ASSEMBLY, No. 2830

STATE OF NEW JERSEY

INTRODUCED MARCH 20, 1997

By Assemblyman GREENWALD, Assemblywomen POU, Quigley, Assemblyman Steele, Assemblywoman Weinberg, Assemblyman Gusciora, Assemblywomen Turner, Allen, Friscia, Gill, Assemblymen Dalton, Caraballo, Roberts, Charles, DeSopo, Blee, Arnone, Zisa, Assemblywoman Cruz-Perez, Assemblymen Doria, Garcia, Romano, Barnes, Wisniewski, R.Smith, Stanley, Jones and Geist

An Act concerning regulation of the insurance industry by the Department of Banking and Insurance, supplementing Title 17 of the Revised Statutes and Title 17B of the New Jersey Statutes.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. a. When the Department of Banking and Insurance receives complaints with respect to policies which represent five percent or more of an insurer’s entire book of business in New Jersey, regarding that insurer's practices and procedures in the handling of applications, claims or any other business practice or procedure, the department shall conduct an examination of the insurer and investigate the nature of the complaints.

    b. If, as a result of the examination and investigation, the department finds evidence of a violation of any law or regulation, the insurer shall have 90 days to correct the violation.

    c. At the end of 90 days, the department shall reexamine the insurer to determine whether the violation has been corrected. Notwithstanding any provision of law to the contrary, if the insurer has not corrected the violation, the insurer shall be subject to the penalties provided by law, including but not limited to a civil penalty in an amount of up to $2,000 for the first violation and up to $5,000 for the second and each subsequent violation.

    2. a. When the Department of Banking and Insurance receives complaints with respect to policies which represent five percent or more of an insurer’s entire book of business in New Jersey, regarding that insurer's practices and procedures in the handling of applications, claims or any other business practice or procedure, the department shall conduct an examination of the insurer and investigate the nature of the complaints.

    b. If, as a result of the examination and investigation, the department finds evidence of a violation of any law or regulation, the insurer shall have 90 days to correct the violation.

    c. At the end of 90 days, the department shall reexamine the insurer to determine whether the violation has been corrected. Notwithstanding any provision of law to the contrary, if the insurer has not corrected the violation, the insurer shall be subject to the penalties provided by law, including but not limited to a civil penalty in an amount of up to $2,000 for the first violation and up to $5,000 for the second and each subsequent violation.

    3. The Department of Banking and Insurance shall report to the Legislature at least annually the rate of complaints received with respect to the private passenger automobile insurance policies of each insurer writing those policies in New Jersey.

    4. This act shall take effect immediately.

STATEMENT

    This bill provides that the Department of Banking and Insurance shall investigate complaints received regarding the practices and procedures of insurers with respect to their handling of applications, claims or other business practices or procedures. The bill applies to both property/casualty insurers and life and health insurers when the department receives complaints with respect to policies which represent five percent or more of the insurer’s entire book of business in New Jersey.

    In addition, the bill provides that if, as a result of the department's examination and investigation, the department finds evidence of a violation of any law or regulation, the insurer shall have 90 days to correct the violation. If, at the end of 90 days, the insurer has not corrected the violation, the insurer shall be subject to the penalties provided by law, including but not limited to a civil penalty in an amount of up to $2,000 for the first violation and up to $5,000 for the second and each subsequent violation.

    Finally, the bill requires the department to report to the Legislature at least annually on the rate of complaints received with respect to the private passenger automobile insurance policies of each insurer writing those policies in New Jersey.

Concerns certain practices of insurers; imposes civil penalties for violations.