[First Reprint]

SENATE, No. 1024

 

STATE OF NEW JERSEY

 

INTRODUCED MARCH 21, 1996

 

 

By Senator LaROSSA

 

 

An Act establishing the automobile insurance urban enterprise zone program1[, amending P.L.1970, c.215, P.L.1970, c.217, P.L 1988, c.119, P.L.1990, c.8, and supplementing Title 17 of the Revised Statutes] and revising parts of the statutory law1.

 

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

 

    1. (New section) The Legislature finds and declares:

    a. That the creation of business incentives aimed at increasing and promoting economic activity in specially designated Urban Enterprise Zones has been effectively utilized by the State in the past.

    b. That consumers located in a limited number of the State's urban centers would benefit from an increase in the number of locations at which they could secure automobile insurance.

    c. That to better serve the needs of automobile insurance consumers and stimulate competition and economic activity, access to automobile insurance needs to be expanded in certain defined urban areas of the State.

    d. That the development of increased access to automobile insurance needs to be encouraged by establishing incentives for insurers to increase their writings in these urban centers through, among other things, the appointment of urban enterprise zone agents.

    e. That there be conducted a comprehensive study on the effects that territorial rate caps have on the overall availability of automobile insurance and that in conducting the study, other highly urbanized locations in the nation be examined.

 

    2. (New section) As used in this act:

    "Automobile" means an automobile as defined pursuant to subsection a. of section 2 of P.L.1972, c.70 (C. 39:6A-2).

    "Automobile insurance urban enterprise zone" means a geographic area identified and designated by the commissioner pursuant to section 3 of this act.

    "Automobile insurance urban enterprise zone program" or "program" means an automobile insurance urban enterprise zone program established pursuant to section 3 of this act.

    "Automobile insurer" means an insurer admitted or authorized to transact the business of automobile insurance in this State.

    "Commissioner" means the Commissioner of Insurance.

    "Eligible person" means an eligible person as defined in section 25 of P.L.1990, c.8 (C.17:33B-13).

    "Qualified insurer" means an automobile insurer that is a qualified insurer pursuant to section 4 of this act.

    "Urban enterprise zone agent" or "UEZ agent" means a producer who is licensed pursuant to P.L.1987, c.293 (C.17:22A-1 et seq.), is appointed by a qualified insurer to represent it in an automobile insurance urban enterprise zone under the terms of this act and maintains a bona fide office within that automobile insurance urban enterprise zone.

 

    3. ( New section) a. The commissioner shall establish in a fair and equitable manner an automobile insurance urban enterprise zone program designed to encourage greater availability of automobile insurance in certain urban areas of this State as designated pursuant to 1subsection b. of1 this section 1[of this act]1. The program shall provide for incentives that the commissioner deems necessary to encourage qualified insurers to increase their writing of automobile insurance business in those areas and that adequately safeguard the interests of policyholders and the public.

    b. The commissioner shall undertake a review of the availability of automobile insurance in this State and shall identify and designate as automobile insurance urban enterprise zones those urban-based geographic areas in which consumers would benefit from increased access to automobile insurance. In making this determination, the commissioner shall consider, among other things, representation by automobile insurers in those rating territories historically deemed underserved. To assist in this review, the commissioner may appoint an advisory committee composed of representatives of automobile insurers and producer associations and individuals who reside in urban areas of this State. Automobile insurance urban enterprise zones designated pursuant to this section shall be defined by regulations promulgated by the commissioner. The commissioner shall conduct periodic reviews of the availability of automobile insurance throughout the State and may amend the regulations to modify the composition of designated automobile insurance urban enterprise zones for the purpose of furthering the intent of this act.

    4. (New section) a. The commissioner shall establish by regulation standards for a qualified insurer. These standards may include, but not be limited to, 1demonstration by the automobile insurer that it has a plan to increase access to automobile insurance for consumers residing in an automobile insurance urban enterprise zone;1 demonstration by the automobile insurer that it has a plan to assist newly appointed UEZ agents in developing the skills necessary to manage a successful business; procedures to monitor and evaluate the impact of efforts to expand services to urban areas; and materials designed to assist urban consumers in understanding automobile insurance coverages. For an automobile insurer doing business on a direct writing basis, the standards may include, but not be limited to, the insurer's marketing plans and goals for increasing its writing of risks in automobile insurance urban enterprise zones.

    b. An automobile insurer, which meets the applicable standards established pursuant to subsection a. of this section, may certify to the commissioner that it is a qualified insurer.

    c. An automobile insurer that certifies to the commissioner that it meets the standards established pursuant to subsection a. of this section shall be considered a qualified insurer for the purposes of this act. If at any time the commissioner determines that a qualified insurer fails to meet the standards established pursuant to subsection a. of this section, or if the commissioner determines it necessary for the protection of the public, he may suspend or revoke the insurer's certification as a qualified insurer. 1If the commissioner determines that a qualified insurer has experienced a pattern of decreases in its in-force exposures in an automobile insurance urban enterprise zone for two or more consecutive years, the commissioner may suspend or revoke the insurer's certification as a qualified insurer. In making this determination, the commissioner shall consider the past performance of the insurer in providing automobile insurance in urban areas.1 If an automobile insurer certifies that it meets the standards for becoming a qualified insurer and it does not meet those standards, that insurer shall not be a qualified insurer for purposes of this act and may, at the discretion of the commissioner, be subject of a fine of not more than $25,000.

    d. Only qualified insurers shall be eligible to participate in the automobile insurance urban enterprise zone program.

 

    5. (New section) a. A qualified insurer may appoint a UEZ agent or agents. Any appointment of a UEZ agent shall comply with the provisions of section 15 of P.L.1987, c.293 (C.17:22A-15), except when there is a conflict with a provision of this act or any regulation promulgated 1[thereunder] hereunder1, this act is controlling. An agency contract between a qualified insurer and a UEZ agent shall be in writing, set forth specific duties and responsibilities of the parties regarding the obligations imposed pursuant to this section and section 4 of this act, and detail the provisions of any limit on the number of exposures provided in subsection b. of this section.

    b. A qualified insurer may limit the number of exposures written through a UEZ agent 1or in the case of a qualified insurer doing business on a direct writing basis, the qualified insurer may limit the number of exposures written in an automobile insurance urban enterprise zone consistent with its marketing plans and goals as provided in subsection a. of section 4 of this act1. An eligible person applying for automobile insurance coverage after the limit is reached shall be advised by the UEZ agent that coverage may be available from another agent of the qualified insurer or direct from the qualified insurer if the insurer is a direct writer. Any such limit shall be imposed on an equitable and nondiscriminatory basis consistent with the provisions of subsections a. and b. of section 27 of P.L.1990, c.8 (C.17:33B-15) until the specified limit is reached.

    c. The commissioner shall establish by regulation requirements that shall be satisfied if a qualified insurer limits the number of exposures written through a UEZ agent, and the manner in which a qualified insurer engaged in the business of automobile insurance on a direct writer basis may utilize the provisions of this section.

 

    6. (New section) a. The commissioner shall study the effect of territorial rating caps imposed on automobile insurance rates pursuant to section 7 of P.L.1983, c.65 (C.17:29A-36). The study shall include an evaluation of the general market conditions resulting from the imposition of territorial rating caps, including, but not limited to: market availability; affordability of automobile insurance coverage; the actuarial soundness of, and statistical basis for, territorial cap systems; and the creation of competitive market conditions.

    In conducting this study, the commissioner shall examine the rating systems in use in other highly urbanized areas of this nation.

    b. The commissioner shall report his findings and recommendations within 12 months of the effective date of this act to the Governor and the Legislature.

 

    7. Section 27 of P.L.1990, c.8 (C.17:33B-15) is amended to read as follows:

    27. a. On or after April 1, 1992, every insurer, either by one or more separate rating plans filed in accordance with the provisions of section 6 of P.L.1988, c.156 (C.17:29A-45) or through one or more affiliated insurers, shall provide automobile insurance coverage for eligible persons.

    b. No insurer shall refuse to insure, refuse to renew, or limit coverage available for automobile insurance to an eligible person who meets its underwriting rules as filed with and approved by the commissioner in accordance with the provisions of section 7 of P.L.1988, c.156 (C.17:29A-46).

    c. Notwithstanding the provisions of subsections a. and b. of this section to the contrary, any qualified insurer engaged in writing automobile insurance in an automobile insurance urban enterprise zone pursuant to P.L. , c. 1(C. )1 (now before the Legislature as this bill) may limit the number of exposures written through its UEZ agent or agents 1, or in the case of a qualified insurer doing business on a direct writing basis, the qualified insurer may limit the number of exposures written in an automobile insurance urban enterprise zone consistent with its marketing plans and goals as provided in subsection a. of section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill)1 . Nothing in this subsection shall be construed to relieve a qualified insurer from its obligation under subsections a. and b. of this section to write all eligible persons residing within an automobile insurance urban enterprise zone through its non-UEZ agent points of access.

    d. The commissioner may suspend, revoke or otherwise terminate the certificate of authority to transact automobile insurance business in this State of any insurer who violates the provisions of this section.

(cf: P.L.1990, c.8, s.27)

 

    8. Section 30 of P.L.1990, c.8 (C.17:33B-18) is amended to read as follows:

    30. a. A licensed insurance agent shall, as a condition of licensure:

    (1) Provide each eligible person seeking automobile insurance premium quotations for the forms or types of automobile insurance coverages which are offered by all insurers represented by the agent or with which the agent places risks;

    (2) Not attempt to channel an eligible person away from an insurer or insurance coverage with the purpose or effect of avoiding an agent's obligation to submit an application or an insurer's obligation to accept an eligible person; and

    (3) Upon request, submit an application of the eligible person for automobile insurance to the insurer selected by the eligible person.

    If a UEZ agent has a contract with a qualified insurer pursuant to the provisions of P.L. , c. (now before the Legislature as this bill) and the UEZ agent is unable to place an otherwise eligible person with that qualified insurer because of the limitation on the number of exposures imposed by that qualified insurer on the UEZ agent, the UEZ agent shall be deemed to have met the requirements of this subsection, provided that the limitation on the number of exposures has been reached and the UEZ agent fulfills all applicable regulatory requirements.

    b. With respect to automobile insurance, an insurer shall not penalize an agent by paying less than normal commissions or normal compensation or salary because of the expected or actual experience produced by the agent's automobile insurance business or because of the geographic location of automobile insurance business written by the agent.

(cf: P.L.1990, c.8, s.30)

 

    9. Section 1 of P.L.1970, c.215 (C.17:29D-1) is amended to read as follows:

    1. The Commissioner of Insurance may adopt, issue and promulgate rules and regulations establishing a plan for the providing and apportionment of insurance coverage for applicants therefor who are in good faith entitled to, but are unable to procure the same, through ordinary methods. Every insurer admitted to transact and transacting any line, or lines, of insurance in the State of New Jersey shall participate in such plan and provide insurance coverage to the extent required in such rules and regulations.

    Any plan established pursuant to this section to provide insurance for automobiles, as defined in section 2 of P.L.1972, c.70 (C.39:6A-2), shall provide:

    a. For a rating system which shall produce rates for each coverage which are adequate for the safeness and soundness of the plan, and are not excessive nor unfairly discriminatory with regard to risks in the plan involving essentially the same hazards and expense elements;

    b. For rates charged to plan insureds which shall be sufficient to meet the plan's expenses and the plan's losses on an incurred basis, including the establishment and maintenance of actuarially sound loss reserves to cover all future costs associated with the exposure;

    c. For a limited assignment distribution system permitting insurers to enter into agreements with other mutually agreeable insurers or other qualified entities to transfer their applicants and insureds under such plan to such insurers or other entities;

    d. That it shall not provide insurance coverage for more than 10 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. The plan shall provide for the cessation of the acceptance of applications or the issuance of new policies at any time it reaches 10 percent of market share, as certified by the commissioner, until such time that the commissioner certifies that the plan is insuring less than 10 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;

    e. That it shall not provide coverage to an eligible person as defined pursuant to section 25 of P.L.1990, c.8 (C.17:33B-13);

    f. That insurers who write automobile risks in those urban territories designated by the commissioner shall receive one assigned risk credit for every two voluntary risks written in those designated territories; [and]

    g. That the plan shall not be subsidized by any source external to the plan; and

    h. That a qualified insurer who writes automobile insurance risks in those automobile insurance urban enterprise zones designated by the commissioner pursuant to section 3 of P.L. , c. 1 (C. )1 (now before the Legislature as this bill) shall receive one assigned risk credit for every 1[one] new1 voluntary risk written in those designated automobile insurance urban enterprise zones through its UEZ agent or agents 1or through any agent with whom the insurer has an in-force contract as of the effective date of that act1. The commissioner shall establish by regulation the manner in which a qualified insurer engaged in the business of automobile insurance on a direct writing basis may utilize the provisions of this subsection.

    Prior to the adoption or amendment of such rules and regulations, the commissioner shall consult with such members of the insurance industry as he deems appropriate. Such consultation shall be in addition to any otherwise required public hearing or notice with regard to the adoption or amendment of rules and regulations.

    The governing body administering the plan shall report annually to the Legislature and the Governor on the activities of the plan. The report shall contain an actuarial analysis regarding the adequacy of the rates for each coverage for the safeness and soundness of the plan.

(cf: P.L.1995, c.151, s.1)

 

    10. Section 26 of P.L.1988, c.119 (C.17:29C-7.1) is amended to read as follows:

    26. a. Notwithstanding the provisions of section 3 of P.L.1972, c.70 (C.39:6A-3), a licensed insurer may, in accordance with subsections b. and c. of this section, refuse to renew a policy of private passenger automobile insurance that provides coverage required to be maintained pursuant to P.L.1972, c.70 (C.39:6A-1 et seq.).

    b. For each calendar year period, an insurer may issue notices of intention not to renew an automobile insurance policy in the voluntary market in an amount not to exceed 2% of the total number of voluntary market automobile insurance policies of the insurer, rounded to the nearest whole number, which are in force at the end of the previous calendar year in each of the insurer's rating territories in use in this State.

    c. (1) For every two newly insured automobiles which an insurer voluntarily writes in each territory during each calendar year period, the insurer shall be permitted to refuse to renew one additional policy of automobile insurance in that territory in excess of the 2% limitation established by subsection b. of this section, subject to a fair and nondiscriminatory formula developed by rule or regulation of the commissioner. For the purposes of this section, "voluntarily writes" shall not include any exposure voluntarily written by or assigned to an insurer to meet any quota established pursuant to section 26 of P.L.1983, c.65 (C.17:30E-14).

    (2) For every 1[one] three1 newly insured 1[automobile] automobiles1 which a qualified insurer voluntarily writes in an automobile insurance urban enterprise zone through its UEZ agent pursuant to P.L. , c. 1 (C. )1 (now before the Legislature as this bill) 1or through any agent with whom the insurer has an in-force contract as of the effective date of that act,1 during each calendar year period, a qualified insurer shall be permitted to refuse to renew insurance on 1[one] two1 additional 1[automobile] automobiles1 in any rating territory except in an automobile insurance urban enterprise zone. The commissioner shall establish by regulation the manner in which a qualified insurer engaged in the business of automobile insurance on a direct writing basis may utilize the provisions of this 1[subsection] paragraph (2). The nonrenewal provisions of this paragraph (2) shall be permitted only in rating territories in which the insurer experiences growth in the aggregate number of in-force exposures. An automobile that is newly insured pursuant to the provisions of this paragraph (2) shall not be considered a newly insured automobile for the purposes of paragraph (1) of this subsection. The commissioner shall develop and promulgate a standardized reporting form which insurers shall utilitze for the purpose of reporting their activity pursuant to this paragraph (2)1.

    d. The provisions of this section shall not apply to any cancellation made pursuant to subsection (A) of section 2 of P.L.1968, c.158 (C.17:29C-7).

    e. The commissioner shall monitor the implementation and operation of this section and shall report his findings, including any legislative proposals, to the Senate Labor, Industry and Professions Committee and the Assembly Insurance Committee, or their successors, within three years of the effective date of this act.

(cf: P.L.1988, c.119, s.26)

 

    11. Section 1 of P.L.1970, c.217 (C.17:22-6.14a) is amended to read as follows:

    1. a. In the event that a policy is canceled by the insurer, either at its own behest or at the behest of the agent or broker of record, the unearned premium, including the unearned commission, shall be returned to the policyholder.

    b. In the event that a policy of insurance, issued by the automobile insurance plan established pursuant to P.L.1970, c.215 (C.17:29D-1) or any successor thereto, is canceled by reason of nonpayment of premium to the insurer issuing the policy or nonpayment of an installment payment due pursuant to an insurance premium finance agreement, the broker of record for that policy may retain the full annual commission due thereon and, if a premium finance agreement is not involved, the effective date of cancellation of the policy shall be no earlier than 10 days prior to the last full day for which the premium paid by the insured, net of the broker's full annual commission, would pay for coverage on a pro rata basis in accordance with rules established by the commissioner.

    c. Contracts between insurance companies and agents for the appointment of the agent as the representative of the company shall set forth the rate of commission to be paid to the agent for each class of insurance within the scope of such appointment written on all risks or operations in this State, except:

    (1) Reinsurance.

    (2) Life insurance.

    (3) Annuities.

    (4) Accident and health insurance.

    (5) Title insurance.

    (6) Mortgage guaranty insurance.

    (7) Hospital service, medical service, health service, or dental service corporations, investment companies, mutual benefit associations, or fraternal beneficiary associations.

    Said rates of commission shall continue in force and effect unless changed by mutual written consent or until termination of said contract as hereinafter provided. Failure to achieve such mutual consent shall require that the agent's contract be terminated as hereinbelow provided. The rate of commission being paid on each class of insurance on the date of enactment hereof shall be deemed to be pursuant to the existing contract between agent and company.

    d. Termination of any such contract for any reason other than one excluded herein shall become effective after not less than 90 days' notice in writing given by the company to the agent and the Commissioner of Insurance. No new business or changes in liability on renewal or in force business, except as provided in subsection l. of this section, shall be written by the agent for the company after notice of termination without prior written approval of the company. However, during the term of the agency contract, including the said 90-day period, the company shall not refuse to renew such business from the agent as would be in accordance with said company's current underwriting standards. The company shall, during a period of 12 months from the effective date of such termination, provided the former agent has not been replaced as the broker of record by the insured, and upon request in writing of the terminated agent, renew all contracts of insurance for such agent for said company as may be in accordance with said company's then current underwriting standards and pay to the terminated agent a commission in accordance with the agency contract in effect at the time notice of termination was issued. Said commission can be paid only to the holder of a valid New Jersey insurance producer's license. In the event any risk shall not meet the then current underwriting standards of said company, that company may decline its renewal, provided that the company shall give the terminated agent and the insured not less than 60 days' notice of its intention not to renew said contract of insurance.

    e. The agency termination provisions of this act shall not apply to those contracts:

    (1) in which the agent is paid on a salary basis without commission or where he agrees to represent exclusively one company or to the termination of an agent's contract for insolvency, abandonment, gross and willful misconduct, or failure to pay over to the company moneys due to the company after his receipt of a written demand therefor, or after revocation of the agent's license by the Commissioner of Insurance; and in any such case the company shall, upon request of the insured, provided he meets the then current underwriting standards of the company, renew any contract of insurance formerly processed by the terminated agent, through an active agent, or directly pursuant to such rules and regulations as may be promulgated by the Commissioner of Insurance, or

    (2) which are entered into between a qualified insurer and a UEZ agent pursuant to section 5 of P.L. , c. 1 (C. )1(now before the Legislature as this bill).

    f. The Commissioner of Insurance, on the written complaint of any person stating that there has been a violation of this act, or when he deems it necessary without a complaint, may inquire and otherwise investigate to determine whether there has been any violation of this act.

    g. All existing contracts between agent and company in effect in the State of New Jersey on the effective date of this act are subject to all provisions of this act.

    h. The Commissioner of Insurance may, if he determines that a company is in unsatisfactory financial condition, exclude such company from the provisions of this act.

    i. Whenever under this act it is required that the company shall renew a contract of insurance, the renewal shall be for a time period equal to one additional term of the term specified in the original contract, but in no event to be less than one year.

    j. The provisions of subsection b. of this section shall not apply to policies written by the New Jersey Automobile Full Insurance Underwriting Association established pursuant to sections 13 through 34 of P.L.1983, c.65 (C.17:30E-1 et seq.).

    k. The New Jersey Automobile Full Insurance Underwriting Association established pursuant to sections 13 through 34 of P.L.1983, c.65 (C.17:30E-1 et seq.), shall not be liable to pay any commission required by subsection b. of this section on any policies written by the association prior to January 1, 1986.

    l. A company which terminates its contractual relationship with an agent subject to the provisions of subsection d. of this section shall, at the time of the agent's termination, with respect to insurance covering an automobile as defined in subsection a. of section 2 of P.L.1972, c.70 (C.39:6A-2), notify each named insured whose policy is serviced by the terminated agent in writing of the following: (1) that the agent's contractual relationship with the company is being terminated and the effective date of that termination; and (2) that the named insured may (a) continue to renew and obtain service through the terminated agent; or (b) renew the policy and obtain service through another agent of the company.

    Notwithstanding any provision of this section to the contrary, no insurance company which has terminated its contractual relationship with an agent subject to subsection d. of this section shall, upon the expiration of any automobile insurance policy renewed pursuant to subsection d. of this section which is required to be renewed pursuant to section 3 of P.L.1972, c.70 (C.39:6A-3), refuse to renew, accept additional or replacement vehicles, refuse to provide changes in the limits of liability or refuse to service a policyholder in any other manner which is in accordance with the company's current underwriting standards, upon the written request of the agent or as otherwise provided in this section, provided the agent maintains a valid New Jersey insurance producer's license and has not been replaced as the broker of record by the insured. However, nothing in this section shall be deemed to prevent nonrenewal of an automobile insurance policy pursuant to the provisions of section 26 of P.L.1988, c.119 (C.17:29C-7.1).

    The company shall pay a terminated agent who continues to service policies pursuant to the provisions of this subsection a commission in an amount not less than that provided for under the agency contract in effect at the time the notice of termination was issued. A terminated agent who continues to service automobile insurance policies pursuant to this subsection shall be deemed to be an insurance broker as defined in section 2 of P.L.1987, c.293 (C.17:22A-2), and not an agent of the company, except that the terminated agent shall have the authority to bind coverage for renewals, additional or replacement vehicles, and for changed limits of liability as provided in this subsection to the same extent as an active agent for the company. The company shall provide the terminated agent with a written copy of its current underwriting guidelines during the time the agent continues to service policies pursuant to this subsection.

    If a terminated agent who is continuing to service policies pursuant to the provisions of this subsection violates the written underwriting guidelines of the company in such a manner or with such frequency as to substantially affect the company's ability to underwrite or provide coverage, the company may discontinue accepting renewal and service requests from, and paying commissions to, the terminated agent; provided, however, that the company provides the terminated agent with at least 45 days' written notice which shall include a detailed explanation of the reasons for discontinuance. A copy of this notice, along with supporting documentation providing evidence that the terminated agent received proper notice of discontinuance pursuant to this subsection and evidence in support of the company's action, shall be sent by the company to the Division of Enforcement and Consumer Protection in the Department of Insurance.

    The provisions of this subsection shall not apply to any policy issued by the New Jersey Automobile Full Insurance Underwriting Association created pursuant to the provisions of P.L.1983, c.65 (C.17:30E-1 et seq.).

    m. A qualified insurer which terminates its contractual relationship with its UEZ agent pursuant to 1[paragraph (2) of subsection e. of this]1 section 15 of P.L. , c. (C. ) (pending before the Legislature as this bill)1 shall terminate its relationship in accordance with the following provisions:

    (1) The qualified insurer shall give the UEZ agent at least 60 days' written notice of termination. Notice of termination shall be on a form prescribed by the commissioner and shall indicate the date of termination and the reason therefore. A copy of the notice of termination shall be sent to the commissioner.

    (2) Notwithstanding the provisions of 1this1 section 1[1 of P.L.1970, c.217 (C.17:22-6.14a)]1 and section 26 of P.L.1988, c.119 (C.17:29C-7.1), a qualified insurer may refuse to renew the business written through a UEZ agent in an orderly and non-discriminatory manner over the course of at least a three-year period commencing on the effective date of termination of its relationship with its UEZ agent. A qualified insurer intending to refuse renewal business written by a terminated UEZ agent shall notify the commissioner and file its plan for complying with the requirements of this paragraph prior to the date of the UEZ agent's termination.

    (3) 1[The] Pursuant to the conditions of an orderly and non-discriminatroy non-renewal plan filed with the commissioner as required by paragraph (2) of this subsection, the1 terminated UEZ agent shall continue to receive commissions for any renewal business pursuant to the terms of the contract in force with the qualified insurer at the time of termination, provided that the UEZ agent maintains a valid New Jersey insurance producer's license and has not been replaced as the broker of record by the insured. A terminated UEZ agent who continues to service automobile insurance policies shall be deemed to be an insurance broker and not 1[as]1 the UEZ agent of the qualified insurer.

(cf: P.L.1989, c.129, s.1


    12. (New section) Notwithstanding the provisions of section 7 of P.L.1983, c.65 (C.17:29A-36), an automobile insurance rate for any coverage, except bodily injury, including underinsured motorist coverage, property damage liability and personal injury protection, for the base class in any automobile insurance urban enterprise zone established pursuant to section 3 of P.L. , c. (now before the Legislature as this bill) for any filer shall not exceed 1.5 times the filer's statewide average base rate for the coverage, exclusive of driving record surcharges and discounts.

 

     113. Section 4 of P.L.1947, c.379 (C.17:29B-4) is amended to read as follows:

    4. The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:

    (1) Misrepresentations and false advertising of policy contracts. Making, issuing, circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby or the dividends or share of the surplus to be received thereon, or making any false or misleading statement as to the dividends or share of surplus previously paid on similar policies, or making any misleading representation or any misrepresentation as to the financial condition of any insurer, or as to the legal reserve system upon which any life insurer operates, or using any name or title of any policy or class of policies misrepresenting the true nature thereof, or making any misrepresentation to any policyholder insured in any company for the purpose of inducing or tending to induce such policyholder to lapse, forfeit, or surrender his insurance.

    (2) False information and advertising generally. Making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station, or in any other way, an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading.

    (3) Defamation. Making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting or encouraging the making, publishing, disseminating or circulating of any oral or written statement or any pamphlet, circular, article or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, and which is calculated to injure any person engaged in the business of insurance.

    (4) Boycott, coercion and intimidation. Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance; or resulting in or tending to result in unreasonable influence being exerted upon any producer that has an in-force contract as of the effective date of P.L. , c. (C. )(now before the Legislature as this bill) for the purpose of replacing the in-force contract with a UEZ agent contract pursuant to section 5 of P.L. , c. (C. )(now before the Legislature as this bill).

    (5) False financial statements. Filing with any supervisory or other public official, or making, publishing, disseminating, circulating or delivering to any person, or placing before the public, or causing directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false statement of financial condition of an insurer with intent to deceive.

    Making any false entry in any book, report or statement of any insurer with intent to deceive any agent or examiner lawfully appointed to examine into its condition or into any of its affairs, or any public official to whom such insurer is required by law to report, or who was authorized by law to examine into its condition or into any of its affairs, or, with like intent, willfully omitting to make a true entry of any material fact pertaining to the business of such insurer in any book, report or statement of such insurer.

    (6) Stock operations and advisory board contracts. Issuing or delivering or permitting agents, officers, or employees to issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities or any special or advisory board contracts or other contracts of any kind promising returns and profits as an inducement to insurance.

    (7) Unfair discrimination. (a) Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract.

    (b) Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of accident or health insurance or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever.

    (c) Making or permitting any discrimination against any person or group of persons because of race, creed, color, national origin or ancestry of such person or group of persons in the issuance, withholding, extension or renewal of any policy of insurance, or in the fixing of the rates, terms or conditions therefor, or in the issuance or acceptance of any application therefor.

    (d) Making or permitting discrimination in the use of any form of policy of insurance which expresses, directly or indirectly, any limitation or discrimination as to race, creed, color, national origin or ancestry or any intent to make any such limitation or discrimination.     (e) Making or permitting any unfair discrimination solely because of age in the issuance, withholding, extension or renewal of any policy or contract of automobile liability insurance or in the fixing of the rates, terms or conditions therefor, or in the issuance or acceptance of any application therefor, provided, that nothing herein shall be construed to interfere with the application of any applicable rate classification filed with and approved by the commissioner pursuant to P.L.1944, c. 27 (C.17:29A-1 to 17:29A-28), or any amendment or supplement thereof, which is in effect with respect to such policy or contract of insurance.

    (8) Rebates. (a) Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any contract of life insurance, life annuity or accident and health insurance, or agreement as to such contract other than as plainly expressed in the contract issued thereon, or paying or allowing, or giving or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance, or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; or giving, or selling, or purchasing or offering to give, sell, or purchase as inducement to such insurance or annuity or in connection therewith, any stocks, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the contract.

    (b) Nothing in clause 7 or paragraph (a) of this clause 8 shall be construed as including within the definition of discrimination or rebates any of the following practices (i) in the case of any contract of life insurance or life annuity, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance; provided, that any such bonuses or abatement of premiums shall be fair and equitable to policyholders and for the best interests of the company and its policyholders; (ii) in the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expense; (iii) readjustment of the rate of premium for a group policy based on the loss or expense experience thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year.     (9) Unfair claim settlement practices. Committing or performing with such frequency as to indicate a general business practice any of the following:

    (a) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;

    (b) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;

    (c) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;

    (d) Refusing to pay claims without conducting a reasonable investigation based upon all available information;

    (e) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;

    (f) Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;

    (g) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;

    (h) Attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application;

    (i) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured;     (j) Making claims payments to insureds or beneficiaries not accompanied by statement setting forth the coverage under which the payments are being made;

    (k) Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;

    (l) Delaying the investigation or payment of claims by requiring an insured, claimant or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.

    (m) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;

    (n) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.

    (10) Failure to maintain complaint handling procedures. Failure of any person to maintain a complete record of all the complaints which it has received since the date of its last examination. This record shall indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of these complaints, and the time it took to process each complaint. For purposes of this subsection, "complaint" shall mean any written communication primarily expressing a grievance.

    (11) The enumeration of this act of specific unfair methods of competition and unfair or deceptive acts and practices in the business of insurance is not exclusive or restrictive or intended to limit the powers of the commissioner or any court of review under the provisions of section 9 of this act.1

(cf: P.L.1975, c.100, s.1)

 

    1[13.] 14.1 This act shall take effect on the 180th day after enactment.

 

 

 

Establishes the automobile insurance urban enterprise zone program.