INSURANCE

DEPARTMENT OF BANKING AND INSURANCE

DIVISION OF INSURANCE

Producer Licensing

Requirements for Managing General Agents

Adopted Amendments: N.J.A.C. 11:17-6.2 and 6.3

Proposed: November 19, 2001 at 33 N.J.R. 3868(a)

Adopted: March 22, 2002 by Holly C. Bakke, Commissioner

Department of Banking and Insurance

Filed: March 22, 2002, as R. 2002 d.123, without change.

Authority: N.J.S.A. 17:1-8.1, 17:1-15e and 17:22C-1 et seq.

Effective Date: April 15, 2002

Expiration Date: April 15, 2003

 

Summary of Public Comments and Agency Responses:

The Department received two written comments on the proposal: one from an insurance company (Clarendon National Insurance Company); and one from a trade organization (Independent Insurance Agents of New Jersey).

COMMENT: One commenter stated that the Department should modify the Summary, Social Impact, Economic Impact and Regulatory Flexibility Statements to recognize that the bond requirement percentage of the direct premiums written by the insurer should reflect that it is "for the previous calendar year that is attributable to the MGA."

RESPONSE: The Department does not believe that it is necessary to modify the impact statements because the text of the rule clearly states that it is "for the previous calendar year that is attributable to the MGA."

COMMENT: One commenter suggested that the Department amend proposed N.J.A.C. 11:17-6.3(c) as follows (additions in boldface; deletions in brackets):

All managing general agents shall acquire and maintain a surety bond for the protection of the insurer contracting with the managing general agent. The bond shall be [in the amount] set at the greater of (i) $100,000 or (ii) [25] 10 percent [up to $10,000,000] [$500,000] of the direct premium written by the insurer for the previous calendar year that is attributable to the managing general agent, [whichever is greater] but in no event shall the surety bond be required to exceed $500,000.

RESPONSE: The commenter's suggestion is a rewording of the Department's proposed amendatory language. The Department believes that the proposal adequately addresses the Departmentís intent and that the suggested amendment is unnecessary.

COMMENT: One commenter suggested that the Department amend N.J.A.C. 11:17-6.3(d) as follows (additions in boldface; deletions in brackets)::

All managing general agents shall acquire and maintain an errors and omissions insurance policy for the protection of the insurer contracting with the managing general agent. The policy coverage limits shall be set at the greater of (i) $100,000 or (ii) [25] 10 percent [up to $10,000,000] [ $500,000] of the direct premium written by [an] the insurer for the previous calendar year that is attributable to the [MGA, whichever is greater] managing general agent, but in no event shall the policy limits be required to exceed $500,000.

RESPONSE: The commenter's suggestion is a rewording of the Department's current amendatory language. The Department believes that the proposal adequately addresses the Departmentís intent and that the suggested amendment is unnecessary.

COMMENT: One commenter expressed its support and commends the Department on the proposed amendments. The commenter stated that it believes the change will benefit managing general agents, and agrees that the reduction in the amount of the surety bond requirement still provides adequate protection to the insurer.

RESPONSE: The Department thanks the commenter for its support.

 

 

Federal Standards Statement

A Federal standards analysis is not required because the adopted amendments concern insurance and are not subject to any Federal requirements or standards.

Full text of the adoption follows: