S184

SENATE, No. 184

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Senator RICE

An Act providing for the disclosure of information regarding the availability, affordability and adequacy of insurance coverage in this State and supplementing Title 17 of the Revised Statutes.

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

1. This act shall be known and may be cited as the "Insurance Disclosure Act."

2. a. The Legislature finds and declares that:

(1) There are anecdotal reports of disparities in the affordability, availability and adequacy of insurance coverage provided by insurers in this State when comparing areas of the State which differ by income and racial composition;

(2) Such disparities in affordability and availability of insurance, as reported, severely limit the ability of qualified consumers to obtain credit for home, business, and automobile purchases; and

(3) Similarly, such disparities in affordability and availability of commercial insurance for small businesses, severely curtail the establishment and growth of such businesses.

b. The Legislature therefore proposes:

(1) To establish a Statewide database for determining the availability, affordability, and adequacy of insurance coverage for consumers and small businesses wherever they are located in the State; and

(2) To determine whether the extent and characteristics of insurance availability, affordability, and coverage require public officials to take any actions regarding areas underserved by insurers or to remedy "redlining" or other illegal or unfair discriminatory insurance practices.

3. As used in this act:

"Agent" means, with respect to an insurer, an agent licensed by this State to sell property and casualty insurance. The term includes agents who are employees of the insurer, agents who are independent contractors working exclusively for the insurer, and agents who are independent contractors appointed to represent the insurer on a nonexclusive basis.

"Applicable region" means the following planning areas as designated in the New Jersey State Development and Redevelopment Plan: Metropolitan Planning Area; Suburban Planning Area; Fringe Planning Area; Rural Planning Area; and Environmentally Sensitive Planning Area.

"Commercial insurance" means any line of property and casualty insurance, homeowner's insurance and dwelling fire and allied lines, and other personal lines of insurance, except private passenger automobile insurance.

"Commissioner" means the Commissioner of Insurance.

"Designated census tract" means census tracts in this State selected by the commissioner pursuant to subsection a. of section 14 of this act.

"Designated insurer" means, with respect to a designated line, an insurer designated by the commissioner under subsection b. of section 14 of this act as a designated insurer for that line, or any insurer that is part of an insurer group selected under that subsection.

"Designated investment" means making or purchasing a loan for the purchase of commercial real estate, making or purchasing a mortgage loan for the purchase of a one to four family dwelling, making or purchasing a commercial or industrial loan, or making any other investment designated by the commissioner under subsection b. of section 9 of this act.

"Designated line" means a line of insurance or performance and payment bonds designated by the commissioner under subsection c. of section 14 of this act.

"Exposure units" means an automobile or dwelling, as the case may be, covered under an insurance policy for private passenger automobile or homeowners or dwelling fire and allied lines coverage.

"Insurance" means property and casualty insurance and includes primary insurance, surplus lines insurance, and any other arrangement for the shifting and distributing of risks that is determined to be insurance under the laws of this State.

"Insurer," except with respect to mortgage insurance as provided in section 8 of this act, means any corporation, association, society, order, firm, company, mutual, partnership, individual, aggregation of individuals, or any other legal entity that is authorized to transact the business of property or casualty insurance in this State or that is engaged in a property or casualty insurance business. With respect to section 7 of this act, "insurer" means any person authorized to transact the business of performance and payment bonds for small businesses. With respect to section 9 of this act, "insurer" means any person authorized to transact the business of insurance in this State that makes designated investments in property in this State. The term does not include an individual or entity which represents an insurer as agent solely for the purpose of selling or which represents a consumer as a broker solely for the purpose of buying insurance.

"Issued" means, with respect to an insurance policy, newly issued or renewed.

"Joint underwriting association" means an unincorporated association of insurers established to provide a particular form of insurance to the public.

"Mortgage insurance" means insurance against the nonpayment of, or default on, a mortgage or loan for residential or commercial property.

"Private mortgage insurance" means mortgage insurance other than mortgage insurance made available under the National Housing Act, 38 U.S.C §3711 et seq., or title V of the Housing Act of 1949, 42 U.S.C.§1471 et seq.

"Property and casualty insurance" means insurance against loss of or damage to property, insurance against loss of income or extra expense incurred because of loss of, or damage to, property and insurance against third party liability claims caused by negligence or imposed by statute or contract. Such term does not include workers' compensation, professional liability, or title insurance.

"Residual market" means an assigned risk plan, joint underwriting association, or any similar mechanism designed to make insurance available to those unable to obtain it in the voluntary market, pursuant to P.L.1968, c. 129 (C.17:37A-1 et seq.) or section 1 of P.L.1970, c.215 (C.17:29D-1).

"Urban center" means an urban center as identified in the New Jersey State Development and Redevelopment Plan.

4. a. The commissioner shall, by regulation, require insurers to compile and submit information to the commissioner for each annual reporting period, in accordance with this act.

b. In establishing the requirements for the submission of information under this act, the commissioner shall consult with federal agencies having appropriate expertise, the National Association of Insurance Commissioners, insurance regulators in the states, statistical agents, representatives of small businesses, representatives of insurance agents (including minority insurance agents), representatives of property and casualty insurers, and community, consumer, and civil rights organizations, as appropriate.

5. a. The requirements established pursuant to section 4 of this act shall:

(1) Be designed to ensure that information is submitted and compiled under this section as may be necessary to permit analysis and comparison of:

(a) the availability and affordability of insurance coverage and the quality or type of insurance coverage, by designated census tract, applicable region, urban center, race and gender of policyholders; and

(b) the location of the principal place of business of insurance agents and the race of such agents, and the location of the principal place of business of insurance agents terminated and the race of such agents, by designated census tract, urban center and applicable region; and

(2) Specify the data elements required to be reported under this section and require uniformity in the definitions of the data elements.

b. (1) The regulations issued under section 4 shall require that each designated insurer for a designated line under subparagraph (a) or (b) of paragraph (1) of subsection c. of section 14 of this act compile and submit to the commissioner, for each annual reporting period:

(a) the total number of policies issued in that line, total exposures covered by that line, total exposures covered by such policies, and total amount of premiums for such policies, by designated line and by designated census tract in which the insured risk is located;

(b) the total number of cancellations and nonrenewals (expressed in terms of policies or exposures, as determined by the commissioner), by designated line and by designated census tract in which the insured risk is located;

(i) licensed agents of that insurer selling insurance in the designated line, by designated census tract in which the agent's principal place of business is located; and

(ii) those agents who were terminated by the insurer, by designated census tract in which the agent's principal place of business was located; and

(d) for that designated line of insurance, information that will enable the commissioner to assess the aggregate loss experience for the insurer, by designated census tract in which the insured risk is located.

(2) (a) The regulations issued under section 4 of this act regarding annual reporting requirements for designated insurers for a designated line of insurance under subparagraph (a) or (b) of paragraph (1) of subsection c. of section 14 of this act shall, with respect to policies issued under the designated line or exposure units covered by those policies, as determined by the commissioner:

(i) specify the data elements that shall be submitted;

(ii) provide for the submission of information on an individual insurer basis;

(iii) provide for the submission of the information with the least burden on insurers, particularly small insurers, and insurance agents;

(iv) take into account existing statistical reporting systems in the insurance industry;

(v) require reporting by designated census tract in which the insured risk is located;

(vi) provide for the submission of information that identifies the designated line, and subline or coverage type;

(vii) provide for submission of information that distinguishes policies written in a residual market from policies written in the voluntary market;

(viii) specify:

(I) whether information shall be submitted on the basis of policy or exposure unit; and

(II) whether information, when submitted, shall be aggregated by like policyholders with like policies, except that the commissioner shall not permit such aggregation if it will adversely affect the accuracy of the information reported;

(ix) provide for the submission of information regarding the number of cancellations and nonrenewals of policies under the designated line by designated census tract in which the insured risk is located, by race and gender of the policyholder (if known to the insurer), and by whether the policy was issued in a voluntary or residual market; and

(x) provide for the submission of information on the racial characteristics and gender of policyholders at the level of detail comparable to that required by the federal "Home Mortgage Disclosure Act of 1975," 12 U.S.C. §2801 et seq., and the regulations promulgated thereunder, 12 C.F.R. §203 et seq.

(b) with respect to the information specified in subsubparagraph (x) of subparagraph (a) of this paragraph (2), applicants for, and policyholders of, insurance may be asked their racial characteristics only in writing. Any such written question shall clearly indicate that a response to the question is voluntary on the part of the applicant or policyholder, but encouraged, and that the information is being requested by the State to monitor the availability and affordability of insurance in this State and further that such information will be held confidential and used only in aggregation with other similar information. If an applicant for, or policyholder of, insurance declines to provide that information, the agent or insurer for the insurance may provide that information.

c. The regulations issued under section 4 of this act shall require each insurer that issues an insurance policy in a designated line of insurance under subparagraph (a) or (b) of paragraph (1) of subsection c. of section 14 of this act that covers an insured risk located in a designated census tract and which is not a designated insurer for the line in this State, to compile and submit to the commissioner, for each annual reporting period, by designated census tract in which the insured risk is located:

(1) The total number of policies issued in that line;

(2) The total exposures covered by those policies; and

(3) The total amount of premiums for those policies.

6. a. The commissioner shall conduct a study to determine the availability, affordability, and quality of types of commercial insurance coverage for residential properties and small businesses in urban centers.

b. To acquire information for the study under this section, the commissioner shall, by regulation, establish requirements for insurers providing commercial insurance for residential properties and small businesses to compile and submit to the commissioner on an annual basis information regarding that insurance, as follows:

(1) The commissioner shall carry out the study only with respect to the urban centers in this State.

(2) For each of the urban centers specified pursuant to paragraph (1) of this subsection b., the commissioner shall designate the insurers required to submit the information. The commissioner shall designate a sufficient number of insurers to provide a representative sample of the insurers providing that insurance in each urban center.

(3) The commissioner shall require the submission of information regarding the lines, sublines, or coverage types of commercial insurance the commissioner determines are necessary or important with respect to establishing, operating, or maintaining residential properties and each type of small business selected under paragraph (4) of this subsection b., and shall require submission of the information by lines, sublines, or coverage types, as appropriate.

(4) For purposes of paragraph (3) of this subsection b., the commissioner shall determine the types of businesses that are typically small businesses and shall select a representative sample of those types.

(5) The commissioner shall identify the data elements required to be submitted.

(6) The commissioner shall require the information to be submitted by designated census tract in which the insured risk is located.

(7) The commissioner shall require the submission of information on an individual insurer basis and shall specify whether information, when submitted, shall be aggregated by like policies, except that the commissioner shall not permit such aggregation if it will adversely affect the accuracy of the information reported.

(8) The commissioner shall require the submission of information under this section only for each of the first five annual reporting periods beginning more than 24 months after the effective date of this act.

c. In establishing the requirements for submission of information under this section, the commissioner shall:

(1) Take into consideration the administrative, paperwork, and other burdens on insurers and insurance agents involved in complying with the requirements of this section;

(2) Minimize the burdens imposed by those requirements with respect to insurers and agents; and

(3) Take into consideration existing statistical reporting systems in the insurance industry.

d. Not later than six months after the expiration of the five-year period referred to in paragraph (8) of subsection b. of this section, the commissioner shall submit a report to the Governor and the Legislature describing the information submitted in the study conducted under this section and any findings of the commissioner from the study regarding disparities in the availability, affordability, and quality or types of commercial insurance coverage for residential properties and small businesses in urban centers.

7. a. The commissioner shall, by regulation in accordance with section 4 of this act, require insurers to compile and submit to the commissioner, for each annual reporting period, information regarding performance and payment bonds for small businesses, by lines designated under subparagraph (c) of paragraph (1) of subsection c. of section 14 of this act, that is similar to the information required to be submitted under section 5.

b. The regulations under this section shall:

(1) Designate insurers required to submit the information, pursuant to standards comparable to the standards for designation under subsection b. of section 14 of this act, and require submission of the information on an individual insurer basis;

(2) Identify data elements required to be submitted;

(3) Require that the information be submitted by designated census tract;

(4) Require that the information be submitted in a manner similar to that required for information submitted under section 5;

(5) Provide an appropriate definition of small businesses; and

(6) Require that the information be submitted for each annual reporting period.

8. a. (1) On an annual basis the commissioner by regulation shall require each insurer authorized to provide private mortgage insurance in this State to provide to the commissioner information regarding its mortgage insurance policies that is equivalent to the information regarding mortgages required to be reported under the "Home Mortgage Disclosure Act of 1975," 12 U.S.C. §2801 et seq, and the regulations promulgated thereunder, 12 C.F.R. §203 et seq.

(2) Each insurer that provides private mortgage insurance in this State shall provide to the public information concerning its private mortgage insurance policies that is equivalent to the information depository institutions are required to make available under the "Home Mortgage Disclosure Act of 1975," 12 U.S.C. §2801 et seq, and the regulations promulgated thereunder, 12 C.F.R. §203 et seq.

b. (1) If, for any annual period referred to in subsection a. of this section, the commissioner determines that any insurer providing private mortgage insurance is not making available to the public or submitting the information referred to in subsection a. of this section or that the information made available or submitted is not equivalent information as described in subsection a. of this section, then the commissioner shall notify the insurer of that noncompliance.

(2) If, after the expiration of three months, the insurer has not remedied that noncompliance to the satisfaction of the commissioner, then the commissioner shall, by regulation, require the insurer to submit to the commissioner information regarding private mortgage insurance which complies with the provisions of section 5 of this act that are applicable to that insurance. These regulations shall be issued not later than six months after the expiration of the three months provided the insurer to comply with the notice provided the insurer pursuant to paragraph (1) of this subsection, and shall apply to the first succeeding annual reporting period that begins at least six months after issuance of these regulations and to each annual reporting period thereafter.

9. a. The commissioner shall, by regulation, require that each designated insurer that makes a designated investment in a property or business located in this State shall compile and submit to the commissioner for each annual reporting period, the following information:

(1) (a) The total number of loans for the purchase of commercial real estate located in this State made by the designated insurer, the aggregate amount of such loans, and the amount of each such loan, by designated census tract in which the real estate for which the loan was made is located.

(b) The total number of mortgage loans for the purchase of one to four family dwellings located in this State made by the designated insurer, the aggregate amount of those loans, and the amount of each loan, by designated census tract in which the dwelling for which the loan was made is located, and information on the racial characteristics, income level, and gender of the borrower under the loan.

(c) The total number of commercial and industrial loans made by the designated insurer, the aggregate amount of those loans, and the amount of each loan, by designated census tract in which the property or business involved in the loan is located, and information on the size of business of the borrower under the loan and on the ownership characteristic of the business, which shall be classified as either minority-owned, women-owned, or otherwise-owned.

(2) (a) The total number of commercial real estate mortgage loans purchased by the designated insurer, the aggregate amount of those loans, and the amount of each loan, by designated census tract in which the real estate is located.

(b) The total number of residential mortgage loans for one to four family dwellings purchased by the designated insurer, the aggregate amount of those loans, and the amount of each loan, by designated census tract in which the dwelling for which the loan was made is located, and information on the racial characteristics, income level, and gender of the borrower under the loan.

(c) The total number of commercial and industrial loans purchased by the designated insurer, the aggregate amount of those loans, and the amount of each loan, by designated census tract in which the property or business involved in the loan is located, and information on the size of business of the borrower under the loan and on the ownership characteristic of the business, which shall be classified as either minority-owned, women-owned, or otherwise-owned.

(3) For such other investments made by the designated insurer pursuant to subsection b. of this section, the total number of those investments, the aggregate amount of those investments, and the amount of each investment, by designated census tract in which the property or business involved in the investment is located, as determined by the commissioner, and information on the size of business of the borrower under the loan and on the ownership characteristic of the business, which shall be classified as either minority-owned, women-owned, or otherwise-owned.

b. (1) For purposes of paragraph (3) of subsection a. of this section, the commissioner may designate activities and investments other than the investments described in paragraphs (1) and (2) of subsection a. of this section for which designated insurers shall compile and submit information under this section.

(2) In making designations under this subsection, the commissioner shall designate:

(a) Activities and investments that significantly benefit low and moderate income families and persons, small businesses in distressed communities, or minority or women owned businesses; and

(b) Activities and investments that contribute to the creation of jobs and economic development of distressed communities.

(3) The commissioner shall specifically consider for designation under this subsection investments in community development financial institutions, community development corporations, State-issued bonds, and securities backed by State development funds.

c. The commissioner shall, by regulation, establish various categories of businesses by size, for purposes of gathering information under subparagraph (c) of paragraph (1), subparagraph (c) of paragraph (2) and paragraph (3) of subsection a. of this section.

10. a. The commissioner may contract with a data collection contractor to collect the information required to be maintained and submitted under sections 5, 6, 7, 8, and 9 of this act if the contractor agrees to collect the information pursuant to the terms and conditions of those sections and this act and the regulations issued thereunder. Information submitted to the contractor shall be available to the public to the same extent as if the information were submitted directly to the commissioner.

b. (1) The commissioner shall provide, by regulation, that insurers may submit any information required by sections 5, 6, 7, 8 and 9 of this act through statistical agents acting on behalf of more than one insurer.

(2) The regulations issued under this subsection shall permit submission of information through a statistical agent only if the commissioner determines that:

(a) The statistical agent has adequate procedures to protect the integrity of the information submitted;

(b) The statistical agent has a statistical plan and format for submitting the information that meets the requirements of this act;

(c) The statistical agent has procedures in place that ensure that information reported under the statistical plan in connection with reporting under this act and submitted to the commissioner is not subject to any adjustment by the statistical agent or an insurer for reasons other than technical accuracy and conformance to the statistical plan;

(d) The information of an insurer is not subject to review by any other insurer before being made available to the public; and

(e) Acceptance of the information through the statistical agent will not adversely affect the accuracy of the information report.

(3) The commissioner may discontinue accepting information reported through a statistical agent pursuant to this subsection if the commissioner determines that the requirements for such reporting are no longer met or that continued acceptance of such information is contrary to the goal of ensuring the accuracy of the information reported.

(4) The State Treasurer shall, at the request of the commissioner, audit information collection and submission performed under this subsection by data collection contractors or statistical agents to ensure that the integrity of the information collected and submitted is protected. In determining whether to request an audit of a statistical agent, the commissioner shall consider the sufficiency, for purposes of this act, of audits of the statistical agent conducted in connection with State insurance regulation.

(5) Notwithstanding any use of a statistical agent as authorized under this subsection, an insurer using such an agent shall be responsible for compliance with the requirements of this act.

11. a. Each insurer required by this act to compile and submit information to the commissioner shall maintain that information for the three-year period beginning upon the conclusion of the annual reporting period to which that information is related. The commissioner shall maintain any information submitted to the commissioner for such period as the commissioner considers appropriate and feasible to carry out the purposes of this act and to allow for historical analysis and comparison of the information.

b. The commissioner shall issue regulations, taking into consideration the provisions of subsection a. of section 13 of this act, prescribing a standard schedule, format, and method for submitting information under this act to the commissioner. The format and method of submitting the information shall facilitate and encourage the submission in a form readable by a computer. Any insurer submitting information to the commissioner may submit in writing to the commissioner any additional information or explanations that the insurer considers relevant to the decision by the insurer to sell insurance.

12. a. For each annual reporting period, the commissioner shall:

(1) Compile, for each designated census tract, by designated line, and by subline or coverage type, if such information is submitted:

(a) Information submitted under sections 5, 6, 7 and 8 of this act and loss ratios, if the submission of loss information is required, which information shall also be aggregated by applicable region and urban center for all insurers submitting that information; and

(b) That information and loss ratios, if the submission of loss information is required, aggregated by applicable region and urban center for each insurer; and

(2) Produce tables based on information submitted under sections 5, 6, 7 and 8 for each designated census tract by insurer and for all insurers, by designated line (and if such information is submitted, by subline or coverage type), indicating:

(a) Insurance underwriting patterns for the applicable regions and urban centers, and maintaining the identity of each designated census tract within those regions or centers, if patterns emerge at those levels also, and including additional information with respect to the designated census tracts, such as average age of property, mean and median income level, racial characteristics of neighborhoods expressed in percentages and any other information the commissioner considers helpful in making the comparisons required by this act; and

(b) Loss ratios based on the information obtained pursuant to sections 5, 6, 7 and 8, if the submission of loss information is required, aggregated for the applicable regions and urban centers, and maintaining the identity of each designated census tract within those regions or centers, if patterns emerge at those levels also, and including additional information with respect to the designated census tracts, such as average age of property, mean and median income level, racial characteristics of neighborhoods expressed in percentages and any other information the commissioner considers helpful in making the comparisons required by this act.

b. For each annual reporting period and for each designated census tract, the commissioner shall compile, by designated line, the information submitted under subparagraph (c) of paragraph (1) of subsection b. of section 5 of this act:

(1) By designated insurer for each applicable region and urban center, maintaining the identity of each designated census tract within each region or center, and including additional information with respect to each designated census tract, such as average age of property, mean and median income level, racial characteristics of neighborhoods expressed in percentages and any other information the commissioner considers helpful in making the comparisons required by this act;

(2) By designated insurer aggregated for the applicable regions and urban centers and including additional information with respect to applicable regions and urban centers compiled from information on the designated census tracts, such as average age of property, mean and median income level, racial characteristics of neighborhoods expressed in percentages and any other information the commissioner considers helpful in making the comparisons required by this act; and

(3) For all designated insurers that have submitted such information for the designated census tracts, aggregated for the applicable regions and urban centers, maintaining the identity of the designated census tracts within those regions or centers if patterns emerge at those geographical levels, and including additional information with respect to applicable regions and urban centers compiled from information on the designated census tracts, such as average age of property, mean and median income level, racial characteristics of neighborhoods expressed in percentages and any other information the commissioner considers helpful in making the comparisons required by this act.

c. For each annual reporting period, the commissioner shall:

(1) Compile the information submitted under section 9 of this act, for each designated census tract:

(a) Aggregated for each applicable region and urban center for all insurers, by designated investment; and

(b) Aggregated for each applicable region and urban center for each insurer, by designated investment; and

(2) Produce tables for each applicable region and urban center for each insurer and for all insurers, indicating patterns of designated investments, and maintaining the identity of each designated census tract within each applicable region and urban center, if patterns emerge at those geographical levels, and include additional information with respect to each applicable region and urban center compiled from the designated census tracts, such as mean and median income level, proportion of business ownership by gender, proportion of borrowers by gender and average size of business of borrowers and any other information the commissioner considers helpful in making the comparisons required by this act.

d. For each annual reporting period, the commissioner shall compile tables providing comparisons across the applicable regions and urban centers with respect to the information submitted pursuant to sections 5, 6, 7, 8 and 9 of this act.

13. a. (1) The commissioner shall maintain and make available to the public, in accordance with the requirements of this section, any information submitted to the commissioner under this act and any information compiled by the commissioner under this act.

(2) The commissioner shall make such information publicly available on a timetable determined by the commissioner, but not later than nine months after the conclusion of the annual reporting period to which the information relates, except that such information shall not be made available to the public until it is available in its entirety or unless in the commissioner's discretion, partial information can be released.

b. (1) The commissioner shall implement a system to facilitate access to any information required to be made available to the public under this act.

(2) The system shall provide access in the following manners:

(a) To information submitted under sections 5, 6, 7, 8 and 9, on the basis of the insurer submitting the information and on the basis of designated census tracts, and on any other basis the commissioner considers feasible and appropriate.

(b) To aggregate information compiled under section 12, on the basis of:

(i) the insurer submitting the information;

(ii) designated census tracts within each applicable region and urban center;

(iii) applicable regions and urban centers; and

(iv) on any other basis the commissioner considers feasible and appropriate.

(3) The access system shall include a toll free number that can be used by the public to request the information and the address at which a written request for the information may be submitted.

(4) The commissioner shall, by regulation, establish the forms in which the information may be furnished by the commissioner. The forms shall include written statements, forms readable by widely used personal computers, and, if feasible, on-line access on personal computers. The commissioner shall provide the information available under this section in any form requested by the person requesting the information, except that the commissioner may charge a fee for providing this information, which may not exceed the amount, determined by the commissioner, that is equal to the cost of reproducing the information.

(5) The commissioner shall make available to the public software that can be used on a personal computer to analyze the information provided under this section. The software shall be capable of analyzing the information by insurer, designated line, race, gender, census tract, urban center and applicable region. It shall also contain data compiled by the commissioner for each census tract, urban center and applicable region on income levels, age of property, and racial characteristics that can be used to evaluate the information provided under this act by insurers. The software and any accompanying data shall be made available to the public for an amount, determined by the commissioner, which shall not exceed the actual cost of reproducing the software and the accompanying data.

c. (1) Notwithstanding any other provision of this act, the commissioner may not make available to the public or otherwise disclose any information submitted under this act regarding the amount or number of claims paid by any insurer, except:

(a) In the form of a loss ratio, expressing the relationship of claims paid to premiums, made available or disclosed in compliance with the provisions of paragraph (2) of this subsection c., or

(b) As provided in paragraph (3) of this subsection c.

(2) In making available to the public or otherwise disclosing a loss ratio for an insurer:

(a) The commissioner may not identify the insurer to which the loss ratio relates; and

(b) The commissioner may disclose the loss ratio only in a manner that does not allow any party to determine the identity of the specific insurer to which the loss ratio relates, except parties having access to information under paragraph (3) of this subsection c.

(3) The commissioner may make information referred to in paragraph (1) of this subsection c. and the identity of the specific insurer to which such information relates available to any federal entity and any State agency responsible for regulating insurance in this State and may otherwise disclose that information to any such entity or agency, but only to the extent that entity or agency agrees not to make that information known to any other person.

14. a. For purposes of this act and with respect to the first five annual reporting periods to which the reporting requirements under this act apply, "designated census tract" means census tracts selected as follows:

(1) The commissioner, in consultation with the New Jersey State Planning Commission, shall select census tracts within the applicable regions and urban centers in a manner and in a sufficient number to be representative of each applicable region and urban center. In addition, and to the extent considered necessary for the comparisons required under this act, the applicable regions may be stratified initially in terms of Northern, Central and Southern New Jersey.

(2) The designations shall be made for each successive five year period at the time provided in paragraph (3), and the first such period shall be the five year period beginning upon the commencement of the sixth annual reporting period to which the reporting requirements under this act apply.

(3) The commissioner shall make the designation of census tracts for an ensuing five year period by regulations issued not later than the date occurring 12 months before the commencement of the five year period.

(4) The designations for a five year period shall take effect upon the commencement of the first annual reporting period of the five year period that begins at least 12 months after the issuance of the regulations making such designations, and shall remain in effect until the expiration of the five year period.

Nothwithstanding any other provision of this section, if changes are made by the federal government in their delineation of census tracts in this State or in planning areas or urban centers by the New Jersey Planning Commission which would impact on the representativeness of designated census tracts, the commissioner, in consultation with the New Jersey Planning Commission and with a concern for comparisons across years, may modify the list of designated census tracts.

b. The commissioner shall designate, for each designated line, insurers doing business in this State in the lines as designated insurers for purposes of this act, subject to the following requirements:

(1) (a) the commissioner shall designate, for each designated line, each of the insurers and insurer groups included in the class established under this paragraph for the State.

(b) the commissioner shall rank the insurers and insurer groups in each designated line from the insurer or group having the largest aggregate premium volume in the State for such line to the insurer or group having the smallest such aggregate premium volume and shall include in the class for the State only:

(i) the insurer or group of the highest rank; and

(ii) each insurer or group of successively lower rank if the inclusion of that insurer or group in the class does not result in the sum of those aggregate premium volumes for insurers and groups in the class exceeding 80 percent of the total aggregate premium volume in the State for the line; and

(iii) the first such successively lower ranked insurer or insurer group whose inclusion in the class results in that sum exceeding 80 percent of the total aggregate premium volume in the State for the line.

(2) the commissioner shall designate, for each designated line, each insurer and insurer group not designated pursuant to paragraph (1) of this subsection b. whose premium volume in the State for the designated line exceeds one percent of the total aggregate premium volume in the State for the line.

(3) the commissioner shall designate, for each designated line:

(a) Each Statewide plan under P.L.1968, c.129 (C.17:37A-1 et seq.) and section 1 of P.L.1970, c.215 (C.17:29D-1), and

(b) Each joint underwriting association, that provides insurance under that line.

(4) The commissioner shall designate insurers under this subsection once every five years. Each insurer designated shall be a designated insurer for each of the first five successive annual reporting periods commencing after that designation.

c. (1) The commissioner shall, by regulation, designate lines of insurance as designated lines for purposes of this act, as follows:

(a) private passenger automobile insurance;

(b) homeowners insurance and dwelling fire insurance. For purposes of this act, homeowners insurance shall not include any renters coverage or coverage for the personal property of a condominium owner;

(d) any other line the commissioner considers appropriate for the study undertaken pursuant to this act.

(2) (a) Except as provided in subparagraph (b) of this paragraph (2), the commissioner shall make the designations under this subsection once every five years, by regulation, and each line and subline or coverage type designated under those regulations shall be designated for each of the first five successive annual reporting periods occurring after issuance of the regulations.

(b) During any five year period referred to in subparagraph (a) of this paragraph (2) in which designations are in effect, the commissioner may amend or revise the designated lines, sublines and coverage types only by regulation and only in accordance with the requirements of this subsection. Those regulations amending or revising designations shall apply only to annual reporting periods beginning after the expiration of the six month period beginning on the date of issuance of the regulations.

d. The commissioner shall designate insurers for purposes of collecting the information required pursuant to section 9 of this act with respect to investments in commercial and residential property.

e. The commissioner shall make the designations required by this section and notify the affected parties during the six month period ending six months before the commencement of the first annual reporting period to which such designations apply.

f. The commissioner may require insurers to submit information the commissioner considers necessary to make designations specifically required under this act. The commissioner may not require insurers to submit any information under this subsection that relates to any line of insurance not specifically authorized to be designated pursuant to this act.

15. a. The commissioner shall develop, or assist in the improvement of, methods of matching addresses, census tracts and applicable regions and urban centers to facilitate compliance by insurers, in as economical a manner as possible, with the requirements of this act. The commissioner shall allow insurers, or statistical agents acting on behalf of insurers, to match addresses and designated census tracts through the use of 9-digit zip codes if the commissioner determines that such use will substantially reduce the cost and burden to insurers of that matching without significant adverse impact on the reliability of the matching.

b. The commissioner shall make available, to any insurer required to provide information to the commissioner under this act, computer software that can be used to convert addresses to designated census tracts. The software shall be made available in forms that provide that conversion for designated census tracts on a Statewide basis. The software shall be made available not less than six months before the first annual reporting period to which the reporting requirements under this act apply and shall be updated annually. The software shall be made available for an amount, determined by the commissioner, which shall not exceed the actual cost of reproducing the software.

16. a. For purposes of this act, the annual reporting periods shall be the 12 month periods commencing in each calendar year on the same day, which shall be selected under subsection b. by the commissioner.

b. Not later than the expiration of the six month period beginning on the effective date of this act, the commissioner shall, by regulation, select a day of the year upon which all annual reporting periods shall commence. In determining that day, the commissioner shall consider the reporting periods used for purposes of State and other insurance statistical reporting systems, in order to minimize the burdens on insurers.

17. a. The commissioner shall, by regulation, require the following disclosures:

(1) Each insurer that, through the insurer, or an agent or broker, declines a written application or written request to issue an insurance policy under a designated line shall provide to the applicant at the time of that declination, through that insurer, agent, or broker, one of the following:

(a) A written explanation of the specific reasons for the declination.

(b) Written notice that:

(i) the applicant may submit to the insurer, agent, or broker, within 90 days of that notice, a written request for a written explanation of the reasons for the declination; and

(ii) pursuant to such a request, an explanation shall be provided to the applicant within 21 days after receipt of that request.

If an insurer, agent, or broker making a declination receives a written request referred to in subparagraph (b) within that 90 day period, the insurer, agent, or broker shall provide a written explanation referred to in that subparagraph within that 21 day period.

(2) Each insurer that cancels or refuses to renew an insurance policy under a designated line shall provide to the policyholder, in writing and within an appropriate period of time as determined by the commissioner, the reasons for canceling or refusing to renew the policy.

b. In issuing regulations under subsection a., the commissioner shall consider relevant portions of model acts developed by the National Association of Insurance Commissioners.

c. In issuing regulations under subsection a. of this section, the commissioner shall specifically consider the necessity of providing insurers, agents, and brokers immunity solely for the act of conveying or communicating the reasons for a declination or cancellation of, or refusal to renew insurance on behalf of a principal making that decision. The commissioner may provide for immunity under the regulations issued under subsection a. if the commissioner determines that such a provision is necessary and in the public interest, except that the commissioner may not provide immunity for any conduct that is negligent, reckless, or willful.

18. a. Any insurer who is determined by the commissioner, after providing opportunity for a hearing on the record, to have violated any requirement of this act shall be subject to a civil penalty not to exceed $5,000 for each day during which that violation continues.

b. The commissioner may bring an action in any court of competent jurisdiction for appropriate declaratory and injunctive relief against any insurer who violates the requirements of this act.

c. An insurer shall be responsibile under subsections a. and b. of this section for any violation of a statistical agent acting on behalf of the insurer.

19. The commissioner shall annually report to the Governor and the Legislature on the implementation of this act and shall make recommendations to the Governor and the Legislature on any additional legislation the commissioner deems appropriate to carry out this act. The commissioner shall include in each annual report a description of any complaints or problems resulting from the implementation of this act made by, or on behalf of, insurance policyholders that concern the disclosure of information regarding policyholders and any recommendations for addressing those problems. Each report shall specifically address whether granting property and casualty insurance powers to other financial intermediaries would significantly reduce redlining and other discriminatory insurance practices and the commissioner shall consult with the appropriate financial institution regulators regarding such issues in preparing the report.

20. a. Not later than 90 days after the effective date of this act, the commissioner shall establish a task force on insurance agency appointments. The task force shall:

(1) Consist of representatives of property and casualty insurance agents, specifically including minority insurance agents, property and casualty insurers, State insurance regulators, and community, consumer, and civil rights organizations;

(2) Have a significant representation from minority insurance agents; and

(3) Be chaired by the commissioner or the commissioner's designee.

b. The task force shall:

(1) Review the problems inner city and minority agents may have in receiving appointments to represent property and casualty insurers and consider the effects those problems have on the availability, affordability, and quality or type of insurance, especially in underserved areas;

(2) Review the practices of insurers in terminating agents and consider the effects those practices have on the availability, affordability, and quality or type of insurance, especially in underserved areas; and

(3) Recommend solutions to improve the ability of inner city and minority insurance agents to market property and casualty insurance products, including steps property and casualty insurers should take to increase their appointments of such agents.

c. The task force shall report to the Governor and the Legislature its findings under paragraphs (1) and (2) of subsection b. of this section and its recommendations under paragraph (3) of subsection b. of this section not later than two years after the effective date of this act. The task force shall terminate when the report is submitted to the Governor and the Legislature.

21. a. (1) The commissioner shall conduct a study to determine the feasibility and utility of requiring insurers to report information with respect to the characteristics of applicants for insurance and reasons for rejection of applicants. The study shall examine the extent to which:

(a) Oral applications or representations are used by insurers and agents in making determinations regarding whether or not to insure a prospective insured;

(b) Written applications are used by insurers and agents in making determinations regarding whether or not to insure a prospective insured;

(c) Written applications are submitted after the insurer or agent has already made a determination to provide insurance to a prospective insured or has determined that the prospective insured is eligible for insurance; and

(d) Prospective insureds are discouraged from submitting applications for insurance based, in whole or in part, on:

(i) the location of the risk to be insured;

(ii) the racial characteristics of the prospective insured;

(iii) the racial composition of the neighborhood in which the risk to be insured is located; and

(iv) in the case of residential property insurance, the age and value of the risk to be insured.

(2) The commissioner shall report the results of the study under paragraph (1) of this subsection a. to the Governor and the Legislature not later than two years after the effective date of this act. The report shall include recommendations of the commissioner:

(a) With respect to requiring insurers to report on the disposition of oral and written applications for insurance; and

(b) For any legislation that the commissioner considers appropriate regarding the issues described in the report.

b. The commissioner shall conduct a study of various practices, actions, and methods undertaken by insurers to meet the property and casualty insurance needs of residents of low and moderate income neighborhoods, minority neighborhoods, and small businesses located in those neighborhoods. The commissioner shall report the results of the study, including any recommendations, to the Governor and the Legislature not later than two years after the effective date of this act.

c. (1) The commissioner shall conduct a study to determine whether, and the extent to which, insurers engage in disparate treatment in handling claims of policyholders under designated lines of insurance based on the race, gender, and income level of the policyholder, and on the racial characteristics and income levels of the area in which the insured risk is located. In conducting the study, the commissioner shall specifically consider whether residents of low income neighborhoods or areas and minority neighborhoods or areas are more likely than residents of other areas to have their claims contested or their insurance coverage canceled.

(2) The commissioner shall submit a report on the results of the study to the Governor and the Legislature not later than two years after the effective date of this act.

d. The commissioner shall conduct a study to determine whether the practice in the insurance industry of basing insurance premium amounts on the territory in which the insured risk is located has a disparate impact for policyholders on the availability, affordability, or quality of insurance by race, gender, or type of neighborhood. The commissioner shall submit a report on the results of the study to the Governor and the Legislature not later than 12 months after the effective date of this act.

e. (1) The commissioner shall conduct a study to determine the feasibility of requiring insurers to reinvest in communities and neighborhoods from which they collect premiums for insurance and whether, and the extent to which, community reinvestment requirements for insurers should be established that are comparable to the community reinvestment requirements applicable to depository institutions. The commissioner shall consult with representatives of insurers and consumer, community, and civil rights organizations regarding the results of the study and any recommendations to be made based on the results of the study.

(2) The commissioner shall report the results of the study, including any such recommendations, to the Governor and the Legislature not later than six months after the conclusion of the first annual reporting period to which the reporting requirements under this act apply.

22. Reporting shall not be required under this act with respect to insurance provided by any program underwritten or administered by the United States.

23. a. The commissioner shall issue regulations, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), necessary to effectuate the provisions of this act. Except as otherwise provided in this act, final regulations shall be issued not later than the expiration of the 12 month period beginning on the effective date of this act.

b. In prescribing such regulations, the commissioner shall take into consideration the administrative, paperwork, and other burdens on insurance agents, including independent insurance agents, involved in complying with the requirements of this act and shall minimize the burdens imposed by those requirements with respect to those agents.

24. The requirements of this act relating to reporting of information by insurers shall take effect with respect to the first annual reporting period that begins more than 24 months after the effective date of this act.

25. This act shall take effect immediately.

STATEMENT

This bill requires the Commissioner of Insurance to promulgate regulations to require property and casualty insurers to compile and provide information to the commissioner on a annual basis which would enable the commissioner to determine the availability and affordability of personal lines and small business insurance and the adequacy of coverage for consumers and small businesses wherever they are located in this State.

Under the bill, information would be collected and studies would be conducted with respect to property and casualty insurance, residential properties and small businesses in urban centers, insurers issuing performance and payment bonds, private mortgage insurers and insurers making investments in commercial and residential property in this State.

To provide a basis for comparison, information is to be collected for designated census tracts, which in turn are to be chosen by the commissioner based on the location and number of census tracts within each applicable region and urban center of the State necessary to provide a representative sample from each. Additional information on census tracts is also to be taken from census data, such as mean and median income, age of housing, racial composition and any other characteristic of census tracts the commissioner thinks will be helpful in making the comparisons required by this act. This information is to be presented in tables for applicable regions and urban centers. These regions and centers are identified in the New Jersey State Planning Commission's report, Communities of Place.

The commissioner is required to develop software to be provided to insurers which will enable them to use nine-digit zip codes to locate the information required to be provided within census tracts. In addition, the commissioner is required to develop a program which would enable the public access to the data aggregated at a census tract level or greater.

The first annual reporting period as established in bill would not take place until at least 24 months after its effective date, in order to provide the commissioner time to set up the information reporting system envisioned by the bill.

Enacts the "Insurance Disclosure Act."