NJ PC State Laws

Exemptions - Prelicensing courses may be waived for an applicant who :

- Holds a license in another state - Is a veteran of the United States armed services and has completed a course of veteran's education - Has completed courses at an accredited college that are equivalent to the courses required - Is an attorney admitted to practice in New Jersey (title insurance authority only) - Holds a professional designation

a notice of the denial of a license application must include:

- Specify the reason(s) for denial - Advise the applicant of the right to request a hearing and the procedure for doing so

A person who previously held a New Jersey insurance license that was surrendered as a condition of public employment will not be required to retake prelicensing education to reinstate the license if:

- The employment was insurance-related - Application for license is made within 1 year of termination of the public employment

An applicant for a producer license who was previously licensed for the same lines of authority in another state will not be required to complete any prelicensing education or examination, if:

- The person currently is licensed in good standing in that state - The application is received within 90 days of the cancellation of the applicant's previous license

At the hearing, the Commissioner may...

- administer oaths - examine and cross examine witnesses - receive oral and documentary evidence - subpoena witnesses and compel their attendance - require the production of books, papers, records, correspondence, or other documents he/she deems relevant to the inquiry

The state is responsible for...

- issuing laws and regulations and enforcing them based on the NAIC - Licensing and supervising insurers and brokers/producers in the state - controlling insurance contracts sold - marketing practices - amount of reserves an insurer must maintain - investigating consumer complaints

Conferring directly with a purchaser or prospective purchaser, when the person either sells insurance or obtains insurance from insurers for purchasers

Negotiate

Stock Acquisition & Common Management

No insurer may invest in of the capital stock of another insurer; nor can they have a common management with any other insurer in order to decrease competition.

Surplus Lines

No license granting surplus lines authority may be issued unless the applicant holds property and casualty authorities.

Interlocking Directorate

No person may be a director of 2 or more competing insurers

Genetic Testing

No person may discriminate on the basis of genetic information, the refusal to submit to a genetic test or make available the results of a genetic test An insurer must notify the subject of a genetic test that the test is required and must obtain the individual's written informed consent prior to administration.

Rebating

Offering to a prospective client any special favor, advantage or consideration not already specified in the contract as an inducement to buy insurance

Any person engaged in the insurance business as an agent, broker, or consultant must be licensed to sell, solicit, or negotiate insurance

Producer

Renewal of license

Producer licenses expire biennially on the last day of the producer's birth month and must be renewed to stay in force - renewal fee - continuing education

McCarran-Ferguson Act (1945), also known as....

Public Law 15

The Commissioner must give notice at least ____ days before a hearing for unfair trade practices

10

Once an agent is appointed, the insurer must notify the department either within ____ days after the contract is executed or when the producer submits his first policy application. When an agency contract is cancelled, the insurer must notify the Commissioner within ____ days

15 days (for both) agency appointment does not terminate until the notice of cancellation has been filed with the Comissioner

life/variable authorities Accident and health or sickness property casualty title insurance personal lines Require ___ hours of course work

20 hours

Any producer who writes flood insurance must complete a ______ course related to flood insurance and the National Flood Insurance Program during the previous license term.

3-credit hour

Department of Banking and insurance myst be notified ____ days before opening or closing a branch office

30 days

Licensees must inform the Commissioner of a change of address within ____ days of the change.

30 days

Number of days to report change of mailing, residence, and email dress or business name

30 days

Timeframe for a nonresident/resident producers to file a change of address

39 days

Records must be retained for at least ___ years

5 OR until receipt of a new license or other documentation from the department showing the new address

All premium funds must be remitted within ____ business days after being received unless provided otherwise by the insurance producer's contract with the insurer or written agreement with the insured.

5 business days

All premiums being returned to the insured must be paid to the insured within ____ business days after being received by the producer. If the returned premium is to be credited to the insured's account, the credit must be shown and applied to the next billing statement sent to the insured

5 business days

A temporary work authority is valid up to ____ days. A temporary work order may be issued to a nonresident licensee, upon moving to NJ:

60 DAYS. > Within 30 days of changing residence to New Jersey, the licensee must notify the commissioner of the change and request the temporary work order > Within 90 days of changing residence to New Jersey, the licensee must request a resident license > The licensee must submit completed fingerprint forms including electronic fingerprinting > Upon receipt of this information, the licensee's status will be changed from nonresident to resident

The department must approve an insurance business' actual, fictitious or assumed name before it is used and filed with the Department of Treasury. after the department approves a business name, the business has ___ days to submit a license application?

90 days

To be licensed, an applicant for a resident insurance producer license must:

> Be at least 18 years of age > Have not committed any act that is a ground for denial, suspension or revocation > Complete a prelicensing course of study for the lines of authority for which the individual has applied > Pay the fees as required > Pass, within 1 year of the application date, the examinations for the lines of authority for which the individual has applied

Certificate of Authority

A certificate issued by the Commissioner evidencing the authority of an insurer to transact insurance in this State > authorized > unauthorized

Failure to Maintain Complaint Handling Procedures

A complete record of all complaints received since an insurer's last examination must be maintained.

Service fee requirements

- A fee must bear a reasonable relationship to the service and not be discriminatory - A fee may not be returned as an inducement to purchase a policy - No service fee for any one policy may exceed $20 - A fee may not be charged for completing forms required by an insurer for servicing a policy, such as accident forms - A maximum service fee of $15 may be charged for a producer acting as a broker or consultant upon placement of a renewal. An inspection fee may be charged if no inspections were made in the preceding 3 years. - Only one service fee may be charged per year - No producer may charge a service fee for services rendered in the sale or service of life or health insurance

Immunity from Prosecution

Any person may ask to be excused from testifying at a hearing on the grounds the testimony may tend to incriminate him/her. If the person is still directed to give such testimony or produce such evidence, he/she must comply with that directive. However, he/she will be immune from later prosecution or penalty.

False Information and Advertising

Any statement containing an assertion that is untrue, deceptive, or misleading

Defamation

Any statement that is false, maliciously critical, or derogatory of an insurer's financial condition and is calculated to injure

Misrepresentation

Any statement that misrepresents: > The conditions or terms of a policy > The financial condition of the insurer person or the legal reserve system on which any life insurer operates > The true nature of a policy by using a misleading name or title > A policy as being shares of stock

Unfair Discrimination

Charging different rates, using different forms, imposing different limitations, or paying different levels of benefits to individuals based upon race, creed, color, national origin or ancestry

when a bank or credit union refuses to give a loan unless the borrower buys insurance from a specific company, it is known as ___

Coercion

Licenses will not be renewed unless the licensee has completed ____ credit hours of approved continuing education courses, ____ of which must be related to professional ethics

Continuing Eduction: 24/3

Boycott, Coercion, or Intimidation

Entering into an agreement with the purpose of restraint of trade or creating a monopoly. As a condition for lending money, a person cannot require the debtor to do certain things to receive or extend the loan, such as purchase an insurance policy from a particular insurer

Producer Employing Another Producer

Existence of a business relationship between two licensed producers acting as an independent contractor does not require the filing of any notice, nor create any responsibility for the acts of the other in the absence of knowledge or concerted action.

Lapse

If an applicant's license has lapsed for a period of less than 1 year, the applicant may apply for late renewal and pay a late renewal fee to be granted a waiver from the prelicensing education and examination requirement.

Cease and Desist Order

If, after a hearing, the Commissioner determines the person is in violation of law, he/she will issue a cease and desist order, subject to review by the Superior Court. $5,000 maximum fine for violating a cease and desist order

Temporary Order

In any formal proceeding, if the Commissioner finds that immediate action must be taken prior to completion of a hearing, he/she may enter a temporary order effective pending completion of the hearing and entry of a final order.

Twisting

Making any misleading representations or comparisons of policies, contracts or insurers for the purpose of inducing any person to terminate or convert a contract, or to take out a policy of life insurance or annuity contract with another insurer

False Statements and Entries

Making false material statements about the financial condition of a person or insurer, or making false entries of material facts (or failing to make true entries) about the business of any person, with the intent to deceive an agent, examiner or any public official authorized to examine its affairs

authorized to sell, solicit, or negotiate insurance contracts, to collect premiums, and to countersign insurance policies on an insurer's behalf

Insurance Agent

acts as the representative of an insured or prospective insured. He/she may places insurance with an insurance company but does not act as its agent

Insurance Broker

offers advice on the benefits, advantages or disadvantages under any insurance policy or contract

Insurance Consultant

Stock Operations and Advisory Board Contracts

It is a type of illegal inducement to offer of any of the following to entice or induce a person to buy life insurance or an annuity: > Company stock or other capital stock > Shares in any common-law corporation > Securities > Advisory board contracts > Contracts promising returns or profits

Effect on Law and Policy Forms

Laws are dependent upon current government policy determined by legislative debates and conferences regarding current issues. Once a law is passed, insurance companies must create or revise policy forms to adhere to new legislative requirements.

State laws are debated and passed by state ______.

Legislators

Bail bond authority

Limited line producers seeking authority for bail bonds must complete 10 hours of classroom instruction + 6 classroom hours = 16 total.

License Examination

Resident producer applicants (except limited lines) must pass the State licensing examination. Scores are valid for 1 year.

To exchange a contract or policy of insurance for money or its equivalent, on behalf of an insurer

Sell

Attempting to sell insurance or inducing a person to apply for a particular kind of insurance from a particular insurer

Solicit

Commissioner's Powers of Investigation

The Commissioner may examine and investigate any insurer engaged in the business of insurance in New Jersey

Producer Substituting for/Taking Over the Business of Disabled/Deceased Producer

The Commissioner may issue a temporary insurance producer license good for up to 180 days to a surviving spouse, business partner, or employee if a producer dies, becomes disabled, or is called to active military service **this is not the same as temporary work authority

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

The Supreme Court ruled insurance was interstate commerce and, when conducted across state lines, was subject to federal regulations. Shift of regulatory balance from state to fed gov

The Commissioners duties include...

The commissioner is the administrator and CEO of the NJ department of insurance - Administering the work of the department - appointing officers and other department personnel - discharging the functions, powers, and duties of department - formulating issuing and communicating rules and regulations - report to governor and legislator - appoint advisory committees

Illegal Inducements

Using the issue of stock, certificates, shares, securities or other benefits promising returns and profits as inducements to buy insurance

Paul vs. Virginia (1869)

established the right of each state to regulate the business of insurance

Insurance-Related Conduct

includes selling, soliciting, negotiating or binding policies of insurance; communicating with insureds about a policy, processing claims, and transmitting funds

Fair Credit Reporting Act

must inform the insured of all reports in last 6 months maintain 7 years of records > bankruptcies for 14 if seeking transaction greater than 150,000 misinformation uncovered, up to 3 months to file

McCarran-Ferguson Act (1945)

states the regulation and taxation of the insurance business by individual states is in the public's best interest ruled that federal antitrust laws only apply in certain circumstances

Retrocession

the transfer of risk from one reinsurer to another reinsurer

Penalties for unfair completion, act of practice

unknowingly - 1,000 knowingly - 5,000 5,000 for first violation up to 10,000 for subsequent violations