NJ Laws, Rules, & Regulations common to ALL lines

Insurance Consultant

A person, for a fee, offers advice regarding the benefits of any insurance policy.

Insurance Broker

Acts as a representative of an insured or prospective insured and helps with insurance transactions on the insureds behalf for a commission

Stock Companies

Are owned by the stock holders. Traditionally issue NONPARTICIPATING policies, in which policy owners do not share profits or losses... do not pay dividends to policy owners, but taxable dividends are paid to stock holders

Insurance Agent

Insurance Producer acting as an agent authorized in writing by insurance company to negotiate and sell contracts, or collect premiums.

Foreign Insurers

Insurance company that is incorporated in another state or territory

Domestic Insurers

Insurance company that is incorporated in the states, mostly the state which it was formed

Alien Insurer

Insurance company that is incorporated outside the US

State laws: Vested public Interest

Insurance is a business which affects the public welfare demands that the industry be regulated in its activities. the industry is highly regulated by state.

Certificate of Authority

Insurers must apply for a license from the state department of insurance and meet any financial (capital and surplus) requirements set by the state. once approved they are considered admitted our authorized as a legal insurer

Renewal

Producer licenses are valid for 2 years. must pay a renewal fee on the last day of month of birth. must submit proof of completing 24 hours of approved continuing education credits and 3 of those hours must be courses related to professional ethics

Insurance -Related Conduct

Selling, negotiating and binding insurance policy; All communication w/ insured concerning terms and conditions of a policy; Office management policies affecting insured; Processing claims; Transmitting funds between insured, producers, premium finance companies and insurance companies

Insurance Transactions

Solicitation; Negotiations; Sale (effectuation of an insurance contract); Advising an individual concerning coverage or claims.

Licensing

The purpose is to ensure that a producer meets educational and ethical standards required to fulfill producers responsibilities to the insurer and to the public.

Reinsurance Treaty

When an insurer has an automatic reinsurance agreement between itself and the reinsurer in which the reinsurer is bound to accept all risks ceded to it

Reinsurance

a contract which one insurance company (reinsurer) indemnifies another insurance company for part or all of its liabilities. Protects insurers against catastrophic losses.

Surplus Lines

a person that is allowed to write business in NJ for insurance companies that do not possess a certificate of authority. must be a NJ resident, hold a property and casualty license

Broad powers of Commissioner

administer the departments work; appoint and remove officers and other personnel employed w/in the department; exercise power of department through divisions established by law; make an annual report

Nonresident producer

an individual who is domiciled and licensed as a resident producer in states other then NJ. must currently hold a license in resident state, submit proper requests for licensure and pay fees, submit to commissioner the application of licensing from home state

Department of banking and Insurance/commisioner

created to execute all laws related to insurance, banking, savings ect.

Penalties

issue a cease and desist order, a fine of $1,000-$5000 for each charge of violations. $10,000 for subsequent offenses (2nd +)

McCarran-Ferguson Act/ Public Law 15

law in 1945. Gave the right of the federal government to regulate the insurance industry but the fed gov would not regulate insurance as long as the states did an adequate job of regulating the industry.

Types of licenses

life; accident and health; variable life and annuity; property; casualty; personal lines; surplus lines; title insurance; limited lines such as: bail bonds, car rental, credit, ticket, travel, legal, storage insurance

Business Entity

may receive a resident insurance producer license for those who qualify: is domiciled in NJ; Completed an application by each officer who holds an insurance producer licenses; is worthy of a license; has one parter who holds a valid insurance license

Mutual Comanies

owned by the policy owners and issue PARTICIPATING policies. owners are entitles to dividends, which are a return of premiums and nontaxable.

Negotiate

the act of directly conferring with or offering advice to a purchaser on a particular contract of insurance concerning any of the benefits, provided that the person engaged in the act either sells insurance or obtains insurance from insurers for purchasers. Hagling

Notice and hearing

the commissioner may issue a state of charges and hold a hearing for any purpose deemed necessary if they suspect that an insurer has committed a violation of unfair trade practice

Ceding Insurer

the originating company that procures insurance on itself from another insurer. give the risk to reinsurer

Solicit

to attempt to sell insurance or ask a person to apply for a specific type of insurance from a particular insurer

Facultative Reinsurance

when Reinsurance is purchased on a specific policy.

Effect on law and policy forms

when a court resolves a conflict of insurance coverage there is a precedent as to how future claims will be settled. such as clarifying the intent of the policy

Extended Reinsurance (retrocession)

when a reinsurer has taken on too many risks and must spread some of its liabilities to other reinsurers

Court Action: Interpretations

when there are misunderstandings of what the policy covers or in the event of a claim or loss under policy and the misunderstanding cannot be resolved by the insurer and insured, courts are asked to interpret contract