Bill Text: NJ S2941 | 2018-2019 | Regular Session | Introduced


Bill Title: Provides that private passenger automobile insurance rating territories shall not place exposure in territory based on ZIP code under certain circumstances.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2018-09-17 - Introduced in the Senate, Referred to Senate Commerce Committee [S2941 Detail]

Download: New_Jersey-2018-S2941-Introduced.html

SENATE, No. 2941

STATE OF NEW JERSEY

218th LEGISLATURE

 

INTRODUCED SEPTEMBER 17, 2018

 


 

Sponsored by:

Senator  SHIRLEY K. TURNER

District 15 (Hunterdon and Mercer)

 

 

 

 

SYNOPSIS

     Provides that private passenger automobile insurance rating territories shall not place exposure in territory based on ZIP code under certain circumstances.

 

CURRENT VERSION OF TEXT

     As introduced.

 


An Act concerning private passenger automobile insurance territorial rating plans and amending P.L.1998, c.21. 

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    Section 26 of P.L.1998, c.21 (C.17:29A-48) is amended to read as follows:

     26.  Every insurer writing private passenger automobile insurance in this State and every rating organization establishing territorial rating plans on behalf of its member companies shall establish new territorial rating plans in place of the insurer's or filer's territorial rating plan in effect on June 1, 1998, which shall include territorial definitions, territorial relativity factors and territorial base rates, and which are in accordance with the provisions of sections 26 through 29 of [this amendatory and supplementary act] P.L. 1998, c. 21 (C. 17:29A-48 through 17:29A-51).  The Commissioner of Banking and Insurance shall promulgate regulations establishing standards governing the establishment of new rating territories, which standards shall include, but not be limited to:

     a.     Territories shall be defined in such a manner as to recognize throughout the territorial rating plan both qualitative similarities and qualitative differences in driving environments or mix of driving environments, which may include, but not be limited to, traffic density, population density, comparative severity of loss, and the degree of homogeneity within a territory in terms of driving environments, population, and driver classification[, and the]. The territory shall be comprised of towns or cities which are contiguous; except that an exposure shall not be placed in a territory based on ZIP code in cases in which the ZIP code crosses a municipal boundary.  In the case in which a ZIP code crosses a municipal boundary, the exposure shall be placed in the territory in which the exposure automobile is garaged;

     b.    Territories shall contain a sufficient number of exposures to result in statistically credible experience, in accordance with regulations established by the commissioner, and shall be defined in a manner which minimizes the effect of variability of loss in a territory on a year-to-year basis;

     c.     Territory definitions shall take into account the impact of the overlapping of traffic patterns on exposure to loss, including the relative number of intraterritory trips and inter-territory trips applicable to each proposed territory, for which the commissioner shall make available to the insurer, filer, or the commission established pursuant to section 28 of [this amendatory and supplementary act] P.L. 1998, c. 21 (C. 17:29A-50), appropriate information collected pursuant to the provisions of section 1 of P.L.1987, c.450 (C.43:21-14a) by the Department of Labor and Workforce Development;

     d.    Territories shall be created in a manner which results in an equable distribution of exposures among territories throughout the State and no territorial rating plan shall result in territories which are arbitrary, unfairly discriminatory, significantly disproportionate in terms of the number of exposures per territory, or created in a manner which is primarily for marketing purposes rather than measuring relativity of exposure to probable loss, or created in a manner which can be used to avoid the insurer's or filer's obligations under section 27 of P.L.1990, c.8 (C.17:33B-15);

     e.     Territories shall be created in a manner which does not result in disproportionate differences in territorial relativity factors or territorial base rates between contiguous territories with similar driving environments or similar mix of driving environments;

     f.     Factors to be considered in establishing territorial rate relativities shall include taking into account similarities or differences in driving environments or mix of driving environments, including traffic density, population density, mix of driver classifications within a territory, including classifications capped pursuant to the provisions of section 7 of P.L.1983, c.65 (C.17:29A-36), comparative degree of severity of loss, and the relative number of intraterritory and inter-territory trips;

     g.    Territories shall be defined in a manner which does not result in unfair inter-territorial subsidization among territories with significant differences in driving environments or mix of driving environments, population density, traffic density, mix of driver classifications, including classifications capped pursuant to the provisions of section 7 of P.L.1983, c.65 (C.17:29A-36) and comparative degree of severity of loss;

     h.    For the purpose of defining territories and establishing territorial relativity factors, loss experience allocated to any territory by an insurer or filer (1) shall take into account any recovery applicable to exposures in the territory which are attributable to subrogation or any other kind of recovery by the insurer reporting the losses and (2) shall not include any loss attributable to capping of driver classifications pursuant to section 7 of P.L.1983, c.65 (C.17:29A-36).

     The commissioner shall establish by regulation the minimum number of exposures which shall be deemed to meet the standard of being statistically credible for the purpose of defining territories.

(cf: P.L.1998, c.22, s.5)

 

     2.    This act shall take effect immediately.

STATEMENT

 

     This bill provides that private passenger automobile insurance rating territories shall not place an exposure in a territory based on ZIP code, when the ZIP code crosses a municipal boundary.  Instead, the bill requires that when a territory includes exposures in two or more contiguous municipalities based on a single postal ZIP code, and the ZIP code therefore crosses a municipal boundary, the exposure shall be placed in a territory based on municipal boundary, not ZIP code, and in the territory in which the exposure automobile is garaged.

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