Property + Laws

Paul v. Virginia (1869)

- Affirmed the right of the states to regulate insurance. - The court ruled that insurance was not interstate commerce.

U.S. v. South-Eastern Underwriters Association (1944)

- Congress still has authority to regulate the industry as a whole. - After an appeal, further ruling held insurance business was, in fact, interstate commerce & subject to fed antitrust laws

Department of Banking & Insurance

- Regulates banking & insurance industries - Chief executive officer of dept is Commissioner, appointed by governor for duration of gov term

McCarran-Ferguson Act (Public Law 15)

- Stated continued regulation of insurance by individual states was in public interest - Stated no act of Congress was to be construed to invalidate, impair, or supersede any law enacted by any state for the purpose of regulating the business of insurance, or which imposes a fee or tax upon the business - States regulate insurance based upon this Act (fed gov't wont intervene unless state fails to regulate) - Says after 6/30/48; Fed antitrust laws would apply to insurance but only to the extent that state regulation wasn't effective

Revocation/Suspension pt 2

- failing to notify commissioner within 30 days of: conviction of any crime, indictment, the filing of any formal criminal charges, suspension or revocation of any insurance license or authority by a state other than nj ===== or initial of formal disciplinary proceedings in a state other than NJ affecting producers insurance license ===== or failing to obtain written consent pursuant to or failing to supply any doc the C may request in connection -the final disposition of any formal disciplinary proceedings initiated against producer or action against by FINRA (Financial industry regulatory authority), any successor organization, or other similar non-govt regulatory authority with statutory authority to create + enforce industry standards of conduct, or any other admin actions or criminal prosecutions, or failing to supply any doc the C may request -may also be revoked, suspended, denied if fail to provide documentation requested by C i;.e. copies of fingerprints, records of complains, convictions, or judgments

Surrender of License

- licensee may terminate a current license by returning it to dept any time before expiration - producer license may be reinstated after termination during same license period by completing an app according to state law - submitting a license for cancellation doesn't void or terminate any disciplinary action against the licensee or prevent disposition of any penalty, ordered restitution, or costs

Business entity

- payment of fees -fingerprinting for each officer, partner, director - properly completed app of NAIC - If applicant is a corp, limited liability company, limited partnership, or limited liability partnership applying for resident license -----copy of og business certificate stamped "filed" by Dept of Treasury, Division of Revenue Business Services, County Clerk, or other authority as applicable or a certificate filed by Dept of Treasury, Division of Business Services authorizing applicant to do business in NJ

Notice & Hearing

-Any required public hearing held by C (or deputy or authorized employee) -When reason to believe a person has been engaged in/is engaging in any unfair method of competition, or any unfair/deceptive act, he will give notice to any person, firm, corporation, association, or other legal entity affected of ----the time, place, & nature of the hearing, -----the authority under which the hearing is to be held; -----any other info necessary to appraise the party of the nature of the hearing --Notice may be made by delivering via registered/certified mail. --Any person asked to produce books, records, accounts at hearing must --If C issues cease-and-desist order post hearing, may also assess a fine up to 1k for every method of unfair comp, unfair act, or unfair practice committed unknowingly.

Penalties

-C may place on probation, suspend, revoke, or refuse to issue/renew a producer's license or may levy a civil penalty -In addition to or as alternative to any penalty, C may impose a fine up to 5k for first violation & 10k per after. -May also order restitution of monies owed any person & reimbursement of the costs of investigation & prosecution

Fraud Surcharge

-In addition to any penalty, fine, or charge; a person who's found to have committed insurance fraud is subject to a surcharge of 1k. -If person charged settles case w| money payment, subject to surcharge equal to 5% of the settlement payment -Money is paid to state treasurer; DBI uses money to fund efforts to fight fraud

Stock Insurers

-Insurer incorporated in accordance with the laws of NJ with its capital divided into shares + owned by stockholders -Stock insurer is concerned w| gaining profits -Policyholders not entitled to insurance dividends nor liable for any assessments

Mutual Insurer

-Insurer incorporated in accordance with the laws of NJ without permanent capital stock; governing body of which is elected by policyholders. -Owned by policyholders -PH may share in company's profits in the form of insurance dividends, if declared -May issue non/assessable policies

Health Info for Economic & Clinical Health Act (HITECH) Privacy Provisions in RRA

-Under HIPAA -outlines expectations regarding personally identifying information (PII) + personally identifying health info (PHI) -Licensee must maintain + make available appropriate records to enable dept to determine compliance w| these requirements

Insurer + Producer conctract

-an insurer (principal) can appoint a producer (agent) to act on its behalf; both parties must consent -the acts of a properly-appointed producer are considered acts of the principal -principals can empower agents to act on their behalf thru express, implied, or apparent authority

Licensed Producer Requirements

-certificate of completion of course - certificate showing passed state exam -fingerprinting & background check -completed within past 2 years -pay 150$ fee - 20 hrs/line

Broad Powers of Commissioner

-conduct investigations -administer oaths -interrogate licensees + others -issue subpoenas to any licensees or other persons with regard to any investigations, hearings, or proceedings ----issued in name of commissioner (or deputy commissioner/other designated employees) ----failing to comply may be penalized for contempt by state Superior Court

500$ for

-failing to notify the state of opening a branch office within 30 days, or closing within 20 -failure by an employing producer, insurer, or other custodian to return a license to the possession of another (named) insurance producer -payment of a license fee with a check returned for insufficient funds

Business Names Cannot Use

-insurance company -guaranty company unless using ---- agent agency broker brokerage or similar words to distinguish business from an insurance company

Information Privacy

-insurance institutions, agents, or insurance-support organizations that collect, receive, or maintain info about NJ residents in connection w| insurance transactions are subject to info privacy rules. -each licensee must implement a comprehensive written info security program including admin, technical, + physical safeguards for protection of customer info

250$ for failure to

-maintain on file with the state a complete & accurate business or home address or failure to notify of a change of address (within 30 days). If the producer fails to notify the C of a change after 60 days, may be fined max amount of 5k -notify the state of a change of business name within 30 days -notify state of the addition or deletion of owners of more than 10% or officers, directors, or partners

Renewal

-must submit completed app + fee at least 10 days before expiration date -requires CE -must inform dept if don't want to renew

Certification of License Status

-upon request by any person, dept must issue a cert of the license status of any currently LP or producer licensed within preceding 4 yrs -contains name, dob, license ref number, whether current or expired, authorized lines, whether qualified by exam or equivalent, & if any formal disciplinary action was taken in last 4 yrs

Commissioner must give notice __ days before a hearing for unfair trade practices

10 days

Notice Of Cancellation/Non-Renewal for HO + Commercial

10 days - cancellation due to nonpayment or moral hazard; 30 days - any other cancellation or nonrenewal

Cancellation of agency contract

15 days - C must be notified of cancellation, including reason why

Basic Auto Insurance

15k - max PIP per person; 250k - max pIP for significant injures 5k - max property damage/per limit 10k - optional bi or death liability limit/per accident

Penalties for unfair completion, act, or practice

1k - max fin for each unknown violation 5k - max fine for violations committed knowingly ; 5k - max fine for violating a cease & desist order

SAIP

250k - pip coverage/per person 10k - death benefits

PIP Benefits

250k/max limit for BI for insured + family members must be paid by insurer within 60 days after receiving notice of loss

NJ Commercial Insurance Deregulation Act

30 days - form must be filed no later after effective date; rates must be filed no later after the effective date, except med malpractice insurance medical malpractice rates become effective after filed

Criminal acts must be reported to C within

30 days of conviction

Max Civil penalties for violating Insurance Producer Licensing Act

5k - fines for first violation 10k - any following

Insurance Fraud

5k - first offense 10k - second 15k - each subsequent offense

Domestic Insurers

A company is a domestic insurer in the state in which it is incorporated.

Twisting

A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.

Offeree

A person to whom an offer is made.

Business Names

A producer doing business under any name other than producer's legal name must notify C before using assumed name. -Any licensee who advertises using a fictitious trade or firm name shall file w C -C will not accept filing of a name similar to another on file bc may mislead public

Defamation

Act of harming or ruining another's reputation

Claim Communications

All claims must be reported to designated insurer by a broker no later than 3 business days following receipt of notification of claim - Every insurance company upon receiving notification of claim, within 10 business days, must acknowledge receipt of notice unless payment is made during this time. Every insurer, upon receiving: - notification of claim, must promptly provide first party claimants with necessary claim forms, instructions, + reasonable assistance so they can comply with policy conditions & insurer's reasonable requirements -receipt of inquiry from insurance department respecting a claim shlal, within 15 days, furnish dept with complete + accurate written response to inquiry based on info available to insurer

Lloyds of London

An association of individuals and companies that underwrite insurance on their own accounts and provide specialized coverages.

Alien Insurer

An insurance company that is incorporated outside the United State; licensed to operate in NJ

Contractual Relationships

Any insurance co may appoint a licensed producer as their agent.

Insurer/Agent Agreement 2

Any insurer appointing an agent shall file w C Upon cancellation of contract, the insurer shall within 15 days file written notice to C.

Unfair Discrimination

Applying different standards to insureds that have the same risks of loss

Contractual RS: Producer Substituting for or taking over business of deceased or disabled person

C may issue temp license not exceeding 180 days w/p exam if C determines it is necessary for servicing of an insurance business in following cases: ---- surviving spouse or court-appointed personal rep of LP to allow adequate time for sale of business --- member or employee of a business entity licensed as LP upon death & responsible for business entity's compliance w| insurance laws, regulations, + rules -- designee of a LP entering active service

Revocation/Suspension

C may put on probation, suspend, revoke, or refuse to issue/renew license or may levy a civil penalty or any combo of actions, for: --providing incorrect, misleading, incomplete, or materially untrue info in the license app --violating any insurance laws, or violating any regulation, subpoena, or order of C or of another state's insurance regulator --obtaining or attempting to obtain a license thru fraud or misrepresentation == fraud, convicted of felony, dishonest practices, revocation in another state

Title 17

CORPORATIONS AND INSTITUTIONS FOR FINANCE AND INSURANCE

Boycott & Coercion

Entering into any agreement to commit, or by any concerted action committing any act of boycott, coercion or intimidation resulting in or tending to result in an unreasonable restraint of, or monopoly in, the business of insurance is prohibited.

Coverage for Domestic Employees

Every homeowners policy or other policy covering comp personal liability insurance issued + delivered in NJ must afford coverage against liability for payment of any obligation the policyholder may incur to an injured domestic servant or household employee

Branch Offices

Extension of insurer's home office Licensees must file with Dept a branch office registration form + fee within 30 days before business is first conducted Must open for business during such hours + days to provide public w| reasonable access & be posted in a manner to notify public May not engage in insurance-related conduct unless at least one licensed producer is present

Admin Penalties

If a producer violates NJ law, they will be advised by certified mail (or personal delivery) of any admin penalty. --- Notice will explain why, what, how, right to hearing Alleged violator has 20 days to request hearing No later than 60 days will Manager of Enforcement tell manner of disposition

Immunity from Prosecution

If any person asks to be excused from providing records or accounts on the grounds that the evidence will incriminate him, he must produce the info but will be immune from prosecution & not be subject to any penalty, provided that perjury isn't involved

Unfair claim settlement practices

Illegal to commit or perform with such frequency as to indicate a general business practice -misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue - failing to help customer and educate on claims -refusing to pay claims w/ no investigation

CE

Includes 3 hrs ethics; 24 hrs total every 2 yrs

Statement in Claims Forms

Insurance claim forms must contain the following

Record of Complaints

Insurers must maintain a complete file + written record of all complaints received since the last dept exam. Records indicate total # of complaints, classification by line of insurance, nature of each complaint, disposition of the complaints, + time it took to process.

Fictitious name

Legal name of an entity may be registered fictitious name - name not referring to an individual - yet be perfectly legal

Public & Nonpublic records

Licensees must make available to C any records & accounts whenever requested State will not disclose criminal or financial details without proper court order

Rebating

No company, officer, agent, broker, may pay or allow, or offer to pay/allow, in connection with placing or negotiating any policy or annuity, any valuable consideration or inducement not specified in the policy or contract, or any special favor/advantage in the dividends accrued on these policies.

Misrepresentation

No one can issue, write, or share, any written or oral statement misrepresenting the terms of any policy or contract, or benefits, or privileges promised under these contracts.

Standards of Conduct General Requirements

No person may act as producer, collect commissions, or other considerations w/o license. All places of business must be under direct supervision of a producer (1/branch) Premiums collected by producer are deemed to be received by insurer the producer represents

60 days

Nonrenewal notice for medical malpractice must be delivered __ before expiration

Nonresident Producer

Person licensed as producer in another state moving to NJ must make app within 90 days of establishing legal residence to become resident licensee

10 days

Policies, certs, or other evidences of insurance which are received by a producer/limited rep from insurer must be delivered to insured within 10 calendar days of their receipt from insurer

Maintenance of Records

Producer must maintain monthly reconciliation of the trust acct, copy of all appys, + correspondence received/sent -kept for 5 yrs after termination of coverage -If electronic, must be printed as hard copy every 30 days

Trade Practices

Purpose of this law is to regulate trade practices in order to identify those which are unfair or deceptive.

Temporary Work Authority

The Commissioner may issue a temporary work authority that allows an applicant for a license to begin work when the person has submitted a licensing application and fee. A temporary work authority expires 60 days after it has been issued.

apparent authority

The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

False Information and Advertising

This states that one cannot use false advertisements or publish false information about insurer, or any person, in the business of insurance.

Negotiate

act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract or policy of insurance concerning any of the substantive benefits, terms, or conditions of the contract or policy, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers

Surplus Lines

all coverages written by unauthorized insurers & defined as surplus lines no license granting SL authority shall be issued/renewed unless applicant holds or will hold property & casualty authorities No SL producer shall charge any fee to an originating broker in connection w| negotiation or procurement of any contract of SL insurance that shall exceed an amount set forth by C + actual costs incurred for services performed by person not associated w| SL producer

Personal Lines

all property + casualty insurance coverage sold to individuals/families for primarily noncommercial purposes

implied authority

an agent's authority to do things not specifically authorized in order to carry out express authority

Foreign Insurer

an out-of-state insurer that is chartered by another state, but licensed to operate in the state

Rebating Limit

any item or consideration given under these circumstances will be considered a rebate if its value exceeds 25$

Solicit

attempting to sell insurance, asking, or urging a person to apply for particular kind of insurance from a particular insurer

License

authority granted to an individual, partnership, or corporation authorizing the licensee to engage in a business or operation of insurance as agent, broker, or consultant to sell.

Certificate of Authority

certificate issued by Commissioner demonstrating the authority of an insurer to transact insurance business in NJ

Sell

exchange a contract or policy of insurance by any means, for money or equivalent, on behalf on insurer

Insurance Broker

for a fee, commission, brokerage fee, or other consideration, acts/aids in any manner concerning negotiation, solicitation, or sale of insurance contracts as representative of insured/prospective insured.

100$/contract

for failure to maintain all copies of employment or agency contracts

5 days

funds must be remitted to insurer return premiums due shall be paid to insured

Lapse

if more than one yr passed, producer must meet all standard prelicensing requirements again

False Financial Statements

illegal to file or publish any fale financial statements with intention of deceiving public or department examiner

Limited Lines

includes bail bonds; credit insurance; ticket insurance; group mortgage cancellation; legal insurance; self-storage & personal property insurance; + special nonresident limited lines.

Stock operations & advisory board contracts

issuing or delivering agency company stock, securities, or advisory board contracts as an inducement to purchasing insurance is prohibited

Exportable List

list of any class or classes of insurance coverages or risks declared nad promulgated by the Commissioner for which there is no reasonable or adequate market among authorized insurers in this state

Denial

may be denied if: ---- it appears on app, renewal form, attached doc, or dept record the applicant hasn't demonstrated the qualifications prescribed -dept must explain reason for denial & advice applicant of the right to request a hearing in accordance w| Administrative Procedure Act & Uniform Administrative Procedure -Upon receipt of request for hearing, dept shall review app + attachments, & determine if license can be issued ---- (if not qualified, dept shall find the matter is a contested case & transmit to office of Administrative Law for hearing within 30 days)

Change of Address pt 2

must also inform dept of any business or legal name change by using a change of name or address form with evidence of such a change accompanying the notice Any legal process may be served by being delivered to licensee's business/residence shall provide dept notify of change in any address within 30 days of change & maintain proof of notification for 5 yrs

Change of Address

must inform Commissioner within 30 days

Insurance Consultant

person who, for a fee, commission, or other consideration, acts or holds themself to the public or any licensee as offering advice, counsel, opinion, or service w| respect to benefits, advantages, disadvantages under any policy issued in NJ

Reinstatement after Revocation

person whose license has been revoked may apply for reinstatement after 5 yrs

Producer Licensing Model Act

producer can choose home state

Reinstatement

producer who allows license to lapse may, within 12 mo from due date of renewal fee, reinstate same w/o taking exam - proof of CE - late renewal fee up to 2x unpaid -whether or not they conducted business during lapse

Insurance Agent

producer who is authorized, in writing, by any insurance company to act as its agent to solicit, negotiate, or sell insurance contracts on its behalf or to collect insurance premiums

Legislation

the act of making or enacting laws

express authority

the authority of an agent, stated in the document or agreement creating the agency

Offeror

the person who makes the offer

Effect of Suspension or Revocation of producer license

upon suspencion/revoke, producer must immediately surrender any license -no person may be a partner, officer, director, owner of licensed business entity or otherwise employed in any capacity by producer

Sherman Antitrust Act

would always apply to cases involving boycott, coercion, or other unfair trade practices