1.1 North Dakota Insurance Department
Key Takeaways
- The North Dakota Insurance Commissioner is ELECTED to a 4-year term during presidential election years - one of only 11 states with an elected commissioner
- The office dates to 1889 statehood; the term was extended from 2 years to 4 years by a 1964 constitutional amendment
- The Department's core powers are licensing, solvency monitoring, rate/form review, market conduct exams, and consumer complaint enforcement
- North Dakota Century Code Title 26.1 is the statutory basis for insurance regulation in the state
- The Department is the primary regulator; the NAIC sets model laws but has no direct enforcement authority
national Life & Health exam preparationFree exam prep with practice questions & AI tutor
North Dakota Insurance Department
The North Dakota Insurance Department (NDID) is the state agency that administers and enforces insurance law under Title 26.1 of the North Dakota Century Code (NDCC). Its mission is to protect the public by ensuring insurers remain solvent and that producers and companies treat consumers fairly. Core functions you should be able to recite on exam day:
- Licensing - issues, renews, suspends, and revokes producer and company licenses
- Solvency monitoring - reviews financial statements and reserves so insurers can pay claims
- Rate and form review - approves policy forms and rates for fairness and legality
- Market conduct examinations - audits how insurers sell, underwrite, and pay claims
- Consumer protection - investigates complaints and enforces unfair-trade-practice laws
- Rulemaking - adopts administrative rules implementing NDCC Title 26.1
The Elected Commissioner
The Insurance Commissioner is a constitutional officer elected statewide:
| Feature | Detail |
|---|---|
| Selection | Elected by North Dakota voters |
| Term length | 4 years |
| Election timing | Presidential election years (2024, 2028, 2032) |
| Office origin | Created at 1889 statehood |
| Term history | Originally 2 years; extended to 4 years by 1964 constitutional amendment |
| Current commissioner | Jon Godfread (re-elected 2024) |
Exam Tip: North Dakota is one of only 11 states where voters ELECT the insurance commissioner. The other 39 states appoint the position (usually by the governor). If an answer choice says "appointed by the governor," it is WRONG for North Dakota.
States With Elected Insurance Commissioners
Memorize that North Dakota sits in a small group of elected-commissioner states. The 11 elected states are:
| State | Selection |
|---|---|
| California | Elected, 4-year term |
| Delaware | Elected, 4-year term |
| Georgia | Elected, 4-year term |
| Kansas | Elected, 4-year term |
| Louisiana | Elected, 4-year term |
| Mississippi | Elected, 4-year term |
| Montana | Elected, 4-year term |
| North Carolina | Elected, 4-year term |
| North Dakota | Elected, 4-year term |
| Oklahoma | Elected, 4-year term |
| Washington | Elected, 4-year term |
Department, NAIC, and Federal Roles
The exam tests the boundary between state and federal authority. Under the McCarran-Ferguson Act of 1945, insurance is regulated primarily at the state level. The Department - not the federal government and not the NAIC - is your direct regulator in North Dakota.
| Body | Role | Enforcement power in ND? |
|---|---|---|
| ND Insurance Department | Licenses, examines, enforces Title 26.1 | Yes - direct |
| NAIC (National Association of Insurance Commissioners) | Writes model laws, coordinates data, runs producer databases | No - advisory only |
| Federal government | Limited role (e.g., ERISA, ACA federal floor) | Mostly no for state lines |
Why This Matters
The NAIC is a voluntary association of the 50 state commissioners. It drafts model acts (such as the Producer Licensing Model Act and the Suitability in Annuity Transactions Model Regulation) that states may adopt. North Dakota adopts many NAIC models into Title 26.1, but the NAIC itself cannot fine, license, or discipline a producer. Only the Commissioner can.
Solvency and Guaranty Protection
A central reason the Department exists is to make sure insurers can pay claims. Solvency oversight - reviewing reserves, surplus, and annual financial statements filed in the NAIC format - protects policyholders before a company ever fails. When an insurer does become insolvent, North Dakota policyholders are protected by the North Dakota Life and Health Insurance Guaranty Association, a backstop that pays covered claims up to statutory caps.
| Guaranty Coverage (per insured) | Statutory Limit |
|---|---|
| Life insurance death benefit | Up to $300,000 |
| Life insurance cash surrender value | Up to $100,000 |
| Health insurance (most types) | Up to $500,000 |
| Present value of annuity benefits | Up to $250,000 |
Common Trap: Producers may not advertise the existence of the guaranty association to induce a sale. Using guaranty-fund coverage as a marketing pitch is a prohibited practice in North Dakota and other states - the fund is a safety net, not a selling point.
Market Conduct and Rate/Form Review
The Department also polices how insurance is sold and priced. A market conduct examination reviews an insurer's advertising, underwriting, claims handling, and producer supervision. Rate and form review ensures rates are not excessive, inadequate, or unfairly discriminatory, and that policy forms comply with North Dakota law before use. These tools let the Commissioner correct unfair trade practices proactively, not just after a consumer complaint.
Contacting the Department
- Address: State Capitol, 5th Floor, Dept. 401, 600 E. Boulevard Ave., Bismarck, ND 58505-0320
- Phone: (701) 328-2440 or (800) 247-0560
- Website: insurance.nd.gov
Common Trap: Candidates confuse the NAIC with a regulator. The NAIC has no authority to discipline you - it only writes models and maintains databases (like the producer database NIPR draws on). Your enforcement authority is the elected North Dakota Commissioner.
Specific Statutory Powers of the Commissioner
The exam expects you to know what the Commissioner can actually do under Title 26.1, not just that the office exists. The Commissioner's powers fall into four buckets:
| Power | Statutory Action | Example |
|---|---|---|
| Investigate | Examine an insurer or producer on complaint or own motion | Audit a producer suspected of premium theft |
| Adjudicate | Hold administrative hearings and issue findings | Decide whether a license should be revoked |
| Order | Issue cease-and-desist orders and impose fines | Halt a deceptive ad campaign |
| License | Issue, renew, suspend, or revoke licenses | Revoke for fraud or unpaid CE |
A Commissioner-issued cease-and-desist order is effective immediately and generally remains in force while the producer pursues judicial review in district court - a producer cannot keep selling simply by filing an appeal. Fines reach $10,000 per violation, and each separate act can be charged as its own violation, so penalties stack quickly.
The Consumer Complaint Process
A core function of the Department is resolving consumer complaints, and the exam tests the sequence:
- A consumer files a written complaint (online, by mail, or by phone follow-up) with the Department's Consumer Assistance division.
- The Department forwards the complaint to the insurer or producer, which must respond in writing within the time the Department sets.
- The Department reviews the response for compliance with Title 26.1 and the policy contract.
- If a violation is found, the matter can escalate to investigation, hearing, and discipline; if not, the consumer is advised of other remedies (e.g., civil suit).
Exam Tip: The Department resolves whether the law and contract were followed - it does not act as a court that awards damages. A consumer who wants money damages beyond contract benefits must still sue. Distinguish the Department's regulatory role from a civil lawsuit.
How is the North Dakota Insurance Commissioner selected?
Which body has direct authority to fine or discipline an insurance producer in North Dakota?
The North Dakota Insurance Commissioner's term was extended from two years to four years by what action?