N.J. Stat. tit. 17, ch. 22C

in effect

N.J. Stat. § 17:22C-1 Definitions

1. For the purposes of this act: "Commissioner" means the Commissioner of Insurance. "Insurer" means: a. Any corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society or other person engaged in the business of insurance pursuant to Subtitle 3 of Title 17 of the Revised Statutes (R.S.17:17-1 et seq.), or Subtitle 3 of Title 17B of the New Jersey Statutes (N.J.S.17B:17-1 et seq.); b. Any medical service corporation operating pursuant to P.L.1940, c.74 (C.17:48A-1 et seq.); c. Any hospital service corporation operating pursuant to P.L.1938, c.366 (C.17:48-1 et seq.); d. Any health service corporation operating pursuant to P.L.1985, c.236 (C.17:48E-1 et al.); and e. Any dental service corporation operating pursuant to P.L.1968, c.305 (C.17:48C-1 et seq.). "Managing general agent" means any person, firm, association or corporation who binds ceding reinsurance contracts on behalf of an insurer or manages all or part of the insurance business of an insurer, including the management of a separate division, department or underwriting office, and acts as an agent for that insurer whether known as a managing general agent, manager or other similar term, who, with or without the authority, either separately or together with affiliates, produces, directly or indirectly, and underwrites an amount of gross written premium equal to or more than 5% of the policyholder surplus as reported in the last annual statement of the insurer in any one quarter or year together with one or more of the following: (1) adjusts or pays claims in excess of an amount determined by the commissioner; or (2) negotiates reinsurance on behalf of the insurer. Notwithstanding the above, the following persons shall not be considered as managing general agents for the purposes of this act: (1) An employee of the insurer; (2) A United States manager of the United States branch of an alien insurer; (3) An underwriting manager which, pursuant to contract, manages all or part of the insurance operations of the insurer, is under common control with the insurer, subject to P.L.1970, c.22 (C.17:27A-1 et seq.), and whose compensation is not solely based on the volume of premiums written; (4) An attorney-in-fact authorized by and acting for the subscribers of a reciprocal insurer or inter-insurance exchange under powers of attorney. "Sub-managing general agent" means any person, firm, association or corporation with which a managing general agent contracts or which a managing general agent appoints to perform all or substantially all of the duties and responsibilities of the managing general agent. "Underwrite" means the authority to accept or reject risk on behalf of the insurer. L.1993,c.237,s.1.

N.J. Stat. § 17:22C-2 Licensing for domestic risks as insurance producer required

2. No person, firm, association or corporation shall act in the capacity of a managing general agent with respect to risks located in this State for an insurer licensed in this State unless such person is licensed as an insurance producer in this State. L.1993,c.237,s.2.

N.J. Stat. § 17:22C-3 Licensing for foreign risks

3. No person, firm, association or corporation shall act in the capacity of a managing general agent representing an insurer domiciled in this State with respect to risks located outside of this State unless such person is licensed as a producer in this State. L.1993,c.237,s.3.

N.J. Stat. § 17:22C-4 Bond required

4. The commissioner may require a bond in an amount acceptable to him for the protection of the insurer. L.1993,c.237,s.4.

N.J. Stat. § 17:22C-5 Errors, omissions policy

5. The commissioner may require the managing general agent to maintain an errors and omissions policy in a form and amount acceptable to the commissioner. L.1993,c.237,s.5.

N.J. Stat. § 17:22C-6 Contract requirements for managing general agents

6. No person, firm, association, or corporation acting in the capacity of a managing general agent shall place business with an insurer unless there is in force a written contract between the parties which sets forth the responsibilities of each party and, if both parties share responsibility for a particular function, specifies the division of such responsibilities, and which contains the following minimum provisions: a. The insurer may terminate the contract upon written notice to the managing general agent. The insurer may suspend the underwriting authority of the managing general agent during the pendency of any dispute regarding the cause for termination. The insurer shall, within 15 days of any termination of the contract, file written notice of the termination with the commissioner. Notice of termination shall be on a form established by the commissioner and shall indicate the date of termination and the reason therefor. Agency appointment shall not terminate until notice of termination has been received by the commissioner. b. The managing general agent shall render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer on not less than a monthly basis. c. All funds collected for the account of an insurer shall be held by the managing general agent in a trust account which shall conform with the requirements established by the commissioner for the management of funds by insurance producers licensed in this State. The account shall be used for all payments on behalf of the insurer. The managing general agent shall retain no more than three months' estimated claims payments and allocated loss adjustment expenses. d. Separate records of business written by the managing general agent shall be maintained. The insurer shall have access and the right to copy all accounts and records related to this business in a form usable by the insurer and the commissioner shall have access to all books, bank accounts and records of the managing general agent in a form usable to the commissioner. e. The contract shall not be assigned in whole or part by the managing general agent. f. Appropriate underwriting guidelines including: (1) The maximum annual premium volume; (2) The basis of the rates to be charged; (3) The types of risks which may be written; (4) Maximum limits of liability; (5) Applicable exclusions; (6) Territorial limitations; (7) Policy cancellation provisions; and (8) The maximum policy period. The insurer shall have the right to cancel or non-renew any policy of insurance subject to the applicable laws and regulations of this State governing the cancellation and nonrenewal of insurance policies. g. If the contract permits the managing general agent to settle claims on behalf of the insurer the managing general agent shall comply with the requirements governing the settlement of claims set forth in subsections (9) and (10) of section 4 of P.L.1947, c.379 (C.17:29B-4), or sections 1 and 2 of P.L.1975, c.101 (C.17B:30-13.1 and 17B:30-13.2), as applicable, and any regulations promulgated by the commissioner thereunder. In addition: (1) All claims shall be reported to the company in a timely manner. (2) A copy of the claim file shall be sent to the insurer at its request or as soon as it becomes known that the claim: (a) Has the potential to exceed an amount determined by the commissioner or exceeds the limit set by the insurer, whichever is less; (b) Involves a coverage dispute; (c) May exceed the managing general agent's claims settlement authority; (d) Is open for more than six months; or (e) Is closed by payment of an amount set by the commissioner or an amount set by the insurer, whichever is less. (3) All claim files shall be the joint property of the insurer and managing general agent. However, upon an order of liquidation of the insurer such files shall become the sole property of the insurer or its estate, and the managing general agent shall have reasonable access to and the right to copy the files on a timely basis. (4) Any settlement authority granted to the managing general agent may be terminated for cause upon the insurer's written notice to the managing general agent or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination. h. If electronic claims files are in existence, the contract shall address the timely transmission of the data. i. If the contract provides for a sharing of interim profits by the managing general agent and the managing general agent has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments or in any other manner, interim profits shall not be paid to the managing general agent until one year after they are earned for property insurance business and five years after they are earned on casualty business, or such other periods of time as determined by the commissioner, and not until the profits have been certified pursuant to section 7 of this act. j. The managing general agent shall not: (1) Bind reinsurance or retrocessions on behalf of the insurer, except that the managing general agent may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules; (2) Commit the insurer to participate in insurance or reinsurance syndicates; (3) Appoint any insurance producer without assuring that the producer is lawfully licensed to transact the type of insurance for which he is appointed; (4) Without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which shall not exceed one percent of the insurer's policyholders' surplus as of December 31 of the last completed calendar year; (5) Collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer, without prior approval of the insurer. If prior approval is given, a report shall be promptly forwarded to the insurer; (6) Permit its subproducer to serve on its board of directors; (7) Jointly employ an individual, who is employed with the insurer; or (8) Appoint a sub-managing general agent. L.1993,c.237,s.6.

N.J. Stat. § 17:22C-7 Audit; loss reserve opinion, on-site procedural audit

7. a. The insurer shall conduct and have on file an independent audit in a form acceptable to the commissioner of each managing general agent with which it has done business. b. If a managing general agent establishes loss reserves, the insurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the managing general agent. Such loss reserve opinion shall be in the format of and otherwise satisfy all requirements established by the commissioner for loss reserve opinions required to be submitted by licensed insurers in this State. c. The insurer shall at least biannually conduct an on-site procedural audit of the underwriting and claims processing operations of the managing general agent. d. The managing general agent may negotiate reinsurance contracts or participation in insurance or reinsurance syndicates on behalf of the insurer. However, binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an officer of the insurer, who shall not be affiliated with the managing general agent. e. Within 30 days of entering into, or within 15 days of termination of, a contract with a managing general agent, the insurer shall provide written notification of that appointment or termination to the commissioner. Notices of appointment of a managing general agent shall include a statement of duties which the managing general agent is expected to perform on behalf of the insurer, the lines of insurance for which the managing general agent is to be authorized to act, and any other information the commissioner may request. f. An insurer shall review each quarter its books and records to determine if any insurance producer has become a managing general agent as defined in section 1 of this act. If the insurer determines that an insurance producer has become a managing general agent, the insurer shall promptly notify the insurance producer and the commissioner of such determination and the insurer and insurance producer shall fully comply with the provisions of this act within 30 days. g. An insurer shall not appoint to its board of directors an officer, director, employee or controlling shareholder of its managing general agents. This subsection shall not apply to relationships governed by P.L.1970, c.22 (C.17:27A-1 et seq.) or, if applicable, any laws governing business transacted by producer-controlled property and casualty insurers in this State. L.1993,c.237,s.7.

N.J. Stat. § 17:22C-8 Acts of managing general agent considered acts of insurer

8. The acts of the managing general agent are considered to be the acts of the insurer on whose behalf it is acting. A managing general agent may be examined as if it were the insurer. L.1993,c.237,s.8.

N.J. Stat. § 17:22C-9 Violations; penalties; summary proceedings

9. a. If the commissioner finds after notice and opportunity for a hearing that any person has violated any provision of this act, the commissioner may refuse to issue or renew the insurance producer's license, or may revoke or suspend the insurance producer's license. b. In addition, or as an alternative to any other penalty, the commissioner may: (1) Impose a fine of up to $5,000 for the first violation, and not exceeding $10,000 for each subsequent violation, and in appropriate circumstances order restitution of moneys owed to any person and reimbursement of the costs of investigation and prosecution; (2) Order the managing general agent to reimburse the insurer, the rehabilitator or liquidator of the insurer for any losses incurred by the insurer caused by a violation of this act committed by the managing general agent. c. If the commissioner finds that the interests of the public require that immediate action be taken prior to completion of the hearing, the making of a determination and the entry of a final order, he may enter an appropriate order to be effective pending completion of the hearing and entry of a final order. These orders may be entered on ex parte proofs if the proofs indicate that the commissioner's withholding of any action until completion of a full hearing will be harmful to the public interest. Orders issued pursuant to this subsection shall be subject to an application to vacate upon 10 days' notice, and a preliminary hearing on the ex parte order shall be held in any event within 20 days after it is entered. In the alternative, or in addition, the commissioner is authorized to institute a proceeding in the Superior Court, to be conducted in a summary manner, for an injunction against specified acts or conduct in aid of the proceedings pending before him, including temporary injunctions and interim restraints. d. Nothing contained in this section shall affect the right of the commissioner to impose any other penalties provided for by the laws of this State. e. Nothing contained in this act is intended to or shall in any manner limit or restrict the rights of policyholders, claimants and auditors. L.1993,c.237,s.9.

N.J. Stat. § 17:22C-10 Rules, regulations

10. The commissioner may promulgate rules and regulations as are necessary to effectuate the purposes of this act. L.1993,c.237,s.10.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026