SENATE, No. 1715
STATE OF NEW JERSEY
INTRODUCED DECEMBER 16, 1996
By Senator LaROSSA
An Act concerning automobile insurance and amending and supplementing P.L.1988, c.156.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) This act shall be known and may be cited as the "Automobile Insurance Surcharge Elimination Act."
2. Section 6 of P.L.1988, c.156 (C.17:29A-45) is amended to read as follows:
6. a. Notwithstanding the provisions of P.L.1944, c.27 (C.17:29A-1 et seq.) to the contrary, every insurer transacting or proposing to transact private passenger automobile insurance may file one or more rating plans in the voluntary market [for standard risks, or non-standard risks, or both. Within 30 days following the effective date of this 1988 amendatory and supplementary act, every] . Every insurer writing private passenger automobile insurance in this State which intends to write coverage in the voluntary market using more than one rate level shall file with the commissioner the rates and underwriting rules which are applicable to each rate level.
b. An insurer which intends to use more than one rating plan, and which has a rating plan on file as of the effective date of this [1988] 1996 amendatory and supplementary act, may make an initial filing for [the] any additional rating [plan] plans in which the modification of the plan on file is expressed as a percentage increase or decrease of the existing rate level.
c. Notwithstanding any other law to the contrary, any rates filed pursuant to subsection b. of this section shall be deemed to be approved if not disapproved by the commissioner within 60 days. Any subsequent modification of any rate level other than that provided for in section 5 of [this 1988 amendatory and supplementary act] P.L.1988, c.156 (C.17:29A-44), or any initial rate level which is not expressed as a percentage increase or decrease of an existing rate level as provided for in this section, shall be subject to the provisions of P.L.1944, c.27 (C.17:29A-1 et seq.).
d. Any limitation on rates established by the provisions of section 7 of P.L.1983, c.65 (C.17:29A-36) shall apply separately to each rate level established pursuant to subsection a. of this section.
e. Every insurer shall maintain such data for each rate level as may be required by the commissioner by regulation for the purpose of determining excess profits pursuant to the provisions of P.L.1988, c.118 (C.17:29A-5.6 et seq.).
f. [No more than 15 percent of the aggregate number of private passenger automobile non-fleet exposures being written in the total private passenger automobile insurance market in this State shall be provided through the non-standard voluntary market as defined by rule or regulation of the commissioner adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). If the commissioner certifies that 15 percent or more of the aggregate number of private passenger automobile non-fleet exposures being written in the total private passenger automobile insurance market in this State are insured in the non-standard voluntary market, no insurer transacting automobile insurance in this State shall refuse to issue or renew an automobile insurance policy in the voluntary market for an eligible person as defined in section 25 of P.L.1990, c.8 (C.17:33B-13) until such time that the commissioner certifies that the non-standard market comprises less than 15 percent of the aggregate number of private passenger automobile non-fleet exposures being written in the total private passenger automobile insurance market in this State.] (Deleted by amendment, P.L. , c. )
g. [Notwithstanding any provision of this or any other section of law to the contrary, no insurer shall file, nor shall the commissioner approve, any rates filed for non-standard risks in the voluntary market in excess of 135 percent of the cost of private passenger automobile insurance in the voluntary market in this State as determined by the commissioner.] (Deleted by amendment, P.L. , c. )
h. [The commissioner shall monitor and report to the Legislature, on March 1, 1992, and annually thereafter, the number of private passenger automobile non-fleet exposures insured in the standard market on December 31 of the preceding calendar year and the number of such exposures insured in the non-standard market on December 31 of the preceding calendar year.] (Deleted by amendment, P.L. , c. )
(cf: P.L.1990, c.8, s.37)
3. Section 7 of P.L.1988, c.156 (C.17:29A-46) is amended to read as follows:
7. a. Insurers shall put in writing all underwriting rules applicable to each rate level utilized pursuant to section 6 of [this 1988 amendatory and supplementary act] P.L.1988, c.156 (C.17:29A-45). No underwriting rule shall operate in such a manner as to assign a risk to a rating plan on the basis of the territory in which the insured resides. An insurer which knowingly fails to transact automobile insurance consistently with its underwriting rules shall be subject to a fine of not less than $500.00 for each violation.
b. All underwriting rules applicable to each rate level as provided for in section 6 of [this 1988 amendatory and supplementary act] P.L.1988, c.156 (C.17:29A-45) shall be filed with the commissioner and shall be subject to his prior approval. All underwriting rules shall be subject to public inspection. Insurers shall apply their underwriting rules uniformly and without exception throughout the State, so that every applicant or insured conforming with the underwriting rules will be insured or renewed, and so that every applicant not conforming with the underwriting rules will be refused insurance.
c. (Deleted by amendment, P.L.1990, c.8.)
d. (Deleted by amendment, P.L.1990, c.8.)
e. An insurer with more than one rating plan for private passenger automobile insurance policies providing identical coverages shall not adopt underwriting rules which would permit a person to be insured under more than one of the rating plans.
(cf: P.L.1990, c.8, s.38)
4. (New section) No insurer shall charge or collect surcharges based on motor vehicle violation penalty points promulgated by the Director of the Division of Motor Vehicles pursuant to section 1 of P.L.1982, c.43 (C.39:5-30.5) or the schedule of automobile insurance eligibility points promulgated by the Commissioner of Banking and Insurance pursuant to section 26 of P.L.1990, c.8 (C.17:33B-14).
5. (New section) Any rate filing made pursuant to the provisions of section 6 of P.L.1988, c.156 (C.17:29A-45) shall be revenue neutral for the insurer.
6. (New section) To provide for a transition with minimum disruption to the private passenger automobile insurance market, the Commissioner of Banking and Insurance shall promulgate regulations providing for a transition period between the private passenger automobile insurance rating system in effect on the date this section takes effect and implementation of the system of multiple private passenger automobile insurance rate plans established by this 1996 amendatory and supplementary act; and any other regulations necessary to effectuate the purposes of this act.
7. This act shall take effect on January 1, 1998, except that section 6 of this act shall take effect immediately, and shall apply to private passenger automobile insurance policies issued or renewed on or after that date.
STATEMENT
This bill, the "Automobile Insurance Surcharge Elimination Act," terminates the current system of private passenger automobile insurance surcharges and provides that automobile insurers may file one or more rating plans. The bill prohibits surcharges by automobile insurers based on either motor vehicle violation points or the schedule of automobile insurance eligibility points promulgated by the Commissioner of Banking and Insurance.
The bill also provides that insurers with more than one rating plan may not adopt underwriting rules which would permit a person to be insured under more than one of the rating plans. Rating plans filed must be revenue neutral for the insurer. The bill leaves in place the prior approval of private passenger automobile insurance rates and underwriting rules by the commissioner.
Finally, to minimize disruption in the automobile insurance market, the bill authorizes the commissioner to promulgate regulations providing for a transition period between the current automobile insurance rating system and implementation of the multiple automobile insurance rate plans established pursuant to this bill; and any other regulations necessary to effectuate the purposes of the bill.
"Automobile Insurance Surcharge Elimination Act;" establishes multiple automobile insurance rate plans.