February 7, 1994
Mr. J. Bradley Wilson General Counsel Office of the Governor 116 West Jones Street Raleigh, North Carolina 27603
Re: Advisory Opinion Employee Insurance Committee
G.S. 58-31-60 – Payroll Slots
Dear Mr. Wilson:
You have requested an advisory opinion as to whether the "request for proposals" to be opened on February 9, 1994, by the DOT Employees Insurance Committee violates NCGS §58-31-60. It is our understanding that a legal notice was published requesting proposals for "Variable Universal Life Insurance." Certain insurance companies also received a letter from the Insurance Committee announcing that sealed bid proposals would be accepted for "Variable Universal Life Insurance." The letter included an attachment entitled "Guidance For Committee Information" listing the types of information which the Insurance Committee would consider. This attachment made no specific reference to any particular type of insurance product.
NCGS §58-31-60 authorizes employee insurance committees to review and select products to meet the needs and desires of employees in the committees’ payroll unit. Each payroll unit is entitled to a minimum of four payroll deduction slots through which employees may elect to have their insurance premiums for products selected by the committee automatically deducted. Subsection (c) of the statute limits the Insurance Committee to the selection of one company per payroll deduction slot.
Department of Transportation employees currently have available a "universal" life insurance policy previously selected and awarded a payroll deduction slot by the DOT Employee Insurance Committee. Therefore, if the current request for proposals requests "universal" life insurance, a subsequent award of a payroll deduction slot to the successful company may violate NCGS §5831-60.
In view of the technical nature of the insurance products involved, we have requested an opinion from the Department of Insurance as to distinctions between "universal", "variable" and "variable universal" life insurance. Enclosed for your review are two memoranda from Mr. Rodney Finger, Assistant Deputy Commissioner, advising that "universal" life insurance and "variable" life insurance are two distinct types of policies. Mr. Finger has also advised that the term "variable universal" life insurance is not a term used or recognized by the Department of Insurance. Our own review of the various types of insurance products available and the terminology routinely utilized by the industry indicates that the terms "universal," "variable" and "variable universal" are sometimes utilized on an interchangeable basis.
In view of the information we have received from the Department of Insurance, we are unable to determine whether the insurance product currently being requested by the DOT Employee Insurance Committee creates a potential violation of NCGS §58-31-60. The circumstances do indicate a possibility that certain vendors may have misconstrued the type of product requested. For these reasons, it is our recommendation that the DOT Employee Insurance Committee reject all proposals submitted and solicit new proposals. Any future solicitation should precisely clarify the type of insurance product requested. Consultation with the Department of Insurance prior to future solicitations may assist in the avoidance of future problems of this nature.
Eugene A. Smith Senior Deputy Attorney General
John R. McArthur
Chief Counsel