INSURANCE

DEPARTMENT OF BANKING AND INSURANCE

DIVISION OF INSURANCE

Producer Licensing

Proposed Amendments: N.J.A.C. 11:17, 11:17A, 11:17B, 11:17C, 11:17D and 11:17E

Authorized By: Holly C. Bakke, Commissioner, Department of Banking and Insurance.

Authority: N.J.S.A. 17:1-8.1 and 15(e) and 17:22A-26 et seq.

Calendar Reference: See Summary below for explanation of exceptions to calendar requirement.

Proposal Number: PRN 2002-207

Submit comments by August 30, 2002 to:

Karen Garfing, Assistant Commissioner

Department of Banking and Insurance

Regulatory Affairs

20 West State Street

PO Box 325

Trenton, NJ 08625-0325

(FAX) (609) 292-0896

Email: Legsregs@dobi.state.nj.us

 

The agency proposal follows:

Summary

On August 15, 2001, the New Jersey Legislature enacted the New Jersey Insurance Producer Licensing Act of 2001, P.L.2001, c.210 (the "Producer Licensing Act" or "the Act"). The Act’s stated purpose is to govern the qualifications and procedures for the licensing of insurance producers, simplify and organize the statutory law to improve efficiency, permit the use of new technology and reduce costs associated with the issuance and renewal of producer licenses. The Act, while taking immediate effect, provided that the new provisions would remain inoperative until rules and regulations were promulgated, or until November 12, 2002.

November 12, 2002 is also the deadline for States to meet the requirements of the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 ("GLB"). See P.L. 106-102. One way in which states may comply with the requirements of GLB is by recognizing and accepting the nonresident licensing procedures of other States on a reciprocal basis, so that producers will not be required to meet different standards in each state. The required reciprocity shall be reached if 29 states:

(1) Permit a producer, who is already licensed to sell insurance in his or her home state, to also sell insurance in other states as a nonresident producer after satisfying uniform requirements, such as submission of the NAIC application or the application for licensure that the producer submitted to his or her home state; and payment of all applicable fees;

(2) Accept the satisfaction by a producer of his or her home state’s continuing education requirements for licensure;

(3) Do not limit or condition producers’ activities because of residence or place of operations (except that countersignature requirements are still permissible); and

(4) Grant reciprocity to all other states meeting the above reciprocity requirements. See 15 U.S.C. §6751(c).

Both the Producer Licensing Act and the amendments proposed herein further refine the individual lines of authority for which a producer may apply for a license. Specifically, variable life and variable annuity, personal line and two separate authorities for property and casualty have been created and limited line authority is added as an authority requiring a producer license. See N.J.S.A. 17:22A-33a. As the Act now requires those engaged in the solicitation, negotiation or sale of limited line insurance to obtain producer licenses, all rules relating to registered limited insurance representatives are proposed for elimination. This expansion of authorities conforms to the GLB definition of insurance producer, See 15 U.S.C. §6766, and furthers the uniformity of authorities among States. This uniformity allows for easy implementation of the mandated reciprocity and paves the way for the use of uniform license applications, either by mail or online.

Various changes have been made throughout the chapters to comply with the Act and the GLB provisions. GLB reciprocity does not permit states to impose any additional requirements on nonresident producers. On the other hand, the proposed amendments permit nonresidents to apply for surplus line authority, and delete the bond requirement for surplus line producers.

The definitions of "resident," "nonresident" and "home state" have been amended to correspond with the Act’s definition of "home state." Before the Act was passed, an applicant who either resided in New Jersey or maintained an office in this State, was required to obtain a resident producer license. Now, such a producer may be licensed as a nonresident producer if another state has been designated as the home state.

The proposed amendments to the prelicensing education, examination and continuing education requirements of N.J.A.C. 11:17-3 reflect the expansion of lines of authority, the move toward national uniformity and reciprocity, and the need to modernize the processes and procedures to take advantage of present and future online data exchanges.

The addition of new lines of authority necessitated the establishment of prelicensing educational requirements for those lines. Specifically, with the bifurcation of property and casualty, producers seeking these authorities are required to undergo 40 hours of instruction for each separate authority. This is the average hour requirement for single major lines in other states. The combined property and casualty authority is proposed to be reduced from 125 hours to 80, bringing it in line with the two separate authorities and the national average. In addition, life and variable authority, as well as health, which separately require 25 hours, are changed to 50 hours when combined. The new personal lines authority, which is a combination of general property and casualty for personal lines and health insurance for personal lines, now requires 50 hours of prelicensing education. The new limited line authority, bail bonds, is proposed for a total of 16 hours of prelicensing education. All authorities requiring prelicensing education will also require State licensing examinations.

Continuing education requirements are proposed for all new authorities with the exception of limited lines. It is proposed that educational course credit be based on actual classroom or self-study hours (one credit equaling one hour) and that the total number of credits awarded for any one course be 24. A new requirement that is proposed requires that 24 of the mandated 48 hours of continuing education credit be in the authorities for which the producer is licensed. In addition, it is proposed that all resident producers be required to complete six credit hours in approved courses related to insurance fraud, professional ethics or other required consumer protection topics. Procedures are proposed to allow for self-study courses and online interactive courses. In keeping with a nationwide uniformity initiative, acceptance of approved courses from other states is proposed. Also, it is proposed that the exemption of attorneys from the continuing education requirement for title insurance be deleted, which is consistent with the requirement for continuing education for all producers with the exception of limited lines.

Changes were made throughout Chapters 17A through 17E to reflect the elimination of limited insurance representatives, to add the new definitions used in the Act and to correct citations. Two subsections were added to Chapter 17B. The first subsection, N.J.A.C. 11:17B-2.1(e), which was statutorily codified at N.J.S.A. 17:22A-41d, allows an insurer or insurance producer to pay or assign commissions, service or brokerage fees, or other valuable consideration to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this State, as long as it does not violate the laws of this State. The other subsection, N.J.A.C. 11:17B-3.2(c), prohibits limited line bail bond agencies from charging fugitive, banking or service related fees. N.J.A.C. 11:17C- 2.6(c)3 requires the daily back up of electronically stored information and monthly off-site storage of those records.

Specific changes to Chapter 17 are as follows:

An amendment to N.J.A.C. 11:17-1.1 is proposed to reflect the title of the new act and to include limited license insurance producers in the Act.

The proposed amendments to the definitions section, N.J.A.C. 11:17-1.2, add terms that have been added to the chapter, change some existing definitions which have been altered in the Act and delete terms no longer used in the Act or the chapter. New definitions have been proposed for "authorized insurance education director," "authorized personnel," "business entity," "contact course" or "class," "credit hour," "credit insurance, " "department," "insurance education program," "insurance education provider," "insurance related debt," "interactive online course," "NAIC," "self-study or self-directed course" and "surrendered for cause." Changes are proposed for "Act," "business name," "first-time applicant," "home state," "insurance related conduct," "non-resident" and "resident." Also, deletions are proposed for "credit involuntary unemployment insurance," "credit life insurance," "credit health insurance," "credit property/casualty insurance," "ticket life insurance," "ticket accident insurance" and "ticket property-casualty insurance." The deletions of these definitions reflect the consolidation of these lines into credit insurance and ticket insurannce.

In addition to the definition of the various authorities previously mentioned, the proposed amendments to N.J.A.C. 11:17-2.2 contain a list of limited lines authorities recognized for licensing in New Jersey. To satisfy reciprocity for nonresidents with other than the listed authorities, an additional proposed new authority "special nonresident limited lines authority" will be created and limited to those who have authorities in their home state for which there is no corresponding authority in New Jersey, such as crop insurance. The licensee’s new authority will be limited to only the specific authority licensed by the home state.

The requirements for first-time applicants for an individual license in N.J.A.C. 11:17-2.3 are proposed to allow producers to use the National Association of Insurance Commissioner ("NAIC") uniform nonresident producer application or a copy of the application for licensure submitted to their home state. The Department is proposing the addition of the applicant’s social security number information presently obtained through the application process to the list of items required for a properly completed application, and adding a requirement for fingerprint forms for criminal history verification from state and national sources. The Department is requesting the social security numbers for data maintenance reasons for our licensing database. A technical proposed amendment reflects the name of the correct Department for the filing of business certificates.

The proposed amendments for N.J.A.C. 11:17-2.4 include changing the term "temporary certificate" to "temporary work authority" to avoid confusion with temporary licenses, and amending the section concerning nonresidents to conform to the new definition of nonresident. A nonresident licensee, upon moving his or her residence or primary place of business into New Jersey and losing resident status in the home state, shall notify the Department within 20 days of his or her intent to qualify as a resident producer.

N.J.A.C. 11:17-2.5 is amended to add the requirement that late renewal fees be attached to the application.

At N.J.A.C. 11:17-2.6, some non-substantive grammatical amendments are proposed, in addition to deletion of a reference to a surplus lines authority bond.

The proposed amendments to N.J.A.C. 11:17-2.7 allow for the addition of electronic filing and notification of changes to licensee’s names and addresses. All standards for business names will now be applied on a continuing basis. The words "determined by the Department to be" are proposed to clarify that the Department will be the arbiter of what is to be considered of similar import to the words "agency," "insurance agency" or "brokerage." It is further proposed that business names which misleadingly identify with not-for profit organizations be prohibited. It is also proposed that the use of implied affiliation with the name of a producer whose license has been voluntarily surrendered for cause be prohibited.

N.J.A.C. 11:17-2.8 is proposed for amendment to allow for the use of online processes and to allow a branch office to transact business, other than the business of insurance, when a licensed individual producer is not present. The requirement that a producer permanently and exclusively be assigned to that office is proposed for deletion.

An amendment to N.J.A.C. 11:17-2.9 proposes removal of the required submission to the Department of the name, license reference and date of employment of producers who enter into employment contracts as employees of other producers. Notification by licensed business entities of addition or deletions of officers, directors, partners or owners of five percent or more of the business entity is recodified in N.J.A.C. 11:17-2.11(c). Amendments to this section also propose allowing the use of the National Insurance Producer Registry ("NIPR") online appointment and termination system for the notification of agency relationships. The National Producer Registry online appointment and termination system is an online registration system which is part of the NIPR Gateway, an electronic communication network that links state insurance regulators with the entities they regulate to facilitate the electronic exchange of license application, license renewal, appointment and termination information. The NIPR Gateway can be accessed through the NAIC webpage at www.naic.org or directly at www.nipr.com.

An amendment to N.J.A.C. 11:17- 2.10(a) is proposed to allow for a surviving spouse, court appointed representative or a member or employee of a business entity to apply for a temporary license when the individual producer, or in the case of a business entity, the licensed producer who was named as the designated officer or owner responsible for the licensed activity of the business, dies, becomes disabled or enters active military service in the Armed Forces. This application replaces the current regulation which required a contract with a licensed producer for the purpose of continuing the business and immediate notice to the Department by the contracting producer. It is proposed that requests for temporary licenses be submitted in writing and transmitted by hard copy or electronically to the Department and shall contain the names, addresses, license numbers of the producers involved as well as the reason for the request. New subsections (b) and (c) add requirements that the applicant for a temporary license name a sponsor who is a licensed producer in this State or an insurer authorized to write insurance in this State, and that a temporary license ceases to be valid if the sponsor or the holder of the temporary license sells, assigns or transfers the insurance business.

Existing N.J.A.C. 11:17-2.11 is proposed for repeal as the entire section relates to limited insurance representatives. Existing N.J.A.C. 11:17-2.12 is recodified as 2.11, and an amendment is proposed to delete Requests for Criminal History Record Information, and to require New Jersey State Police and Federal fingerprint cards for resident applicants only, in its stead. This change allows for the verification of criminal status from state and national sources and eliminates application requirements for nonresidents that are not permitted under GLB reciprocity. N.J.A.C. 11:17-2.11(a)3 requiring applicants, licensees or officers, directors, partners or owners to submit fingerprint cards on request, is deleted. The requirements that these persons must submit fingerprint cards at the time of application or at the time they are added to a licensed business entity remains. For all licensees, it is proposed that documentation be forwarded to the Department, upon request, for court actions concerning insurance related debt and child support. Notification of the addition or deletion of certain parties within a business entity is added, requiring business entities to retain evidence of the notification of those additions or deletions for five years or until they receive written verification from the Department, whichever is earlier.

Existing N.J.A.C. 11:17-2.13 is recodified as 2.12 and fees for limited insurance representative registration as well as filing and processing any notice of agency contracts are deleted. The amendment also adds license fees for limited lines producers as follows: $150.00 for license fees and $50.00 for late renewal fees. The late renewal fees for other than limited lines changes to $100.00.

Existing N.J.A.C. 11:17-2.14 is recodified as 2.13 and renewals forms are added to the list of documentation that the Department examines for demonstration of qualification for licensure.

Existing N.J.A.C. 11:17- 2.15 is renumbered 2.14 and "termination of license" is changed to "surrender of license" to reflect the actual language used by the Department and producers.

Existing N.J.A.C. 11:17- 2.16 is recodified as 2.15 and adds records identified in Section 43 of the Act to the list of nonpublic records.

Existing N.J.A.C. 11:17- 2.17 is recodified as 2.16 and references to registered limited insurance representatives, and registation applicants are removed.

N.J.A.C. 11:17-3.1 is amended and restructured. Instead of one section with 16 subsections, the section is reconfigured into three sections with corresponding subsections. The resulting new sections are N.J.A.C. 11:17-3.2, Insurance education provider duties and requirements, and N.J.A.C. 11:17-3.3, Penalties for insurance education providers, insurance education directors and authorized personnel.

Original subsections (a) through (e) are retained, and subsection (b) amended to require submission of the names, addresses and telephone numbers of program directors and authorized personnel. Authorized personnel were added to allow an insurance education director to name those within its organization who may deal directly with the Department for responsibilities not specifically required to be performed by the director. These proposed amendments take into account large or national insurance education providers where it is cumbersome, if not impossible, for a single individual to be responsible for all dealings with the Department.

Paragraph (b)5 as amended permits an insurance education provider to "offer" courses as well as teach, allowing for alternate means of presenting courses, such as online or self-study. A proposed amendment to paragraph (e)4 provides that failure to submit a renewal application by the date of expiration results in loss of insurance education approval and authorization to teach or offer insurance courses.

Subsection (f) is recodified as N.J.A.C. 11:17-3.2(a), and requires insurance education providers to provide information to their students regarding the means by which they may contact the provider, and to maintain an office where pertinent records, student records, samples of instructional materials, and certificates of approval are kept and made available to the Department. With the addition of online and self-study courses, the requirement to provide students with information needed to contact the director and authorized personnel, the director’s responsibility for assuring compliance with the requirements of this regulation, specific reference to office hours, the requirement for up-to-date copies of New Jersey insurance statutes and administrative rules, as well as the requirement for an office in New Jersey have been deleted. Producers whose licenses have been revoked, suspended or voluntarily surrendered for cause in any state may not act as insurance education directors. Notification of any change in the insurance education provider’s application or renewal information is required and the Department may secure student records, including proof of passing final exams, if program approval is revoked. The requirement that an insurance education director receive and distribute information is limited to communications received from the Department and the independent examination vendor used by the Department.

N.J.A.C. 11:17-3.2(b), which was recodified from N.J.A.C. 11:17-3.1(i), provides for an exact date, 15 days prior to the start of each quarter, when an insurance education provider must submit required information, including location, of all prelicensing or continuing education courses to be offered the following quarter. A proposed amendment requires those providing self-study and examination courses to provide the name of the approved course, as well as the date and location of each proctored examination. A further proposed addition requires providers to notify the Department of any additions or cancellations to the course schedule.

New N.J.A.C. 11:17-3.3, which was N.J.A.C. 11:17-3.1(k) through (p), removes failure to conduct any classes for a period of 12 months from the grounds for suspension, revocation or termination of an insurance education provider. Three new grounds are added: demonstrated incompetence or untrustworthiness of an insurance education provider, director or authorized personnel; violation of any of the insurance laws of this State; and aiding or abetting any person in violating the insurance laws of this State. Any fraud or misrepresentation is also grounds for suspension, revocation or termination. Monetary penalties in lieu of supervision, termination or revocation of approval of any provider, director or authorized personnel are increased to a maximum of $5,000 for a first violation and a maximum of $10,000 for succeeding violations.

Amended N.J.A.C. 11:17-3.4, which was N.J.A.C. 11:17-3.2, contains the required number of hours for prelicensing education by line of authority. Prelicensing education topics, for all lines of authority other than limited lines, will now include insurance fraud detection and prevention. Suitability is added to life and variable annuity lines of authority, and specific course requirements are proposed for the newly added lines. The waiver form included in the appendix, for anyone whose disability precludes him or her from classroom attendance, is deleted and replaced with language allowing the Department to prescribe the approved form, accompanied by a physician’s certification to request permission to participate in self-study prelicensing courses. Insurers who sell, solicit or negotiate limited line credit insurance are required to offer a program of instruction on credit insurance to all limited line credit producers appointed by the insurer. The program of instruction must include education on the suitability of the products and be submitted for approval by the Department.

Amended N.J.A.C. 11:17-3.5, which was N.J.A.C. 11:17-3.3, remains unchanged except for N.J.A.C. 11:17-3.5(b)14 which is amended to clarify when contract vendors shall defend or indemnify the Department of Insurance, the State of New Jersey and its agents, officers and employees. Subsection (d) is amended to allow the Department, upon finding good cause, to extend the time in which a nonresident applying as a resident, may apply for a waiver of prelicensing education, and limits the required examination to only the New Jersey law and practice portion of any required examination for the authorities requested. An amendment is proposed to N.J.A.C. 11:17-3.5(f)2 to allow for a modification to the Commissioner’s order requiring an applicant for licensure to retake the State licensing examination, in addition to the existing choices of recision and enforcement. N.J.A.C. 11:17-3.5(g) is deleted as it deals exclusively with limited insurance representatives.

N.J.A.C. 11:17-3.6, which was N.J.A.C. 11:17-3.4, contains the proposed amendments for continuing education previously discussed. Proposed subsection (b) contains the rules for calculating credit hours, including the limitation that no continuing education course will be approved for more than 24 credit hours, regardless of the actual number of hours of instruction, reading or study. Subsection (c) contains the rules for self-study courses and their monitored exams. It includes the rule that a monitored examination is not required with an interactive online course that the Department has determined to have sufficient internal testing. Subsection (d) complies with GLB reciprocity by allowing producers who satisfy credit requirements in a state other that New Jersey to satisfy New Jersey’s continuing education requirements if that state reciprocates. Proposed subsection (e) allows producers with professional insurance designations approved by the Department, who satisfy continuing education requirements for those designations, to apply for award of credit toward their producer licensing continuing education credits. This new subsection replaces N.J.A.C. 11:17-3.4(c)1 which is proposed for deletion.

Proposed N.J.A.C. 11:17-3.6(f), which was N.J.A.C. 11:17-3.4(b), requires those seeking approval for continuing education courses to submit contact information for the provider, an outline of the course including the time allowed for each topic, a copy of the table of contents for any textbook, and the name and qualifications of the instructor. For those seeking approval of self-study courses, the submissions include: a copy of the competency examination, including answers; the amount of time allowed for the exam; a statement of how the integrity of the exam will be maintained, and a statement of how the exam will be monitored to assure the enrolled licensee takes the exam. For those seeking approval of interactive online courses, the submissions include: online access for the Department to review the course; evidence of the internal testing included with the course and details of how access shall be controlled to assure the enrolled licensee completes the course. Paragraph (f)4, which was N.J.A.C. 11:17-3.4(b)5, includes topics which will be considered for approval for courses, in addition to the topics and types of information which will not be considered.

The current N.J.A.C. 11:17-3.4(c), which addressed the certification of continuing education credits, is deleted, having been replaced by the calculation of credit hours delineated in new N.J.A.C. 11:17-3.6(b). Proposed N.J.A.C. 11:17-3.6(g), which was N.J.A.C. 11:17-3.4(d), limits instructors to receiving credit once for teaching any one approved course. Proposed N.J.A.C. 11:17-3.6(h), which was N.J.A.C. 11:17-3.4(e), is reworded because of the deletion of the aforementioned paragraphs. N.J.A.C. 11:17-3.4(f), the requirement that attorneys licensed in title insurance only, submit certificates of good standing, is deleted. Current N.J.A.C. 11:17-3.4(g) is deleted. This subsection allowed the Department to grant credit for alternative courses for handicapped or disabled persons. This subsection is no longer necessary with the addition of self-study and interactive online courses.

Proposed N.J.A.C. 11:17-3.7, recodified from 3.5, reflects the new authorities which are being added.

N.J.A.C. 11:17-5, Transition rules, is repealed as this subchapter refers to the transition to prelicensing and continuing education regulations prior to the new Act and is not consistent with the reciprocity requirements of GLB.

In N.J.A.C. 11:17-6, Managing General Agents, N.J.A.C. 11:17-6.1, Definitions, is amended to change the definitions of "resident," "nonresident" and "producer" to reflect the new Act. An amendment to N.J.A.C. 11:17-6.7 requires daily back up of electronically stored records and storage at an off-site location.

This rule proposal provides for a comment period of 60 days, and therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Social Impact

The proposed amendments affect all persons selling, soliciting or negotiating insurance in New Jersey and all those engaged in the business of providing insurance education to those in New Jersey. For those selling, soliciting or negotiating insurance, the impact of the amendments is dependent on their status prior to the amendments. For those who were defined as resident producers prior to the amendments and are still resident producers under the new definition, the amendments continue to impose licensing, examination and continuing education requirements. The Department believes that the proposed amendments, which allow for the use of new and modern systems such as the eventual use of credit card payments, online license applications and the approval of self-study or online interactive continuing education courses, will have a positive effect by enhancing the ease of use of processes already in place. The Department also believes that the expansion of the use of temporary licenses will help to ease the burden if the producer dies, becomes disabled or enters the Armed Services. The Department further believes that the new requirement that the majority of continuing education credits be in the authority for which the producer is licensed will be beneficial both to the producer and the general public, as the producer remains knowledgeable of the latest updates in his or her area of expertise. The same is true concerning the six mandated credits in insurance fraud, professional ethics or other consumer protection topic. Likewise, imposing the continuing education requirement on attorneys with producer licenses for title insurance ensures they stay abreast of recent developments in this area. Although this may have a negative impact on those attorneys, the Department believes that it is beneficial both to the attorney producer and the general public, as the attorney producer remains knowledgeable of the latest updates in his or her area of expertise and the title insurance consumer’s interests are safeguarded.

For nonresident producers, the Department believes that the amendments will be beneficial. The proposed new provisions comply with GLB and allow for a simplified and streamlined application process. Assuming reciprocity under GLB, nonresident producers are not required to comply with the examination and continuing education requirements of this State. In addition, nonresident producers will also be able to take advantage of modernized systems, such as online license applications.

The Department believes, however, that certain producers who were not previously required to be licensed will be impacted more negatively. Limited insurance representatives will now be required to become licensed producers if they intend to sell, solicit or negotiate insurance in this State. In addition, a limited line producer whose only authority is bail bonds must comply with the prelicensing education requirements.

The potential negative impact resulting for prelicensing education requirements is reduced after licensure. Limited line producers are not required to comply with the continuing education requirements.

Although limited insurance representatives may face additional requirements to obtain licensure, this licensing is necessary to comply with the reciprocity requirements of GLB, to become more uniform with other States and to protect the insuring public. In addition, the Department believes that the proposed educational requirements are necessary to ensure the use of correct and efficient business procedures by producers and to protect the insurance consumer. Prelicensing education requirements are being revised to bring them more in line with national standards. New topics of special public concern, such as insurance fraud detection and prevention and suitability are added to the prelicensing courses where appropriate.

Those engaged in providing insurance education to licensed producers in New Jersey are affected by these amendments. The Department believes that the additional requirement submissions for approval of continuing education courses is necessary to both strengthen the Department’s ability to oversee insurance education providers and assure proper training of resident producers. Likewise, while the Department believes that insurers that sell, solicit or negotiate limited line credit insurance will be affected by the requirement to provide a program of instruction to all limited line credit insurance producers appointed by them, and by the requirement to submit the program for approval, the Department believes that these are necessary for the same reasons.

In addition, the Department believes that those engaged in providing insurance education on a national level should be affected positively by these amendments. The proposed amendments ease the rules for approval of courses offered by national education providers, allow for the approval of self-study and interactive online courses and remove the requirement for a permanent New Jersey office.

Economic Impact

The proposed amendments will have an economic impact on all persons selling, soliciting or negotiating insurance in New Jersey and all those engaged in the business of providing insurance education to those in New Jersey. The Department does not anticipate any adverse economic impact on resident producers who are currently licensed in this State.

However, those who are now defined as resident producers by the Act who were not previously required to be licensed will be affected economically. They will now be required to pay application and renewal fees, and those with authority in bail bonds will incur the cost for examination and education requirements, as well. In recognition of the limited nature of limited lines authority, the application and renewal fees are half those for other lines, and the educational requirements for bail bonds authorities are also reduced, with a significantly smaller prelicensing requirement and no continuing education obligation. The Department believes that the imposition of education requirements and the addition of subjects such as fraud prevention and protection will have a positive economic effect on the insurance public, by helping to eliminate fraud.

The Department further believes that some producers with authority in bail bonds will also experience an adverse economic effect due to the proposed amendment limiting fees. This is directly balanced, however, by the positive economic effect on those who purchase bail bonds, who will now be protected from these extraneous charges.

The Department believes that the proposed amendments will have a positive economic effect on nonresident producers. The new streamlined application process will produce savings in time and money. In addition, the Department believes that the amendments will have a positive economic effect on insurance education providers. The amendment removes the requirement for a permanent New Jersey office and allows the use of authorized personnel for certain functions previously required of only directors. This allows the insurance education provider to better allocate its time and resources. The addition of online education and self-study courses opens new avenues of opportunity to the insurance education provider. The costs for the use of professional services to implement online education or for an in-house expert would be more than offset by decreased live classroom expenses. The Department further believes that credit insurers will use in-house resources to provide the program of instruction to the limited line credit producers and the additional costs will be minimal.

The Department does not believe that there will be an ongoing economic impact on its own administrative, enforcement or oversight costs. As with any modernization of systems, the Department anticipates some initial implementation costs, but believes that they will be offset by the reduced costs associated with the streamlined nonresident producer procedures.

Federal Standards Statement

No Federal standards analysis is necessary because no Federal standards are in effect. Gramm-Leach-Bliley Financial Services Modernization Act of 1999, Pub. L. 106-102, mandates that standards be implemented by the states. There will be no Federal implementation of standards to protect the public health, safety and welfare unless 29 states do not comply with that mandate by November 12, 2002.

Jobs Impact

The Department does not anticipate that these proposed amendments will result in the generation or loss of jobs with respect to licensed producers. The Department believes that the proposed amendments for insurance education providers may have some impact on jobs. Some instructors’ jobs may be lost as providers increase the use of online education; however, jobs will be generated by the initial programming and upkeep of the online systems. It is unknown whether the provider will seek professional services for these systems or use internal sources. The Department invites commenters to submit any data or studies concerning the jobs impact of the proposed rules together with their written comments on other aspects of this proposal.

Agriculture Industry Impact

The Department does not expect any agriculture industry impact as a result of the proposed amendments.

Regulatory Flexibility Analysis

Most persons selling, soliciting or negotiating insurance in New Jersey and some engaged in the business of providing insurance education to those in New Jersey are small businesses as defined in the New Jersey Regulatory Flexibility Act. See N.J.S.A. 52:14B-17. In addition, some insurers of credit insurance may be small businesses. These entities will be subject to all requirements and required to bear the costs of compliance as discussed above.

The proposed amendments provide no different reporting, recordkeeping or other compliance requirements specifically based on business size. The proposed amendments enforce a regulatory framework for the licensure of producers to ensure that they possess the minimum qualifications and knowledge necessary to sell, solicit or negotiate insurance in New Jersey in order to protect insureds and the market generally. Providing different compliance requirements based on business size would, therefore, thwart the intent of the Legislature as expressed in the Act and violate the reciprocity provisions of GLB.

The proposed amendments also provide a framework to ensure the minimum qualifications for insurance education providers, to delineate the minimum educational curriculums and to allow for the oversight of those minimums to protect the producer and the general public. These purposes do not provide for different compliance requirements based on business size.

For these reasons, the proposed amendments provide no differentiation in compliance requirements based on business size.

 

Smart Growth Impact

The proposed amendments have no impact on the achievement of smart growth and the implementation of the State Development and Redevelopment plan.

 

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

CHAPTER 17

PRODUCER LICENSING

SUBCHAPTER 1. GENERAL PROVISIONS

11:17-1.1 Purpose and scope

    1. This chapter implements provisions of N.J.S.A. 17:22A-[1 et seq.] 26 et seq., the New Jersey Insurance Producer Licensing Act of 2001 (the Act). The chapter concerns the licensing conduct of insurance producers and shall be considered part of the insurance law of the State of New Jersey, and violation of any provisions shall be sufficient cause for action against any person as permitted by statute. Specification of the standards of conduct shall not, however, prohibit the application of other insurance statutes or rules to licensed producers.

(b) Provisions of the Act and of this chapter shall be applied to all licensees, [limited insurance representatives and other persons] required to be licensed pursuant to the Act, including nonresident licensees, in connection with the licensing and standards of conduct on business for which a New Jersey insurance producer license is required.

11:17-1.2 Definitions

(a) (No change.)

(b) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Act" means the New Jersey Insurance Producer Licensing Act of 2001, N.J.S.A. 17:22A-[1et seq]26 et seq.

. . .

"Authorized insurance education director" or "insurance education director" means the person designated by the insurance education provider and approved by the Department to be responsible for the program’s compliance with these rules and for the program’s operations.

"Authorized personnel" means any person designated by the insurance education provider and approved by the Department to be authorized to submit insurance education provider certification forms, schedules, course approval forms and other information not specifically required to be provided by the insurance education director on behalf of the insurance education provider.

. . .

"Business entity" means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.

"Business name" means the legal name of a [corporation or partnership,] business entity and any trade or fictitious name under which a licensee or license applicant conducts or intends to conduct insurance business.

"Contact course" or "class" means a classroom presentation, seminar, lecture or teleconference with monitored attendance and an instructor present.

"Credit hour," "credit education unit" or "CEU" means one hour of credit based on classroom attendance or an approved hour for seminars and self-study calculated in accordance with the provisions of N.J.A.C. 11:17-3.6(b).

"Credit insurance" means insurance coverages for credit health and credit life as defined in N.J.S.A. 17B:29-2, credit disability, credit unemployment , involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, automobile dealer GAP, credit property and any other insurance offered in connection with the extension of credit that is limited wholly or partially to reducing or extinguishing that credit obligation.

["Credit involuntary unemployment insurance" means casualty insurance on a debtor to provide indemnity for payments becoming due on a specific loan or credit transaction while the debtor is involuntarily unemployed.

"Credit life insurance" and "credit health insurance" mean the insurance coverages as defined in N.J.S.A. 17B:29-2.

"Credit property/casualty insurance" means insurance against loss from bad debts and includes property insurance coverage solely for the lender's interest against loss of or damage to personal property serving as security on a specific loan or credit transaction.]

"Department" means the New Jersey Department of Banking and Insurance.

"First-time applicant" means any person who was not [actively] licensed in New Jersey during the 12-month period prior to application.

"Home state" means [the state other than this State in which a nonresident licensee or license applicant holds a resident insurance license.] the District of Columbia and any state or territory of the United States in which an insurance producer maintains his or her principal place of residence or principal place of business and is licensed to act as a resident insurance producer.

"Insurance education program" or "program" means an insurance education provider’s overall curriculum.

"Insurance education provider" means any insurance school, authorized insurer, recognized producer or insurance trade association, accredited college, university or trade school, or other institution or organization that is approved by the Department in accordance with N.J.A.C. 11:17-3.1 to provide prelicensing or continuing education for insurance producers in this State.

"Insurance related conduct" includes selling, soliciting, negotiating or binding policies of insurance; all communication with insureds concerning any term or condition of a policy of insurance; office management policies affecting insureds; processing claims; and transmitting funds between insureds, producers, premium finance companies and insurance companies.

"Insurance related debt" means any debt incurred by a producer arising from the selling, soliciting or negotiating of insurance.

"Interactive online course" means a computer online or internet course with an internal testing program that can monitor if the licensee responded with at least 70 percent correct answers without access to online study materials.

. . .

"NAIC" means the National Association of Insurance Commissioners, its affiliates or subsidiaries, or any agency or committee thereof.

"Nonresident" (of New Jersey) means a person who [neither resides in New Jersey nor maintains an office] does not maintain his or her principal place of residence or principal place of insurance business in New Jersey [where insurance business is transacted], and for whom a state other than New Jersey has been designated the home state for the purposes of licensure.

"Resident" (of New Jersey) means a person who [either resides in New Jersey or maintains an office] maintains his or her principal place of residence or principal place of insurance business in New Jersey where insurance business is transacted and for whom New Jersey has been designated the home state for the purpose of licensure.

. . .

"Self-study or self-directed course" means a continuing education course with study material in text, video, audio, or computerized format including interactive online courses, that is completed by successfully passing a test of the subject matter.

"Surrendered for cause" means the return of a license in lieu of or in connection with a revocation, suspension, other sanction or termination order.

"Ticket [life insurance", "ticket accident insurance" and "ticket property/casualty] insurance" means the insurance coverages sold covering only the risk of travel [in connection with a ticket] sold by a travel agent or an agent of any railroad company, steamship company, airline company, car rental company or bus company.

SUBCHAPTER 2. LICENSING RULES

11:17-2.1 Term of license

(a) (No change.)

(b) Each license issued shall contain an expiration date. An initial license shall be deemed effective as of the date of issuance of any temporary [certificate] authority issued pursuant to N.J.A.C. 11:17-2.4.

11:17-2.2 License authorities

(a) Producers licensed in accordance with the Act and this chapter shall be authorized to write the kinds of insurance designated, if qualified by each authority set forth below.

1. Life Authority: All coverages defined as "life insurance" in N.J.S.A. 17B:17-3; and all coverages defined as an "annuity" in N.J.S.A. 17B:17-5[; and all coverages defined as "contract on a variable basis" in N.J.S.A. 17B:28-1].

2. [Health] Accident and health or sickness Authority: all coverages defined as "health insurance" in N.J.S.A. 17B:17-4.

3. Property [Casualty] Authority: All coverages written by authorized insurers for direct and consequential loss or damage to property of any kind including fire and allied lines, earthquake, growing crops, ocean marine, inland marine, workers' compensation [and employers' liability, automobile liability bodily injury, automobile liability property damage, other liability], boiler and machinery, [fidelity and surety,] credit property[/casualty], burglary and theft, glass, sprinkler leakage and water damage, livestock, smoke or smudge, physical loss to buildings, radioactive contamination, mechanical breakdown or power failure, other property [or casualty] loss[, municipal bond insurance] and mortgage guaranty insurance.

4. Casualty Authority: All coverages written by authorized insurers for coverage against legal liability from death, disability, injury or damage to real or personal property including employers' liability, automobile liability bodily injury, automobile liability property damage, other liability, credit casualty, other casualty loss, fidelity and surety, and municipal bond insurance.

[4] 5. Surplus Lines Authority: All coverages written by unauthorized insurers and defined as "surplus lines" in N.J.S.A. 17:22-6.42. [No license shall be issued, renewed or maintained with surplus lines authority unless the applicant or licensee meets the requirements specified in N.J.S.A. 17:22A-14.]

[5] 6. (No change in text.)

7. Variable life and variable annuity: all coverages defined as a "contract on a variable basis" pursuant to N.J.S.A. 17B:28-1.

8. Personal lines Authority: All property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes.

9. Limited lines Authority includes:

    1. Bail bonds;
    2. Credit insurance;
    3. Ticket insurance;
    4. Group mortgage cancellation;
    5. Legal insurance;
    6. Self-storage personal property insurance; and
    7. Special nonresident limited lines. This authority shall be limited to those authorities for which the applicant is licensed in his or her home state and for which there is no corresponding authority in this State.
    1. (No change.)

(c) No person shall be authorized to transact business regarding contracts on a variable basis unless that person also holds a securities license as required by this State or any other state or Federal law, as applicable.

11:17-2.3 Application filing requirements for initial licenses

(a) [A] Requirements for a first time applicant for an individual license [shall submit the following] are as follows:

1. A properly completed application, in a form approved by the Department or the version of the NAIC uniform application for individual nonresident producers in affect at the time of application, requesting issuance of an insurance producer license with one or more authorities, which shall contain the applicant's legal name, home address, date of birth, social security number, business mailing and location address, business trade name, if any, and response to questions concerning applicant's character and fitness for licensing. The application must be signed, dated and certified to be correct by the applicant. In lieu of the NAIC uniform application, a nonresident applicant may submit a copy of the application for licensure submitted to the home state;

2. If a resident, when required, a certificate evidencing completion of an approved course of prelicensing education or a certificate evidencing waiver of that requirement; and a certificate evidencing that the applicant has passed the State licensing examination for the authority or authorities requested, or a certificate evidencing waiver of the examination requirement;

3. If a nonresident, [a recent certification from the insurance licensing agency of the applicant's home state] the applicant shall certify that he or she holds a currently valid license authorizing transaction of insurance business in the applicant’s home state for the kinds of insurance for which application is made;

4. (No change.)

5. [A] If a resident, properly completed criminal history [verification form] requests and fingerprint forms in a format prescribed by the Department;

[6. If the application requests surplus lines authority, a bond conforming to the requirements of N.J.A.C. 11:17 –2.12; and]

[7. A valid check or money order for] 6. Payment of the fees required in accordance with N.J.A.C. 11:17-2.[2.13] 2.12.

(b) A first time applicant for [an organization] a business entity license shall submit the following:

1. A properly completed application in a form approved by the Department or the version of the NAIC uniform application for business entities in effect at the time of application, requesting issuance of an insurance producer license for one or more authorities, which shall contain the [organization’s] business entity's legal name; business mailing and location address; other business names, if any; names, license reference numbers, if any, and license authorities of each licensed officer or partner; names, addresses and license reference numbers, if any, of all persons owning five percent or more of the [organization] business entity; and responses to questions concerning the applicant's character, fitness and financial responsibility. The application must be dated, signed and certified to be correct by all officers or partners of the organization that hold, or have applied for, New Jersey insurance producer licenses , In lieu of the NAIC uniform application, a nonresident applicant may submit a copy of the application for licensure submitted to the home state;

2. If the applicant is a [New Jersey] corporation, limited liability company, limited partnership or limited liability partnership, applying for a resident license, a copy of the [Certificate of Incorporation or of the partnership document,] original business certificate stamped "filed" by the [Office of the Secretary of State] Department of Treasury, Division of Revenue Business Services, County Clerk or other authority as applicable or a certificate filed by the Department of Treasury, Division of Business Services authorizing the applicant to transact business in New Jersey. If the application includes a business name other than the organization's legal name, the applicant shall also submit a certificate stamped "filed" by the [Office of the Secretary of State] Department of Treasury, Division of Business Services, County Clerk or other authority, as applicable, confirming that the business name has been properly recorded;

[3. If the applicant is a foreign corporation or partnership applying for a resident license to open an office in New Jersey, a certificate filed by the Office of the New Jersey Secretary of State authorizing the applicant to transact business in New Jersey;]

[4.]3. If the applicant is a [foreign corporation or partnership] business entity applying for a nonresident license, a [recently issued] certification [by the licensing authority in the applicant's home state] evidencing that the applicant is authorized [there] in the home state to transact insurance business with comparable authorities;

[5. Properly]4. For resident business entities, properly completed [criminal history verification] fingerprint forms in a format prescribed by the Department for each officer, director, partner or owner of five percent or more of the applicant [organization] business entity;

[6. If applying for surplus lines authority, a bond conforming to the requirements of N.J.A.C. 11:17-2.12(c)]

[7.] 5. (No change in text.)

[8. A valid check or money order for] 6. Payment of the fees required by N.J.A.C. 11:17- [2.13] 2.12.

(c) Failure to pay a license fee due to "not sufficient funds" or otherwise non-negotiable instrument shall void any license issued in [good faith] reliance thereon by the Commissioner. Any business written during the period prior to payment shall be deemed in violation of N.J.S.A. 17:22A-[3]29 and shall subject the [licensee] applicant to penalties in addition to the penalties prescribed at N.J.A.C. 11:17D-2.4(a) 3 for checks returned for insufficient funds, and, when applicable, a late renewal fee.

11:17-2.4 Temporary [certificate] work authority

(a) The Commissioner or his or her designee is authorized to issue a temporary [certificate evidencing that an] work authority allowing the applicant [may] to begin work when the applicant has submitted in proper form the items required by N.J.A.C. 11:17-2.3 if the submission does not disclose any matter that may disqualify the applicant from being licensed. Any certificate issued in accordance with this section shall contain an expiration date and shall expire no more than 60 days after issuance.

(b) A nonresident licensee, upon moving his or her residence or primary place of business into the State of New Jersey and losing resident status in the home state, shall within 20 days thereof notify the Department of his or her change of address and intent to qualify as a resident insurance producer. Upon such notification, the licensee may continue to act as an insurance producer for a period of 90 days from the date of such notification. The Commissioner or his or her designee may, for good cause shown, extend this time.

11:17-2.5 License renewal

(a) A current licensee shall renew a license in the following manner:

1. At least 10 days before the license expiration date, each licensee shall submit a properly completed renewal application together with [a valid check or money order for] payment of renewal fees in accordance with N.J.A.C. 11:17-[2.13]2.12. The renewal application shall be signed, dated and certified to be correct by the licensee or a licensed officer or partner of a licensed [organization] business entity. The licensee shall certify that he, she or it continues to be qualified in accordance with the insurance laws of New Jersey.

(b) Failure to submit the renewal application for receipt by the date of expiration shall be deemed to establish that the license expired on the expiration date shown, and that the licensee was not thereafter authorized to engage in any activities for which the license is required.

(c) (No change.)

(d) If an applicant's license has lapsed for a period of less than one year, the applicant may apply for late renewal of the license within one year of the date the license expired provided the following is attached to the application:

1. Proof of completion of [48] continuing education credits [as] when required by N.J.A.C. 11:17-[3.4 and]3.6; [and]

2. The applicant's certification which shall state whether or not the applicant has transacted any business as an insurance producer during the unlicensed period and, if so, the number of policies written, renewed or modified by endorsement or other means; and

3. Late renewal fee as provided by N.J.A.C. 11:17 – 2.12.

(e) (No change.)

11:17-2.6 Additional authorities

(a) A currently licensed individual producer may obtain additional authorities as described in N.J.A.C. 11:17-2.2 by submitting the following:

1. –3. (No change.)

[4. If applying for surplus lines authority, a bond conforming to the requirements of N.J.A.C. 11:17-2.12(c);]

[5. A valid check or money order for] 4. Payment of the processing fee as required by N.J.A.C. 11:17-[2.13]2.12.

(b) A currently licensed [organizational] business entity producer may obtain additional authorities as described in N.J.A.C. 11:17-2.2 by submitting the following:

1. (No change.)

2. If a nonresident applicant, [a recent certification issued by the licensing authority in the applicant’s home state, evidencing that] certification from the applicant that it holds a currently valid license with the comparable authority in [that] its home state; and

[3. If applying for surplus lines authority, a bond conforming to the requirements of N.J.A.C. 11:17-2.12(c);]

[4. A valid check or money order for] 3. Payment of the processing fee described in N.J.A.C. 11:17-[2.13]2.12.

11:17-2.7 Legal and business names; addresses

(a) No resident licensed individual producer shall conduct insurance business under a name other than [its] his or her legal name unless the name has been filed with and approved by the Department. Nothing in this section shall prohibit the transaction of business under the licensee’s legal name and the words "agency,"[,] "insurance agency,"[,] "brokerage" or words determined by the Department to be of similar import. Issuance of a license containing the name shall serve as notice of approval.

(b) (No change.)

(c) No resident business entity shall conduct insurance business unless the business name has been filed with and approved by the Department. Issuance of a license containing the name shall serve as notice of approval.

[(c)] (d) Standards for [approval of] business names are as follows:

1. – 3. (No change.)

4. No business name shall express or imply any identification or affiliation with a Federal, State or other government entity, including any department, division, bureau or [any] subdivision of such [entity] entities nor shall it misleadingly imply identification with a not-for-profit organization;

5. (No change.)

6. No business name shall contain the name of, or imply any affiliation with, a producer whose license has been revoked, terminated, suspended or voluntarily surrendered for cause.

[(d) An] (e) A resident applicant may obtain prior Departmental approval of a proposed business name before the filing of the name with the [Secretary of State] Department of Treasury, Division of Revenue Business Services, County Clerk or other authority by submitting the proposed name or names for consideration. Prior approvals of names shall expire 90 days after the date of prior approval if no license application is received by the Department.

[(e)](f) The requirements for business addresses and notification of change of business mailing or location address and residence address are as follows:

1. All licensees shall provide the Department with a complete and current business mailing address, [which shall include] and, if different, a street or location address. Individual licensees shall also provide the Department with a complete and current residence address.

2. All licensees shall provide in the format prescribed by the Department [with written] notification of any change of business mailing or location address and residence address within 20 days of the change and maintain a proof of notification for five years or until receipt of a new or renewed license or other documentation from the Department showing the new address.

3. (No change.)

[(f)](g) A licensee shall advise the Department of a change of any legal name, business name or a change of the address which appears on the license by noting the change on its current original license and returning it to the Department for cancellation and reissuance of a new license containing the updated information or by electronic means. No fee shall be required for such changes. If the notice is to change a legal or business name[,] of a resident business entity, the business name shall be approved by the Department in accordance with (b) above and the hard copy request shall be accompanied by a copy of the document filed in the [office of the Secretary of State] Department of Treasury, Division of Revenue Business Services, County Clerk or other authority evidencing that the change has been properly recorded or, if the notice is given by electronic means, a copy of the authority shall be immediately mailed to the Department.

11:17-2.8 Branch offices

(a) Licensees shall file with the Department by hard copy or electronic means a branch office registration form within 30 days before business is first conducted there. A branch office registration form shall be accompanied by the processing fee specified in N.J.A.C. 11:17-[2.13]2.12. The appropriate registration form will be prescribed by the Department.

(b) (No change.)

(c) The licensee shall advise the Department in writing a hard copy or electronic means of the closing of any branch office within 20 calendar days of the closing by returning the branch office certificate for cancellation.

(d) (No change.)

(e) No branch office may [be opened or operated] engage in insurance related conduct unless at least one licensed individual insurance producer is [permanently and exclusively assigned to that office and] present [or accessible during normal business hours except when engaged in the activities of the branch office elsewhere.] The requirements of this section shall not preclude a branch office from remaining open to service accounts while the assigned producer is temporarily absent, and shall not permit unlicensed individuals to engage in any activities for which a license is required.

11:17-2.9 Business relationships

(a) The agency relationship between company and producer is subject to the following requirements:

1. (No change.) 2. An insurance company contracting with a licensed insurance producer shall be responsible to advise the Department of that relationship by filing a notice within 15 days after execution of the contract, on a form prescribed by the Department or by using the online appointment and termination system available through the National Insurance Producer Registry, incorporated herein by reference, as a amended and supplemented, located at http//www.nipr.com containing the company's name and reference number; the producer's name and reference number; and the effective date of the contract. The form shall contain the name and title of the company official who signed and certified the notice. [The notice shall be submitted with the fee set forth in N.J.A.C. 11:17-2.13.]3. – 4. (No change.) 5. The agency contract shall be deemed to continue in effect until a notice of termination of that contract is filed by the insurance company with the Department on a form prescribed by the Commissioner or by using the online appointment and termination system available through the National Insurance Producer Registry, incorporated herein by reference, as a amended and supplemented, located at http//www.nipr.com 6. The notice of termination filed shall specify the true reason for termination. If the reason [is conduct by the producer that may constitute cause for disciplinary action against] involves misconduct by the producer, an additional copy of the notice of cancellation shall be mailed by the insurance company to the Department's Enforcement [Division] Unit, PO Box 329, Trenton, NJ 08625-0329 together with an outline of available information and documentation.

7. – 8. (No change.)

(b) The employment of another producer by a producer is subject to the following requirements:

1. (No change.)

2. [An employer who has entered into such an employment contract shall notify the Department of the agreement by submitting a document signed by the employer, or a licensed officer or partner if an organization, containing the employee’s name, license reference number and the date of employment.] The employer shall examine the credentials of the employee to determine that he or she is licensed to conduct the kinds of business described in the contract.

3. – 5. (No change.)

11:17-2.10 Continuation of business of a producer who becomes disabled [or], dies or enters the Armed Forces

[(a) A licensed producer continuing the business of a deceased or disabled producer is subject to the following requirements;]

[1.](a) Pursuant to the provisions of the Act, a surviving spouse, [next of kin, or administrator or executor] or court appointed personal representative of a deceased or disabled producer, [or the legal guardian of a producer who has become mentally or physically disabled,] or a member or employee of a business entity in which the licensed producer, who was the designated officer or owner responsible for the licensed activity of the business, dies or becomes disabled, or a designee of a producer entering active service in the Armed Forces of the United States of America may [enter into a contract with a licensed producer for the purpose of continuing the business of the deceased or disabled producer] submit a request for a temporary license by hard copy or electronic means, containing the names, addresses and license numbers of the producers involved and the reason for the request. [The contract may provide that the deceased or disabled producer's representative receive for a period not to exceed six months a portion of the fees or commissions generated by the business, notwithstanding that the representative does not hold a producer's license.] No temporary license shall last for a period longer than 180 days.

[2. The licensed producer who contracts with the surviving spouse, next of kin, or administrator or executor of a deceased producer, or the legal guardian of a producer who has become mentally or physically disabled, to continue the business of the deceased or disabled producer shall immediately notify the Department in writing.

3. The notice shall contain the name and license reference number of the licensed producer; name and license reference number of the deceased or disabled producer; address where the business will be conducted; date of death or disablement; term of contract; and the name and address of the deceased or disabled producer's representative.

4. The notice shall be signed by the licensed producer and filed with the Department.

5. The notice shall be accompanied by the deceased or disabled producer's current license returned for cancellation and such other documents as may be necessary to show the legal capacity of the deceased or disabled producer's representative.

6. The licensed producer shall notify the Department when the contract has terminated.]

(b) As a condition of issuance of a temporary license, the Commissioner shall require the applicant to designate a sponsor who is licensed as a producer in this State or is an insurer authorized to write insurance in this State.

(c) If the sponsor or holder of a temporary license sells, assigns or otherwise transfers ownership of the insurance business prior to the expiration of the temporary license, the license shall cease to be valid and shall be surrendered to the Department.

[11:17-2.11 Limited insurance representatives.

(a) The following kinds of insurance may be marketed through limited insurance representatives:

1. Bail bonds;

2. Credit life;

3. Credit health;

4. Credit involuntary unemployment;

5. Credit property/casualty;

6. Ticket life;

7. Ticket accident;

8. Ticket property/casualty;

9. Group mortgage cancellation;

10. Mortgage guaranty;

11. Legal insurance; and

12. Self-storage personal property insurance.

(b) An organization shall not be registered as a limited insurance representative unless there is also an individual member of that organization licensed or registered as a limited insurance representative. Each individual acting as a limited insurance representative for an organization must be so licensed or so registered. An insurance company authorized to write the lines of insurance described in (a) above shall register its limited insurance representatives with the Department in accordance with this section.

(c) Prior to registering any limited insurance representative, the insurance company and the representative shall execute a written contract describing the duties and responsibilities of each. Both parties shall retain a copy of the contract and shall make it available to the Department upon request.

(d) The insurance company shall satisfy itself that the proposed limited insurance representative is trustworthy, competent, of good character, honest, financially responsible and capable of acting as its representative.

(e) The insurance company shall register its limited insurance representatives on a form prescribed by the Commissioner containing its company name and reference number; the representative's name, and date of birth if an individual; business mailing and location address; kind of insurance business to be conducted; and the effective date of the contract. The fee described in N.J.A.C. 11:17-2.13 shall be paid at the time of initial registration.

(f) The contract will be deemed to continue in effect until the insurance company files a notice of termination of the registration with the Department on a form prescribed by the Commissioner. The notice shall specify the reason for termination. If the reason is conduct of the representative that may constitute cause for disciplinary action against the representative, the company shall mail an additional copy of the notice to the Department's Enforcement Division together with an outline of available documentation.

(g) During the existence of the contract and until notice of termination has been filed, the limited insurance representative shall be deemed to be acting under the supervision of the insurer and as an agent for it, with respect to any insurance related conduct and pursuant to the contract between the parties.

(h) Nothing in this section shall prevent licensed insurance producers from marketing the kinds of insurance described in (a) above so long as they are licensed with the appropriate authority according to N.J.A.C. 11:17-2.2. Nothing in this section shall prevent companies authorized to write such insurance from entering into an agency contract with a licensed producer and filing a notice of agency contract in accordance with N.J.A.C. 11:17-2.9(a).]

11:17-[2.12]2.11 Licensing information requirements

(a) The following requirements relate to the provision of criminal history information by licensed producers and license applicants.

1. An applicant for an individual resident license shall submit with his or her initial application [a] New Jersey State Police and Federal [Request for Criminal History Record Information] fingerprint cards and the fee required to pay for its processing.

2. An applicant for [an organization] a resident business entity license shall submit with its application New Jersey State Police and Federal [Request for Criminal History Record Information] fingerprint cards and the fee required to pay for their processing, for each officer, director, partner and owner of five percent or more of the organization. Applicants who contemporaneously submit [organization] resident business entity and resident individual applications need not submit duplicates.

[3. Upon request by the Department, any licensed producer or license applicant, or any officer, director, partner or owner of five percent or more of any applicant organization, shall have fingerprint impressions taken and submit them to the Department on a New Jersey State Police fingerprint card, with the fee required to pay for their processing.]

Recodify existing 4. and 5. as 3. and 4. (No change in text.)

[6.]5. Failure to indicate a criminal conviction on the application for an insurance producers license shall constitute a material misrepresentation and subject a licensee to the penalties provided at N.J.S.A. 17:22A-[17a and b] 40a and c.

(b) Upon request by the Department, a licensed producer or license applicant shall supply copies of any [petition or complaint in] documentation pertaining to any bankruptcy, [discharge in bankruptcy, or copies of any pleadings in a proceeding for] assignment to creditors, insurance related debt or child support action. Failure to respond to any specific request or to submit documentation requested shall constitute grounds for denial of the license application or renewal of the license, or suspension or revocation of any current license.

[(c) The following provisions apply to the bond requirement for surplus lines authority.

1. The bond required to be filed in connection with the application of any person for a producer license with surplus lines authority shall be on a form approved by the Commissioner pursuant to N.J.S.A. 17:22A-14.

2. Failure to maintain a bond in full force and effect and in the full amount expiration or cancellation of the bond. Voiding or canceling surplus lines authority shall be subject to the right of any producer to a hearing in accordance with the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1, on the issue of whether the filed bond remained valid or a replacement bond was obtained and filed.

3. Upon request by the Department, licensees shall provide information concerning the volume of surplus lines business transacted. ]

[(d)] (c) Licensed [organizations] business entities shall notify the Department within 30 days of the addition or deletion of any licensed or unlicensed officer, director, partner or owner of five percent or more of the licensed organization. Notification of the addition of any unlicensed officer, director, partner or owner of five percent or more of the licensed [organization] business entity shall be accompanied by [a] properly completed [criminal history verification] fingerprint forms [and] together with the required fee. Licensed business entities shall retain evidence of notification for a period of five years or, until receipt of documentation from the Department verifying such change, if earlier.

[(e)] (d) Departure, termination or deletion of licensee officers, directors or partners, which leaves [an organization] a business entity insurance producer with no licensed officers, directors or partners or with officers, directors or partners who do not have like authorities as the [organization] business entity producer, shall make the [organization] business entity producer license inactive. Under these circumstances, the [organization] business entity license shall be returned immediately to the Commissioner.

11:17-[2.13]2.12 Fees

(a) The following fees shall be payable as set forth in this chapter:

1. License fee, not limited line: $300.00;

2. – 5. (No change.)

6. [Filing or processing any Notice of Agency Contract: $20.00; ] Limited line license: $150.00;

[7. Any limited insurance representative registration: $20.00; and]

[8.] 7. Late renewal fee, not limited line: $[50.00]100.00; and

9. Late renewal fee, limited line: $50.00.

(b) [A] All fees shall be paid by check or money order or electronic debit or credit card made payable to: State of New Jersey--General Treasury. All Department fees are non-refundable after the license effective date.

(c) (No change.)

11:17-[2.14]2.13 Denial of license

(a) Whenever it appears from an application, renewals form, attached documents [and] or Department records that an applicant has not demonstrated the qualifications prescribed in the Act and this chapter, the Department shall advise the applicant in writing that the license requested is denied; shall specify the reason for denial; and shall further advise the applicant of the right to request a hearing in accordance with the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1[-1 et seq.] and the procedure for doing so.

(b) – (c) (No change.)

11:17-[2.15]2.14 [Termination] Surrender and cancellation of license; reinstatement after [termination] surrender

(a) A licensee may [terminate] surrender a current producer license by returning the license document to the Department for cancellation at any time before expiration. The Department may refuse to accept a request for cancellation of [an organization] a business entity license unless all current licensed officers or partners consent to the request.

(b) A producer license may be reinstated after [termination] surrender during the same license period by completing an application in accordance with the provisions of N.J.A.C. 11:17-2.3. No additional license fee for that period shall be required but the processing fee provided in N.J.A.C. 11:17-[2.13]2.12 shall be paid.

(c) - (d) (No change.)

(e) Nothing in these rules shall authorize any person whose license has been revoked [or], suspended, cancelled or surrendered to continue to transact insurance business after the date of revocation [or], suspension, cancellation or surrender.

 

11:17-[2.16]2.15 Licensee records

(a) (No change.)

(b) The following licensee records are specifically determined to be nonpublic records in accordance with N.J.S.A. 47:1A-1 et seq.:

1. – 4. (No change.)

5. Records concerning the medical disability of any licensee; [and]

6. Investigative files in any matter pending investigation, or in any completed investigation in which no formal disciplinary action was taken[.]; and

7. Records identified in N.J.S.A. 17:22A-43.

(c) – (d) (No change.)

11:17-[2.17]2.16 Requests for disclosure of social security numbers

(a) The Department may request that licensed producers[, registered limited insurance representatives, ] and license applicants [and registration applicants] submit their social security numbers to the Department. All such requests shall either include or be accompanied by a notice stating:

1. – 3. (No change.)

SUBCHAPTER 3. PROFESSIONAL QUALIFICATION

11:17-3.1 Approval of insurance education program

(a) [Professional schools, insurance companies and others who] Persons and entities that establish programs [which] that include teaching [of] or offering insurance courses to satisfy professional qualification requirements for prelicensing or continuing education for producers shall, prior to conducting such courses, [obtain approval] be approved by the Department in accordance with this section.

(b) An application for approval of an insurance education [program] provider shall be made on a form prescribed by the Commissioner and shall provide the following information:

1. The name of the [program] insurance education provider and the address of the permanent program office;

2. (No change.)

3. The name, address and telephone number of the program director or directors, New Jersey producer license reference number(s), if any, and a signed statement from each insurance education director that he or she has read this subchapter, understands his or her responsibilities as an insurance education director, and that he or she is fully responsible for the activity of the insurance education program;

4. The names, addresses and telephone numbers of any authorized personnel;

[4.] 5. Whether the [program] insurance education provider will teach or offer prelicensing education courses, continuing education courses, or both;

[5.] 6. The address of any permanent classroom or classrooms to be used by the [program] provider; and

[6.] 7. Any other information that may be required by the Department to determine whether the provider and the insurance education program meets the requirements for approval.

(c) [Programs] Insurance education providers seeking approval to teach courses of prelicensing education shall also provide:

1. The names of all instructors employed by the [program] insurance education provider to teach prelicensing education courses and [sign certificates of completion] certify that the producers have completed the prelicensing program together with documentation confirming that each is qualified in accordance with [(f)3 below] N.J.A.C. 11:17-3.2(a)3;

2. The names of the courses, by license authority, which will be taught by the [program] insurance education provider, if approved; and

3. A copy of the enrollment application for the [program] insurance education provider, [a form of] the student contract, and any other agreement between the [program] insurance education provider and student.

(d) Each application for approval of an insurance education provider’s program shall be certified as correct by the insurance education director or directors named in the application, and shall be accompanied by a fee of $300.00. The application [for approval] shall be submitted to the [Supervisor of Insurance Education] Department at least 90 days prior to the anticipated opening of the program.

(e) Applications for program approval shall be reviewed to determine compliance with the requirements prescribed in this subchapter. An applicant shall supply such additional information or documentation as may be required by the Department to determine whether such requirements are met.

1. An inspection of the [program] provider’s office and any permanent classroom facility may be conducted prior to approval or the approval may be granted conditioned upon the results of an inspection.

2. [If the application is in proper form and the requirements described in this subchapter are met] Upon approval of an application, the Department shall issue a certificate of approval which shall contain:

i. The name and approval code number of the [program] insurance education provider;

ii. An indication as to whether the [program] insurance education provider is approved for prelicensing education, continuing education or both; and

iii. The effective date and expiration date of the approval.

3. [A program] An insurance education provider approval shall expire in the fourth year on the last day of the licensing quarter in which it was effective;

4. [A program approval may be renewed by the same procedure set forth in this section] At least 10 days prior to the renewal date, the provider’s insurance education director shall submit a properly completed renewal application and the $300.00 renewal fee. Applications for renewal shall be reviewed by the Department in accordance with the procedures established in this section for new insurance education provider approval. Failure to submit the renewal application for receipt by the date of expiration shall be deemed to establish that the insurance education provider approval has expired, and the provider is not thereafter authorized to teach or offer insurance courses to satisfy professional qualification requirements for prelicensing or continuing education for producers.

[(f) Each approved insurance education program (except as modified hereafter) shall:

1. Maintain a permanent office in New Jersey where shall be maintained student records, samples of all instructional material used, up-to-date copies of the New Jersey insurance statutes and administrative rules, and the certificate of approval for the program. The office shall be open and accessible to the Department and to prospective, present and past students during normal business hours. The requirement for a permanent office in New Jersey may be waived for programs sponsored by accredited colleges and universities, producer trade associations or tax exempt, nonprofit educational institutions that agree to maintain student records and provide records and provide records to the Department and former students upon request.

2. Retain a director in charge of the program, who shall be accessible to the Department and the public at the program’s permanent office as required in (f)1 above during normal business hours. The program director shall:

i. Oversee the program and activities of all instructors;

ii. Be responsible to carry out the program’s administrative duties imposed by this subchapter;

iii. Receive and distribute to all instructors and students communications from the Department and others. The director shall not have had his or her insurance license revoked; and

iv. Failure by a licensed director to supervise the program for records compliance and attendance requirements for the issuance of school certificates and continuing education verification forms to students may result in action being taken against the director’s producer license and/or program.

3. Use knowledgeable and competent instructors to teach all courses. An instructor shall not have had his or her New Jersey insurance producer license revoked and shall in the opinion of the Commissioner, be otherwise of good character and reputation. Instructors employed to teach courses of prelicensing education shall possess at least five years’ experience in insurance practice, insurance education or the equivalent which must be derived from the same authority or authorities of insurance for which the instructor is employed to teach courses, and shall in addition:

i. Hold a recognized professional designation; or

ii. Have passed the New Jersey instructor examination; or

iii. Be a faculty member of an accredited college or university teaching insurance courses.

4. Be permitted to use special lecturers or guest speakers to instruct on particular topics, so long as the program carries out the recordkeeping and reporting requirements imposed by this subchapter. For prelicensing education courses , the use of substitute teachers, special lecturers or guest speakers shall not collectively exceed 25 percent of the total course hours.

5. Use classroom facilities with sufficient lighting, desls or tables and which are otherwise conducive to learning. Classroom facilities shall be open the Commissioner or his or her designee for class monitoring at any time.

6. If approved to teach prelicensing courses, instruct students in accordance with a curricula established or approved by the Department.

7. Conduct and administer courses in a manner reasonably calculated to assure that certificates or reports of courses attended and completed accurately reflect the students attendance and performance. Except as may be provided consistent with the provisions of N.J.A.C. 11:17-3.4(g), an instructor shall be physically present in the classroom during the conduct of the entire course including any tests or examinations.

8. Maintain for five years the records of each student including the name(s) of the course or courses taken; proof that the course final examination was passed, of applicable; and copies of te final examinations and education certificates issued. Programs voluntarily terminating operations shall turn over education certificates to the Department within 14 days of ceasing operation.

9. If approved to teach preliceinsing courses, provide remedies for students who have failed the State licensing examination, which may include review courses or second full courses at reduced rates.

10. If approved to teach prelicensing courses and if it charges tuition therefor, provide to all persons requesting an enrollment application or information, at the time of such request and in a manner approved by the Department, all passing rates on the State licensing examination for all programs for each examination given during the preceding six month period; or, if the program has not been in operation for this period of time, the passing rate for all examinations given during the period which the program has been in operation. This information shall be test specific and shall be furnished in writing and without request.

(g) An approved insurance education may maintain classroom facilities at more than one permanent location in New Jersey under the supervision of a single insurance education director, provided that:

1. The address of each permanent classroom is revealed on the application for approval or subsequent amendments;

2. That each classroom meets the standard of (f)5 above; and

3. Permanent student records are maintained at the program's office.

(h) An approved insurance education program may conduct classes at temporary locations in New Jersey provided that each classroom facility meets the requirements of (f)5 above, and that permanent student records are maintained at the program's office.]

11:17-3.2 Insurance education provider duties and requirements

[(f)] (a) Each approved insurance education provider (except as modified hereafter) shall:

1. Maintain an office where student records, samples of all instructional material used, , and the certificate of approval for the program are kept. The office shall be accessible to the Department. The insurance education provider shall provide information regarding the means by which prospective, present and former students may contact the insurance education provider through its authorized personnel and insurance education director;

2. Retain an insurance education director in charge of the program, who shall be accessible to the Department and the public as required in (a) above during normal business hours. A producer whose license is suspended, revoked or voluntarily surrendered for cause in this or any other state may not act as an insurance education director. The insurance education director shall:

i. Oversee the program and activities of all instructors and authorized personnel;

ii. Be responsible to carry out or oversee the program's administrative duties imposed by this subchapter;

iii. Receive and distribute to all instructors, authorized personnel and students communications from the Department and the Department’s contract vendor;

iv. Notify the Department in writing of any change to the insurance education provider’s application or renewal information, including but not limited to, changes in the insurance education provider’s name, address or telephone number, as well as the identity of the authorized insurance education director or authorized personnel.

3. Use knowledgeable and competent instructors to teach all courses. An instructor shall not have had his or her insurance producer license revoked, suspended or voluntarily surrendered for cause in any state and shall in the opinion of the Commissioner, be otherwise of good character and reputation. Instructors shall possess at least five years' experience in insurance practice, insurance education or the equivalent which must be derived from the same authority or authorities of insurance for which the instructor is teaching. Prelicensing education instructors shall, in addition:

i. Hold a recognized professional designation; or

ii. Have passed the New Jersey instructor examination; or

iii. Be a faculty member of an accredited college or university teaching insurance courses.

4. Use classroom facilities with sufficient lighting, desks tables and other equipment which are conducive to learning. Classroom facilities shall be open to the Commissioner or his or her designee for monitoring at any time.

5. If approved to teach prelicensing courses, instruct students in accordance with a curricula submitted and approved by the Department.

6. Conduct and administer courses in a manner reasonably calculated to assure that certificates or reports of courses attended and completed accurately reflect the students’ attendance and performance. Except as may be provided consistent with the provisions of N.J.A.C. 11:17-3.4(k), for prelicensing education and for classroom or seminar continuing education offerings, an instructor shall be physically present in the classroom during the entire course including any tests or examinations.

7. Maintain for five years the records of each student including the name(s) of the course or courses taken; proof that the course final examination was passed, if applicable; and copies of the final examinations and education certificates issued. Programs voluntarily terminating operations shall turn over education certificates to the Department within 14 days of ceasing operation. If a program approval is revoked, the Department shall retain the right to secure such records;

8. If approved to teach prelicensing courses, provide remedies for students who have failed the State licensing examination, which may include review courses or additional full courses at reduced rates; and

9. If approved to teach prelicensing courses and if it charges tuition therefor, without specific request and in a manner approved by the Department, provide to all persons at the time of request for enrollment application or information, all passing rates by line of authority for the State licensing prelicensing education courses offered by the provider during the preceding six month period; or, if the program has not been in operation for this period of time, the passing rate for all examinations given during the period which the program has been in operation.

[(i)] (b) [Upon request from the Department, the director of an approved education program] Fifteen days prior to the start of each quarter, each insurance education provider shall provide to the Department in writing by hard copy or electronic means, information about the time, date and [place] location of [any] all prelicensing or continuing education courses scheduled [so that the classes may be monitored] for the following quarter. If the insurance education provider is offering self-study and examination courses, it shall provide the Department with the name of the approved courses offered and the date and location of each proctored examination. If the schedule of courses changes, the provider shall immediately notify the Department of any additions or cancellations.

[(j)] (c) An approved insurance education program shall issue to each student who has successfully completed a prelicensing education course a certificate which shall contain the following:

1. - 3. (No change.)

4. Signatures of the student and the instructor, authorized personnel, or the insurance education director of the program;

5. - 6. (No change.)

11:17-3.3 Penalties for insurance education providers, insurance education directors and authorized personnel

[(k)] (a) An insurance education [program] provider may be denied approval for failure to meet the requirements of this [section] subchapter.

[(l)] (b) Any denial of an application for approval of insurance education provider’s program [approval], or any proposal to revoke or suspend approval of insurance education provider’s program, shall be in writing, and shall advise the applicant of his or her right to a hearing in accordance with the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1-1 [et seq]. Nothing in this section shall prohibit the rejection and return of applications for correction of ministerial errors.

[(m)] (c) The Commissioner may suspend, terminate or revoke the approval of an insurance education [program] provider, director or authorized personnel for any of the following reasons:

1. The failure to maintain any requirement set forth in this [section] subchapter;

2. The failure to advise the Department promptly of any change in information initially submitted in the application during the period of approval including, but not limited to, change of insurance education director, school address, place or time of scheduled classes and instructors;

3. [Obtaining an approval by fraud]Fraud or misrepresentation;

[4. The failure to conduct any classes for a period of 12 months;

5. For prelicensing education programs only, the failure to maintain an overall passing rate on the State insurance licensing examination of 70 percent or more for any period of 12 consecutive months. The 70 percent passing rate shall be determined on the basis of first time test takers;]

[6.] 4. For continuing education programs only, the failure to report to the Department or the Department’s contract vendor the students' continuing education credits[.];

5. Demonstrated incompetence or untrustworthiness of an insurance education provider, director or authorized personnel;

6. Violating any of the insurance laws of this State; or

7. Aiding or abetting any person in violating the insurance laws of this State.

[(n)] (d) Any school whose approval has been suspended, terminated or revoked shall turn over its education certificates to the Department within 14 days.

[(o)](e) As an alternative to suspension, termination or revocation of approval, the Commissioner may place any [program] provider, director or authorized personnel on probation with appropriate conditions or impose monetary penalties not to exceed $[1,000]5,000 for the first violation and $[2,000]10,000 for each succeeding violation.

[(p)] (f) No insurance education [program] provider, authorized personnel or director whose approval has been revoked may reapply for approval for a period of five years.

11:17-[3.2] 3.4 Prelicensing education

(a) [Each]Except as provided in (e) through (g) below, each applicant for a resident insurance producer's license that is not solely for a limited line product shall pass a course of prelicensing education with the appropriate number of hours of classroom instruction described in (b)[through (e)] and (c) below.

(b) Prior to being licensed in New Jersey for the first time as a producer, an applicant shall complete a course on regulation of the insurance industry in New Jersey for a total of 15 classroom hours. The course shall include the following topics:

1. –3. (No change.)

4. Producer trade practices, standards of conduct and ethics; [and]

5. Doing business as a licensed insurance producer[.]; and

6. Insurance fraud detection and prevention.

(c) [Prior]In addition, prior to being admitted to the State licensing examination to obtain a particular producer license authority, an applicant shall complete a course of prelicensing education for the specific authority or authorities as follows:

1. Life [authority] and /or variable authorities, for a total of 25 classroom hours:

i. General life insurance concepts;

ii. Suitability

[ii.]iii. Annuities;

[iii.]iv. Contracts on a variable basis; and

[iv.]v. New Jersey law and practice regarding life insurance.

2. (No change.)

3. Life, variable and health authorities, for a total of [40]50 classroom hours:

i. General life insurance concepts;

ii. Suitability

[ii.]iii.Annuities;

[iii.]iv. Contracts on a variable basis;

[iv.]v. General health insurance concepts; and

[v.]vi. New Jersey law and practice regarding life and health insurance..

4. Property[/casualty] authority, for a total of [125] 40 classroom hours:

i. General property insurance concepts;

[ii. General casualty insurance concepts;]

[iii.] ii. Health insurance concepts; and

[iv.] iii. New Jersey law and practice regarding property and health insurance.

5. Casualty authority, for a total of 40 classroom hours:

i. General casualty insurance concepts;

ii. Health insurance concepts; and

iii. New Jersey law and practice regarding casualty and health insurance.

6. Property and casualty authorities, for a total of 80 classroom hours:

i. General property insurance concepts;

ii. General casualty insurance concepts;

iii. Health insurance concepts; and

iv. New Jersey law and practice regarding property/casualty and health insurance.

[5.] 7. Title insurance authority, for a total of 45 classroom hours:

i. – ii. (No change.)

8. Personal Lines authority, for a total of 50 classroom hours:

i. General property/casualty principles for personal lines;

ii. General health insurance principles for individual coverages; and

iii. New Jersey law and practice regarding property/casualty and health insurance for personal lines products.

(d) Limited line producers seeking authority for bail bonds shall pass a course of prelicensing education with the appropriate number of hours of classroom instruction specified in (d)1 and 2 below:

1. Prior to being licensed in New Jersey for the first time for bail bonds as a limited line producer, an applicant shall complete a course on regulation of the insurance industry in New Jersey for a total of six classroom hours. The course shall include the following topics:

i. State regulatory jurisdiction;

ii. The powers of the Commissioner and the methods of regulation;

iii. Producer licensing; and

iv. Producer trade practices, standards of conduct, ethics and fraud.

2. In addition, prior to being admitted to the State licensing examination to obtain a limited line insurance producer license for bail bond license authority, an applicant shall complete a course of prelicensing education for the specific authority or authorities as follows:

i. Bail bond authority for a total of 10 classroom hours;

(1) Criminal court system and criminal code;

(2) Laws relating to bail bonds; and

(3) Recordkeeping, fiduciary responsibility and trust accounting.

[(d)] (e) A person holding an approved insurance professional designation described in N.J.A.C. 11:17-[3.5]3.7 shall not be required to complete the courses of prelicensing education.

[(e)] (f) (No change in text.).

[(f)] (g) Upon application to the [Supervisor of Insurance Education] Department, any of the courses in (b), (c) and (d) above may be waived for any license applicant who can demonstrate that he or she satisfies at least one of the following conditions:

1. (No change.)

2. For all authorities, that he or she is a veteran of the United States armed services, and has completed a course of veteran's education approved by the Department of Education and the Commissioner of Banking and Insurance;

3. –4. (No change.)

[(g)] (h) An application for waiver shall be made on a form prescribed by the Department and shall be submitted directly to the [Supervisor of Insurance Education] Department prior to registering for the State licensing examination or making application for an insurance producer license. In addition to providing the information requested by the form:

1. Applicants seeking a waiver authorized by [(f)1](g)1 above shall submit a recent certification of license status or letter of severance issued by the insurance licensing authority in the state where they hold or held an insurance license.

2. Applicants seeking a waiver authorized by [(f)2](g)2 above shall submit proof of completion of a course of veteran's education issued by the New Jersey Department of Education.

3. Applicants seeking a waiver authorized by [(f)3](g)3 above shall submit a transcript issued by the accredited school, college or university where the course was taken and a description of the subject matter covered.

4. Applicants seeking a waiver authorized by [(f)4](g)4 above shall submit a certificate of good standing issued by the Clerk of the New Jersey Supreme Court.

[ (h)] (i) If a waiver is approved pursuant to [(f) and (g)](g) and (h) above, the [Supervisor of Insurance Education] Department shall issue a letter of approval waiving the prelicensing education requirement, which the applicant shall [be] thereafter attach[ed] to the producer license application when submitted to the Department.

[(i) Producer license applicants who obtain a waiver of the education requirement shall be solely responsible for preparing themselves to take the state examination.]

(j) Waivers shall expire in [30] 60 days from the date of issuance and shall thereafter be reissued or renewed for good cause only, upon presentation of evidence satisfactory to the [Commissioner]Department . Any such extension shall not exceed [one] an additional period of 30 days.

(k) For all authorities, classroom attendance at any course(s) in (b), (c) or (d) above shall be waived by the Department for any applicant who can demonstrate that he or she is a person with a disability as defined in "the American with Disabilities Act" (42 U.S.C. § 12102) and that his or her disability [presents an impediment to] substantially limits classroom attendance at the required courses. In order to obtain a waiver, the following procedure must be complied with prior to participation in the [correspondence] self-study course(s):

[1. The applicant must file for permission to take correspondence course(s) in lieu of classroom attendance (Appendix, Form No. 1, incorporated herein by reference); and

2. Provide a physician's Certification indicating the nature of the disability that precludes classroom attendance (Appendix, Form No. 2, incorporated herein by reference).]

(1) The applicant must file, in writing by hard copy or electronic means a request for permission to take the course accompanied by a physician's certification indicating the nature of the disability that substantially limits classroom attendance.

(l) Each insurer that sells, solicits or negotiates limited line credit insurance shall provide a program of instruction on credit insurance to all limited line credit insurance producers appointed by the insurer. The program of instruction shall include instruction on the suitability of credit insurance products and be submitted for approval in a format prescribed by the Department. The program of instruction shall be deemed approved if not disapproved within 30 days of receipt by the Department of the submission.

[APPENDIX

Form No. 1

DISABLED PERSON'S REQUEST FOR WAIVER OF CLASSROOM ATTENDANCE;

PERMISSION TO TAKE Self-study Courses IN ACCORDANCE WITH N.J.A.C.

11:17-3.2(k)

Mail to:

Supervisor of Insurance Education

New Jersey Department of Banking and Insurance

Enforcement and Consumer Protection

PO Box 329

Trenton, NJ 08625-0329

Applicant Name: _______________________________________________________________

Address: ______________________________________________________________________

_______________________________________________________________________

Social Security Number: _______________________________________________________

Date of Birth: ________________________________________________________________

*******************************************************************************

I HEREBY REQUEST PERMISSION TO TAKE THE FOLLOWING PRELICENSING CORRESPONDENCE COURSE:________________________________________________________________

_______________________________________________________________________________

SUCCESSFUL COMPLETION OF THIS COURSE IS NECESSARY TO SECURE THE FOLLOWING

RESIDENT INSURANCE PRODUCER'S LICENSE: ______________________________________ ________________________________________

_______________________________________________________________________________

I HAVE THE FOLLOWING DISABILITY WHICH PRECLUDES CLASSROOM ATTENDANCE AT

PRELICENSING COURSE(S) AND I SHOULD BE GRANTED PERMISSION TO TAKE THE ABOVE

MENTIONED CORRESPONDENCE COURSE(S): _________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

I HAVE ATTACHED A CERTIFICATION SIGNED AND PREPARED BY DR. ________________ WHICH ATTESTS TO MY DISABILITY

.

________________________ ___________________________

Date Applicant

*******************************************************************************

Date: ____________________________________________

Approved: ________________________________________

Denied: _____________________ Reasons: ________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

By: _______________________

Supervisor of Insurance Education

Form No. 2

PHYSICIAN'S STATEMENT

Applicant's Name: _____________________________________________________________

Address: ______________________________________________________________________

________________________________________________________________________

Social Security Number: _______________________________________________________

TO THE PHYSICIAN COMPLETING THIS FORM:

IN ORDER TO INSURE THAT INDIVIDUALS LICENSED TO SELL INSURANCE IN NEW

JERSEY HAVE THE PROPER TRAINING AND EDUCATION IN THE INSURANCE

INDUSTRY THE DEPARTMENT OF BANKING AND INSURANCE REQUIRES THAT THEY

COMPLETE CERTAIN EDUCATION CLASSES. THESE COURSES NORMALLY REQUIRE

CLASSROOM ATTENDANCE BY THE LICENSE APPLICANT. HOWEVER, THE

DEPARTMENT REALIZES THAT DUE TO A DOCUMENTED DISABILITY SOME MAY BE

UNABLE TO ATTEND CLASSES. IN THESE CASES THEY WILL BE GIVEN

PERMISSION TO COMPLETE HOME STUDY COURSES. TO ASSIST THE NEW JERSEY

DEPARTMENT OF BANKING AND INSURANCE IN EVALUATING THE ABOVE

INDIVIDUAL'S REQUEST FOR THIS ACCOMMODATION PLEASE COMPLETE THE

FOLLOWING AND RETURN IT TO THE ABOVE INDIVIDUAL FOR SUBMISSION TO THE

DEPARTMENT WITH OTHER NECESSARY PAPERWORK. NOTE: UNDER N.J.A.C.

11:17-2(B)5 THIS INFORMATION IS NOT CONSIDERED PART OF THE PUBLIC

RECORD AND WILL BE KEPT CONFIDENTIAL.

1. IN YOUR PROFESSIONAL OPINION DOES THIS PERSON'S MEDICAL CONDITION PRECLUDE

CLASSROOM ATTENDANCE AT PRELICENSING COURSES? __________ YES or __________ NO

2. BRIEFLY IDENTIFY THE DISABILITY WHICH RESULTS IN THE INABILITY TO ATTEND

PRELICENSING CLASSES:________________________________________________________

_______________________________________________________________________________

PHYSICIAN NAME ________________________________________________________________

ADDRESS AND TELEPHONE NUMBER __________________________________________________

PHYSICIAN SIGNATURE _________________________ DATE_____________________________ ]

 

11:17-[3.3]3.5. State licensing examination; use of independent examination vendor; exemptions; retaking of examination

(a) [All] Except for applicants seeking authority in only ticket insurance, group mortgage cancellation insurance, legal insurance, credit insurance or self-storage personal property insurance, all applicants for a resident insurance producer license shall pass the State licensing examination, which may be given by the Department or by an independent vendor under contract to the Department [that meets the criteria set forth in (b) below].

(b) Any contract for development and administration of the New Jersey State insurance producer licensing examination shall include, [without limitation,] the following terms and conditions.

1. – 13 (No change.)

14. [The] At the request of the Department, the contract vendor shall defend and indemnify in whole or in part the Department of Insurance, the State of New Jersey and its agents, officers and employees from all claims, actions, damages, liability and expenses in connection with loss of life, personal injury, damage to property and/or failure to comply with the requirements of "The Americans with Disabilities Act" arising out of the ownership, occupancy or use by the contract vendor of any facilities used as test administration centers, occasioned wholly or in part by any act or omission of the contract vendor, its agents, contractors or employees.

15. – 17. (No change.)

(c) Applicants holding a recognized professional designation described in N.J.A.C. 11:17-[3.5] 3.7 are exempt from the licensing examination requirements.

(d) Applicants [who] previously licensed as nonresidents who are applying as residents shall apply for a waiver of prelicensing education and pass the [State] New Jersey law and practice portion of any required examination for the authority(ies) requested within 90 days of [meeting the definition of resident license] establishing New Jersey as the home state [otherwise the license will no longer be valid for failure to qualify as a resident]. The Department may, upon finding good cause pursuant to a timely, written request for an extension of time from the applicant, extend this time.

(e) (No change.)

(f) For good cause shown, the Commissioner may, by order, require an applicant for licensure or a licensee to retake the State licensing examination within a specified period of time. The order shall clearly and fully state the alleged factual circumstances upon which it is based. In the case of a licensee, a license shall remain effective pending the results of the new examination unless otherwise subject to revocation or suspension.

1. A licensee or applicant for licensure may appeal the decision of the Commissioner within 10 days of receipt of the order to retake the examination by filing with the Commissioner a written statement and supporting documentation, if any, disputing with specificity the allegations in the order. In appropriate circumstances, the Commissioner, or his or her designee, may provide the licensee or applicant for licensure with [the] opportunity to present evidence orally.

2. After review of the record, the Commissioner shall either modify or rescind the order or require the licensee or applicant for licensure to retake the examination within a prescribed period of time.

i. –ii (No change.)

[(g) Resident individuals registered by any insurance company to do business as a limited insurance representative dealing with bail bonds or mortgage guarantee insurance shall have taken and passed an examination given by the company thereby demonstrating an appropriate level of competency as a limited insurance representative with respect to these lines of insurance. The insurance company registering such persons shall confirm that this requirement has been met, and the limited insurance representative shall maintain this requirement at his or her place of business.]

11:17-[3.4]3.6 Continuing education

(a) No resident individual insurance producer licensed with life, accident and health or sickness, property, casualty, surplus lines, title, variable life and variable annuity or personal lines authority shall be renewed [with an effective date of on or after May 1, 1995] unless the renewal applicant demonstrates that he or she has completed 48 [continuing education] credit[s] hours of approved continuing education courses during the previous four years[.], 24 of which shall be in approved courses in the authorities for which the producer is licensed and six of which shall be in approved courses related to insurance fraud, professional ethics or any other subject matter required by the Commissioner for the protection of consumers. [Insurance related computer courses must be limited to one such course per four-year licensing period. Producers taking prelicensing insurance courses for the purpose of adding an authority shall not be granted continuing education credits for completing such courses. Producers satisfying credit requirements in a state other than New Jersey may apply for waiver of the 48 credit requirement in New Jersey. The Commissioner shall grant a waiver if the credit requirements of the sister state are substantially similar to those of New Jersey.]

(b) For a contact course, a credit hour shall provide no less than 50 minutes of instruction. Breaks, announcements and time not spent in instruction shall not be included in calculating credit hours requested. For self-study courses, credit hours include time for reading and study, which the Department has approved as reasonable to successfully pass the final examination. Time taking the examination is not counted towards approved credit hours. Each continuing education course submitted for approval shall be in whole credit hours and shall contain at least two hours of instruction or time spent for reading and study. No continuing education course will be approved for more than 24 credit hours, regardless of the actual number of hours of instruction, reading or study.

(c) Self-study courses shall be considered for approval if the program of instruction culminates in a monitored examination of the subject presented. A monitored examination is not required for an interactive, online program that the Department determines has sufficient internal testing to validate the student’s full comprehension of the material presented.

(d) Producers satisfying credit requirements in a state other than New Jersey will be considered to have satisfied New Jersey’s continuing education requirements if the home state recognizes the satisfaction of its continuing education requirements imposed upon New Jersey producers on the same basis.

(e) Producers who fulfill the continuing education requirements for a professional insurance designation approved by the Department shall be awarded 12 credit hours for each full year of the four years preceding renewal for which these requirements were fulfilled. Application to obtain such approval shall be made on a form approved by the Department and accompanied by an official document or transcript from the organization awarding such designation.

[(b)](f) Approved insurance education [programs] providers shall submit courses [to] for approval by the Department [for certification of continuing education credits,] at least 30 days prior to the date the course is to begin [such courses as they may develop]. This 30-day requirement may be waived upon a showing by the program of unusual circumstances that require immediate action:

1. A request for continuing education credit certification shall be made on a form prescribed by the Department which shall [request] contain the following information:

i. The name, [and] code number and contact information of the approved insurance education [program] provider submitting the course;

ii. [A brief description of the topics or subject matter to be covered] An outline of the course including the time allowed for each topic;

iii. A copy of the table of contents for any textbooks used;

iv. For self-study courses that are not interactive, online courses;

(1) A copy of a sample competency examination, including answers;

(2) The amount of time allowed for the exam;

(3) A statement of how the integrity of the exam will be maintained; and

(4) A statement of how the exam will be monitored to assure the enrolled licensee takes the exam;

v. For interactive, online courses:

(1) Online access with instructions for the Department to review the course;

(2) Evidence of the internal testing included with the course; and

(3) Details of how access shall be controlled to assure the enrolled licensee completes the course;

[iii.] vi. The number of [actual classroom] hours [required to complete] proposed for the course;

vii. The name and qualifications of the instructor; and

[iv] viii. Such other information as may, in the opinion of the Department, be necessary to evaluate the course for certification of continuing education credits[; and].

[v. Whether the course will be offered independent of other approved courses or as part of a cluster of courses given within a single day or on succeeding days.]

2. [Submissions for certification of a series of courses in accordance with (c)4 below may substitute the education requirements to obtain and maintain the designation together with samples of courses, for the requirements of (b)1i, ii, iii and iv above.] If a continuing education course has been approved for use in the resident state of an insurance education provider and the resident state accepts courses approved by New Jersey for its resident insuranceeducation provider, the Department shall approve such courses unless the content is prohibited under (f)4 below. The insurance education provider shall submit evidence of such approval with the information required in (f)1 above.

[3. Courses which have been submitted and evaluated independently may be offered as a cluster of courses only if the subject matter of the courses is distinct and not overlapping. When such courses are being offered consecutively, notice of such offering shall be made to the Supervisor of Insurance Education for reevaluation at least 30 days prior to its anticipated administration.]

[4.]3.. The [Supervisor of Insurance Education] Department shall [certify] notify the insurance education provider of approval or disapproval of courses submitted for continuing education credits [as provided above, or disapprove the course for continuing education credits, and notify the program director of the decision]. In the event of disagreement with the decision, the [program] insurance education director may, within 30 days of receipt of notice from the Department, supply the [Supervisor of Insurance Education] Department with a written request for reevaluation supported by reasons for disagreement with the decision and such additional information as may be appropriate. The [Supervisor of Insurance Education] Department shall promptly reevaluate the course and advise the [program] insurance education director of the result of the [Supervisor’s] reevaluation.

[5. No credit shall be allowed] 4. Approval shall be considered for courses that include information on types of insurance products, insurance practices, ethics, insurance fraud, insurance taxation, relevant state or national laws, claims or underwriting practices or procedures or other topics directly related to the business of insurance. Approval shall not be granted for courses dealing in whole or in part with [salesmanship] sales training, [or personal] motivation or personal enrichment, or computer or business skills not specifically related to insurance , nor shall primarily social activities be considered [to compute] in computing course length.

[(c) Continuing education credits shall be certified in accordance with the following:

1. Each completed part of the Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC) and Chartered Property/Casualty Underwriter (CPCU) designations shall be worth 12 continuing education credits.

2. Each college level insurance course completed and passed at an accredited college, university or entity other than a college which has been evaluated and approved for college credit by the American Council on Education shall be worth four continuing education credits for each semester hour of college credit.

3. The number of continuing education credits certified shall be based upon the length of the course, course content and the level of difficulty. Each continuing education course submitted by an approved insurance education program may, depending upon the evaluation of the course content and whether the courses are offered independently or clustered with other courses, be worth the total number of credits computed in accordance with the following schedule.

i. One credit for a half day three-hour course;

ii. Two credits for a full day six-hour course;

iii. Three credits for a two day 12-hour course;

iv. Four credits for a course more than two days comprising 13 hours or

more;

v. Two additional credits for a basic level or introductory course; and

vi. Four additional credits for an advanced course.

4. Each series of courses submitted as a single unit by an approved education program, and which are administered in connection with the issuance or annual maintenance of a professional designation approved in at least one-third of the states requiring continuing education as a condition of licensure, shall be worth up to 12 continuing education credits based upon the length of the courses and the level of difficulty of the subject matter. For example, annual maintenance of the certified insurance counselor designation shall, upon approval of the program, satisfy the continuing education requirements of this paragraph.

5. Courses offered to attain a professional designation or license will be worth no more than eight credits.

6. No approval will be granted for home study or correspondence courses except as provided in (g) below.]

[(d)](g) The insurance education director [of] or authorized personnel for an approved insurance education [program] provider shall report the names and producer license reference number of those persons completing each continuing education course within 30 days of course completion or certification of continuing education credits, whichever is later. The instructor teaching the course may be deemed to have completed it for the purpose of securing continuing education credit. Instructors may only receive credit once for teaching any one approved course. The report shall be made to the Department, or its designee, on a form prescribed by the Department, and shall include the following information:

1. The [program] insurance education provider name and school code;

2. The name and code number of the continuing education course and date completed; and

3. The number of continuing education credits as certified by the Department.

[(e)] (h) Producers who request continuing education credit [pursuant to (c)1 or 2 above] for successful completion of an insurance course from an accredited college or university or for successful completion of a course of study and examination for a course leading to attainment of an approved professional insurance designation shall submit to the Department, on a form prescribed by the Department, the request together with a transcript or other documentation certifying completion of the course and [college] credits awarded.

[(f) Attorneys who are licensed for title insurance only shall submit to the Department, at least three months but not more than one year prior to renewal, a certificate of good standing issued by the Clerk of the Supreme Court of New Jersey accompanied by a completed form prescribed by the Department, which provides the attorney's name, producer reference number, date of birth, social security number and license expiration date.

(g) The Commissioner may grant credit for alternative courses, such as home study for handicapped or disabled persons, as defined by "The Americans with Disabilities Act," when classroom attendance is an impediment due to the person's disability. Evidence of such hardship in the form of a certification by a physician shall be submitted with any such request. The request shall describe how the person's disability is an impediment to classroom attendance. Individuals with disabilities shall contact the Supervisor of Insurance Education prior to alternative course enrollment at the Department of Banking and Insurance, PO Box 329, Trenton, New Jersey 08625-0329.]

[(h)](i) (No change in text.)

[(i)](j) If the accounting required by [(h)](i) above is considered by the resident producer to be inaccurate, he or she shall promptly request the [director] insurance education provider of the approved education program to file with the Department, or its designee, an appropriate [supplemental] corrected report.

[(j)](k) At least four months prior to the renewal of license, the Department, or its designee, shall issue to individual resident producers a statement indicating, based on current records, whether the continuing education requirement for renewal has been met. In the event the producer asserts that credit has not been recorded for a certified continuing education course, it shall be the sole responsibility of the producer to request the [director] insurance education provider of the approved program where the course was taken to file with the Department, or its designee, a supplemental report of continuing education credits.

11:17-[3.5]3.7 Recognized professional designations

(a) The Department recognizes the following professional designations as acceptable substitutes for the producer education and examination requirements except continuing education:

1. For life, [and]accident and health or sickness, variable life and variable annuity authorities, a Chartered Life Underwriter (CLU) or a Chartered Financial Consultant (ChFC) designation conferred by the American College of Life Underwriters;

2. For property[/], casualty, [health] personal lines, bail bonds and surplus lines authorities, a Chartered Property/Casualty Underwriter (CPCU) designation conferred by The American Institute of Property and Liability Underwriters.

(b) (No change.)

[SUBCHAPTER 5. TRANSITION RULES

11:17-5.1 Prelicensing education and examination

  1. Beginning on the effective date of the Act, no license shall be issued to any individual who has last passed the State licensing examination more than one year before the date of application. For purposes of this subsection, the date of application shall be deemed to be the date the application was received by the Department.
  2. Beginning on the effective date of the Act, no license shall be issued to any individual who has last completed the course of prelicensing education more than two years before the date of application.
  3. For purposes of this section, the date of application shall be deemed the date the application was received by the Department.

11:17-5.2 Professional qualifications

No continuing education credits shall be accepted for courses completed prior to May 1, 1991.

11:17-5.3 (Reserved)]

SUBCHAPTER 6. MANAGING GENERAL AGENTS

11:17-6.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

. . .

"Nonresident" (of New Jersey) means a person who [neither resides in New Jersey nor maintains an office] does not maintain his or her principal place of residence or principal place of insurance business in New Jersey [where insurance business is transacted], and for whom a state other than New Jersey has been designated the home state for the purpose of licensure.

"Producer" means a person licensed in accordance with N.J.S.A. 17:22A-[1 et seq.] 26 et seq.

"Resident" (of New Jersey) means a person who [either resides in New Jersey or maintains an office] maintains his or her principal place of residence or principal place of insurance business in New Jersey [where insurance business is transacted] and for whom New Jersey has been designated the home state for the purpose of licensure.

 

11:17-6.7 Record maintenance

(a) – (c) (No change.)

(d) The books and records required by this subchapter to be maintained may be maintained electronically if the following conditions are met:

1. – 2. (No change.)

3. That electronic back ups are produced daily and, at least every 30 days, the records maintained electronically are reproduced [ in hardcopy and maintained] and stored off-site. [on file for a period of five years after the termination of coverage for an insured, or, alternatively, are maintained for said period of five years on an electronic system that is, in the opinion of the Commissioner, unalterable. Such a determination of unalterability shall be made by the Commissioner, in writing, before any electronic system may be used for storage beyond 30 days].

CHAPTER 17A.

INSURANCE PRODUCER [AND LIMITED INSURANCE REPRESENTATIVE] STANDARDS OF CONDUCT: MARKETING

SUBCHAPTER 1. ACTIVITIES FOR WHICH A PERSON MUST BE LICENSED AS AN INSURANCE PRODUCER [OR REGISTERED AS A LIMITED INSURANCE REPRESENTATIVE]

11:17A-1.1 Purpose; scope

(a) The purpose of this subchapter is to implement the provisions of N.J.S.A. 17:22A-[1 et seq.] 26 et seq. generally, and 17:22A-[3] 29 in particular, by identifying the insurance-related activities that require licensure as an insurance producer [or registration as a limited insurance representative].

(b) (No change.)

11:17A-1.2 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

. . .

"Declination,"[,] "denied" or "denial" means:

1. Refusal by an insurance [agent] producer to submit an application on behalf of an applicant to any of the insurers represented by the [agent] producer;

2. – 3. (No change.)

4. The refusal by an insurer or [agent] producer to provide, upon the request of an applicant, an application form or other means of making an application or request for automobile insurance coverage;

5.-7. (No change.)

. . .

["Effectuate" or "effectuation" means the act of binding or making operable and effective an insurance contract or any change thereto, including all binders and endorsements, but does not include clerical duties carried out under the supervision and control of an insurer or licensed insurance producer, or procedures relating to loss control, inspection, or the processing, adjusting, investigating or settling of a claim on an existing insurance contract.]

. . .

"Insurance producer" means [any person engaged in the business of an insurance agent, insurance broker or insurance consultant as defined in N.J.S.A. 17:22A-2] any person required to be licensed under the laws of this State to sell, solicit or negotiate insurance.

. . .

["Limited insurance representative" means a person who is authorized to solicit, negotiate or effect contracts for a particular line of insurance as an agent for an insurance company authorized to write that line in this State which by the nature of the line of business and the manner by which it is marketed to the public does not require the professional competency demanded for an insurance producer license.]

"Negotiate" or "negotiation" means the act of conferring directly with, or offering advice [to, a prospective purchaser of a contract of insurance concerning any of the substantive benefits, terms of, proposed changes to, or the premium to be charged for, the contract,] directly to a purchaser or prospective purchaser of a particular contract or policy of insurance concerning any of the substantive benefits, terms or conditions of the contract or policy, provided the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers, but does not include clerical duties carried out under the supervision and control of an insurer or licensed insurance producer, or procedures relating to loss control, inspection, or the processing, adjusting, investigating or settling of a claim on an existing insurance contract.

. . .

"Solicit" or "solicitation" means [any activities which are designed to result in the purchase of a contract of insurance, or a change to an existing contract of insurance] attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular insurer, but does not include clerical duties carried out under the supervision and control of an insurer or licensed insurance producer, or procedures relating to loss control, inspection, or the processing, adjusting, investigating or settling of a claim on an existing insurance contract.

. . .

11:17A-1.3 Who must be licensed; exceptions

(a) [No] Except as provided in N.J.A.C. 11:17B-2.1(b) or (e) no person shall act as an insurance producer or maintain or operate any office in this State for the transaction of the business of an insurance producer, or receive any commission, brokerage fee, compensation or other consideration for services rendered as an insurance producer, without first obtaining a license from the Commissioner granting authority for the kind of insurance transacted.

(b) Unless otherwise specifically provided by N.J.S.A. 17:22A-[1 et seq.] 26 et seq., any person who solicits, negotiates or [effects] sells contracts of insurance in New Jersey shall be considered to be transacting the business of insurance in New Jersey so as to require licensure as an insurance producer.

(c) Engaging in a single act or transaction of the business of an insurance producer, or holding oneself out to the public or an insurance producer as being so engaged, shall be sufficient proof of engaging in the business of an insurance producer as to require licensure pursuant to N.J.S.A. 17:22A-[1 et seq.] 26 et seq.

(d) (No change.)

(e) Officers or employees of insurers authorized to do business in this State and officers or employees of licensed insurance producers, who solicit, negotiate or [effectuate] sell insurance by communicating directly with the public whether in person or by mail, fax, computer or telephone, in the name of and on behalf of the insurer or the licensed insurance producer, for compensation of any type, shall be licensed as an insurance producer[, or registered as a limited insurance representative, as appropriate]. The requirements of this subsection shall not apply to officers or employees whose participation in the solicitation, negotiation or [effectuation] sale of insurance contracts is [incidental to their employment duties and whose compensation is not directly related to sales] in a manner not requiring a license as an insurance producer as described in N.J.S.A. 17:22A-30b(5).

11:17A-1.4 [Solicitation, negotiation, effectuation of] Selling, soliciting or negotiating an insurance contract

(a) No person shall solicit, negotiate or [effect] sell an insurance contract in New Jersey unless he or she is a licensed insurance producer [or a registered limited insurance representative].

(b) [Solicitation, negotiation and effectuation of] Selling, soliciting or negotiating an insurance contract includes, but is not limited to, the following activities:

1. – 8. (No change.)

9. Initiating an inquiry as to the terms of existing coverage, except [as described at N.J.A.C. 11:17A-1.5(a)5] exclusively in the course of clerical duties;

10. – 14. (No change.)

(c) No insurance producer [or limited insurance representative] shall negotiate or solicit in New Jersey any insurance contract which has not first been filed in New Jersey where such contract is required to be filed.

11:17A-1.6 Duty to have insurance producer at each place of business

(a) (No change.)

(b) Any insurance producer who has established one or more places of business for the purpose of transacting the business of insurance shall assign at least one separate insurance producer to each location and shall register as a branch office in accordance with N.J.A.C. 11:17-2.8. Any insurance business conducted at a branch office shall be the responsibility of both the licensed producer assigned to that office and the insurance producer that registered the branch office in accordance with [N.J.S.A. 17:22A-8] N.J.A.C. 11:17-2.8.

(c) Licensed partners, officers and directors, and all owners with an ownership interest [of five percent or more] in the [organization shall] business entity may be held responsible for all insurance related conduct of the [organization] business entity licensee, any of its branch offices, its other licensed officers or partners, and its employees.

11:17A-1.8 Penalties

(a) The Commissioner shall impose penalties for violations of this subchapter in accordance with the provisions of N.J.S.A. 17:22A-[1et seq.] 26 et seq. and any other applicable law.

(b) (No change.)

SUBCHAPTER 2. UNFAIR TRADE PRACTICES

11:17A-2.1 Purpose; scope

(a) This subchapter implements the provisions of N.J.S.A. 17:29A-15, 17:29B-4 and 17B:30-13 and 15 by prohibiting insurance producers [and limited insurance representatives] from engaging in certain practices in connection with the business of insurance.

(b) This subchapter applies to all insurance producers [or limited insurance representatives].

11:17A-2.5 Tie-ins; coercion

(a) No financial institution licensed as an insurance producer [or registered as a limited insurance representative] shall, as a condition precedent, concurrent or subsequent to the lending of money or the extension of credit, or the renewal of the loan or extension of credit, require that the borrower acquire, finance or negotiate a policy or contract of insurance through any particular insurer [,] or insurance producer, [or limited insurance representative,] or cancel insurance with another insurance producer[, limited insurance representative] or insurer.

1. A financial institution licensed as an insurance producer [or registered as a limited insurance representative] shall accept the insurance policy provided by a borrower unless a reasonable basis exists to disapprove the insurance policy. For the purpose of this paragraph, disapproval shall be deemed unreasonable if it is not based solely on reasonable standards as determined by the Commissioner, uniformly applied, relating to the extent of coverage required and the financial soundness and services of an insurer. Such standards shall not discriminate against any particular type of insurer, nor shall such standards call for the disapproval of an insurance policy because such policy contains coverage in addition to that required. If a financial institution rejects the insurance furnished by the borrower, it shall provide the borrower with a clear and complete written statement of reasons for the rejection.

2. Pursuant to and consistent with (a) and (a)1 above, all financial institutions licensed as insurance producers [or registered as limited insurance representatives] shall issue a written disclosure to prospective insureds which shall inform them of their right to acquire insurance coverage from and through sources independent of the financial institution and its subsidiaries when such insurance coverage is required to secure a loan, credit or mortgage, or any renewal thereof. The written disclosure required by this paragraph shall be worded as follows, and printed in a type size not less than 10 point type, and shall be maintained by the insurance producer [or limited insurance representative] for at least five years. A copy of this disclosure shall be given to the borrower at the time the issue of insurance first arises.

DISCLOSURE NOTICE

The Insurance Laws of New Jersey provide that the lender may not require the borrower to take insurance through any particular insurer [,] or insurance producer (e.g., agent or broker) [or limited insurance representative].

The borrower has the right to have the insurance placed with or through an insurance producer [, limited insurance representative] and insurer of his or her choice, provided that they meet the reasonable requirements of the lender. Subject to the rules adopted by the Commissioner, the lender has the right to designate reasonable requirements as to the insurer [,] and the insurance producer [and limited insurance representative,] and as to the adequacy of the coverage. The lender cannot require the borrower to cancel insurance with another insurance producer [, limited insurance representative] and insurer unless the continuation of such coverage and relationship would be unreasonable within the meaning of this notice and N.J.A.C. 11:17A-2.5.

I have read the foregoing statement and understand my rights and privileges and those of the lender relative to the placing of insurance.

I have selected _______ (insert name) as the Insurance Company/Agency/Insurance Producer [or Limited Insurance Representative] to provide the required _______ (insert type) insurance.

_________________________________________

Name of Borrower

_________________________________________

Name of Borrower

_________________________________________

Date

(b) No financial institution licensed as an insurance producer [or registered as a limited insurance representative] shall require, directly or indirectly, that any borrower, mortgagor, purchaser, insurer or other insurance producer [or limited insurance representative] pay a separate charge in connection with the handling of any insurance policy required as security for a loan or the extension of credit, or pay a separate charge to substitute the insurance policy of one insurer for that of another.

(c) No financial institution licensed as an insurance producer [or registered as a limited insurance representative] shall require any procedure or condition of an insurer [,] or insurance producer [or limited insurance representative] not customarily required of insurers or insurance producer [or limited insurance representative] that are affiliated or connected with the financial institution.

(d) No insurance producer [or limited insurance representative] shall engage in any conduct which reasonably could result in or results in:

1. Leading a person to believe that his or her credit-worthiness, or that the extension of credit, is conditioned upon the purchase of insurance through a particular insurance producer [, limited insurance representative] or insurer; or

2. An unlicensed financial institution either soliciting, negotiating, or [effecting] selling insurance business acting on behalf of the insurance producer [, or limited insurance representative].

(e) No insurance producer [or limited insurance representative] shall require an applicant or policyholder, or a member of the applicant's or policyholder's family, to purchase from him or her a collateral policy of insurance as a condition precedent to securing or renewing a policy of insurance. Nothing in this subsection shall prevent an insurance producer [or limited insurance representative] from requiring the purchase of a collateral insurance policy from a source other than the insurance producer [or limited insurance representative], including a person or entity with whom he or she is associated, if such a condition precedent is based upon appropriate underwriting guidelines of the insurer.

(f) No insurance producer [or limited insurance representative] engaged in a business other than the business of insurance shall engage in any conduct which reasonably could result in or which results in coercing an applicant or policyholder into purchasing insurance as a condition precedent, concurrent or subsequent to securing any other good or service.

(g) No insurance producer [or limited insurance representative] shall restrict the sale or issuance of an insurance policy, or participate in the restriction of the sale or issuance of an insurance policy, to persons who enter into, or agree to enter into, premium financing agreements with any particular premium finance service company.

(h) (No change.)

11:17A-2.7 Unfair discrimination

No insurance producer [or limited insurance representative] shall refuse to take an application from a policyholder or prospective policyholder for any reason based in whole or in part upon the race, color, creed, religion, sex, marital status or physical impairments of an applicant or policyholder, or for any arbitrary, capricious, or unfairly discriminatory reason, or for any reason which is contrary to Federal or State law. Nothing in this section shall prohibit an insurance producer from refusing to submit an application to an insurer where there exists a contractual arrangement with an insurer to perform underwriting pursuant to established and legally permissible written underwriting guidelines and the refusal is based on these guidelines.

11:17A-2.8 "Twisting" prohibited

No insurance producer [or limited insurance representative] shall make any misleading representations or incomplete or fraudulent comparison of any insurance policies or annuity contracts or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, or convert any insurance policy or annuity contract, or to take out a policy of insurance or annuity contract with another insurer.

11:17A-2.9 Notice to purchasers of self-storage personal property insurance

(a) [Limited insurance representatives] Insurance producers that market self-storage personal property insurance as defined in N.J.A.C. 11:17-1.2 shall provide potential purchasers with written notice:

1. (No change.)

2. That the coverage may be cancelled within 30 days and a full refund made to the purchaser upon written notice to [either the limited insurance representative]the producer who sold the self-storage insurance contract or the insurer.

11:17A-2.10 Penalty

(a) The Commissioner shall impose penalties for violations of this subchapter in accordance with the provisions of N.J.S.A. 17B:30-1 et seq., 17:29B-1 et seq. and [N.J.S.A.] 17:22A-[1 et seq.] 26 et seq.

(b) (No change.)

SUBCHAPTER 3. INCORPORATION OF OTHER PROVISIONS OF THE NEW JERSEY ADMINISTRATIVE CODE APPLICABLE TO INSURANCE PRODUCERS [AND LIMITED INSURANCE REPRESENTATIVES]

11:17A-3.1 Incorporation of other rules

(a) The following rules are herein incorporated by reference to the extent that they regulate the conduct of insurance producers [and limited insurance representatives]:

1. –6. (No change.)

SUBCHAPTER 4. MISCELLANEOUS MARKETING AND RELATED REQUIREMENTS

11:17A-4.4 Special underwriting associations

(a) Every insurance producer who solicits, negotiates or [effects] sells contracts of insurance for the placement of risks in any residual market mechanism created by or pursuant to any statute shall conduct his or her business in accordance with the applicable plan of operation.

(b) For the purpose of this section, "solicit,"[,] "negotiate" or ["effect"] "sell" shall have the same meanings as provided by N.J.A.C. 11:17A-1.2.

11:17A-4.5 Disclosure of personal or privileged information

No insurance producer [or limited insurance representative] shall disclose personal or privileged information about an individual collected or received in connection with an insurance transaction except in conformity with N.J.S.A. 17:23A-1 et seq.

11:17A-4.6 Delivery of policies

Policies, certificates, or other evidence of insurance which are received by an insurance producer [or limited insurance representative] from an insurer for delivery to an insured shall be delivered or mailed to the insured by the insurance producer [or limited insurance representative] within 10 calendar days of their receipt by the insurance producer [or limited insurance representative], unless the insured agrees in writing that the insurance producer [or limited insurance representative] may retain them for a longer period of time. With respect to title insurance only, in all cases where the insurance producer prepares the policies of insurance, those policies shall be delivered to the insured or to the applicant within 30 days following the receipt by the insurance producer of the necessary proofs showing that all requirements or exceptions to title as set forth in the title commitment, and which customarily do not appear in the policy, have been satisfactorily disposed of.

11:17A-4.7 Receipts for materials

An insurance producer [or limited insurance representative] who takes possession of an insured's or a potential insured's insurance policies, certificates, or other documents pertaining to existing or pending insurance, shall provide to the insured a written receipt for those materials at the time the insurance producer [or limited insurance representative] receives the materials. The receipt shall contain an itemized list of the materials received, the insurance producer's [or limited insurance representative's] name and the address and telephone number of the agency or other place where the insurance producer [or limited insurance representative] can be contacted. The receipt shall be dated and signed by the insurance producer [or limited insurance representative] and the insured.

11:17A-4.8 Replies to inquiries by Commissioner

An insurance producer [or limited insurance representative] shall reply, in writing, to any inquiry of the Department relative to the business of insurance within the time requested in said inquiry, or no later than 15 calendar days from the date the inquiry was made or mailed in cases where no response time is given.

11:17A-4.9 Reporting of claims and estimated losses by [property-casualty agent] producers

Claims and estimated losses thereon shall be reported to the insurer or designated claims representative by an insurance producer [acting as a property-casualty insurance agent] no later than five business days following his or her receipt of notice of claim, unless the insurance producer has contractual authority from the insurer to settle the claim.

11:17A-4.11 Penalties

(a) The Commissioner shall impose penalties for violations of this subchapter in accordance with the provisions of N.J.S.A. 17:22A- [1 et seq.]26 et seq. and any other applicable law.

(b) (No change.)

CHAPTER 17B.

INSURANCE PRODUCER [AND LIMITED INSURANCE REPRESENTATIVE] STANDARDS OF CONDUCT: COMMISSIONS AND FEES

SUBCHAPTER 1. GENERAL REQUIREMENTS

11:17B-1.1 Scope

This chapter applies to all insurance producers [and limited insurance representatives] selling commercial and/or personal lines insurance, including private passenger automobile and any other policies written through residual markets pursuant to N.J.S.A. 17:29D-1, life, health, title, property, or casualty insurance, and limited line authorities except as may be otherwise provided in this chapter.

11:17B-1.2 Purpose

(a) The purposes of this chapter are:

1. – 4. (No change.)

5. To prohibit certain abuses which could arise out of the sale of insurance by an insurance producer [or limited insurance representative] acting as a motor club representative.

11:17B-1.3 Definitions

The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise.

. . .

"Commission" means any payment from an insurer that is contingent upon the sale of a policy, contract, or certificate of insurance, or is based on the total premiums produced by the producer or written by the insurer. "Commission" shall not be deemed to include any discount charge or fee charged by a credit card company, bank, or similar entity pursuant to a written agreement between such entity or entities and an insurer[,] or insurance producer [or limited insurance representative], by which the insurer[,] or insurance producer [or limited insurance representative] accepts payment for insurance premiums by credit card, debit card, or direct account deductions in accordance with N.J.A.C. 11:1-24.

. . .

"Consultant fee" means any charge to a client for services rendered as an insurance consultant as defined at N.J.S.A. 17:22A-[2]28.

. . .

["Insurance agent" means an insurance producer acting as an insurance agent as defined at N.J.S.A. 17:22A-2.

"Insurance broker" means an insurance producer acting as an insurance broker as defined at N.J.S.A. 17:22A-2.]

"Insurance consultant" means an insurance producer acting as an insurance consultant as defined at N.J.S.A. 17:22A-[2]28.

"Insurance producer" means [any] a person [engaged in the business of an insurance agent, insurance broker, or insurance consultant as defined at N.J.S.A. 17:22A-2] required to be licensed under the laws of this State to sell, solicit or negotiate insurance.

["Limited insurance representative" means a person acting as a limited insurance representative as defined at N.J.S.A. 17:22A-2.]

. . .

11:17B-1.4 Penalties

(a) The Commissioner shall impose penalties for violations of this chapter in accordance with the provisions of N.J.S.A. 17:22A-[1et seq.]26 et seq. and any other applicable law.

(b) (No change.)

SUBCHAPTER 2. COMMISSIONS

11:17B-2.1 Commissions

(a) No insurance producer [or limited insurance representative] shall pay any commission to any unlicensed [or unregistered] individual or organization for services rendered in this State as an insurance producer [or limited insurance representative] except for services rendered while licensed [or registered].

(b) Payment or receipt of renewal or other deferred commissions to or by any individual or organization who has ceased to hold a license [or registration] under N.J.S.A. 17:22A-[1 et seq.] 26 et seq. shall be permitted only for business produced by that individual or organization while an insurance producer [or limited insurance representative].

(c) No commission or renewal, deferred or otherwise, or any other compensation shall be paid to any individual or organization whose license [or registration] has been revoked or suspended, except for services rendered while licensed [or registered]. Nothing in this subsection shall prohibit a person from selling its book of business for compensation contingent upon the persistency of the business. Nothing in this subsection shall prohibit any person from asserting a right of setoff against an insurance producer [or limited insurance representative] whose license [or registration] is revoked.

(d) No insurance producer [or limited insurance representative] shall pay or return, or offer to pay or return to any policyholder, certificateholder, or prospective policyholder or certificateholder, all or any portion of the commission received or which will be received in connection with the sale of insurance.

(e) An insurer or insurance producer may pay or assign commissions, service or brokerage fees or other valuable consideration to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this State, unless the payment would violate the laws of this State.

SUBCHAPTER 3. FEES

11:17B-3.1 Fees

(a) (No change.)

(b) Insurance producers acting as agents for an insurance company [, and limited insurance representatives,] shall not charge or receive any fee on a policy to or from a policyholder or insured for services rendered as an insurance producer [or as a limited insurance representative].

(c) –(h) (No change.)

11:17B-3.2 Service fees

(a) – (b) (No change.)

(c) Bail bond agencies shall not charge the following fees:

1. Fugitive fees (fees charged for the apprehension of a defendant who fails to appear for a court date and administrative fees associated with creating a fugitive file);

2. Banking fees (fees charged for returned checks/stop payments) or;

3. Service-related fees, such as travel fees and after-hour service fees.

 

CHAPTER 17C.

INSURANCE PRODUCER STANDARDS OF CONDUCT: MANAGEMENT OF FUNDS

SUBCHAPTER 1. GENERAL REQUIREMENTS

11:17C-1.2 Definitions

The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise.

. . .

"Insurance producer" means [any person engaged in the business of an insurance agent, insurance broker or insurance consultant as defined at N.J.S.A. 17:22A-2] a person required to be licensed under the laws of the State to sell, solicit or negotiate insurance.

. . .

11:17C-1.3 Penalties

(a) The Commissioner shall impose penalties for violations of this chapter in accordance with the provisions of N.J.S.A. 17:22A-[1 et seq.]26 et seq. and any other applicable law.

(b) (No change.)

SUBCHAPTER 2. RULES CONCERNING MANAGEMENT OF FUNDS

11:17C-2.6 Record maintenance and examination; electronic [record keeping] recordkeeping

(a) – (b) (No change.)

(c) The books and records required by this chapter to be maintained may be maintained electronically if the following conditions are met:

1. – 2. (No change.)

3. That electronic back ups are produced daily and, at least every 30 days, the records maintained electronically are reproduced [ in hardcopy and maintained] and stored off-site [on file for a period of five years after the termination of coverage for an insured, or, alternatively, are maintained for said period of five years on an electronic system that is, in the opinion of the Commissioner, unalterable. Such a determination of unalterability shall be made by the Commissioner, in writing, before any electronic system may be used for storage beyond 30 days].

CHAPTER 17D.

INSURANCE PRODUCER [AND LIMITED INSURANCE REPRESENTATIVE]

STANDARDS OF CONDUCT: ADMINISTRATIVE PROCEDURES AND PENALTIES

SUBCHAPTER 1. GENERAL REQUIREMENTS

11:17D-1.1 Purpose and scope

This chapter is promulgated to describe the procedures for imposing administrative penalties, including the method of determining monetary fines, for violations of the provisions of N.J.S.A. Titles 17 and 17B and any rules or orders issued by the Commissioner. The procedures and penalties described apply to all insurers, insurance producers[, limited insurance representatives] and other persons subject to the jurisdiction of the Commissioner.

11:17D-1.2 Definitions

The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise.

. . .

"Insurance producer" [is defined at N.J.S.A. 17:22A-2] means a person required to be licensed under the laws of this State to sell, solicit or negotiate insurance.

["Limited insurance representative" is defined at N.J.S.A. 17:22A-2m.]

. . .

SUBCHAPTER 2. ADMINISTRATIVE PROCEDURES AND PENALTIES

11:17D-2.1 Procedures for the imposition of administrative penalties

(a) – (c) (No change.)

(d) Rules concerning a request by an alleged violator for a hearing follow:

1. An alleged violator shall have 20 calendar days from service of the notice of intent to impose an administrative penalty within which to deliver a written request for a hearing to: [Administrator,] Manager of Enforcement, New Jersey Department of Banking and Insurance, PO Box [325] 329, Trenton, New Jersey 08625-[0325]0329 or faxed to the Department at (609) 292-5337.

2 – 4. (No change.)

5. Upon receipt of a properly completed request for a hearing, the [Administrator] Manager of Enforcement, or such other Department personnel as may be designated by the Commissioner, shall examine the request and may conduct or direct such further proceedings as may be appropriate, including, but not limited to, an interview with the alleged violator.

6. Not later than 60 days after the receipt of a properly completed request for a hearing, the [Administrator] Manager of Enforcement, or such other Department personnel as may be designated by the Commissioner, shall advise the alleged violator of the manner of disposition, which may be as follows:

i. –iii. (No change.)

11:17D-2.2 Monetary penalty for time related violations

(a) Time related violations shall include the following:

1. When an insurance producer [or limited insurance representative] fails to respond to an inquiry of the Department within the time requested or within 15 calendar days from the date of the inquiry if no response date is given; or

2. When an insurance producer [or limited insurance representative] fails to act within or continues his or her actions during the time established or proscribed by a statute, administrative rule or order.

(b) Each calendar day that an insurance producer [or limited insurance representative] is in violation of (a)1 or 2 above shall be considered a separate violation and the Commissioner may impose the maximum penalty provided therefor by law.

 

11:17D-2.5 Effect of suspension or revocation of producer license

(a) -(d) (No change.)

[(e) No person whose insurance producer license has been suspended or revoked shall become or act as a limited insurance representative during the period of suspension or revocation.]

[(f) In accordance with N.J.S.A. 17:22A-18, no] (e) No person whose license has been suspended or revoked may be a partner, officer, director or owner of a licensed [organization] buisness entity, or otherwise be employed in any capacity by an insurance producer.

11:17D-2.6 Reinstatement after suspension of insurance producer license

(a) - (b) (No change.)

(c) [The] If a resident producer, the applicant shall demonstrate compliance with the professional qualification provisions of N.J.S.A. 17:22A-[4(c) and N.J.S.A. 17:22A- 4(d)] 32a(3)and (5).

11:17D-2.7 Reinstatement after revocation of insurance producer license

(a) (No change.)

(b) The applicant shall demonstrate compliance with the professional qualification requirements of N.J.S.A. 17:22A-[4(c) and N.J.S.A. 17:22A- 4(d)] 32a(3)and (5).

(c) - (f) (No change.)

[11:17D-2.8 Suspension or revocation of registration as a limited insurance representative

(a) No person whose registration as a limited insurance representative has been suspended or revoked may be registered or conduct business as a limited insurance representative or as an insurance producer during the period of suspension or revocation.

(b) Imposition of a period of suspension or revocation shall terminate the existing relationship between the limited insurance representative and the insurance company that registered the representative.

(c) Upon completion of the period of suspension, or not less than five years in the case of revocation, the limited insurance representative may be re- registered by any company if all other conditions that may have been imposed by the order of suspension or revocation have been satisfied.]

11:17D-[2.9]2.8 (No change in text.)

 

CHAPTER 17E.

PERSONS EMPLOYED IN THE BUSINESS OF INSURANCE

SUBCHAPTER 1. CONVICTED PERSONS; WAIVERS

11:17E-1.2 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

. . .

"Business of insurance" means the writing of insurance or the reinsuring of risks by an insurer, including all acts necessary or incidental to such writing of insurance or reinsurance, and the activities of any person who acts as, or is, an officer, director, agent, or employee of an insurer, producer, [limited insurance representative,] or any other person authorized to act on behalf of such persons, including independent contractors of insurers.

. . .

["Limited insurance representative" means a person who is authorized to solicit, negotiate or effect contracts for a particular line of insurance as an agent for an insurance company authorized to write that line in this State which by the nature of the line of business and the manner by which it is marketed to the public does not require the professional competency demanded for an insurance producer license.]

. . .

11:17E-1.3 Prohibited activities; requirement to obtain waiver; determination of appropriate state

(a) (No change.)

(b) No insurer, producer, [limited insurance representative,] or any other person or independent contractor involved in the business of insurance in this State shall employ any prohibited person in any capacity without having first ensured that said prohibited person has obtained a waiver in accordance with 18 U.S.C. § 1033(e)(2) and this subchapter.

(c) (No change.)

(d) This State shall be deemed to be the appropriate state from which an applicant shall obtain a waiver where:

1. (No change.)

2. The applicant would be required to obtain a producer's license [or limited insurance representative registration] to do business in this State; or

3. The applicant is or will be an officer, director or employee of a domestic insurer, reinsurer, producer, third-party administrator or independent contractor performing substantial insurance related activities for a domestic insurer [,] or producer [or limited insurance representative].

 

11:17E-1.4 Applications, general provisions and maintenance of records

(a) (No change.)

(b) The following prohibited persons when seeking a waiver shall complete and file the "Comprehensive Form," set forth as Exhibit B in the Appendix to this subchapter:

1. Persons in possession of any license to engage in the business of insurance as a producer [or limited insurance representative] in this State;

2. – 3. (No change.)

(c) (No change.)

(d) No prohibited person shall be granted a license, or renewal of a license, as a producer [or as a limited insurance representative] unless such person has first been granted a waiver by the Commissioner or his or her designee pursuant to this chapter.

(e) - (j) (No change.)

 

 

inoregs/bgprod-f