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17:21-3. Election of directors of benefit companies
All elections of directors of any stock insurance company of this state incorporated by special charter, whose object is to assist its sick or needy members, or aid in defraying funeral expenses of deceased members and make provision for their families, shall be by the stockholders of the company, and no policyholder or person insured in the company may vote at an election unless he is also a stockholder.
17:22-5.2. Effective date
This act shall take effect May first, one thousand nine hundred and forty-two.
L.1941, c. 118, p. 267, s. 3.
17:22-6.2a. Authorization entitling broker to receive insurance premium on behalf of insurer
Any insurer which delivers in this State to any insurance broker a contract of insurance (other than a contract of life insurance, or life, accident or health insurance) pursuant to the application or request of such broker, acting for an insured other than himself, shall be deemed to have authorized such broker to receive on its behalf payment of any premium which is due on such contract at the time of its issuance or delivery or payment of any installment of such premium or any additional premium which becomes due or payable thereafter on such contract, provided such payment is received by such broker within 90 days after the due date of such premium or installment thereof or after the date of delivery of statement by the insurer of such additional premium.
L.1966, c. 50, s. 1, eff. May 24, 1966.
17:22-6.14a Rates of commission to be set forth in contracts; exceptions; termination of contracts.
1. a. In the event that a policy is canceled by the insurer, either at its own behest or at the behest of the agent or broker of record, the unearned premium, including the unearned commission, shall be returned to the policyholder.
b. In the event that a policy of insurance, issued by the automobile insurance plan established pursuant to P.L.1970, c.215 (C.17:29D-1) or any successor thereto, is canceled by reason of nonpayment of premium to the insurer issuing the policy or nonpayment of an installment payment due pursuant to an insurance premium finance agreement, the broker of record for that policy may retain the full annual commission due thereon and, if a premium finance agreement is not involved, the effective date of cancellation of the policy shall be no earlier than 10 days prior to the last full day for which the premium paid by the insured, net of the broker@s full annual commission, would pay for coverage on a pro rata basis in accordance with rules established by the commissioner.
c. Contracts between insurance companies and agents for the appointment of the agent as the representative of the company shall set forth the rate of commission to be paid to the agent for each class of insurance within the scope of such appointment written on all risks or operations in this State, except:
(1) Reinsurance.
(2) Life insurance.
(3) Annuities.
(4) Accident and health insurance.
(5) Title insurance.
(6) Mortgage guaranty insurance.
(7) Hospital service, medical service, health service, or dental service corporations, investment companies, mutual benefit associations, or fraternal beneficiary associations.
Said rates of commission shall continue in force and effect unless changed by mutual written consent or until termination of said contract as hereinafter provided. Failure to achieve such mutual consent shall require that the agent@s contract be terminated as hereinbelow provided. The rate of commission being paid on each class of insurance on the date of enactment hereof shall be deemed to be pursuant to the existing contract between agent and company.
d. Termination of any such contract for any reason other than one excluded herein shall become effective after not less than 90 days@ notice in writing given by the company to the agent and the Commissioner of Banking and Insurance. No new business or changes in liability on renewal or in force business, except as provided in subsection l. of this section, shall be written by the agent for the company after notice of termination without prior written approval of the company. However, during the term of the agency contract, including the said 90-day period, the company shall not refuse to renew such business from the agent as would be in accordance with said company@s current underwriting standards. The company shall, during a period of 12 months from the effective date of such termination, provided the former agent has not been replaced as the broker of record by the insured, and upon request in writing of the terminated agent, renew all contracts of insurance for such agent for said company as may be in accordance with said company@s then current underwriting standards and pay to the terminated agent a commission in accordance with the agency contract in effect at the time notice of termination was issued. Said commission can be paid only to the holder of a valid New Jersey insurance producer@s license. In the event any risk shall not meet the then current underwriting standards of said company, that company may decline its renewal, provided that the company shall give the terminated agent and the insured not less than 60 days@ notice of its intention not to renew said contract of insurance.
e. The agency termination provisions of this act shall not apply to those contracts:
(1) in which the agent is paid on a salary basis without commission or where he agrees to represent exclusively one company or to the termination of an agent@s contract for insolvency, abandonment, gross and willful misconduct, or failure to pay over to the company moneys due to the company after his receipt of a written demand therefor, or after revocation of the agent@s license by the Commissioner of Banking and Insurance; and in any such case the company shall, upon request of the insured, provided he meets the then current underwriting standards of the company, renew any contract of insurance formerly processed by the terminated agent, through an active agent, or directly pursuant to such rules and regulations as may be promulgated by the Commissioner of Banking and Insurance; or
(2) which are entered into between a qualified insurer and a UEZ agent pursuant to section 22 of P.L.1997, c.151 (C.17:33C-4).
f. The Commissioner of Banking and Insurance, on the written complaint of any person stating that there has been a violation of this act, or when he deems it necessary without a complaint, may inquire and otherwise investigate to determine whether there has been any violation of this act.
g. All existing contracts between agent and company in effect in the State of New Jersey on the effective date of this act are subject to all provisions of this act.
h. The Commissioner of Banking and Insurance may, if he determines that a company is in unsatisfactory financial condition, exclude such company from the provisions of this act.
i. Whenever under this act it is required that the company shall renew a contract of insurance, the renewal shall be for a time period equal to one additional term of the term specified in the original contract, but in no event to be less than one year.
j. The provisions of subsection b. of this section shall not apply to policies written by the New Jersey Automobile Full Insurance Underwriting Association established pursuant to sections 13 through 34 of P.L.1983, c.65 (C.17:30E-1 et seq.).
k. The New Jersey Automobile Full Insurance Underwriting Association established pursuant to sections 13 through 34 of P.L.1983, c.65 (C.17:30E-1 et seq.), shall not be liable to pay any commission required by subsection b. of this section on any policies written by the association prior to January 1, 1986.
l. A company which terminates its contractual relationship with an agent subject to the provisions of subsection d. of this section shall, at the time of the agent@s termination, with respect to insurance covering an automobile as defined in subsection a. of section 2 of P.L.1972, c.70 (C.39:6A-2), notify each named insured whose policy is serviced by the terminated agent in writing of the following: (1) that the agent@s contractual relationship with the company is being terminated and the effective date of that termination; and (2) that the named insured may (a) continue to renew and obtain service through the terminated agent; or (b) renew the policy and obtain service through another agent of the company.
Notwithstanding any provision of this section to the contrary, no insurance company which has terminated its contractual relationship with an agent subject to subsection d. of this section shall, upon the expiration of any automobile insurance policy renewed pursuant to subsection d. of this section which is required to be renewed pursuant to section 3 of P.L.1972, c.70 (C.39:6A-3), refuse to renew, accept additional or replacement vehicles, refuse to provide changes in the limits of liability or refuse to service a policyholder in any other manner which is in accordance with the company@s current underwriting standards, upon the written request of the agent or as otherwise provided in this section, provided the agent maintains a valid New Jersey insurance producer@s license and has not been replaced as the broker of record by the insured. However, nothing in this section shall be deemed to prevent nonrenewal of an automobile insurance policy pursuant to the provisions of section 26 of P.L.1988, c.119 (C.17:29C-7.1).
The company shall pay a terminated agent who continues to service policies pursuant to the provisions of this subsection a commission in an amount not less than that provided for under the agency contract in effect at the time the notice of termination was issued. A terminated agent who continues to service automobile insurance policies pursuant to this subsection shall be deemed to be an insurance producer as defined in section 3 of P.L.2001, c.210 (C.17:22A-28), and not an agent of the company, except that the terminated agent shall have the authority to bind coverage for renewals, additional or replacement vehicles, and for changed limits of liability as provided in this subsection to the same extent as an active agent for the company. The company shall provide the terminated agent with a written copy of its current underwriting guidelines during the time the agent continues to service policies pursuant to this subsection.
If a terminated agent who is continuing to service policies pursuant to the provisions of this subsection violates the written underwriting guidelines of the company in such a manner or with such frequency as to substantially affect the company@s ability to underwrite or provide coverage, the company may discontinue accepting renewal and service requests from, and paying commissions to, the terminated agent; provided, however, that the company provides the terminated agent with at least 45 days@ written notice which shall include a detailed explanation of the reasons for discontinuance. A copy of this notice, along with supporting documentation providing evidence that the terminated agent received proper notice of discontinuance pursuant to this subsection and evidence in support of the company@s action, shall be sent by the company to the Division of Enforcement and Consumer Protection in the Department of Banking and Insurance.
The provisions of this subsection shall not apply to any policy issued by the New Jersey Automobile Full Insurance Underwriting Association created pursuant to the provisions of P.L.1983, c.65 (C.17:30E-1 et seq.).
m. A qualified insurer which terminates its contractual relationship with its UEZ agent pursuant to section 22 of P.L.1997, c.151 (C.17:33C-4) shall terminate its relationship in accordance with the following provisions:
(1) The qualified insurer shall give the UEZ agent at least 60 days@ written notice of termination. Notice of termination shall be on a form prescribed by the commissioner and shall indicate the date of termination and the reason for the termination. A copy of the notice of termination shall be sent to the commissioner.
(2) Notwithstanding the provisions of this section and section 26 of P.L.1988, c.119 (C.17:29C-7.1), a qualified insurer may refuse to renew the business written through a UEZ agent in an orderly and non-discriminatory manner over the course of at least a three-year period provided that such refusals to renew in each year shall not exceed one-third of a terminated UEZ agent@s book of business on the effective date of termination of its relationship with its UEZ agent. A qualified insurer intending to refuse renewal business written by a terminated UEZ agent shall notify the commissioner prior to the date of the UEZ agent@s termination.
(3) The terminated UEZ agent who continues to service automobile insurance policies shall continue to receive commissions for any renewal business pursuant to the terms of the contract in force with the qualified insurer at the time of termination, provided that the UEZ agent maintains a valid New Jersey insurance producer@s license and has not been replaced as the broker of record by the insured. A terminated UEZ agent who continues to service automobile insurance policies shall be deemed to be an insurance broker and not the agent of the qualified insurer.
n. In any case of a transfer by an insurance company of any kind or kinds of insurance specified in its certificate of authority to another company, pursuant to the provisions of R.S.17:17-10 or section 72 of P.L.1990, c.8 (C.17:33B-30), the policies transferred shall continue to be serviced by the agent of record and the company to which the business is transferred shall offer contracts to the agents of the transferring company which contain terms and conditions concerning the use, control and ownership of policy expirations and payment of commissions that are no less favorable than the terms and conditions of their current contracts. Nothing in this subsection shall prohibit a company from offering contracts to agents of the transferring company that limit the agents@ right to produce new business or prohibit subsequent modification of the rate of commission set forth in the agency contract in accordance with subsection c. of this section. This subsection shall not apply if the company seeking to transfer policies pays its agents on a salary basis without commission or if its agents represent the company exclusively.
L.1970,c.217,s.1; amended 1971, c.152, s.1; 1979, c.75, s.1; 1981, c.137, s.1; 1986, c.211, s.11; 1989, c.129; 1997, c.151, s.28; 2003, c.153.
17:22-6.14a1. Property and casualty insurers; filing of current underwriting guidelines
All property and casualty insurers doing business in New Jersey shall, upon request of the Commissioner of Insurance, file with the Department of Insurance a copy of their current underwriting guidelines, together with any amendments thereto or modification thereof. Such guidelines, amendments or modifications shall not be arbitrary, capricious or unfairly discriminatory.
L.1971, c. 152, s. 2, eff. May 20, 1971.
17:22-6.14a2. Notice of nonrenewal; identification of underwriting standards not met; liability for information to insurer as to reasons for nonrenewal
Where a policy of insurance is not renewed because of failure to meet the then current underwriting standards, the notice of nonrenewal shall identify the underwriting standard and specify in detail the factual basis upon said underwriting standard has not been met.
There shall be no liability on the part of and no cause of action of any nature shall arise against the Commissioner of Insurance or against any insurer, its authorized representative, its agents, its employees, or any firm, person or corporation furnishing to the insurer information as to reasons for nonrenewal, for any statement made by any of them in any written notice of nonrenewal, or in any other communication, oral or written specifying the reasons for nonrenewal, or the providing of information pertaining thereto, or for statements made or evidence submitted at any hearings conducted in connection therewith.
L.1971, c. 152, s. 3, eff. May 20, 1971.
17:22-6.14a3. Rules and regulations by commissioner of insurance
The Commissioner of Insurance is authorized to adopt, promulgate and enforce such rules and regulations as he determines to be necessary to implement this act.
L.1971, c. 152, s. 4, eff. May 20, 1971.
17:22-6.14b. Severability
If any section, subsection, subdivision, paragraph, sentence or clause of this act is held invalid or unconstitutional, such decision shall not affect the remaining portions of this act, and to this end the provisions of this act are declared to be severable.
L.1970, c. 217, s. 2, eff. Oct. 13, 1970.
17:22-6.26. Repeals
Sections 17:22-1, 17:22-2, 17:22-3, 17:22-4, 17:22-5, 17:23-3, 17:32-6, and 17:32-11 of the Revised Statutes and section one of ~An act concerning the licensing of agents for insurance companies in certain cases, supplementing chapter twenty-two of Title 17, and amending section 17:33-1 of the Revised Statutes~ , approved May sixteenth, one thousand nine hundred and forty-one and all acts or parts of acts inconsistent herewith are repealed.
L.1944, c. 175, p. 675, s. 26, eff. May 2, 1944.
17:22-6.35. Repeal
Section 17:36-1 of the Revised Statutes is repealed.
L.1948, c. 462, p. 1900, s. 8.
17:22-6.37. Acting for unauthorized companies; prohibition; exceptions
No person shall in this State directly or indirectly act as agent for, or otherwise represent or aid on behalf of another, any insurer not then authorized to transact such insurance in this State, in the solicitation, negotiation, procurement or effectuation of insurance or annuity contracts, or renewals thereof, or in the dissemination of information as to coverage or rates, or forwarding of applications, or delivery of policies or contracts, or inspection of risks, or fixing of rates, or investigation or adjustment of claims or losses, or collection or forwarding of premiums, or in any other manner represent or assist such an insurer in the transaction of insurance with respect to subjects of insurance resident, located or to be performed in this State. Except that, the holder of an insurance broker@s license shall have authority on behalf of a prospective assured to negotiate and deal with a surplus lines agent to effect any such transaction, collect the insurance premium therefor from the assured, and receive from the said surplus lines agent a share of any commission or brokerage fee earned by the said surplus lines agent in connection therewith.
This section does not apply to:
(a) Matters authorized to be done by the commissioner under the unauthorized insurers process law, (N.J.S.A. 17:51-1 et seq.);
(b) Surplus lines insurance when written pursuant to the surplus lines law;
(c) Transactions as to which a certificate of authority is not required of an insurer under the insurance laws of the State of New Jersey;
(d) Reinsurance effectuated in accordance with the laws of New Jersey;
(e) Railroad or aviation risks engaged in interstate or international commerce;
(f) Insurances of vessels, crafts or hulls, cargoes, marine builders@ risks, marine protection and indemnity or other risks including strikes and war risks commonly insured under ocean or wet marine forms of policy.
No insurance contract entered into in violation of this section shall be deemed to have been rendered invalid thereby.
L.1960, c. 32, p. 105, s. 3. Amended by L.1963, c. 189, s. 1.
17:22-6.38. Violation; misdemeanor; penalties
Any person who in this State represents or aids an unauthorized insurer in violation of section 3 of this act shall upon conviction thereof be guilty of a misdemeanor.
In addition to the penalty provided for herein such violator shall be liable, personally, jointly and severally with any other person or persons liable therefor, for payment of taxes payable on account of such insurance as if such insurance were independently procured.
L.1960, c. 32, p. 106, s. 4.
17:22-6.39. Actions or proceedings by unauthorized insurers prohibited; exceptions
No unauthorized insurer shall institute, file, or maintain, or cause to be instituted, filed, or maintained, any suit, action or proceeding in this State to enforce any right, claim or demand arising out of any insurance transaction in this State except with respect to the following:
(1) Investigation, settlement, or litigation of claims under its policies lawfully written in this State, or liquidation of assets and liabilities of the insurer (other than collection of new premiums), all as resulting from its former authorized operations in this State;
(2) Transactions involving a policy, subsequent to issuance thereof, covering only subjects of insurance not resident, located or expressly to be performed in this State at time of issuance, and lawfully solicited, written, or delivered outside this State; or railroad or aviation risks engaged in interstate or international commerce and insurances of vessels, crafts or hulls, cargoes, marine builders@ risks, marine protection and indemnity or other risks including strikes and war risks commonly insured under ocean or wet marine forms of policy;
(3) Transactions pursuant to surplus lines coverages lawfully written under subtitle 3 of this Title;
(4) Reinsurance effectuated in accordance with the laws of New Jersey;
(5) The continuation and servicing of life insurance or disability insurance policies or annuity contracts remaining in force as to residents of this State where the insurer has withdrawn from the State and is not transacting new insurance therein.
L.1960, c. 32, p. 106, s. 5. Amended by L.1963, c. 189, s. 2.
17:22-6.40. Short title; application of act
Sections 6 through 31 of this act (C. 17:22-6.40 through 17:22-6.65) constitute and may be referred to as ~the surplus lines law.~ This act does not apply to life insurance companies writing life insurance, accident and health insurance and annuities, nor to risks insured under exceptions (e) and (f) of section 3 of this act (C 17:22-6.37), nor to insurance coverages which are independently procured as provided in section 30 (C. 17:22-6.64) of this act.
L.1960, c. 32, p. 107, s. 6. Amended by L.1963, c. 189, s. 3; L.1973, c. 22, s. 3, eff. Feb. 8, 1973.
17:22-6.41. Definitions relative to surplus lines insurers
7. As used in this surplus lines law:
(a) ~Surplus lines agent~ means an individual licensed as an insurance producer with surplus lines authority as provided in P.L.1987, c.293 (C.17:22A-1 et seq.) to handle the placement of insurance coverages on behalf of unauthorized insurers.
(b) ~Surplus lines insurer~ means an unauthorized insurer in which an insurance coverage is placed or may be placed under this surplus lines law.
(c) To ~export~ means to place in an unauthorized insurer under this surplus lines law, insurance covering a subject of insurance resident, located, or to be performed in New Jersey.
(d) ~Commissioner~ means the Commissioner of Insurance of the State of New Jersey.
(e) ~Certificate of insurance~ means permanent evidence of insurance on a form approved by the commissioner and issued by a surplus lines agent who has filed evidence of his binding authority with the commissioner on behalf of an alien insurer. When issued other than on behalf of an alien insurer, an initial certificate of insurance will be treated as temporary evidence of insurance, pending the issuance of a policy. ~Certificate of insurance~ also means evidence of a renewal of that insurance provided: (1) there is no change in the terms or amounts of coverage; (2) the coverage is still eligible for export; and (3) the insured may request the issuance of a new policy.
(f) ~Cover note,~ ~binder~ or ~confirmation of insurance,~ means temporary evidence of insurance, to be replaced by a policy or certificate of insurance.
L.1960,c.32,s.7; amended 1981, c.250, s.1; 1996, c.69, s.1.
17:22-6.42. Procurement of surplus line coverages; conditions
8. If certain insurance coverages of subjects resident, located, or to be performed in this State cannot be procured from authorized insurers, such coverages, hereinafter designated ~surplus lines,~ may be procured from unauthorized insurers, subject to the following conditions:
(a) The insurance must be eligible for export under section 9 of P.L.1960, c.32 (C.17:22-6.43);
(b) The insurer must be an eligible surplus lines insurer under section 11 of P.L.1960, c.32 (C.17:22-6.45);
(c) The insurance must be so placed through a licensed New Jersey surplus lines agent; and
(d) Other applicable provisions of this surplus lines law must be complied with.
(e) No surplus lines agent shall exercise binding authority in this State on behalf of any insurer unless the agent has first filed with the commissioner for informational purposes and not for the purpose of approval or disapproval the written agreement between the agent and the insurer setting forth the terms, conditions and limitations governing the exercise of the binding authority by the agent. A copy of any amendments to the agreement and of any notice of cancellation or termination of the agreement shall be filed by the agent with the commissioner no later than 10 days after adoption thereof.
The agreement filed pursuant to this section shall be considered and treated as a confidential document, and shall not be available for inspection by the public.
The agreement shall include the following items:
(1) A description of the classes of insurance for which the agent holds binding authority;
(2) The geographical limits upon the exercise of binding authority by the agent;
(3) The maximum dollar limitation on the binding authority of the agent for any one risk for each class of insurance written by the agent;
(4) The maximum policy period for which the agent may bind a risk;
(5) If the binding authority is delegable by the agent, a prohibition against the delegation without the prior written approval of the insurer.
If an agent who is qualified in accordance with this section to exercise binding authority on behalf of an insurer delegates the binding authority to any other agent, the agent to whom the authority is delegated shall not exercise the same until a copy of the instrument delegating the binding authority shall first have been filed with the commissioner for informational purposes and not for the purpose of approval or disapproval. The instrument delegating the binding authority shall include an identification of the binding authority agreement between the delegating agent and the insurer.
(f) Forms used by eligible surplus lines insurers pursuant to P.L.1960, c.32 (C.17:22-6.40 et seq.) shall not be subject to the insurance laws and regulations of this State except to the extent that P.L.1960, c.32 (C.17:22-6.40 et seq.) regulates those forms. For purposes of this subsection, ~eligible surplus lines insurers~ include eligible surplus lines insurers and unauthorized insurers, which pursuant to section 11 of P.L.1960, c.32 (C.17:22-6.45), are insuring risks which are eligible for export but insurance coverage thereon, in whole or in part, is not procurable from eligible surplus lines insurers.
L.1960,c.32,s.8; amended 1981, c.250, s.2; 1996, c.69, s.2; 2001, c.210, s.23; 2003, c.179, s.1.
17:22-6.43. Eligibility for export of insurance coverage; conditions
9. No insurance coverage shall be eligible for export unless it meets all of the following conditions:
(a) The insurance coverage required must not be procurable, after a diligent effort has been made to do so, from among the insurers authorized to transact that kind and class of insurance in this State, and the insurance coverage exported shall be only that coverage not so procurable from authorized insurers, provided, however, that associated commercial general liability and commercial property coverages may be exported along with such unprocurable coverage; and
(b) The premium rate at which the coverage is exported shall not be lower than the lowest rate which has been filed by or on behalf of any authorized insurer, provided, however, that any reduction in coverage or limits as compared to policies filed by authorized insurers may be exported at a commensurate reduction in premium rate.
(c) (Deleted by amendment, P.L.2003, c.179.)
Except, that the commissioner shall by rules and regulations declare eligible for export generally and notwithstanding the provisions of subsections (a)and (b) above, any class or classes of insurance coverage or risk for which he finds, after a hearing, which he shall hold annually or more often, of which notice thereof was given to each insurer authorized to transact such class or classes in this State, that there is no reasonable or adequate market among authorized insurers. The notice of such hearing shall provide interested parties with the opportunity to present relevant information at the hearing for the commissioner@s consideration. Any such rules and regulations shall continue in effect during the existence of the conditions upon which predicated, but subject to earlier termination by the commissioner. The commissioner shall notify all surplus lines agents of such termination.
L.1960,c.32,s.9;amended 1996, c.69, s.3; 2003, c.179, s.2.
17:22-6.44. Writing of coverages declared eligible for export without regard to rate filings
An admitted insurer may write any insurance coverage declared eligible for export by the commissioner under section 9 of this act through any surplus lines agent without regard to rate filings which may otherwise be applicable to such admitted insurers provided that the business is written in compliance with all other applicable provisions of this act. Such insurance so written by an admitted insurer shall be subject to the tax on premiums imposed in chapter 132 of the laws of 1945.
L.1960, c. 32, p. 109, s. 10. Amended by L.1964, c. 237, s. 1.
17:22-6.45. Eligibility as surplus lines insurer
11. No surplus lines agent shall place any coverage with any unauthorized insurer which is not then an eligible surplus lines insurer as provided for under this section. No unauthorized insurer shall be or become an eligible surplus lines insurer unless made eligible by the commissioner in accordance with the following conditions:
(a) Eligibility of the insurer must be requested in writing by a licensed surplus lines agent;
(b) The insurer must be currently an authorized insurer in the state or country of its domicile as to the kind or kinds of insurance proposed to be so placed, and must have been such an insurer for not less than one full year preceding; or must be the subsidiary of an admitted insurer or of an already eligible surplus lines insurer that has been so admitted or eligible for a period of not less than one full year preceding;
(c) Before granting eligibility the requesting surplus lines agent or the insurer shall furnish the commissioner with duly authenticated copies of its current annual financial statement, one in the language and monetary values of the country of the insurer, and the other in the English language and with all monetary values therein expressed in United States dollars, at the current exchange rate shown in the statement, and with such additional information relative to the insurer as the commissioner may require;
(d) The insurer shall establish satisfactory evidence of financial integrity, and:
(1) Have capital and surplus, or its equivalent under the laws of its domiciliary jurisdiction, which is not less than twice the amount of minimum capital and surplus required for like admitted insurers or $15,000,000, whichever is greater; except that unauthorized insurers already eligible under this act shall have at least $10,000,000 by December 31, 1996; at least $12,500,000 by December 31, 1997; and $15,000,000 by December 31, 1998. In addition, an alien insurer shall maintain in the United States, as the sole security requirement to qualify for eligibility in this State, an irrevocable trust fund in a state or federally chartered bank in an amount not less than $2,500,000 for the protection of all of its policyholders in the United States; provided, however, that an alien insurer eligible for surplus lines may be required to deposit securities in New Jersey in an amount deemed appropriate by the commissioner as a condition of maintaining its eligibility status. The trust fund shall consist of cash, securities, letters of credit, or of investments of substantially the same character and quality as those which are eligible investments for the capital and statutory reserves of admitted insurers authorized to write like kinds of insurance in this State. The trust fund shall not be included in any calculation of capital and surplus or its equivalent and shall have an expiration date which at no time shall be less than five years. In lieu of the above capital and surplus requirements, and trust fund amount, any Lloyd@s or other similar group of alien insurers, which group includes unincorporated individual insurers shall maintain a trust fund of not less than $50,000,000.00 as security to the full amount thereof for all policyholders and creditors in the United States of each member of the group, and the trust shall likewise comply with the terms and conditions hereinabove set forth. The credit for reinsurance requirements of sections 2 and 3 of P.L.1993, c.243 (C.17:51B-2 and 17:51B-3) shall not apply to an eligible alien surplus lines insurer that appears on the quarterly listing prepared by the International Insurers Department (IID) of the National Association of Insurance Commissioners and that provides the commissioner annually with a copy of such insurer@s current Schedule R filing and such other information concerning ceded reinsurance that the International Insurers Department or the commissioner may from time to time require. Any insurance exchange created by the laws of an individual state may be approved by the commissioner as an eligible insurer under the provisions of this section, and shall maintain capital and surplus, or the substantial equivalent thereof, of not less than $35,000,000.00 in the aggregate. For insurance exchanges which maintain funds in an amount acceptable to the commissioner for the protection of all insurance exchange policyholders, each individual syndicate, except those syndicates which have elected and qualify for S corporation status pursuant to subsection (a) of section 1362 of the federal Internal Revenue Code of 1986, 26 U.S.C.1362, shall maintain minimum capital and surplus, or the substantial equivalent thereof, of not less than $2,000,000.00. Any syndicate which has elected and qualified for S corporation status pursuant to subsection (a) of section 1362 of the federal Internal Revenue Code of 1986, 26 U.S.C.1362, need not maintain the minimum capital and surplus required under the provisions of this section and the failure of any such syndicate to meet these minimum requirements shall not render the exchange ineligible for approval under this section; except that so long as such syndicate fails to maintain the minimum capital and surplus required under the provisions of this section, such syndicate shall not transact the business of insurance in this State and shall not be approved by the commissioner as an eligible insurer under the provisions of this section. In the event the insurance exchange does not maintain funds in an amount acceptable to the commissioner for the protection of all insurance exchange policyholders, each individual syndicate shall have capital and surplus, or its equivalent under the laws of its domiciliary jurisdiction, which is not less than twice the amount of minimum capital and surplus required for like admitted insurers. No insurance exchange approved as an eligible insurer by the commissioner shall be a member of the New Jersey Surplus Lines Insurance Guaranty Fund created pursuant to P.L.1984, c.101 (C.17:22-6.70 et seq.) nor shall any claim against an exchange be deemed to be a covered claim pursuant to the provision of that act; and
(2) Have caused to be provided to the commissioner a copy of its current annual statement certified by the insurer, which, relative to the period reported upon, is no more than 18 months old, and which is either: (A) filed with and approved by the regulatory authority in the domicile of the unauthorized insurer; or (B) certified by an accounting or auditing firm licensed in the jurisdiction of the insurer@s domicile. In the case of an insurance exchange, the statement may be an aggregate combined statement of all underwriting syndicates operating during the period reported upon;
(e) The condition or methods of operation of the insurer must not be such as would render its operation hazardous to the public or its policyholders in this State;
(f) The insurer must be of good reputation as to the providing of service to its policyholders and the payment of losses and claims;
(g) No insurer shall be eligible the management of which is found by the commissioner to be incompetent or untrustworthy, or so lacking in insurance company managerial experience as to make the proposed operation hazardous to the insurance-buying public; or which the commissioner has good reason to believe is affiliated directly or indirectly through ownership, control, reinsurance transactions or other insurance or business relations, with any person or persons whose business operations are or have been detrimental to policyholders, stockholders, investors, creditors or to the public;
(h) No insurer shall be eligible the voting control or ownership of which is held in whole or substantial part by any government or governmental agency, or which is operated for or by any such government or agency. Membership in a mutual insurer, or subscribership in a reciprocal insurer, or ownership of stock of an insurer by the alien property custodian or similar official of the United States, or supervision of an insurer by public insurance supervisory authority shall not be deemed to be an ownership, control, or operation of the insurer for the purposes of this subsection;
(i) The insurer shall constitute, by a duly executed instrument filed with the department, the commissioner and his successor in office its true and lawful attorney, upon whom all original process in any action or legal proceeding against it may be served, and therein agree that any original process against it which may be served upon the commissioner shall be of the same force and validity as if served on the insurer, and that the authority thereof shall continue in force irrevocable so long as any liability of the insurer remains outstanding in this State.
The commissioner shall annually publish a list of all currently eligible surplus lines insurers, and shall mail a copy thereof to each licensed surplus lines agent at his office last of record with the commissioner.
This section shall not be deemed to cast upon the commissioner any duty or responsibility to determine the actual financial condition or claims practices of any unauthorized insurer; and the status of eligibility, if granted by the commissioner, shall indicate only that the insurer appears to be sound financially and to have satisfactory claims practices, and that the commissioner has no credible evidence to the contrary.
Where it appears that any particular insurance risk which is eligible for export, but insurance coverage thereon, in whole or in part, is not procurable from the eligible surplus lines insurers, then the surplus lines agent may file a supplemental affidavit stating such facts and advising the commissioner that such part of the risk as shall be unprocurable, as aforesaid, is being placed with named unauthorized insurers, in the amounts and percentages set forth in the affidavit. Such named unauthorized insurer shall, however, before accepting any risk in this State, deposit with the commissioner United States government bonds in an amount acceptable to the commissioner, which shall be held by said commissioner for the benefit of New Jersey policyholders only and the surplus lines agent shall procure from such unauthorized insurer and file with the commissioner a certified copy of its current annual statement of financial condition. If such deposit is made and the statement reveals, including both capital and surplus, net assets of at least $5,000,000 consisting of at least $1,500,000 liquid assets, then the surplus lines agent may proceed to consummate the contract of insurance. Whenever any insurance risk or any part thereof is placed with an unauthorized insurer, as provided herein, the policy, binder or cover note shall bear conspicuously on its face in boldface type the following notation:
~All or some of the insurers participating in this risk have not been admitted to transact business in the State of New Jersey, nor have they been approved as a surplus lines insurer by the insurance commissioner of this State. The placing of such insurance by a duly licensed surplus lines agent in this State shall not be construed as approval of such insurer by the insurance commissioner of the State of New Jersey. Such insurance is not covered by the New Jersey Property-Liability Insurance Guaranty Association or the New Jersey Surplus Lines Insurance Guaranty Fund.~ All other provisions of this Title , except the provisions of P.L.1984, c.101 (C.17:22-6.70 et seq.), shall apply to such placement the same as if such risks were placed with an eligible surplus lines insurer.
L.1960,c.32,s.11; amended 1985, c.16, s.1; 1987, c.407; 1993, c.243, s.4; 1994, c.50; 1996, c.69, s.4.
17:22-6.46. Withdrawal of eligibility; grounds; notice
If at any time the commissioner has reason to believe that any unauthorized insurer then on the list of eligible surplus lines insurers is insolvent, or in unsound financial condition, or that it is no longer eligible under the conditions therefor provided in section 11 of this act, he shall withdraw the eligibility of the insurer to insure surplus lines risks in this State.
If the commissioner finds, after a hearing thereon of which notice was given to all licensed surplus lines agents, that an insurer currently eligible as a surplus lines insurer has willfully violated the laws of New Jersey, or does not make reasonably prompt payment of just losses and claims in this State, he may withdraw the eligibility of the insurer to insure surplus lines risks in this State.
The commissioner shall promptly mail notice of all such withdrawals of eligibility to each surplus lines agent at his address last of record with the commissioner.
L.1960, c. 32, p. 113, s. 12.
17:22-6.47. Submission of affidavit, certification to surplus lines agent
13. Within 30 business days after the effectuation of any surplus lines insurance the originating broker shall submit to the surplus lines agent an affidavit or certification by the broker, on a form prescribed and furnished by the commissioner, as to efforts made to place the coverage with authorized insurers and the results thereof, except that no such affidavit or certification shall be required for those coverages, risks or classes of insurance declared eligible for export by the commissioner pursuant to section 9 of P.L.1960, c.32 (C.17:22-6.43). The affidavit or certification shall be maintained in the files of the broker and the surplus lines agent and shall be available for inspection by the commissioner for a period of at least five years.
A broker who fails to submit the affidavit or certification to the surplus lines agent within the prescribed time is subject to the penalties provided under section 27 of P.L.1960, c.32 (C.17:22-6.61).
L.1960,c.32,s.13; amended 1981, c.250, s.3; 1996, c. 69, s.5.
17:22-6.48. Surplus lines examining office
The commissioner shall establish and maintain an office and such facilities as may reasonably be necessary to carry out the purposes of this act. This office shall be known as ~The Surplus Lines Examining Office.~
In the operation of the examining office, the commissioner may employ or obtain necessary personnel and office furniture, fixtures and facilities, and/or may make joint use of personnel, furniture, fixtures and facilities otherwise employed or used in his office.
L.1960, c. 32, p. 114, s. 14.
17:22-6.49. Appropriation
There is hereby appropriated to the Department of Banking and Insurance for the fiscal year 1959-60 the sum of $35,000.00 for the purpose of discharging the functions of the Surplus Lines Examining Office and the payment of salaries and expenses incurred in connection therewith.
L.1960, c. 32, p. 114, s. 15.
17:22-6.50. Issuance and delivery of evidence of insurance
Upon placing a surplus line coverage, the surplus lines agent shall promptly issue and deliver to the insured evidence of the insurance consisting either of the policy as issued by the insurer or, if such policy is not then available, a certificate of insurance, cover note, or other confirmation of insurance, as provided in this act. Such document shall be executed or countersigned by the surplus lines agent and shall show the description and location of the subject of the insurance, coverage, conditions and term of the insurance, the premium and rate charge and taxes collected from the insured, and the name and address of the insured and insurer. If the direct risk is assumed by more than one insurer, the document shall state the name and address and proportion of the entire direct risk assumed by each insurer.
No surplus lines agent shall issue any such document, or purport to insure or represent that insurance will be or has been granted by any unauthorized insurer unless he has written authority from the insurer for the insurance, or has received confirmation from the insurer in the regular course of business that such insurance has been granted, or an insurance policy or certificate of insurance providing the insurance actually has been issued by the insurer and delivered to the insured.
If after the issuance and delivery of any such document there is any change as to the identity of the insurers, or the proportion of the direct risk assumed by the insurer as stated in the original certificate of insurance, cover note or confirmation of insurance, or in any other material respect as to the insurance coverage evidenced by such a document, the surplus lines agent shall promptly issue and deliver to the insured a substitute certificate of insurance, cover note or confirmation, or endorsement for the original of such document, accurately showing the current status of the coverage and the insurers responsible thereunder. No such change shall result in a coverage or insurance contract which would be in violation of this surplus lines law if originally issued on such basis.
If a policy issued by the insurer is not available upon placement of the insurance and the surplus lines agent has issued and delivered a certificate of insurance on behalf of other than an alien insurer, or a cover note or confirmation, as hereinabove provided, the surplus lines agent shall as soon as reasonably possible, and in no event later than 90 days after placement of such insurance, procure from the insurer its policy evidencing the insurance and deliver the policy to the insured in replacement of the certificate of insurance, cover note, or confirmation theretofore issued.
Any surplus lines agent who issues a false certificate, cover note, binder or confirmation of insurance, or false endorsement therefor, or who fails to notify the insured promptly of any material change with respect to such insurance and deliver as soon as reasonably possible to the insured a substitute certificate of insurance, cover note or confirmation, or endorsement as provided in paragraph 3 commits a crime of the fourth degree.
L.1960,c.32,s.16; amended by 1981,c.250,s.4.
17:22-6.50a. Certificate of insurance; contents
Every certificate of insurance shall contain or have attached thereto a complete record of all policy insuring agreements, conditions, exclusions, clauses, endorsements or any other material facts that would regularly be included in a surplus lines policy.
L.1981, c. 250, s. 5, eff. Aug. 6, 1981.
17:22-6.52. Statement of surplus lines agent
Each surplus lines agent through whom a surplus lines coverage is procured shall write or print on the outside of the policy and on any certificate, cover note, or other confirmation of the insurance his name, address and license number, the name of the New Jersey broker through whom the business originated, and the name, address and code designation, if any, of the foreign or alien broker through whom the coverage was placed. Where such coverage is placed with an eligible surplus lines insurer there shall be stamped or written upon the first page of the policy or the certificate, cover note or confirmation of insurance, the words: ~This Insurance is Issued Pursuant to the New Jersey Surplus Lines Law.~
L.1960, c. 32, p. 116, s. 18.
17:22-6.53. Validity of contracts procured from unauthorized insurers
Insurance contracts procured as ~surplus lines~ coverages from unauthorized insurers in accordance with this law shall be fully valid and enforceable as to all parties.
L.1960, c. 32, p. 116, s. 19.
17:22-6.54. Liability of insurer
If the unauthorized insurer has assumed the risk as to a surplus lines coverage placed under this surplus lines law, and if the premium therefor has been received by the surplus lines agent who placed such insurance, then in all questions thereafter arising under the coverage as between the insurer and the insured the insurer shall be deemed to have received the premium due to it for such coverage; and the insurer shall be liable to the insured as to losses covered by such insurance, and for unearned premiums which may become payable to the insured upon cancellation of such insurance, whether or not in fact the surplus lines agent is indebted to the insurer with respect to such insurance or for any other cause.
Each unauthorized insurer assuming a surplus lines risk under this surplus lines law shall be deemed thereby to have subjected itself to the terms of this section.
L.1960, c. 32, p. 116, s. 20.
17:22-6.55a. Advisory organizations
a. Advisory surplus lines organizations of surplus lines agents may be formed to: (1) facilitate and encourage compliance by its members with the laws of this State and the rules and regulations of the commissioner relative to surplus lines insurance; (2) provide means for the examination, which shall remain confidential, of all surplus lines coverages written by its members to determine whether the coverages comply with the laws and regulations; (3) communicate with organizations of admitted insurers with respect to the proper use of the surplus lines market; and (4) receive and disseminate to its members information relative to surplus lines coverages.
b. Every advisory organization shall file with the commissioner: (1) a copy of its constitution, its articles of agreement or association or its certificate of incorporation, (2) a copy of its bylaws, and the rules and regulations governing its activities, (3) a current list of its members, (4) the name and address of a resident of this State upon whom notices or orders of the commissioner or processes issued at his direction may be served, and (5) an agreement that the commissioner may examine the advisory organization in accordance with the provisions of this section.
c. The commissioner may, whenever he deems it necessary and at least once every three years, make or cause to be made an examination of each advisory organization. The reasonable cost of any examination shall be paid by the advisory organization upon presentation to it by the commissioner of a detailed account of the cost. The officers, managers, agents and employees of the advisory organization may be examined at any time, under oath, and shall exhibit all books, records, accounts, documents or agreements governing its method of operation. The commissioner shall furnish two copies of the examination report to the advisory organization examined and shall notify the organization that it may, within 20 days thereof, request a hearing on the report or on any facts or recommendations therein. If the commissioner finds the advisory organization or any member thereof to be in violation of this section, he may issue an order requiring the discontinuance of the violation, and may impose a penalty not exceeding $1,000.00 for the first offense and not exceeding $2,000.00 for each succeeding offense, to be enforced and collected by the commissioner in the name of the State in a summary proceeding in accordance with ~the penalty enforcement law~ (N.J.S. 2A:58-1 et seq.).
d. The commissioner may contract with a surplus lines advisory organization, which shall render advice and assistance in carrying out the purposes of the surplus lines law, and whereby the affidavits, reports, certificates or statements required by the surplus lines law may be filed with and maintained by the advisory organization. The services performed by the advisory organization shall be funded by a stamping fee assessed on each surplus lines policyholder whose policy is submitted to the advisory organization, which stamping fee shall be established by the board of governors of the advisory organization from time to time and shall be subject to approval by the commissioner.
e. The advisory organization may submit reports and make recommendations to the commissioner regarding the financial condition of any surplus lines insurer. These reports and recommendations shall not be considered to be public information or subject to any State or federal freedom of information law. There shall be no liability on the part of nor shall any cause of action of any nature be sustained against surplus lines insurers, the advisory organization or its members, agents or employees, the directors, or the commissioner or authorized representatives of the commissioner for statements in any reports or recommendations made by them in good faith under this section.
L. 1985, c. 16, s. 2, eff. Jan. 23, 1985.
17:22-6.57. Record of surplus lines contracts procured
23. Each surplus lines agent shall keep in his office a full and true record of each surplus lines contract procured by him, including a copy of the daily report, if any, and showing such of the following items as may be applicable:
(a) Amount of the insurance and perils insured against;
(b) Brief general description of property insured and where located;
(c) Gross premium charged;
(d) Return premium paid, if any;
(e) Rate of premium charged upon the several items of property;
(f) Effective date of the contract, and the terms thereof;
(g) Name and post-office address of the insured;
(h) Name and home office address of the insurer;
(i) Amount collected from the insured; and
(j) Other information as may be required by the commissioner.
The record shall at all times be open to examination by the commissioner without notice, and shall be so kept available and open to the commissioner for five years next following expiration or cancellation of the contract.
L.1960,c.32,s.23; amended 1996, c.69, s.6; 2001, c.210, s.24.
17:22-6.58. Verified report of surplus lines insurance transacted
24. Each surplus lines agent shall within 45 calendar days after the end of each calendar quarter file with the commissioner a verified report in duplicate of all surplus lines insurance transacted by him during such calendar quarter.
The report shall be on forms as prescribed and furnished by the commissioner and shall show:
(a) Gross amount of each kind of insurance transacted;
(b) Aggregate gross premiums charged;
(c) Aggregate of returned premiums and taxes paid to insureds;
(d) Aggregate of net premiums; and
(e) Additional information as required by the commissioner.
L.1960,c.32,s.24; amended 1996, c.69, s.7.
17:22-6.59. Premium receipts tax for surplus lines coverages
25. The premiums charged for surplus lines coverages are subject to a premium receipts tax of 3% of all gross premiums less any return premiums charged for such insurance. The surplus lines agent shall collect from the insured , either directly or through the originating broker, the amount of the tax, in addition to the full amount of the gross premium charged by the insurer for the insurance; provided, however, that the tax on any unearned portion of the premium shall be returned to the policyholder by the surplus lines agent. The surplus lines agent is prohibited from absorbing such tax, or, as an inducement for insurance or for any other reason, rebating all or any part of such tax or of his commission.
The surplus lines agent shall forward to the commissioner together with his quarterly report submitted pursuant to section 24 of P.L.1960, c.32 (C.17:22-6.58) a check in the amount of the premium receipts tax due for that period made out to ~the State of New Jersey,~ except that where the policies cover fire insurance on property in any municipality or portion of a township, or fire district in this State, which now has or may hereafter have, a duly incorporated firemen@s relief association, the premium receipts tax covering such insurance shall be paid to the treasurer of the association.
The tax imposed hereunder, if delinquent, shall be subject to the provisions of R.S.54:49-3 and R.S.54:49-4.
The check covering taxes paid under the provisions of this act shall be forwarded by the commissioner to the Director of the Division of Taxation and that portion of the premiums representing fire insurance shall be distributed by him in the amount now or hereafter provided by law as to taxes collected by him from fire insurance companies of other states and foreign countries. The commissioner shall ascertain and report to the Director of the Division of Taxation all facts necessary to enable the director to ascertain, fix and collect the amount of the tax to be paid by each licensee subject thereto under this act.
If a surplus lines policy covers risks or exposures only partially in this State, the tax payable shall be computed on the portion of the premium which is properly allocable to the risks or exposures located in this State.
This section does not apply as to insurance of or with respect to insurance of risks of the State Government or its agencies, or of any county or municipality or of any agency thereof.
L.1960,c.32,s.25; amended 1996, c.69, s.8.
17:22-6.60. Suit for tax
If the tax payable by a surplus lines agent under this surplus lines law is not so paid within the time prescribed, the same shall be recoverable in a suit brought by the commissioner against the surplus lines agent and the surety or sureties on the bond filed by the surplus lines agent in accordance with the requirements of this act.
L.1960, c.32, p. 121, s.26.
17:22-6.61. Suspension, revocation, refusal to renew license of surplus lines agents
27. The commissioner may suspend, revoke, or refuse to renew the license of a surplus lines agent and all other licenses and permits held by the licensee under this Title, upon any one or more of the following grounds:
(a) (Deleted by amendment, P.L.2001, c.210);
(b) Removal of the accounts and records of his surplus lines business during the period when such accounts and records are required to be maintained under section 23 of P.L.1960, c.32 (C.17:22-6.57);
(c) Closure of the licensee@s office for a period of more than 30 consecutive days, unless granted permission by the commissioner upon showing circumstances warranting such closure for a longer period;
(d) Failure to make and file his quarterly reports when due as required by section 24 of P.L.1960, c.32 (C.17:22-6.58);
(e) Failure to pay the tax on surplus lines premiums, as provided for in this surplus lines law;
(f) (Deleted by amendment, P.L.2001, c.210);
(g) Suspension, revocation or refusal to renew any other license issued by the commissioner;
(h) Lack of qualifications as for an original surplus lines agent@s license;
(i) Violation of any provision of this surplus lines law;
(j) For any other cause for which a license could be denied, revoked, suspended or renewal refused under section 15 of P.L.2001, c.210 (C.17:22A-40).
In addition to the foregoing penalties set forth in this section, any person, persons or corporation violating any of the provisions of this act shall be liable to a penalty not exceeding $2,500 for the first offense and not exceeding $5,000 for each succeeding offense to be recovered in a summary proceeding as provided in R.S.17:33-2.
L.1960,c.32,s.27; amended 1996, c.69, s.9; 2001, c.210, s.25.
17:22-6.62. Revocation for failure to file report or pay taxes; procedure; review
If any licensed surplus lines agent fails to file the quarterly report required or pay the taxes as required of him under this surplus lines law, the commissioner shall issue an order directed to the licensee requiring the licensee to file such report and pay such tax or to show cause by a day certain to be named therein why the commissioner should not revoke his license. The notice shall provide a return day not sooner than 30 days subsequent to its issuance and shall be served upon the licensee by registered mail at his business post-office address.
The licensee may, not less than 10 days prior to such return day, file his response in writing with the commissioner showing cause why he has not paid such tax, but the only defenses available to the licensee with respect thereto shall be that the commissioner is requiring the payment of a tax greater than that due from the licensee, and such defense will be available only if the licensee shall have filed return purporting to show the tax payable by the licensee, and shall have tendered the amount of tax computed by the licensee to be due.
If on the return day the licensee has not filed such return and paid the tax and has not filed any such defense and made such tender, the commissioner shall revoke the licenses of the licensee.
If the licensee files such defense to the order and makes such tender within the time required, on the return day the commissioner shall hold a hearing with respect to such matters and if the commissioner determines after such hearing that the licensee has failed to pay the tax required, and the licensee does not within 5 days thereafter pay such tax, the commissioner shall enter his order revoking the licenses of such licensee.
The revocation of a license by the commissioner under this section shall be subject to review in the Superior Court by a proceeding in lieu of prerogative writ.
L.1960, c.32, p. 122, s.28.
17:22-6.63. Lawsuits against unauthorized insurer
29. An unauthorized insurer which has not been made eligible as a surplus lines insurer by the commissioner in accordance with section 11 of P.L.1960, c.32 (C.17:22-6.45) may be sued upon any cause of action arising in this State under any surplus lines insurance contract issued by it or certificate, cover note or other confirmation of such insurance issued by the surplus lines agent, pursuant to the same procedure as is provided in the Unauthorized Insurers@ Process Act, P.L.1952, c.330 (C.17:51-1 et seq.).
Any such policy issued by the insurer, or any certificate of insurance issued by the surplus lines agent, shall contain a provision stating the substance of this section and designating the person to whom the commissioner shall mail process.
This section shall be cumulative to any other methods which may be provided by law for service of process upon the insurer.
L.1960,c.32,s.29; amended 1996, c.69, s.10.
17:22-6.64. Report of insurance through unauthorized foreign, alien insurer
30. Every insured who in this State procures or causes to be procured or continues or renews insurance with an unauthorized foreign or alien insurer, or any insured or self-insurer who procures or continues excess loss, catastrophe or other insurance, upon a subject of insurance resident, located or to be performed within this State, other than insurance procured through a surplus lines agent pursuant to the surplus lines law of this State or exempted from tax under section 25 of P.L.1960, c.32 (C.17:22-6.59), shall within 30 days after the date such insurance was so procured, continued, or renewed, file a report of the same with the commissioner in writing and upon forms designated by the commissioner and furnished to such an insured upon request. The report shall show the name and address of the insured or insureds, name and address of the insurer, the subject of the insurance, a general description of the coverage, the amount of premium currently charged therefor, and such additional pertinent information as is reasonably requested by the commissioner.
Any insurance in an unauthorized insurer procured through negotiations or an application, in whole or in part occurring or made within or from within this State, or for which premiums in whole or in part are remitted directly or indirectly from within this State, shall be deemed to be insurance procured, or continued or renewed in this State within the intent of this section.
There is hereby levied upon the obligation, chose in action, or right represented by the premium charged for such insurance, a tax at the rate of 3% of the gross amount of such premium less any return premiums charged for such insurance. Within 30 days after the insurance was so procured, continued or renewed, and coincidentally with the filing with the commissioner of the report provided for in this section, the insured shall pay the amount of the tax to the commissioner, who, after reviewing the above report, shall turn over the amount of the tax to the Director of the Division of Taxation along with a summary of the facts necessary to enable the director to ascertain and fix the proper amount of the tax.
If the insured fails to withhold from the premium the amount of tax herein levied, the insured shall be liable for the amount thereof and shall pay the same to the commissioner within the time specified in this section.
The tax imposed hereunder if delinquent shall be subject to the provisions of R.S.54:49-3 and R.S.54:49-4.
The tax shall be collectible from the insured by civil action brought by the commissioner.
The amount of taxes paid to the Director of the Division of Taxation under the provisions of this section on premiums for fire insurance shall be distributed by him in the manner now or hereafter provided by law as to taxes collected by him from fire insurance companies of other states and foreign countries.
This section does not abrogate or modify, and shall not be construed or deemed to abrogate or modify, any provision of section 3 of P.L.1960, c.32 (C.17:22-6.37), representing or aiding unauthorized insurer prohibited; section 4 of P.L.1960, c.32 (C.17:22-6.38), penalty for representing unauthorized insurer; or section 5 of P.L.1960, c.32 (C.17:22-6.39), suits by unauthorized insurers prohibited; or any other provision of this Title.
This section does not apply as to life or disability insurances.
L.1960,c.32,s.30; amended 1996, c.69, s.11.
17:22-6.65. Production of records and information upon order of commissioner
Every person by or as to whom insurance is procured or placed in an unauthorized insurer, upon the commissioner@s order shall produce for his examination all policies and other documents evidencing the insurance, and shall disclose to the commissioner the amount of gross premiums paid or agreed to be paid for the insurance. In case of a failure of any person to comply with the commissioner@s order, the Superior Court, on application of the commissioner, may issue an order requiring the production of the records and information sought by the commissioner. Any person failing to obey the court@s order may be punished by the court as for a contempt.
This section does not apply to life insurance or disability insurance.
L.1960, c.32, p. 125, s.31.
17:22-6.66. Partial invalidity
If any clause, sentence, paragraph, section or part of this act shall be a judged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, section or part thereof directly involved in the controversy in which such judgment shall have been rendered.
L.1960, c.32, p. 125, s.32.
17:22-6.67. Effective date
This action shall take effect immediately except that sections 1 and 2 shall not take effect until November 1, 1960.
L.1960, c.32, p. 125, s.33.
17:22-6.68. Repeal
Section 21 of ~An act relating to the licensing, regulation and supervision of insurance agents, insurance brokers and insurance solicitors, supplementing chapters 22, 32 and 36 of Title 17 of the Revised Statutes and repealing sections 17:22-1, 17:22-2, 17:22-3, 17:22-4, 17:22-5, 17:23-3, 17:32-6 and 17:32-11 of the Revised Statutes and section 1 of ~An act concerning the licensing of agents for insurance companies in certain cases, supplementing chapter 22 of Title 17, and amending section 17:33-1 of the Revised Statutes,@ approved May 16, 1941 (P.L.1941, c.118)~ approved April 20, 1944 (P.L.1944, c.175) is repealed.
L.1960, c.32, p. 104, s.1.
17:22-6.69. Repeal
Sections 2, 3, 4, 5, 6 and 7 of ~An act to amend and supplement ~An act relating to the licensing, regulation and supervision of insurance agents, insurance brokers and insurance solicitors, supplementing chapters 22, 32 and 36 of Title 17 of the Revised Statutes, and repealing sections 17:22-1, 17:22-2, 17:22-3, 17:22-4, 17:22-5, 17:23-3, 17:32-6 and 17:32-11 of the Revised Statutes and section 1 of ~An act concerning the licensing of agents for insurance companies in certain cases supplementing chapter 22 of Title 17, and amending section 17:33-1 of the Revised Statutes~ approved May 16, 1941 (P.L.1941, c.118)@ approved April 20, 1944 (P.L.1944, c.175) and to repeal section 17:36-1 of the Revised Statutes~ approved October 28, 1948 (P.L.1948, c.462) are repealed.
L.1960, c.32, p. 105, s.2.
17:22-6.70. Short title
This act shall be known and may be cited as the ~New Jersey Surplus Lines Insurance Guaranty Fund Act.~
L.1984, c.101, s. 1, eff. July 27,1984.
17:22-6.70a Findings, declarations relative to surplus lines insurance.
1. The Legislature finds and declares:
a. The ~New Jersey Surplus Lines Insurance Guaranty Fund Act,~ P.L.1984, c.101 (C.17:22-6.70 et seq.), enacted 18 years ago in the face of an imminent threat of declaration of insolvency of Ambassador Insurance Company of Vermont, has provided valuable benefits by covering claims of certain claimants against insolvent property and casualty insurers selling insurance in New Jersey as surplus lines.
b. That act was amended 15 years ago to include, as covered claims, those claims arising from the declared insolvency of Northeastern Fire Insurance Company of Pennsylvania.
c. Claims covered by the New Jersey Surplus Lines Insurance Guaranty Fund included claims by New Jersey residents or claims arising from property permanently located in New Jersey, in an amount up to the lesser of the policy limit or $300,000, subject to policy deductibles, thereby redistributing some of the economic burden of surplus lines insurer failures.
d. The New Jersey Surplus Lines Insurance Guaranty Fund currently contains a balance of approximately $80,000,000 and $40,000,000 is sufficient to satisfy existing covered claims.
e. The Legislature believes that, beyond the payment of existing covered claims, it is good public policy to maintain surplus lines insurance guaranty benefits for certain lines of insurance in the future.
L.2002,c.30,s.1.
17:22-6.71 Purpose, application of act.
2. The purpose of this act is to provide a mechanism for the payment of covered claims under certain insurance policies issued by eligible surplus lines insurers; to minimize excessive delays in the payment of the covered claims against insolvent, eligible, nonadmitted insurers; and to avoid financial loss to claimants or policyholders because of the insolvency of an eligible, nonadmitted insurer.
On and after July 27, 1984 and before June 25, 2002, P.L.1984, c.101 (C.17:22-6.70 et seq.) shall apply to all property and casualty lines of direct insurance authorized under R.S.17:17-1, except workers@ compensation insurance, title insurance, surety bonds, credit insurance, mortgage guaranty insurance, municipal bond coverage, fidelity insurance, investment return assurance, and ocean marine insurance. This act shall also not apply to reinsurance of any kind.
On or after June 25, 2002, P.L.1984, c.101 (C.17:22-6.70 et seq.) shall apply only to medical malpractice liability insurance as defined in subsection d. of section 3 of P.L.1975, c.301 (C.17:30D-3) and property insurance covering owner occupied dwellings of less than four dwelling units. On or after June 25, 2002, P.L.1984, c.101 (C.17:22-6.70 et seq.) shall not apply to reinsurance of any kind.
L.1984,c.101,s.2; amended 1984, c.207, s.1; 2002, c.30, s.2; 2004, c.165, s.1.
17:22-6.72 Definitions relative to the Surplus Lines Insurance Guaranty Fund.
3. Affiliate~ means a person who directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with an insolvent insurer on December 31 of the year immediately preceding the date the insurer becomes an insolvent insurer.
~Association~ means the New Jersey Property-Liability Insurance Guaranty Association created pursuant to P.L.1974, c.17 (C.17:30A-1 et seq.).
~Commissioner~ means the Commissioner of Banking and Insurance.
~Covered claim~ means an unpaid claim, including a claim for unearned premiums, which arises out of and is within the coverage, and not in excess of the applicable limits of an insurance policy to which this act applies, and which was issued by a surplus lines insurer which was eligible to transact insurance business in this State at the time the policy was issued and which has been determined to be an insolvent insurer on or after June 1, 1984, but prior to June 25, 2002, if (1) the claimant or policyholder is a resident of this State at the time of the occurrence of the insured event for which a claim has been made, provided that for an entity other than an individual, the residence of the claimant or insured is the state in which its principal place of business was located at the time of the insured event; or (2) the claim is a first party claim for damage to property with a permanent location in this State. A ~covered claim~ which arises because of an insolvency occurring on or after June 25, 2002 shall be limited to an unpaid claim, including a claim for unearned premiums, which arises out of either medical malpractice liability insurance coverage or property insurance covering owner occupied dwellings of less than four dwelling units within the coverage, and not in excess of the applicable limits, of an insurance policy to which P.L.1984, c.101 (C.17:22-6.70 et seq.) applies, and which was issued by a surplus lines insurer which was eligible to transact insurance business in this State at the time the policy was issued and which has been determined to be an insolvent insurer on or after June 25, 2002, if (1) the claimant or policyholder is a resident of this State at the time of the occurrence of the insured event for which a claim has been made, provided that for an entity other than an individual, the residence of the claimant or insured is the state in which its principal place of business was located at the time of the insured event; or (2) the claim is a first party claim for damage to property with a permanent location in this State.
~Covered claim~ shall not include: (1) any amount due any reinsurer, insurance pool or underwriting association, as subrogation recoveries or otherwise, except that a claim for any such amount, asserted against a person insured under a policy issued by a surplus lines insurer which has become an insolvent insurer, which, if it were not a claim by or for the benefit of a reinsurer, insurer, insurance pool, or underwriting association, would be a ~covered claim,~ may be filed directly with the receiver of the insolvent insurer, but in no event may any such claim be asserted in any legal action against the insured of that insolvent insurer; (2) amounts for interest on unliquidated claims; (3) punitive damages unless covered by the policy; (4) counsel fees for prosecuting suits for claims against the fund; (5) assessments or charges for failure by an insolvent insurer to have expeditiously settled claims; (6) counsel fees and other claim expenses incurred prior to the date of insolvency; (7) a claim filed with the fund, liquidator or receiver of an insolvent insurer after the final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer or, if a final date is not set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer, two years from the date of the order of liquidation, unless the claimant demonstrates unusual hardship and the commissioner approves of treatment of the claim as a ~covered claim.~ ~Unusual hardship~ shall be defined in regulations promulgated by the commissioner. With respect to insurer insolvencies pending as of the effective date of P.L.2004, c.165 (C.17:22-6.84 et al.), a ~covered claim~ shall not include a claim filed with the fund, liquidator or receiver of an insolvent insurer: (a) more than one year after the effective date of P.L.1996, c. 156 or (b) the date set by the court for the filing of claims against the liquidator or receiver of the insolvent insurer, whichever date occurs later; and (8) any first party claim by an insured whose net worth exceeds $25 million on December 31 of the year prior to the year in which the insurer becomes an insolvent insurer provided that the insured@s net worth on that date shall be deemed to include the aggregate net worth of the insured and all of its affiliates as calculated on a consolidated basis.
~Exhaust~ means with respect to other insurance, the application of a credit for the maximum limit under the policy provided, however, in any case where continuous indivisible injury or property damage occurs over a period of years as a result of exposure to injurious conditions, exhaustion shall be deemed to have occurred only after a credit for the maximum limits under all other coverages, primary or excess, if applicable, issued in all other years has been applied. With respect to health insurance and workers@ compensation insurance, ~exhaust~ means the application of a credit for the amount of recovery under the insurance policy. With respect to another insurance guaranty association or its equivalent, ~exhaust~ means the application of a credit for the maximum statutory limit of recovery from that other guaranty association or its equivalent. The amount of a covered claim payable by the fund shall be reduced by the amount of any applicable credits.
~Fund~ means the New Jersey Surplus Lines Insurance Guaranty Fund created pursuant to section 4 of this act.
~Insolvent insurer~ means an insurer which was an eligible surplus lines insurer at the time the insurance policy was issued or when the insured event occurred, and against whom an order of liquidation has been entered with a finding of insolvency by a court of competent jurisdiction in this State or the state or place in which the surplus lines insurer is domiciled. ~Insolvent insurer~ does not include an admitted insurer or any insurance exchange issuing insurance pursuant to section 10 of P.L.1960, c.32 (C.17:22-6.44).
~Member insurer~ means an eligible, nonadmitted or surplus lines insurer required to be a member of, and that is subject to, assessments by the fund.
~Net direct written premiums~ means direct gross premiums on insurance policies written by a surplus lines insurer to which this act applies, less return premiums thereon and dividends paid or credited to policyholders on that direct business. If a policy issued by a surplus lines insurer covers risks or exposures only partially in this State, the ~net direct written premiums~ shall be computed, for assessment purposes, on that portion of the premium subject to the premium receipts tax levied in accordance with section 25 of P.L.1960, c.32 (C.17:22-6.59). ~Net direct written premiums~ do not include premiums on contracts between insurers or reinsurers.
~Person~ means any individual, corporation, partnership, association or voluntary organization.
~Surplus lines insurer~ means a nonadmitted insurer approved as an eligible, nonadmitted or unauthorized insurer pursuant to section 11 of P.L.1960, c.32 (C.17:22-6.45) at the time the policies were issued against which a covered claim may be filed in accordance with this act.
L.1984,c.101,s.3; amended 1984, c.207, s.2; 1987, c.237; 1996, c.156, s.3; 2002, c.30, s.3; 2004, c.165, s.2.
17:22-6.73 Surplus Lines Insurance Guaranty Fund.
4. There is created a private, nonprofit, unincorporated, legal entity to be known as the New Jersey Surplus Lines Insurance Guaranty Fund. All surplus lines insurers shall be and remain member insurers of the fund as a condition of their continued eligibility pursuant to section 11 of P.L.1960, c.32 (C.17:22-6.45). The fund shall be managed and administered by the New Jersey Property-Liability Insurance Guaranty Association. The association shall exercise all of the powers vested in the fund under this act, and such other powers as may be necessary or appropriate to the fulfilling of its responsibilities under this act. The association shall administer the affairs of the fund in accordance with the ~New Jersey Property-Liability Guaranty Association Act,~ P.L.1974, c.17 (C.17:30A-1 et seq.) and its plan of operation adopted pursuant to section 9 (C.17:30A-9), insofar as the provisions of that act and that plan are not thereof inconsistent with the provisions of this act, and subject to any amendments to the plan as may be necessary or appropriate to effectuate the purposes of this act. After the excess moneys in the fund are transferred to the General Fund pursuant to section 5 of P.L.1984, c.101 (C.17:22-6.74), the association shall be responsible for the run-off and wind-up of all covered claims existing before June 25, 2002. On or after June 25, 2002, the operations and obligations of the fund pursuant to P.L.1984, c.101 (C.17:22-6.70 et seq.), with respect to eligible surplus lines insurers determined to be insolvent after that date, other than eligible surplus lines insurers issuing policies for medical malpractice liability insurance or property insurance covering owner occupied dwellings of less than four dwelling units, shall be terminated. On or after June 25, 2002, the fund shall only provide coverage for eligible surplus lines insurers issuing medical malpractice liability insurance or property insurance covering owner occupied dwellings of less than four dwelling units determined to be insolvent after that date.
In order to assist the association in implementing the provisions of this act, there is created an advisory body to the board of directors of the association to be comprised of two members representing eligible surplus lines insurers and two members representing surplus lines agents, to be appointed by and to serve at the pleasure of the commissioner. The association shall consult the advisory body on any matter relating to the provisions of P.L.1984, c.101 (C.17:22-6.70 et seq.).
L.1984,c.101,s.4; amended 1984, c.207, s.3; 2002, c.30, s.4.
17:22-6.74 Powers, duties and obligations of the Surplus Lines Insurance Guaranty Fund.
5. a. The fund shall:
(1) Be obligated to the extent of the covered claims against an insolvent insurer incurred prior to or 30 days after the determination of insolvency, or before the policy expiration date, if less than 30 days after that determination, or before the policyholder replaces the policy or causes its cancellation, if he does so within 30 days of the determination. The fund@s obligation for covered claims shall not be greater than $300,000.00 per occurrence, subject to any applicable deductible and self-insured retention contained in the policy. The commissioner may pay a portion of or defer the fund@s obligations for covered claims based on the moneys available in the fund. In no event shall the fund be obligated to a policyholder or claimant in excess of the limits of liability of the insolvent insurer stated in the policy from which the claim arises. Any obligation of the fund to defend an insured shall cease upon the fund@s payment or tender of an amount equal to the lesser of the fund@s covered claim statutory limit or the applicable policy limit;
(2) Be deemed the insurer to the extent of its obligation on the covered claims and to such extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent;
(3) Assess member insurers in accordance with section 6 of this act in amounts necessary to pay:
(a) Obligations of the fund under paragraph (1) of this subsection,
(b) Expenses of handling covered claims,
(c) Any other expenses incurred in the implementation of the provisions of this act;
(4) Investigate claims brought against the fund; and adjust, compromise, settle, and pay covered claims to the extent of the fund@s obligation; and deny all other claims; and may review settlements, releases and judgments to which the insolvent insurer or its policyholders were parties to determine the extent to which the settlements, releases and judgments may be properly contested;
(5) Notify those persons as the commissioner directs under section 8 of this act;
(6) Handle claims through the association@s employees or representatives, or through one or more insurers or other persons designated as servicing facilities;
(7) Pay the other expenses of the association in administering the provisions of this act; and
(8) (Deleted by amendment, P.L.2004, c.165.)
b. The fund may:
(1) Sue or be sued;
(2) Negotiate and become a party to those contracts which are necessary to carry out the purpose of this act;
(3) Perform those other acts which are necessary or appropriate to effectuate the purpose of this act;
(4) (Deleted by amendment, P.L.2002, c.30.)
(5) With the approval of the commissioner, borrow and separately account for moneys from any source, including but not limited to the New Jersey Property-Liability Insurance Guaranty Association and the Unsatisfied Claim and Judgment Fund, in such amounts and on such terms as the New Jersey Property-Liability Insurance Guaranty Association may determine are necessary or appropriate to effectuate the purposes of P.L.2003, c.89 (C.17:30A-2.1 et al.) in accordance with the association@s plan of operation; and
(6) Make loans, in such amounts and on such terms as the association may determine are necessary or appropriate, to the New Jersey Property-Liability Insurance Guaranty Association in accordance with the provisions of the ~New Jersey Property-Liability Insurance Guaranty Association Act,~ P.L.1974, c.17 (C.17:30A-1 et seq.) and the ~Unsatisfied Claim and Judgment Fund Law,~ P.L.1952, c.174 (C.39:6-61 et seq.).
L.1984,c.101,s.5; amended 1984, c.207, s.4; 2002, c.30, s.5; 2003, c.89, s.81; 2004, c.165, s.3.
17:22-6.75. Financial support; surcharges; loans
a. In order to provide the monies necessary to meet the fund@s obligations and expenses under this act:
(1) Each member insurer, including a surplus lines insurer made eligible on or after the effective date of this act, shall make an initial one time payment of $25,000.00, to be made to the fund within 60 days of the effective date of this act; and
(2) A surcharge on the policy premium, as determined by the commissioner, shall be levied and collected on any surplus lines coverage issued or renewed on or after the effective date of this amendatory act. The surcharge shall be collected by the surplus lines agent at the time of delivery of the cover note, certificate of insurance, policy or other initial confirmation of insurance. No premium receipts tax, commissions or assessments shall be levied or collected on the surcharge. The surplus lines agent shall forward to the fund the amount of the surcharge on a quarterly payment basis. Each member insurer and surplus lines agent shall be notified of the policy surcharge not later than 10 days before it is due. The amount of the surcharge may be, from time to time, adjusted, terminated or reinstituted by the commissioner, as he may deem necessary to meet the current and projected obligations and expenses of the fund, except that in no case shall the surcharge in any year exceed 4% of the policy premium.
b. The fund may, from time to time, borrow monies from the New Jersey Property-Liability Insurance Guaranty Association to pay the fund@s obligations and expenses under this act, which are in excess of the monies available to the fund therefor. The aggregate amount owed by the fund to the association shall at no time exceed $10,000,000.00, exclusive of interest charges, except that the commissioner may limit the amount of loans outstanding at any one time to less than $10,000,000.00 upon a finding that the additional monies requested by the fund would reduce the monies available to the association below a level necessary to meet the current and prospective obligations of the association pursuant to paragraph (3) of subsection a. of section 8 of P.L.1974 (C.17:30A-8). Monies borrowed under this subsection shall be paid back to the association in accordance with a payment schedule approved by the commissioner. An interest charge shall be levied on all monies borrowed under this subsection at the current market rate of interest, using an index or indexes to be selected by the commissioner.
c. No policy surcharge shall be levied or collected upon a determination by the commissioner that the fund@s unencumbered assets exceed the fund@s outstanding and anticipated obligations and other liabilities, including expenses chargeable to the fund, by $10,000,000.00 or more.
L.1984, c.101, s. 6, eff. July 27,1984. Amended by L.1984, c.207, s.5.
17:22-6.76. Suspension of eligibility of member insurer or license of surplus lines agent; interest on unpaid assessment or surcharge; reinstatement
The commissioner may, after notice, suspend the eligibility of a member insurer or the license of a surplus lines agent that fails to pay an assessment or policy surcharge under section 6 of this act when due, or any interest accruing thereon, or fails to comply with the applicable provisions of the plan of operations. The commissioner may, after notice and hearing in accordance with the ~Administrative Procedure Act,~ P.L.1968, c.410 (C.52:14B-1 et seq.), withdraw the eligibility of that insurer or suspend or revoke the surplus lines agent@s license.
Interest shall be charged on the amount of the unpaid assessment or surcharge subject to the provisions of this section. The interest charge shall be at the current market rate of interest, using an index or indexes to be selected by the commissioner, and shall be payable at the time the unpaid assessment or policy surcharge is paid to the fund.
Eligibility of a surplus lines insurer or the license of an agent shall not be restored or reissued until all monies owing under this section have been paid to the fund.
L.1984, c.101, s. 7, eff. July 27,1984. Amended by L.1984, c.207, s.6.
17:22-6.77 Declaration of insolvency, actions of commissioner.
8. a. An insolvent insurer shall forward to the commissioner and to the association a copy of the declaration of insolvency within three business days of the date of the determination of the insolvency. A surplus lines insurer shall forward to the fund and commissioner a copy of any complaint seeking an order of liquidation with a finding of insolvency against the insurer at the same time that such complaint is filed with a court of competent jurisdiction.
b. The commissioner shall:
(1) Order the termination of all in-force policies of an insolvent insurer within 30 days of the date of determination of the insolvency;
(2) Upon request, provide the fund with a statement of the net direct written premiums of each member insurer; and
(3) Require surplus lines agents or the fund to notify the policyholders of the insolvent insurer and any other interested parties of the determination of insolvency and of their rights under this act. Notification shall be by publication in newspapers of general circulation as the commissioner shall direct.
L.1984,c.101,s.8; amended 1984, c.207, s.7; 2004, c.165, s.4.
17:22-6.78 Assignment of rights by person recovering.
9. a. Any person recovering under this act shall be deemed to have assigned his rights under the policy from which the claim arose to the fund to the extent of his recovery from the fund. Every policyholder or claimant seeking the protection of this act shall cooperate with the fund to the same extent as that person would have been required to cooperate with the insolvent insurer. The fund shall have no cause of action against the policyholder of the insolvent insurer for any sums it has paid out, except for those causes of action as the insolvent insurer would have had if the sums had been paid by the insolvent insurer. In the case of an insolvent insurer operating on a plan with an assessment liability, payments of claims by the fund shall not operate to reduce the liability of policyholders to the receiver, liquidator, or statutory successor for unpaid assessments.
b. The receiver, liquidator, or statutory successor of an insolvent insurer shall be bound by settlements of covered claims by the fund or its representatives. The court having jurisdiction shall grant the covered claims paid by the fund priority, against the assets of the insolvent insurer, over any claims against the assets of the insolvent insurer by claimants having received any payment from the fund for the covered claims, to the extent of the amount of the payments made by the fund. The expenses of the fund in handling claims shall be accorded the same priority as the liquidator@s expenses.
c. The fund shall periodically file with the receiver or liquidator of the insolvent insurer statements of the covered claims paid by the fund and estimates of anticipated claims on the fund, which shall preserve the rights of the fund against the assets of the insolvent insurer.
d. The liquidator, receiver, or statutory successor of an insolvent insurer covered by this act shall permit access by the fund or its representative to all of the insolvent insurer@s records which would assist the fund in carrying out its functions under this act with regard to covered claims. In addition, the liquidator, receiver or statutory successor shall provide the fund or its representative with copies, or permit copies to be made of the insolvent insurer@s records upon request, and at the expense of the fund.
e. The fund shall have the right to recover from the following persons the amount of any covered claim paid to or on behalf of such person pursuant to this act:
(1) An insured whose net worth on December 31 of the year immediately preceding the date the insurer becomes an insolvent insurer exceeds $25 million and whose liability obligations to other persons are satisfied in whole or in part by payments made under P.L.1984, c.101 (C.17:22-6.71 et seq.); and
(2) Any person who is an affiliate of the insolvent insurer and whose liability obligations to other persons are satisfied in whole or in part by payments made under P.L.1984, c.101 (C.17:22-6.71 et seq.).
L.1984,c.101,s.9; amended 2004, c.165, s.5.
17:22-6.79 Recovery of covered claims, exhaustion of other sources.
10. a. Any person having a covered claim that may be recovered from more than one insurance guaranty association, or its equivalent, shall be required to exhaust first his rights under the statute governing the association of the place of residence of the policyholder at the time of the insured event, except that if it is a first party claim for damage to property with a permanent location, he shall seek recovery first from the association of the jurisdiction in which the property is located. If recovery is denied or deferred by that association, a person may proceed to seek recovery from any other insurance guaranty association from which recovery may be legally sought.
b. Any person having a claim under an insurance policy other than a policy of an insolvent insurer, shall be required to exhaust first his right under that other policy. For purposes of this subsection b., a claim under an insurance policy shall include a claim under any kind of insurance, whether it is a first-party or third-party claim, and shall include without limitation, general liability, accident and health insurance, workers@ compensation, health benefits plan coverage, primary and excess coverage, if applicable, and all other private, group or governmental coverages.
L.1984,c.101,s.10; amended 1996, c.156, s.4; 2004, c.165, s.6.
17:22-6.80. Examination of insurers in financial condition hazardous to policyholders or public; request to domiciliary jurisdiction for examination and report
In the event the commissioner has sufficient basis to believe that the financial condition of a member insurer is hazardous to the policyholders or the public, the commissioner shall request the appropriate regulatory authority of the domiciliary jurisdiction of that member insurer to examine and report back to the commissioner on the financial condition of the member insurer.
L.1984, c.101, s. 11, eff. July 27,1984.
17:22-6.81. Examination and regulation of fund; financial report
The fund shall be subject to examination and regulation by the commissioner. The association, on behalf of the fund, shall submit, not later than March 31 of each year, a financial report for the preceding calendar year in a form approved by the commissioner.
L.1984, c.101, s. 12, eff. July 27,1984.
17:22-6.82. Immunity from liability of persons acting under this law
There shall be no liability on the part of, and no cause of action of any nature shall arise against any member insurer, the fund, the association or its board of directors, or agents or employees, or the commissioner or his representatives for any action taken by them in the performance of their powers and duties under this act.
L.1984, c.101, s. 13, eff. July 27,1984.
17:22-6.83. Coverage under this act; notice on application and policy or certificate; advertisement
A member insurer shall include on the application and on the face of the policy or certificate for insurance subject to this act, a notice stating that the insurer is not an admitted company in New Jersey, but that the policy coverage has the protection, in whole or in part, of the New Jersey Surplus Lines Insurance Guaranty Fund, if the eligible surplus lines insurer becomes bankrupt or insolvent. A member insurer or an agent or broker may advertise that policy coverages offered by a member insurer and subject to the provisions of this act are protected by the New Jersey Surplus Lines Insurance Guaranty Fund, should the surplus lines insurer become bankrupt or insolvent. The commissioner shall determine the contents and form of the notice.
L.1984, c.101, s. 14, eff. July 27,1984. Amended by L.1984, c.207, s.8.
17:22-6.84 Proceedings involving insolvent insurer stayed; conditions.
7. All proceedings in which the insolvent insurer is a party or is obligated to defend a party in any court in this State shall, subject to full or partial waiver by the fund in specific cases involving covered claims, be stayed for 120 days, and any additional time thereafter as may be determined by the court, from the date of the order of liquidation or any ancillary proceeding initiated in the State, whichever is later, to permit proper defense by the fund of all pending causes of action. Public notice of the stay shall be by publication in three newspapers of general circulation in this State within 10 days of the order of liquidation. With respect to any covered claims arising from a judgment under any decision, verdict or finding based on the default of the insolvent insurer or its failure to defend an insured, the fund either on its own behalf or on behalf of that insured may apply to have such judgment, order, decision, verdict or finding set aside by the court in which such judgment, order, decision, verdict or finding is entered and shall be permitted to defend against such claim on the merits.
L.2004,c.165,s.7.
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