement from 2001. The North Dakota Insurance Department staff consists of professionals who are empowered to help set the direction of the Department. The staff has engaged in thorough strategic planning processes to clearly identify goals, which each division within the 1 Department will strive to achieve. These goals are also identified in employees’ annual performance evaluations that are conducted each year. The Department will be able to show the taxpayers of North Dakota what the Department has accomplished over the next year. The North Dakota Insurance Department prides itself in protecting the people of North Dakota while fostering a competitive marketplace for the insurance industry. Any success that is achieved is a cooperative effort between the professionals in the Department, the North Dakota Legislature, and the insurance industry in North Dakota. THE INSURANCE INDUSTRY IN NORTH DAKOTA The insurance industry in North Dakota is strong and vital to the economies of our state, our communities, and our families. In 2002, North Dakotans paid over $2.5 billion in premiums for all types of insurance. The industry-generated sales that year resulted in the payment of nearly $27.2 million in insurance premium tax. This source of revenue has been steady and growing. Today, the insurance industry generates an amount equal to nearly three percent of the entire general fund. Equally impressive is the total dollar amount paid to North Dakotans in the form of claims paid to their insureds by insurance companies. In 2002, over $2 billion in claims and benefits were paid to our residents. When hail destroys a roof, when a car is damaged in an accident, or when a child is rushed to a hospital, claims such as these are paid every day in North Dakota, providing families with needed protection. There are over 28,000 insurance producers licensed to sell insurance in North Dakota. Of these, nearly 6,000 are North Dakota residents. While bad apples exist in any profession, we are pleased to report that the vast majority of our sales force is comprised of honest professionals who treat their customers fairly. A strong working relationship exists between the Department and the insurance industry. The insurance industry in our state strongly supports vigilant oversight of the insurance marketplace. In fact, the industry directly pays all the costs associated with the regulation of insurance in North Dakota. All license fees and fines paid by companies and agents are deposited into the Insurance Regulatory Trust Fund and used to fund the entire cost of the state's regulation of their activity. North Dakota consumers get the protection they deserve