Bill Text: NJ A5067 | 2020-2021 | Regular Session | Introduced
Bill Title: Establishes New Jersey Pandemic Risk Reinsurance Program.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2020-12-07 - Introduced, Referred to Assembly Financial Institutions and Insurance Committee [A5067 Detail]
Download: New_Jersey-2020-A5067-Introduced.html
Sponsored by:
Assemblywoman ANGELA V. MCKNIGHT
District 31 (Hudson)
SYNOPSIS
Establishes New Jersey Pandemic Risk Reinsurance Program.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning business interruption insurance coverage under certain circumstances and supplementing Title 17 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in this act:
"Business interruption insurance" means commercial lines of property and casualty insurance coverage provided or made available for losses resulting from periods of suspended business operations, whether provided under broader coverage for property losses or separately.
"Commissioner" means the Commissioner of Banking and Insurance.
"Covered public health emergency" means any outbreak of infectious disease or pandemic for which an emergency is declared:
(1) by the Governor during a state of emergency declared pursuant to P.L.1942, c.251 (C.App.A:9-33 et seq.), or a public health emergency declared pursuant to P.L.2005, c.222 (C.26:13-1 et seq.);
(2) under the federal Public Health Service Act; or
(3) by the President of the United States as a public health emergency or major disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.
"Department" means the Department of Banking and Insurance.
"Eligible employee" means a full-time employee who works a normal work week of 25 or more hours.
"Eligible insurer" means an entity or affiliate that:
(1) issues policies insuring against loss or damage to property that include the loss of use and occupancy and business interruption in this State;
(2) is a recipient of direct earned premiums for any type of commercial property and casualty insurance coverage;
(3) is licensed or admitted to provide insurance in New Jersey; and
(4) meets any other criteria as determined by the commissioner.
"Fund" means the New Jersey Pandemic Risk Reinsurance Fund created pursuant to section 4 of this act.
"Insurer deductible" means the value of the insurer's direct earned premiums during the immediately preceding calendar year, multiplied by 5%.
"Property and casualty insurance" means commercial lines of property and casualty insurance, including excess insurance, workers' compensation insurance, and directors and officers liability insurance. "Property and casualty insurance" does not include:
(1) private mortgage insurance or title insurance;
(2) medical malpractice or other professional liability insurance;
(3) life or health insurance; or
(4) flood insurance provided under the National Flood Insurance Act.
2. The commissioner shall establish the New Jersey Pandemic Risk Reinsurance Program pursuant to the following guidelines:
a. No compensation shall be paid from the program unless the aggregate industry losses in New Jersey resulting from a covered public health emergency exceed $75 million.
b. Subject to the availability of funds, the aggregate annual maximum amount paid out of the program shall not exceed $500 million.
c. Losses in excess of the insurer deductible but not exceeding the aggregate annual maximum amount pursuant to subsection b. of this section shall be covered jointly by the program and participating eligible insurers subject to each insurer's retention.
d. The program shall pay incurred losses on a pro rata basis, the methodology for which shall be determined by the commissioner within 240 days of the effective date of this act.
e. Reinsurance purchased by a participating eligible insurer through the private market shall not affect the calculation of the insurer's deductible or retention.
3. a As a condition of participating in the New Jersey Pandemic Risk Reinsurance Program established pursuant to this act, an eligible insurer shall offer to an insured or prospective insured with no more than 100 eligible employees in the State of New Jersey, a rider to the insurance policy which includes, as a covered peril under that policy, coverage for global virus transmission or pandemic, or both, pursuant to a covered public health emergency.
b. The Commissioner of Banking and Insurance shall, on an expedited basis, review and approve, as appropriate, any insurance policy rider submitted by an insurer and designed to provide the coverage offered pursuant to this section.
4. a. There is created a special, non-lapsing fund in the Department of Banking and Insurance that shall be designated the "New Jersey Pandemic Risk Reinsurance Fund." The fund shall be maintained as a separate account and administered by the Commissioner of Banking and Insurance. The fund shall be used to establish and fund the New Jersey Pandemic Risk Reinsurance Program established pursuant to section 2 of this act.
b. The fund shall consist of:
(1) an amount the commissioner deems appropriate to fully fund the program, which shall not be less than $50 million, appropriated annually out of the General Fund of the State;
(2) not less than $50 million out of the amounts of federal government assistance provided to this State pursuant to "Coronavirus Aid, Relief, and Economic Security Act," Pub. Law 116-136; and
(3) not less than $50 million out of the amounts of additional federal government assistance that may become available to this State with regard to the coronavirus disease 2019 pandemic.
c. All interest earned on the moneys that have been deposited into the fund shall be retained in the fund and used for purposes consistent with the fund.
d. Moneys in the fund shall only be used for the purposes established in this act.
5. Upon the enactment of any legislation to establish a Federal Pandemic Risk Reinsurance Program, or any similar program at the federal level, the commissioner shall gradually cease operation of the New Jersey Pandemic Risk Reinsurance Program established pursuant to this act.
6. This act shall take effect immediately and shall apply to insurance policies issued or renewed beginning 90 days after the date of enactment.
STATEMENT
This bill establishes the New Jersey Pandemic Risk Reinsurance Fund and the New Jersey Pandemic Risk Reinsurance Program (program) for eligible insurers offering business interruption insurance coverage pursuant to the bill when claims payable resulting from the covered public health emergency exceed $75 million Statewide.
Under the bill, the Commissioner of Banking and Insurance is to establish the New Jersey Pandemic Risk Reinsurance Program pursuant to the following guidelines:
a. No compensation is to be paid from the program unless the aggregate industry losses in New Jersey resulting from a covered public health emergency exceed $75 million.
b. Subject to the availability of funds, the aggregate annual maximum amount paid out of the program is not to exceed $500 million.
c. Losses in excess of the insurer deductible but not exceeding the aggregate annual maximum amount pursuant to the provisions of the bill are to be covered jointly by the program and participating eligible insurers subject to each insurer's retention.
d. The program is to pay incurred losses on a pro rata basis, the methodology for which is to be determined by the commissioner within 240 days of the effective date of this act.
e. Reinsurance purchased by a participating eligible insurer through the private market is not to affect the calculation of the insurer's deductible or retention.
The bill provides that the New Jersey Pandemic Risk Reinsurance Fund is to consist of an annual appropriation out of the General Fund of the State of not less than $50 million. In addition, the bill provides for not less than $50 million to be allocated out of the amounts of federal government assistance provided to this State pursuant to "Coronavirus Aid, Relief, and Economic Security Act," Pub. Law 116-136. Lastly, the bill provides that, out of the amounts of additional federal government assistance that may become available to this State with regard to the coronavirus disease 2019 pandemic, not less than $50 million is to be allocated to the New Jersey Pandemic Risk Reinsurance Fund.
The bill provides that, as a condition of participating in the New Jersey Pandemic Risk Reinsurance Program established pursuant to this act, an eligible insurer is required to offer to an insured or prospective insured with no more than 100 eligible employees in the State of New Jersey, a rider to the insurance policy which includes, as a covered peril under that policy, coverage for global virus transmission or pandemic, or both, pursuant to a covered public health emergency.
The Commissioner of Banking and Insurance is to review and approve, as appropriate and on an expedited basis, any insurance policy rider submitted by an insurer and designed to provide the coverage offered pursuant to this section.
