New Jersey Insurance Laws, Rules and Regulations
Regulator and licensing
The New Jersey Department of Banking and Insurance (DOBI) regulates insurance. A person must hold a valid producer license for the lines sold and be appointed by the insurer before soliciting business for it. Prelicensing education and a state exam are required; temporary licenses are limited and short-term. Licensees must notify DOBI of address changes and of administrative actions or criminal matters, and must complete continuing education - 24 credit hours every two years, including ethics hours. A license may be refused, suspended, or revoked for violations.
Conduct rules
- Rebating - offering any part of the commission or anything of value not stated in the policy is prohibited, even if the client asks.
- Twisting - misrepresenting a policy to induce a replacement is prohibited, as are misrepresentation, false advertising, and unfair claim settlement practices.
- Commingling - premiums collected belong to the insurer or the insured, not the producer; fiduciary handling is required.
- Sharing commissions with unlicensed persons is prohibited.
- Replacement - when a sale replaces existing coverage, the producer must provide the required notice and comparison information.
- Suitability - annuity and life sales must be suitable for the buyer's needs, and illustrations must follow state standards.
Consumer protections
New Jersey requires a free-look period (commonly 10 days) on life insurance and annuities, and the New Jersey Life and Health Insurance Guaranty Association protects policyowners up to statutory limits (commonly $300,000 in death benefits, $100,000 in cash surrender value, and $300,000 in annuity and health benefits) if an insurer fails.
Traps
The license belongs to the individual, not the insurer; appointments are insurer-specific. Rebating is illegal even with the client's consent.
Rule of thumb
Ask three questions in every scenario: Is the producer licensed and appointed? Was anything of value offered off the policy? Was a replacement properly disclosed?