Rate Intervenor Rules

Definition of Substantial Contribution; Procedures for Intervening in a Rate Filing

Adopted Amendments: N.J.A.C. 11:3-17.2 and 17.6

Proposed: August 20, 2001 at 33 N.J.R. 2730(a) (see also 33 N.J.R. 3280(a))

Adopted: October 24, 2001 by Donald Bryan, Acting Commissioner for

Insurance, Department of Banking and Insurance

Filed: October 25, 2001 as R. 2001 d. 441 , without change.

Authority: N.J.S.A. 17:1-8.1, 17:1-15e, 17:29A-46.7 and 46.8.

Effective Date: November 19, 2001

Expiration Date: January 4, 2006

Summary of Public Comments and Agency Responses:

The Department received four written comments on the proposal, two from insurers (Harleysville Insurance Companies and State Farm Insurance Companies); one from the Alliance of American Insurers; and one from the Professional Insurance Agents of New Jersey.

Comment: One commenter stated that proposed N.J.A.C. 11:3-17.2 will add a definition for "substantial contribution." The commenter stated that the proposed definition provides standards for the Commissioner to decide whether a rate intervenor is entitled to compensation paid by the insurer for actions taken in the insurer's prior approval rate filing seeking an overall increase. The commenter stated that the current proposed definition, however, allows compensation where the intervenor provides only new albeit relevant information that may not have an impact on the results.

The commenter argued that compensation should be based on providing relevant information that impacts the overall results, not for simply providing interesting information. The commenter stated that rate intervenors were authorized by AICRA, which expressed purpose was to reduce the cost of auto insurance. The commenter argued that compensating rate intervenors for information that does not have an impact on the results does not decrease insurance costs, and is thus not within the scope of AICRA.

The commenter suggested that the definition of "substantial contribution" be amended to provide that (addition in boldface):

"Ö Commissioner had the intervenor not participated and resulted in a decrease in the overall rate change allowed by the Commissioner in the Final Decision and Order based on those issues, evidence and arguments."

RESPONSE: The Department believes that the language in the proposed amendment provides a standard that requires information that is more than just "interesting." Specifically, the requirement is that the information contributed by the intervenor "substantially contributed to the Commissionerís Final Decision and Order by presenting relevant issues, evidence or arguments which were separate and distinct from those emphasized by the Department of Banking and Insurance staff or any other party, such that the intervenorís participation resulted in more relevant credible, and nonfrivolous information being available for the Commissioner to make his or her decision than would have been available to the Commissioner had the intervenor not participated." The Department believes this standard requires more than just relevant information that may not have an impact on the results.

COMMENT: The Department notes that three commenters expressed support for the proposed amendment.

Federal Standards Statement

A Federal standard analysis is not required because these adopted amendments concern insurance and are not subject to any Federal requirements or standards.

Full text of the adoption follows: