NJ Laws and Rules Flashcards
The ______ (or principal) is the company or organization that issues a policy of insurance
insurer
_______ are owned by stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses.
Stock companies
Stock companies issue ______ policies, in which policyowners do not share in profits or losses
nonparticipating
A nonparticipating (stock) policy does not pay _____ to policyowners; however, taxable dividends are paid to stockholders.
dividends
_______ are owned by the policyowner and issue participating policies.
Mutual companies
With participating policies, policyowners are entitled to dividends, which in the case of mutual companies are a return of excess premiums and are therefore
nontaxable
Insurance companies are classified according to the
location of incorporation (domicile)
Regardless of where an insurance company is incorporated, it must obtain a
Certificate of Authority
Insurers who meet the state’s financial requirements and are approved to transact business in the state are considered ______ _______ into the state as a legal insurer
authorized or admitted
An _____ is an insurance producer acting as an agent authorized in writing by any insurance company to solicit, negotiate or sell insurance contracts, or collect premiums on its behalf. Deemed to represent the insurer
insurance agent
When an insurance producer negotiates for an insurance contract on behalf of a client, the producer is acting as a
broker
An insurance broker acts a representative of an insured or prospective insured, and helps with insurance transactions on the insured’s behalf for a
commissions, brokerage fee, or other consideration
An _______ is a person who, for a fee, commission, other consideration, offers any advice, counsel, opinion, or service regarding the benefits, advantages, or disadvantages of any insurance policy issued in this state
insurance consultant
The term insurance transaction includes any of the following:
1) Solicitation
2) Negotiations
3) Sale
4 Advising an individual concerning coverage
_____ is a contract under which one insurance company (the reinsurer) indemnifies another insurance company for part or all of its liabilities
Reinsurance
The purpose of reinsurance is to protect _____ against catastrophic losses
insurers
The originating company that procures insurance on itself from another insurer is called the
ceding insurer
When a reinsurer or assuming insurer has taken on too many risks and must spread some of its liabilities to other reinsurers is called
extended reinsurance or retrocession
Insurance is an industry that is
vested in the public interest
Paul vs Virginia, in rendering its decision, the Supreme Court states that insurance was
NOT interstate commerce
U.S. vs South-Eastern Underwriters Assoc. Supreme court states
that insurance IS interstate commerce and therefore subject to regulation by the federal government. This decision stands today
McCarran-Ferguson Act March 9,1945. Congress insisted that it was the right of the federal government to regulate the insurance industry but states in the Act that federal government would nor regulate insurance
as long as the states did an adequate job of regulating the industry
If the commissioner believes that a licensed person has violated an insurance regulation or is engaged in any unfair trade practice, the Commissioner has the right to call a disciplinary hearing, and will provide the person charged with a _____ written notice of the date and time and place of hearing
10 days
After the hearing, Commissioner will determine if a violation has occurred and if so will issue a ____ ____ order, which requires person to stop unlawful action
cease and desist
Commissioner may also levy a fine up to ______ for each charge of violation of fair methods of competition laws or engaging in an unfair trade practice
$1,000
