ASSEMBLY, No. 1301
STATE OF NEW JERSEY
Introduced Pending Technical Review by Legislative Counsel
PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION
By Assemblyman GREENWALD
An Act concerning rates for automobile insurance and amending P.L.1988, c.156.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 5 of P.L.1988, c.156 (C.17:29A-44) is amended to read as follows:
5. a. [Beginning July 1, 1989, a] A filer may charge rates for private passenger automobile insurance in the voluntary market which are not in excess of the following:
(1) For private passenger automobile personal injury protection coverage, residual bodily injury and property damage insurance, the maximum permissible annual rate increase applicable to each rate level utilized by an insurer in the voluntary market pursuant to section 6 of P.L.1988, c.156 (C.17:29A-45) shall be a Statewide average rate change of not more than the last published increase in the medical care services components of the national Consumer Price Index, all urban consumers, U.S. city average[, plus three percentage points].
(2) For private passenger automobile physical damage coverage, the maximum permissible annual rate increase applicable to each rate level utilized by an insurer in the voluntary market pursuant to section 6 of P.L.1988, c.156 (C.17:29A-45) shall be a Statewide average rate change of not more than the last published increase in the automobile maintenance and repair components of the national Consumer Price Index, U.S. city average[, plus three percentage points].
b. For the purposes of this section, "Statewide average rate change" means the total Statewide premium for all coverages combined at the rates in effect at the time of the filing for each rate level.
c. Any change in excess of the rate changes permitted by paragraphs (1) and (2) of subsection a. shall be subject to the provisions of P.L.1944, c.27 (C.17:29A-1 et seq.).
d. If, at any time, the commissioner believes that an increase in either or both of the published indices will produce rate levels which are excessive, he may modify the Statewide average rate change which may be used pursuant to this section.
e. A filer may implement a change in rate level, pursuant to subsection a. of this section, in whole or in part, in a single or in multiple filings by making an informational filing with the commissioner in a manner and form approved by the commissioner. The filing shall include a statement of the reason or reasons for the change in rate level, including, but not limited to, the claim and expense experience of the individual filer.
f. Other than filings made pursuant to subsection c. of this section, [neither] the provisions of subsection c. of section 14 of P.L.1944, c.27 (C.17:29A-14)[, nor the provisions of section 19 of P.L.1974, c.27 (C.52:27E-18),]shall not apply to any filing made pursuant to this section. However, the commissioner shall provide a copy of any filing made or other information provided by a filer pursuant to the provisions of this section to the appropriate division or office in the Department of Insurance. The appropriate division or office in the Department of Insurance may challenge a rate change implemented pursuant to subsection a. of this section after the effective date of the rate change by filing such challenge in writing with the commissioner within 30 days of the effective date of the rate change. The commissioner shall hear the matter on an expedited basis and shall render a final determination within six months of the date of filing. The commissioner may, for good cause, extend this six-month period up to an additional three months. If that division or office in the Department of Insurance prevails, the commissioner shall reduce or rescind the rate change as appropriate. If the commissioner reduces or rescinds a rate change as a result of a challenge by the appropriate division or office in the Department of Insurance filed pursuant to the provisions of this subsection, the filer shall bear the cost of the reasonable expenses incurred by that division or office in the Department of Insurance in maintaining the challenge.
g. [The commissioner shall monitor the implementation and use of flex rating pursuant to this section and shall report his findings to the Senate Labor, Industry and Professions Committee and the Assembly Insurance Committee, or their successors, including any legislative proposals, no later than July 1, 1992. This report shall provide an evaluation of the use of this rating mechanism and its impact on the availability and affordability of private passenger automobile insurance in this State and the depopulation of the New Jersey Automobile Full Insurance Underwriting Association and shall include any legislative
proposals or other recommendations of the commissioner.](Deleted by amendment, P.L. , c. .)
(cf: P.L.1994, c.58, s.44)
2. This act shall take effect immediately.
STATEMENT
This bill modifies the formula for determining the "flex rates" for automobile insurance. The "flex rate" provisions of the automobile insurance rating laws allow annual increases in the rates for certain coverages based on inflation as reflected in certain components of the Consumer Price Index (CPI), plus three percentage points. This bill removes the addition of the three percentage points. In addition, the bill deletes an outdated provision of law which required a report of the commissioner on the "flex rate" provisions on or before July 1, 1992.
Removes 3% addition in the formula for flex rating for automobile insurance rates.