NJ State Regulatory Jurisdiction
a nonresident insurance producer who moves from one state to another or resident insurance producer who moves from this state to another shall file change of address and provide certification from new resident state within ______ of change of legal residence (no fee or license app required)
30 days
commissioner may suspend, revoke, place on probation, or refuse to issue/renew insurance producer license if individual fails to inform commissioner within ______ of conviction of any crime, indictment or filing of any formal criminal charges or suspension or revocation of any insurance license or authority by a state other than NJ or initiation of formal disciplinary proceedings in other state affecting producer's insurance license
30 days
licensees must inform commissioner of change of address within _____ of change
30 days
a nonresident licensee upon moving home or place of business to NJ & requesting resident status will notify dept of change of address & contact info within ____ & in _____ of change in resident status in prior state
30 days; 90 days
any certificated issued through temporary work authority will contain an expiration date and expire no more than____ after issuance
60 days
a producer licensed in another state who moves to NJ is exempt from prelicensing ed reqs if their license is in good standing in home state within ______ before he moves to NJ
90 days
licensed producer unable to comply w/renewal procedures due to military service like med disability may request waiver. producer may also request waiver of exam req or other fine/sanction imposed for failure to comply w/renewal procedures
:)
Company/Producer contractual relationships
any insurer authorized to transact business in NJ may, by written contract, appoint ind w/valid license as an agent. contract must authorize producer to act as agent for appointing insurer for all lines of insurance for which insurer is authorized and agent holds authority in NJ. contract must contain duties, responsibilities, and limitations of authority between agent & appointing insurer, & agent must abide by its terms
Commissioner
appointed by governor, w/advice/consent of senate, & will serve during gov's term until appointment of successor. no one connected w/anagement or control of any corp, firm, association, or institution may be commissioner. also, no interest in, dealings, or transactions w/any financial institution, insurance company, or other entity chartered, licensed or regulated by the dept, by commissioner or any office/employee of dept.
Agent/Insurer contractual relationship
as long as agent working within scope of agent contract, agent's actions considered actions of insurer. aka insurer responsible for actions of its agents.agent working on behalf of insurer when collects apps/premiums to submit to insurer & delivers policies to insured. agent's knowledge presumed to be insurer's knowledge.
soliciting
attempting to sell an insurance policy or asking a person to complete and submit an app for insurance policy
producer acting as insurance agent 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 and who may be authorized to countersign insurance policies on its behalf.
Paul vs. Virginia 1869
case ruled that insurance transactions crossing state lines are not interstate commerce. important because insurance transactions legally fell under reg of the state and local laws instead of fed. legislation lasted 75 years
certificate of authority
certificate issued by commissioner evidencing authority of insurer to transact insurance in state
What will happen if anyone refuses to obey a subpoena?
commissioner may issue order compelling appearance of witness to give testimony or produce evidence or both
business entity acting as insurance producer must have at least 1 of principals to obtain license. may receive licenses for:
life, accident & health, property, casualty, variable, credit, & personal lines insurance
implied authority
not specifically expressed by principal to agent in agency contract, but implicit in agent's duties. authority that agent is presumed to have as part of his ability to transact insurance. ex. collecting premiums from insureds, tho may not be explicitly stated in agency agreement is implied to be part of agent duties.
no license granting surplus lines authority may be issued or renewed unless applicant holds or will hold ______
property and casualty authorities
1944 US v. South-Eastern Underwriters Assoc. case
ruled that insurance transactions crossing state lines are interstate commerce and are subject to federal regulation
reinsurance
spreading risk from 1 insurer to 1 or more other insurers-->contract under which originating insurer, called 'ceding insurer' procures insurance for itself in another insurer called the 'assuming insurer' w/respect to part or all of an insurance risk of originating insurer
McCarran-Ferguson Act/Public Law 15 1945
stated that while fed gov has power to regulate insurance industry, it may not exercise such rights if insurance industry is effectively and adequately regulated at the state level. Law specifically states that fed antitrust laws won't apply to state-regulated insurance unless coercion, boycott, or intimidation occurs.
selling
to purchase an insurance contract in exchange for valuable consideration (i.e. premium payment(s))
sell, solicit and negotiate
transacting insurance
lingering implied authority
when agent retains evidence of authority such as sales brochures and apps, after agent no longer expressed authority w/insurer -insureds may be misled to believe that agent still has authority to transact insurance on behalf of insurer. to avoid this, insurers must recoup materials from former agents
If determined that an act of question was unfair, commissioner will make findings in writing and issue and cause to be served upon person charged with violation an order requiring a cease and desist from engaging in such methods of competition, act or practive, and commissioner may order payment of penalty not to exceed _______ for each and every act or violation unless person knew or should've known he was in violation, then penalty will not be more than ______for each act or violation
$1,000; $5,000
Bond price deputy commissioners must provide
$10,000
penalties for violation of insurance laws/regs: max for each subsequent offense
$10,000
Bond price commissioner must provide
$25,000
penalties for violation of insurance laws/regs: max for first offense
$5,000
no surplus lines producer may charge any fee to originating broker in connection w/negotiation and procurement of any contract of surplus lines insurance that exceeds ______ plus actual costs incurred for any services performed by person who isn't associated w/surplus lines producer, such as inspection services
$50
Commissioner's duties
1. admin work of dept 2. appoint and remove officers and other personnel employed within dept 3. perform, exercise & discharge functions, power and duties of dept through divisions established by law or as the commissioner deems necessary 4. organize work of dept according to structure/organizational units commissioner determines to be necessary for efficient operation 5. determine all matters of policy within commissioner's jurisdiction 6. institute legal proceedings/processes necessary to enforce properly/give effect to any of the Commissioner's powers or duties 7. make report eachyr to gov and to legislat of dept's operations for preceeding fiscal yr/render other reports as gov requests or required by law 8. appoint advisory committees which may be desirable to advise and assist dept or division in carrying out its functions and duties 9. maintain suitable headquarters for dept & other quarters as commissioner will deem necessary to proper functioning of dept. 10. have power->conduct investigations, administer oaths, interrogate licensees, & issue subpoenas to anyone connect w/investigation, hearing, etc. 11. charge for license & all services performed by insurance dept.
Prelicensing reqs
1. all license candidates must pass written exam to complete producer app 2. passing exam score must've been received within 1 year prior to date of app 3. also, app must obtain certificate of completion for approved course of prelicensing ed. time req for courses: life/health insurance: 20 hours credit for course won't count if course completed over two years before date of app 4. person may obtain waiver of req if he/she possesses any of the following designations or educational credentials: -CLU (life insurance) -CPCU (property and casualty insurance) -CIC (life and health, property & casualty insurance) -college degree in insurance -attorneys (title insurance)
Licensing --> a person may not sell, solicit or negotiate insurance in NJ unless they're licensed. Applicant must:
1. be at least 18 2. submit a properly completed app 3. have not committed an act that is ground for denial, suspension or revocation 4. pass an insurance producer licensing examination 5. successfully complete a prelicensing course of study 6. pay a nonrefundable app fee
Apps must be made using uniform business entity app. App must contain the following:
1. legal name of business entity 2. entity's business mailing address and location address 3. any other business names 4. license reference numbers 5. names, address, and license #s of all persons owning 5% or more of business entity 6. responses to ?s regarding applicant's char, fitness, & financial responsibility 7. if applicant is corp, LLC, limited partnership, or LLP, copy of original business certificate stamped "filed" by dept. of treasury, division of revenue business services, county clerk, giving entity authority to transact business in NJ 8. if applicant is a business entity applying for nonresident license, a certification evidencing that app is authorized in home state to transact business comparable authorities. 9. for resident business entities, fingerprint forms in a format designated by the dept for each officer, director partner, or owner of 5% or more of entity.
Producer employing another producer is subject to the following reqs:
1. licensed producers may enter employment contracts by which employed producer conducts business under supervision of & in name of employing producer. contracts must be in writing & specify that doesn't include all license authorities of parties, if is the case. both parties must have copies of contract & must make them available to dept upon request. 2. employer who has entered into employment contract must notify dept of agreement within 15 DAYS OF APTMNT. 3. employer must examine credentials of employee to determine that he is licensed to conduct kinds of business described in contracts. 4. employee may (if authorized by employer and any insurance company for which employer is an agent) execute employer's name to contracts of insurance in accordance w/written agency contract 5. employer must be responsible for insurance-related conduct of employee. in any disciplinary proceeding, existence of employment contract must be prima facie evidence that employer knew activities of employee. 6. existence of business relationships btwn 2 licensed producers by which each acts as independent contractor may not require filing of notice in accordance w/subchapter nor create responsibility for acts of other in absence of knowledge or concerted action
A nonresident person will receive a nonresident insurance producer license if:
1. person is currently licensed as resident insurance producer in good standing in his home state 2. person has submitted proper request for licensure/paid fees 3. person has submitted/transmitted app to commissioner for licensure that ind has submitted to home state or, in lieu of the same, completed uniform app 4. person's home state awards nonresident insurance producer licenses to residents of NJ on same basis.
Penalties commissioner may place on probation, suspend, revoke, or refuse to issue/renew insurance producer's license for any of the following causes:
1. providing incorrect, misleading, incomplete or materially untrue info in license app 2. violating any insurance laws 3. improperly withholding, misappropriating or conversion monies/properties received in course of doing insurance business 4. intentionally misrepresenting terms of actual/proposed insurance contract 5. having been convicted of felony or crime of 4th degree or higher 6. committing an unfair trade practice 7. using fraudulent, coercive, or dishonest practices/demonstrating incompetence, untrustworthiness/financial irresponsibility 8. having insurance producer's license or equivalent denied, suspended, revoked in any other state, province, territory 9. knowingly accepting insurance business from unlicensed producer 10. failing to comply w/admin or court order imposing child support obligation 11. failing to pay income tax 12. intentionally withholding material info/making misstatement in license app 13. committing a fraudulent act 14. knowingly facilitating/assisting another person in violating insurance laws. 15. failing to notify commissioner within 30 DAYS OF CONVICTION OF ANY CRIME, indictment or filing of any formal criminal charges or suspension or revocation of any insurance license or authority by a state other than NJ or initiation of formal disciplinary proceedings in other state affecting producer's insurance license
Before approving the app, the commissioner must find that:
1. the business entity has paid the required fees 2. the business entity has designated a licensed insurance producer or producers responsible for the business entity's compliance w/insurance laws, rules, and regs of NJ
temp licenses may be issued in the following cases:
1. to surviving spouse or court-appointed personal rep of licensed insurance producer, upon death/disability of producer, to allow adequate time for sale of insurance business owned by producer or recovery or return of producer to business or to procide for training/licensing of new personnel to operate producer's business 2. to member/employee of business entity licensed as insurance producer, upon death or disability of ind designated in business entity app or license as responsible for business entity's compliance w/insurance laws of NJ 3. to designee of licensed insurance producer entering active service in armed forces of USA 4. in any other circumstance in which commissioner deems public interest will be best served by issuance of temp insurance producer license
If commissioner has reason to believe that anyone has been engaged in unfair method of competition/deceptive act/practice, he will issue a statement of charges & a notice of hearing to be held at a time and place, no less than ______ after date of service.
10 days
License will remain in effect *unless revoked or suspended* as long as fee is timely paid and in case of resident individual insurance producers, continuing education reqs satisfied. an individual insurance producer who allows license to lapse may within ______ from the due date of the renewal fee, reinstate same license w/o necessity of passing written exam. However, penalty in amount not to exceed _____ the unpaid renewal fee will be required for any fee received after due date.
12 months; double
Upon cancellation of agency contract (Company/producer contractual relationship), insurer must file a written notice of cancellation w/commissioner within _____
15 days
producer employing another producer: employer who has entered into employment contract must notify dept of agreement within _____ of appointment
15 days
Producer substituting for/taking over business of disabled/deceased producer: commissioner may issue temp insurance producer license for period not to exceed ______ w/o requiring exam if commissioner determines that license is necessary for servicing of insurance business upon death or disability of ind designated in business entity app or license as responsible for business entity's compliance w/insurance laws, rules, and regulations of NJ.
180 days
life/health insurance prelicensing ed. time req for course is _____, but it won't count if course was completed over _____ before date of app.
20 hours; 2 years
Dept IS OR ISN'T authorized to issue nonresident licenses containing above authorities (producer/business entity) regardless of whether authority conferred by nonresident applicant's home state license precisely matches kinds/lines of insurance as above, so long as they're comparable.
IS
negotiation
act of discussing w/or providing advice on purchase of insurance product to prospective purchaser
Prior to Paul vs. Virgina
In 1800s, insurance was regulated individually by the state, but insurers preferred uniform regulation for all states. In 1866, VA passed law mandating that all insurers not incorporated in VA submit $50,000 bond to become licensed to sell insurance in VA. Samuel Paul applied as agent to sell NY insurance in VA but insurer refused to comply with bond req. he sold anyway w/o VA license and was indicted, convicted, and ordered to pay a $50 fine.
prior to 1944 US v. South-Eastern Underwriters Assoc. case
In 1942, U.S. attorney general accused South-Eastern Underwriters Association of committing a restraint of business, violation of Sherman Antitrust Act. Court decision of Paul vs. Virginia was overruled.
commissioner may require any docs reasonably necessary to verify info in app. each insurer that sells, solicits or negotiates any form of limited line credit insurance must provide to each ind whose duties include selling, soliciting, or negotiating limited line credit insurance:
a program of instruction that is approved by the commissioner.
Apparent authority2
customer may be lead to false impression bc agent's actions. ex. life insurance agent's perceived ability to bind insurer-> though they can't, insured may perceive agent to have authority.
Apparent authority
deals w/relationship btwn insurer, agent, & customer. situation where insurer gives customer reasonable belief that agent has power & authority to bind principal even in cases where agent isn't authorized.
express authority
explicit authority granted to agent by principal as written in agency contract
surplus lines
fill need for coverage by insuring risks declined by standard underwriting & pricing processes of admitted insurance carriers, w/ability to accommodate wide variety of risks, surplus lines market acts as effective supplement to admitted market
producer acting as an insurance broker
for a commission, brokerage fee, or other consideration, acts/aids anything concerning negotiation solicitation or sale of insurance contracts as representative of insured or prospective insured or person who places insurance in company he doesn't represent as an agent
producer acting as an insurance consultant
for commission, brokerage fee, or other acts holds himself out to public or any licensee offering any advice/counsel/opinion w/respect to benefits, advantages, or disadvantages under any insurance policy or contract that is or could be issued in NJ, but does not include bank trust officers, attorney's-at-law and certified public accountants who negotiate contracts on behalf of others or provide general financial counsel if no commission or brokerage fee is paid for those services
alien insurer
formed under laws of another country
foreign insurer
formed under laws of another state
domestic insurer
formed under laws of this state
insurance-related conduct
includes selling soliciting negotiating or binding policies of insurance' all communication w/insureds concerning any term or condition of policy of insurance, office management policies affecting insureds; processing claims; and transmitting funds between insureds, producers, premium finance companies and insurance companies
domestic mutual insurer
insurer incorporated in accordance with laws of this state w/o permanent capital stock, governing body of which, except while temporary capital stock is outstanding and is elected by its policyholders
domestic stock insurer
insurer incorporated in accordance with laws of this state with its capital divided into shares and owned by stockholders
license will have
licensee's name, address, personal id #, date of issuance, lines of authority, & expiration date.
