SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 1363

with committee amendments

STATE OF NEW JERSEY

DATED: JUNE 20, 1996

      The Senate Budget and Appropriations Committee reports favorably and with committee amendments Senate Bill No. 1363.

      The bill, as amended, merges the Department of Banking and the Department of Insurance into one Department of Banking and Insurance. The bill provides that the person in the office as the Commissioner of Insurance on June 30, 1996, shall, at the pleasure of the Governor, hold the office of the Commissioner of Banking and Insurance for the unexpired term for which the commissioner was appointed, and until a successor is appointed and qualified. The bill creates two new divisions within the Department of Banking and Insurance: a Division of Banking and a Division of Insurance. Each division is under the immediate supervision of a director who is appointed by the Governor, with the advice and consent of the Senate, and who serves at the pleasure of the Governor. The bill also provides that the person currently in office as Deputy and Acting Commissioner of Banking shall, at the pleasure of the Governor, hold the office of the Director of the Division of Banking and that the person currently in office as the Deputy Commissioner of Insurance for Property and Casualty shall, at the pleasure of the Governor, hold the office of Director of the Division of Insurance.

      Under the bill, the Department of Banking and Insurance shall be organized so that, subject to the supervision of the commissioner, the Director of the Division of Banking shall be in charge of the functions and duties that relate to banking and supervise and regulate those entities previously supervised and regulated by the Department of Banking, and the Director of the Division of Insurance shall be in charge of the functions and duties that relate to insurance and supervise and regulate those entities previously supervised and regulated by the Department of Insurance. The bill provides that in the absence of the commissioner, the Director of the Division of Banking will be acting commissioner for all matters relating to banking and the Director of the Division of Insurance will be acting commissioner for all matters relating to insurance.

      Under the bill, a Department of Banking and Insurance Study Commission is established to be convened by the commissioner no later than January 2, 2001. The commission will examine the effects of the merger of the two departments. Membership on the commission includes representatives from the executive and legislative branches as well as members from the banking, insurance and real estate industries and the public. The commission must complete its review and report its findings and recommendations to the Governor and the Legislature no later than 12 months after January 2, 2001.

      As amended and reported, this bill is identical to the Assembly Committee Substitute for Assembly Bill No. 96 of 1996 (Azzolina/Garrett).

COMMITTEE AMENDMENTS:

      Committee amendments: create the two new divisions in the Department of Banking and Insurance and provide that the director of each division is appointed by the Governor, with the advice and consent of the Senate; that the person currently in office as Deputy and Acting Commissioner of Banking will, at the pleasure of the Governor, hold the office of the Director of the Division of Banking and that the person currently in office as the Deputy Commissioner of Insurance for Property and Casualty will, at the pleasure of the Governor, hold the office of Director of the Division of Insurance; provide that the department is organized so that, subject to the supervision of the commissioner, the Director of the Division of Banking shall be in charge of the functions and duties that relate to banking and supervise and regulate those entities previously supervised and regulated by the Department of Banking, and the Director of the Division of Insurance shall be in charge of the functions and duties that relate to insurance and supervise and regulate those entities previously supervised and regulated by the Department of Insurance; provide that in the absence of the commissioner, the Director of the Division of Banking will be acting commissioner for all matters relating to banking and the Director of the Division of Insurance will be acting commissioner for all matters relating to insurance.

      The committee amendments also establish a Department of Banking and Insurance Study Commission to be convened by the commissioner no later than January 2, 2001. The commission will examine the effects of the merger of the two departments. Membership on the commission includes representatives from the executive and legislative branches as well as members from the banking, insurance and real estate industries and the public. The commission must complete its review and report its findings and recommendations to the Governor and the Legislature no later than 12 months after January 2, 2001.

FISCAL IMPACT

      According to statements made by the current Commissioner of Insurance, to this committee, the enactment of this bill will result in annual savings to the State of $2 million. These savings will be passed on to private industry by means of lower regulatory fees.