What criteria must a health insurer meet under North Carolina law when deciding to cancel a policy?

A health insurer in North Carolina is required to base any cancellation of a policy on valid grounds that are explicitly stated in the terms of the policy. This means that the cancellation cannot be arbitrary or capricious; it must align with the reasons and conditions that have been outlined in the insurance policy itself. Such grounds might include non-payment of premiums, fraudulent claims, or violation of policy terms.

Maintaining this requirement helps ensure fairness and transparency in the insurance process, as policyholders have a clear understanding of the conditions under which their policy may be canceled. This is crucial for consumer protection, as it holds insurers accountable for their actions and helps prevent unjust cancellations that could leave individuals without necessary coverage.

The other options reflect different aspects of insurance regulation or general practices but do not accurately capture the specific legal requirement for cancellation grounded in the policy terms. For example, while notification of cancellation may be part of standard procedures, it is the validity of the cancellation grounds that holds significant legal weight in the context of North Carolina law.