N.J. Stat. tit. 17, ch. 50

N.J. Stat. tit. 17, ch. 50
in effect

N.J. Stat. § 17:50-1 Exchange of contracts authorized; law exclusive

Individuals, partnerships, trustees and all corporations of this State, herein designated "subscribers," are hereby authorized to exchange reciprocal or interinsurance contracts with each other and with individuals, partnerships, trustees and corporations of other States, districts, provinces and countries, for any or all of the kinds of business for which a company may be formed or authorized to transact under the provisions of chapter seventeen of Title 17 of the Revised Statutes, except life insurance. Such contracts and the exchange thereof and such subscribers, their attorneys in fact and representatives shall be regulated by this act, and by no other statute of this State relating to insurance, except as herein otherwise provided. L.1945, c. 161, p. 554, s. 1.

N.J. Stat. § 17:50-2 Attorney in fact; exchange

Such contracts may be executed by an attorney in fact, herein designated "attorney," duly authorized and acting for such subscribers, and such attorney may be a corporation. The office or offices of such attorney, herein defined as an "exchange," shall be maintained at such place or places as may be designated by the subscribers in the power of attorney. L.1945, c. 161, p. 554, s. 2.

N.J. Stat. § 17:50-3 Declaration to be filed by attorney in fact

Such attorney shall file with the Commissioner of Banking and Insurance of this State a declaration, verified by the oath of such attorney, or when such attorney is a corporation, by the oath of its president or oaths of its treasurer and secretary setting forth: (a) The name of the attorney and the name or designation of the exchange under which such contracts are to be issued, which name or designation shall not be so similar to any other name or designation theretofore adopted by any attorney or by any insurance organization in this State so as to confuse or deceive; (b) The kind or kinds of insurance to be effected or exchanged; (c) A copy of the form of policy contract or agreement under or by which such insurance is to be effected or exchanged and forms of application therefor; (d) A certified copy of the power of attorney or other authorization of such attorney under or by which such attorney is to effect or exchange such insurance contracts; (e) The location of the office or offices from which such contracts or agreements are to be issued; (f) That except as to the kinds of insurance hereinafter specifically mentioned in this paragraph, applications have been made for indemnity upon at least two hundred separate risks aggregating not less than three million dollars ($3,000,000.00) represented by executed contracts or bona fide applications to become concurrently effective. In the case of employers' liability or workmen's compensation insurance, application shall have been made for indemnity upon at least one hundred separate risks covering a total annual payroll of not less than two and one-half million dollars ($2,500,000.00) as represented by executed contracts or bona fide applications to become concurrently effective. In the case of automobile insurance, applications shall have been made for indemnity upon at least one thousand motor vehicles or for insurance aggregating not less than one and one-half million dollars ($1,500,000.00) represented by executed contracts or bona fide applications to become concurrently effective on any or all classes of automobile insurance effected by said subscribers through said attorney; (g) That there shall be maintained at the exchange, available for the payment of losses, assets conforming to the requirements of section five hereof; (h) A financial statement under oath in form prescribed by the Commissioner of Banking and Insurance of this State; (i) An instrument authorizing service of process as provided for in this act, and (j) Where the principal office of the attorney is located in another State, a certificate from the proper official of the State where the principal office is maintained, that the subscribers and the attorney have complied with all provisions of law and are authorized in that State to transact the classes of business which are sought to be transacted in this State. L.1945, c. 161, p. 554, s. 3.

N.J. Stat. § 17:50-4 Instrument authorizing service of process on Commissioner of Banking and Insurance to be filed; service fee

Concurrently with the filing of the declaration provided for by the terms of section three hereof, the attorney shall file with the Commissioner of Banking and Insurance of this State an instrument in writing duly executed by him for said subscribers, conditioned that upon the issuance of certificate of authority provided for in section eleven hereof, action may be brought in any county in which the cause of action arises, or where the claimant resides, and service of process may be had upon the Commissioner of Banking and Insurance of this State in all actions or proceedings in this State arising out of any policies, contracts or agreements issued, which service shall be valid and binding upon all subscribers exchanging at any time reciprocal or interinsurance contracts through such attorney. Three copies of such process shall be served and the Commissioner of Banking and Insurance of this State shall file one copy in his office, forward one copy to said attorney, and return one copy with his admission of service. Where the principal office of the attorney is located in this State, service of process may also be had upon all subscribers by serving the attorney at said office. Service of process shall not be had upon subscribers or any of them in any action or proceeding in this State, except in the manner provided in this section, and any action or other proceeding may be begun and prosecuted or defended by them under the name or designation adopted by them. A service fee of two dollars ($2.00) shall accompany each such service and be paid to the Commissioner of Banking and Insurance. L.1945, c. 161, p. 556, s. 4. Amended by L.1953, c. 17, p. 297, s. 189.

N.J. Stat. § 17:50-5 Reinsurance reserve; surplus; claim or loss reserve

There shall be maintained at all times by the exchange, a reinsurance reserve in cash or securities authorized by the laws of the State in which the principal office of the attorney is located for the investment of similar funds of insurance companies doing the same kind of business, in an amount equal to fifty per centum (50%) of the net annual premium deposits collected and credited to the accounts of subscribers on policies having one year or less to run and pro rata on those for longer periods, or, in lieu thereof, one hundred per centum (100%) of the net unearned premium deposits collected and credited to the accounts of subscribers calculated separately for each policy in force as of any given date. In addition to the reserves provided for in this section, there shall also be maintained at all times at the exchange, as assets, a surplus in cash or such securities as aforesaid of not less than the amount of minimum capital and surplus required of a domestic stock insurance company to do the kind or kinds of insurance which it is authorized to write under section one of this act. There shall also be maintained at all times in the hands of the attorney, as a claim or loss reserve, in cash or such securities as aforesaid, assets sufficient to discharge all liabilities on all outstanding or accrued losses arising under policies issued, which are to be calculated in accordance with the laws of the State relating to similar reserves for companies insuring similar risks. If at any time the amounts on hand are less than the foregoing requirements, the subscribers, or their attorney for them, shall make up the deficiency. Net premium deposits, as used in this act, shall be construed to mean the premium deposits made by subscribers after deducting therefrom the amount paid as return premiums upon canceled contracts and reinsurance in companies or associations licensed to do business in this State. If it appears that the amount of funds required in this section has not been accumulated, then the subscribers, or the attorney for them, shall immediately advance such sums as are needed to comply with the provisions of this section, and the funds so advanced shall not be treated as a liability at the exchange, and shall not be withdrawn except with the approval of the chief insurance officer of the State wherein the exchange is domiciled, and such advances shall be repaid only out of the surplus, over and above the minimum required by this section. If the subscribers, or their attorney for them, shall fail to advance sums necessary for the maintenance of such minimum reserves and surplus, within thirty days after receipt of notice from the Commissioner of Banking and Insurance so to do, then said Commissioner of Banking and Insurance shall take charge of and liquidate such exchange in the manner provided by law in the case of other insurers; and in the case of an exchange of another State said Commissioner of Banking and Insurance may revoke its license to transact business in this State. L.1945, c. 161, p. 557, s. 5.

N.J. Stat. § 17:50-6 General deposit with Commissioner; filing certificate by foreign exchange

Each domestic exchange transacting business in this State shall keep and maintain with the Commissioner of Insurance a general deposit of cash or securities in the sum of not less than $100,000.00. In the case of foreign exchanges, a certificate of such deposit with the chief insurance officer of the State of domicile shall be filed with the Commissioner of Insurance of this State. L.1945, c.161, s.6; amended 1989,c.264,s.11.

N.J. Stat. § 17:50-7 Power of attorney; requisites; policies without contingent liability

The power of attorney under which any contracts of insurance are exchanged pursuant to this act shall provide for a cash premium deposit and a contingent several liability of the subscriber during each annual period of the term of each contract of insurance issued to him to be fixed in the power of attorney but in an amount not less than one or more than ten times the amount of the annual portion of such cash premium deposit stated in the contract; except that exchanges which have a surplus equal to seven hundred fifty thousand dollars ($750,000.00) or to the minimum capital and surplus required of a stock insurance company transacting the same kind or kinds of business, whichever is greater, may issue policies without contingent liability; provided, however, that any such exchange which shall have issued policies without contingent liability after the acquisition of such surplus may continue to do so only so long as it maintains a surplus in the above amount, and no such exchange shall issue any nonassessable policies, except during such time as it shall continue to maintain such surplus, or in lieu thereof any reciprocal exchange having a surplus equivalent to the capital and surplus required of a stock company authorized to do business in this State and transacting the same kind or kinds of insurance, may issue contracts without contingent liability, provided that the power of attorney contains a provision that the attorney shall accumulate a surplus out of the subscribers deposits for the protection of all subscribers and that no part of such surplus may be returned to any subscriber upon the withdrawal of such subscriber from the exchange. L.1945, c. 161, p. 558, s. 7. Amended by L.1948, c. 218, p. 1051, s. 1.

N.J. Stat. § 17:50-8 Report of financial condition to Commissioner; examination of records, affairs and financial condition

Such attorney shall, within the time limited for filing the annual statement by insurance companies, transacting the same kind of business, make a report, under oath, to the Commissioner of Banking and Insurance of this State for each calendar year in such form as he may prescribe, showing the financial condition of affairs at the office where such contracts are issued, and shall at any reasonable time furnish such additional information and reports as may be required by said commissioner; provided, however, that the attorney shall not be required to furnish the names and addresses of any subscribers, except in the case of unpaid final judgments. The records, affairs and financial condition of the exchange shall be subject to examination by the Commissioner of Banking and Insurance of this State, and such examination shall be at the expense of the office examined. Where the principal office of the attorney is located in another State, the Commissioner of Banking and Insurance of this State may, in lieu of the examination provided for in this section, accept a certified copy of the report of examination made by the insurance department of the State where the principal office is located, or by the insurance department of any other State. L.1945, c. 161, p. 559, s. 8.

N.J. Stat. § 17:50-9 Power to exchange contracts; insurance of trust property

(a) Any corporation now or hereafter organized under the laws of this State shall, in addition to the rights, powers and franchises specified in its articles of incorporation, have full power and authority as a subscriber to exchange insurance contracts of the kind and character herein mentioned. The right to exchange such contracts is hereby declared to be incidental to the purposes for which such corporations are organized, and as much granted as the rights and powers expressly conferred. (b) All persons, firms or corporations holding property in trust may insure the same at a reciprocal exchange, and, in their representative capacity, may assume the liabilities and be entitled to the rights of a subscriber, but such trustees by so doing, shall not personally or individually be liable under the power of attorney executed on behalf of the trust. L.1945, c. 161, p. 560, s. 9.

N.J. Stat. § 17:50-10 Misdemeanor; solicitation of powers of attorney and applications for insurance contract; injunction; appointment of receiver

Any attorney who shall exchange any contracts of insurance of the kind and character specified in this act, or any attorney or representative of such attorney who shall solicit or negotiate any applications for same, without the attorney first complying with the foregoing provisions, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be subjected to a fine of not less than $100.00 nor more than $1,000.00. The Superior Court shall have jurisdiction to restrain any violation of this act in an action brought for that purpose by the Commissioner of Banking and Insurance, and may appoint a receiver for such assets of any person, partnership, or association of persons as are actually employed in the conduct of business in violation of this act. For the purposes of organization, and upon issuance of permit by the Commissioner of Banking and Insurance of this State, and under such conditions as he may impose, powers of attorney and applications for such insurance contracts may be solicited without compliance with the provisions of this act, but no attorney or other person shall execute or issue any such contracts of insurance until all the provisions of this act shall have been complied with and certificate of authority issued by the Commissioner of Banking and Insurance. L.1945, c. 161, p. 560, s. 10. Amended by L.1959, c. 69, p. 185, s. 1.

N.J. Stat. § 17:50-11 Certificate of authority

Before issuing any such contracts in this State, the attorney shall procure from the Commissioner of Banking and Insurance of this State a certificate of authority showing that the exchange has complied with all the requirements of this act and is authorized to transact business in this State, which said certificate shall expire on the first day of May of the following year, and shall be renewed each year as of the first day of May thereof. Such certificate shall specify the name or designation under which such contracts of insurance are issued. The Commissioner of Banking and Insurance of this State may, after hearing, revoke or suspend any certificate of authority issued hereunder in the case of violation of any of the provisions of this act, after reasonable notice has been given such attorney in writing, so that he may appear and show cause why such action should not be taken. L.1945, c. 161, p. 561, s. 11.

N.J. Stat. § 17:50-12 Authority of attorney to insert in policy provisions or conditions

The attorney may insert in any form of policy prescribed by the laws of this State or adopted by this State any provisions or conditions required by the plan of reciprocal or inter-insurance; provided, however, that same shall not be in conflict with the laws of this State. L.1945, c. 161, p. 561, s. 12.

N.J. Stat. § 17:50-13 Fees and taxes

Such exchanges shall be subject to the same fees and taxes as are provided by the laws of this State, now or hereafter enacted, applicable to insurance companies organized or admitted to do the same kind or kinds of business under the laws of this State. L.1945, c. 161, p. 561, s. 13.

N.J. Stat. § 17:50-14 Application of law as to appointment, licensing, etc., of insurance agents and solicitors

The provisions of the general insurance laws of this State regarding the appointment, licensing, qualification and regulation of insurance agents and solicitors shall not apply to an exchange or its attorney, or executive officer of such attorney, if a corporation, but shall apply to any other person, partnership or corporation representing any such reciprocal or inter-insurance exchange in soliciting, negotiating or affecting of business in this State. L.1945, c. 161, p. 561, s. 14.

N.J. Stat. § 17:50-15 Application of laws governing insurance rates and licensing of rate making organizations

The provisions of the laws of this State regulating the making and applying of insurance rates and providing for the licensing of rating organizations, being chapter twenty-seven, laws of one thousand nine hundred and forty-four, approved March ninth, one thousand nine hundred and forty-four, effective March ninth, one thousand nine hundred and forty-four, shall apply to reciprocal or inter-insurance contracts, but nothing therein contained shall be construed to prohibit the return of savings or dividends to subscribers of policyholders. L.1945, c. 161, p. 562, s. 15.

N.J. Stat. § 17:50-16 Workmen's compensation insurance, authority to exchange contracts

Employers are hereby expressly authorized to exchange contracts of workmen's compensation insurance, at any reciprocal exchange licensed in this State to do that kind of business, but all such exchanges shall be subject to the provisions of the laws of this State relating to the business of workmen's compensation insurance and shall contribute and pay to the funds described in sections 34:15-94, 34:15-112, 34:15-113, 34:15-114 and 34:15-115 of the Revised Statutes in the same manner and to the same extent as mutual carriers engaged in the business of workmen's compensation insurance. L.1945, c. 161, p. 562, s. 16.

N.J. Stat. § 17:50-17 Retaliatory laws

The retaliatory laws of this State set forth in section 17:32-12 of the Revised Statutes shall be applicable to reciprocal or inter-insurance exchanges. L.1945, c. 161, p. 562, s. 17.

N.J. Stat. § 17:50-18 Conflicting laws repealed

All laws or parts of laws in conflict herewith are hereby repealed, insofar as they are in conflict with this act. L.1945, c. 161, p. 562, s. 18.

N.J. Stat. § 17:50-19 Partial invalidity

In the event any section, part or provisions of this act is held to be illegal, the same shall not affect any other section, part or provisions of the act, but the remaining sections, parts and provisions shall be and remain in full force and effect. L.1945, c. 161, p. 562, s. 19.
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