INSURANCE

DEPARTMENT OF BANKING AND INSURANCE

DIVISION OF INSURANCE

Standards for Individual Life Insurance Policy Forms

Standards for Smoker/Nonsmoker and/or Tobacco/Nontobacco Reclassification

Adopted New Rule: N.J.A.C. 11:4-41.14

Proposed: November 19, 2001 at 33 N.J.R. 3865(a).

Adopted: March 4, 2002 by Holly C. Bakke, Acting Commissioner, Department of Banking and Insurance.

Filed: March 4, 2002 as R. 2002 d.103 with a substantive change not requiring additional public notice or comment (see N.J.A.C. 1:30-6.3).

Authority: N.J.S.A. 17:1-8, 17:1-15e and 17B:25-18.2 and 18.3.

Effective Date: April 1, 2002.

Expiration Date: November 30, 2005.

Summary of Public Comment and Agency Response:

The Department received one comment from State Farm Life Insurance Company.

COMMENT: The commenter stated that the Department's proposed new rule will require insurers who do not endorse all of their existing policies to make substantial changes to their premium billing notices within 90 days of adoption of this new rule. The commenter indicated that such notices are computer generated and are complex documents, and that a significant amount of time will be needed to alter and test the programming to revise the notices. Additionally, this programming will need to be performed as a state exception because other states do not require such a notice. According to the commenter, nine months will be needed to make these changes.

RESPONSE: The Department agrees that additional time may be needed for insurers to comply with notice requirements of the proposed new rule. Accordingly, the Department is revising proposed N.J.A.C. 11:4-41.14(d) to provide 270 days from the adoption of this rule within which insurers must comply with the notice requirements.

Federal Standards Statement

A Federal standards analysis is not required because the adopted new rule sets forth standards for reclassification of insureds under individual life insurance policies from smoker to nonsmoker status, or from tobacco to nontobacco status, and are not subject to any Federal requirements or standards.

Full text of the adoption follows (additions to proposal indicated in boldface with asterisks *thus*; deletions from proposal indicated in brackets with asterisks *[thus]*):

11:4-41.14 Standards for smoker/nonsmoker and/or tobacco/nontobacco reclassification

(a) (c) (No change from proposal.)

(d) Insurers electing not to endorse previously-approved forms to include the provision required by (c) above shall provide insureds with the information contained in (c) above in a premium notice or other written notice no later than the next premium due date or *[90 days from the effective date of this section,]* *December 27, 2002*, whichever is later, and shall immediately comply with all other requirements of this section.

(e) (j) (No change from proposal.)