New Jersey Administrative Code
Title 11 - INSURANCE
Chapter 1 - ADMINISTRATION
Subchapter 10 - ADMISSION REQUIREMENTS FOR FOREIGN AND ALIEN PROPERTY AND CASUALTY INSURERS
Section 11:1-10.4 - General eligibility requirements
Universal Citation: NJ Admin Code 11:1-10.4
Current through Register Vol. 56, No. 6, March 18, 2024
(a) In order for a foreign or alien company engaged in the business of property and casualty insurance to be admitted to transact the business of insurance in the State of New Jersey, the requirements in this section shall be satisfied in addition to any other requirements in this subchapter or any other provision of law.
1. The insurer shall satisfy the Commissioner
that it is not in a hazardous financial condition.
2. The insurer shall satisfy the Commissioner
that its financial condition is not such as would render its operations
hazardous to the policyholders, stockholders or the general public. In
determining whether a hazardous financial condition exists, the factors set
forth in 11:2-27.3 shall be considered. A
hazardous financial condition shall be deemed to exist when those factors
indicate, either singly or in combination of two or more, that the operations
of any insurer transacting the business of insurance in any jurisdiction is
considered by the Commissioner to be hazardous to the policyholders,
stockholders or the general public.
3. The insurer shall satisfy the following
capital and surplus licensure requirements:
i. An applicant shall satisfy, at a minimum,
the statutorily-prescribed minimum capital and surplus requirements for all
lines of insurance that it is authorized to write pursuant to the Certificate
of Authority issued by its state or country of domicile, whether or not the
applicant desires to transact any of those lines of insurance in the State of
New Jersey. The Department shall make an adjustment of surplus regarding all
applicant companies as follows:
(1) There
shall be deducted from unassigned funds special deposits not held for the
protection of all policyholders; and
(2) All applicants shall include in their
Annual Statement a provision for unauthorized reinsurance for unearned premiums
and losses in connection with the reinsurance in all companies not authorized
to transact business in New Jersey. An amount in these items slightly larger
than that required for New Jersey shall be acceptable where the liability is
based on the calculation for some other state. These penalties may be adjusted
for subsequent legal action on license status in the State of New Jersey or in
other jurisdictions.
ii.
Requirements for an application to meet the minimum capital and surplus amounts
for all lines of insurance that it is authorized to write pursuant to the
Certificate of Authority issued by its state or country of domicile may be
modified by the Commissioner if the applicant:
(1) Does not transact one or more of the
kinds of insurance contained in the Certificate of Authority issued by its
state or county of domicile; and
(2) Submits a resolution by its board of
directors stating that it will refrain from transacting the kind(s) of
insurance permitted by the Certificate of Authority issued by its state,
districts, territories, commonwealth, possessions or country of
domicile.
4.
The applicant shall have its application deferred if any one of the following
conditions exist:
i. An applicant company
which has failed four or more Insurance Regulatory Information System (IRIS)
tests shall have its application deferred until it has demonstrated to the
Commissioner and its state, districts, territories, commonwealth, possessions
or country of domicile that these IRIS test results are not indicative of a
financial condition that may be hazardous to the general public, policyholders,
claimants, creditors and stockholders; or
ii. An applicant company which has failed to
file with the NAIC an Annual Statement for the prior year shall have its
application deferred until it has filed with the NAIC such Annual
Statement.
5. The
insurer shall satisfy the following seasoning requirements:
i. Subject to the provisions of this
subchapter, no applicant shall be considered for a Certificate of Authority to
transact the business of insurance in the State of New Jersey unless the
Commissioner has been furnished with evidence that the applicant, under its
present control, has been authorized by its/their state(s), district(s),
territory(ies), commonwealth(s), possession(s) or country(ies) of domicile, to
engage in the kind(s) of insurance business for which the applicant seeks a
Certificate of Authority, and has in fact been actively engaged in such
business for a period of at least three years prior to the date of the
application for the New Jersey Certificate of Authority.
ii. An applicant insurer qualified under
(a)5i above shall demonstrate that:
(1)
During either any two of the last three years or the most recent year, it
generated a net income from operations, after Federal taxes, as reported in the
Underwriting and Investment Exhibit in the Annual Statement; and
(2) Surplus has not decreased due to
operations over the three-year period in question; and
iii. The Commissioner may, upon the request
of an applicant, on a case-by-case basis, waive the three-year seasoning
requirement required by (a)5i and ii above. In determining whether a reduction
or waiver is appropriate in a particular case, the Commissioner shall consider
whether the requirements of this section have been satisfied, and, in addition,
whether any one of the applicable requirements provided in (a)5iii(1) through
(6) below have been satisfied. These requirements include:
(1) Whether the applicant is a wholly-owned
subsidiary of an insurer which has been authorized to transact the business of
insurance in the State of New Jersey for at least three years. The Commissioner
shall be satisfied as to the financial condition and methods of operation of
the authorized insurer who shall effectively guaranty, by a resolution passed
by its board of directors, the minimum capital and surplus requirements
required by statute of the applicant during the first three years of its
operation in this State; or
(2)
Whether the applicant is a wholly-owned subsidiary of an insurer which has been
authorized to transact the business of insurance in the State of New Jersey for
at least one year, and secured admission into New Jersey by having been in
operation for at least three years pursuant to (a)5i and ii above. The
Commissioner shall be satisfied as to the financial condition and methods of
operation of the authorized insurer, which shall effectively guaranty, by a
resolution passed by its board of directors, the minimum capital and surplus
requirements required by statute of the applicant during the first three years
of its operation in this State. The insurer parent shall also be required to
have one of the top three ratings, or, in the case of Dun and Bradstreet, an
evaluation acceptable to the Department, from at least two of the following:
Standard and Poor's; Dun and Bradstreet; Moody's and A.M. Best; or
(3) Whether the applicant is the continuing
corporation resulting from a merger or consolidation of insurers, at least one
of which has been authorized in its state or country of domicile to transact
the kind(s) of insurance business for which the applicant seeks a New Jersey
Certificate of Authority and has been actively engaged in such insurance
business for at least three years and is currently in good standing;
or
(4) Whether the applicant
obtains a surety bond or bonds issued by an insurance company or insurance
companies approved by the Commissioner and authorized in the State of New
Jersey, in an amount to be determined by the Commissioner, with a minimum
requirement of $ 5,000,000 and issued for a period of time as shall be
determined by the Commissioner, but which shall not exceed three years. The
Commissioner shall exercise his or her discretion in setting an amount for a
surety bond upon consideration of factors such as, but not limited to, the
volume to be written and the type of risk, and any other factors which the
Commissioner, in his or her discretion, shall consider to be appropriate. This
bond shall be prepared in such a way as to meet the requirements of the
Department concerning the protection of New Jersey policyholders, claimants and
creditors of the applicant insurance company; or
(5) Whether the applicant demonstrates to the
Commissioner that a line or lines of insurance in this State for which the
applicant is seeking authority is underserved in this State at the time the
request for waiver is made. For purposes of this provision "line of insurance"
shall be construed to mean a sub-line of business or category of business
within the line, and shall not be construed to mean an entire line of business.
Any applicant seeking a waiver of the three-year seasoning requirement set
forth in (a)5i and ii above pursuant to this provision shall submit a written
request for such waiver which shall include the following:
(A) Such information and documentation as may
be necessary to demonstrate to the Commissioner that there is no reasonable or
adequate market among authorized insurers for the type of insurance coverage
involved. In making this showing, the applicant shall demonstrate that there
is, in fact, a market for the type of coverage involved in the request, that it
is presently underserved, and that the applicant will serve that market. A
showing that the coverage is presently listed on the Exportable List
promulgated by the Commissioner pursuant to N.J.S.A. 17:22-6.4 3 and N.J.A.C.
11:1-34 shall be deemed to demonstrate that the coverage is presently
underserved in this State;
(B)
Documentation that the applicant possesses the requisite underwriting,
managerial and financial capability and expertise to write the particular
business involved in the request, to the extent the original application for
admission does not so demonstrate; and
(C) A certification that the applicant
acknowledges that if the request is granted and the applicant is admitted to
transact business under such waiver, the applicant's authority to transact
business shall be limited only to the type of coverage involved in the request,
and that the applicant may not write any other business so long as it does not
satisfy the seasoning requirements set forth (a)5i and ii above or any waiver
therefrom set forth in (a)5iii (1) through (5) above. This shall not be
construed to limit the ability of the applicant to request that the
Commissioner remove the restriction upon a showing that it satisfies the
seasoning requirements pursuant to (a)5i and ii above, or waiver therefrom set
forth in (a)5iii(1) through (5) above, and that it is otherwise qualified to
write such business pursuant to law, including, but not limited to, this
subchapter; or
(6)
Whether the Commissioner finds that admission of the applicant would assist the
Commissioner in helping to prevent or ameliorate disruptions in the
property/casualty insurance market. In making this determination, the
Commissioner may consider relevant factors in support of such a finding,
including, but not limited to, the financial strength of the applicant as
evidenced by such factors as its level of capitalization, RBC score, and
whether the applicant is part of a holding company system the members of which
have been successfully engaged in the business of insurance, excessive
marketplace volatility, inadequate competition, trends in restrictions in
underwriting guidelines or acceptance criteria, or limitations or restrictions
in coverage by companies admitted to transact the relevant line(s) of
insurance.
6.
The insurer shall procure a New Jersey Certificate of Authority by establishing
compliance with the applicable requirements of
17:17-1 et seq. and shall
successfully complete an admissions process which shall include a detailed
review by the Commissioner of the business affairs and financial condition of
the applicant as provided by this subchapter.
(b) An applicant company intending to make a formal application for admission shall first submit a letter of intent which shall consist of the preliminary information set forth in 11:1-10.5.
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