ASSEMBLY, No. 2944
STATE OF NEW JERSEY
INTRODUCED MAY 8, 1997
By Assemblyman GREENWALD
An Act concerning automobile insurance and revising parts of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) This act shall be known and may be cited as the "Automobile Insurance Premium Reduction Act."
2. (New section) Every filer's private passenger automobile insurance rates shall provide for:
a. a 10 percent reduction in premium of each coverage in a policy of private passenger automobile insurance if :
(1) the named insured or any member of his family residing in the named insured's household insured under the policy, who is not a named insured under another private passenger automobile insurance policy:
(a) has not had an at-fault accident in the three-year period immediately preceding application for or renewal of the policy;
(b) is an eligible person as defined in section 25 of P.L. 1990, c. 8 (C. 17:33B-13); and
(c) has possessed a valid driver's license issued by the State of New Jersey or other jurisdiction for three or more years; and
(2) the registration or license of the named insured or any member of his family residing in the named insured's household insured under the policy, who is not a named insured under another private passenger automobile insurance policy, are not currently suspended or revoked and have not been suspended or revoked at any time during the three-year period immediately preceding application for or renewal of the private passenger automobile insurance policy; and
b. an additional 10 percent reduction for each additional consecutive year that the named insured or any member of his family residing in the named insured's household insured under the policy who is not a named insured under another private passenger automobile insurance policy has not had an at-fault accident and meets all the other requirements of subsection a. of this section, except that the total reduction in premium shall not exceed 30 percent.
3. (New section) a. Any initial rate filing made on or after January 1, 1998 pursuant to the provisions of section 2 of this act shall be revenue neutral for the insurer.
b. An insurer shall provide to the commissioner a certification by an actuary that the initial rate filing pursuant to subsection a. of this section is revenue neutral, and no other approval by the commissioner is required with respect to revenue neutrality.
4. (New section) Except for a plan established pursuant to section 1 of P.L.1970, c.215 (C.17:29D-1), no insurer shall charge or collect surcharges based on motor vehicle violation penalty points promulgated by the Director of the Division of Motor Vehicles pursuant to section 1 of P.L.1982, c.43 (C.39:5-30.5) or the schedule of automobile insurance eligibility points promulgated by the Commissioner of Banking and Insurance pursuant to section 26 of P.L.1990, c.8 (C.17:33B-14).
5. (New section) Every health care provider seeking reimbursement for medical expense benefits payable under the personal injury protection coverage of a private passenger automobile insurance policy as provided in section 4 of P.L.1972, c.70 (C.39:6A-4) or section 10 of P.L. 1972, c.70 (C.39:6A-10) shall use the Health Care Financing Administration Common Procedure Coding System (HCPCS), as periodically revised.
6. Section 6 of P.L.1988, c.156 (C.17:29A-45) is amended to read as follows:
6. a. [Notwithstanding the provisions of P.L.1944, c.27 (C.17:29A-1 et seq.) to the contrary, every] Every insurer transacting or proposing to transact private passenger automobile insurance may file one or more rating plans in the voluntary market [for standard risks, or non-standard risks, or both. Within 30 days following the effective date of this 1988 amendatory and supplementary act, every]. Every insurer writing private passenger automobile insurance in this State which intends to write coverage in the voluntary market using more than one rate level shall file with the commissioner the rates and underwriting rules which are applicable to each rate level.
b. An insurer which intends to use more than one rating plan [and which has a rating plan on file as of the effective date of this 1988 amendatory and supplementary act,] may make an initial filing for [the] additional rating [plan] plans [in which the modification of the plan on file is expressed as] which are based on a percentage increase or decrease of the existing rate level in its current rating plan.
c. Notwithstanding any other law to the contrary, any initial rates filed pursuant to subsection b. of this section shall be deemed to be approved if not disapproved by the commissioner within [60] 90 days. Any subsequent modification of any rate level [other than that provided for in section 5 of this 1988 amendatory and supplementary act,] or any initial rate level which is not [expressed as] based on a percentage increase or decrease of an existing rate level as provided for in this section, shall be subject to the provisions of P.L.1944, c.27 (C.17:29A-1 et seq.).
d. Any limitation on rates established by the provisions of section 7 of P.L.1983, c.65 (C.17:29A-36) shall apply separately to each rate level established pursuant to subsection a. of this section.
e. Every insurer shall maintain such data for each rate level as may be required by the commissioner by regulation for the purpose of determining excess profits pursuant to the provisions of P.L.1988, c.118 (C.17:29A-5.6 et seq.).
f. No more than 15 percent of the aggregate number of private passenger automobile non-fleet exposures being written in the total private passenger automobile insurance market in this State shall be provided through the non-standard voluntary market as defined by rule or regulation of the commissioner adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). If the commissioner certifies that 15 percent or more of the aggregate number of private passenger automobile non-fleet exposures being written in the total private passenger automobile insurance market in this State are insured in the non-standard voluntary market, no insurer transacting automobile insurance in this State shall refuse to issue or renew an automobile insurance policy in the voluntary market for an eligible person as defined in section 25 of P.L.1990, c.8 (C.17:33B-13) until such time that the commissioner certifies that the non-standard market comprises less than 15 percent of the aggregate number of private passenger automobile non-fleet exposures being written in the total private passenger automobile insurance market in this State.
g. Notwithstanding any provision of this or any other section of law to the contrary, no insurer shall file, nor shall the commissioner approve, any rates filed for non-standard risks in the voluntary market in excess of 135 percent of the cost of private passenger automobile insurance in the voluntary market in this State as determined by the commissioner.
h. The commissioner shall monitor and report to the Legislature, on March 1, 1992, and annually thereafter, the number of private passenger automobile non-fleet exposures insured in the standard market on December 31 of the preceding calendar year and the number of such exposures insured in the non-standard market on December 31 of the preceding calendar year.
(cf: P.L.1990, c.8, s.37)
7. Section 7 of P.L.1988, c.156 (C.17:29A-46) is amended to read as follows:
7. a. Insurers shall put in writing all underwriting rules applicable to each rate level utilized pursuant to section 6 of [this 1988 amendatory and supplementary act. No underwriting rule shall operate in such a manner as to assign a risk to a rating plan on the basis of the territory in which the insured resides] P.L.1988, c.156 (C.17:29A-45). An insurer may take into account actuarially justified factors, including, but not limited to, driving record characteristics appropriate for underwriting and classification in formulating its underwriting rules. No underwriting rule shall operate in such a manner as to increase the rate of an insured solely on the basis of the insured's accrual of automobile insurance eligibility points as provided in section 26 of P.L.1990, c.8 (C.17:33B-14) or motor vehicle violation penalty points as provided in section 1 of P.L. 1982, c. 43 (C. 39:5-30.5); except that an insurer may employ underwriting rules that operate in such a manner as to increase the rate of an insured if the insured is involved in an at-fault accident as defined in section 26 of P.L. 1990, c. 8 (C. 17:33B-14). An insurer which knowingly fails to transact automobile insurance consistently with its underwriting rules shall be subject to a fine of not less than $500.00 for each violation.
b. All underwriting rules applicable to each rate level as provided for in section 6 of [this 1988 amendatory and supplementary act] P.L.1988, c.156 (C.17:29A-45) shall be filed with the commissioner and shall be subject to his prior approval. All underwriting rules shall be subject to public inspection. Insurers shall apply their underwriting rules uniformly and without exception throughout the State, so that every applicant or insured conforming with the underwriting rules will be insured or renewed, and so that every applicant not conforming with the underwriting rules will be refused insurance.
c. (Deleted by amendment, P.L.1990, c.8.)
d. (Deleted by amendment, P.L.1990, c.8.)
e. An insurer with more than one rating plan for private passenger automobile insurance policies providing identical coverages shall not adopt underwriting rules which would permit a private passenger automobile to be insured under more than one of the rating plans.
(cf: P.L.1990, c.8, s.38)
8. Section 14 of P.L.1985, c.520 (C.39:6A-4.5) is amended to read as follows:
14. a. Any person who, at the time of an automobile accident resulting in injuries to that person, is required but fails to maintain medical expense benefits coverage mandated by section 4 of P.L.1972, c.70 (C.39:6A-4), or liability insurance required by section 1 of P.L. 1972, c.197 (C.39:6B-1), or is: (1) convicted of operating an automobile while under the influence of alcohol or drugs pursuant to R.S. 39:4-50 or section 2 of P.L.1981, c.512 (C.39:4-50.4a) or for an offense of a substantially similar nature committed in any other jurisdiction; or (2) convicted of a crime of the first, second or third degree resulting from the use of an automobile, or of theft of an automobile, shall [:
a. For the purpose of filing an action for recovery of noneconomic loss, as defined in section 2 of P.L.1972, c.70 (C.39:6A-2), be subject to the tort option specified in subsection a. of section 8 of P.L.1972, c.70 (C.39:6A-8).
b. (Deleted by amendment, P.L.1988, c.119.)] have no cause of action for recovery of noneconomic loss for any bodily injury sustained as a result of an accident while occupying, entering into, alighting from or using an automobile; except that this section shall not apply if the person's insurance had been canceled for non-payment of premium when the person's premium payment was not more than 60 days overdue.
(cf: P.L.1988, c.119, s.4)
9. Section 5 of P.L.1988, c.156 (C.17:29A-44) and section 26 of P.L.1988, c.119 (C.17:29C-7.1) are repealed.
10. (New section) To provide for an orderly transition with minimum disruption to the private passenger automobile insurance market, the Commissioner of Banking and Insurance shall establish administrative processes that are reasonable, necessary, appropriate and consistent with the provisions of this amendatory and supplementary act for a transition period between the private passenger automobile insurance rating system in effect on the date this section takes effect and implementation of the system of multiple private passenger automobile insurance rate plans established by this amendatory and supplementary act; and may promulgate regulations necessary to effectuate the other purposes of this amendatory and supplementary act.
11. Sections 9 and 10 of this act shall take effect immediately; section 8 of this act shall take effect immediately and shall apply to all causes of action arising on or after the effective date; sections 5, 6 and 7 of this act shall take effect on the 120th day following enactment; and sections 1 through 4 of this act shall take effect on January 1, 1998 and shall apply to private passenger automobile insurance policies issued or renewed on or after January 1, 1998.
STATEMENT
This bill requires insurers to reduce premiums for drivers who have not been involved in at-fault accidents. A driver would receive an initial 10 percent reduction in premium if all of the drivers insured under the policy have not had any at-fault accidents in the three-year period immediately preceding application for or renewal of the policy, and meet the other requirements of the bill. Then, for each consecutive year thereafter that all drivers insured under the policy had no at-fault accidents and met the other requirements of the bill, the insurance premium would be further reduced by ten percent. No driver would receive more than a 30 percent overall reduction in premium for any one policy.
Drivers eligible are those: (1) who are eligible persons as defined in section 35 of P.L.1990, c.8 (C.17:33B-13); (2) who have possessed a valid driver's license issued by the State of New Jersey or other jurisdiction at least three years; (3) whose registrations or licenses to operate a motor vehicle are not currently suspended or revoked; and (4) whose registrations or licenses to operate a motor vehicle were not suspended or revoked at any time during the three-year period immediately preceding application for or renewal of the private passenger automobile insurance policy.
The bill requires health care providers seeking reimbursement under the medical expense benefits portion of the personal injury protection (PIP) coverage of an automobile insurance policy to use the Health Care Financing Administration Common Procedure Coding System (HCPCS), as periodically revised. The codes currently used in the PIP fee schedule are inadequate.
In an effort to reduce costs that contribute to high premiums, the bill would prohibit certain drivers who break the law from suing for noneconomic or "pain and suffering" damages. Drivers who are convicted of driving under the influence of alcohol or drugs, of a first, second, or third degree crime resulting from the use of a motor vehicle, of theft of a motor vehicle, or who fail to maintain insurance, would not be allowed to maintain an action for noneconomic damages. However, drivers whose insurance has been canceled for non-payment of premium would not be subject to this prohibition if their premium payment was overdue by not more than 60 days at the time of the accident.
The bill also prohibits insurers from charging or collecting surcharges based on motor vehicle violation points promulgated by the Division of Motor Vehicles or the schedule of automobile insurance eligibility points promulgated by the Commissioner of Banking and Insurance. Sections 6 and 7 of the bill would allow insurers to charge premiums on the basis of a tiered rating system. The system would allow insurers to take into account actuarially justified factors when slotting drivers into rating tiers, but it would not allow insurers to increase premiums for drivers that have accrued automobile insurance eligibility points or motor vehicle points solely on the basis of the accrual of the points. It would allow premiums to increase if the insured car was involved in an at-fault accident.
Finally, the bill repeals the "two percent" and "two-for-one" law, section 26 of P.L.1988, c.119 (C.17:29C-7.1), that allows insurers to refuse to renew certain automobile insurance policies, as well as the "flex rating" law that grants insurers automatic annual rate increases, section 5 of P.L.1988, c.156 (C.17:29A-44).
The "Automobile Insurance Premium Reduction Act"