Insurance Pre-Licensing

McCarren-Ferguson & Public Law 15

#3 of the 3 things that have been influential in determining how the insurance industry is regulated, is a federal LAW. It has two names you must know interchangeably. What are they?

in NJ, no other state

A producer may wish to establish an office where?

an adequate job

According to the McCarren-Ferguson/Public Law 15, insurance business is exempt from certain federal laws, allowing the STATES to regulate insurance as long as they do what?

McCarren-Ferguson/Public Law 15

According to what law is insurance business is exempt from certain federal laws, allowing the states to regulate insurance as long as they do an adequate job?

Virginia, it is determined a state regulation. Remember SNOT, since it was a State regulation, then the business of insurance is NOT interstate commerce.

Who won the Paul vs. Virginia case?

No, the federal government is still the "ultimate authority" BOTH regulate insurance today.

Did the McCarren-Ferguson/Public Law 15 reverse US vs. SEUA?

no

Does the hearing have to be conducted by the commissioner?

Because the law came first, rules and regulation must properly reflect the law

Why can the Commissioner only put the rules and regulations into effect?

The commissioner is appointed into office by the governor with the advice and consent of the senate.

How does the commissioner get into office?

It is funded through assessment of member companies.

How is the guarantee association funded?

20 days

How long does an alleged offender have to request a hearing?

at the pleasure of the governor.

How long does the commissioner serve?

it will be personally delivered or by registered or certified mail and sent to the last known address

How will the notice be delivered?

$500

If a producer dissolves a branch office and forgets to notify the DOBI, the fine is ___.

notice of the charges and is entitled to a hearing

If the commissioner has reason to believe that a person has violated the insurance law, the alleged violator will receive a ___?

MAKE, AMEND, ALTER, MODIFY & REPEAL (MAAMR)

If the question asks anything about the Commissioner's power regarding rules and regulations, he can do anything he wants regarding them, including, ___ , ___ , ___, ___, and ___. (hint: the word begin with MAAMR)

STATES & INTERSTATE COMMERCE

In the first case, it was determined that __, has the right to regulate insurance. In other words, that insurance IS NOT ____ ____.

REVERSED & FEDERAL GOVERNMENT

In the second case, 75 years after the first (1944), the Supreme Court ___ the ruling of the first case. It was determined that the ___ ___ had the right to regulate insurance.

it was considered interstate commerce.

Why did the Federal government have the right to regulate insurance after the second case.

Life insurance: $5000,000 , $100,000 Unallocated annuities: $2,000,000 Health insurance: unlimited (up to policy maximum) property liability: up to $300,000 ($75,000 for PIP)

Life insurance: up to ____ in death benefits, up to ___ in cash value. Unallocated annuities: up to ___ Health insurance: ___ property liability: up to __ (__ for PIP)

yes, May still be directed to give testimony, but granted immunity

May a person ask to be excused from testimony on the grounds that the testimony may be "self-incriminatory?" Explain.

countersign policies and and to collect premiums on behalf of the insurance company

Since the agent is hands and feet for the insurance company, the agent may be authorized to do what?

Guarantee Association

The __ __ was formed under NJ law to protect consumers from financial loss in the event a member insurance company has financial trouble.

30 & 30

The branch office must be registered within __ days before opening and if the branch office is dissolved, the producer must notify the DOBI within __ days after closing.

reasonable, posted

The branch office must keep __ hours to serve the public and these must be __ in a matter reasonably calculated to inform the public.

make restitution of monies owed; and pay court costs

in addition to fines, the guilty party may be required to __?

- impaired: meaning the insurer is potentially unable to pay its claims - insolvent: meaning it is unable to pay and must be liquidated

The guarantee association was formed under NJ law to protect consumers from financial loss in the event a member insurance company has financial trouble. This could mean the insurance company is __

places insurance, represent as an agent

The insurance broker is also someone who __ __ in an insurance company that he/she does not want to __ __ __ __.

Paul vs. Virginia

The name of the first case that took place in 1869.

The commissioner

Who heads up; the DOBI?

licensee

The producer that establishes that Branch Office must assure that a __ is present whenever the Branch office is engaged in insurance-related conduct.

Two court rulings and an important federal law.

There are three things that have been influential in determining how the insurance industry is regulated. What are they?

The law

Who holds the greater power/authority, the ruling of the Commissioner or the law?

books, papers, documents and correspondence relevant to the hearing/investigation

Those given a notice may be required to produce what?

RULES, REGULATIONS & LAWS

To enforce the the laws, the department (DOBI) creates ___ and ___ that should be consistent with the law.

- collecting premium money at any place other than your recorded place of business - communicating with insureds regarding terms/conditions of coverage - recommending additions or deletions to a policy -urging a prospective purchaser to buy a particular policy - initiating a sale over the telephone or otherwise etc. etc.

What activities require licensure?

- promulgating rules and regulations to ENFORCE the law , administering work of the department, report annually to the governor and the legislature, appoint and remove department officers, employees, advisory committees, institute legal proceedings and investigate affairs if any insurancer/those engaged in the business has engaged in any unfair method of completion or deceptive practice

What are some of the broad powers of the Commissioner?

clerical duties

What duties are you restricted to without a license?

producer license

What is the document that is issued to a qualified person as proof that a person may transact business in NJ?

U.S. vs. SEUA

What is the name of the second case where the first case was reversed by the Supreme Court?

certificate of authority

What specific document is issued by the Commissioner as proof that an insurer has the authority to transact business in NJ?

promulgate (put (a law or decree) into effect by official proclamation)

What word describes the fact that the Commissioner may make ("set forth") rules and regulations?

insurance broker

When a person acts to represent the insured or prospective insured, then that person is acting as an __ __.

insurance consultant

When a person receives a fee for the offering of advice, counsel, opinion, etc. regarding insurance, then that person is acting as an __ __.

a minimum of 10 days

When the commissioner schedules the hearing, the alleged violator will be given notice of the hearing when?

legeslative, the department (DOBI)

___ makes the laws/statues, ___ makes the rules and regulations (keep those separate!)

by the commissioner prior to use

all contracts of reinsurance and extended reinsurance used in NJ must be approved by who and when?

domestic company

an insurer formed (incorporated, chartered) under the laws of NJ is called a __?

foreign

an insurer formed under the laws of a jurisdiction (state) of the USA other than NJ is called __?

alien

an insurer formed under the laws of another country other than the United States (including territories and its possessions) is __?

domestic stock company

an insurer incorporated in accordance with the laws of NJ, with it "capital divided into shares and owned by its STOCKHOLDERS" is a __ __ __ .

domestic mutual company

an insurer incorporated in accordance with the laws of NJ, without permanent capital stock, and in which the governing body is elected by its policyholders is a __ __ __.

Executive branch (3)

contains the Department of Banking & Insurance (DOBI) - which is responsible for enforcing (4) the laws

$25,000 (5,000 + 10,000 + 10,000)

giving rebates to 3 people can result in a fine of __?

contempt

if a person fails to respond to a subpoena, he/she may be punished by the state's superior court for __?

Retrocession

if a reinsurance company wishes to transfer all or some of its risk to yet another insurancer, this "extended reinsurance" is also called __.

ceding, assuming & reinsurance

its like "insurance for insurance companies," the contract under which an originating insurer which is called the __ insurer procures insurance for itself in another insurer called the __ insurer with respect to all or part of an insurance risk is called __.

the commissioner

no matter who holds the hearing, who has the final say?

- $5,000 for the first offense - $10,000 for each subsequent offence

regarding penalties, the general insurance penalties in NJ that may be imposed in addition, or as an alternative to any other penalty are;

legislative branch (1)

the branch of government that makes the laws, responsible for interpreting (2) the law

- date/time of the hearing -authority under which it is held -information regarding the nature of the hearing

the notice of a hearing will include what?

Insurance Related Conduct

what is the phrase that includes all the activities for which a license is requires, as well as activities which need to be supervised by licensee?

insurance agent

when a person is "authorized in writing" to represent a company, then that person is "acting as" an __ __.

- subpoena witness - administer oaths -examine people under oath - compel a person to subscribe to written testimony - require books, papers, records or other documents

with regard to a hearing, the commissioner, or person conducting the hearing has what authorities?