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