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NJ Laws, Rules and Regulations - Pertinent to Property & Casualty Insurance Questions and Answers 100% Verified
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NJ Laws, Rules and Regulations - Pertinent to Property & Casualty Insurance
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NJ Laws, Rules and Regulations -Pertinent to Property & Casualty
Insurance
State Regulatory Jurisdiction - answer The purpose of state insurance regulation is to
protect the public against the insolvency of insurers as well. The area of insurance is
subject to state and federal regulation because it is a business that is affected with a
public interest.
Legislation - answer One of the primary methods the government uses to regulate the
insurance business. Legislation creates insurance law.
Insurance Commissioner - answer- usually appointed by the governor
- possesses broad powers to enforce the insurance laws (code) of his particular state
- has the authority to license insurers & producers, regulate rates and conduct
investigations
State Regulation - answerThe state insurance department is generally responsible for:
- issuing rules and regulations (the commissioner enforces laws and issues rules based
on law - only the legislature enacts or passes laws)
- licensing and supervising insurance producers and brokers
- controlling the types of insurance contracts that may be sold
- determining the amount of reserves an insurer must maintain ( reserves are the
monies the company must set aside to pay future claims and guarantee financial
solvency)
- overseeing insurance marketing practices
- investigating customer complaints
Federal Laws and Court Cases - answerOver time federal statues and court cases have
resolved that individual states have primary regulatory responsibility of the insurance
industry. However, other federal statues impact the insurance industry and may be on
the insurance licensing exam.
Paul V. Virginia - answerThis court case heard in 1869 declared that an insurance
policy was not an article of commerce and that it was actually a contract of indemnity.
Therefore, because insurance was not commerce, it was also not interstate commerce
and the federal government (i.e. congress) had no authority to regulate it.
, US v. South-Eastern Underwriters Association (1944) - answerThis court case found
that although Paul V. Virginia affirmed the authority of each state to regulate insurance,
Congress still had the authority to regulate the insurance industry as a whole. After an
appeal, a further ruling held that the insurance business was, in fact, interstate
commerce and thus subject to federal anti-trust laws.
McCarran-Ferguson Act (Public Law 15) - answerIn 1945, over ruling the court by
stating affirmatively that regulation of insurance was the job of the states, not the federal
government. The law exempted insurance from federal antitrust rules if it was covered
by state regulation. If there are any "holes" in state regulations, the Fed address it. This
is what is in place today. ORDER OF REGULATION IS: STATE, THEN FEDERAL
GOVERNMENT
Fair Credit Reporting Act (1970) - answerThis consumer protection bill requires fair and
accurate reporting of information about consumers, including applicants for insurance.
Insurers must inform applicants about any investigations being made.
National Do-Not-Call Registry - answerManaged by the federal trade commission (FTC)
and allows consumers to place their personal telephone and cellphone numbers on a
list telling telemarketers which numbers they are prohibited from calling.
*political, charitable, debt collection and informational calls still allowed
Department of Banking and Insurance - answerThe Department of Banking and
Insurance regulates the banking and insurance industries in NJ.
CEO of Department = Commissioner (appointed by governor)
Broad Powers - answerThe Commissioner is assigned broad powers and
responsibilities regarding the regulation of insurance.
- conduct investigations
- administer oaths
- interrogate licensees and others
- issue subpoenas to any licensees or other persons with regard to any investigations,
hearings or other proceedings
Rules and Regulations to Effectuate Purposes of title 17 - answerThe commissioner
may make and enforce and may alter, modify, amend or repeal rules and regulations to
effectuate the purposes of title 17.
Additional powers and duties include:
- administer the work of the department
- appoint and remove department personnel
- report illegalities committed by insurers, agents, brokers, or other insurance persons to
the attorney general
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