New Jersey Life Producer Practice Exam

Under what condition do federal antitrust laws apply to insurance in New Jersey?

1. Only when state regulations are ineffective

2. When the insurance is sold out of state

3. Only for non-profit insurance companies

4. When the market is monopolized

The correct answer is: Only when state regulations are ineffective

Federal antitrust laws apply to insurance in New Jersey primarily under the condition that state regulations are ineffective. This is aligned with the McCarran-Ferguson Act, which exempts the business of insurance from federal antitrust laws as long as it is regulated by state law. When state regulations fail to provide adequate oversight and consumers are unprotected or competition is stifled, federal antitrust laws can come into play to ensure fair competition and protect consumer interests. In scenarios where state laws effectively regulate the insurance industry, federal intervention is less likely. This principle underscores the importance of effective state regulation in maintaining the balance between allowing states to control the insurance market and preserving competition in instances where that control may be inadequate.