NJ PC State Law
Exam Questions
and Complete
Solutions Graded
A+
Denning [Date] [Course title]
,Paul vs. Virginia (1869) - Answer: Resulted in a landmark decision establishing the right of each state to
regulate the business of insurance. The Court ruled the insurance industry was not subject to the
commerce clause of the Constitution. This decision stood until reversed in 1944.
U.S. vs. South-Eastern Underwriters Association (1944) - Answer: The South-Eastern Underwriters
Association (SEUA) was found guilty of price fixing and other violations of the Sherman Anti-trust Act.
The Supreme Court ruled insurance was interstate commerce and, when conducted across state lines,
was subject to federal regulations.
McCarran-Ferguson Act (1945) - Answer: The McCarran-Ferguson Act of 1945, also known as Public Law
15, states the regulation and taxation of the insurance business by individual states is in the public's best
interest. In addition, federal antitrust laws apply only to the extent that state law does not regulate
insurance. With the McCarran-Ferguson Act as public law, state government—and not the Interstate
Commerce Commission—regulates the insurance industry.
Court actions - Answer: are interpretations and rulings by courts of law to settle dispute. Interpretations
are required when a case involves a statute whose meaning is vague or ambiguous. The judge will use
canons of statutory interpretation, or common sense derived from common law, and legislative history
to resolve the meaning of statutes.
The Commissioner - Answer: is the administrator and chief executive office of the New Jersey
Department of Insurance, whose duties include:
-Administering the work of the department
-Appointing officers and other department personnel
-Discharging the functions, powers and duties of the department
-Formulating, issuing, and communicating rules and regulations including regulation of the companies,
agencies, boards, commissions, and other entities within its jurisdiction, including licensees, officers and
employees
-Reporting each year to the Governor and to the Legislature on the operations of the preceding fiscal
year
-Appointing advisory committees
Whenever someone has engaged in any unfair method of competition or any unfair or deceptive act or
practice, the Commissioner may issue a notice of a hearing, providing how many days notice? - Answer:
10
, What is the Penalty for a deceptive act or practice - Answer: $1,000 per violation. If the person knew or
reasonably should have known he/she was in violation the penalty may be increased to $5,000 for each
violation. In addition the Commissioner may impose a fine of up to $5,000 for the first violation, and up
to $10,000 for any subsequent violation of any provision of New Jersey insurance law.
Retrocession - Answer: Retrocession is the transfer of risk from one reinsurer to another reinsurer.
Certificate of Authority - Answer: A certificate issued by the Commissioner evidencing the authority of
an insurer to transact insurance in this State.
Insurance Agent - Answer: is authorized to sell, solicit, or negotiate insurance contracts, to collect
premiums, and to countersign insurance policies on an insurer's behalf.
Insurance Broker - Answer: acts as the representative of an insured or prospective insured. He/she may
places insurance with an insurance company but does not act as its agent.
Insurance Consultant - Answer: offers advice on the benefits, advantages or disadvantages under any
insurance policy or contract. To qualify for an insurance consultant's license, an individual must be
licensed as a producer.
Limited Lines - Answer: Bail bonds, car rental insurance, credit insurance, ticket insurance, travel
insurance, group mortgage cancellation, legal insurance, and self-storage personal property insurance.
Personal Lines - Answer: Property and casualty coverage sold to individuals and families for primarily
noncommercial purposes.
Casualty - Answer: Coverage against legal liability, including death, injury or disability or damage to real
or personal property.
Surplus Lines - Answer: Coverage written by unauthorized insurers.
Exam Questions
and Complete
Solutions Graded
A+
Denning [Date] [Course title]
,Paul vs. Virginia (1869) - Answer: Resulted in a landmark decision establishing the right of each state to
regulate the business of insurance. The Court ruled the insurance industry was not subject to the
commerce clause of the Constitution. This decision stood until reversed in 1944.
U.S. vs. South-Eastern Underwriters Association (1944) - Answer: The South-Eastern Underwriters
Association (SEUA) was found guilty of price fixing and other violations of the Sherman Anti-trust Act.
The Supreme Court ruled insurance was interstate commerce and, when conducted across state lines,
was subject to federal regulations.
McCarran-Ferguson Act (1945) - Answer: The McCarran-Ferguson Act of 1945, also known as Public Law
15, states the regulation and taxation of the insurance business by individual states is in the public's best
interest. In addition, federal antitrust laws apply only to the extent that state law does not regulate
insurance. With the McCarran-Ferguson Act as public law, state government—and not the Interstate
Commerce Commission—regulates the insurance industry.
Court actions - Answer: are interpretations and rulings by courts of law to settle dispute. Interpretations
are required when a case involves a statute whose meaning is vague or ambiguous. The judge will use
canons of statutory interpretation, or common sense derived from common law, and legislative history
to resolve the meaning of statutes.
The Commissioner - Answer: is the administrator and chief executive office of the New Jersey
Department of Insurance, whose duties include:
-Administering the work of the department
-Appointing officers and other department personnel
-Discharging the functions, powers and duties of the department
-Formulating, issuing, and communicating rules and regulations including regulation of the companies,
agencies, boards, commissions, and other entities within its jurisdiction, including licensees, officers and
employees
-Reporting each year to the Governor and to the Legislature on the operations of the preceding fiscal
year
-Appointing advisory committees
Whenever someone has engaged in any unfair method of competition or any unfair or deceptive act or
practice, the Commissioner may issue a notice of a hearing, providing how many days notice? - Answer:
10
, What is the Penalty for a deceptive act or practice - Answer: $1,000 per violation. If the person knew or
reasonably should have known he/she was in violation the penalty may be increased to $5,000 for each
violation. In addition the Commissioner may impose a fine of up to $5,000 for the first violation, and up
to $10,000 for any subsequent violation of any provision of New Jersey insurance law.
Retrocession - Answer: Retrocession is the transfer of risk from one reinsurer to another reinsurer.
Certificate of Authority - Answer: A certificate issued by the Commissioner evidencing the authority of
an insurer to transact insurance in this State.
Insurance Agent - Answer: is authorized to sell, solicit, or negotiate insurance contracts, to collect
premiums, and to countersign insurance policies on an insurer's behalf.
Insurance Broker - Answer: acts as the representative of an insured or prospective insured. He/she may
places insurance with an insurance company but does not act as its agent.
Insurance Consultant - Answer: offers advice on the benefits, advantages or disadvantages under any
insurance policy or contract. To qualify for an insurance consultant's license, an individual must be
licensed as a producer.
Limited Lines - Answer: Bail bonds, car rental insurance, credit insurance, ticket insurance, travel
insurance, group mortgage cancellation, legal insurance, and self-storage personal property insurance.
Personal Lines - Answer: Property and casualty coverage sold to individuals and families for primarily
noncommercial purposes.
Casualty - Answer: Coverage against legal liability, including death, injury or disability or damage to real
or personal property.
Surplus Lines - Answer: Coverage written by unauthorized insurers.
