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HB 720NORTH CAROLINASession 2025State Billpassed chamber

Passed

North Carolina Updates Insurance Guaranty Association Act to Set Cybersecurity Coverage Caps and Net Worth Limits

Original title: Insurance Guaranty Association Act Revisions.-AB

Last action · May 1, 2025: Ref To Com On Rules and Operations of the Senate (Senate action)Sponsors: Chris Humphrey and 3 others

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Introduced

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Floor Vote

Passed

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What This Bill Would Do

North Carolina amends the Insurance Guaranty Association Act to establish a $500,000 limit for cybersecurity insurance claims, exclude claimants with a net worth over $50 million, and modify the Association's powers regarding claims defense, returns, and automatic court stays during insurer insolvencies.

Why it matters

Changes the payout limits and claim eligibility for businesses and individuals seeking coverage through the Insurance Guaranty Association when an insurer becomes insolvent, capping cybersecurity claims at $500,000 and excluding high-net-worth insureds.

Background

The Department of Insurance recommended the revisions enacted in this bill to update the scope and powers of the Insurance Guaranty Association. context

Who It Would Affect

Groups the bill's text would affect if enacted, as described in the record. Being affected is not a position for or against it.

Directly affected

Insurance Guaranty Association

The Association assumes new liability caps, defense rights, and recovery powers for handling claims of insolvent insurers.

Directly affected

High-net-worth insureds

Insureds with a net worth exceeding $50 million are excluded from making covered claims and may be required to reimburse the Association for paid claims.

Directly affected

Cybersecurity insurance policyholders

Policyholders are subject to a $500,000 aggregate cap per insured event for cybersecurity claims.

Key Facts

Excludes warranty insurance, service contracts, and certain coverages except cybersecurity from the scope of direct insurance under the article.
Defines 'covered claim' to exclude claim amounts awarded as punitive damages, retrospective rating plan returns, fines, penalties, attorneys' fees, or claims from claimants whose net worth exceeds $50 million.
Defines 'cybersecurity insurance' to include first and third-party coverage for data privacy breaches, network intrusions, computer viruses, ransomware, and cyber extortion.
Limits the Association's total obligation for all first and third-party cybersecurity claims arising out of a single insured event to $500,000.

Show all 8 facts

Sets the maximum return of unearned premium per policy at $10,000.
Empowers the Association to review and contest settlements, releases, and judgments executed within 120 days prior to an order of liquidation if reasonable care or appeals were not pursued.
Grants the Association the right to recover paid claims and expenses from insureds whose net worth exceeds $50 million on December 31 of the year preceding insolvency.
Automatically stays all court and administrative proceedings involving an insolvent insurer for 120 days.

Frequently Asked Questions

What is the maximum payout for cybersecurity claims under this act?

The Association is not obligated to pay an amount in excess of $500,000 for all first and third-party claims under a cybersecurity policy arising out of a single insured event.

Can high-net-worth businesses file claims with the Insurance Guaranty Association?

Claims are excluded if the claimant's net worth exceeds $50 million on December 31 of the year preceding the date the insurer becomes insolvent.

How long are legal proceedings stayed when an insurer becomes insolvent?

All proceedings in which the is a party are stayed automatically for 120 days and any additional time determined by the court.

What else do you want to know?

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Where This Stands

Currently passed chamber. The next step in the legislative lifecycle is Law.

Procedural history

16 actions

May 1, 2025Senate
Ref To Com On Rules and Operations of the Senate
May 1, 2025Senate
Passed 1st Reading
May 1, 2025Senate
Regular Message Received From House
May 1, 2025House
Regular Message Sent To Senate
Apr 30, 2025House
Passed 3rd Reading
Apr 30, 2025House
Passed 2nd Reading

Show 10 earlier actions

Apr 29, 2025House
Placed On Cal For 04/30/2025
Apr 29, 2025House
Cal Pursuant Rule 36(b)
Apr 29, 2025House
Reptd Fav
Apr 17, 2025House
Re-ref Com On Rules, Calendar, and Operations of the House
Apr 17, 2025House
Withdrawn From Com
Apr 16, 2025House
Re-ref Com On Finance
Apr 16, 2025House
Reptd Fav
Apr 3, 2025House
Ref to the Com on Insurance, if favorable, Finance, if favorable, Rules, Calendar, and Operations of the House
Apr 3, 2025House
Passed 1st Reading
Apr 2, 2025HouseIntroduced
Filed

Version history

Only one version on file - nothing to compare yet. As later stages (committee substitute, engrossed, enrolled) are captured, the redline appears here.

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