New Jersey Laws, Rules and Regulations Common to all Lines

4 Years

A "certification of license status" report can be run on any currently licensed NJ producer, but can only contain information on formal disciplinary actions taken within the past

$5,000

A licensee violates an insurance regulation. A hearing is held and the person is found guilty. If this is the person's first offense, the penalty is no more than

Rebating

An agent offers a client free tickets to a sporting event in the exchange for the purchase of an insurance policy. What is the agent guilty of?

The claims will be paid by the state Life and Health Guaranty Association

An insurer goes bankrupt and is unable to pay on any of its insured's claims. Which of the following would happen?

Authorized Insurer

An insurer that holds a Certificate of Authority in the state which it transacts business is considered an

By its members - authorized users

How is the Insurance Guaranty Association funded?

Acting in a fiduciary capacity

The Commissioner may NOT revoke a producer's license for

$500,000

The maximum the Insurance Guaranty Association will pay to an individual for life insurance death benefit is

Certificate of Authority

To legally transact insurance in this state, an insurer must obtain what?

To an insurer authorized to transact business in this state

To whom may a certificate of authority be issued?

Discrimination

Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

18

What is the minimum licensing age for nonresident insurance producers in NJ?

To prevent a producer or insurer from further violating laws for transacting insurance

What is the purpose of a cease and desist order?

It was decided that insurance was not interstate commerce and could not be regulated by the federal government

What significance did Paul vs VA have on the insurance industry?

Admitted

What term is closest to an authorized insurer?

An agent who resides and is licensed in another state, but who is authorized to transact insurance in the state

Who is considered a nonresident agent?

The insurance company

Who is responsible for the contents of insurance advertisements?

The insurer who is being examined

Who is responsible for the costs associated with the examination of insurers?

Only producers properly licensed for the type of insurance transaction

Who may share in the commission from the sale of a life insurance policy?

Stockholders

Who owns stock companies?

5 Business Days

Within how many days must a producer report claims to the insurer?

Hold a bond as a condition for licensure

Applicants for surplus lines authority must NOT fulfill the following requirement

False Advertising

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

Defamation

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

Commissioner 4

If a violation of the New Jersey insurance code were to occur, a cease and desist order and/or penalty may be issued. Who may issue a ceased desist order?

Insurer

In the agent/insurer relationship, who is considered the principal?

Commissioner 3

It is the job of what authority to appoint and remove officers and other personnel employed within the Department?

A violation of the New Jersey Insurance Fraud Prevention Act

Presenting any written or oral statement in support of or in opposition to a claim payment, while knowing that the statement contains false or misleading information material to the claim, would best be considered

To protect policy owners, insureds and beneficiaries from financial losses caused by insolvent insurers

What is the purpose of insurance guaranty associations?

Broker

What type of licensee represents the insured?

Pay dividends to the policyowner

A participating insurance policy may

$10,000

A producer was found guilty of a 3rd violation of the insurance code. What would be the monetary penalty they would have to pay?

Until it is terminated

A producer's appointment lasts for how long?

The person can obtain a temporary work authority

An applicant for a producer's license has successfully completed all of the steps necessary to obtain the license. The soon-to-be producer does not want to wait until they receive their license to begin working. What is possible?

No; advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?

For continuation of business in case the licensed producer dies or becomes disabled

For what reason can a temporary license be issued?

Coercion

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as

12 Months

If an applicant's license has lapsed within the past year, the applicant may apply for late renewal of the license within the maximum of how many months of expiration?

Authorized or admitted

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Authorized

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be

Authorized or admitted 2

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Sexual Orientation

It would be considered unfair discrimination to ask an insurance applicant about _______ and then use that as a rating factor to determine insurability

30

Licensees must notify the Department within how many days of any change of address?

Misrepresentation 2

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?

Insurance-Related Conduct

Producer's and insurer's actions related to insurance transactions, from selling to processing claims are referred to as

$5,000 2

Provided that it is the first offense, what is the maximum penalty for failing to respond to a subpoena?

10 Days

The Commissioner believes that an insurance rule or regulation has been violated and decides to call a disciplinary hearing. How many days before a hearing must the Commissioner issue a notice to the person charged with the violation?

States

The McCarran Act stated that the federal government would not regulate insurance as long as an adequate job of regulating the industry was done by the

The decision has changed. Insurance is considered to be interstate commerce and is subject to regulation by the federal government

The Paul vs Va case was decided in 1869. To what extent does the Supreme Court's decision still apply to insurance today?

The US vs the South-Eastern Underwriter Association

The Supreme Court stated that insurance is interstate commerce and is therefore subject to regulation by the federal government in the decision of what case?

At least 1

To be issued a business entity producer license by the Commissioner, the business entity must have how many partners or officers licensed as producers?

Hold a resident license in good standing in the producer's home state

To become licensed as a nonresident producer in this state, a producer must do what?

Complete continuing education hours and pay a renewal fee

What are producers required to do in order to renew their license?

The agent

What type of licensee represents the insurance company?

Alien Insurer

When transacting business in this state, an insurer formed under the laws of another country is known as an

Commissioner

Which authority has the power to deny someone an insurance producer's license?

Producer's spouse or designee in case the licensed producer dies or becomes disabled

Who can usually be granted a temporary license?

A person authorized to sell, solicit and negotiate insurance contracts

Who is an insurance agent?

Consultant

Who is an insurance professional who offers advice regarding benefits or advantages of an insurance policy to clients for a fee?

All insurers authorized to write insurance within a state

Who must be a member of insurance guaranty associations?

Foreign

An insurance company is domiciled in Montana and transacts insurance in Wyoming. What term best describes the insurer's classification in Wyoming?

A fine up to $5,000

An insurance producer refused to comply with a subpoena. What would be the producer's penalty for this violation?

Rebating

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as

Cease and desist order

If the Commissioner/Superintendent finds a license engaging in an unfair method of competition or an unfair practice, what order will be issued?

Commissioner 2

In accordance with the Administrative Procedure Act, what entity has the authority to make and enforce rules and regulations to implement and carry out the purposes of the Insurance laws of NJ?

5 Years

In cases where a producer's license has been revoked, the producer must wait for how long before applying for reinstatement?

Insurance company officers, directors, or any other employee who does not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical)

In general, who can be excluded from producer licensing and examination requirements?

Domestic, foreign and alien

Insurers are classified according to their domicile. What are the 3 types of insurers?

May 10th (within 10 calendar days)

The company has issued a policy and delivered it to Producer B on May 1st, Monday. By what date must the policy be delivered to the insured?

If the producer's home state has the same CE requirements and the producer satisfies them

Under what circumstance would a nonresident producer NOT be required to complete CE hours in NJ?

A cease and desist order, a fine and license suspension or revocation

What are the most common penalties for violations of insurance statutes?

$5,000; $10,000; $15,000

What are the penalties for the first, second and any subsequent violation of the NJ Fraud Prevention Act, respectively?

Commissioner

What authority is in charge of investigating claims held against licensees?

Domestic

What best describes an insurance company that has been formed under the laws of the state?

Certificate of Authority

What document is required for an insurance company to transact insurance?

Misrepresentation

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

A Massachusetts resident who sells insurance full-time in Boston but wants to expand his customer base by becoming licensed in NJ

What individual would most likely be issued a nonresident producer's license?

Developing Insurance Rates

What is NOT a duty of the Commissioner?

Suggesting negotiations in settling the claim

What is NOT an example of an unfair claims settlement practices

Have interest in insurance companies regulated by the Department

What is NOT an example of the Commissioner's powers?

Making comparisons between different policies

What is NOT considered a misrepresentation as it pertains to unfair trade practices?

Controlled Business

What is NOT considered an unfair and deceptive practice?

Sharing Commissions

What is NOT considered an unfair trade practice in the business of insurance?

It is issued to group insurance participants

What is NOT true regarding a Certificate of Authority?

Rebates are allowed if it's in the best interest of the client

What is NOT true regarding rebates?

Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates

What is controlled business?

The license needs to be returned to the Insurance Department. It can be reinstated by filling out an application and paying a fee

What is true regarding license cancellation and reinstatement?

Professional Insurance Agent

What professional designation is NOT recognized by the Department as an acceptable substitute for education and examination requirements?

It reversed the decision of Paul vs VA, determining that insurance is interstate commerce and should be regulated federally

What significance did US vs South-Eastern Underwriters have on the insurance industry?

Defamation 2

What term describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?

Twisting

What type of misrepresentation persuades an insured, to their detriment, to cancel, lapse or switch policies from one to another?

NJ Life and Health Guaranty Association

What was created to protect policyowners, insureds and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment?

Dividends from a mutual insurer

What would NOT be considered a rebate offered to an insured in the sale of insurance?

A Signed Contract

What would indicate a contractual relationship between a producer and an insurance company?

Broker

When an insurance producer negotiates for an insurance contract on behalf of a client, the producer is acting as a

Whenever deemed necessary, but at least once every few years (please check your state regulations for specific time requirement)

When can the Commissioner or Director examine insurers?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)

When is controlled business legal?

The Department of Insurance (Commissioner/Director/Superintendent)

Who must be notified of a producer's change of address?

Member Insurers

Who provides funding for the NJ Life and Health Guaranty Association?

A resident producer licensed for Property and Casualty insurance applying for a Life Insurance license

Who would NOT be exempt from the life insurance examination?