DEPARTMENT OF BANKING AND INSURANCE
DIVISION OF INSURANCE
Filings: Property and Casualty
Adopted New Rules: N.J.A.C. 11:1-2.1, 2.7 and 1-2 Appendix, Exhibits A and B
Adopted Amendments: N.J.A.C. 11:1-2, 11:3-16.3, 11:13-2.5 and 11:13-5.1 Exhibits A, B and C
Proposed: June 4, 2001 at 33 N.J.R. 1875(a)
Adopted: March 4, 2002 by Holly C. Bakke, Acting Commissioner, Department of Banking and Insurance
Filed: March 4, 2002 as R. 2002 d.101, with a technical change not requiring additional public notice and comment (see N.J.A.C. 1:30-6.3).
Authority: N.J.S.A. 17:1-8.1, 17:1-15e, 17:29A-1 et seq. and 17:29AA-1 et seq.
Effective Date: April 1, 2002
Expiration Date: January 31, 2006, N.J.A.C. 11:1
January 4, 2006, N.J.A.C. 11:3
November 10, 2002, N.J.A.C. 11:13
Summary of Public Comments and Agency Responses:
The Department received five written comments on the proposed new rules and amendments during the comment period. Comments were received from three insurers (New Jersey Manufacturers Insurance Group, Parkway Insurance Company, State Farm Insurance Company), a rating organization (Insurance Services Office, Inc.) and one from the Insurance Council of New Jersey.
COMMENT: One commenter expressed concern with N.J.A.C. 11:1-2.1, the purpose and scope section. The commenter stated that these rules do not make specific reference to rating organizations and seem to apply only to their members and subscribers. The commenter requested that the Department clarify whether these rules apply to rating organizations.
RESPONSE: The Department agrees with the commenter. In the Summary, and other impact statements to the proposed rules, the Department makes specific reference to the application of these rules to rating organizations. The Department is amending N.J.A.C 11:1-2.1 to clarify that these rules apply to rating organizations.
COMMENT: Three commenters expressed concern with proposed N.J.A.C. 11:1-2.2(c). This provision requires that final printed pages and Form MARS002 accompany all commercial lines filings submitted to the Department. It further requires that final printed pages and Form MARS002 for personal lines filings be provided no later than 10 days after notice of approval or no later than 10 days prior to the effective date.
One commenter stated that the last sentence of this provision does not provide insurers with sufficient time to prepare and submit the form.
A second commenter questioned whether the Department meant the earlier or the later of the two dates.
A third commenter questioned whether this provision means that the insurer must go through the time and expense of making up printed pages before filing, thereby delaying the filing and incurring additional cost, rather than simply filing temporary pages. The commenter stated that if the Department disapproves the filing, or approves the filing subject to amendments of the printed pages, then the time and expense of printing pages is wasted because they would have to be reprinted either for a new filing or to reflect the Departmentís amendments.
The third commenter also stated that this provision should permit the filing of temporary pages for commercial lines in order to avoid wasting time and money in creating printed pages that may be disapproved or amended. The commenter further stated that the use of temporary pages in a filing has not caused any problems in the past and is even permitted in the same proposed subsection for personal lines.
RESPONSE: The Department believes that 10 days is a sufficient amount of time for a company to prepare and submit the requested information. The Department notes that usually the effective date requested by the insurer is months after the Department has completed its review.
With respect to the second comment, the Department is providing both timeframes as an option to the company. Compliance with either date constitutes compliance with these rules.
Although the Department agrees with the third comment, only a very small percentage of commercial filings require changes. The Department requires that final printed pages accompany commercial filings because obtaining final printed pages after the review is complete on commercial filings has been a time-consuming process and this procedure will eliminate that time and expense. Therefore, the Department does not believe a change to the proposal is necessary.
COMMENT: One commenter expressed concern with N.J.A.C.11:1-2.2(c). The commenter noted that Form MARS002 requires the filer to include the NJ Department File No. when submitting this form.
The commenter stated that commercial lines rules are "use and file" and commercial lines forms fall under a "modified prior approval" approach with a 30-day waiting period. The commenter stated that the Department does not assign a file number to a submission until it receives the submission and sends an acknowledgment copy. The commenter contends that the NJ Department File No. would not be available for commercial lines filings at the time of submission. The commenter recommends that the instructions for Form MARS002 be amended to read that commercial lines filings are not required to include the NJ Department file number.
RESPONSE: The Department notes that, in most situations, the Department filing number is unknown to a commercial filer. The Department recognizes that there may be situations where the final prints along with MARS002 are filed after the review process. In such a case, the Department filing number would be known. When the Department number is not available, the Department does not expect that number to be included on the form.
COMMENT: One commenter expressed concern with proposed N.J.A.C. 11:1-2 Appendix, Exhibit A - Question 9 Previously Disapproved Materials. The commenter stated that Question 9 of Form MARS001 in Appendix A of N.J.A.C. 11:1-2 asks, "Does this filing contain any provision previously disapproved by the New Jersey Insurance Department?" The commenter stated that the instructions for Question 9 state, "Include previously disapproved exclusions, rates or rules." The commenter stated that it is not clear whether this question includes materials from filings that were approved by the Department with modifications. The commenter stated that the intent of the form appears to require disapproved materials, not materials that the Department ultimately approved.
The commenter suggested that the following amendments to the proposed instructions to Question 9 of Form MARS001 in Appendix, Exhibit A of N.J.A.C. 11:1-2 be amended to read (addition in boldface):
"Include previously disapproved exclusions, rates
or rules. Do not include exclusions, rates or rules that were previously
approved with modifications."
RESPONSE: The Department is requiring that any known disapproved provisions be included in the insurerís response to this question. If a provision is approved and the filing contains the altered provision, this question does not need a response.
COMMENT: One commenter expressed concern with N.J.A.C. 11:1-2 Appendix, Exhibit B Ė Effective Date. The commenter stated that this date should be consistent with Item 3, of the Filing Source Document. The commenter stated that, if MARS002 is filed at a different time than the Filing Source Document, as would be the case for personal lines filings under proposed N.J.A.C. 11:1-2.2(c) (and also for commercial lines), then the effective date may have been changed. The commenter stated that filings could get delayed as part of the approval process (for example, requests for more information by the Department, public hearings on a filing.) The commenter contends that this would mean that the ultimate effective date would be later than what is originally filed. In that case, the final printed pages (that are filed after approval) would need to include the later ultimate effective date, not the earlier effective date in the original filing.
Therefore, the commenter suggested that the second sentence of the proposed instruction for "Effective Date" in Appendix A, Exhibit B be amended to read, "This date should be the effective date approved by the Department unless this form is filed simultaneously with the Filing Source Document. In that case, this date should be consistent with Item 3. of the Filing Source Document."
RESPONSE: The instructions to Appendix, Exhibit A and B refer to a "proposed" effective date. The proposal does not indicate that the effective date cannot be changed. Additionally, the commenterís suggested language states: "approval by the Department"; however, the Department does not approve commercial filings. Therefore, this change is not necessary.
COMMENT: One commenter stated that the instructions for Form MARS001, Item 12 Form refer to page 14 of the Annual Statement. The line of business information that traditionally was reported on page 14 is now on page 15. The commenter suggested that the Department amend the proposed rules to reflect the current page number.
RESPONSE: Item 12 of the instructions does not refer to page 14 in the annual statement but "Statutory Page 14 data", which is the title of the State specific Exhibit of Premiums and Losses page found in an insurerís annual statement.
COMMENT: One commenter recommended that a "Donít Knowí answer be included as an option on Form MARS001, item 9 and item 11, because a filer may not know what the Department has disapproved on other carriers' submissions.
RESPONSE: The Department is requesting that any known disapproved provisions submitted by the filer be included in the response to Question 9. The Department is requesting that any known submissions for use in this State by another carrier be included in Question 11. If the insurer is unaware of any prior submissions, that question may be left blank.
COMMENT: One commenter stated that it appreciated the Departmentís efforts to streamline the filing process. However, this goal cannot be achieved unless the process of reviewing filings is also clarified. The commenter suggested that the Department establish definitive time lines so that the review process moves along expeditiously. The commenter further recommended that the Department inform a filer within 15 days of receipt of the filing that it is complete. The commenter stated that if the filing is not complete, then the Department should specify what items are needed in order to complete the filing. The commenter also stated that within 45 days after acknowledging that the filing is complete, the Department should provide written preliminary actuarial findings on the filing so that the areas of disagreement are clearly defined and the filer can decide whether to pursue the matter further. After receipt of the preliminary findings, the filer shall have 15 days to request a hearing. The commenter suggested that if a hearing is not held and a final decision is not rendered within 90 days of the request for hearing, the filer may pursue relief in the Appellate Division. The commenter argued that this recommendation would ensure the timely review and streamline procedures for the resolution of filing disputes consistent with the Departmentís attempt to improve efficiency in the filing process.
RESPONSE: These amendments revise the questionnaires that are submitted along with insurersí commercial and personal lines filings. These revised questionnaires permit the Department to review insurersí filing in an efficient manner. The commenterís suggestion addresses the amount of time the Department takes in its review of filings. The commenterís suggestions require the proposal of new rules that are outside the scope of this proposal.
COMMENT: One commenter questioned Form MARS001, Item 6 Ė Subline. The commenter stated that the instructions provide a list of sublines recognized by the Department. The commenter questioned whether the Department recognized that these sublines may not always be applicable. The commenter stated that, for example, it does not have a "credit property" subline under personal inland marine.
The commenter recommended that the instructions be amended to require Item 6 to be completed only when applicable.
RESPONSE: Since the subline code is only applicable on very specific submissions, this area of the questionnaire will be left blank by filers in most situations.
COMMENT: One commenter expressed concern with Form MARS001 Item 10. The commenter stated that Item 10 provides that "If this filing is a revision of your current program, provide the New Jersey Department File number and effective date of the rates, rules, or forms that are being revised by this filing."
The commenter stated that it interprets this to mean the Department file number and effective date applicable to the product, not the specific section of the rate, rule, or form to which the filing applies. The commenter argued that it would be difficult to keep track of every individual change to a section of a loss cost, rule or form and match each change with a New Jersey Department file number. For example, if the filing revised the Garage Form to add a sentence to an exclusion, the New Jersey Department file number related to the last revision to the Garage Form would be listed, not the last revision to the particular exclusion. The commenter stated that the Department should be aware that this is a burdensome request that will be difficult and expensive for insurers to implement.
RESPONSE: The Department agrees with the commenter that the file number of the last revision to the product, and not the last revision to the specific section of the rate, rule, or form to which the filing applies, is the file number that should be included on the MARS Form.
The Department believes that insurers will not be unduly burdened in responding to Item 10 because the file number of the last revision to a general product is information that should be readily accessible.
COMMENT: One commenter expressed concern with Item 11. Item 11 provides that "If this filing is identical or similar to that of another carrier, provide the New Jersey Department File number and company name."
The commenter stated that it does not understand how an insurer or rating organization would be able to determine which companies have submitted filings identical to the filing being submitted. The commenter argued that even if it were able to make this determination, it would not know the New Jersey Department file number associated with the filing. The commenter recommended that this question be deleted.
RESPONSE: Companies frequently request and copy submissions made by other companies. Copies obtained through the Department contain the Department Filing number similarly, a group of companies may be filing the same program for an affiliate. The filing review process can be completed more quickly if this information is included. If this information is unknown then the item should be left blank. Therefore, the Department does not believe that a change to the proposed rules is necessary at this time.
COMMENT: One commenter questioned if, upon adoption, the Department intends to make the filing forms and the accompanying instructions available through the Departmentís website?
RESPONSE: The MARS001 and MARS002 forms, along with the corresponding instructions, will be made available on the Departmentís website.
Federal Standards Statement
A Federal standards analysis is not required because the adopted repeals, new rules and amendments relate to requirements with respect to rate and form filings by property and casualty insureds and rating organizations, 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*):
11:1-2.1 Purpose and scope
(a) This subchapter shall apply to every *rating organization and* and property and casualty insurer that makes its own rate, rule and policy form filings and to every member or subscriber of a rating organization on whose behalf rate, rule and policy form filings are made pursuant to the provisions of N.J.S.A. 17:29A-1 et seq. and 17:29AA-1 et seq.