RETAKE Chapter 4: State Regulation, Law, Ethics Flashcards
(35 cards)
State Regulations: Ins. Guaranty Association (3)
- PROTECTS policy owners, insureds, and beneficiaries against insolvement insurers
- All admitted insures MUST be MEMBERS of the association
- Unfair Trade Practice: States the insurer’s policies are guarenteed by the existence of the Association
Types of licenses (3)
- Ind. and Business entities: Resident and Non resident
- Temp. License- Valid for 180 DAYS issued to maintaning the existing business
- Suurplus Agent- to transact business w/ unauthorized companies if ins. not available from auth. insurers; must HOLD A PROPERTY AND CASULTy LICENSE
State Regulatory Jurisdiction (3) 3.a-d
- NJ statutes and Administrative code
- Court Action: interpretations of contracts
- Department of Banking and Insurance:
COMMISION OF INS.
a. regualtes the internal affairs of dept. of ins.
b. conducts hearings and issues orders
c. does NOT WRITE LAWS
d. Examines ALL authorized insurers and producers
Commissioners Duty’s (5)
- Supervise Ins. Business
- licensing
- Approve policies and forms
- Enforces ins. laws and impose penalties for violation
- Conduct examinations, investigations, hearings
Who is EXEMPT from Licensing?
- Admin/ Clearical employee NOT involved in sales
- Special Agents giving tech advice
- Employee benefites admin, rating/classification rules
- FULL TIME salaried employees ADVISING ONLY thier employer
- NON RESIDENT selling COMP. PORP> and CAUSLTY POLICIES
Surplus Line Agents
-What is allowed?
-Qualifications?
-Restrictions
- ALLOWED to write business in NJ for ins. comp. DO NOT POSSESS COA in NJ
- Be a NJ resident, hold P&C license
- A surplus lines producer may not charge a fee to the originating broker, except to recover actual costs paid to third-party service providers.
NON RESIDENT PRODUCER
-req. to transact (what&req.)
- Must uptain NON RESIDENTIAL PRODUCER LICENSE
a. holds a license in the same AUTH. of Ins. in state of residence
b. Submit proper paperwork and fee’s
c. Submit or transmit to commisioner the APP. for license FROM HOME STATE - MUST APPOINT COMMISIONER AS AGENT to recieve service of original legal purpose in NJ
NON RESIDENT PRODUCER
-def
DEF: IND. who is domicile and lisensed as a reident producer in another state other than NJ
LICENSE REQ. other req. for process
2
- Req. FINGERPRINTS and WRITTEN CONSENT TO COMMISIONER FOR BACKGROUND CHECK
- MUST keep license w/ Business address on file, and display at any request
What must a license include? A-G
a. Name
b. Address
c. Personal Identification #
d. Date of Ins.
e. line of authority
f. Exp. Date
g. Other info if needed by commissioner
What is excluded from an ind. license (6)
- Surplus Lines Sales
– Not allowed unless you hold a separate surplus lines license - Claims Adjusting
– Cannot adjust or settle claims unless licensed as an adjuster - Selling Outside Your Licensed Lines
– For example: Licensed in property? You can’t sell life insurance unless licensed for it - Giving Legal Advice
– Not permitted to give legal interpretations of policies (unless you’re an attorney) - Charging Unauthorized Fees
– Can’t charge extra service fees unless allowed by NJ law and clearly disclosed - Acting Without Insurer Appointment
– You must be appointed by an insurer to bind coverage or accept premiums on their behalf
What are false advertising forms? (3)
- Forms of com. advertising
a. newspapers
b. television comm.
c. internet promotions
ADS must NOT include
a. untrue
b. deceptive
c. misleading statements
If a question uses words like (3)… it’s likely testing you on false advertising.
“misleading,” “misrepresent,” or “government approved,”
Misrepresenting Policy Benefits or Terms: False Advertising
Claiming a policy covers something it doesn’t — or exaggerating how much it pays.
i.e Example: Saying a basic dwelling policy covers flood damage when it doesn’t.
Implying Government Endorsement:
False Advertising
uggesting your insurance is approved or backed by the state, federal government, or any government agency when it’s not.
Example: Using phrases like “Licensed by the State of NJ — government approved protection!”
Using False or Misleading Comparisons:
False Advertising
Comparing your policy to a competitor’s in a dishonest or unfair way.
i.e
Example: Saying “Our policy is better than XYZ Insurance” without backing it up or by misrepresenting the competitor’s coverage.
Specifically inc. in Misrepresenting 4.
- Terms, Benefits, Conditions, or Advantages of ins. Policy
- Dividends (to be received or previously paid)
- Financial Condition of a person or insurer
- the TRUE PURPOSE of a loan or assignment againtst an policy
OTHER PROHIBITED PRACTICES IN MISREP. 3
- Represting a policy as a share of stock
- using names or titles that misrep. the nature of the policy
- using a name that falsely suggest the person or entitity is an insurer
What is Rebating Tip to remember?
If you see a question where a producer offers a refund, prize, or discount not in the policy — it’s almost always rebating.
What is Rebating?
Offering part of your commission, money, gifts, or anything of value to induce someone to buy insurance.
What is Inducement?
Offering something of value (not stated in the policy) to persuade someone to buy insurance from you.
What are things in inducement?
Includes: gifts, services, special favors, or offers not specified in the insurance contract.
PSI tip for inducement?
If the question says the producer offered free home security or gift cards to get a sale — it’s an illegal inducement.
