Welcome to the Legal Side of Insurance
Up to this point, the concepts covered have been ones that apply to the insurance industry as a whole. Now you can turn your attention to regulations that apply specifically to New Jersey.
You'll learn about a variety of topics, from the duties of the Insurance Department, to licensing laws, and unfair trade practices.
Exam Alert: Numbers, Numbers, Numbers!
This chapter contains several definitions and many specific numbers for time limits and dollar amounts. Be sure to memorize them for your exam.
- • 10 days' notice before disciplinary hearing
- • $1,000 fine for unintentional violations
- • $5,000 fine for willful/knowing violations
- • $5,000/$10,000 for violating insurance laws
What Makes This Chapter Different?
Unlike coverage chapters which focus on "what's covered," this chapter focuses on:
Who Regulates
State vs federal, the Commissioner's role
What's Required
Licensing, continuing education, compliance
What's Forbidden
Prohibited practices, violations, penalties
Chapter 4 Roadmap: 9 Parts + Recap
Definitions
Types of insurers, producers, transactions, and reinsurance
State Regulation
Federal laws, Commissioner powers, hearings, and penalties
Licensing
Requirements, renewal, revocation, and appointments
Trade Practices
Prohibited practices and producer responsibilities
Information Privacy
Protecting customer information
Insurance Fraud
NJ Insurance Fraud Prevention Act violations and penalties
By the Numbers
Key numbers, time limits, and dollar amounts to memorize
Conflict of Interest
NJ Conflict of Interest Law and Legislative Code of Ethics
Ethics
Principles, responsibilities, and avoiding unethical practices
Chapter Recap
Review all key concepts and quick reference
How to Conquer This Chapter
1. Create Number Flashcards
Make flashcards for EVERY number in this chapter. Quiz yourself daily:
- • How many days' notice before a hearing?
- • What's the fine for willful violations?
- • How long does a license last?
2. Real-World Examples Help
Legal concepts are abstract. Every part includes concrete scenarios showing:
- • What the violation looks like in real life
- • What happens to the agent/insurer
- • What the penalty is
3. Compare to Your State
If you're licensed in another state, note NJ differences:
- • Licensing requirements may vary
- • Fines/penalties differ
- • Some NJ laws are unique
4. Focus on "Why It Matters"
Don't just memorize - understand the PURPOSE:
- • Why does the state regulate insurance?
- • Why are certain practices prohibited?
- • Who is being protected?
Quick Reference: Key Players in NJ Insurance Regulation
The Commissioner
Head of the NJ Department of Banking and Insurance. Appointed by Governor. Has power to:
- • Issue/revoke licenses
- • Conduct hearings
- • Issue cease and desist orders
- • Impose fines
Producers (Agents/Brokers)
Licensed individuals who sell insurance. Must:
- • Pass licensing exam
- • Complete continuing education
- • Follow ethical guidelines
- • Avoid unfair trade practices
Insurers (Companies)
Must have a Certificate of Authority to operate in NJ. Categories:
- • Domestic (NJ incorporated)
- • Foreign (other US state)
- • Alien (outside US)