Current through Register Vol. 56, No. 18, September 16, 2024
(a) The following acts or practices are
specifically prohibited with respect to those policies subject to the
provisions of this subchapter:
1. Effecting
or attempting to effect a mid-term premium increase and/or a reduction in the
amount or type of coverage provided under the policy unless prior written
approval therefor has been obtained from the Commissioner.
2. Block nonrenewing entire lines or classes
of insurance, except pursuant to a plan which: complies with (b) below; is
submitted to the Commissioner at least 30 days prior to the issuance of any
notice of nonrenewal; and is not disapproved within 30 days after its filing
with the Commissioner. For the purpose of this paragraph, the termination or
attempted termination of an appointed agent solely to achieve the block
nonrenewal of entire lines or entire classes of insurance shall be deemed a
nonrenewal subject to this paragraph. In addition, nonrenewals pursuant to a
change in an insurer's underwriting guidelines shall be subject to this
subchapter.
3. Block cancelling
entire lines of insurance or classes of business except pursuant to a plan
which: complies with (c) below; is submitted to the Commissioner at least 30
days prior to the issuance of any notice of cancellation; and is not
disapproved within 30 days after its filing with the Commissioner. For the
purposes of this paragraph, the termination or attempted termination of an
appointed agent solely to achieve the block cancellation of entire lines of
insurance or entire classes of business shall be deemed a cancellation subject
to this paragraph. In addition, cancellations pursuant to a change in an
insurer's underwriting guidelines shall be subject to this
subchapter.
(b) A plan
filed pursuant to (a)2 above shall contain the following information:
1. The reason(s) for the block
nonrenewal;
2. The name of all
companies involved in the block nonrenewal;
3. The line or class of insurance or the
program affected by the block nonrenewal;
4. The number of policies and exposures for
each line or class being nonrenewed;
5. The total market share of the nonrenewing
company or companies by line of insurance. For homeowners' policies, this shall
include the number of exposures by designated zip codes set forth in
N.J.A.C.
11:2-42.9(b) (Appendix E)
and, separately, any additional zip codes that fall within a company's
definition of a coastal area;
6. A
copy of the proposed nonrenewal notice. The notices shall not include the
statements otherwise required pursuant to
N.J.A.C.
11:1-20.2(h) and
11:3-8.6(b)1, as
applicable, related to filing complaints with the Department concerning the
non-renewal. A sample of such notice shall be posted on the Department's
website at
http://www.state.nj.us/dobi/, and
may be modified by the Department from time to time;
7. The criteria being utilized for the block
nonrenewal (such as coastal underwriting guidelines, etc.);
8. A provision for a minimum of 60 days
notice to be provided to the insured prior to nonrenewal; and
9. The proposed duration of the nonrenewal
plan, which the nonrenewing company or companies may specify as being longer
than three years, notwithstanding that, pursuant to
11:1-22.4(a), the
maximum time period by which the Commissioner may extend the duration of a
nonrenewal plan is three years.
(c) A plan filed pursuant to (a)3 above shall
contain the following information:
1. The
reason(s) for the block cancellation;
2. The name of all companies involved in the
block cancellation;
3. The line or
class of insurance or the program affected by the block cancellation;
4. The number of policies and exposures for
each line or class being cancelled;
5. The total market share of the nonrenewing
company or companies by line of insurance. For homeowners' policies, this shall
include the number of exposures by designated zip codes set forth in
N.J.A.C.
11:2-42.9(b) (Appendix E)
and, separately, any additional zip codes that fall within a company's
definition of a coastal area;
6. A
copy of the proposed cancellation notice. The notices shall not include the
statements otherwise required pursuant to
N.J.A.C.
11:1-20.2(h) and
11:3-8.6(b)1, as
applicable, related to filing complaints with the Department concerning the
cancellation. A sample of such notice shall be posted on the Department's
website at
http://www.state.nj.us/dobi/, and
may be modified by the Department from time to time;
7. The criteria being utilized for the block
cancellation (such as coastal underwriting guidelines, etc.);
8. A provision for a minimum of 60 days
notice to be provided to the insured prior to cancellation; and
9. The proposed duration of the block
cancellation plan, which the cancelling company or companies may specify as
being longer than three years notwithstanding that, pursuant to
11:1-22.4(a), the
maximum time period by which the Commissioner may extend the duration of a
cancellation plan is three years.
(d) Notwithstanding (a)2 and 3 above, an
insurer may cancel or nonrenew a line or class of business where such
cancellation or nonrenewal is necessary because of loss or substantial changes
in applicable reinsurance by filing a plan with the Commissioner that contains
the information set forth in (b) or (c) above, as applicable, and pursuant to
the requirements of this subsection. The insurer's plan shall be filed with the
Commissioner at least 20 days prior to the issuance of any notice of
cancellation or nonrenewal. The plan shall be deemed to become effective unless
disapproved by the Commissioner within 20 days after such plan has been filed
with the Department.
1. Any such plan shall
contain a certification by an elected officer of the company:
i. That the loss or substantial change in
applicable reinsurance or the financial condition of the reinsurer necessitates
the cancellation or nonrenewal action;
ii. That the insurer has made a good faith
effort to obtain replacement reinsurance but was unable to do so due to either
the unavailability or unaffordability of replacement reinsurance;
iii. Identifying the category of risks, the
total number of risks written by the company in that category, and the number
of risks intended to be cancelled or nonrenewed;
iv. Identifying the total amount of the
insurer's net retention for the risks intended to be cancelled or
nonrenewed;
v. Identifying the
total amount of risk ceded to each reinsurer and the portion of that total that
is no longer available;
vi.
Explaining how the loss of or reduction in reinsurance affects the company's
risks throughout the entire line or category or insurance proposed for
cancellation and/or nonrenewal;
vii. Explaining why cancellation and/or
nonrenewal is necessary to cure the loss of or reduction in available
reinsurance; and
viii. Explaining
how the cancellations or nonrenewals, if approved, will be implemented with
respect to individual risks and the steps that will be taken to ensure that the
cancellation/nonrenewal decisions will not be applied in an arbitrary,
capricious or unfairly discriminatory manner.
2. Any plan for cancellation or nonrenewal
due to loss of or substantial changes in applicable reinsurance may be
submitted to the Department as provided at (d) above only if the guideline
meets the standards set forth at
11:1-20.4(b)10. A
plan for termination based on any other guideline for loss of or substantial
changes in available reinsurance must be submitted to the Department for
approval as specified at (a)2 or 3 above, as applicable.
(e) Notwithstanding (a)2 and 3 above, an
insurer may cancel or nonrenew a line or class of insurance based upon a
material increase in exposure arising out of changes in statutory or case law
subsequent to the issuance of the insurance contract or loss of or reduction in
available insurance capacity by filing a plan with the Commissioner pursuant to
the requirements of this subsection. The insurer's plan shall be filed with the
Commissioner at least 20 days prior to the issuance of any notice of
cancellation or nonrenewal. The plan shall be deemed to become effective unless
disapproved by the Commissioner within 20 days after such plan has been filed
with the Department.
1. Any plan for
cancellation or nonrenewal due to loss of or reduction in available insurance
capacity may be submitted to the Department as provided at (e) above, only if
the guideline meets the standards set forth at
11:1-20.4(b)8. A
plan for termination based on any other guideline for loss of or reduction in
available insurance capacity must be submitted to the Department for approval
as specified at (a)2 or 3 above, as applicable.
(f) Notwithstanding (a)2 and 3 above, an
insurer may nonrenew a line or class of insurance based upon agency termination
by filing a plan with the Commissioner pursuant to the requirements of this
subsection. The insurer's plan shall be filed with the Commissioner at least 20
days prior to the issuance of any notice of nonrenewal. The plan shall be
deemed to become effective unless disapproved by the Commissioner within 20
days after such plan has been filed with the Department.
1. Any plan for nonrenewal due to agency
termination may be submitted to the Department as provided at (f) above only if
the guideline meets the standards at
11:1-20.4(b)13. A
plan for nonrenewal based on any other guideline for agency termination must be
submitted to the Department for approval as specified at (a)2 above.
