INSURANCE

DEPARTMENT OF BANKING AND INSURANCE

DIVISION OF INSURANCE

Rate Intervenor Rules

Proposed New Rules: N.J.A.C. 11:3-17

Proposed Amendments: N.J.A.C. 11:3-18.4

Authorized By: Karen L. Suter, Commissioner, Department of Banking and Insurance

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

Proposal Number: PRN 2001-158

Submit comments by June 6, 2001 to:

Karen Garfing, Assistant Commissioner
Regulatory Affairs
New Jersey Department of Banking and Insurance
20 West State Street
P.O. Box 325
Trenton, New Jersey 08625-0325

Fax: (609)292-0896

Email: Legsregs@dobi.state.nj.us

The agency proposal follows:

Summary

On May 19, 1998, the Automobile Insurance Cost Reduction Act, P.L.1998,c.21, was enacted into law. N.J.S.A. 17:29A-46.8 requires the Commissioner of the Department of Banking and Insurance ("Commissioner") to establish standards and procedures for qualifying persons to intervene in rate filings filed by an automobile insurer writing private passenger automobile insurance in this State.

The Department's proposed new rules and amendment set forth the procedures for a qualified person or entity to register with the Department as an "intervenor" in order to participate in these rate filings. In accordance with N.J.S.A. 17:29A-46.8, the intervenor is required to have expertise in the insurance laws of this State; an understanding of actuarial principles employed in establishing rates and rating systems; sufficient access to a qualified actuary and sufficient expertise to conduct a technical examination of a rate filing; sufficient resources to intervene in the rate filing; and the ability to represent the interest of consumers and to accept a duty of fidelity to do so.

These rules provide procedures for notifying registered intervenors of a proposed rate increase as well as establishing procedures for the intervenor to participate in a rate filing. An intervenor that decides to intervene in the rate filing process must do so not later than 15 days after the Departmentís receipt of the rate filing. The intervenorís final report on the matter is due to the Department within 75 days after the Departmentís receipt of the rate filing. The Commissioner shall award reasonable advocacy, witness fees and expenses upon determining that the intervenor has demonstrated that he or she has made a substantial contribution to the adoption of any order or decision in connection with a rate filing made pursuant to N.J.S.A.17:29A-46.8.

The proposed new rules also state the conditions that may cause the revocation of the intervenorís registration.

Proposed N.J.A.C. 11:3-17.1 establishes the scope and purpose of the rules.

Proposed N.J.A.C. 11:3-17.2 contains the definition of terms used in this subchapter.

Proposed N.J.A.C. 11:3-17.3 provides the registration requirements for a person to qualify as an intervenor.

Proposed N.J.A.C. 11:3-17.4 lists circumstances that may result in an intervenorís registration being revoked or a filer being barred from filing for a rate increase.

Proposed N.J.A.C. 11:3-17.5 provides the requirements for notice of a rate increase to registered intervenors.

Proposed N.J.A.C. 11:3-17.6 establishes procedures for intervenors to intervene in a rate filing.

Proposed N.J.A.C. 11:3-17.7 addresses the awarding of fees and expenses for intervenors.

The proposed amendment to N.J.A.C.11:3-18.6 permits the registered intervenor to request a hearing on a rate filing.

Social Impact

The Department believes that the proposed new rules and amendments will have a positive social impact on consumers. These rules permit the intervention in the rate filing process by an intervenor who has expertise in insurance laws of this State; an understanding of actuarial principles employed in establishing rates and rating systems; sufficient resources to intervene; access to a qualified actuarial expert to conduct a technical evaluation of a rate filing, and represents the interest of consumers.

These rules will impact insurers in that when a person or entity intervenes in a rate filing, the insurer will be required to provide the information requested in accordance with these rules. Additionally, if the intervenor successfully demonstrates that he or she has made a substantial contribution to the adoption of any order or decision by the Commissioner or a court in connection with a rate filing made pursuant to these rules, the filer shall have to pay reasonable advocacy, witness fees and expenses, as awarded by the Commissioner.

Economic Impact

The proposed new rules will have an economic impact on insurers, rating organizations and intervenors. The proposed new rules require intervenors to become registered with the Department. There is a registration fee of $100.00 for intervenors and an annual renewal fee of $100.00.

Insurers and rating organizations will be impacted as a result of these rules to the extent that an intervenor makes a substantial contribution to the adoption of any order or decision in connection with a rate filing made pursuant to these rules and is therefore awarded reasonable advocacy, witness fees and expenses which are paid by the filer.

Federal Standards Statement

A Federal standards analysis is not required because the proposed new rules and amendment concern insurance and are not subject to any Federal standards or requirements.

Jobs Impact

The Department does not anticipate that jobs may be generated as a result of these rules. Actuarial or legal services may be utilized in order to comply with these rules. The Department does not anticipate that any jobs will be lost as a consequence of the proposed new rules and amendments.

Agriculture Impact

Pursuant to P.L. 1998,c.48, the Right to Farm Act, and N.J.S.A. 52:14B-4(a)b of the Administrative Procedure Act, the Department does not expect any agriculture industry impact from these new rules.

Regulatory Flexibility Analysis

It is expected that most of the persons or entities registering with the Department as intervenors will be "small businesses" as that term is defined in the New Jersey Regulatory Flexibility Act, N.J.S.A. 52:14B-16et seq. The registration and renewal fees provided by these rules reflect the Departmentís processing costs. A businessís size does not alter the Departmentís associated processing costs. Since the enabling legislation for the proposed new rules sets forth standards for a person or entity to be qualified to intervene in the rate filing process, and the procedures for intervention are administrative in nature and necessarily uniform to promote an effective process, there is no basis for the differential treatment of small businesses.

The Department anticipates that professional services (that is, actuarial or legal)

may be needed in order to comply with these rules which may result in the paying of varying fees based on the services provided.

The proposed new rules require intervenors to become registered with the Department. The registration fee is $100.00 for intervenors and an annual renewal fee of $100.00. These rules also require intervenors who have decided to intervene to submit a final report to the Department.

Insurers and rating organizations may also be impacted as a result of these rules to the extent that an intervenor makes a substantial contribution to the adoption of any order or decision in connection with a rate filing made pursuant to these rules and is therefore awarded reasonable advocacy, witness fees and expenses which are paid by the filer, in accordance with N.J.S.A. 17:29A-46.8g.

Full text of the proposal follows (additions indicated in boldface thus:)

Subchapter 17 Rate intervenor rules

11:3-17.1 Purpose and scope

The purpose of these rules is to establish standards and procedures for persons who wish to intervene in private passenger automobile rate filings pursuant to N.J.A.C. 11:3-16.

11:3-17.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise:

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Filer" means a rating organization or any insurer making its own rates or loss costs or a portion thereof, establishing or proposing to establish a new rate or rate change.

"Insurer" or "insurance company" means an entity authorized or eligible to transact the business of insurance in New Jersey.

"Intervenor" means a person or entity registered by the Commissioner of Banking and Insurance to intervene in rate filings. In order to be an intervenor, the person or entity shall file with the Department by submitting the registration form in accordance with N.J.A.C.11:3-17.3.

"Rate filing" means a filing by an automobile insurer writing private passenger automobile insurance in this State, made pursuant to N.J.S.A. 17:29A-14 and N.J.A.C. 11:3-16, that seeks an overall rate increase. It does not include an expedited prior approval filing made pursuant to N.J.S.A. 17:29A-46.6; or a filing made pursuant to any statutory change in coverage; a policy form filing, tier rating filing, or classification rating plan.

"Rate increase" means a change in base rates or loss costs by coverage that results in an overall increase in premium.

11:3-17.3 Intervenor registration requirements

(a) Any person or entity that wishes to register as an intervenor in a rate filing shall certify to the following qualifications in the application form incorporated herein by reference as Appendix A to this subchapter:

1. Expertise in the insurance laws of this State;

2. An understanding of the actuarial principles employed in establishing rates and rating systems;

3. Sufficient access to a qualified actuary and sufficient expertise to conduct a technical examination of a rate filing;

4. Sufficient resources to intervene in the rate filing process as provided in this subchapter; and

5. A demonstrated commitment to represent the interest of consumers and accept a duty of fidelity to do so.

(b) Persons or entities who have met the requirements in (a) above may register with the Department by submitting the following:

1. A completed registration form (Appendix A); and

2. A registration fee of $100.00 dollars which shall accompany the registration form. A check or money order for the fee shall be made payable to the New Jersey Department of Banking and Insurance.

(c) An annual renewal fee of $100.00 shall be made payable to the New Jersey Department of Banking and Insurance.

(d) Registration and renewal information shall be sent to the Department at the following address:

New Jersey Department of Banking and Insurance

Property/Casualty

Attention: Rate Intervenor Registration

20 West State Street

P.O.Box 325

Trenton, New Jersey 08625-0325

11:3-17.4 Penalties for intervenors or filers

(a) The Commissioner shall revoke the registration of an intervenor if he or she determines that:

1. The intervenor no longer meets the qualifications; or

2. The intervenor is convicted of a crime or loses a professional license for misconduct.

(b) An intervenor shall be forever barred from registration for conviction of a crime of the third degree if he or she solicits, accepts or agrees to accept any benefits as consideration for knowingly violating or agreeing to violate a duty of fidelity to which he/she is subject pursuant to N.J.S.A.17:29A-46.8.

(c) A filer shall be barred from making a filing for any rate increase for a period of one year if the filer confers, or offers, or agrees to confer, any benefit the acceptance of which would be criminal pursuant to N.J.S.A.17:29A-46.8. The Commissioner shall deny the rate filing of any filer convicted pursuant to N.J.S.A. 17:29A-46.8.

(d) The Commissioner shall notify an intervenor by certified mail of his or her revocation of registration as an intervenor pursuant to N.J.S.A. 17:29A-46.8.

(e) Revocation of an intervenor's registration shall be made by the Commissioner on his or her own motion or upon motion by a member of the public.

11:3-17.5 Notification of rate increase

(a) Upon receipt of a rate filing from a filer for a rate increase, the Commissioner shall:

1. Within five days of receipt of a rate filing, cause to be published a notification of the proposed rate increase in at least two newspapers of general circulation throughout the State; and

    1. Promptly notify all registered intervenors by e-mail or fax within two days of receipt; and by notice on the Departmentís website of the receipt of a rate filing.

11:3-17.6 Procedures for intervening in a rate filing

(a) Procedures for review of rate filings shall be conducted in accordance with N.J.A.C.11:3-18 and this subchapter.

(b) An intervenor shall notify the Department and the filer in writing, by mail or fax of its intent to intervene no later than 15 days after the Departmentís receipt of the rate filing. An intervenor may request and then shall receive a copy of the rate filing and any amendments and supplements thereto and shall pay the cost of copying and mailing as provided by N.J.S.A. 47:1A-2. Notice to the Department shall be sent to:

New Jersey Department of Banking and Insurance

Property/Casualty

Attention: Auto Unit/Rate Intervenor

20 West State Street

P.O. Box 325

Trenton, New Jersey 08625-0325

Fax: (609) 777-0019

(c) If the Department determines that the filing is complete in that it satisfies the requirements set forth in N.J.A.C. 11:3-16, no supplemental information beyond limited discovery to seek clarifying or explanatory information shall be permitted. The following procedures may be used to obtain clarifying, explanatory or supplemental information if necessary:

1. Not later than 30 days after the Departmentís receipt of the rate filing, the intervenor may request in writing to the filer that the filer provide relevant information that may be necessary to clarify or explain information contained in the filing. Not later than 15 days after receipt of any such request, the filer shall provide the clarifying or explanatory information to the intervenor and simultaneously to the Department.

    1. Copies of all correspondence and any additional information exchanged by the parties shall also be provided to the Department. All correspondence to and from the intervenor shall be prominently marked "Rate Intervenor Correspondence."
    2. If a filer denies an intervenorís information request pursuant to (c)1 above, the intervenor may petition the Commissioner for an Order directing the filer to provide additional information that is required to clarify or explain information contained in the rate filing. This petition shall be submitted to the Department and the filer simultaneously within 10 days of the filerís denial or failure to respond or it shall be deemed waived.

i. The petition shall include a list of the information requested and show good cause why the additional information is required. The filer may respond within five days to the Department and the intervenor.

ii. Upon receipt of such petition, and after consideration of any responsive statement by the filer, the Commissioner shall either direct the filer to provide all or part of the information within a specified time, or deny the petition.

(d) The intervenorís Final Report on the rate filing shall be filed with the Department within 75 days after the Departmentís receipt of the rate filing or within 14 days of the hearing, whichever is earlier.

11:3-17.7 Awarding of fees and expenses

    1. Any request for reimbursement shall be accompanied by an affidavit of expenses and shall simultaneously be submitted to the Department and the filer within 30 days of the Commissionerís Final Decision and Order on the rate filing. The request shall include a statement by the intervenor which details its substantial contribution to the adoption of the Commissionerís Final Decision and affirms that the intervenor has not violated the duty of fidelity. If the Commissioner determines that the intervenor has made a substantial contribution to the adoption of any order or decision by the Commissioner or a court in connection with the proceedings pursuant N.J.S.A. 17:29A-46.8, the Commissioner shall issue an Order directing the filer to pay the reasonable advocacy and witness fees and expenses of the intervenor.
    2. The Commissioner shall award reasonable advocacy and witness fees and expenses after consideration of the required affidavits, and upon a determination that the intervenor has demonstrated that he or she has made a substantial contribution to the adoption of any order or decision in connection with a rate fling made pursuant to N.J.S.A. 17:29A-46.8. The award shall be paid for by the filer.

 

Appendix A

New Jersey Department of Banking and Insurance

Office of Property/Casualty

RATE INTERVENOR REGISTRATION

Name ________________________________________________________________

 

______________________________________________________________________

(Street Address) (City/Town) (State) (Zip Code)

(Area Code) Ė Phone Number Fax Number E-Mail Address

*Rate Intervenors are subject to an annual fee of $100, which shall accompany this registration form and shall be made payable to: New Jersey Department of Banking and Insurance.

(I)(We) have expertise in the insurance laws of this State.

(I)(We) have an understanding of the actuarial principles employed in establishing rates and rating systems.

(I) (We) have sufficient access to a qualified actuary and possess sufficient expertise to conduct a technical examination of a rate filing.

(I) (We) have sufficient resources to intervene in the rate filing process as provided in N.J.A.C. 11:3-17.

(I) (We) represent the interest of consumers and accept a duty of fidelity to do so.

(I) (We) have not been convicted of any crime or lost a professional license for misconduct.

(I) (We) certify that the foregoing statements made are true. I am aware that if any of the statements are willfully false, I am subject to punishment.

 

11:3-18.4 Procedures for review of prior approval filings

(a) Ė (c) (No change.)

(d) Not later than 60 days after receipt of a filing by the Department either the filer or a registered intervenor pursuant to N.J.S.A. 17:29A-46.8 may request in writing a hearing on the filing. A request for hearing shall include a statement of facts and issues in sufficient detail so as to notify the Department and any other party of the matters in dispute.

(e) Ė (f) (No change.)