New Jersey Administrative Code
Title 11 - INSURANCE
Chapter 17 - PRODUCER LICENSING
Subchapter 6 - MANAGING GENERAL AGENTS
Section 11:17-6.3 - Requirements for MGA

Universal Citation: NJ Admin Code 11:17-6.3

Current through Register Vol. 56, No. 6, March 18, 2024

(a) Subject to (f) below, no person, firm, association or corporation shall act in the capacity of a managing general agent with respect to risks located in this State for an insurer licensed in this State unless such person is licensed as an insurance producer in this State, with authority for the kind or kinds of business to be transacted.

(b) Subject to (f) below, no person, firm, association or corporation shall act in the capacity of a managing general agent representing an insurer domiciled in this State with respect to risks located outside of this State unless such person is licensed as a producer in this State.

(c) Subject to (f) below, all managing general agents shall acquire and maintain a surety bond for the protection of the insurer contracting with the managing general agent. The bond shall be in the amount of $ 100,000 or 10 percent up to $ 500,000 of the direct premium written by the insurer for the previous calendar year that is attributable to the managing general agent, whichever is greater.

1. The bond amount shall be adjusted accordingly on or before April 1st of each year.

2. The bond shall be executed by an admitted company authorized to transact fidelity and surety business in New Jersey. The bond shall not be written by the insurer or an affiliate of the insurer contracting with the managing general agent.

3. The executed bond shall be submitted to the insurance company contracting with the MGA.

(d) Subject to (f) below, all managing general agents shall acquire and maintain an errors and omissions insurance policy. The policy coverage limits shall be set at $ 100,000 or 10 percent up to $ 500,000 of the direct premium written by an insurer for the previous calendar year that is attributable to the MGA, whichever is greater.

1. The policy coverage limits shall be adjusted accordingly on or before April 1st of each year.

2. The errors and omissions policy shall be issued by an insurer admitted to do business in New Jersey or an eligible surplus lines insurer. The policy shall not be written by the insurer or an affiliate of the insurer contracting with the MGA.

3. Proof of an errors and omissions insurance policy shall be submitted to the insurance company contracting with the MGA.

(e) The obligations of the MGA to maintain in force a bond and errors and omissions insurance as provided in this section shall continue until Notice of Termination of Managing General Agent Contract is filed with the Department as provided in this subchapter.

(f) An insurer authorized or admitted to transact property/casualty insurance in this State pursuant to 17:17-1 et seq. or 17:32-1 et seq., as applicable, that acts as an MGA for an unaffiliated insurer, shall not be subject to this section provided that the authorized or admitted insurer acting as an MGA for an unaffiliated insurer is authorized or admitted to transact the lines of insurance in this State for which it is acting as an MGA.

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