SENATE, No. 1629
STATE OF NEW JERSEY
INTRODUCED OCTOBER 28, 1996
By Senators ADLER and CODEY
An Act concerning certain fines which may be imposed by the Commissioner of Insurance and amending P.L.1987, c.293.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 17 of P.L.1987, c.293 (C.17:22A-17) is amended to read as follows:
17. a. The commissioner may refuse to issue or renew a license, or may revoke or suspend a license if he finds after notice and an opportunity for hearing in accordance with the "Administrative Procedure Act," P.L.1968, c. 410 (C. 52:14B-1 et seq.) and any rules or regulations adopted thereunder, that the person has:
(1) Willfully violated any provision of the insurance laws of this State;
(2) Intentionally withheld material information or made a material misstatement in an application for a license;
(3) Obtained or attempted to obtain a license by fraud or misrepresentation;
(4) Committed any fraudulent act;
(5) Misappropriated or converted to his own use, or has illegally withheld, moneys which were received in the conduct of business and belonged to insurers, policyholders or others;
(6) Used the license not for the purpose of engaging in the insurance business with the general public, but primarily for the purpose of soliciting or negotiating insurance contracts or policies covering himself, members of his family, members or employees of any organization of which he is an officer, or officers or employees of an organization in which the licensee or members of his immediate family own a controlling interest, or the property or interests of those persons. A license shall be deemed to have been used principally for this purpose if the commissioner finds that during any 12-month period the aggregate commissions or other compensation accruing or to accrue from that business have exceeded or will exceed the aggregate commissions or other compensation accruing or to accrue on other business written by the applicant or licensee during the same period;
(7) Materially misrepresented the terms or conditions of insurance contracts or policies to any policyholder, insurance company, insurance producer or member of the general public;
(8) Paid a rebate to any person or paid a commission, brokerage fee or other compensation to a person who is not licensed as an insurance producer in this State, or any state other than this State, for services rendered as an insurance producer;
(9) Aided, abetted or assisted another person in violating any of the insurance laws of this State;
(10) Has been convicted of a crime involving moral turpitude or any crime reflecting on the insurance producer's fitness for licensure;
(11) Failed to file or maintain with the commissioner a complete and accurate business and home mailing address or to immediately notify the commissioner of any change in the business or home mailing address;
(12) Failed to file and maintain with the commissioner the name or names of licensed employers or employees or to immediately notify the commissioner of a change of employer or of licensed employees in a manner prescribed by rule or regulation of the commissioner;
(13) Failed to pay any fine imposed or restitution ordered by the commissioner;
(14) Failed to appear in response to any subpena issued by the commissioner or his authorized designee; failed to produce any documents or other material requested in such a subpena; or refused or failed to cooperate with an investigation by the commissioner of the activities of the person or any other licensee;
(15) Failed to keep, maintain or make available for inspection by the commissioner those records that the commissioner shall require to be kept and maintained by rule or regulation;
(16) Failed to notify the commissioner within 30 days of his conviction for any crime, indictment or the filing of any formal criminal charges, or the suspension or revocation of any insurance license or authority by a state, other than this State, or the initiation of formal disciplinary proceedings in a state, other than this State, affecting the producer's insurance license; or failed to supply any documentation that the commissioner may request in connection therewith;
(17) Failed at any time to possess cash and accounts receivable for insurance premiums in an amount equal to or in excess of the accounts payable by the licensee for insurance premiums. Those accounts receivable shall not include insurance premiums owing the licensee more than 120 days after the last day of the month during which the insurance coverage became effective. As used in this section, "insurance premiums" include unearned premiums or premiums to be refunded to policyholders and both written and earned premiums whether actually collected from policyholders or not. The filing, within the preceding 10 years, of a petition in bankruptcy, a deed of assignment for the benefit of creditors pursuant to N.J.S. 2A:19-1 et seq., or any similar filing acknowledging at the time of that filing that the licensed insurance producer owed to one or more insurance companies, insurance producers, policyholders, premium finance companies or other persons any insurance premiums, including any unearned or return premiums due policyholders in an aggregate amount of $5,000.00 or more, shall create a presumption that there has been a violation of this subsection;
(18) Collected from an insured or prospective insured any fee or other compensation other than a commission deductible from an insurance premium, except when acting as an insurance broker or insurance consultant and:
(a) The fee or other compensation is based upon a written memorandum signed by the party to be charged, which memorandum specifies or defines the amount of compensation; and
(b) The amount of the fee or other compensation bears a reasonable relationship to the services rendered and is not discriminatory.
(19) Failed willfully or repeatedly to comply with standards and practices established pursuant to the plan of operation of any statutory mechanism for providing insurance coverage in this State, including, but not limited to, any automobile insurance plan operating pursuant to P.L.1970, c.215 (C.17:29D-1), the New Jersey Automobile Full Insurance Underwriting Association operating pursuant to P.L.1983, c.65 (C.17:30E-1 et seq.) and the New Jersey Insurance Underwriting Association operating pursuant to P.L.1968, c.129 (C.17:37A-1 et seq.);
(20) Demonstrated unworthiness, lack of integrity, bad faith, dishonesty, financial irresponsibility or incompetency to transact business as an insurance producer.
b. In addition or as an alternative to any other penalty, the commissioner may impose a fine of up to $5,000.00 for the first violation of any provision of this act, and not exceeding $10,000.00 for each subsequent violation, and in appropriate circumstances may order restitution of moneys owed any person and reimbursement of the costs of investigation and prosecution. Whenever a violation involves the sale of insurance without a proper license, the commissioner may impose, in addition to or as an alternative to any other penalty, a fine equal to the amount of any commission or fee received in connection with the sale by the person lacking a proper license and may order reimbursement of the costs of investigation and prosecution.
No person whose license has been revoked shall be issued a license unless the costs assessed pursuant to this subsection are paid.
c. The commissioner may promulgate rules or regulations necessary to implement the provisions of this section.
(cf: P.L.1987, c.293, s. 17)
2. This act shall take effect immediately.
STATEMENT
This bill implements one of the recommendations made by the State Commission of Investigation in its report entitled "Insurance Interests and Licensure of Former Insurance Commissioner Andrew J. Karpinski", issued in October, 1996. The bill provides that in the case of a violation of the insurance laws which involves the sale of insurance without a proper license, the commissioner may impose, in addition to or as an alternative to any other penalty, a fine equal to the amount of any commission or fee received in connection with the sale by the person lacking a proper license and may order reimbursement of the costs of investigation and prosecution. At present, the commissioner may penalize licensees who violate the insurance laws by refusing to issue or renew a license, revoking or suspending a license, imposing fines (up to $5,000 for a first violation; not more than $10,000 for each subsequent violation), or ordering restitution and the payment of costs.
Allows Commissioner of Insurance to impose additional fine for violations involving sale of insurance without proper license.