INSURANCE

DEPARTMENT OF BANKING AND INSURANCE

DIVISION OF INSURANCE

Filings: Property and Casualty

Proposed New Rules: N.J.A.C. 11:1-2.1, 2.7 and 11:1-2 Appendix, Exhibits A and B

Proposed 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

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

Authority: N.J.S.A. 17:1-8.1, 17:1-15e, 17:29A-1et seq. and 17:29AA-1et seq.

Proposal Number: PRN 2001- 193

Submit comments by July 4, 2001 to:

Karen Garfing Assistant Commissioner
Regulatory Affairs
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

The Department of Banking and Insurance ("Department") is proposing new rules, amendments and repeals to revise the questionnaires that are submitted along with an insurersí or rating organizationsí commercial and personal lines filings. Currently, insurers and rating organizations are required to complete questionnaires that provide the Department with certain basic information on the filing. For example, the questionnaire requires insurers or rating organizations to indicate if the filing is a new rate filing or a deviation. Additionally, insurers and rating organizations are required to indicate certain information such as the company name(s), the kinds, lines and business (personal or commercial) of insurance affected by the filing, as well as the companyís NAIC number.

The revised questionnaires utilize a format that enhances the Departmentís ability to review filings, eliminates unnecessary information and streamlines the filing process. The revised questionnaires will eliminate the confusion caused by the need for insurers and rating organizations to maintain separate questionnaires when submitting personal and commercial filings. Although the Department is moving to a single questionnaire approach, filers cannot combine personal and commercial lines into a single filing. The revised questionnaires permit the Department to review insurersí filings in an efficient manner. In conjunction with the new questionnaires, the Department is repealing its current filing questionnaires.

The proposed new questionnaires are referred to as Filing Source Documents MARS001 and MARS002, and are proposed as Exhibits A and B in the Appendix to N.J.A.C. 11:1-2. These documents will increase the Departmentís efficiency by requiring all insurers and rating organizations to furnish information fundamental to the Departmentís review of all filings and will aid in the input of this information into the Departmentís databases. These proposed rules also require insurers and rating organizations to submit final printed pages, which codifies the Departmentís policy.

The proposed new questionnaires also replace the Departmentís Circular Letters "Filing Procedures-Property and Casualty Filing Questionnaire-Circular Automobile No. 58-Effective June 1, 1980 and Property and Liability Other than Automobile Circular No. 29," issued April 25, 1980.

The Department is also proposing a new rule, N.J.A.C. 11:1-2.1, which provides a purpose and scope for this subchapter.

In addition the Department is amending and recodifying N.J.A.C. 11:1-2.1. The Department is deleting the existing language of N.J.A.C.11:1-2.1(a) and including it as part of the purpose and scope provision. The Department is also adding new N.J.A.C. 11:1-2.1(b) to require all commercial and personal lines filings submitted to the Department to be accompanied by a Filing Source Document. The Department is deleting the current N.J.A.C.11:1-2.1(c) because it is not necessary.

Further, the Department is amending N.J.A.C. 11:1-2.3 which provides that the memorandum required by this ruling may include side by side comparison indicating the proposed changes. The Department is amending N.J.A.C. 11:1-2.4, in order to clarify the Departmentís intent with respect to new filings. The Department is also proposing a new rule, N.J.A.C. 11:1-2.7, which is a penalty provision.

The Department is amending N.J.A.C. 11:13-2.5 by deleting references to the filing questionnaires and replacing this phrase with Filing Source Documents. The Department is also deleting the part of N.J.A.C.11:13-2.5(c ) that is no longer necessary given the amendments to subsection (b). The Department is adding the N.J.A.C. 11:1-2 Appendix Filing Source Document and Exhibits A and B.

Finally, the Department is amending N.J.A.C. 11:13-5.1 by deleting Exhibits A, B and C from this subchapter, which are being replaced by the Exhibits in N.J.A.C. 11:1-2.

Social Impact

The Department is proposing new questionnaires to be used by insurers and rating organizations in the submission of their commercial and personal lines filings. The Department has revised the questionnaires that are to be submitted along with insurersí or rating organizationsí commercial and personal lines filings. The revised questionnaires utilize a format that enhances the Departmentís ability to review filings, eliminates unnecessary information and streamlines the filing process. The proposed new rules and amendments will increase the Departmentís efficiency by requiring all insurers to furnish information fundamental to the review of all filings and to aid in the input of this information into the Departmentís databases.

Economic Impact

The proposed new rules, amendments and repeals merely replace existing filing forms for commercial and personal lines filings with new forms. Accordingly, the Department does not believe that these rules should impose any additional economic burden on any person or entity. These proposed rules eliminate the need for insurers and rating organizations to maintain separate questionnaires when submitting personal and commercial filings. However, insurers and rating organizations will be required to bear any costs associated with the filing of the revised questionnaires.

Federal Standards Statement

A Federal standards analysis is not required because the proposed new rules, amendments and repeals relate to requirements with respect to rate and form filings by property and casualty insurers and rating organizations, and are not subject to any Federal requirements or standards.

Jobs Impact

The Department does not anticipate that any jobs will be generated or lost as a consequence of the proposed new rule, amendments and repeals. The proposed new rule revise the questionnaires that are to be submitted along with insurersí or rating organizationsí commercial and personal lines filings and deletes the current forms. The Department does not believe that in order to comply with these rules, insurers or rating organizations need to employ additional personnel.

The Department invites commenters to submit any data or studies concerning the jobs impact of these proposed new rules, amendments and repeals together with their written comments on other aspects of the proposal.

Agricultural Industry Impact

The Department does not expect any impact on the agriculture industry from the proposed new rule or amendments.

Regulatory Flexibility Analysis

The Departmentís proposed new rules, amendments and repeals may apply to a "small business" as that term is defined at N.J.S.A. 52:14B-16 et seq. To the extent these rules apply to small businesses, these small businesses will be rating organizations that submit commercial or personal lines filings. The Departmentís proposed rules revise the questionnaires that are submitted along with insurersí or rating organizationsí commercial and personal lines filings.

These rules do not vary based on business size. Currently, the Department imposes reporting, recordkeeping or other compliance requirements on rating organizations and insurers. These proposed rules do not provide additional reporting, recordkeeping or compliance requirements based on the size of the rating organization or insurer. Additionally, these rules do not require insurers or rating organizations to gather new information, but instead the revised questionnaires utilize a format that enhances the Departmentís ability to review filings; eliminates unnecessary information and streamlines the filing process. Further, the revised questionnaires will eliminate the confusion caused by the need for insurers and rating organizations to maintain separate questionnaires when submitting personal and commercial filings. Although the Department is moving to a single questionnaire approach, filers cannot combine personal and commercial lines into a single filing. In order to ensure consistency in the data reported, the new rules, amendments and repeals do not provide any differentiation in compliance requirements based on business size.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

SUBCHAPTER 2 FILINGS[;] PROPERTY [-LIABILITY] AND CASUALTY

 

11:1-2.1 Purpose and scope

    1. This subchapter shall apply to every 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.

(b) This subchapter establishes requirements as to the format of filings pertaining to rates, manual rules, rating plans, policy forms and endorsements, and sets forth guidelines as to required supporting information with respect to such filings.

11:1-[2.1]2.2 Filing[s] of rates, manual rules, rating plans, policy forms and endorsements

[(a) This regulation establishes requirements as to the format of filings pertaining to rates, manual rules, rating plans, policy forms and endorsements, and presents guidelines as to required supporting information.]

[(b) (a) [Such filings] Filings submitted to this Department for approval [must] shall be explicit and self-contained, [must be] supported by statistics, where applicable, and [must] shall set forth the information upon which the filer relied in making the filing.

(b) All commercial and personal lines filings submitted to the Department shall be accompanied by a Filing Source Document, MARS001 incorporated herein by reference as Exhibit A in the Appendix to this subchapter and shall be submitted in duplicate.

(c) [The following applies to various categories of such filings.] All commercial lines filings submitted to the Department shall also be accompanied by final printed pages and Form MARS002, incorporated herein by reference as Exhibit B in the Appendix to this subchapter. For personal lines filings, final printed pages and Form MARS002 shall be provided no later than 10 days after notice of approval or no later than 10 days prior to the effective date.

11:1-[2.2] 2.3 Filing[s] of changes

(a) Filings containing changes in rates, rules, plans and forms previously approved for the filer shall be presented in the following fashion:

    1. (No change.)
    2. A memorandum shall be filed reciting the rule or section of form to be changed, properly referenced as to the manual or form, with newly added matter underlined and matter to be eliminated in brackets [ ] or a side by side comparison indicating the proposed changes.

    1. (No change.)

11:1-[2.3] 2.4 (No change in text.)

11:1-[2.4] 2.5 New filings

[Manual rules, rating plans and policy forms are rarely entirely new. Most such filings are built upon something previously or currently in use.] Action on [such] new filings will be expedited if they are identified as to their foundation. Filings shall not be identified as new filings if they properly fall under the categories discussed under Section [2 or 3] 3 or 4 of this Subchapter.

11:1-[2.5]2.6 Notification

The filing with a [covering] cover letter shall be submitted to the Department of Banking and Insurance. The filing shall be accompanied by a [transmittal form (copies of which can be obtained from the Department of Banking and Insurance, 20 West State Street, Trenton, New Jersey 08625)] Filing Source Document as described in N.J.A.C. 11:1-2.2(b) and (c) and incorporated herein by reference as Exhibit A and B in the Appendix to this subchapter, properly completed and signed by the person authorized by the company to make filings.

11:1-2.7 Penalties

Failure to comply with the provisions of this subchapter may result in the imposition of penalties as prescribed by law.

SUBCHAPTER 16 RATE FILING REQUIREMENTS FOR VOLUNTARY MARKET

PRIVATE PASSENGER AUTOMOBILE INSURANCE

11:3-16.3 General requirements and filing format

(a)-(d) (No change.)

    1. All filings shall be accompanied by a [New Jersey Department of Banking and Insurance transmittal form incorporated herein by reference Exhibit K in the Appendix] Filing Source Document MARS001, incorporated herein by reference as Exhibit A, in the Appendix of N.J.A.C. 11:1-2.

(f)-(l) (No change.)

CHAPTER 13 SUBCHAPTER 2 COMMERCIAL LINES FILINGS

11:13-2.5 [Filing questionnaires] Filing Source Documents

    1. The [filing questionnaires described in this section and shown as Exhibits A, B and C of this subchapter] Filing Source Documents, MARS001 and MARS002, herein incorporated by reference as Exhibits A and B in the Appendix of N.J.A.C. 11:1-2. shall be used in conjunction with the procedures and requirements set forth in [sections 1 through 4 above] N.J.A.C. 11:13-21 through 2.5 by all insurers and rating organizations in submitting filings required pursuant to the Commercial Insurance Deregulation Act of 1982 and this chapter.
    2. Every insurer and every rating organization submitting filings of policy forms, rules, rates or supplementary rate information shall complete and submit with the filing the [Commercial Lines Insurance- General Questionnaire and Affidavit of Compliance shown in Exhibit A and the Commercial Lines Insurance-Rate and Supplementary Rate Information Questionnaire shown in Exhibit B.] Filing Source Documents, MARS001 and MARS002.

[(c) Every insurer submitting policy forms for approval shall complete and submit with the filing the Commercial Lines Insurance General Questionnaire and Affidavit of Compliance shown in Exhibit A and the Commercial Lines Insurance-Policy Approval Questionnaire shown in Exhibit C 1.][1.] (c) Pursuant to N.J.S.A.17:29AA-6, only a policy form filing which is accompanied by [a] properly completed [General Questionnaire,] Filing Source Documents MARS001 and MARS002. [Affidavit of Compliance and Policy Approval Questionnaire,] shall be deemed approved by the Commissioner as of its deemed effective date unless disapproved by the Commissioner prior to that date.

11:13-5.1 Higher rate filings

(a) (No change.)

(b) The following modifications to the rule referenced in (a) above:

1. Reference to N.J.S.A. 17:29AA-22 contained in N.J.A.C. 11:4-7.1(b)11 is deleted and replaced with N.J.S.A. 17:29AA-26.

[The following are Exhibits are part of this subchapter.