LAW

Reinsurance cont.

"Ceding insurer" and "assuming insurer"

Board Powers of Commissioner

- Administrator and chief executive officer (CEO) of the Department of Banking and Insurance, the COMMISSIONER has the authority and obligation to : -Adopt, issue and promulgate, in the name of the Department, such RELUES AND REGULATIONS AS MAY BE AUTHORIZED BY LAW - Make an annual report to the Governor and to the Legislature about the Department's operations for the preceding fiscal year and furnish any other reports which may be requested by the Governor or may be required by law - The commissioner is Appointed by the GOVERNOR

McCarran-Ferguson Act/Public 15

- Which became law on March 9,1945 - Congress insisted that it was the right of the federal government to regulate the insurance industry, but stated in the McCarran Act that the federal government would not regulate insurance AS LONG AS THE STATE DID A ADEQUATE JOB of regulating the industry.

Broker and Consulting Free Cont.

- a writing agreement containing a clear statement of the amount to be charged and the nature of the service to be provided - A statement that the fees are not part of the premium and can charged only with the insured's consent - A clear statement of whether a commission will be received on the purchase of insurance

Producer

- be 18 years of age or older - complete and sign a licensing application -complete an approved prelicensing education course with in 2 years before submitting the licensing application - pass a licensing examination with in 1 year before submitting a licensing application PAGE 11 Read the rest

Revocation / Suspension

- misappropriating funds belonging to insured's or insurers - using license to write controlled business in any 12 - month period; 50% or more - paying rebate to induce business - Failing to possess cash and accounts receivable for insurance premiums

Paul vs. Virginia

-1st Supreme Court -1869 -The decision of the US Supreme Court that insurance was not interstate commerce, and therefore was not subject to regulation by the federal government

Limit on Controlled Business

-Insurance licenses are intended to be issued for the purpose of authorizing the transaction of business with members of the general public, and not primarily for allowing someone to benefit from commissions on business which insures their own personal interests. - this is why the law imposes limits on the amount of "controlled business" a producer may write. - during any 12 month period, the commissioner earned on controlled business must nit exceed 50% of the total commissions eared on all businesses

U.S. vs. South-Eastern Underwriters Assoc.

-SEUA case in 1944, the Supreme Court reversed its decision of Paul vs. Virginia, stating that insurance is interstate commerce and is therefore subjected to regulation by the federal government

Business Entity Cont. 1

All licensed partners, officers, and owners of 10% or more of the organization will be held RESPONSIBLE FOR THE CONDUCT OF THE ORGANIZATION

Business Entity

Although not every partner or officer needs to hold and individual producer license, every partner or officer who will engage in the insurance must hold an individual producer licensee and, in any event, at least one partner or officer must hold an INDIVIDUAL PRODUCER LICENSE

Company / Producer

Any insurance appointing an agent by contract shall file with the Department a notice if appointment Notice must be filed within 15 DAYS after execution of the contract, and must contain the company's name and reference number , the producer's name and reference number, and the effective date of contract.

Notice and Hearing cont.

Anyone failing to comply with the subpoena may be ordered by the New Jersey Superior Court to comply or face contempt of court charges

Certificate of Authority

Before insures may transfer business in a specific state , they must apply for a license or CERTIFICATE OF AUTHORITY AUTHORIZED or ADMITTED UNAUTHORIZED OR NON-ADMITTED

Penalties

Case and Desist Order -> UP TO $5,000 for each violation $5,000 FOR A FIRST OFFENSE NO MORE $10,000 FOR EACH SUBSEQUENT OFFENSE

Insurance Agent

Independent -> representative Captives -> they work for those companies like allstate considered to be representing insurer the insurance company

Misdemeanor

It is misdemeanor for any person or other entity to act as an insured in NJ without having the proper CERTIFICATE of authority. It is misdemeanor of any person to transact any insurance business in this state as producer without having a required license

Insurance is regulated by each state through the three basic branches of government

Legislative Judicial Executive branches

Business Entity Cont. 2

NO PRODUCER LICESE WILL BE ISSUED TO A BUSINESS ENTITY OPERATED BYA PERSON WHO HAS HIS OR HER LICENSE REVOKED WITHIN THE PAST 10 DAYS

Revocation/ Suspension Cont.

No one whose license has been revoked can act as a partner

Nonpublic Records

Petitions or discharges in bankruptcy, complaints, orders or other pleadings in actions for assignment to creditors and other separate documents submitted in connection with a license application concerning whether an applicant is disqualified by reason of unworthiness

Insurance Related Conduct

Selling, soliciting, negotiating and binding insurance policies

Notice and Hearing

The Commissioner has the power to conduct investigations, admitters oaths, interrogate licenses, and issue subpoenas to any licensee or other person in connection with any investigation, hearing or other proceeding.

Insurance Broker

a producer acting as a broker representative of insured

Cancelation / Reinstatement

a producer cannot avoid a disciplinary hearing or penalty by submitting his or her license for cancellation; the disciplinary action will continue.

Broker and Consulting Fee

an insurance producer acting as an insurance broker or consultant may charge a fee to a policyholder or insured for services rendered as an insurance producer

Minor Lines

bail bonds credit car rental insurance group mortgage cancellation mortgage guaranty legal insurance self-storage personal property travel insurance

Type of licenses / Authorization / Requirement

collecting premium; and other than your place of business

Company/ Producer

if an insurer cancels an agency contract, it must notify the Commissioner in WRITING WITHIN 15 DAYS

FOREIGN

insurer is an insurance company that is incorporated in ANOTHER STATE, TERRITORIAL POSSESSION or Washington D.C

DOMESTIC

insurer is and insurance company that is incorporated IN THIS STATE

ALIEN

insurer is and insurance company that is incorporated OUTSIDE the UNITED STATES

Insurance Consulting

is a person who, for a FEE review and write the report

REINSURANCE

is an contract under which one insurance company is consideration of a premium paid to it, agrees to indemnify another insurance company for part or all of its liabilities from insurance policies it has issued.

Renewal

licenses will expire on the last day of the producer's month of birth proof of completing 24 hours of approved continuing education credits during the previous 2 years

Major Lines

life health property casualty personal lines property/ casualties surplus lines title insurance

NONRESIDENT Producer

nonresident moving to NJ, upon losing resident status in their home state, shall notify the department within 20 DAYS of the intent to qualify as a resident. They will receive a 90 DAY education waiver

STOCK COMPANIES

owed by the STOCKHOLDERS who provide the capital necessary to establish and operate the insurance company

MUTULA COMPANIES

owed(directed) by the POLICYHOLDERS

Producer Substituting for or taking over the business of a disabled / deceased producer

the agreement cannot exceed 180 days or 6 month

Denial

the commissioner has the power to deny the issuance or renewal of a license to anyone, within 30DAYS, based on information contained in that person's application

Notice and Hearing cont.

the person or company charged must be given 10 DAYS written notice of hearing date and time

Temporary work Authority

the temporary work authority expires NO MORE THAN 60 DAYS after it is issues and becomes ineffective when the actual license is issued